I

104TH CONGRESS

2D SESSION H. R. 2846

To amend the Internal Revenue Code of 1986 to allow a credit for the

cleanup of certain contaminated industrial sites and to allow the use

of tax-exempt redevelopment bonds for such cleanup.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1996

Mr. COYNE introduced the following bill; which was referred to the Committee

on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow a

credit for the cleanup of certain contaminated industrial

sites and to allow the use of tax-exempt redevelopment

bonds for such cleanup.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Brownfields Redevelop5 ment Act of 1996’’.

6 SEC. 2. ENVIRONMENTAL REMEDIATION TAX CREDIT.

7 (a) GENERAL RULE.—Part IV of subchapter A of

8 chapter 1 of the Internal Revenue Code of 1986 (relating
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1 to credits allowable) is amended by adding at the end

2 thereof the following new subpart:

3 ‘‘Subpart H—Environmental Remediation Credit

‘‘Sec. 54. Amount of environmental remediation credit.

‘‘Sec. 54A. Definitions and special rules.

4 ‘‘SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION

5 CREDIT.

6 ‘‘(a) GENERAL RULE.—For purposes of section 38,

7 the environmental remediation credit determined under

8 this section is 50 percent of the costs—

9 ‘‘(1) which are paid or incurred by the taxpayer

10 for environmental remediation with respect to any

11 qualified contaminated site which is owned by the

12 taxpayer, and

13 ‘‘(2) which are incurred by the taxpayer pursu14 ant to an environmental remediation plan for such

15 site which was approved by the Administrator of the

16 Environmental Protection Agency or by the head of

17 any State or local government agency designated by

18 the Administrator to carry out the Administrator’s

19 functions under this subpart with respect to such

20 site.

21 ‘‘(b) REMEDIATION PLAN MUST BE COMPLETED.—

22 ‘‘(1) IN GENERAL.—Except as otherwise pro23 vided in paragraph (2)—
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1 ‘‘(A) no environmental remediation credit

2 shall be determined under this section with re3 spect to any qualified contaminated site unless

4 the Administrator of the Environmental Protec5 tion Agency (or such Administrator’s designee

6 under subsection (a)(2)) certifies the environ7 mental remediation plan for such site has been

8 completed, and

9 ‘‘(B) if such Administrator (or designee)

10 certifies that such plan has been completed,

11 such credit shall be taken into account under

12 subsection (a) ratably over the 5 taxable year

13 period beginning with the taxable year in which

14 such plan was completed.

15 ‘‘(2) SPECIAL RULE WHERE EXTRAORDINARY

16 COST INCREASES.—If—

17 ‘‘(A) the taxpayer determines that due to

18 unforeseen circumstances the cost of completing

19 the remediation plan for any qualified contami20 nated site exceeds 200 percent of the estimated

21 costs of completing such plan, and

22 ‘‘(B) the State or local official administer23 ing the remediation credit program agrees with

24 such determination,
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1 the taxpayer may cease the implementation of such

2 plan and shall be entitled to an environmental reme3 diation credit with respect to costs incurred before

4 such cessation. Such credit shall be taken into ac5 count under subsection (a) ratably over the 5-tax6 able-year period beginning with the taxable year in

7 which such cessation occurs.

8 ‘‘(c) CERTAIN PARTIES NOT ELIGIBLE.—A taxpayer

9 shall not be eligible for any credit determined under this

10 section with respect to any qualified contaminated site if—

11 ‘‘(1) at any time on or before the date of the

12 enactment of this subpart, such taxpayer was the

13 owner or operator of any business on such site,

14 ‘‘(2) at any time before, on, or after such date

15 of enactment such taxpayer—

16 ‘‘(A) had (by contract, agreement, or oth17 erwise) arranged for the disposal or treatment

18 of any hazardous materials at such site or ar19 ranged with a transporter for transport for dis20 posal or treatment of any hazardous materials

21 at such site, or

22 ‘‘(B) had accepted any hazardous mate23 rials for transport to such site, or

24 ‘‘(3) the taxpayer is related to any taxpayer re25 ferred to in paragraph (1) or (2).
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1 The preceding sentence shall not apply to a taxpayer who

2 became described therein by reason of the acquisition of

3 the business or site through foreclosure (or the equivalent)

4 of a security interest held by the taxpayer or a related

5 party if the taxpayer undertakes to sell or otherwise dis6 pose of such business or site in a reasonably expeditious

7 manner on commercially reasonable terms.

8 ‘‘(d) QUALIFIED CONTAMINATED SITE.—For pur9 poses of this subpart, the term ‘qualified contaminated

10 site’ means any contaminated site if—

11 ‘‘(1) the condition of the contaminated site is

12 such that without participation in the environmental

13 remediation credit program redevelopment is un14 likely,

15 ‘‘(2) the contaminated site has not been in pro16 ductive use for at least 1 year before participation

17 in the program,

18 ‘‘(3) there is a strong likelihood of redevelop19 ment of the site for industrial or commercial use

20 that will result in creation of jobs and expansion of

21 the tax base, and

22 ‘‘(4) environmental remediation and redevelop23 ment are likely to be completed within a reasonable

24 period of time.
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1 ‘‘SEC. 54A. DEFINITIONS AND SPECIAL RULES.

2 ‘‘(a) CONTAMINATED SITE.—For purposes of this

3 subpart—

4 ‘‘(1) IN GENERAL.—The term ‘contaminated

5 site’ means any site if at least 1 of the following en6 vironmental conditions are present on such site:

7 ‘‘(A) A release or threatened release of any

8 hazardous, toxic, or dangerous substance.

9 ‘‘(B) Any storage tanks which contain any

10 hazardous, toxic, or dangerous substance.

11 ‘‘(C) Any illegal disposal of solid waste.

12 ‘‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUB13 STANCE.—Any substance, waste, or material shall be

14 treated as a hazardous, toxic, or dangerous sub15 stance if it is so treated under—

16 ‘‘(A) the Comprehensive Environmental

17 Response, Compensation, and Liability Act (42

18 U.S.C. 9601 et seq.) as in effect on the date of

19 the enactment of this section, or

20 ‘‘(B) the Resource Conservation and Re21 covery Act (42 U.S.C. 6901 et seq.) as so in ef22 fect.

23 The following materials shall in any event be treated

24 as such a substance: petroleum or crude oil or any

25 derivative thereof, friable asbestos or any asbestos
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1 containing material, polychlorinated biphenyls, and

2 lead paint.

3 ‘‘(b) ENVIRONMENTAL REMEDIATION.—For pur4 poses of this subpart, the term ‘environmental remedi5 ation’ means—

6 ‘‘(1) removal or remediation activity in accord7 ance with the plan approved under section 54(a)(2),

8 ‘‘(2) restoration of natural, historic or cultural

9 resources at the site, or the mitigation of unavoid10 able losses of such resources incurred in connection

11 with the remediation or response activity,

12 ‘‘(3) health assessments or health effects stud13 ies related to the site,

14 ‘‘(4) remediation of off-site contamination

15 caused by activity on the site (other than remedi16 ation activities of a type not permitted for the site),

17 and

18 ‘‘(5) any other costs specified in the plan ap19 proved under section 54(a)(2), including demolition

20 of existing contaminated structures, site security,

21 permit fees necessary for remediation, and environ22 mental audits.

23 ‘‘(c) RELATED PERSON.—For purposes of this sub24 part, persons shall be treated as related to each other if

25 such persons are treated as a single employer under the
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1 regulations prescribed under section 52(b) or such persons

2 bear a relationship to each other specified in section

3 267(b) or 707(b).’’

4 (b) CREDIT MADE PART OF GENERAL BUSINESS

5 CREDIT.—Subsection (b) of section 38 of such Code is

6 amended by striking ‘‘plus’’ at the end of paragraph (10),

7 by striking the period at the end of paragraph (11) and

8 inserting ‘‘, plus’’, and by adding at the end thereof the

9 following new paragraph:

10 ‘‘(12) the environmental remediation credit

11 under section 54(a).’’

12 (c) LIMITATION ON CARRYBACK.—Subsection (d) of

13 section 39 of such Code is amended by adding at the end

14 thereof the following new paragraph:

15 ‘‘(7) NO CARRYBACK OF ENVIRONMENTAL RE16 MEDIATION CREDIT BEFORE EFFECTIVE DATE.—No

17 portion of the unused business credit for any taxable

18 year which is attributable to the credit under section

19 54 may be carried back to a taxable year beginning

20 on or before the date of the enactment of section

21 54.’’

22 (d) DEDUCTION FOR UNUSED CREDIT.—Subsection

23 (c) of section 196 of such Code is amended by striking

24 ‘‘and’’ at the end of paragraph (6), by striking the period
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1 at the end of paragraph (7) and inserting ‘‘, and’’, and

2 by adding at the end thereof the following new paragraph:

3 ‘‘(8) the environmental remediation credit de4 termined under section 54.’’

5 (e) CLERICAL AMENDMENT.—The table of subparts

6 for part IV of subchapter A of chapter 1 of such Code

7 is amended by adding at the end thereof the following new

8 item:

‘‘Subpart H. Environmental remediation credit.’’

9 (f) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 the date of the enactment of this Act.

12 SEC. 3. USE OF REDEVELOPMENT BONDS FOR ENVIRON13 MENTAL REMEDIATION.

14 (a) ENVIRONMENTAL REMEDIATION INCLUDED AS

15 REDEVELOPMENT PURPOSE.—Subparagraph (A) of sec16 tion 144(c)(3) of the Internal Revenue Code of 1986 (re17 lating to redevelopment purposes) is amended by striking

18 ‘‘and’’ at the end of clause (iii), by striking the period

19 at the end of clause (iv) and inserting ‘‘, and’’, and by

20 adding at the end the following new clause:

21 ‘‘(v) the costs of environmental reme22 diation (as defined in section 54A(b)) with

23 respect to a qualified contaminated site (as

24 defined in section 54(d)) if such costs are

25 incurred pursuant to an environmental re-
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1 mediation plan which was approved by the

2 Administrator of the Environmental Pro3 tection Agency or by the head of any State

4 or local government agency designated by

5 the Administrator to carry out the Admin6 istrator’s functions under this clause.’’

7 (b) CERTAIN REQUIREMENTS NOT TO APPLY TO

8 REDEVELOPMENT BONDS FOR ENVIRONMENTAL REME9 DIATION.—Subsection (c) of section 144 of such Code is

10 amended by adding at the end the following new para11 graph:

12 ‘‘(9) CERTAIN REQUIREMENTS NOT TO APPLY

13 TO REDEVELOPMENT BONDS FOR ENVIRONMENTAL

14 REMEDIATION.—In the case of any bond issued as

15 part of an issue 95 percent or more of the proceeds

16 of which are to finance costs referred to in para17 graph (3)(A)(v)—

18 ‘‘(A) paragraph (2)(A)(i) shall not apply,

19 ‘‘(B) paragraph (2)(A)(ii) shall not apply

20 to any issue issued by the governing body de21 scribed in paragraph (4)(A) with respect to the

22 area which includes the site,

23 ‘‘(C) the requirement of paragraph

24 (2)(B)(ii) shall be treated as met if—
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1 ‘‘(i) the payment of the principal and

2 interest on such issue is secured by taxes

3 imposed by a governmental unit, or

4 ‘‘(ii) such issue is approved by the ap5 plicable elected representative (as defined

6 in section 147(f)(2)(E)) of the govern7 mental unit which issued such issue (or on

8 behalf of which such issue was issued),

9 ‘‘(D) subparagraphs (C) and (D) of para10 graph (2) shall not apply,

11 ‘‘(E) subparagraphs (C) and (D) of para12 graph (4) shall not apply, and

13 ‘‘(F) if the real property referred to in

14 clause (iii) of paragraph (3)(A) is 1 or more

15 dwelling units, such clause shall apply only if

16 the requirements of section 142(d) or 143 (as

17 the case may be) are met with respect to such

18 units.’’

19 (c) PENALTY FOR FAILURE TO SATISFACTORILY

20 COMPLETE REMEDIATION PLAN.—Subsection (b) of sec21 tion 150 of such Code is amended by adding at the end

22 thereof the following new paragraph:

23 ‘‘(7) QUALIFIED CONTAMINATED SITE REMEDI24 ATION BONDS.—In the case of financing provided for

25 costs described in section 144(c)(3)(A)(v), no deduc-
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1 tion shall be allowed under this chapter for interest

2 on such financing during any period during which

3 there is a determination by the Administrator of the

4 Environmental Protection Agency (or by the head of

5 any State or local government agency designated by

6 the Administrator to carry out the Administrator’s

7 functions under this paragraph) that the remedi8 ation plan under which such costs were incurred was

9 not satisfactorily completed.’’

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to bonds issued after the date of

12 the enactment of this Act.

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