I

104TH CONGRESS

1ST SESSION H. R. 1799

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

cleanup of certain contaminated industrial sites.

IN THE HOUSE OF REPRESENTATIVES

JUNE 8, 1995

Mr. ENGLISH of Pennsylvania (for himself, Mr. WELLER, Mr. ACKERMAN, and

Mr. BLUTE) 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.

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

3 SECTION 1. ENVIRONMENTAL REMEDIATION TAX CREDIT.

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

5 chapter 1 of the Internal Revenue Code of 1986 (relating

6 to credits allowable) is amended by adding at the end

7 thereof the following new subpart:

8 ‘‘Subpart H—Environmental Remediation Credit

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

‘‘Sec. 54A. Designation of eligible States.
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‘‘Sec. 54B. Allocation of credit limits.

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

1 ‘‘SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION

2 CREDIT.

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

4 the environmental remediation credit determined under

5 this section is 40 percent of the costs—

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

7 for environmental remediation with respect to any

8 qualified contaminated site which is owned by the

9 taxpayer, and

10 ‘‘(2) which are incurred by the taxpayer pursu11 ant to an environmental remediation plan for such

12 site which was approved by the Administrator of the

13 Environmental Protection Agency.

14 ‘‘(b) CREDIT MAY NOT EXCEED ALLOCATION.—The

15 environmental remediation credit determined under this

16 section with respect to any qualified contaminated site

17 shall not exceed the remediation credit amount allocated

18 to the taxpayer under section 54B with respect to such

19 site.

20 ‘‘(c) REMEDIATION PLAN MUST BE COMPLETED.—

21 ‘‘(1) IN GENERAL.—Except as otherwise pro22 vided in paragraph (2)—

23 ‘‘(A) no environmental remediation credit

24 shall be determined under this section with re-
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1 spect to any qualified contaminated site unless

2 the Administrator of the Environmental Protec3 tion Agency certifies the environmental remedi4 ation plan for such site has been completed,

5 and

6 ‘‘(B) if such Administrator certifies that

7 such plan has been completed, such credit shall

8 be taken into account under subsection (a) rat9 ably over the 5 taxable year period beginning

10 with the taxable year in which such plan was

11 completed.

12 ‘‘(2) SPECIAL RULE WHERE EXTRAORDINARY

13 COST INCREASES.—If—

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

15 unforeseen circumstances the cost of completing

16 the remediation plan for any qualified contami17 nated site exceeds 200 percent of the estimated

18 costs of completing such plan, and

19 ‘‘(B) the State or local official administer20 ing the remediation credit program agrees with

21 such determination,

22 the taxpayer may cease the implementation of such

23 plan and shall be entitled to an environmental reme24 diation credit with respect to costs incurred before

25 such cessation. Such credit shall be taken into ac-
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1 count under subsection (a) ratably over the 5-tax2 able-year period beginning with the taxable year in

3 which such cessation occurs.

4 ‘‘(d) CERTAIN PARTIES NOT ELIGIBLE.—A taxpayer

5 shall not be eligible for any credit determined under this

6 section with respect to any qualified contaminated site if—

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

8 enactment of this subpart such taxpayer was the

9 owner or operator of any business on such site,

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

11 of enactment such taxpayer—

12 ‘‘(A) had (by contract, agreement, or oth13 erwise) arranged for the disposal or treatment

14 of any hazardous materials at such site or ar15 ranged with a transporter for transport for dis16 posal or treatment of any hazardous materials

17 at such site, or

18 ‘‘(B) had accepted any hazardous mate19 rials for transport to such site, or

20 ‘‘(3) the taxpayer is related to any taxpayer re21 ferred to in paragraph (1) or (2).

22 ‘‘(e) QUALIFIED CONTAMINATED SITE.—For pur23 poses of this subpart, the term ‘qualified contaminated

24 site’ means any contaminated site if such site is within
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1 a State designated under section 54A(a) for participation

2 in the environmental remediation credit program.

3 ‘‘(f) ADMINISTRATION BY STATE OR LOCAL GOVERN4 MENT AGENCIES PERMITTED.—Any reference in this sec5 tion, section 144(d), or section 150(b)(7) to the Adminis6 trator of the Environmental Protection Agency shall in7 clude a reference to the head of any State or local govern8 ment agency designated by the Administrator to carry out

9 the Administrator’s functions under such sections with re10 spect to any site.

11 ‘‘SEC. 54A. DESIGNATION OF ELIGIBLE STATES.

12 ‘‘(a) IN GENERAL.—The Secretary of Housing and

13 Urban Development shall designate States under this sec14 tion for participation in the environmental remediation

15 credit program.

16 ‘‘(b) ELIGIBILITY REQUIREMENTS.—No State may

17 be designated under this section unless—

18 ‘‘(1) such State has submitted an application

19 for such a designation to the Secretary of Housing

20 and Urban Development in such manner as such

21 Secretary may require,

22 ‘‘(2) such State has established an environ23 mental credit remediation program which shall in24 clude—
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1 ‘‘(A) procedures for the assessment of con2 taminated sites located within such State for

3 purposes of determining whether such sites are

4 appropriate for participation in the environ5 mental remediation credit program,

6 ‘‘(B) a credit allocation plan which con7 tains the selection criteria required under sub8 section (c), and

9 ‘‘(C) provision for non-Federal contribu10 tions to the environmental remediation of se11 lected sites through grants, loans, property or

12 income tax abatement, contributions by private

13 parties or non-Federal governmental sources, or

14 any other direct or indirect financial assistance;

15 and

16 ‘‘(3) such State has designated a State official

17 responsible for the administration of its environ18 mental remediation credit program.

19 ‘‘(c) SELECTION CRITERIA.—The selection criteria

20 required under this subsection are the following:

21 ‘‘(1) The condition of the contaminated site is

22 such that without participation in the environmental

23 remediation credit program redevelopment is un24 likely.
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1 ‘‘(2) The contaminated site has not been in pro2 ductive use for at least 1 year before participation

3 in the program.

4 ‘‘(3) There is a strong likelihood of redevelop5 ment of the site for industrial or commercial use

6 that will result in creation of jobs and expansion of

7 the tax base.

8 ‘‘(4) Environmental remediation and redevelop9 ment are likely to be completed within a reasonable

10 period of time.

11 ‘‘SEC. 54B. ALLOCATION OF CREDIT LIMITS.

12 ‘‘(a) OVERALL LIMITATION.—For each calendar year

13 after 1995, there shall be an overall credit limitation of

14 $200,000,000.

15 ‘‘(b) METHOD OF MAKING ALLOCATION.—

16 ‘‘(1) IN GENERAL.—Any State receiving a por17 tion of the overall credit limitation under subsection

18 (a) may use such portion to make allocations of en19 vironmental remediation credit amounts to contami20 nated sites selected under the credit allocation plan

21 required under section 54A(b)(2)(B).

22 ‘‘(2) PERIOD DURING WHICH ALLOCATED

23 AMOUNT MAY BE USED.—Any State receiving a por24 tion of the overall credit limitation for any calendar

25 year may use such portion only to make allocations
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1 under paragraph (1) during such calendar year or

2 the following calendar year.

3 ‘‘SEC. 54C. DEFINITIONS AND SPECIAL RULES.

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

5 subpart—

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

7 site’ means any site if at least 1 of the following en8 vironmental conditions are present on such site:

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

10 hazardous, toxic, or dangerous substance.

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

12 hazardous, toxic, or dangerous substance.

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

14 ‘‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUB15 STANCE.—Any substance, waste, or material shall be

16 treated as a hazardous, toxic, or dangerous sub17 stance if it is so treated under—

18 ‘‘(A) the Comprehensive Environmental

19 Response, Compensation, and Liability Act (42

20 U.S.C. 9601 et seq.),

21 ‘‘(B) the Resource Conservation and Re22 covery Act (42 U.S.C. 6901 et seq.), or

23 ‘‘(C) any State or local environmental law

24 or ordinance.
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1 The following materials shall in any event be treated

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

3 derivative thereof, friable asbestos or any asbestos

4 containing material, polychlorinated biphenyls, or

5 urea formaldehyde foam insulation.

6 ‘‘(b) ENVIRONMENTAL REMEDIATION.—For pur7 poses of this subpart, the term ‘environmental remedi8 ation’ means—

9 ‘‘(1) removal or remediation activity in accord10 ance with an approved environmental plan including

11 soil and ground water remediation,

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

13 resources at the site, or the mitigation of unavoid14 able losses of such resources incurred in connection

15 with the remediation or response activity,

16 ‘‘(3) health assessments or health effects stud17 ies,

18 ‘‘(4) environmental audits,

19 ‘‘(5) remediation of off-site contamination

20 caused by activity on the site, and

21 ‘‘(6) any other costs reasonably required by rea22 son of the environmental conditions of the site in23 cluding demolition of existing contaminated struc24 tures, site security, and permit fees necessary for re25 mediation.
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1 ‘‘(c) BASIS REDUCTION.—The basis of any qualified

2 contaminated site shall be reduced by the amount of any

3 credit determined under this subpart with respect to such

4 site.

5 ‘‘(d) RELATED PERSON.—For purposes of this sub6 part, persons shall be treated as related to each other if

7 such persons are treated as a single employer under the

8 regulations prescribed under section 52(b) or such persons

9 bear a relationship to each other specified in section

10 267(b) or 707(b).’’

11 (b) CREDIT MADE PART OF GENERAL BUSINESS

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

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

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

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

16 following new paragraph:

17 ‘‘(12) the environmental remediation credit

18 under section 54(a).’’

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

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

21 thereof the following new paragraph:

22 ‘‘(7) NO CARRYBACK OF ENVIRONMENTAL RE23 MEDIATION CREDIT BEFORE EFFECTIVE DATE.—No

24 portion of the unused business credit for any taxable

25 year which is attributable to the credit under section
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1 54 may be carried back to a taxable year ending

2 before the date of the enactment of section 54.’’

3 (d) DEDUCTION FOR UNUSED CREDIT.—Subsection

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

5 ‘‘and’’ at the end of paragraph (6), by striking the period

6 at the end of paragraph (7) and inserting ‘‘, and’’, and

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

8 ‘‘(8) the environmental remediation credit de9 termined under section 54.’’

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

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

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

13 item:

‘‘Subpart H—Environmental remediation credit.’’

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

15 this section shall take effect on the date of the enactment

16 of this Act.

17 SEC. 2. TAX-EXEMPT FINANCING OF ENVIRONMENTAL RE18 MEDIATION OF QUALIFIED CONTAMINATED

19 SITES.

20 (a) IN GENERAL.—Subsection (e) of section 141 of

21 the Internal Revenue Code of 1986 (defining qualified

22 bond) is amended by striking ‘‘or’’ at the end of subpara23 graph (F), by redesignating subparagraph (G) as subpara24 graph (H), and by inserting after subparagraph (F) the

25 following new subparagraph:
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1 ‘‘(G) a qualified contaminated site remedi2 ation bond, or’’.

3 (b) QUALIFIED CONTAMINATED SITE REMEDIATION

4 BOND.—Section 144 of such Code is amended by adding

5 at the end thereof the following new subsection:

6 ‘‘(d) QUALIFIED CONTAMINATED SITE REMEDIATION

7 BOND.—For purposes of this part—

8 ‘‘(1) IN GENERAL.—The term ‘qualified con9 taminated site remediation bond’ means any bond is10 sued as part of an issue 95 percent or more of the

11 proceeds of which are to finance—

12 ‘‘(A) the acquisition of a qualified contami13 nated site, or

14 ‘‘(B) the costs of environmental remedi15 ation (as defined in section 54C(b))—

16 ‘‘(i) with respect to such a site which

17 is owned by the person incurring such

18 costs, and

19 ‘‘(ii) which are incurred pursuant to

20 an environmental remediation plan for

21 such site which was approved by the Ad22 ministrator of the Environmental Protec23 tion Agency.
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1 ‘‘(2) LIMITATIONS.—Such term shall not in2 clude any bond issued to provide financing with re3 spect to a qualified contaminated site if—

4 ‘‘(A) any amount of such financing is pro5 vided directly or indirectly to any person who is

6 not eligible for the credit determined under sec7 tion 54 with respect to such site by reason of

8 section 54(d),

9 ‘‘(B) less than 60 percent of the amount of

10 the financing so provided with respect to such

11 site is for costs described in paragraph (1)(B),

12 or

13 ‘‘(C) the amount of the financing so pro14 vided to acquire such site exceeds the excess

15 of—

16 ‘‘(i) the fair market value of the site

17 after the completion of the environmental

18 remediation plan, over

19 ‘‘(ii) the amount of the financing so

20 provided with respect to such site for costs

21 described in paragraph (1)(B).

22 ‘‘(3) QUALIFIED CONTAMINATED SITE.—For

23 purposes of this subsection, the term ‘qualified con24 taminated site’ has the meaning given such term by

25 section 54(e).
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1 ‘‘(4) RESTRICTION ON LAND ACQUISITION NOT

2 TO APPLY.—Section 147(c) shall not apply to any

3 qualified contaminated site remediation bond.’’

4 (c) PENALTY FOR FAILURE TO SATISFACTORILY

5 COMPLETE REMEDIATION PLAN.—Subsection (b) of sec6 tion 150 of such Code is amended by adding at the end

7 thereof the following new paragraph:

8 ‘‘(7) QUALIFIED CONTAMINATED SITE REMEDI9 ATION BONDS.—In the case of financing provided by

10 a qualified contaminated site remediation bond for

11 costs described in section 144(d)(1)(C), no deduction

12 shall be allowed under this chapter for interest on

13 such financing during any period during which there

14 is a determination by the Administrator of the Envi15 ronmental Protection Agency that the remediation

16 plan under which such costs were incurred was not

17 satisfactorily completed.’’

18 (d) CLERICAL AMENDMENTS.—

19 (1) The section heading for section 144 of such

20 Code is amended by inserting before the period

21 ‘‘qualified contaminated site remediation bond’’.

22 (2) The table of sections for subpart A of part

23 IV of subchapter B of chapter 1 of such Code is

24 amended by inserting before the period at the end
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1 of the item relating to section 144 ‘‘; qualified con2 taminated site remediation bond’’.

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