I

104TH CONGRESS

2D SESSION H. R. 4200

To amend the Internal Revenue Code of 1986 to encourage the cleanup

of contaminated brownfield sites.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 26, 1996

Mrs. JOHNSON of Connecticut 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 encourage

the cleanup of contaminated brownfield 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. EXPENSING OF ENVIRONMENTAL REMEDI4 ATION COSTS.

5 (a) IN GENERAL.—Part VI of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 is amended

7 by adding at the end the following new section:
2

•HR 4200 IH

1 ‘‘SEC. 198. EXPENSING OF ENVIRONMENTAL REMEDIATION

2 COSTS.

3 ‘‘(a) IN GENERAL.—A taxpayer may elect to treat

4 any qualified environmental remediation expenditure

5 which is paid or incurred by the taxpayer as an expense

6 which is not chargeable to capital account. Any expendi7 ture which is so treated shall be allowed as a deduction

8 for the taxable year in which it is paid or incurred.

9 ‘‘(b) QUALIFIED ENVIRONMENTAL REMEDIATION

10 EXPENDITURE.—For purposes of this section—

11 ‘‘(1) IN GENERAL.—The term ‘qualified envi12 ronmental remediation expenditure’ means any ex13 penditure—

14 ‘‘(A) which is otherwise chargeable to cap15 ital account, and

16 ‘‘(B) which is paid or incurred in connec17 tion with the abatement or control of hazardous

18 substances at a qualified contaminated site.

19 ‘‘(2) SPECIAL RULE FOR EXPENDITURES FOR

20 DEPRECIABLE PROPERTY.—Such term shall not in21 clude any expenditure for the acquisition of property

22 of a character subject to the allowance for deprecia23 tion which is used in connection with the abatement

24 or control of hazardous substances at a qualified

25 contaminated site; except that the portion of the al26 lowance under section 167 for such property which
3

•HR 4200 IH

1 is otherwise allocated to such site shall be treated as

2 a qualified environmental remediation expenditure.

3 ‘‘(c) QUALIFIED CONTAMINATED SITE.—For pur4 poses of this section—

5 ‘‘(1) IN GENERAL.—The term ‘qualified con6 taminated site’ means any area—

7 ‘‘(A) which is held by the taxpayer for use

8 in a trade or business or for the production of

9 income, or which is property described in sec10 tion 1221(1) in the hands of the taxpayer, and

11 ‘‘(B) which contains (or potentially con12 tains) any hazardous substance.

13 ‘‘(2) TAXPAYER MUST RECEIVE STATEMENT

14 FROM STATE ENVIRONMENTAL AGENCY.—An area

15 shall be treated as a qualified contaminated site by

16 reason of a substance described in subparagraph

17 (A), (B), or (C) of subsection (d)(1) only if the tax18 payer receives a statement from the appropriate

19 agency of the State in which such area is located

20 that such area meets the requirements of subpara21 graph (B) of paragraph (1) of this subsection.

22 ‘‘(3) APPROPRIATE STATE AGENCY.— For pur23 poses of paragraph (2), the appropriate agency of a

24 State is the agency designated by the Administrator

25 of the Environmental Protection Agency for pur-
4

•HR 4200 IH

1 poses of this section. If no agency of a State is des2 ignated under the preceding sentence, the appro3 priate agency for such State shall be the Environ4 mental Protection Agency.

5 ‘‘(d) HAZARDOUS SUBSTANCE.—For purposes of this

6 section—

7 ‘‘(1) IN GENERAL.—The term ‘hazardous sub8 stance’ means—

9 ‘‘(A) any substance which is a hazardous

10 substance as defined in section 101(14) of the

11 Comprehensive Environmental Response, Com12 pensation, and Liability Act of 1980,

13 ‘‘(B) any substance which is designated as

14 a hazardous substance under section 102 of

15 such Act,

16 ‘‘(C) any extremely hazardous substance

17 under the Emergency Planning and Community

18 Right to Know Act of 1986,

19 ‘‘(D) asbestos (whether friable or nonfri20 able),

21 ‘‘(E) radon,

22 ‘‘(F) lead paint, and

23 ‘‘(G) any petroleum product.

24 ‘‘(2) EXCEPTION.—Such term shall not include

25 any substance described in subparagraph (A), (B),
5

•HR 4200 IH

1 (C), or (G) of paragraph (1) with respect to which

2 a removal or remedial action is not permitted under

3 section 104 of the Comprehensive Environmental

4 Response, Compensation, and Liability Act of 1980

5 by reason of subsection (a)(3) thereof.

6 ‘‘(e) DEDUCTION RECAPTURED AS ORDINARY IN7 COME ON SALE, ETC.—Solely for purposes of section

8 1245, in the case of property to which a qualified environ9 mental remediation expenditure would have been capital10 ized but for this section—

11 ‘‘(1) the deduction allowed by this section for

12 such expenditure shall be treated as a deduction for

13 depreciation, and

14 ‘‘(2) such property (if not otherwise section

15 1245 property) shall be treated as section 1245

16 property solely for purposes of applying section 1245

17 to such deduction.

18 ‘‘(f) COORDINATION WITH OTHER PROVISIONS.—

19 Sections 280B and 468 shall not apply to amounts which

20 are treated as expenses under this section.

21 ‘‘(g) REGULATIONS.—The Secretary shall prescribe

22 such regulations as may be necessary or appropriate to

23 carry out the purposes of this section.’’
6

•HR 4200 IH

1 (b) CLERICAL AMENDMENT.—The table of sections

2 for part VI of subchapter B of chapter 1 of such Code

3 is amended by adding at the end the following new item:

‘‘Sec. 198. Expensing of environmental remediation costs.’’

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to expenditures paid or incurred

6 after the date of the enactment of this Act, in taxable

7 years ending after such date.

Æ