I

105TH CONGRESS

1ST SESSION H. R. 997

To amend the Internal Revenue Code of 1986 to allow expensing and rapid

amortization of certain environmental remediation expenditures.

IN THE HOUSE OF REPRESENTATIVES

MARCH 6, 1997

Mr. WELLER (for himself, Mr. LIPINSKI, Mr. CRANE, Mr. RUSH, Mr. FAWELL, Mr. JACKSON of Illinois, Mr. MANZULLO, Mr. GUTIERREZ, Mr.

ENGLISH of Pennsylvania, Mr. BLAGOJEVICH, Mr. SHAYS, Mr. DAVIS of

Illinois, Mr. COSTELLO, and Mr. EVANS) 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

expensing and rapid amor tization of certain environmental remediation expenditures.

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 AND RAPID AMORTIZATION FOR

4 CERTAIN ENVIRONMENTAL REMEDIATION

5 EXPENDITURES.

6 (a) IN GENERAL.—Part VI of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to
2

•HR 997 IH

1 itemized deductions for individuals and corporations) is

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

3 ‘‘SEC. 198. EXPENSING AND RAPID AMORTIZATION FOR

4 CERTAIN ENVIRONMENTAL REMEDIATION

5 EXPENDITURES.

6 ‘‘(a) TREATMENT AS EXPENSES.—

7 ‘‘(1) IN GENERAL.—At the election of the tax8 payer, qualified environmental remediation expendi9 tures which are paid or incurred by the taxpayer

10 during the taxable year in connection with a trade

11 or business shall be treated as expenses which are

12 not chargeable to capital account. The expenditures

13 so treated shall be allowed as a deduction.

14 ‘‘(2) LIMITATION.—The amount treated under

15 paragraph (1) as an expense with respect to any

16 qualified contaminated site shall not exceed

17 $500,000 for all taxable years.

18 ‘‘(3) CONTROLLED GROUPS.—Rules similar to

19 the rules of paragraphs (6), (7), and (8) of section

20 179(d) shall apply for purposes of this subsection.

21 ‘‘(b) 60-MONTH AMORTIZATION OF REMAINING EN22 VIRONMENTAL REMEDIATION EXPENDITURES.—

23 ‘‘(1) IN GENERAL.—At the election of the tax24 payer, qualified environmental remediation expendi25 tures—
3

•HR 997 IH

1 ‘‘(A) which are paid or incurred by the

2 taxpayer in connection with his trade or busi3 ness, and

4 ‘‘(B) which are not treated as expenses

5 under subsection (a),

6 may be treated as deferred expenses.

7 ‘‘(2) AMORTIZATION OF DEFERRED EX8 PENSES.—In computing taxable income, such de9 ferred expenses shall be allowed as a deduction rat10 ably over such period of not less than 60 months as

11 may be selected by the taxpayer (beginning with the

12 month in which the taxpayer pays or incurs such ex13 penditures). Such deferred expenses shall be treated

14 as expenditures which are properly chargeable to

15 capital account for purposes of section 1016(a)(1)

16 (relating to adjustments to basis of property).

17 ‘‘(c) CERTAIN PERSONS NOT ELIGIBLE.—A taxpayer

18 shall not be eligible for the treatment under this section

19 with respect to any qualified contaminated site if—

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

21 enactment of this section such taxpayer was the

22 owner or operator of any business on such site,

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

24 of enactment such taxpayer—
4

•HR 997 IH

1 ‘‘(A) had (by contract, agreement, or oth2 erwise) arranged for the disposal or treatment

3 of any hazardous materials at such site or ar4 ranged with a transporter for transport for dis5 posal or treatment of any hazardous materials

6 at such site, or

7 ‘‘(B) had accepted any hazardous mate8 rials for transport to such site, or

9 ‘‘(3) the taxpayer is related to any taxpayer re10 ferred to in paragraph (1) or (2).

11 ‘‘(d) QUALIFIED ENVIRONMENTAL REMEDIATION

12 EXPENDITURES.—For purposes of this section, the term

13 ‘qualified environmental remediation expenditure’ means

14 any amount (otherwise chargeable to capital account)

15 which is paid or incurred by the taxpayer for environ16 mental remediation with respect to any qualified contami17 nated site which is owned by the taxpayer.

18 ‘‘(e) OTHER DEFINITIONS.—For purposes of this

19 section—

20 ‘‘(1) QUALIFIED CONTAMINATED SITE.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 subsection, the term ‘qualified contaminated

23 site’ means any site if the appropriate agency

24 certifies that at least 1 of the following environ25 mental conditions is present on such site:
5

•HR 997 IH

1 ‘‘(i) A release or threatened release of

2 any hazardous, toxic, or dangerous sub3 stance.

4 ‘‘(ii) Any storage tanks which contain

5 any hazardous, toxic, or dangerous sub6 stance.

7 ‘‘(iii) Any illegal disposal of solid

8 waste.

9 Such term shall not include any site listed on

10 the National Priorities List under the Com11 prehensive Environmental Response, Compensa12 tion, and Liability Act of 1980.

13 ‘‘(B) APPROPRIATE AGENCY.—For pur14 poses of subparagraph (A), the appropriate

15 agency is—

16 ‘‘(i) the agency of the State in which

17 the site is located which is designated by

18 the Administrator of the Environmental

19 Protection Agency for purposes of this

20 paragraph, or

21 ‘‘(ii) if the agency described in clause

22 (i) designates an agency of the local gov23 ernment in which the site is located for

24 purposes of this paragraph, such local gov25 ernment agency.
6

•HR 997 IH

1 ‘‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUB2 STANCE.—Any substance, waste, or material shall be

3 treated as a hazardous, toxic, or dangerous sub4 stance if it is so treated under—

5 ‘‘(A) the Comprehensive Environmental

6 Response, Compensation, and Liability Act of

7 1980 (42 U.S.C. 9601 et seq.),

8 ‘‘(B) the Resource Conservation and Re9 covery Act (42 U.S.C. 6901 et seq.), or

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

11 or ordinance.

12 The following materials shall in any event be treated

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

14 derivative thereof, friable asbestos or any asbestos

15 containing material, polychlorinated biphenyls, or

16 urea formaldehyde foam insulation.

17 ‘‘(3) ENVIRONMENTAL REMEDIATION.—The

18 term ‘environmental remediation’ means—

19 ‘‘(A) removal or remediation activity, in20 cluding soil and ground water remediation,

21 ‘‘(B) restoration of natural, historic or cul22 tural resources at the site, or the mitigation of

23 unavoidable losses of such resources incurred in

24 connection with the remediation or response ac25 tivity,
7

•HR 997 IH

1 ‘‘(C) health assessments or health effects

2 studies,

3 ‘‘(D) environmental investigations,

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

5 caused by activity on the site, and

6 ‘‘(F) any other costs reasonably required

7 by reason of the environmental conditions of the

8 site, including demolition of existing contami9 nated structures, site security, and permit fees

10 necessary for remediation.

11 ‘‘(4) RELATED PERSON.—Persons shall be

12 treated as related to each other if such persons are

13 treated as a single employer under the regulations

14 prescribed under section 52(b) or such persons bear

15 a relationship to each other specified in section

16 267(b) or 707(b).

17 ‘‘(f) LAND AND OTHER PROPERTY.—This section

18 shall not apply to any expenditure for—

19 ‘‘(1) the acquisition or improvement of land, or

20 ‘‘(2) the acquisition or improvement of property

21 of a character which is subject to the allowance

22 under section 167 (relating to allowance for depre23 ciation, etc.) or section 611 (relating to allowance
8

•HR 997 IH

1 for depletion); except that, for purposes of this sec2 tion, allowances under section 167, and allowances

3 under section 611, shall be treated as expenditures.’’

4 (b) CONFORMING AMENDMENTS.—

5 (1) Paragraph (14) of section 1016(a) of such

6 Code is amended by inserting ‘‘, or under section

7 198(b) (relating to qualified environmental remedi8 ation expenditures),’’ after ‘‘expenditures)’’.

9 (2) Subparagraph (C) of section 1245(a)(2) of

10 such Code is amended by striking ‘‘or 193’’ and in11 serting ‘‘193, or 198’’.

12 (3) Subparagraph (C) of section 1245(a)(3) of

13 such Code is amended by striking ‘‘or 194’’ and in14 serting ‘‘194, or 198’’.

15 (4) The table of sections for part VII of sub16 chapter B of chapter 1 of such Code is amended by

17 adding at the end the following new item:

‘‘Sec. 198. Expensing and rapid amortization for certain environmental remediation expenditures.’’

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

19 this section shall apply to taxable years beginning after

20 the date of the enactment of this Act.

Æ