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 Com-
mittee 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. ENVIRONMENTAL REMEDIATION TAX CREDIT.
(a) GENERAL RULE.—Part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating
to credits allowable) is amended by adding at the end
thereof the following new subpart:
‘‘Subpart H—Environmental Remediation Credit
‘‘Sec. 54. Amount of environmental remediation credit.
‘‘Sec. 54A. Designation of eligible States.
‘‘Sec. 54B. Allocation of credit limits.
‘‘Sec. 54C. Definitions and special rules.
‘‘SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION
CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the environmental remediation credit determined under
this section is 40 percent of the costs—
‘‘(1) which are paid or incurred by the taxpayer
for environmental remediation with respect to any
qualified contaminated site which is owned by the
taxpayer, and
‘‘(2) which are incurred by the taxpayer pursu-
ant to an environmental remediation plan for such
site which was approved by the Administrator of the
Environmental Protection Agency.
‘‘(b) CREDIT MAY NOT EXCEED ALLOCATION.—The
environmental remediation credit determined under this
section with respect to any qualified contaminated site
shall not exceed the remediation credit amount allocated
to the taxpayer under section 54B with respect to such
site.
‘‘(c) REMEDIATION PLAN MUST BE COMPLETED.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in paragraph (2)—
‘‘(A) no environmental remediation credit
shall be determined under this section with re-
spect to any qualified contaminated site unless
the Administrator of the Environmental Protec-
tion Agency certifies the environmental remedi-
ation plan for such site has been completed,
and
‘‘(B) if such Administrator certifies that
such plan has been completed, such credit shall
be taken into account under subsection (a) rat-
ably over the 5 taxable year period beginning
with the taxable year in which such plan was
completed.
‘‘(2) SPECIAL
RULE
WHERE
EXTRAORDINARY
COST INCREASES.—If—
‘‘(A) the taxpayer determines that due to
unforeseen circumstances the cost of completing
the remediation plan for any qualified contami-
nated site exceeds 200 percent of the estimated
costs of completing such plan, and
‘‘(B) the State or local official administer-
ing the remediation credit program agrees with
such determination,
the taxpayer may cease the implementation of such
plan and shall be entitled to an environmental reme-
diation credit with respect to costs incurred before
such cessation. Such credit shall be taken into ac-
count under subsection (a) ratably over the 5-tax-
able-year period beginning with the taxable year in
which such cessation occurs.
‘‘(d) CERTAIN PARTIES NOT ELIGIBLE.—A taxpayer
shall not be eligible for any credit determined under this
section with respect to any qualified contaminated site if—
‘‘(1) at any time on or before the date of the
enactment of this subpart such taxpayer was the
owner or operator of any business on such site,
‘‘(2) at any time before, on, or after such date
of enactment such taxpayer—
‘‘(A) had (by contract, agreement, or oth-
erwise) arranged for the disposal or treatment
of any hazardous materials at such site or ar-
ranged with a transporter for transport for dis-
posal or treatment of any hazardous materials
at such site, or
‘‘(B) had accepted any hazardous mate-
rials for transport to such site, or
‘‘(3) the taxpayer is related to any taxpayer re-
ferred to in paragraph (1) or (2).
‘‘(e) QUALIFIED CONTAMINATED SITE.—For pur-
poses of this subpart, the term ‘qualified contaminated
site’ means any contaminated site if such site is within
a State designated under section 54A(a) for participation
in the environmental remediation credit program.
‘‘(f) ADMINISTRATION BY STATE OR LOCAL GOVERN-
MENT AGENCIES PERMITTED.—Any reference in this sec-
tion, section 144(d), or section 150(b)(7) to the Adminis-
trator of the Environmental Protection Agency shall in-
clude a reference to the head of any State or local govern-
ment agency designated by the Administrator to carry out
the Administrator’s functions under such sections with re-
spect to any site.
‘‘SEC. 54A. DESIGNATION OF ELIGIBLE STATES.
‘‘(a) IN GENERAL.—The Secretary of Housing and
Urban Development shall designate States under this sec-
tion for participation in the environmental remediation
credit program.
‘‘(b) ELIGIBILITY REQUIREMENTS.—No State may
be designated under this section unless—
‘‘(1) such State has submitted an application
for such a designation to the Secretary of Housing
and Urban Development in such manner as such
Secretary may require,
‘‘(2) such State has established an environ-
mental credit remediation program which shall in-
clude—
‘‘(A) procedures for the assessment of con-
taminated sites located within such State for
purposes of determining whether such sites are
appropriate for participation in the environ-
mental remediation credit program,
‘‘(B) a credit allocation plan which con-
tains the selection criteria required under sub-
section (c), and
‘‘(C) provision for non-Federal contribu-
tions to the environmental remediation of se-
lected sites through grants, loans, property or
income tax abatement, contributions by private
parties or non-Federal governmental sources, or
any other direct or indirect financial assistance;
and
‘‘(3) such State has designated a State official
responsible for the administration of its environ-
mental remediation credit program.
‘‘(c) SELECTION CRITERIA.—The selection criteria
required under this subsection are the following:
‘‘(1) The condition of the contaminated site is
such that without participation in the environmental
remediation credit program redevelopment is un-
likely.
‘‘(2) The contaminated site has not been in pro-
ductive use for at least 1 year before participation
in the program.
‘‘(3) There is a strong likelihood of redevelop-
ment of the site for industrial or commercial use
that will result in creation of jobs and expansion of
the tax base.
‘‘(4) Environmental remediation and redevelop-
ment are likely to be completed within a reasonable
period of time.
‘‘SEC. 54B. ALLOCATION OF CREDIT LIMITS.
‘‘(a) OVERALL LIMITATION.—For each calendar year
after 1995, there shall be an overall credit limitation of
$200,000,000.
‘‘(b) METHOD OF MAKING ALLOCATION.—
‘‘(1) IN GENERAL.—Any State receiving a por-
tion of the overall credit limitation under subsection
(a) may use such portion to make allocations of en-
vironmental remediation credit amounts to contami-
nated sites selected under the credit allocation plan
required under section 54A(b)(2)(B).
‘‘(2) PERIOD
DURING
WHICH
ALLOCATED
AMOUNT MAY BE USED.—Any State receiving a por-
tion of the overall credit limitation for any calendar
year may use such portion only to make allocations
under paragraph (1) during such calendar year or
the following calendar year.
‘‘SEC. 54C. DEFINITIONS AND SPECIAL RULES.
‘‘(a) CONTAMINATED SITE.—For purposes of this
subpart—
‘‘(1) IN
GENERAL.—The term ‘contaminated
site’ means any site if at least 1 of the following en-
vironmental conditions are present on such site:
‘‘(A) A release or threatened release of any
hazardous, toxic, or dangerous substance.
‘‘(B) Any storage tanks which contain any
hazardous, toxic, or dangerous substance.
‘‘(C) Any illegal disposal of solid waste.
‘‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUB-
STANCE.—Any substance, waste, or material shall be
treated as a hazardous, toxic, or dangerous sub-
stance if it is so treated under—
‘‘(A) the Comprehensive Environmental
Response, Compensation, and Liability Act (42
U.S.C. 9601 et seq.),
‘‘(B) the Resource Conservation and Re-
covery Act (42 U.S.C. 6901 et seq.), or
‘‘(C) any State or local environmental law
or ordinance.
The following materials shall in any event be treated
as such a substance: petroleum or crude oil or any
derivative thereof, friable asbestos or any asbestos
containing material, polychlorinated biphenyls, or
urea formaldehyde foam insulation.
‘‘(b) ENVIRONMENTAL
REMEDIATION.—For pur-
poses of this subpart, the term ‘environmental remedi-
ation’ means—
‘‘(1) removal or remediation activity in accord-
ance with an approved environmental plan including
soil and ground water remediation,
‘‘(2) restoration of natural, historic or cultural
resources at the site, or the mitigation of unavoid-
able losses of such resources incurred in connection
with the remediation or response activity,
‘‘(3) health assessments or health effects stud-
ies,
‘‘(4) environmental audits,
‘‘(5) remediation of off-site contamination
caused by activity on the site, and
‘‘(6) any other costs reasonably required by rea-
son of the environmental conditions of the site in-
cluding demolition of existing contaminated struc-
tures, site security, and permit fees necessary for re-
mediation.
‘‘(c) BASIS REDUCTION.—The basis of any qualified
contaminated site shall be reduced by the amount of any
credit determined under this subpart with respect to such
site.
‘‘(d) RELATED PERSON.—For purposes of this sub-
part, persons shall be treated as related to each other if
such persons are treated as a single employer under the
regulations prescribed under section 52(b) or such persons
bear a relationship to each other specified in section
267(b) or 707(b).’’
(b) CREDIT MADE PART OF GENERAL BUSINESS
CREDIT.—Subsection (b) of section 38 of such Code is
amended by striking ‘‘plus’’ at the end of paragraph (10),
by striking the period at the end of paragraph (11) and
inserting ‘‘, plus’’, and by adding at the end thereof the
following new paragraph:
‘‘(12) the environmental remediation credit
under section 54(a).’’
(c) LIMITATION ON CARRYBACK.—Subsection (d) of
section 39 of such Code is amended by adding at the end
thereof the following new paragraph:
‘‘(7) NO CARRYBACK OF ENVIRONMENTAL RE-
MEDIATION CREDIT BEFORE EFFECTIVE DATE.—No
portion of the unused business credit for any taxable
year which is attributable to the credit under section
54 may be carried back to a taxable year ending
before the date of the enactment of section 54.’’
(d) DEDUCTION FOR UNUSED CREDIT.—Subsection
(c) of section 196 of such Code is amended by striking
‘‘and’’ at the end of paragraph (6), by striking the period
at the end of paragraph (7) and inserting ‘‘, and’’, and
by adding at the end thereof the following new paragraph:
‘‘(8) the environmental remediation credit de-
termined under section 54.’’
(e) CLERICAL AMENDMENT.—The table of subparts
for part IV of subchapter A of chapter 1 of such Code
is amended by adding at the end thereof the following new
item:
‘‘Subpart H—Environmental remediation credit.’’
(f) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 2. TAX-EXEMPT FINANCING OF ENVIRONMENTAL RE-
MEDIATION OF QUALIFIED CONTAMINATED
SITES.
(a) IN GENERAL.—Subsection (e) of section 141 of
the Internal Revenue Code of 1986 (defining qualified
bond) is amended by striking ‘‘or’’ at the end of subpara-
graph (F), by redesignating subparagraph (G) as subpara-
graph (H), and by inserting after subparagraph (F) the
following new subparagraph:
‘‘(G) a qualified contaminated site remedi-
ation bond, or’’.
(b) QUALIFIED CONTAMINATED SITE REMEDIATION
BOND.—Section 144 of such Code is amended by adding
at the end thereof the following new subsection:
‘‘(d) QUALIFIED CONTAMINATED SITE REMEDIATION
BOND.—For purposes of this part—
‘‘(1) IN
GENERAL.—The term ‘qualified con-
taminated site remediation bond’ means any bond is-
sued as part of an issue 95 percent or more of the
proceeds of which are to finance—
‘‘(A) the acquisition of a qualified contami-
nated site, or
‘‘(B) the costs of environmental remedi-
ation (as defined in section 54C(b))—
‘‘(i) with respect to such a site which
is owned by the person incurring such
costs, and
‘‘(ii) which are incurred pursuant to
an environmental remediation plan for
such site which was approved by the Ad-
ministrator of the Environmental Protec-
tion Agency.