To amend the Internal Revenue Code of 1986 to allow taxpayers a credit against income tax for expenditures to remediate contaminated sites.

October 7, 2004

Mr. VOINOVICH (for himself and Mr. COLEMAN) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to allow taxpayers a credit against income tax for expenditures to remediate contaminated sites.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Brownfields Revitalization Act of 2004'.

SEC. 2. CREDIT FOR EXPENDITURES TO REMEDIATE CONTAMINATED SITES.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

`SEC. 45G. ENVIRONMENTAL REMEDIATION CREDIT.

`(a) IN GENERAL- For purposes of section 38, the environmental remediation credit determined under this section is 50 percent of the qualified remediation expenditures paid or incurred by the taxpayer during the taxable year with respect to a qualified contaminated site located in an eligible area.

`(b) QUALIFIED REMEDIATION EXPENDITURES- For purposes of this section, the term `qualified remediation expenditures' means expenditures, whether or not chargeable to capital account, in connection with--

`(1) the abatement or control of any hazardous substance (as defined in section 198(d)), petroleum, or any petroleum by-product at the qualified contaminated site in accordance with an approved remediation and redevelopment plan,

`(2) the complete demolition of any structure on such site if any portion of such structure is demolished in connection with such abatement or control,

`(3) the removal and disposal of property in connection with the activities described in paragraphs (1) and (2), and

`(4) the reconstruction of utilities in connection with such activities.

For purposes of this section, the term `approved remediation and redevelopment plan' means any plan for such abatement, control, and redevelopment of a qualified contaminated site which is approved by the State development agency for the State in which the qualified contaminated site is located.

`(c) CREDIT MAY NOT EXCEED ALLOCATION-

`(1) IN GENERAL- The environmental remediation credit determined under this section with respect to any qualified contaminated site shall not exceed the credit amount allocated under this section by the State development agency to the taxpayer for the remediation and redevelopment plan submitted by the taxpayer with respect to such site.

`(2) TIME FOR MAKING ALLOCATION- An allocation shall be taken into account under paragraph (1) for any taxable year only if made before the close of the calendar year in which such taxable year begins.

`(3) MANNER OF ALLOCATION-

`(A) ALLOCATION MUST BE PURSUANT TO PLAN- No amount may be allocated under this subsection to any qualified contaminated site unless such amount is allocated pursuant to a qualified allocation plan of the State development agency of the State in which such site is located.

`(B) QUALIFIED ALLOCATION PLAN- For purposes of this paragraph, the term `qualified allocation plan' means any plan--

`(i) which sets forth selection criteria to be used to determine priorities of the State development agency in allocating credit amounts under this section, and

`(ii) which gives preference in allocating credit amounts under this section to qualified contaminated sites based on--

`(I) the extent of poverty,

`(II) whether the site is located in an enterprise zone or renewal community,

`(III) whether the site is located in the central business district of the local jurisdiction,

`(IV) the extent of the required environmental remediation,

`(V) the extent of the commercial, industrial, or residential

redevelopment of the site in addition to environmental remediation,

`(VI) the extent of the financial commitment to such redevelopment, and

`(VII) the amount of new employment expected to result from such redevelopment.

`(4) STATES MAY IMPOSE OTHER CONDITIONS- Nothing in this section shall be construed to prevent any State from requiring assurances, including bonding, that any project for which a credit amount is allocated under this section will be properly completed or that the financial commitments of the taxpayer are actually carried out.

`(d) STATE ENVIRONMENTAL REMEDIATION CREDIT CEILING-

`(1) IN GENERAL- The State environmental remediation credit ceiling applicable to any State for any calendar year shall be an amount equal to the sum of--

`(A) the unused State environmental remediation credit ceiling (if any) of such State for the preceding calendar year,

`(B) such State's share of the national environmental remediation credit limitation for the calendar year,

`(C) the amount of State environmental remediation credit ceiling returned in the calendar year, plus

`(D) the amount (if any) allocated under paragraph (3) to such State by the Secretary.

For purposes of subparagraph (A), the unused State environmental remediation credit ceiling for any calendar year is the excess (if any) of the sum of the amounts described in subparagraphs (B), (C), and (D) over the aggregate environmental remediation credit amount allocated for such year.

`(2) NATIONAL ENVIRONMENTAL REMEDIATION CREDIT LIMITATION-

`(A) IN GENERAL- The national environmental remediation credit limitation for each calendar year is $1,000,000,000.

`(B) STATE'S SHARE OF LIMITATION- A State's share of such limitation is the amount which bears the same ratio to the limitation applicable under subparagraph (A) for the calendar year as such State's population bears to the population of the United States.

`(3) UNUSED ENVIRONMENTAL REMEDIATION CREDIT CARRYOVERS ALLOCATED AMONG CERTAIN STATES-

`(A) IN GENERAL- The unused environmental remediation credit carryover of a State for any calendar year shall be assigned to the Secretary for allocation among qualified States for the succeeding calendar year.

`(B) UNUSED ENVIRONMENTAL REMEDIATION CREDIT CARRYOVER- For purposes of this paragraph, the unused environmental remediation credit carryover of a State for any calendar year is the excess (if any) of--

`(i) the unused State environmental remediation credit ceiling for the year preceding such year, over

`(ii) the aggregate environmental remediation credit amount allocated for such year.

`(C) FORMULA FOR ALLOCATION OF UNUSED ENVIRONMENTAL REMEDIATION CREDIT CARRYOVERS AMONG QUALIFIED STATES- Rules similar to the rules of clauses (iii) and (iv) of section 42(h)(3)(D) shall apply for purposes of this paragraph.

`(4) POPULATION- For purposes of this subsection, population shall be determined in accordance with section 146(j).

`(5) INFLATION ADJUSTMENT- In the case of any calendar year after 2004, the $1,000,000,000 amount contained in paragraph (2) shall be increased by an amount equal to--

`(A) such dollar amount, multiplied by

`(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting `calendar year 2003' for `calendar year 1992' in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $500,000.

`(e) ELIGIBLE AREA; OTHER DEFINITIONS- For purposes of this section--

`(1) ELIGIBLE AREA-

`(A) IN GENERAL- The term `eligible area' means the entire area encompassed by a local governmental unit if such area contains at least 1 census tract having a poverty rate of at least 20 percent.

`(B) AREAS NOT WITHIN CENSUS TRACTS- In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates.

`(C) USE OF CENSUS DATA- Population and poverty rate shall be determined by the most recent decennial census data available.

`(2) QUALIFIED CONTAMINATED SITE- The term `qualified contaminated site' has the meaning given to such term by section 198, determined by treating petroleum and petroleum by-products as hazardous substances.

`(3) POSSESSIONS TREATED AS STATES- The term `State' includes a possession of the United States.

`(f) CREDIT MAY BE ASSIGNED-

`(1) IN GENERAL- If a taxpayer elects the application of this subsection for any taxable year, the amount of credit determined under this section for such year which would (but for this subsection) be allowable to the taxpayer shall be allowable to the person designated by the taxpayer. The person so designated shall be treated as the taxpayer for purposes of subsection (h).

`(2) TREATMENT OF AMOUNTS PAID FOR ASSIGNMENT- If any amount is paid to the person who assigns the credit determined under this section, no portion of such amount or such credit shall be includible in the payee's gross income.

`(g) TREATMENT OF POTENTIAL RESPONSIBLE PARTIES-

`(1) IN GENERAL- No credit shall be allowed under this section to any potential responsible party (within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980) with respect to any qualified contaminated site (including by reason of receiving an assignment of the credit under subsection (f)) unless at least 25 percent of the cost of remediating such site is borne by such party.

`(2) RELIEF FROM LIABILITY FOR OTHER 75 PERCENT- If the requirement of paragraph (1) is met by a potential responsible party, such party shall not be liable under any Federal law for any cost taken into account in determining whether such requirement is met.

`(3) AMOUNTS PAID FOR CREDIT ASSIGNMENT NOT ELIGIBLE- Amounts paid by a potential responsible party to any person for the assignment by such person of the credit under subsection (f)) shall not be taken into account in determining whether the requirement of paragraph (1) is met.

`(h) RECAPTURE OF CREDIT IF ENVIRONMENTAL REMEDIATION NOT PROPERLY COMPLETED-

`(1) IN GENERAL- If the State development agency of the State in which the qualified contaminated site is located determines that the environmental remediation which is part of the approved remediation and redevelopment plan for such site was not properly completed, then the taxpayer's tax under this chapter for the taxable year in which such determination is made shall be increased by the credit recapture amount.

`(2) CREDIT RECAPTURE AMOUNT- For purposes of paragraph (1), the credit recapture amount is an amount equal to the sum of--

`(A) the aggregate decrease in the credits allowed to the taxpayer under section 38 for all prior taxable years which would have resulted if the credit allowable by reason of this section were not allowed, plus

`(B) interest at the overpayment rate established under section 6621 on the amount determined under subparagraph (A) for each prior taxable year for the period beginning on the due date for filing the return for the prior taxable year involved.

No deduction shall be allowed under this chapter for interest described in subparagraph (B).

`(3) SPECIAL RULES-

`(A) TAX BENEFIT RULE- The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted.

`(B) NO CREDITS AGAINST TAX- Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit or the tax imposed by section 55.

`(i) DENIAL OF DOUBLE BENEFIT-

`(1) IN GENERAL- No deduction shall be allowed for that portion of the qualified remediation expenditures otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under this section.

`(2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER THAN DEDUCTS EXPENSES- If--

`(A) the amount of the credit determined for the taxable year under this section, exceeds

`(B) the amount allowable as a deduction for such taxable year for qualified remediation expenditures (determined without regard to paragraph (1)),

the amount chargeable to capital account for the taxable year for such expenditures shall be reduced by the amount of such excess.

`(3) CONTROLLED GROUPS- In the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 52(a)) or a trade or business which is treated as being under common control with other trades or businesses (within the meaning of section 52(b)), this subsection shall be applied under rules prescribed by the Secretary similar to the rules applicable under subsections (a) and (b) of section 52.'

(b) CREDIT TREATED AS BUSINESS CREDIT- Section 38(b) of such Code is amended by striking `plus' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `, plus', and by adding at the end the following new paragraph:

`(16) the environmental remediation credit determined under section 45G(a).'.

(c) NO CARRYBACKS BEFORE EFFECTIVE DATE- Subsection (d) of section 39 of such Code (relating to carryback and carryforward of unused credits) is amended by adding at the end the following:

`(11) NO CARRYBACK OF SECTION 45G CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the environmental remediation credit determined under section 45G may be carried back to a taxable year ending before the date of the enactment of section 45G.'.

(d) CONFORMING AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

`Sec. 45G. Environmental remediation credit.'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

END