109th CONGRESS
2d Session
S. 3509
To amend the Internal Revenue Code of 1986 to provide tax incentives
for the remediation of contaminated sites.
IN THE SENATE OF THE UNITED STATES
June 14, 2006
Mr. VOINOVICH introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide tax incentives
for the remediation of 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 `America's Brownfield Cleanup Act'.
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. 45N. 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 at the qualified
contaminated site in accordance with an approved remediation plan,
`(2) the demolition of any structure (or portion thereof) 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.
Such term includes the cost of financial assurances (including bonding)
and insurance described in subsection (g)(4).
`(c) Qualified Contaminated Site- For purposes of this section--
`(1) IN GENERAL- The term `qualified contaminated site' means any area--
`(A) which is an eligible response site as defined in section 101(41)
of the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980,
`(B) which is held by the taxpayer for use in a trade or business or
for the production of income, or which is property described in section
1221(a)(1) in the hands of the taxpayer,
`(C) at or on which there has been a release (or threat of release)
or disposal of any hazardous substance, and
`(D) with respect to which an approved remediation plan and an approved
redevelopment plan are both in effect.
`(2) NATIONAL PRIORITIES LISTED SITES NOT INCLUDED- Such term shall not
include any site which is on, or proposed for, the national priorities
list under section 105(a)(8)(B) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (as in effect on the date of the
enactment of this section).
`(d) Hazardous Substance- For purposes of this section--
`(1) IN GENERAL- The term `hazardous substance' means--
`(A) any substance which is a hazardous substance as defined in section
101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980,
`(B) any substance which is designated as a hazardous substance under
section 102 of such Act, and
`(C) any petroleum product (within the meaning of section 4612(a)(3)).
`(2) EXCEPTION- Such term shall not include any substance with respect
to which a removal or remedial action is not permitted under section 104
of such Act by reason of subsection (a)(3) thereof.
`(e) Approved Remediation Plan- For purposes of this section, the term `approved
remediation plan' means, with respect to any site, any plan for the conduct
of the activities described in paragraphs (1) through (4) of subsection
(b)--
`(1) which is approved by a State environmental agency--
`(A) pursuant to a response program which includes each of the elements
listed in section 128(a)(2) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, and
`(B) after a determination by such agency that the plan provides for
the abatement or control of the hazardous substances at such site, and
`(2) which includes a written statement from such agency that such site
meets the requirements of paragraphs (1)(A), (1)(C), and (2) of subsection
(c).
`(f) Approved Redevelopment Plan- For purposes of this section, the term
`approved redevelopment plan' means, with respect to any site, any plan
for the redevelopment of such site which is approved by the State development
agency after a determination by such agency that the plan provides for the
redevelopment of such site in a manner beneficial to the State and local
economy and to the local community generally.
`(g) 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 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--
`(i) an approved remediation plan and an approved redevelopment plan
are both in effect with respect to such site, and
`(ii) such amount is allocated pursuant to a qualified allocation
plan of the State development agency.
`(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 empowerment zone, enterprise
community, 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,
`(VII) the amount of new employment expected to result from such
redevelopment, and
`(VIII) whether it is reasonably expected that under the approved
remediation plan at least 25 percent of the estimated total qualified
remediation expenditures will be borne by one or more persons who
are potentially liable under section 107(a) of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980.
`(4) STATES MAY IMPOSE OTHER CONDITIONS- Nothing in this section shall
be construed to prevent any State from requiring--
`(A) 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,
`(B) that the taxpayer obtain insurance which reimburses qualified remediation
expenditures in excess of the total estimated amount of such expenditures,
or
`(C) that the taxpayer obtain insurance covering liability for personal
injury, death, or property damage.
`(h) State Environmental Remediation Credit Ceiling- For purposes of this
section--
`(1) LIMITATION- The aggregate credit amounts allocated by the State development
agency during any calendar year shall not exceed the State environmental
remediation credit ceiling applicable to such State for such calendar
year.
`(2) DETERMINATION OF LIMITATION AMOUNT- The State environmental remediation
credit ceiling applicable to any State for any calendar year shall be
an amount equal to the sum of--
`(A) such State's share of the national environmental remediation credit
limitation for the calendar year,
`(B) the unused State environmental remediation credit ceiling (if any)
of such State 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 (5) to such State
by the Secretary.
`(3) 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.
`(4) UNUSED STATE ENVIRONMENTAL REMEDIATION CREDIT CEILING- The unused
State environmental remediation credit ceiling for any calendar year is
the excess (if any) of--
`(A) the State environmental remediation credit ceiling applicable to
the State for the preceding calendar year (determined without regard
to paragraph (2)(B)), over
`(B) the aggregate environmental remediation credit amount allocated
by the State for such preceding year.
`(5) UNUSED ENVIRONMENTAL REMEDIATION CREDIT ALLOCATED AMONG STATES AFTER
1-YEAR CARRYFORWARD-
`(A) IN GENERAL- The excess unused environmental remediation credit
of a State for any calendar year shall be assigned to the Secretary
for allocation among qualified States for the succeeding calendar year.
`(B) EXCESS UNUSED ENVIRONMENTAL REMEDIATION CREDIT- For purposes of
this paragraph, the excess unused environmental remediation credit of
a State for any calendar year is the excess (if any) of--
`(i) the unused State environmental remediation credit ceiling for
the preceding calendar year, over
`(ii) the aggregate environmental remediation credit amount allocated
by the State for such preceding year.
`(C) FORMULA FOR ALLOCATION OF EXCESS UNUSED ENVIRONMENTAL REMEDIATION
CREDIT AMONG STATES- Rules similar to the rules of clauses (iii) and
(iv) of section 42(h)(3)(D) shall apply for purposes of this paragraph.
`(6) POPULATION- For purposes of this subsection, population shall be
determined in accordance with section 146(j).
`(7) INFLATION ADJUSTMENT- In the case of any calendar year after 2006,
the $1,000,000,000 amount contained in paragraph (3) 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 2005'
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.
`(i) Other Definitions and Special Rule- For purposes of this section--
`(A) IN GENERAL- The term `eligible area' means the entire area encompassed
by a local governmental unit or Indian tribal government if such entire
area contains at least 1 census tract having a poverty rate of at least
20 percent.
`(B) USE OF EQUIVALENT COUNTY DIVISIONS- In the case of any 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 treated as census tracts for purposes of subparagraph
(A).
`(C) USE OF CENSUS DATA- For purposes of this paragraph, population
and poverty rate shall be determined by the most recent decennial census
data available.
`(2) STATE ENVIRONMENTAL AGENCY- The term `State environmental agency'
means any State agency specifically authorized by gubernatorial act or
State statute to carry out the functions and responsibilities of a State
environmental agency for purposes of this section.
`(3) STATE DEVELOPMENT AGENCY- The term `State development agency' means
any State agency specifically authorized by gubernatorial act or State
statute to carry out the functions and responsibilities of a State development
agency for purposes of this section.
`(4) POSSESSIONS TREATED AS STATES- The term `State' includes a possession
of the United States.
`(5) SPECIAL RULES FOR HAZARDOUS SUBSTANCES THAT ARE PETROLEUM PRODUCTS-
In the case of an area at or on which there has been a release (or threat
of release) or disposal of any hazardous substance that is a petroleum
product, the following rules shall apply:
`(A) The requirement of subsection (c)(1)(A) shall be deemed to be met.
`(B) The requirement of subsection (e)(1)(A) shall be deemed to be met.
`(C) Subsection (e)(2) shall be applied by substituting `(1)(C) and
(2)' for `(1)(A), (1)(C), and (2)'.
`(j) 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 this title (other than this paragraph).
`(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 shall be includible in such person's gross income.
`(k) Recapture of Credit if Approved Remediation Plan or Approved Redevelopment
Plan Not Properly Completed-
`(A) the State environmental agency determines that the approved remediation
plan for the qualified contaminated site was not properly completed,
or
`(B) the State development agency determines that the approved redevelopment
plan for such site was not properly completed,
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).
`(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.
`(l) 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 41(f)(5))
or a trade or business which is treated as being under common control
with other trades or businesses (within the meaning of section 41(f)(1)(B)),
this subsection shall be applied under rules prescribed by the Secretary
similar to the rules applicable under subparagraphs (A) and (B) of section
41(f)(1).
`(m) Cost of Removal or Remedial Action- The credit allowed under this section
shall not be treated as a cost of removal or remedial action incurred by
the United States for purposes of section 107(a)(4)(A) of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980.'.
(b) Exclusion by Site Owner of Remediation Expenditures Paid by Potentially
Responsible Parties- Part III of subchapter B of chapter 1 of such Code
is amended by inserting after section 139A the following new section:
`SEC. 139B. REMEDIATION CONTRIBUTIONS BY POTENTIALLY RESPONSIBLE PARTIES.
`(a) In General- Gross income shall not include any amount received as a
qualified remediation contribution.
`(b) Qualified Remediation Contribution- For purposes of this section, the
term `qualified remediation contribution' means any amount which is paid
to or for the benefit of the owner of any property by a potentially responsible
party (within the meaning of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980) with respect to such property for qualified remediation
expenditures (as defined in section 45N(b)) with respect to such property.
`(c) Denial of Double Benefit- Notwithstanding any other provision of this
subtitle--
`(1) no deduction or credit shall be allowed (to the person for whose
benefit a qualified remediation contribution is made) for, or by reason
of, any expenditure to the extent of the amount excluded under this section
with respect to such expenditure, and
`(2) no increase in the basis of any property shall result from any amount
excluded under this section with respect to such property.'.
(c) Credit Treated as Business Credit- Section 38(b) of such Code is amended
by striking `and' at the end of paragraph (29), by striking the period at
the end of paragraph (30) and inserting `, plus', and by adding at the end
the following new paragraph:
`(31) the environmental remediation credit determined under section 45N(a).'.
(1) 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. 45N. Environmental remediation credit.'.
(2) The table of sections for part III of subchapter B of chapter 1 of
such Code is amended by inserting after the item relating to section 139A
the following new item:
`Sec. 139B. Remediation contributions by potentially responsible parties.'.
(e) Effective Date- The amendments made by this section shall apply to taxable
years beginning after December 31, 2005.
END
