[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2340 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2340

 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, 1993

 Mr. Reynolds 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 a credit for the 
           cleanup of certain contaminated industrial sites.

    Be it enacted by the Senate and House of Representatives 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 
                                        jurisdictions.
                              ``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 25 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 pursuant 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 provided in 
        paragraph (2)--
                    ``(A) no environmental remediation credit shall be 
                determined under this section with respect to any 
                qualified contaminated site unless the Administrator of 
                the Environmental Protection Agency certifies the 
                environmental remediation 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) ratably 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 contaminated site 
                exceeds 200 percent of the estimated costs of 
                completing such plan, and
                    ``(B) the State or local official administering the 
                remediation credit program agrees with such 
                determination,
        the taxpayer may cease the implementation of such plan and 
        shall be entitled to an environmental remediation credit with 
        respect to costs incurred before such cessation. Such credit 
        shall be taken into account under subsection (a) ratably over 
        the 5-taxable-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 otherwise) 
                arranged for the disposal or treatment of any hazardous 
                materials at such site or arranged with a transporter 
                for transport for disposal or treatment of any 
                hazardous materials at such site, or
                    ``(B) had accepted any hazardous materials for 
                transport to such site, or
            ``(3) the taxpayer is related to any taxpayer referred to 
        in paragraph (1) or (2).
    ``(e) Qualified Contaminated Site.--For purposes of this subpart, 
the term `qualified contaminated site' means any contaminated site if 
such site is within--
            ``(1) any large city or medium-size city designated under 
        section 54A(a) for participation in the environmental 
        remediation credit program, or
            ``(2) the portion of any State designated under section 
        54A(b) for participation in the environmental remediation 
        credit program which is not within the borders of a large city 
        or medium-size city.
    ``(f) Administration by State or Local Government Agencies 
Permitted.--Any reference in this section, section 144(d), or section 
150(b)(7) to the Administrator of the Environmental Protection Agency 
shall include a reference to the head of any State or local government 
agency designated by the Administrator to carry out the Administrator's 
functions under such sections with respect to any site.

``SEC. 54A. DESIGNATION OF ELIGIBLE JURISDICTIONS.

    ``(a) Designation of Cities.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development shall--
                    ``(A) designate 4 large cities under this 
                subsection for participation in the environmental 
                remediation credit program, and
                    ``(B) designate 20 medium-size cities under this 
                subsection for participation in such program.
        All such designations shall be made within the 180-day period 
        beginning on the date of the enactment of this subpart.
            ``(2) Eligibility requirements.--No city may be designated 
        under paragraph (1) unless--
                    ``(A) such city has submitted an application for 
                such a designation to the Secretary of Housing and 
                Urban Development in such manner as such Secretary may 
                require,
                    ``(B) such city has established an environmental 
                credit remediation program which shall include--
                            ``(i) procedures for the assessment of 
                        contaminated sites located within such city for 
                        purposes of determining whether such sites are 
                        appropriate for participation in the 
                        environmental remediation credit program,
                            ``(ii) a credit allocation plan which 
                        contains the selection criteria required under 
                        paragraph (4), and
                            ``(iii) provision for non-Federal 
                        contributions to the environmental remediation 
                        of selected 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
                    ``(C) such city has designated a city official 
                responsible for the administration of its environmental 
                remediation credit program.
            ``(3) Selection criteria.--From among the cities eligible 
        for designation under paragraph (1), the Secretary of Housing 
        and Urban Development shall make designations under paragraph 
        (1) on the basis of the following factors (with the factor 
        specified in subparagraph (A) weighted at 50 points and the 
        factors specified in subparagraphs (B) and (C) weighted at 25 
        points each):
                    ``(A) The comparative degree of economic 
                deterioration among cities of the same category, as 
                measured by the city's manufacturing job loss between 
                1970 and 1990.
                    ``(B) The strength and quality of the established 
                local commitment to remediate contaminated sites.
                    ``(C) The percentage of the total Comprehensive 
                Environmental Response, and Liability Information 
                System sites which are located in such city.
            ``(4) Selection criteria.--The selection criteria required 
        under this paragraph are the following:
                    ``(A) The condition of the contaminated site is 
                such that without participation in the environmental 
                remediation credit program redevelopment is unlikely.
                    ``(B) The contaminated site has not been in 
                productive use for at least 1 year before participation 
                in the program.
                    ``(C) There is a strong likelihood of redevelopment 
                of the site for industrial or commercial use that will 
                result in creation of jobs and expansion of the tax 
                base.
                    ``(D) Environmental remediation and redevelopment 
                are likely to be completed within a reasonable period 
                of time.
    ``(b) Designation of States.--
            ``(1) In general.--The Secretary of Agriculture shall 
        designate 5 States for participation in the environmental 
        remediation credit program. All such designations shall be made 
        before ______.
            ``(2) Requirements for designation.--No State may be 
        designated under paragraph (1) unless such State meets 
        requirements comparable to those required under paragraph (2) 
        of subsection (a).
            ``(3) Selection criteria.--From among the States eligible 
        for designation under paragraph (1), the Secretary of 
        Agriculture shall make designations under paragraph (1) on the 
        basis of the following factors (with the factors specified in 
        subparagraphs (A) and (B) weighted at 25 points each and the 
        factor specified in subparagraph (C) weighted at 50 points):
                    ``(A) The comparative degree of economic 
                deterioration among States as measured by the State's 
                manufacturing job loss between 1970 and 1990.
                    ``(B) The strength and quality of the established 
                State or local commitment to remediate contaminated 
                sites.
                    ``(C) The comparative prevalence of environmentally 
                contaminated sites as measured by the ratio of the 
                Comprehensive Environmental Response, Compensation, and 
                Liability Information System sites in the State per 
                capita.

``SEC. 54B. ALLOCATION OF CREDIT LIMITS.

    ``(a) Overall Limitation.--For each calendar year after 1993, there 
shall be an overall credit limitation of $75,000,000 to be allocated as 
follows:
            ``(1) One-third of such overall credit limitation shall be 
        allocated equally among the large cities designated under 
        section 54B(a).
            ``(2) One-third of such overall credit limitation shall be 
        allocated equally among the medium-size cities designated under 
        section 54B(a).
            ``(3) One-third of such overall credit limitation shall be 
        allocated equally among the States designated under section 
        54B(b).
    ``(b) Method of Making Allocation.--
            ``(1) In general.--Any jurisdiction receiving a portion of 
        the overall credit limitation under subsection (a) may use such 
        portion to make allocations of environmental remediation credit 
        amounts to contaminated sites selected under the credit 
        allocation plan required under section 54A(a)(2)(B)(ii).
            ``(2) Period during which allocated amount may be used.--
        Any jurisdiction receiving a portion 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 environmental 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 substance.--Any 
        substance, waste, or material shall be treated as a hazardous, 
        toxic, or dangerous substance 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 Recovery 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 purposes of this subpart, the 
term `environmental remediation' means--
            ``(1) removal or remediation activity in accordance 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 unavoidable losses 
        of such resources incurred in connection with the remediation 
        or response activity,
            ``(3) health assessments or health effects studies,
            ``(4) environmental audits,
            ``(5) remediation of off-site contamination caused by 
        activity on the site, and
            ``(6) any other costs reasonably required by reason of the 
        environmental conditions of the site including demolition of 
        existing contaminated structures, site security, and permit 
        fees necessary for remediation.
    ``(c) Large City.--For purposes of this subpart, the term `large 
city' means any city with a population of at least 1,000,000 as 
determined on the basis of the most recent decennial census.
    ``(d) Medium Size City.--For purposes of this subpart, the term 
`medium size city' means any city with a population of at least 250,000 
but less than 1,000,000 as determined on the basis of the most recent 
decennial census.
    ``(e) 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.
    ``(f) Related Person.--For purposes of this subpart, 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 (7), by striking the period at the end of paragraph (8) and 
inserting ``, plus'', and by adding at the end thereof the following 
new paragraph:
            ``(9) 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:
            ``(4)  No carryback of environmental remediation 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 (4), 
by striking the period at the end of paragraph (5) and inserting ``, 
and'', and by adding at the end thereof the following new paragraph:
            ``(6) the environmental remediation credit determined 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 REMEDIATION 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 subparagraph (F), by redesignating subparagraph 
(G) as subparagraph (H), and by inserting after subparagraph (F) the 
following new subparagraph:
                    ``(G) a qualified contaminated site remediation 
                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 contaminated site 
        remediation bond' means any bond issued as part of an issue 95 
        percent or more of the proceeds of which are to finance--
                    ``(A) the acquisition of a qualified contaminated 
                site, or
                    ``(B) the costs of environmental remediation (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 Administrator of the 
                        Environmental Protection Agency.
            ``(2) Limitations.--Such term shall not include any bond 
        issued to provide financing with respect to a qualified 
        contaminated site if--
                    ``(A) any amount of such financing is provided 
                directly or indirectly to any person who is not 
                eligible for the credit determined under section 54 
                with respect to such site by reason of section 54(d),
                    ``(B) less than 60 percent of the amount of the 
                financing so provided with respect to such site is for 
                costs described in paragraph (1)(B), or
                    ``(C) the amount of the financing so provided to 
                acquire such site exceeds the excess of--
                            ``(i) the fair market value of the site 
                        after the completion of the environmental 
                        remediation plan, over
                            ``(ii) the amount of the financing so 
                        provided with respect to such site for costs 
                        described in paragraph (1)(B).
            ``(3) Qualified contaminated site.--For purposes of this 
        subsection, the term `qualified contaminated site' has the 
        meaning given such term by section 54(e).
            ``(4) Restriction on land acquisition not to apply.--
        Section 147(c) shall not apply to any qualified contaminated 
        site remediation bond.''
    (c) Penalty for Failure to Satisfactorily Complete Remediation 
Plan.--Subsection (b) of section 150 of such Code is amended by adding 
at the end thereof the following new paragraph:
            ``(7) Qualified contaminated site remediation bonds.--In 
        the case of financing provided by a qualified contaminated site 
        remediation bond for costs described in section 144(d)(1)(C), 
        no deduction shall be allowed under this chapter for interest 
        on such financing during any period during which there is a 
        determination by the Administrator of the Environmental 
        Protection Agency that the remediation plan under which such 
        costs were incurred was not satisfactorily completed.''
    (d) Clerical Amendments.--
            (1) The section heading for section 144 of such Code is 
        amended by inserting before the period ``qualified contaminated 
        site remediation bond''.
            (2) The table of sections for subpart A of part IV of 
        subchapter B of chapter 1 of such Code is amended by inserting 
        before the period at the end of the item relating to section 
        144 ``; qualified contaminated site remediation bond''.

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HR 2340 IH----2