[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1049 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1049

To require the Administrator of the Environmental Protection Agency and 
  the Secretary of Housing and Urban Development to provide financial 
      assistance to support the assessment, cleanup, and economic 
 redevelopment of brownfield sites; to amend the Internal Revenue Code 
    of 1986 to encourage the cleanup of such sites by allowing the 
 expensing of environmental remediation costs; and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 12, 1997

 Mr. Shays (for himself and Mr. Maloney of Connecticut) introduced the 
following bill; which was referred to the Committee on Commerce, and in 
addition to the Committees on Banking and Financial Services, and Ways 
 and Means, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To require the Administrator of the Environmental Protection Agency and 
  the Secretary of Housing and Urban Development to provide financial 
      assistance to support the assessment, cleanup, and economic 
 redevelopment of brownfield sites; to amend the Internal Revenue Code 
    of 1986 to encourage the cleanup of such sites by allowing the 
 expensing of environmental remediation costs; and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Brownfield 
Economic Revitalization Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
    TITLE I--ENVIRONMENTAL PROTECTION AGENCY BROWNFIELDS ASSISTANCE 
                                PROGRAMS

Sec. 101. Definitions.
Sec. 102. Grants for inventories, site assessments, and other pre-
                            cleanup activities.
Sec. 103. Grants for revolving loan programs.
Sec. 104. Assistance for partnership agreements.
Sec. 105. Assistance for workforce training.
Sec. 106. Grants for voluntary cleanup programs.
Sec. 107. Authorization of appropriations.
TITLE II--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT BROWNFIELDS GRANT 
                                PROGRAM

Sec. 201. Economic development grants in connection with community 
                            development loan guarantees.
        TITLE III--EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS

Sec. 301. Expensing of environmental remediation costs.

                  TITLE I--BROWNFIELD GRANTS PROGRAMS

SEC. 101. DEFINITIONS.

    In this title:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Brownfield site.--The term ``brownfield site'' means an 
        abandoned, idled, or under-used industrial or commercial 
        facility where expansion or redevelopment is complicated by 
        real or perceived environmental contamination.
            (3) Environment.--The term ``environment'' has the meaning 
        given the term in section 101 of the Comprehensive 
        Environmental Response, Compensation, and Liability Act of 1980 
        (42 U.S.C. 9601).
            (4) Environmental contamination.--The term ``environmental 
        contamination'' means the existence at a facility of 1 or more 
        hazardous substances, pollutants, or contaminants that may pose 
        a threat to human health or the environment.
            (5) Facility.--The term ``facility'' has the meaning given 
        the term in section 101 of the Comprehensive Environmental 
        Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
        9601).
            (6) Grant.--The term ``grant'' includes a cooperative 
        agreement.
            (7) Hazardous substance.--The term ``hazardous substance'' 
        has the meaning given the term in section 101 of the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (42 U.S.C. 9601).
            (8) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given the term in section 101 of the Comprehensive 
        Environmental Response, Compensation, and Liability Act of 1980 
        (42 U.S.C. 9601).
            (9) Local government.--The term ``local government'' means 
        a political subdivision of a State.
            (10) Owner.--The term ``owner'' has the meaning given the 
        term in section 101 of the Comprehensive Environmental 
        Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
        9601).
            (11) Pollutant or contaminant.--The term ``pollutant or 
        contaminant'' has the meaning given the term in section 101 of 
        the Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (42 U.S.C. 9601)).
            (12) Release.--The term ``release'' has the meaning given 
        the term in section 101 of the Comprehensive Environmental 
        Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
        9601).
            (13) Response action.--The term ``response action'' has the 
        meaning given the term ``response'' in section 101 of the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (42 U.S.C. 9601).
            (14) Site assessment.--
                    (A) In general.--The term ``site assessment'' means 
                an investigation that determines the nature and extent 
                of a release or potential release of a hazardous 
                substance at a brownfield site and meets the 
                requirements of subparagraph (B).
                    (B) Investigation.--For the purposes of this 
                paragraph, an investigation that meets the requirements 
                of this subparagraph--
                            (i) shall include--
                                    (I) a review of existing 
                                information;
                                    (II) an offsite reconnaissance, if 
                                appropriate; and
                                    (III) an onsite reconnaissance, if 
                                appropriate, to determine if a release 
                                may require additional investigation or 
                                action; and
                            (ii) may include review of such information 
                        regarding the brownfield site and previous uses 
                        as is available at the time of the review.
            (15) State.--The term ``State'' has the meaning given the 
        term in section 101 of the Comprehensive Environmental 
        Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
        9601).

SEC. 102. GRANTS FOR INVENTORIES, SITE ASSESSMENTS, AND OTHER PRE-
              CLEANUP ACTIVITIES.

    (a) In General.--The Administrator shall establish a program to 
award grants to States, local governments, or Indian tribes to 
inventory brownfield sites and to conduct site assessments and other 
pre-cleanup activities relating to such sites, including site 
identification, site characterization, and the planning and design of 
response actions for such sites.
    (b) Scope of Program.--
            (1) Grant awards.--To carry out subsection (a), the 
        Administrator may, on approval of an application, provide 
        financial assistance to a State, local government, or Indian 
        tribe.
            (2) Grant application.--An application for a grant under 
        this section shall include, to the extent practicable, each of 
        the following:
                    (A) An identification of the brownfield sites for 
                which assistance is sought and a description of the 
                effect of the brownfield sites on the community, 
                including a description, to the extent possible, of the 
                nature and extent of any known or suspected 
                environmental contamination within the areas.
                    (B) A description of the need of the applicant for 
                Federal financial assistance to inventory brownfield 
                sites and to conduct site assessments or other pre-
                cleanup activities at such sites.
                    (C) A demonstration of the potential of the grant 
                assistance to stimulate economic development, 
                including, to the extent possible, the extent to which 
                the assistance will stimulate the availability of other 
                funds for site assessment, site identification, or 
                environmental remediation and subsequent redevelopment 
                of the areas in which eligible brownfield sites are 
                situated.
                    (D) A description of the local commitment as of the 
                date of the application, which shall include a 
                community involvement plan that demonstrates meaningful 
                community involvement.
                    (E) A plan that shows how the site identification, 
                site assessment, or other pre-cleanup activities will 
                be implemented, including--
                            (i) an environmental plan that ensures the 
                        use of sound environmental procedures;
                            (ii) an explanation of the appropriate 
                        government authority and support for the 
                        project as in existence on the date of the 
                        application;
                            (iii) proposed funding mechanisms for any 
                        additional work, to the extent known; and
                            (iv) a proposed land ownership plan.
                    (F) A statement on the long-term benefits and the 
                sustainability of the proposed project that includes--
                            (i) the ability of the project to be 
                        replicated nationally and measures of success 
                        of the project; and
                            (ii) to the extent known, the potential of 
                        the plan for each area in which an eligible 
                        brownfield site is situated to stimulate 
                        economic development of the area on completion 
                        of the environmental remediation.
                    (G) Such other factors as the Administrator 
                considers relevant to carry out this title.
            (3) Approval of application.--
                    (A) In general.--In making a decision whether to 
                approve an application under paragraph (1), the 
                Administrator shall--
                            (i) consider the need of the State, local 
                        government, or Indian tribe for Federal 
                        financial assistance to carry out this section;
                            (ii) consider the ability of the applicant 
                        to carry out an inventory, site assessment, or 
                        other pre-cleanup activity under this section; 
                        and
                            (iii) consider such other factors as the 
                        Administrator considers relevant to carry out 
                        this section.
                    (B) Grant conditions.--As a condition of awarding a 
                grant under this section, the Administrator may, on the 
                basis of the criteria considered under subparagraph 
                (A), attach such conditions to the grant as the 
                Administrator determines appropriate.
            (4) Grant amount.--The amount of a grant awarded to any 
        State, local government, or Indian tribe under subsection (a) 
        for inventory, site assessment, and other pre-cleanup 
        activities with respect to 1 or more brownfield sites shall not 
        exceed $200,000.
            (5) Termination of grants.--If the Administrator determines 
        that a State, local government, or Indian tribe that receives a 
        grant under this subsection is in violation of a condition of a 
        grant referred to in paragraph (3)(B), the Administrator may 
        terminate the grant made to the State, local government, or 
        Indian tribe and require full or partial repayment of the 
        grant.

SEC. 103. GRANTS FOR REVOLVING LOAN PROGRAMS.

    (a) In General.--
            (1) Establishment.--The Administrator shall establish a 
        program to award grants to be used by States, local 
        governments, or Indian tribes to capitalize revolving loan 
        funds for the cleanup of brownfield sites.
            (2) Loans.--The loans may be provided by the State, local 
        government, or Indian tribe to finance cleanups of brownfield 
        sites by the State, local government, or Indian tribe, or by an 
        owner or a prospective purchaser of a brownfield site 
        (including a local government or Indian tribe) at which a 
        cleanup is being conducted or is proposed to be conducted.
    (b) Scope of Program.--
            (1) In general.--
                    (A) Grants.--In carrying out subsection (a), the 
                Administrator may award a grant to a State, local 
                government, or Indian tribe that submits an application 
                to the Administrator that is approved by the 
                Administrator.
                    (B) Use of grant.--The grant shall be used by the 
                State, local government, or Indian tribe to capitalize 
                a revolving loan fund to be used for cleanup of 1 or 
                more brownfield sites.
                    (C) Grant application.--An application for a grant 
                under this section shall be in such form as the 
                Administrator determines appropriate. At a minimum, the 
                application shall include the following:
                            (i) Evidence that the grant applicant has 
                        the financial controls and resources to 
                        administer a revolving loan fund in accordance 
                        with this title.
                            (ii) Provisions that--
                                    (I) ensure that the grant applicant 
                                has the ability to monitor the use of 
                                funds provided to loan recipients under 
                                this title;
                                    (II) ensure that any cleanup 
                                conducted by the applicant is 
                                protective of human health and the 
                                environment; and
                                    (III) ensure that any cleanup 
                                funded under this Act will comply with 
                                all applicable Federal and State laws 
                                that apply to the cleanup.
                            (iii) Identification of the criteria to be 
                        used by the State, local government, or Indian 
                        tribe in providing for loans under the program. 
                        The criteria shall include the financial 
                        standing of the applicants for the loans, the 
                        use to which the loans will be put, the 
                        provisions to be used to ensure repayment of 
                        the loan funds, and the following:
                                    (I) A complete description of the 
                                financial standing of the applicant 
                                that includes a description of the 
                                assets, cash flow, and liabilities of 
                                the applicant.
                                    (II) A written statement that 
                                attests that the cleanup of the site 
                                would not occur without access to the 
                                revolving loan fund.
                                    (III) The proposed method, and 
                                anticipated period of time required, 
to clean up the environmental contamination at the brownfield site.
                                    (IV) An estimate of the proposed 
                                total cost of the cleanup to be 
                                conducted at the brownfield site.
                                    (V) An analysis that demonstrates 
                                the potential of the brownfield site 
                                for stimulating economic development on 
                                completion of the cleanup of the 
                                brownfield site.
            (2) Grant approval.--In determining whether to award a 
        grant under this section, the Administrator shall consider--
                    (A) the need of the State, local government, or 
                Indian tribe for financial assistance to clean up 
                brownfield sites that are the subject of the 
                application, taking into consideration the financial 
                resources available to the State, local government, or 
                Indian tribe;
                    (B) the ability of the State, local government, or 
                Indian tribe to ensure that the applicants repay the 
                loans in a timely manner;
                    (C) the demonstrated ability of the State, local 
                government, or Indian tribe to administer such a loan 
                program;
                    (D) the demonstrated experience of the State, local 
                government, or Indian tribe regarding brownfield sites 
                and the reuse of contaminated land, including whether 
                the government has received any grant under the 
                Comprehensive Environmental Response, Compensation, and 
                Liability Act of 1980 (42 U.S.C. 9601 et seq.) to 
                assess brownfield sites, except that applicants who 
                have not previously received such a grant may be 
                considered for awards under this section;
                    (E) the efficiency of having the loan administered 
                by the level of government represented by the applicant 
                entity;
                    (F) the experience of administering any loan 
                programs by the entity, including the loan repayment 
                rates;
                    (G) the demonstrations made regarding the ability 
                of the State, local government, or Indian tribe to 
                ensure a fair distribution of grant funds among 
                brownfield sites within the jurisdiction of the State, 
                local government, or Indian tribe; and
                    (H) such other factors as the Administrator 
                considers relevant to carry out this section.
            (3) Grant amount.--The amount of a grant made to a State, 
        local government, or Indian tribe under this section shall not 
        exceed $500,000.
            (4) Revolving loan fund approval.--Each application for a 
        grant to capitalize a revolving loan fund under this section 
        shall, as a condition of approval by the Administrator, include 
        a written statement by the State, local government, or Indian 
        tribe that--
                    (A) cleanups to be funded under the loan program of 
                the State, local government, or Indian tribe shall be 
                conducted under the auspices of, and in compliance 
                with, the State voluntary cleanup program, the State 
                Superfund program, or another appropriate State 
                program, or Federal authority;
                    (B) the cleanup or proposed voluntary cleanup is 
                cost-effective; and
                    (C) the estimated total cost of the cleanup is 
                reasonable.
    (c) Grant Agreements.--Each grant under this section for a 
revolving loan fund shall be made pursuant to a grant agreement. At a 
minimum, the grant agreement shall include provisions that ensure the 
following:
            (1) Compliance with law.--The grant recipient will include 
        in all loan agreements a requirement that the loan recipient 
        shall comply with all applicable Federal and State laws 
        applicable to the cleanup and shall ensure that the cleanup is 
        protective of human health and the environment.
            (2) Repayment.--The State, local government, or Indian 
        tribe will require repayment of the loan consistent with this 
        title.
            (3) Use of funds.--The State, local government, or Indian 
        tribe will use the funds solely for purposes of establishing 
        and capitalizing a loan program in accordance with this title 
        and of cleaning up the environmental contamination at the 
        brownfield site or sites.
            (4) Repayment of funds.--The State, local government, or 
        Indian tribe will require in each loan agreement, and take 
        necessary steps to ensure, that the loan recipient will use the 
        loan funds solely for the purposes stated in paragraph (3), and 
        will require the return of any excess funds immediately on a 
        determination by the appropriate State, local, or tribal 
        official that the cleanup has been completed.
            (5) Nontransferability.--The funds will not be 
        transferable, unless the Administrator agrees to the transfer 
        in writing.
            (6) Liens.--
                    (A) Definitions.--In this paragraph, the terms 
                ``security interest'' and ``purchaser'' have the 
                meanings given the terms in section 6323(h) of the 
                Internal Revenue Code of 1986.
                    (B) Liens.--A lien in favor of the grant recipient 
                shall arise on the contaminated property subject to a 
                loan under this section.
                    (C) Coverage.--The lien shall cover all real 
                property included in the legal description of the 
                property at the time the loan agreement provided for in 
                this section is signed, and all rights to the property, 
                and shall continue until the terms and conditions of 
                the loan agreement have been fully satisfied.
                    (D) Timing.--The lien shall--
                            (i) arise at the time a security interest 
                        is appropriately recorded in the real property 
                        records of the appropriate office of the State, 
                        county, or other governmental subdivision, as 
                        designated by State law, in which the real 
                        property subject to the lien is located; and
                            (ii) be subject to the rights of any 
                        purchaser, holder of a security interest, or 
                        judgment lien creditor whose interest is or has 
                        been perfected under applicable State law 
                        before the notice has been filed in the 
                        appropriate office of the State, county, or 
                        other governmental subdivision, as designated 
                        by State law, in which the real property 
                        subject to the lien is located.
            (7) Other conditions.--The State, local government, or 
        Indian tribe will comply with such other terms and conditions 
        as the Administrator determines are necessary to protect the 
        financial interests of the United States and to protect human 
        health and the environment.
    (d) Audits.--
            (1) In general.--The Inspector General of the Environmental 
        Protection Agency shall audit a portion of the grants awarded 
        under this section to ensure that all funds are used for the 
        purposes set forth in this section.
            (2) Future grants.--The result of the audit shall be taken 
        into account in awarding any future grants to the State, local 
        government, or Indian tribe.

SEC. 104. ASSISTANCE FOR PARTNERSHIP AGREEMENTS.

    (a) In General.--The Administrator shall carry out a program to 
provide assistance for brownfields partnership agreements between the 
Environmental Protection Agency and States, local governments, other 
Federal departments and agencies, or private entities.
    (b) Purpose.--The purpose of a partnership agreement assisted under 
this section shall be to research and disseminate information to the 
public about activities related to brownfield sites, including 
remediation techniques and such other matters as the Administrator 
considers appropriate.
    (c) Form of Assistance.--The Administrator may provide grants, 
technical assistance, or such other forms of assistance under this 
section as the Administrator considers appropriate.

SEC. 105. ASSISTANCE FOR WORKFORCE TRAINING.

    (a) In General.--The Administrator shall carry out a program to 
provide assistance for brownfields workforce training programs in 
communities that contain brownfield sites.
    (b) Purposes.--Assistance provided under this section may include--
            (1) expansion of environmental training and curriculum 
        development at colleges located near brownfields sites;
            (2) establishment of environmental education and training 
        centers or other community-based job training organizations; 
        and
            (3) such other activities as the Administrator considers 
        appropriate.
    (c) Form of Assistance.--The Administrator may provide grants, 
technical assistance, or such other forms of assistance under this 
section as the Administrator considers appropriate.

SEC. 106. GRANTS FOR VOLUNTARY CLEANUP PROGRAMS.

    (a) In General.--The Administrator shall establish a program to 
award grants to States or Indian tribes to enhance, expand, and develop 
voluntary cleanup programs.
    (b) Purposes of Grant.--A grant awarded to a State or Indian tribe 
under this section shall be used by the State or Indian tribe for any 
of the following purposes:
            (1) To develop legal authorities and regulations for a 
        voluntary cleanup program.
            (2) To hire and train staff for the program.
            (3) To implement the program.
            (4) To carry out such other activities related to the 
        enhancement, expansion, or development of a voluntary cleanup 
program as the Administrator determines appropriate.
    (c) Eligibility Requirements.--The Administrator may establish such 
criteria for eligibility for grants under this section as the 
Administrator considers appropriate.
    (d) Application.--A grant may not be awarded under this subsection 
unless an application is submitted to, and approved by, the 
Administrator. Such an application shall be submitted in such form and 
manner, and contain such information, as the Administrator determines 
appropriate.
    (e) Voluntary Cleanup Program Defined.--For purposes of this 
section, a voluntary cleanup program is a program established by a 
State or Indian tribe under which a person may respond voluntarily to a 
release or threatened release of hazardous substances at brownfield 
sites under the jurisdiction of the State or Indian tribe.

SEC. 107. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the Environmental 
Protection Agency $87,400,000 for each of fiscal years 1998, 1999, 
2000, and 2001 for purposes of carrying out this title.

   TITLE II--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT BROWNFIELD 
                                GRANTS.

SEC. 201. ECONOMIC DEVELOPMENT GRANTS IN CONNECTION WITH COMMUNITY 
              DEVELOPMENT LOAN GUARANTEES.

    Section 108(q) of the Housing and Community Development Act of 1974 
(42 U.S.C. 5308(q)) is amended by adding at the end the following new 
paragraph:
            ``(5) Brownfields redevelopment.--
                    ``(A) In general.--The Secretary shall, to the 
                extent amounts are made available pursuant to 
                subparagraph (F) and applications are approved under 
                this paragraph, make grants under this paragraph to 
                eligible public entities for projects for the cleanup 
                and economic redevelopment of brownfield sites. The 
                provisions of paragraphs (1) through (4) of this 
                subsection shall apply to grants under this paragraph 
                and the requirements under this paragraph shall be in 
                addition to the requirements under paragraphs (1) 
                through (4).
                    ``(B) Eligible recipients.--Grants under this 
                paragraph may be made only to eligible public entities 
                requesting guarantees under subsection (a) for notes or 
                other obligations to finance a project involving 
                eligible activities under subparagraph (C).
                    ``(C) Eligible activities.--Assistance under this 
                paragraph may be used only for the purposes of and in 
                conjunction with projects and activities for the 
                economic redevelopment of brownfield sites.
                    ``(D) Selection criteria.--
                            ``(i) Additional criterion.--The criteria 
                        for awarding assistance under this paragraph 
                        shall include the extent to which the applicant 
                        has developed an approach or process for the 
                        cleanup and redevelopment of brownfield sites 
                        and is coordinating such program with 
                        appropriate environmental regulatory agencies.
                            ``(ii) Priority.--In awarding such 
                        assistance, the Secretary shall give priority 
                        to eligible entities meeting the selection 
                        criteria (established pursuant to paragraph (4) 
                        and clause (i)) and proposing a plan involving 
                        projects and activities for brownfield sites 
                        located within any empowerment zone or 
                        enterprise community (as such terms are defined 
                        in section 1393(b) of the Internal Revenue Code 
                        of 1986).
                    ``(E) Coordination with epa.--The Secretary shall 
                consult and coordinate with the Administrator of the 
                Environmental Protection Agency in providing assistance 
                under this paragraph and establishing selection 
                criteria under subparagraph (D) to ensure that 
                activities assisted with amounts provided under this 
                paragraph are consistent and coordinated with efforts 
                of such Agency and other agencies and organizations to 
                clean up and redevelop brownfield sites.
                    ``(F) Definition.--For purposes of this paragraph, 
                the term `brownfield site' has the meaning provided by 
                section 101(2) of the Brownfield Economic 
                Revitalization Act of 1997.
                    ``(G) Authorization of appropriations.--For grants 
                under this paragraph, there is authorized to be 
                appropriated to the Secretary $25,000,000 for each of 
                fiscal years 1998, 1999, 2000, and 2001.''.

        TITLE III--EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS

SEC. 301. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 198. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    ``(a) In General.--A taxpayer may elect to treat any qualified 
environmental remediation expenditure which is paid or incurred by the 
taxpayer as an expense which is not chargeable to capital account. Any 
expenditure which is so treated shall be allowed as a deduction for the 
taxable year in which it is paid or incurred.
    ``(b) Qualified Environmental Remediation Expenditure.--For 
purposes of this section--
            ``(1) In general.--The term `qualified environmental 
        remediation expenditure' means any expenditure--
                    ``(A) which is otherwise chargeable to capital 
                account, and
                    ``(B) which is paid or incurred in connection with 
                the abatement or control of hazardous substances at a 
                qualified contaminated site.
            ``(2) Special rule for expenditures for depreciable 
        property.--Such term shall not include any expenditure for the 
        acquisition of property of a character subject to the allowance 
        for depreciation which is used in connection with the abatement 
        or control of hazardous substances at a qualified contaminated 
        site; except that the portion of the allowance under section 
        167 for such property which is otherwise allocated to such site 
        shall be treated as a qualified environmental remediation 
        expenditure.
    ``(c) Qualified Contaminated Site.--For purposes of this section--
            ``(1) Qualified contaminated site.--
                    ``(A) In general.--The term `qualified contaminated 
                site' means any area--
                            ``(i) 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(1) in the hands of the taxpayer,
                            ``(ii) which is within a targeted area, and
                            ``(iii) at or on which there is a release 
                        or threat of release or disposal of any 
                        hazardous substance.
                    ``(B) Taxpayer must receive statement from state 
                environmental agency.--An area shall be treated as a 
                qualified contaminated site with respect to 
                expenditures paid or incurred during any taxable year 
                only if the taxpayer receives a statement from the 
                appropriate agency of the State in which such area is 
                located that such area meets the requirements of 
                clauses (ii) and (iii) of subparagraph (A).
                    ``(C) Appropriate state agency.--For purposes of 
                subparagraph (B), the appropriate agency of a State is 
                the agency designated by the Administrator of the 
                Environmental Protection Agency for purposes of this 
                section. If no agency of a State is designated under 
                the preceding sentence, the appropriate agency for such 
                State shall be the Environmental Protection Agency.
            ``(2) Targeted area.--
                    ``(A) In general.--The term `targeted area' means--
                            ``(i) any population census tract with a 
                        poverty rate of not less than 20 percent,
                            ``(ii) a population census tract with a 
                        population of less than 2,000 if--
                                    ``(I) more than 75 percent of such 
                                tract is zoned for commercial or 
                                industrial use, and
                                    ``(II) such tract is contiguous to 
                                1 or more other population census 
                                tracts which meet the requirement of 
                                clause (i) without regard to this 
                                clause,
                            ``(iii) any empowerment zone or enterprise 
                        community (and any supplemental zone designated 
                        on December 21, 1994), and
                            ``(iv) any site announced before February 
                        1, 1997, as being included as a brownfields 
                        pilot project of the Environmental Protection 
                        Agency.
                    ``(B) National priorities listed sites not 
                included.--Such term shall not include any site which 
                is on, or is 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).
                    ``(C) Certain rules to apply.--For purposes of this 
                paragraph, the rules of sections 1392(b)(4) and 
                1393(a)(9) shall apply.
                    ``(D) Treatment of certain sites.--For purposes of 
                this paragraph, a single contaminated site shall be 
                treated as within a targeted area if--
                            ``(i) a substantial portion of the site is 
                        located within a targeted area described in 
                        subparagraph (A) (determined without regard to 
                        this subparagraph), and
                            ``(ii) the remaining portions are 
                        contiguous to, but outside, such targeted area.
    ``(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, and
                    ``(B) any substance which is designated as a 
                hazardous substance under section 102 of such Act.
            ``(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) Deduction Recaptured as Ordinary Income on Sale, Etc.--Solely 
for purposes of section 1245, in the case of property to which a 
qualified environmental remediation expenditure would have been 
capitalized but for this section--
            ``(1) the deduction allowed by this section for such 
        expenditure shall be treated as a deduction for depreciation, 
        and
            ``(2) such property (if not otherwise section 1245 
        property) shall be treated as section 1245 property solely for 
        purposes of applying section 1245 to such deduction.
    ``(f) Coordination With Other Provisions.--Sections 280B and 468 
shall not apply to amounts which are treated as expenses under this 
section.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

                              ``Sec. 198. Expensing of environmental 
                                        remediation costs.''
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after the date of the enactment 
of this Act, in taxable years ending after such date.
                                 <all>