[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3509 Introduced in Senate (IS)]








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--
            ``(1) Eligible area.--
                    ``(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.--
            ``(1) In general.--If--
                    ``(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).
            ``(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.
    ``(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).''.
    (d) Clerical Amendments.--
            (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.
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