[Congressional Record Volume 147, Number 87 (Thursday, June 21, 2001)]
[Senate]
[Page S6616]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. TORRICELLI (for himself and Mr. Dayton):
  S. 1082. A bill to amend the Internal Revenue Code of 1986 to expand 
the expensing of environmental remediation costs; to the Committee on 
Finance.
  Mr. TORRICELLI. Mr. President, I rise to introduce a bill that is 
intended to build upon a bi-partisan effort that has spanned over a 
decade culminating with the passage of S. 350. In August of 1997, this 
body approved a potentially significant brownfield tax incentive. This 
tax incentive referred to as the ``expensing'' provision allowed new 
owners of these contaminated sites to write off clean-up costs from 
their taxes in the year they are deducted. Despite this stride forward 
there have been issues pertaining to the provision that have 
represented barriers to re-development efforts.
  The barriers which have thwarted re-development efforts have been: 
(1) the sunset of the bill contributed to uncertainty associated with 
the time needed to clean-up, obtain financing and re-develop these 
properties; (2) the exclusion of petroleum related products and 
pesticides from the definition of ``hazardous substances'' which 
required that the treatment of these clean up costs as (non-deductable) 
capital expenditures rather than expenses; and (3) the recapturing as 
ordinary income, at the time of sale, qualified environmental 
remediation expenses that have received exemptions.
  My bill will eliminate the sunset provision. Eliminating the sunset 
for this expensing provision would be a major stride forward. Obtaining 
sufficient financing for brownfield re-development is generally 
difficult enough without the specter of a looming sunset.
  Petroleum products in the form of fuel oil, heating oil or gasoline 
and pesticides are quite often found at these brownfield sites. 
Unfortunately, ``hazardous substance'' as it relates to brownfields 
does not include these particular substances. Therefore, the exclusion 
of substances commonly found at brownfields increases the costs of 
brownfield re-development significantly. This bill will expand the 
definition of hazardous items to include petroleum and pesticides.
  In an effort to give true value to brownfields tax incentives, this 
bill will repeal the recapture provision related to brownfield tax 
incentives, section 193 e. Currently, any qualified environmental 
remediation expenditure which has been deducted is subject to recapture 
as ordinary income when sold or otherwise disposed. Because the tax 
liability for ordinary income is taxed higher, there is no incentive to 
redevelop contaminated sites and then sell the property for beneficial 
use. The repeal of this exclusion will give developers an opportunity 
to realize their tax incentives if they intend to sell property shortly 
after redevelopment.
  The passage of the expensing provisions and the recently passed S. 
350 represent critical steps in enhancing the public/private 
partnership in brownfield re-development but more must be done. An 
effective partnership will utilize tax incentives to help attract 
affordable private investment. Using tax incentives to overcome capital 
shortages, in the marketplace, to achieve greater public benefits, is a 
proven formula for success. This can reverse negative trends and start 
new constructive trends.
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