[Congressional Record Volume 147, Number 178 (Thursday, December 20, 2001)]
[Extensions of Remarks]
[Pages E2346-E2347]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INTRODUCTION OF BILL TO CLARIFY TAX TREATMENT OF CERTAIN ENVIRONMENTAL 
                            ESCROW ACCOUNTS

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                      Wednesday, December 19, 2001

  Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from 
California, Mr. Becerra, together with my colleagues, Mr. Boehlert from 
New York and Mr. Coyne from Pennsylvania, in introducing a bill 
intended to clarify the tax treatment of certain environmental escrow 
accounts. The provisions in the bill would encourage prompt and 
efficient settlements with the Environmental Protection Agency 
(``EPA'') for the clean-up of hazardous waste sites.
  Currently, there is some uncertainty in the tax treatment of certain 
``settlement funds''

[[Page E2347]]

which are, in effect, controlled by the EPA, in their role of resolving 
claims under the Comprehensive Environmental Response, Compensation and 
Liability Act of 1980 (``CERCLA''). This uncertainty may prevent 
taxpayers from entering into prompt settlements with the EPA for the 
cleanup of Superfund hazardous waste sites and reduce the ultimate 
amount of funds available for cleanup of such sites.
  Under our bill, if certain conditions are met, the EPA (U.S. 
government) will be considered the beneficial owner of funds set aside 
in an environmental settlement fund account. These conditions include 
the fund being: (1) established pursuant to a consent decree; (2) 
created for the receipt of settlement payments for the sole purpose of 
resolving claims under CERCLA; (3) controlled (in terms of expenditures 
of contributions and earnings thereon) by the government or an agency 
or instrumentality thereof; and (4) upon termination, disbursed to the 
government or an agency or instrumentality thereof (e.g., the EPA). If 
such conditions are met, the EPA will be considered the beneficial 
owner of the escrow account for tax purposes and the account will not 
be considered a grantor trust for purposes of Sections 468B, and 671-
677 of the Internal Revenue Code.
  These escrow accounts, which are established under court consent 
decrees, are a necessary tool to enable the EPA to carry out its 
responsibilities and resolve or satisfy claims under CERCLA. Under 
these types of consent decrees, the EPA should be considered the owner 
of such funds for Federal tax purposes.
  Due to the uncertainty as to the proper Federal income tax treatment 
of such government-controlled funds, taxpayers may be hesitant to 
promptly resolve their claims under CERCLA by contributing to the 
settlement funds. One of the underlying purposes of CERCLA is to ensure 
prompt and efficient cleanup of Superfund hazardous waste sites. This 
goal is being frustrated by the existing uncertainty in the tax laws.
  The bill resolves these uncertainties and expedites the cleanup of 
Superfund hazardous waste sites by treating these escrow accounts as 
being beneficially owned by the U.S. government and not subject to tax. 
We urge our colleagues to join us in cosponsoring this legislation.

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