U.S. Legislative Update

Recently, a number of brownfield-related initiatives have been introduced in Congress. In December, 2005, there was significant action on a number of bills, including:

Brownfield cleanup tax expensing: Legislation has been introduced in the House (HR 877) by Reps. Weller (R-IL), Becerra (D-CA), and Johnson (R-CT); and Senate (S398) by Sens. Santorum (R-PA) and Bayh (D-IN) to continue the brownfield tax incentive and make it permanent, allowing site owners to write off all cleanup costs in the year they incur them, rather than over the depreciable life of the property.

These bills would also address shortcomings of the current expensing incentive, including making petroleum sites eligible for expensing. They would also limit recapture penalties to allow developers who do not intend to be the site’s end users to take advantage of this incentive.

Similar language has been included in both the House and Senate budget reconciliation bills; they have passed each chamber, but were awaiting conference as the year ended.

Cleanup tax credits: On December 8, 2005, Rep. Mike Turner (R-OH) re-introduced his bill (HR 4480) to authorize $1 billion in cleanup tax credits, which would be allocated among the states for distribution to local projects. He has dropped potentially-responsible-party (PRP) liability relief in his new bill, to address a major concern raised by various stakeholders who did not want a potential loophole opened in the polluter pays approach of other federal laws.  In his new version, states will give credit allocation priority to sites where PRPs contribute at least 25 percent of cleanup costs.

HUD brownfields: President Bush’s fiscal 2006 budget proposes no new funding for HUD’s Brownfields Economic Development Initiative (BEDI). However, in fiscal 2005, Congress overrode the administration’s zero request and provided $24 million for this program, which was slightly less than the $25 million available in fiscal 2004. The House included $24 million for BEDI in a floor amendment as it considered HUD appropriations; the final appropriations bill agreed to by conferees includes $10 million for BEDI — but also a $10 million rescission of unobligated funds.

As of the end of the year, HUD was considering suspending the program for fiscal 2005, even though applications have been received and scored (although no winners have yet been announced). HUD will then take the money from its fiscal 2005 BEDI appropriation, and roll over the balance, an estimated $15 million, to fiscal 2006 and launch a new competition. BFN