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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - January 30, 1997)

Text of this article available as: TXT PDF [Pages S856-S897] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Ms. MOSELEY-BRAUN (for herself, Mr. Abraham, Mr. D'Amato, Mr. Jeffords, Mr. Lieber- man, Mr. Daschle and Mrs. Murray): S. 235. A bill to amend the Internal Revenue Code of 1986 to encourage economic development through the creation of additional empowerment zones and enterprise communities and to encourage the cleanup of contaminated brownfield sites; to the Committee on Finance. THE COMMUNITY EMPOWERMENT ACT OF 1997 Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure, together with my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle to reintroduce the Community Empowerment Act of 1997. This legislation is designed to create new jobs and spur economic growth by encouraging the cleanup and reuse of contaminated industrial and commercial sites known as Brownfields. This bill also creates 20 new additional empowerment zones and 80 new enterprise communities all across the Nation. I like to call them environmentally challenged sites. They are sites on which there has been some contamination but not to a level sufficient to reach Superfund status. But they are contaminated nonetheless. They are, on the one hand, excellent locations for industrial and commercial redevelopment because the transportation, more often than not, already exists. The infrastructure, the utilities, and the labor force already exists. However, these properties are often unattractive to potential redevelopers because of the known, unknown, or perceived contamination that may exist on the property. This factor creates an incentive for companies to locate and develop in greenfields, which are undeveloped areas generally in the suburbs. This urban flight contributes to urban sprawl, taking jobs away from the city. It also results in the paving off of many of the greenfield areas of our country. The challenge for all of us is to stop this trend. And one way to do that is by encouraging businesses through the Tax Code to redevelop and to reuse the existing brownfield sites; to reclaim, if you will, sites that have been contaminated which have been used or used up. At present, if an industrial property owner does environmental damage to their property and then cleans up the site, the owner is allowed to deduct the cost of that cleanup from a single year's earnings. However, in a strange twist of logic, someone who buys an environmentally damaged piece of property and cleans up that property is not allowed to expense these cleanup costs, but instead must capitalize the cost and depreciate the cleanup expense over many years. The result of this? The result has been an urban landscape littered with vacant or abandoned properties, properties that attract crime and bring down property values in surrounding neighborhoods. Confronting the brownfields issue can help to address many of the problems that face high unemployment in older communities, including job creation, economic renewal, environmental justice, and environmental improvement. The collective efforts of everyone, particularly the nonprofit community, the private sector, government at all levels, developers, and community groups, are essential to begin the process of returning brownfields property back to productive use and to bring economic growth back to disadvantaged cities and rural areas. Under the provisions of this legislation, qualifying brownfields will be provided full first-year expensing of environmental cleanup costs under the Federal Tax Code. Full first-year expensing simply means that a tax deduction will be allowed for the cleanup costs in the year that those costs are incurred. The Community Empowerment Act provides tax incentives that we hope will break through some of the current barriers preventing the private sector from investing in brownfields cleanup projects. So it provides a carrot, if you will, to the private sector to begin to help not only with the environmental cleanup but also with urban redevelopment. So it becomes a win-win in both regards in that way. In my own State of Illinois, the brownfields provisions will have a major impact on efforts to help restore neglected and abandoned industrial areas. It will facilitate the cleanup of some 300 to 500 sites in Illinois, each of [[Page S857]] which has a remediation cost ranging from $250,000 to $500,000 per site. The Treasury Department estimates that this act will provide $2 billion in tax incentives that will leverage an additional $10 billion in private investment, returning an estimated 30,000 brownfields across the country to productive use again. The $2 billion investment will be included in the President's balanced budget plan and so it will be paid for. The Federal assistance that this proposal envisions will be concentrated in neighborhoods with the most severe problems and that are truly in need of such investment. The bill targets four areas. First, the empowerment zones and enterprise communities across the country. Second, areas with a poverty rate of 20 percent or more that are near industrial or former industrial sites. Third, existing EPA brownfields pilot areas. The Environmental Protection Agency has already designated brownfields sites across the country. Fourth, areas with a population of under 2,000 or more than 75 percent of which is zoned for industrial or commercial use. So this is not just a big-city solution. This is something that will affect the cities, the suburbs, and the rural areas as well in providing an incentive to reclaim these environmentally challenged areas of our country. In my hometown, in Chicago, Mayor Daley has taken the initiative to establish a brownfields pilot program which has made public investment leverage substantial private investment dollars. One of these projects is known as the Scott Peterson Meats Co., in Chicago. The site had been tax delinquent for several years when Scott Peterson Meats and the city began to work together. The city conducted an assessment of potential hazards that were identified and which included asbestos-containing materials, lead-based paints, and some 11 underground storage tanks, some of which were filled with tar. The city paid for environmental investigation, cleanup, and building demolition, which totaled some $250,000 in contractor costs. Due to the city's investment, however, the company, Scott Peterson Meats, then turned around and invested an additional $5.2 million in a new smokehouse on its existing property, and it has hired over 100 additional employees to date. So with the win-win of environmental cleanup and urban reclamation we also have job creation coming out of this legislative initiative. Another example of a successful public-private partnership pulling people together to clean up a brownfields site is the Madison Equipment site located in Illinois. This abandoned industrial building was a neighborhood eyesore. Scavengers had stolen most of the wiring and plumbing, and illegal or what is called midnight dumping of trash and debris was rampant. Madison Equipment needed expansion space, but it feared the environmental liability. However, in 1993, the city of Chicago took the initiative to invest just a little over $3,000 in this project, in this environmental reclamation, this brownfields project, and 1 year later the company, Madison, put in $180,000 of its own to redevelop the building. The critical reason that lenders and investors look at this area now is because the city committed the public investment to spur private redevelopment and investment. When local government demonstrates the confidence to commit public funds, private financial institutions are more likely to follow suit. These types of examples show how a little investment can go a long way and how we can engage the partnership between the public and the private sector in nonbureaucratic ways in order to spur a result that truly is in the public interest. Chicago's pilot project will successfully return all the pilot sites to productive use for a total of about $850,000 in public money. This pilot project is a perfect example of what this legislation can accomplish on a national level. But in order to make it happen, cooperation is the key. Effective strategies require strong partnerships among government, industry, organized labor, community groups, developers, environmentalists, and financiers, who all realize that when their efforts are aligned, when we work together, progress is made easier. The second component of this legislation is the establishment of 20 more empowerment zones and 80 additional enterprise communities. They will receive a variety of tools for redevelopment from the Government. First, they receive a package of tax incentives and flexible grants available over a 10-year period. Second, they receive priority consideration for other Federal empowerment programs. Third, they receive assistance in removing bureaucratic redtape and regulatory barriers that prevent innovative uses of the Federal assistance that they have received. This approach recognizes that a top-down, big Government solution does not work in these times and what we have to do is enhance public- private partnerships and the involvement and engagement of all sectors in order to bring about again the public policy result that we are all desirous of seeing. Economic empowerment can be achieved, but it is best done, I believe, through these public-private partnerships. Economic revitalization in this Nation's most distressed communities is essential to the growth of our entire country. With the concept of team effort, we can rebuild cities by stimulating investments and creating jobs. Environmental protection used in this way can and will be good business. It is also good policy. With this legislation, we will begin the effort to restore economic growth back into our country's industrial centers and rural communities all the while improving our environment. Again, I wish to thank my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle for their original cosponsorship of this legislation and for making this legislation a truly bipartisan effort. I urge all of my colleagues to join in supporting the quick passage of this legislation. I ask unanimous consent that the full text of the bill and a section- by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 235 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. TITLE I--ADDITIONAL EMPOWERMENT ZONES SEC. 101. ADDITIONAL EMPOWERMENT ZONES. (a) In General.--Paragraph (2) of section 1391(b) (relating to designations of empowerment zones and enterprise communities) is amended-- (1) by striking ``9'' and inserting ``11'', (2) by striking ``6'' and inserting ``8'', and (3) by striking ``750,000'' and inserting ``1,000,000''. (b) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act, except that designations of new empowerment zones made pursuant to such amendments shall be made during the 180-day period beginning on the date of the enactment of this Act. TITLE II--NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES SEC. 201. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1391 (relating to designation procedure for empowerment zones and enterprise communities) is amended by adding at the end the following new subsection: ``(g) Additional Designations Permitted.-- ``(1) In general.--In addition to the areas designated under subsection (a)-- ``(A) Enterprise communities.--The appropriate Secretaries may designate in the aggregate an additional 80 nominated areas as enterprise communities under this section, subject to the availability of eligible nominated areas. Of that number, not more than 50 may be designated in urban areas and not more than 30 may be designated in rural areas. ``(B) Empowerment zones.--The appropriate Secretaries may designate in the aggregate an additional 20 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 15 may be designated in urban areas and not more than 5 may be designated in rural areas. ``(2) Period designations may be made.--A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 1999. [[Page S858]] ``(3) Modifications to eligibility criteria, etc.-- ``(A) Poverty rate requirement.-- ``(i) In general.--A nominated area shall be eligible for designation under this subsection only if the poverty rate for each population census tract within the nominated area is not less than 20 percent and the poverty rate for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent. ``(ii) Treatment of census tracts with small populations.-- A population census tract with a population of less than 2,000 shall be treated as having a poverty rate of not less than 25 percent 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 have a poverty rate of not less than 25 percent (determined without regard to this clause). ``(iii) Exception for developable sites.--Clause (i) shall not apply to up to 3 noncontiguous parcels in a nominated area which may be developed for commercial or industrial purposes. The aggregate area of noncontiguous parcels to which the preceding sentence applies with respect to any nominated area shall not exceed 1,000 acres (2,000 acres in the case of an empowerment zone). ``(iv) Certain provisions not to apply.--Section 1392(a)(4) (and so much of paragraphs (1) and (2) of section 1392(b) as relate to section 1392(a)(4)) shall not apply to an area nominated for designation under this subsection. ``(v) Special rule for rural empowerment zones and enterprise communities.--The Secretary of Agriculture may designate not more than 1 empowerment zone, and not more than 5 enterprise communities, in rural areas without regard to clause (i) if such areas satisfy emigration criteria specified by the Secretary of Agriculture. ``(B) Size limitation.-- ``(i) In general.--The parcels described in subparagraph (A)(iii) shall not be taken into account in determining whether the requirement of subparagraph (A) or (B) of section 1392(a)(3) is met. ``(ii) Special rule for rural areas.--If a population census tract (or equivalent division under section 1392(b)(4)) in a rural area exceeds 1,000 square miles or includes a substantial amount of land owned by the Federal, State, or local government, the nominated area may exclude such excess square mileage or governmentally owned land and the exclusion of that area will not be treated as violating the continuous boundary requirement of section 1392(a)(3)(B). ``(C) Aggregate population limitation.--The aggregate population limitation under the last sentence of subsection (b)(2) shall not apply to a designation under paragraph (1)(B). ``(D) Previously designated enterprise communities may be included.--Subsection (e)(5) shall not apply to any enterprise community designated under subsection (a) that is also nominated for designation under this subsection. ``(E) Indian reservations may be nominated.-- ``(i) In general.--Section 1393(a)(4) shall not apply to an area nominated for designation under this subsection. ``(ii) Special rule.--An area in an Indian reservation shall be treated as nominated by a State and a local government if it is nominated by the reservation governing body (as determined by the Secretary of Interior).'' (b) Employment Credit Not To Apply to New Empowerment Zones.--Section 1396 (relating to empowerment zone employment credit) is amended by adding at the end the following new subsection: ``(e) Credit Not To Apply to Empowerment Zones Designated Under Section 1391(g).--This section shall be applied without regard to any empowerment zone designated under section 1391(g).'' (c) Increased Expensing Under Section 179 Not To Apply in Developable Sites.--Section 1397A (relating to increase in expensing under section 179) is amended by adding at the end the following new subsection: ``(c) Limitation.--For purposes of this section, qualified zone property shall not include any property substantially all of the use of which is in any parcel described in section 1391(g)(3)(A)(iii).'' (d) Conforming Amendments.-- (1) Subsections (e) and (f) of section 1391 are each amended by striking ``subsection (a)'' and inserting ``this section''. (2) Section 1391(c) is amended by striking ``this section'' and inserting ``subsection (a)''. SEC. 202. VOLUME CAP NOT TO APPLY TO ENTERPRISE ZONE FACILITY BONDS WITH RESPECT TO NEW EMPOWERMENT ZONES. (a) In General.--Section 1394 (relating to tax-exempt enterprise zone facility bonds) is amended by adding at the end the following new subsection: ``(f) Bonds for Empowerment Zones Designated Under Section 1391(g).-- ``(1) In general.--In the case of a new empowerment zone facility bond-- ``(A) such bond shall not be treated as a private activity bond for purposes of section 146, and ``(B) subsection (c) of this section shall not apply. ``(2) Limitation on amount of bonds.-- ``(A) In general.--Paragraph (1) shall apply to a new empowerment zone facility bond only if such bond is designated for purposes of this subsection by the local government which nominated the area to which such bond relates. ``(B) Limitation on bonds designated.--The aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any empowerment zone shall not exceed-- ``(i) $60,000,000 if such zone is in a rural area, ``(ii) $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and ``(iii) $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000. ``(C) Special rules.-- ``(i) Coordination with limitation in subsection (c).-- Bonds to which paragraph (1) applies shall not be taken into account in applying the limitation of subsection (c) to other bonds. ``(ii) Current refunding not taken into account.--In the case of a refunding (or series of refundings) of a bond designated under this paragraph, the refunding obligation shall be treated as designated under this paragraph (and shall not be taken into account in applying subparagraph (B)) if-- ``(I) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and ``(II) the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond. ``(3) New empowerment zone facility bond.--For purposes of this subsection, the term `new empowerment zone facility bond' means any bond which would be described in subsection (a) if only empowerment zones designated under section 1391(g) were taken into account under sections 1397B and 1397C.'' (b) Effective Date.--The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 203. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) Modifications Relating to Enterprise Zone Business.-- Paragraph (3) of section 1394(b) (defining enterprise zone business) is amended to read as follows: ``(3) Enterprise zone business.-- ``(A) In general.--Except as modified in this paragraph, the term `enterprise zone business' has the meaning given such term by section 1397B. ``(B) Modifications.--In applying section 1397B for purposes of this section-- ``(i) Businesses in enterprise communities eligible.-- References in section 1397B to empowerment zones shall be treated as including references to enterprise communities. ``(ii) Waiver of requirements during startup period.--A business shall not fail to be treated as an enterprise zone business during the startup period if-- ``(I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397B as modified by this paragraph) at the end of such period, and ``(II) such business makes bona fide efforts to be such a business. ``(iii) Reduced requirements after testing period.--A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397B if at least 35 percent of the employees of such business for such year are residents of an empowerment zone or an enterprise community. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397B(d). ``(C) Definitions relating to subparagraph (b).--For purposes of subparagraph (B)-- ``(i) Startup period.--The term `startup period' means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of-- ``(I) the date of issuance of the issue providing such property, or ``(II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). ``(ii) Testing period.--The term `testing period' means the first 3 taxable years beginning after the startup period. ``(D) Portions of business may be enterprise zone business.--The term `enterprise zone business' includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated.'' (b) Modifications Relating to Qualified Zone Property.-- Paragraph (2) of section 1394(b) (defining qualified zone property) is amended to read as follows: ``(2) Qualified zone property.--The term `qualified zone property' has the meaning given such term by section 1397C; except that-- ``(A) the references to empowerment zones shall be treated as including references to enterprise communities, and ``(B) section 1397C(a)(2) shall be applied by substituting `an amount equal to 15 percent of the adjusted basis' for `an amount equal to the adjusted basis'.'' [[Page S859]] (c) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 204. MODIFICATIONS TO ENTERPRISE ZONE BUSINESS DEFINITION FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1397B (defining enterprise zone business) is amended-- (1) by striking ``80 percent'' in subsections (b)(2) and (c)(1) and inserting ``50 percent'', (2) by striking ``substantially all'' each place it appears in subsections (b) and (c) and inserting ``a substantial portion'', (3) by striking ``, and exclusively related to,'' in subsections (b)(4) and (c)(3), (4) by adding at the end of subsection (d)(2) the following new flush sentence: ``For purposes of subparagraph (B), the lessor of the property may rely on a lessee's certification that such lessee is an enterprise zone business.'', (5) by striking ``substantially all'' in subsection (d)(3) and inserting ``at least 50 percent'', and (6) by adding at the end the following new subsection: ``(f) Treatment of Businesses Straddling Census Tract Lines.--For purposes of this section, if-- ``(1) a business entity or proprietorship uses real property located within an empowerment zone, ``(2) the business entity or proprietorship also uses real property located outside the empowerment zone, ``(3) the amount of real property described in paragraph (1) is substantial compared to the amount of real property described in paragraph (2), and ``(4) the real property described in paragraph (2) is contiguous to part or all of the real property described in paragraph (1), then all the services performed by employees, all business activities, all tangible property, and all intangible property of the business entity or proprietorship that occur in or is located on the real property described in paragraphs (1) and (2) shall be treated as occurring or situated in an empowerment zone.'' (b) Effective Dates.-- (1) In general.--The amendments made by this section shall apply to taxable years beginning on or after the date of the enactment of this Act. (2) Special rule for enterprise zone facility bonds.--For purposes of section 1394(b) of the Internal Revenue Code of 1986, the amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 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 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) which contains (or potentially contains) 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 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 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. ____ Section-by-Section Analysis Title I--Additional Empowerment Zones Section 101 would authorize the designation of an additional two urban empowerment zones under the 1994 first round. Title II--New Empowerment Zones and Enterprise Communities Section 201 authorizes a second round of designations, consisting of 80 enterprise communities and 20 empowerment zones. Of the 80 enterprise communities, 50 would be in urban areas and 30 would be in rural areas. Of the 20 empowerment zones, 15 would be in urban areas and 5 would be in rural areas. The designations would be made before January 1, 1999. Certain of the eligibility criteria applicable in the first round would be modified for the second round of designations. First, the poverty criteria would be relaxed somewhat, so that unlike the first round there would be no requirement that at least 50 percent of the population census tracts have a poverty rate of 35 percent or more. In addition, the poverty criteria will not be applicable to areas specified in the application as developable for commercial or industrial purposes (1,000 acres in the case of an enterprise community, 2,000 acres in the case of an empowerment zone), and these areas will not be taken into account in applying the size limitations (e.g., 20 square miles for urban areas, 1,000 square miles for rural areas). The Secretary of Agriculture will be authorized to designate up to one rural empowerment zones and five rural enterprise communities [[Page S860]] based on specified emigration criteria without regard to the minimum poverty rates set forth in the statute. Rural census tracts in excess of 1,000 square miles or including a substantial amount of governmentally owned land may exclude such excess mileage or governmentally owned land from the nominated area. Unlike the first round, Indian reservations will be eligible to be nominated (and the nomination may be submitted by the reservation governing body without the State government's participation). The empowerment zone employment credit will not be available to businesses in the new empowerment zones, and the increased expensing under section 179 will not be available in the developable acreage areas of empowerment zones. Section 202 authorizes a new category of tax-exempt financing for businesses in the new empowerment zones. These bonds, rather than being subject to the current State volume caps, will be subject to zone-specific caps. For each rural empowerment zone, up to $60 million in such bonds may be issued. For an urban empowerment zone with a population under 100,000, $130 million of these bonds may be issued. For each urban empowerment zone with a population of 100,000 or more, $230 million of these bonds may be issued. Section 203 liberalizes the current definition of an ``enterprise zone business'' for purposes of the tax-exempt financing available under both the first and second rounds. Businesses will be treated as satisfying the applicable requirements during a 2-year start-up period if it is reasonably expected that the business will satisfy those requirements by the end of the start-up period and the business makes bona fide efforts to that end. Following the start-up period a 3-year testing period will begin, after which certain enterprise zone business requirements will no longer be applicable (as long as more than 35 percent of the business' employees are residents of the empowerment zone or enterprise community). The rules under which substantially renovated property may be ``qualified zone property,'' and thereby be eligible to be financed with tax-exempt bonds, would also be liberalized slightly. Section 204 liberalizes the definition of enterprise business for purposes of both the tax-exempt financing provisions and the additional section 179 expensing by reducing from 80 percent to 50 percent the amount of total gross income that must be derived within the empowerment zone or enterprise community, by reducing how much of the business' property and employees' services must be located in or provided within the zone or community, and by easing the restrictions governing when rental businesses will qualify as enterprise zone businesses. A special rule is also provided to clarify how a business that straddles the boundary of an empowerment zone or enterprise community (e.g., by straddling a population census tract boundary) is treated for purposes of the enterprise zone business definition. title iii--expensing of environmental remediation costs Section 301 would provide a current deduction for certain remediation costs incurred with respect to qualified sites. Generally, these expenses would be limited to those paid or incurred in connection with the abatement or control of environmental contaminants. This deduction would apply for alternative minimum tax purposes as well as for regular tax purposes. Qualified sites would be limited to those properties that satisfy use, geographic, and contamination requirements. The use requirement would be satisfied if the property is held by the taxpayer incurring the eligible expenses for use in a trade or business or for the production of income, or if the property is of a kind properly included in the inventory of the taxpayer. The geographic requirement would be satisfied if the property is located in (i) any census tract that has a poverty rate of 20 percent or more, (ii) any other census tract (a) that has a population under 2,000, (b) 75 percent or more of which is zoned for industrial or commercial use, and (c) that is contiguous to one or more census tracts with a poverty rate of 20 percent or more, (iii) an area designated as a federal EZ or EC or (iv) an area subject to one of the 40 EPA Brownfields Pilots announced prior to February 1997. Both urban and rural sites may qualify. Superfund National Priority listed sites would be excluded. The contamination requirement would be satisfied if hazardous substances are present or potentially present on the property. Hazardous substances would be defined generally by reference to sections 101(14) and 102 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), subject to additional limitations applicable to asbestos and similar substances within buildings, certain naturally occurring substances such as radon, and certain other substances released into drinking water supplies due to deterioration through ordinary use. To claim the deduction under this provisions, the taxpayer would be required to obtain a statement that the site satisfies the geographic and contamination requirements from a State environmental agency designated by the Environmental Protection Agency for such purposes or, if no such agency has been designated by the EPA, by the EPA itself. This deduction would be subject to recapture under current- law section 1245. Thus, any gain realized on disposition generally would be treated as ordinary income, rather than capital gain, up to the amount of deductions taken with respect to the property. Mr. D'AMATO. Mr. President, I join my colleagues, Senators Moseley-Braun, Abraham, Jeffords, Daschle, Lieberman, and Murray, in introducing legislation that will provide a new tax incentive to encourage the private sector to clean up thousands of contaminated, abandoned sites known as brownfields. Brownfield sites are abandoned or vacant commercial and industrial properties suspected of being environmentally contaminated. Under current law, the IRS has determined that costs incurred to clean up land and ground water are deductible as business expenses, as long as the costs are incurred by the same taxpayer that contaminated the land, and that taxpayer plans to use the land after the cleanup for the same purposes used prior to the cleanup. That means that new owners who wish to use land suspected of environmental contamination for a new purpose, would be precluded from deducting the costs of cleanup in the year incurred. They would only be allowed to capitalize the costs and depreciate them over time. Therefore, it is time for us to recognize the need for aggressive economic development policies for the future economic health of communities around the country, and to recognize the inequity of current tax law. My colleagues and I believe that our legislation is the type of initiative the Federal Government needs to encourage development of once abandoned, unproductive sites that will bring real economic benefits to urban distressed and rural areas across the United States. By encouraging redevelopment, jobs will be created, economic growth will continue, property values will increase as well as local tax revenues. Mr. President, I am proud to say that in my State of New York, the city of Elmira has been selected as a fourth round finalist for the EPA's Brownfields Economic Redevelopment Initiative Demonstration Pilot Program. The city of Elmira has primed an unsightly and unsafe urban brownfield and is now in the final stages of turning it into a revenue- and jobs-producing venture. The city of Elmira initiated this important project with no guarantees of public or private funding and has done this at very minimal cost to taxpayers. Can you imagine what could and would be done if the public and private sector had the encouragement to also become involved? Mr. President, I urge my colleagues on both sides of the aisle to join us in cosponsoring this important legislation. Mr. JEFFORDS. Mr. President, I am pleased to join with Senators Moseley-Braun, D'Amato, Abraham, and Lieberman in sponsoring the Community Empowerment Act of 1997, which will encourage the cleanup of abandoned industrial sites known as brownfields in Vermont and across the country. The term ``brownfields'' refers to contaminated industrial sites. Most of these sites were abandoned during the 1970's and 1980's, as industrial development migrated away from urban areas to the greener landscape of the suburbs. One such site in Vermont is the Holden- Leonard Mill, a 20-building complex in Bennington, VT, that is poised to become a brownfields success story after 10 years of work. Once employing one-quarter of Bennington's work force, the mill shut down in 1939 and then was owned by a patchwork of owners until the 1980's. After soil tests disclosed high levels of pollutants, the mill sat empty after 1986. Fortunately, a buyer of the site came forward in 1992 and with cooperation between the business, State agencies, and the EPA the mill has been refurbished and over 200 new employees have been hired. The process, however, of revitalizing this site began in 1986 and is still going on. Our aim with this legislation is to provide tax incentives to businesses willing to clean up and redevelop brownfields sites so that more brownfield sites can be returned to productive use and so that the process doesn't have to take 10 years. Last November, I sponsored a forum on brownfields redevelopment in Burlington, VT. There is only one unpolluted site in Burlington available for industrial development. Yet there are currently 17 brownfields sites in the city, all with great potential for [[Page S861]] development. I toured several of these sites and saw this potential first hand. Burlington is both an EPA brownfields pilot city and an enterprise community. Under our legislation, businesses that acquire these sites would be able to claim tax deductions for their environmental cleanup costs. With tax incentives for brownfields redevelopment, I am hoping that we will see more of these abandoned sites returned to productive use. We treasure our open spaces in Vermont, and we are looking at ways to give incentives to companies to invest in our downtowns. When a company builds a facility on a brownfield site it takes advantage of existing infrastructure. the revitalization of a brownfield site means one less farm or field is paved over or forest cut down for the sake of a new plant or facility. I urge my colleagues to join us in supporting this bill. Mr. LIEBERMAN. Mr. President, I am delighted to join this distinguished group of Senators in introducing legislation to provide tax incentives for the cleanup of brownfields. This legislation will provide a powerful incentive to clean-up these sites. And that clean up will be followed by more jobs and more economic growth in areas that very much need both of those things. I am encouraged by the broad, bipartisan support both here in the Congress and in the administration and in the environmental community and in the business community, to provide tax incentives to get these sites cleaned up. Brownfield sites are abandoned commercial and industrial properties that are environmentally contaminated. Developers and lenders avoid these sites both for liability reasons and because the tax incentives for cleaning up these sites is so limited. The result is an urban landscape littered with vacant and abandoned properties--properties which invite crime, depress surrounding housing and commercial prices, and hinder economic growth in these areas. Additionally, by discouraging the clean-up of brownfields, we are encouraging the development of undeveloped areas known as greenfields. This bill is simple: it allows taxpayers who purchase contaminated properties to deduct the costs of cleaning up brownfields in the year that cleanup expenses occur. This tax incentive would apply to existing and future empowerment zones and enterprise communities, in areas with a poverty rate of 20 percent or more and in adjacent industrial and commercial areas and in existing brownfields pilot areas as designated by the Environmental Protection Agency. Currently, a taxpayer who buys a contaminated property and cleans it up must spread the costs of that cleanup over time. We expect the cost of this bill to be about $2 billion over 7 years. The administration has estimated that this proposal may bring as many as 30,000 brownfield sites back to productive use. In Connecticut, my home State, we know first hand about the problems these brownfield sites can pose for a community. In her soon to be released study of various brownfields sites, Edith M. Pepper of the Northeast-Midwest Institute included the Bryant Electric Plant in Bridgeport, CT, as one of her case studies. As she notes, the Bryant Electric Plant shut down in 1988 after 90 years of operating in Bridgeport's west end. It is no secret that Bridgeport is in difficult shape economically. Closing this 500,000 square foot facility did nothing to help that situation. However, as Ms. Pepper notes in her case study of this brownfields site, it appears that hope is on the way. A non-profit development group, the West End Community Development Corp. [CDC] is working to form a large business park on and around the Bryant site. Over $15 million has already been invested in the site, including a significant amount for cleanup. According to city officials, the developer plans to create 300-400 new jobs and invest $20-50 million in Bridgeport's west end. The brownfields bill we are introducing today could help in Bridgeport. Undoubtedly it could help in places like New Haven and Hartford as well. The bill we are introducing today expands upon a bill that Senator Abraham and I introduced in the last Congress, S. 1542. That bill limited these cleanup incentives to the 104 empowerment zones and enterprise communities that exist in 42 States across the country. I am delighted by today's effort to expand on the number of regions and sites that will be covered in the brownfields legislation and I urge my colleagues to join us in cosponsoring this important legislation. Mr. ABRAHAM. Mr. President, I join Senator Moseley-Braun, Senator Jeffords, Senator Lieberman, Senator D'Amato, and others in introducing the Community Empowerment Act of 1997. This legislation builds upon the legislation Senator Lieberman and I introduced last Congress, as well as the similar legislation introduced by Senators Moseley-Braun, D'Amato, and Jeffords. Having now joined forces for the new Congress, the Moseley-Braun- Abraham legislation will provide tax incentives for the environmental cleanup of brownfields located in economically distressed areas. There are between 100,000 and 300,000 of these sites across the country, Mr. President, and they are a blight on both the landscape and the economy of our communities. I am sponsoring this legislation because, in my view, too many of our troubled cities, towns, and rural areas have both environmental and economic problems. These problems conspire to produce an endless cycle of impoverishment. Contaminated sites are abandoned and new companies refuse to take over the property for fear of environmental lawsuits from government and/or private parties. As a result, contamination and joblessness continue and even get worse. For example, a survey of Toledo, OH businesses found that environmental concerns were affecting 62 percent of the area's commercial and industrial real estate transactions. These effects are all but universally negative in terms of job creation and economic development. Another example: Construction of a $3 million lumber treatment plant in Hammond, IN, was abandoned after low levels of contamination were found at the proposed site. The developer concluded that uncertain costs and potential liabilities outweighed the site's benefits. The city of Hammond lost construction jobs, 75 full-time lumber plant jobs, and any reasonable prospect that a developer would assume the risk of developing property anywhere on the 20 acre site. In Flint, the former site of Thrall Oil Co., now sits vacant. Economic development officials believe this property should attract future manufacturing development. Unfortunately, because the Michigan Department of Environmental Quality has labeled it ``contaminated,'' developers cannot be found. For decades now, Mr. President, the Federal Government has tried, with little success, to revitalize economically distressed areas. The blight remains. Urban renewal and various welfare programs too often have only made things worse by spawning dependency on government help. Environmental laws have fared little better. Intended to force cleanup of contaminated sites, these laws instead have scared away potential investors with potentially unlimited liability, including liability for contamination the investors did not cause or even know about. Environmental regulations and liability established under the Federal Superfund Program along with various other Federal and State environmental rules have helped create thousands of these brownfield properties in the United States. These are industrial or commercial sites suspected of being in some way environmentally contaminated. Although not serious threats to public health and safety, these properties have become unavailable for economic use, because legal rules make them too financially risky for investment and job creation. Potential liability scares businesses and investors away from these sites, creating permanently abandoned blights on the urban and rural landscape. Investors are afraid of being dragged into multimillion- dollar litigation and cleanup over contamination they did not cause. Worse, investors willing to shoulder the liability of a potential environmental cleanup find that they cannot write off the cost of environmental remediation of brownfields. Instead these costs must be spread over a number of years. Thus, the Tax Code and environmental laws combine to scare away potential sources of investment and growth, [[Page S862]] often from our most economically distressed areas. To help both our economy and our environment, the Moseley-Braun- Abraham legislation would target tax benefits at brownfields in economically distressed areas to encourage cleanup and job creation. We would allow investors in brownfields to expense their cleanup costs immediately--without having to split these costs up over a number of years. This will have three positive effects. First, these incentives will help our communities. By encouraging redevelopment of abandoned, unproductive sites, these tax incentives will reinvigorate economic growth in distressed communities across the country. They will provide economic opportunity rather than government dependence by encouraging investment and entrepreneurship where it is most needed. Second, this legislation will help the environment. These tax incentives will significantly improve our ability to clean up environmentally contaminated sites. The legacy of existing cleanup laws is a remarkable lack of progress. With thousands of sites across the country categorized as brownfields, we need to start cleaning them now, and we need private investment to get the job done. Furthermore, encouraging brownfields cleanup will save undeveloped land from unnecessary development. For every brownfield that is cleaned up and reused there will be a green field that remains clean and unused. Third, this solution, unlike those attempted in the past, utilizes the private sector to reclaim contaminated land and reinvigorate distressed communities. By encouraging private investment, rather than attempting to purchase or force cooperation with government mandates, we can free up private capital and initiative to do its job of revitalizing these distressed areas. By adopting this approach, the Senate will take a significant step toward revitalized, reinvigorated, and renewed urban and rural zones. With the incentives, included in this amendment, good jobs and a clean environment will go together, to everyone's benefit. I thank Senators Moseley-Braun, D'Amato, Lieberman, Jeffords, and our other cosponsors for joining me in this important effort, and I look forward to seeing meaningful brownfields reforms passed this Congress. By Mr. GRAMS (for himself, Mr. Abraham, Mr. Ashcroft, Mr. Faircloth, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. Stevens and Mr. Hagel): S. 236. A bill to abolish the Department of Energy, and for other purposes; to the Committee on Energy and Natural Resources. THE DEPARTMENT OF ENERGY ABOLISHMENT ACT Mr. GRAMS. Mr. President, I introduce legislation aimed at improving government as we know it. The Department of Energy Abolishment Act of 1997 comes after nearly two decades of debate. The basic question has always remained the same: Why should we expend taxpayer dollars on this Cabinet-level agency? And today, we ask the same question. Following a year's worth of discussions on the blueprint I am putting forth, much progress has been made. When the 104th Congress began to tackle this issue, we looked at three main issues. First, we examined the fact that the Department of Energy no longer has a mission--which is clearly reflected by the fact that nearly 85 percent of its budget is expended upon nonenergy programs. Next, we studied those programs charged to the DOE and reviewed its ability to meet the related job requirements. And finally, we looked at the DOE's bloated budget in light of the first two criterion--determining whether the taxpayers should be forced to expend over $16 billion annually on this hodge- podge collection. Nearly a year later, this Nation continues to grow increasingly dependent upon foreign oil--in total contrast to the DOE's core mission. Even in light of this administration's focus on alternative energy, the DOE expends less than one-fifth of its budget on energy- related programs. And after examining key DOE mission programs, such as the Civilian Nuclear Waste program, it is clear that the goals of those missions are not being met. So we are challenged to either accept the status quo or move to change it. I must admit that the status quo may be easier in the short- term. But in the context of the proverbial big picture, we cannot afford to turn our backs. Besides the fact that it is the role of Congress to oversee taxpayer expenditures and ensure a fair rate of return on their investments, this Nation is faced with a national debt in excess of $5.3 trillion. However, gaining consensus on the need for change is easier than effecting such change. So, last year I worked with the Senate Task Force on Government Agency Elimination to develop a blueprint. Under the direction of the former Senate Majority Leader, Senator Dole, I worked with Senators Faircloth, Abraham, and Stevens to study proposals on the DOE. After months of discussions with experts in the fields of energy and defense, we introduced legislation--legislation which is the core of the bill I am introducing today. Let me be the first to state that the ideas contained within this bill are not all of my own. Just as the idea to eliminate the Department of Energy is not a new one--since its creation in 1978, experts have been clamoring to abolish this agency in search of a mission. This bill represents the comments and input of many who have worked in these fields for decades, but like all things--I consider it a work in progress. As many of our colleagues will recall, the Senate Energy and Natural Resources Committee held a hearing on this very bill last September. During the hearing, we received testimony from such distinguished witnesses as the Former Assistant Energy Secretary Shelby Brewer and the Former Defense Secretary Caspar Weinberger in support of the proposal. Having either directly run these programs, or relied upon them, they provided strong firsthand evidence as to the detriment of leaving things as they are. The committee also received testimony from the current Acting Secretary and then-Assistant Energy Secretary, Charlie Curtis, who testified in support of improving the delivery of the Department's missions, at lower cost, for the benefit of the American people. His testimony focused upon how the DOE was working to improve its efforts to fulfill various missions, and how changing horses midstream would derail the DOE's efforts. In his remarks, Mr. Curtis dismissed the DOE Abolishment Act because the DOE did not believe it appropriate to entertain matters of this moment and complexity in the context of a bill which has as its proposed objective changing the organizational structure and fate of the Department of Energy. What the DOE fails to recognize is that the conclusions--to abolish the DOE--arise from an analysis of the Department's activities, rather than from any antigovernment ideology or mere desire to reduce government spending, as pointed out by Dr. Irwin Stelzer of the American Enterprise Institute. Supporters of the DOE Abolishment Act have always agreed that there are core functions performed by the DOE which must continue to be done, but the DOE has yet to provide a compelling argument as to why the DOE itself must continue to exist or successfully respond to our reasons for its elimination. But Mr. Curtis' objections are understandable when placed in the context of remarks by Nobel-prize economist, Dr. Milton Friedman: ``The Department of Energy offers an excellent example of a major difference between private and government projects. If a private project is a failure, it will be closed down; if a government project is a failure, it will be expanded. * * * It is in the self-interest of the Government officials in charge to keep the project alive; and they always have the ready excuse that the reason for failure was the lack of sufficient funds.'' So today, I am joined by my colleagues, Senator Abraham of Michigan, Senator Ashcroft of Missouri, Senator Faircloth of North Carolina, Senator Hutchinson of Arkansas, Senators Kyl and McCain of Arizona and Senator Stevens of Alaska, in reaffirming congressional intent to change the Department of Energy as we know it. Under the Department of Energy Abolishment Act of 1997, we dismantle the patchwork quilt of government initiatives--reassembling them into agencies better equipped

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - January 30, 1997)

Text of this article available as: TXT PDF [Pages S856-S897] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Ms. MOSELEY-BRAUN (for herself, Mr. Abraham, Mr. D'Amato, Mr. Jeffords, Mr. Lieber- man, Mr. Daschle and Mrs. Murray): S. 235. A bill to amend the Internal Revenue Code of 1986 to encourage economic development through the creation of additional empowerment zones and enterprise communities and to encourage the cleanup of contaminated brownfield sites; to the Committee on Finance. THE COMMUNITY EMPOWERMENT ACT OF 1997 Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure, together with my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle to reintroduce the Community Empowerment Act of 1997. This legislation is designed to create new jobs and spur economic growth by encouraging the cleanup and reuse of contaminated industrial and commercial sites known as Brownfields. This bill also creates 20 new additional empowerment zones and 80 new enterprise communities all across the Nation. I like to call them environmentally challenged sites. They are sites on which there has been some contamination but not to a level sufficient to reach Superfund status. But they are contaminated nonetheless. They are, on the one hand, excellent locations for industrial and commercial redevelopment because the transportation, more often than not, already exists. The infrastructure, the utilities, and the labor force already exists. However, these properties are often unattractive to potential redevelopers because of the known, unknown, or perceived contamination that may exist on the property. This factor creates an incentive for companies to locate and develop in greenfields, which are undeveloped areas generally in the suburbs. This urban flight contributes to urban sprawl, taking jobs away from the city. It also results in the paving off of many of the greenfield areas of our country. The challenge for all of us is to stop this trend. And one way to do that is by encouraging businesses through the Tax Code to redevelop and to reuse the existing brownfield sites; to reclaim, if you will, sites that have been contaminated which have been used or used up. At present, if an industrial property owner does environmental damage to their property and then cleans up the site, the owner is allowed to deduct the cost of that cleanup from a single year's earnings. However, in a strange twist of logic, someone who buys an environmentally damaged piece of property and cleans up that property is not allowed to expense these cleanup costs, but instead must capitalize the cost and depreciate the cleanup expense over many years. The result of this? The result has been an urban landscape littered with vacant or abandoned properties, properties that attract crime and bring down property values in surrounding neighborhoods. Confronting the brownfields issue can help to address many of the problems that face high unemployment in older communities, including job creation, economic renewal, environmental justice, and environmental improvement. The collective efforts of everyone, particularly the nonprofit community, the private sector, government at all levels, developers, and community groups, are essential to begin the process of returning brownfields property back to productive use and to bring economic growth back to disadvantaged cities and rural areas. Under the provisions of this legislation, qualifying brownfields will be provided full first-year expensing of environmental cleanup costs under the Federal Tax Code. Full first-year expensing simply means that a tax deduction will be allowed for the cleanup costs in the year that those costs are incurred. The Community Empowerment Act provides tax incentives that we hope will break through some of the current barriers preventing the private sector from investing in brownfields cleanup projects. So it provides a carrot, if you will, to the private sector to begin to help not only with the environmental cleanup but also with urban redevelopment. So it becomes a win-win in both regards in that way. In my own State of Illinois, the brownfields provisions will have a major impact on efforts to help restore neglected and abandoned industrial areas. It will facilitate the cleanup of some 300 to 500 sites in Illinois, each of [[Page S857]] which has a remediation cost ranging from $250,000 to $500,000 per site. The Treasury Department estimates that this act will provide $2 billion in tax incentives that will leverage an additional $10 billion in private investment, returning an estimated 30,000 brownfields across the country to productive use again. The $2 billion investment will be included in the President's balanced budget plan and so it will be paid for. The Federal assistance that this proposal envisions will be concentrated in neighborhoods with the most severe problems and that are truly in need of such investment. The bill targets four areas. First, the empowerment zones and enterprise communities across the country. Second, areas with a poverty rate of 20 percent or more that are near industrial or former industrial sites. Third, existing EPA brownfields pilot areas. The Environmental Protection Agency has already designated brownfields sites across the country. Fourth, areas with a population of under 2,000 or more than 75 percent of which is zoned for industrial or commercial use. So this is not just a big-city solution. This is something that will affect the cities, the suburbs, and the rural areas as well in providing an incentive to reclaim these environmentally challenged areas of our country. In my hometown, in Chicago, Mayor Daley has taken the initiative to establish a brownfields pilot program which has made public investment leverage substantial private investment dollars. One of these projects is known as the Scott Peterson Meats Co., in Chicago. The site had been tax delinquent for several years when Scott Peterson Meats and the city began to work together. The city conducted an assessment of potential hazards that were identified and which included asbestos-containing materials, lead-based paints, and some 11 underground storage tanks, some of which were filled with tar. The city paid for environmental investigation, cleanup, and building demolition, which totaled some $250,000 in contractor costs. Due to the city's investment, however, the company, Scott Peterson Meats, then turned around and invested an additional $5.2 million in a new smokehouse on its existing property, and it has hired over 100 additional employees to date. So with the win-win of environmental cleanup and urban reclamation we also have job creation coming out of this legislative initiative. Another example of a successful public-private partnership pulling people together to clean up a brownfields site is the Madison Equipment site located in Illinois. This abandoned industrial building was a neighborhood eyesore. Scavengers had stolen most of the wiring and plumbing, and illegal or what is called midnight dumping of trash and debris was rampant. Madison Equipment needed expansion space, but it feared the environmental liability. However, in 1993, the city of Chicago took the initiative to invest just a little over $3,000 in this project, in this environmental reclamation, this brownfields project, and 1 year later the company, Madison, put in $180,000 of its own to redevelop the building. The critical reason that lenders and investors look at this area now is because the city committed the public investment to spur private redevelopment and investment. When local government demonstrates the confidence to commit public funds, private financial institutions are more likely to follow suit. These types of examples show how a little investment can go a long way and how we can engage the partnership between the public and the private sector in nonbureaucratic ways in order to spur a result that truly is in the public interest. Chicago's pilot project will successfully return all the pilot sites to productive use for a total of about $850,000 in public money. This pilot project is a perfect example of what this legislation can accomplish on a national level. But in order to make it happen, cooperation is the key. Effective strategies require strong partnerships among government, industry, organized labor, community groups, developers, environmentalists, and financiers, who all realize that when their efforts are aligned, when we work together, progress is made easier. The second component of this legislation is the establishment of 20 more empowerment zones and 80 additional enterprise communities. They will receive a variety of tools for redevelopment from the Government. First, they receive a package of tax incentives and flexible grants available over a 10-year period. Second, they receive priority consideration for other Federal empowerment programs. Third, they receive assistance in removing bureaucratic redtape and regulatory barriers that prevent innovative uses of the Federal assistance that they have received. This approach recognizes that a top-down, big Government solution does not work in these times and what we have to do is enhance public- private partnerships and the involvement and engagement of all sectors in order to bring about again the public policy result that we are all desirous of seeing. Economic empowerment can be achieved, but it is best done, I believe, through these public-private partnerships. Economic revitalization in this Nation's most distressed communities is essential to the growth of our entire country. With the concept of team effort, we can rebuild cities by stimulating investments and creating jobs. Environmental protection used in this way can and will be good business. It is also good policy. With this legislation, we will begin the effort to restore economic growth back into our country's industrial centers and rural communities all the while improving our environment. Again, I wish to thank my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle for their original cosponsorship of this legislation and for making this legislation a truly bipartisan effort. I urge all of my colleagues to join in supporting the quick passage of this legislation. I ask unanimous consent that the full text of the bill and a section- by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 235 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. TITLE I--ADDITIONAL EMPOWERMENT ZONES SEC. 101. ADDITIONAL EMPOWERMENT ZONES. (a) In General.--Paragraph (2) of section 1391(b) (relating to designations of empowerment zones and enterprise communities) is amended-- (1) by striking ``9'' and inserting ``11'', (2) by striking ``6'' and inserting ``8'', and (3) by striking ``750,000'' and inserting ``1,000,000''. (b) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act, except that designations of new empowerment zones made pursuant to such amendments shall be made during the 180-day period beginning on the date of the enactment of this Act. TITLE II--NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES SEC. 201. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1391 (relating to designation procedure for empowerment zones and enterprise communities) is amended by adding at the end the following new subsection: ``(g) Additional Designations Permitted.-- ``(1) In general.--In addition to the areas designated under subsection (a)-- ``(A) Enterprise communities.--The appropriate Secretaries may designate in the aggregate an additional 80 nominated areas as enterprise communities under this section, subject to the availability of eligible nominated areas. Of that number, not more than 50 may be designated in urban areas and not more than 30 may be designated in rural areas. ``(B) Empowerment zones.--The appropriate Secretaries may designate in the aggregate an additional 20 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 15 may be designated in urban areas and not more than 5 may be designated in rural areas. ``(2) Period designations may be made.--A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 1999. [[Page S858]] ``(3) Modifications to eligibility criteria, etc.-- ``(A) Poverty rate requirement.-- ``(i) In general.--A nominated area shall be eligible for designation under this subsection only if the poverty rate for each population census tract within the nominated area is not less than 20 percent and the poverty rate for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent. ``(ii) Treatment of census tracts with small populations.-- A population census tract with a population of less than 2,000 shall be treated as having a poverty rate of not less than 25 percent 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 have a poverty rate of not less than 25 percent (determined without regard to this clause). ``(iii) Exception for developable sites.--Clause (i) shall not apply to up to 3 noncontiguous parcels in a nominated area which may be developed for commercial or industrial purposes. The aggregate area of noncontiguous parcels to which the preceding sentence applies with respect to any nominated area shall not exceed 1,000 acres (2,000 acres in the case of an empowerment zone). ``(iv) Certain provisions not to apply.--Section 1392(a)(4) (and so much of paragraphs (1) and (2) of section 1392(b) as relate to section 1392(a)(4)) shall not apply to an area nominated for designation under this subsection. ``(v) Special rule for rural empowerment zones and enterprise communities.--The Secretary of Agriculture may designate not more than 1 empowerment zone, and not more than 5 enterprise communities, in rural areas without regard to clause (i) if such areas satisfy emigration criteria specified by the Secretary of Agriculture. ``(B) Size limitation.-- ``(i) In general.--The parcels described in subparagraph (A)(iii) shall not be taken into account in determining whether the requirement of subparagraph (A) or (B) of section 1392(a)(3) is met. ``(ii) Special rule for rural areas.--If a population census tract (or equivalent division under section 1392(b)(4)) in a rural area exceeds 1,000 square miles or includes a substantial amount of land owned by the Federal, State, or local government, the nominated area may exclude such excess square mileage or governmentally owned land and the exclusion of that area will not be treated as violating the continuous boundary requirement of section 1392(a)(3)(B). ``(C) Aggregate population limitation.--The aggregate population limitation under the last sentence of subsection (b)(2) shall not apply to a designation under paragraph (1)(B). ``(D) Previously designated enterprise communities may be included.--Subsection (e)(5) shall not apply to any enterprise community designated under subsection (a) that is also nominated for designation under this subsection. ``(E) Indian reservations may be nominated.-- ``(i) In general.--Section 1393(a)(4) shall not apply to an area nominated for designation under this subsection. ``(ii) Special rule.--An area in an Indian reservation shall be treated as nominated by a State and a local government if it is nominated by the reservation governing body (as determined by the Secretary of Interior).'' (b) Employment Credit Not To Apply to New Empowerment Zones.--Section 1396 (relating to empowerment zone employment credit) is amended by adding at the end the following new subsection: ``(e) Credit Not To Apply to Empowerment Zones Designated Under Section 1391(g).--This section shall be applied without regard to any empowerment zone designated under section 1391(g).'' (c) Increased Expensing Under Section 179 Not To Apply in Developable Sites.--Section 1397A (relating to increase in expensing under section 179) is amended by adding at the end the following new subsection: ``(c) Limitation.--For purposes of this section, qualified zone property shall not include any property substantially all of the use of which is in any parcel described in section 1391(g)(3)(A)(iii).'' (d) Conforming Amendments.-- (1) Subsections (e) and (f) of section 1391 are each amended by striking ``subsection (a)'' and inserting ``this section''. (2) Section 1391(c) is amended by striking ``this section'' and inserting ``subsection (a)''. SEC. 202. VOLUME CAP NOT TO APPLY TO ENTERPRISE ZONE FACILITY BONDS WITH RESPECT TO NEW EMPOWERMENT ZONES. (a) In General.--Section 1394 (relating to tax-exempt enterprise zone facility bonds) is amended by adding at the end the following new subsection: ``(f) Bonds for Empowerment Zones Designated Under Section 1391(g).-- ``(1) In general.--In the case of a new empowerment zone facility bond-- ``(A) such bond shall not be treated as a private activity bond for purposes of section 146, and ``(B) subsection (c) of this section shall not apply. ``(2) Limitation on amount of bonds.-- ``(A) In general.--Paragraph (1) shall apply to a new empowerment zone facility bond only if such bond is designated for purposes of this subsection by the local government which nominated the area to which such bond relates. ``(B) Limitation on bonds designated.--The aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any empowerment zone shall not exceed-- ``(i) $60,000,000 if such zone is in a rural area, ``(ii) $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and ``(iii) $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000. ``(C) Special rules.-- ``(i) Coordination with limitation in subsection (c).-- Bonds to which paragraph (1) applies shall not be taken into account in applying the limitation of subsection (c) to other bonds. ``(ii) Current refunding not taken into account.--In the case of a refunding (or series of refundings) of a bond designated under this paragraph, the refunding obligation shall be treated as designated under this paragraph (and shall not be taken into account in applying subparagraph (B)) if-- ``(I) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and ``(II) the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond. ``(3) New empowerment zone facility bond.--For purposes of this subsection, the term `new empowerment zone facility bond' means any bond which would be described in subsection (a) if only empowerment zones designated under section 1391(g) were taken into account under sections 1397B and 1397C.'' (b) Effective Date.--The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 203. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) Modifications Relating to Enterprise Zone Business.-- Paragraph (3) of section 1394(b) (defining enterprise zone business) is amended to read as follows: ``(3) Enterprise zone business.-- ``(A) In general.--Except as modified in this paragraph, the term `enterprise zone business' has the meaning given such term by section 1397B. ``(B) Modifications.--In applying section 1397B for purposes of this section-- ``(i) Businesses in enterprise communities eligible.-- References in section 1397B to empowerment zones shall be treated as including references to enterprise communities. ``(ii) Waiver of requirements during startup period.--A business shall not fail to be treated as an enterprise zone business during the startup period if-- ``(I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397B as modified by this paragraph) at the end of such period, and ``(II) such business makes bona fide efforts to be such a business. ``(iii) Reduced requirements after testing period.--A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397B if at least 35 percent of the employees of such business for such year are residents of an empowerment zone or an enterprise community. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397B(d). ``(C) Definitions relating to subparagraph (b).--For purposes of subparagraph (B)-- ``(i) Startup period.--The term `startup period' means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of-- ``(I) the date of issuance of the issue providing such property, or ``(II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). ``(ii) Testing period.--The term `testing period' means the first 3 taxable years beginning after the startup period. ``(D) Portions of business may be enterprise zone business.--The term `enterprise zone business' includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated.'' (b) Modifications Relating to Qualified Zone Property.-- Paragraph (2) of section 1394(b) (defining qualified zone property) is amended to read as follows: ``(2) Qualified zone property.--The term `qualified zone property' has the meaning given such term by section 1397C; except that-- ``(A) the references to empowerment zones shall be treated as including references to enterprise communities, and ``(B) section 1397C(a)(2) shall be applied by substituting `an amount equal to 15 percent of the adjusted basis' for `an amount equal to the adjusted basis'.'' [[Page S859]] (c) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 204. MODIFICATIONS TO ENTERPRISE ZONE BUSINESS DEFINITION FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1397B (defining enterprise zone business) is amended-- (1) by striking ``80 percent'' in subsections (b)(2) and (c)(1) and inserting ``50 percent'', (2) by striking ``substantially all'' each place it appears in subsections (b) and (c) and inserting ``a substantial portion'', (3) by striking ``, and exclusively related to,'' in subsections (b)(4) and (c)(3), (4) by adding at the end of subsection (d)(2) the following new flush sentence: ``For purposes of subparagraph (B), the lessor of the property may rely on a lessee's certification that such lessee is an enterprise zone business.'', (5) by striking ``substantially all'' in subsection (d)(3) and inserting ``at least 50 percent'', and (6) by adding at the end the following new subsection: ``(f) Treatment of Businesses Straddling Census Tract Lines.--For purposes of this section, if-- ``(1) a business entity or proprietorship uses real property located within an empowerment zone, ``(2) the business entity or proprietorship also uses real property located outside the empowerment zone, ``(3) the amount of real property described in paragraph (1) is substantial compared to the amount of real property described in paragraph (2), and ``(4) the real property described in paragraph (2) is contiguous to part or all of the real property described in paragraph (1), then all the services performed by employees, all business activities, all tangible property, and all intangible property of the business entity or proprietorship that occur in or is located on the real property described in paragraphs (1) and (2) shall be treated as occurring or situated in an empowerment zone.'' (b) Effective Dates.-- (1) In general.--The amendments made by this section shall apply to taxable years beginning on or after the date of the enactment of this Act. (2) Special rule for enterprise zone facility bonds.--For purposes of section 1394(b) of the Internal Revenue Code of 1986, the amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 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 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) which contains (or potentially contains) 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 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 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. ____ Section-by-Section Analysis Title I--Additional Empowerment Zones Section 101 would authorize the designation of an additional two urban empowerment zones under the 1994 first round. Title II--New Empowerment Zones and Enterprise Communities Section 201 authorizes a second round of designations, consisting of 80 enterprise communities and 20 empowerment zones. Of the 80 enterprise communities, 50 would be in urban areas and 30 would be in rural areas. Of the 20 empowerment zones, 15 would be in urban areas and 5 would be in rural areas. The designations would be made before January 1, 1999. Certain of the eligibility criteria applicable in the first round would be modified for the second round of designations. First, the poverty criteria would be relaxed somewhat, so that unlike the first round there would be no requirement that at least 50 percent of the population census tracts have a poverty rate of 35 percent or more. In addition, the poverty criteria will not be applicable to areas specified in the application as developable for commercial or industrial purposes (1,000 acres in the case of an enterprise community, 2,000 acres in the case of an empowerment zone), and these areas will not be taken into account in applying the size limitations (e.g., 20 square miles for urban areas, 1,000 square miles for rural areas). The Secretary of Agriculture will be authorized to designate up to one rural empowerment zones and five rural enterprise communities [[Page S860]] based on specified emigration criteria without regard to the minimum poverty rates set forth in the statute. Rural census tracts in excess of 1,000 square miles or including a substantial amount of governmentally owned land may exclude such excess mileage or governmentally owned land from the nominated area. Unlike the first round, Indian reservations will be eligible to be nominated (and the nomination may be submitted by the reservation governing body without the State government's participation). The empowerment zone employment credit will not be available to businesses in the new empowerment zones, and the increased expensing under section 179 will not be available in the developable acreage areas of empowerment zones. Section 202 authorizes a new category of tax-exempt financing for businesses in the new empowerment zones. These bonds, rather than being subject to the current State volume caps, will be subject to zone-specific caps. For each rural empowerment zone, up to $60 million in such bonds may be issued. For an urban empowerment zone with a population under 100,000, $130 million of these bonds may be issued. For each urban empowerment zone with a population of 100,000 or more, $230 million of these bonds may be issued. Section 203 liberalizes the current definition of an ``enterprise zone business'' for purposes of the tax-exempt financing available under both the first and second rounds. Businesses will be treated as satisfying the applicable requirements during a 2-year start-up period if it is reasonably expected that the business will satisfy those requirements by the end of the start-up period and the business makes bona fide efforts to that end. Following the start-up period a 3-year testing period will begin, after which certain enterprise zone business requirements will no longer be applicable (as long as more than 35 percent of the business' employees are residents of the empowerment zone or enterprise community). The rules under which substantially renovated property may be ``qualified zone property,'' and thereby be eligible to be financed with tax-exempt bonds, would also be liberalized slightly. Section 204 liberalizes the definition of enterprise business for purposes of both the tax-exempt financing provisions and the additional section 179 expensing by reducing from 80 percent to 50 percent the amount of total gross income that must be derived within the empowerment zone or enterprise community, by reducing how much of the business' property and employees' services must be located in or provided within the zone or community, and by easing the restrictions governing when rental businesses will qualify as enterprise zone businesses. A special rule is also provided to clarify how a business that straddles the boundary of an empowerment zone or enterprise community (e.g., by straddling a population census tract boundary) is treated for purposes of the enterprise zone business definition. title iii--expensing of environmental remediation costs Section 301 would provide a current deduction for certain remediation costs incurred with respect to qualified sites. Generally, these expenses would be limited to those paid or incurred in connection with the abatement or control of environmental contaminants. This deduction would apply for alternative minimum tax purposes as well as for regular tax purposes. Qualified sites would be limited to those properties that satisfy use, geographic, and contamination requirements. The use requirement would be satisfied if the property is held by the taxpayer incurring the eligible expenses for use in a trade or business or for the production of income, or if the property is of a kind properly included in the inventory of the taxpayer. The geographic requirement would be satisfied if the property is located in (i) any census tract that has a poverty rate of 20 percent or more, (ii) any other census tract (a) that has a population under 2,000, (b) 75 percent or more of which is zoned for industrial or commercial use, and (c) that is contiguous to one or more census tracts with a poverty rate of 20 percent or more, (iii) an area designated as a federal EZ or EC or (iv) an area subject to one of the 40 EPA Brownfields Pilots announced prior to February 1997. Both urban and rural sites may qualify. Superfund National Priority listed sites would be excluded. The contamination requirement would be satisfied if hazardous substances are present or potentially present on the property. Hazardous substances would be defined generally by reference to sections 101(14) and 102 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), subject to additional limitations applicable to asbestos and similar substances within buildings, certain naturally occurring substances such as radon, and certain other substances released into drinking water supplies due to deterioration through ordinary use. To claim the deduction under this provisions, the taxpayer would be required to obtain a statement that the site satisfies the geographic and contamination requirements from a State environmental agency designated by the Environmental Protection Agency for such purposes or, if no such agency has been designated by the EPA, by the EPA itself. This deduction would be subject to recapture under current- law section 1245. Thus, any gain realized on disposition generally would be treated as ordinary income, rather than capital gain, up to the amount of deductions taken with respect to the property. Mr. D'AMATO. Mr. President, I join my colleagues, Senators Moseley-Braun, Abraham, Jeffords, Daschle, Lieberman, and Murray, in introducing legislation that will provide a new tax incentive to encourage the private sector to clean up thousands of contaminated, abandoned sites known as brownfields. Brownfield sites are abandoned or vacant commercial and industrial properties suspected of being environmentally contaminated. Under current law, the IRS has determined that costs incurred to clean up land and ground water are deductible as business expenses, as long as the costs are incurred by the same taxpayer that contaminated the land, and that taxpayer plans to use the land after the cleanup for the same purposes used prior to the cleanup. That means that new owners who wish to use land suspected of environmental contamination for a new purpose, would be precluded from deducting the costs of cleanup in the year incurred. They would only be allowed to capitalize the costs and depreciate them over time. Therefore, it is time for us to recognize the need for aggressive economic development policies for the future economic health of communities around the country, and to recognize the inequity of current tax law. My colleagues and I believe that our legislation is the type of initiative the Federal Government needs to encourage development of once abandoned, unproductive sites that will bring real economic benefits to urban distressed and rural areas across the United States. By encouraging redevelopment, jobs will be created, economic growth will continue, property values will increase as well as local tax revenues. Mr. President, I am proud to say that in my State of New York, the city of Elmira has been selected as a fourth round finalist for the EPA's Brownfields Economic Redevelopment Initiative Demonstration Pilot Program. The city of Elmira has primed an unsightly and unsafe urban brownfield and is now in the final stages of turning it into a revenue- and jobs-producing venture. The city of Elmira initiated this important project with no guarantees of public or private funding and has done this at very minimal cost to taxpayers. Can you imagine what could and would be done if the public and private sector had the encouragement to also become involved? Mr. President, I urge my colleagues on both sides of the aisle to join us in cosponsoring this important legislation. Mr. JEFFORDS. Mr. President, I am pleased to join with Senators Moseley-Braun, D'Amato, Abraham, and Lieberman in sponsoring the Community Empowerment Act of 1997, which will encourage the cleanup of abandoned industrial sites known as brownfields in Vermont and across the country. The term ``brownfields'' refers to contaminated industrial sites. Most of these sites were abandoned during the 1970's and 1980's, as industrial development migrated away from urban areas to the greener landscape of the suburbs. One such site in Vermont is the Holden- Leonard Mill, a 20-building complex in Bennington, VT, that is poised to become a brownfields success story after 10 years of work. Once employing one-quarter of Bennington's work force, the mill shut down in 1939 and then was owned by a patchwork of owners until the 1980's. After soil tests disclosed high levels of pollutants, the mill sat empty after 1986. Fortunately, a buyer of the site came forward in 1992 and with cooperation between the business, State agencies, and the EPA the mill has been refurbished and over 200 new employees have been hired. The process, however, of revitalizing this site began in 1986 and is still going on. Our aim with this legislation is to provide tax incentives to businesses willing to clean up and redevelop brownfields sites so that more brownfield sites can be returned to productive use and so that the process doesn't have to take 10 years. Last November, I sponsored a forum on brownfields redevelopment in Burlington, VT. There is only one unpolluted site in Burlington available for industrial development. Yet there are currently 17 brownfields sites in the city, all with great potential for [[Page S861]] development. I toured several of these sites and saw this potential first hand. Burlington is both an EPA brownfields pilot city and an enterprise community. Under our legislation, businesses that acquire these sites would be able to claim tax deductions for their environmental cleanup costs. With tax incentives for brownfields redevelopment, I am hoping that we will see more of these abandoned sites returned to productive use. We treasure our open spaces in Vermont, and we are looking at ways to give incentives to companies to invest in our downtowns. When a company builds a facility on a brownfield site it takes advantage of existing infrastructure. the revitalization of a brownfield site means one less farm or field is paved over or forest cut down for the sake of a new plant or facility. I urge my colleagues to join us in supporting this bill. Mr. LIEBERMAN. Mr. President, I am delighted to join this distinguished group of Senators in introducing legislation to provide tax incentives for the cleanup of brownfields. This legislation will provide a powerful incentive to clean-up these sites. And that clean up will be followed by more jobs and more economic growth in areas that very much need both of those things. I am encouraged by the broad, bipartisan support both here in the Congress and in the administration and in the environmental community and in the business community, to provide tax incentives to get these sites cleaned up. Brownfield sites are abandoned commercial and industrial properties that are environmentally contaminated. Developers and lenders avoid these sites both for liability reasons and because the tax incentives for cleaning up these sites is so limited. The result is an urban landscape littered with vacant and abandoned properties--properties which invite crime, depress surrounding housing and commercial prices, and hinder economic growth in these areas. Additionally, by discouraging the clean-up of brownfields, we are encouraging the development of undeveloped areas known as greenfields. This bill is simple: it allows taxpayers who purchase contaminated properties to deduct the costs of cleaning up brownfields in the year that cleanup expenses occur. This tax incentive would apply to existing and future empowerment zones and enterprise communities, in areas with a poverty rate of 20 percent or more and in adjacent industrial and commercial areas and in existing brownfields pilot areas as designated by the Environmental Protection Agency. Currently, a taxpayer who buys a contaminated property and cleans it up must spread the costs of that cleanup over time. We expect the cost of this bill to be about $2 billion over 7 years. The administration has estimated that this proposal may bring as many as 30,000 brownfield sites back to productive use. In Connecticut, my home State, we know first hand about the problems these brownfield sites can pose for a community. In her soon to be released study of various brownfields sites, Edith M. Pepper of the Northeast-Midwest Institute included the Bryant Electric Plant in Bridgeport, CT, as one of her case studies. As she notes, the Bryant Electric Plant shut down in 1988 after 90 years of operating in Bridgeport's west end. It is no secret that Bridgeport is in difficult shape economically. Closing this 500,000 square foot facility did nothing to help that situation. However, as Ms. Pepper notes in her case study of this brownfields site, it appears that hope is on the way. A non-profit development group, the West End Community Development Corp. [CDC] is working to form a large business park on and around the Bryant site. Over $15 million has already been invested in the site, including a significant amount for cleanup. According to city officials, the developer plans to create 300-400 new jobs and invest $20-50 million in Bridgeport's west end. The brownfields bill we are introducing today could help in Bridgeport. Undoubtedly it could help in places like New Haven and Hartford as well. The bill we are introducing today expands upon a bill that Senator Abraham and I introduced in the last Congress, S. 1542. That bill limited these cleanup incentives to the 104 empowerment zones and enterprise communities that exist in 42 States across the country. I am delighted by today's effort to expand on the number of regions and sites that will be covered in the brownfields legislation and I urge my colleagues to join us in cosponsoring this important legislation. Mr. ABRAHAM. Mr. President, I join Senator Moseley-Braun, Senator Jeffords, Senator Lieberman, Senator D'Amato, and others in introducing the Community Empowerment Act of 1997. This legislation builds upon the legislation Senator Lieberman and I introduced last Congress, as well as the similar legislation introduced by Senators Moseley-Braun, D'Amato, and Jeffords. Having now joined forces for the new Congress, the Moseley-Braun- Abraham legislation will provide tax incentives for the environmental cleanup of brownfields located in economically distressed areas. There are between 100,000 and 300,000 of these sites across the country, Mr. President, and they are a blight on both the landscape and the economy of our communities. I am sponsoring this legislation because, in my view, too many of our troubled cities, towns, and rural areas have both environmental and economic problems. These problems conspire to produce an endless cycle of impoverishment. Contaminated sites are abandoned and new companies refuse to take over the property for fear of environmental lawsuits from government and/or private parties. As a result, contamination and joblessness continue and even get worse. For example, a survey of Toledo, OH businesses found that environmental concerns were affecting 62 percent of the area's commercial and industrial real estate transactions. These effects are all but universally negative in terms of job creation and economic development. Another example: Construction of a $3 million lumber treatment plant in Hammond, IN, was abandoned after low levels of contamination were found at the proposed site. The developer concluded that uncertain costs and potential liabilities outweighed the site's benefits. The city of Hammond lost construction jobs, 75 full-time lumber plant jobs, and any reasonable prospect that a developer would assume the risk of developing property anywhere on the 20 acre site. In Flint, the former site of Thrall Oil Co., now sits vacant. Economic development officials believe this property should attract future manufacturing development. Unfortunately, because the Michigan Department of Environmental Quality has labeled it ``contaminated,'' developers cannot be found. For decades now, Mr. President, the Federal Government has tried, with little success, to revitalize economically distressed areas. The blight remains. Urban renewal and various welfare programs too often have only made things worse by spawning dependency on government help. Environmental laws have fared little better. Intended to force cleanup of contaminated sites, these laws instead have scared away potential investors with potentially unlimited liability, including liability for contamination the investors did not cause or even know about. Environmental regulations and liability established under the Federal Superfund Program along with various other Federal and State environmental rules have helped create thousands of these brownfield properties in the United States. These are industrial or commercial sites suspected of being in some way environmentally contaminated. Although not serious threats to public health and safety, these properties have become unavailable for economic use, because legal rules make them too financially risky for investment and job creation. Potential liability scares businesses and investors away from these sites, creating permanently abandoned blights on the urban and rural landscape. Investors are afraid of being dragged into multimillion- dollar litigation and cleanup over contamination they did not cause. Worse, investors willing to shoulder the liability of a potential environmental cleanup find that they cannot write off the cost of environmental remediation of brownfields. Instead these costs must be spread over a number of years. Thus, the Tax Code and environmental laws combine to scare away potential sources of investment and growth, [[Page S862]] often from our most economically distressed areas. To help both our economy and our environment, the Moseley-Braun- Abraham legislation would target tax benefits at brownfields in economically distressed areas to encourage cleanup and job creation. We would allow investors in brownfields to expense their cleanup costs immediately--without having to split these costs up over a number of years. This will have three positive effects. First, these incentives will help our communities. By encouraging redevelopment of abandoned, unproductive sites, these tax incentives will reinvigorate economic growth in distressed communities across the country. They will provide economic opportunity rather than government dependence by encouraging investment and entrepreneurship where it is most needed. Second, this legislation will help the environment. These tax incentives will significantly improve our ability to clean up environmentally contaminated sites. The legacy of existing cleanup laws is a remarkable lack of progress. With thousands of sites across the country categorized as brownfields, we need to start cleaning them now, and we need private investment to get the job done. Furthermore, encouraging brownfields cleanup will save undeveloped land from unnecessary development. For every brownfield that is cleaned up and reused there will be a green field that remains clean and unused. Third, this solution, unlike those attempted in the past, utilizes the private sector to reclaim contaminated land and reinvigorate distressed communities. By encouraging private investment, rather than attempting to purchase or force cooperation with government mandates, we can free up private capital and initiative to do its job of revitalizing these distressed areas. By adopting this approach, the Senate will take a significant step toward revitalized, reinvigorated, and renewed urban and rural zones. With the incentives, included in this amendment, good jobs and a clean environment will go together, to everyone's benefit. I thank Senators Moseley-Braun, D'Amato, Lieberman, Jeffords, and our other cosponsors for joining me in this important effort, and I look forward to seeing meaningful brownfields reforms passed this Congress. By Mr. GRAMS (for himself, Mr. Abraham, Mr. Ashcroft, Mr. Faircloth, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. Stevens and Mr. Hagel): S. 236. A bill to abolish the Department of Energy, and for other purposes; to the Committee on Energy and Natural Resources. THE DEPARTMENT OF ENERGY ABOLISHMENT ACT Mr. GRAMS. Mr. President, I introduce legislation aimed at improving government as we know it. The Department of Energy Abolishment Act of 1997 comes after nearly two decades of debate. The basic question has always remained the same: Why should we expend taxpayer dollars on this Cabinet-level agency? And today, we ask the same question. Following a year's worth of discussions on the blueprint I am putting forth, much progress has been made. When the 104th Congress began to tackle this issue, we looked at three main issues. First, we examined the fact that the Department of Energy no longer has a mission--which is clearly reflected by the fact that nearly 85 percent of its budget is expended upon nonenergy programs. Next, we studied those programs charged to the DOE and reviewed its ability to meet the related job requirements. And finally, we looked at the DOE's bloated budget in light of the first two criterion--determining whether the taxpayers should be forced to expend over $16 billion annually on this hodge- podge collection. Nearly a year later, this Nation continues to grow increasingly dependent upon foreign oil--in total contrast to the DOE's core mission. Even in light of this administration's focus on alternative energy, the DOE expends less than one-fifth of its budget on energy- related programs. And after examining key DOE mission programs, such as the Civilian Nuclear Waste program, it is clear that the goals of those missions are not being met. So we are challenged to either accept the status quo or move to change it. I must admit that the status quo may be easier in the short- term. But in the context of the proverbial big picture, we cannot afford to turn our backs. Besides the fact that it is the role of Congress to oversee taxpayer expenditures and ensure a fair rate of return on their investments, this Nation is faced with a national debt in excess of $5.3 trillion. However, gaining consensus on the need for change is easier than effecting such change. So, last year I worked with the Senate Task Force on Government Agency Elimination to develop a blueprint. Under the direction of the former Senate Majority Leader, Senator Dole, I worked with Senators Faircloth, Abraham, and Stevens to study proposals on the DOE. After months of discussions with experts in the fields of energy and defense, we introduced legislation--legislation which is the core of the bill I am introducing today. Let me be the first to state that the ideas contained within this bill are not all of my own. Just as the idea to eliminate the Department of Energy is not a new one--since its creation in 1978, experts have been clamoring to abolish this agency in search of a mission. This bill represents the comments and input of many who have worked in these fields for decades, but like all things--I consider it a work in progress. As many of our colleagues will recall, the Senate Energy and Natural Resources Committee held a hearing on this very bill last September. During the hearing, we received testimony from such distinguished witnesses as the Former Assistant Energy Secretary Shelby Brewer and the Former Defense Secretary Caspar Weinberger in support of the proposal. Having either directly run these programs, or relied upon them, they provided strong firsthand evidence as to the detriment of leaving things as they are. The committee also received testimony from the current Acting Secretary and then-Assistant Energy Secretary, Charlie Curtis, who testified in support of improving the delivery of the Department's missions, at lower cost, for the benefit of the American people. His testimony focused upon how the DOE was working to improve its efforts to fulfill various missions, and how changing horses midstream would derail the DOE's efforts. In his remarks, Mr. Curtis dismissed the DOE Abolishment Act because the DOE did not believe it appropriate to entertain matters of this moment and complexity in the context of a bill which has as its proposed objective changing the organizational structure and fate of the Department of Energy. What the DOE fails to recognize is that the conclusions--to abolish the DOE--arise from an analysis of the Department's activities, rather than from any antigovernment ideology or mere desire to reduce government spending, as pointed out by Dr. Irwin Stelzer of the American Enterprise Institute. Supporters of the DOE Abolishment Act have always agreed that there are core functions performed by the DOE which must continue to be done, but the DOE has yet to provide a compelling argument as to why the DOE itself must continue to exist or successfully respond to our reasons for its elimination. But Mr. Curtis' objections are understandable when placed in the context of remarks by Nobel-prize economist, Dr. Milton Friedman: ``The Department of Energy offers an excellent example of a major difference between private and government projects. If a private project is a failure, it will be closed down; if a government project is a failure, it will be expanded. * * * It is in the self-interest of the Government officials in charge to keep the project alive; and they always have the ready excuse that the reason for failure was the lack of sufficient funds.'' So today, I am joined by my colleagues, Senator Abraham of Michigan, Senator Ashcroft of Missouri, Senator Faircloth of North Carolina, Senator Hutchinson of Arkansas, Senators Kyl and McCain of Arizona and Senator Stevens of Alaska, in reaffirming congressional intent to change the Department of Energy as we know it. Under the Department of Energy Abolishment Act of 1997, we dismantle the patchwork quilt of government initiatives--reassembling them into agencies bette

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - January 30, 1997)

Text of this article available as: TXT PDF [Pages S856-S897] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Ms. MOSELEY-BRAUN (for herself, Mr. Abraham, Mr. D'Amato, Mr. Jeffords, Mr. Lieber- man, Mr. Daschle and Mrs. Murray): S. 235. A bill to amend the Internal Revenue Code of 1986 to encourage economic development through the creation of additional empowerment zones and enterprise communities and to encourage the cleanup of contaminated brownfield sites; to the Committee on Finance. THE COMMUNITY EMPOWERMENT ACT OF 1997 Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure, together with my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle to reintroduce the Community Empowerment Act of 1997. This legislation is designed to create new jobs and spur economic growth by encouraging the cleanup and reuse of contaminated industrial and commercial sites known as Brownfields. This bill also creates 20 new additional empowerment zones and 80 new enterprise communities all across the Nation. I like to call them environmentally challenged sites. They are sites on which there has been some contamination but not to a level sufficient to reach Superfund status. But they are contaminated nonetheless. They are, on the one hand, excellent locations for industrial and commercial redevelopment because the transportation, more often than not, already exists. The infrastructure, the utilities, and the labor force already exists. However, these properties are often unattractive to potential redevelopers because of the known, unknown, or perceived contamination that may exist on the property. This factor creates an incentive for companies to locate and develop in greenfields, which are undeveloped areas generally in the suburbs. This urban flight contributes to urban sprawl, taking jobs away from the city. It also results in the paving off of many of the greenfield areas of our country. The challenge for all of us is to stop this trend. And one way to do that is by encouraging businesses through the Tax Code to redevelop and to reuse the existing brownfield sites; to reclaim, if you will, sites that have been contaminated which have been used or used up. At present, if an industrial property owner does environmental damage to their property and then cleans up the site, the owner is allowed to deduct the cost of that cleanup from a single year's earnings. However, in a strange twist of logic, someone who buys an environmentally damaged piece of property and cleans up that property is not allowed to expense these cleanup costs, but instead must capitalize the cost and depreciate the cleanup expense over many years. The result of this? The result has been an urban landscape littered with vacant or abandoned properties, properties that attract crime and bring down property values in surrounding neighborhoods. Confronting the brownfields issue can help to address many of the problems that face high unemployment in older communities, including job creation, economic renewal, environmental justice, and environmental improvement. The collective efforts of everyone, particularly the nonprofit community, the private sector, government at all levels, developers, and community groups, are essential to begin the process of returning brownfields property back to productive use and to bring economic growth back to disadvantaged cities and rural areas. Under the provisions of this legislation, qualifying brownfields will be provided full first-year expensing of environmental cleanup costs under the Federal Tax Code. Full first-year expensing simply means that a tax deduction will be allowed for the cleanup costs in the year that those costs are incurred. The Community Empowerment Act provides tax incentives that we hope will break through some of the current barriers preventing the private sector from investing in brownfields cleanup projects. So it provides a carrot, if you will, to the private sector to begin to help not only with the environmental cleanup but also with urban redevelopment. So it becomes a win-win in both regards in that way. In my own State of Illinois, the brownfields provisions will have a major impact on efforts to help restore neglected and abandoned industrial areas. It will facilitate the cleanup of some 300 to 500 sites in Illinois, each of [[Page S857]] which has a remediation cost ranging from $250,000 to $500,000 per site. The Treasury Department estimates that this act will provide $2 billion in tax incentives that will leverage an additional $10 billion in private investment, returning an estimated 30,000 brownfields across the country to productive use again. The $2 billion investment will be included in the President's balanced budget plan and so it will be paid for. The Federal assistance that this proposal envisions will be concentrated in neighborhoods with the most severe problems and that are truly in need of such investment. The bill targets four areas. First, the empowerment zones and enterprise communities across the country. Second, areas with a poverty rate of 20 percent or more that are near industrial or former industrial sites. Third, existing EPA brownfields pilot areas. The Environmental Protection Agency has already designated brownfields sites across the country. Fourth, areas with a population of under 2,000 or more than 75 percent of which is zoned for industrial or commercial use. So this is not just a big-city solution. This is something that will affect the cities, the suburbs, and the rural areas as well in providing an incentive to reclaim these environmentally challenged areas of our country. In my hometown, in Chicago, Mayor Daley has taken the initiative to establish a brownfields pilot program which has made public investment leverage substantial private investment dollars. One of these projects is known as the Scott Peterson Meats Co., in Chicago. The site had been tax delinquent for several years when Scott Peterson Meats and the city began to work together. The city conducted an assessment of potential hazards that were identified and which included asbestos-containing materials, lead-based paints, and some 11 underground storage tanks, some of which were filled with tar. The city paid for environmental investigation, cleanup, and building demolition, which totaled some $250,000 in contractor costs. Due to the city's investment, however, the company, Scott Peterson Meats, then turned around and invested an additional $5.2 million in a new smokehouse on its existing property, and it has hired over 100 additional employees to date. So with the win-win of environmental cleanup and urban reclamation we also have job creation coming out of this legislative initiative. Another example of a successful public-private partnership pulling people together to clean up a brownfields site is the Madison Equipment site located in Illinois. This abandoned industrial building was a neighborhood eyesore. Scavengers had stolen most of the wiring and plumbing, and illegal or what is called midnight dumping of trash and debris was rampant. Madison Equipment needed expansion space, but it feared the environmental liability. However, in 1993, the city of Chicago took the initiative to invest just a little over $3,000 in this project, in this environmental reclamation, this brownfields project, and 1 year later the company, Madison, put in $180,000 of its own to redevelop the building. The critical reason that lenders and investors look at this area now is because the city committed the public investment to spur private redevelopment and investment. When local government demonstrates the confidence to commit public funds, private financial institutions are more likely to follow suit. These types of examples show how a little investment can go a long way and how we can engage the partnership between the public and the private sector in nonbureaucratic ways in order to spur a result that truly is in the public interest. Chicago's pilot project will successfully return all the pilot sites to productive use for a total of about $850,000 in public money. This pilot project is a perfect example of what this legislation can accomplish on a national level. But in order to make it happen, cooperation is the key. Effective strategies require strong partnerships among government, industry, organized labor, community groups, developers, environmentalists, and financiers, who all realize that when their efforts are aligned, when we work together, progress is made easier. The second component of this legislation is the establishment of 20 more empowerment zones and 80 additional enterprise communities. They will receive a variety of tools for redevelopment from the Government. First, they receive a package of tax incentives and flexible grants available over a 10-year period. Second, they receive priority consideration for other Federal empowerment programs. Third, they receive assistance in removing bureaucratic redtape and regulatory barriers that prevent innovative uses of the Federal assistance that they have received. This approach recognizes that a top-down, big Government solution does not work in these times and what we have to do is enhance public- private partnerships and the involvement and engagement of all sectors in order to bring about again the public policy result that we are all desirous of seeing. Economic empowerment can be achieved, but it is best done, I believe, through these public-private partnerships. Economic revitalization in this Nation's most distressed communities is essential to the growth of our entire country. With the concept of team effort, we can rebuild cities by stimulating investments and creating jobs. Environmental protection used in this way can and will be good business. It is also good policy. With this legislation, we will begin the effort to restore economic growth back into our country's industrial centers and rural communities all the while improving our environment. Again, I wish to thank my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle for their original cosponsorship of this legislation and for making this legislation a truly bipartisan effort. I urge all of my colleagues to join in supporting the quick passage of this legislation. I ask unanimous consent that the full text of the bill and a section- by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 235 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. TITLE I--ADDITIONAL EMPOWERMENT ZONES SEC. 101. ADDITIONAL EMPOWERMENT ZONES. (a) In General.--Paragraph (2) of section 1391(b) (relating to designations of empowerment zones and enterprise communities) is amended-- (1) by striking ``9'' and inserting ``11'', (2) by striking ``6'' and inserting ``8'', and (3) by striking ``750,000'' and inserting ``1,000,000''. (b) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act, except that designations of new empowerment zones made pursuant to such amendments shall be made during the 180-day period beginning on the date of the enactment of this Act. TITLE II--NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES SEC. 201. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1391 (relating to designation procedure for empowerment zones and enterprise communities) is amended by adding at the end the following new subsection: ``(g) Additional Designations Permitted.-- ``(1) In general.--In addition to the areas designated under subsection (a)-- ``(A) Enterprise communities.--The appropriate Secretaries may designate in the aggregate an additional 80 nominated areas as enterprise communities under this section, subject to the availability of eligible nominated areas. Of that number, not more than 50 may be designated in urban areas and not more than 30 may be designated in rural areas. ``(B) Empowerment zones.--The appropriate Secretaries may designate in the aggregate an additional 20 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 15 may be designated in urban areas and not more than 5 may be designated in rural areas. ``(2) Period designations may be made.--A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 1999. [[Page S858]] ``(3) Modifications to eligibility criteria, etc.-- ``(A) Poverty rate requirement.-- ``(i) In general.--A nominated area shall be eligible for designation under this subsection only if the poverty rate for each population census tract within the nominated area is not less than 20 percent and the poverty rate for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent. ``(ii) Treatment of census tracts with small populations.-- A population census tract with a population of less than 2,000 shall be treated as having a poverty rate of not less than 25 percent 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 have a poverty rate of not less than 25 percent (determined without regard to this clause). ``(iii) Exception for developable sites.--Clause (i) shall not apply to up to 3 noncontiguous parcels in a nominated area which may be developed for commercial or industrial purposes. The aggregate area of noncontiguous parcels to which the preceding sentence applies with respect to any nominated area shall not exceed 1,000 acres (2,000 acres in the case of an empowerment zone). ``(iv) Certain provisions not to apply.--Section 1392(a)(4) (and so much of paragraphs (1) and (2) of section 1392(b) as relate to section 1392(a)(4)) shall not apply to an area nominated for designation under this subsection. ``(v) Special rule for rural empowerment zones and enterprise communities.--The Secretary of Agriculture may designate not more than 1 empowerment zone, and not more than 5 enterprise communities, in rural areas without regard to clause (i) if such areas satisfy emigration criteria specified by the Secretary of Agriculture. ``(B) Size limitation.-- ``(i) In general.--The parcels described in subparagraph (A)(iii) shall not be taken into account in determining whether the requirement of subparagraph (A) or (B) of section 1392(a)(3) is met. ``(ii) Special rule for rural areas.--If a population census tract (or equivalent division under section 1392(b)(4)) in a rural area exceeds 1,000 square miles or includes a substantial amount of land owned by the Federal, State, or local government, the nominated area may exclude such excess square mileage or governmentally owned land and the exclusion of that area will not be treated as violating the continuous boundary requirement of section 1392(a)(3)(B). ``(C) Aggregate population limitation.--The aggregate population limitation under the last sentence of subsection (b)(2) shall not apply to a designation under paragraph (1)(B). ``(D) Previously designated enterprise communities may be included.--Subsection (e)(5) shall not apply to any enterprise community designated under subsection (a) that is also nominated for designation under this subsection. ``(E) Indian reservations may be nominated.-- ``(i) In general.--Section 1393(a)(4) shall not apply to an area nominated for designation under this subsection. ``(ii) Special rule.--An area in an Indian reservation shall be treated as nominated by a State and a local government if it is nominated by the reservation governing body (as determined by the Secretary of Interior).'' (b) Employment Credit Not To Apply to New Empowerment Zones.--Section 1396 (relating to empowerment zone employment credit) is amended by adding at the end the following new subsection: ``(e) Credit Not To Apply to Empowerment Zones Designated Under Section 1391(g).--This section shall be applied without regard to any empowerment zone designated under section 1391(g).'' (c) Increased Expensing Under Section 179 Not To Apply in Developable Sites.--Section 1397A (relating to increase in expensing under section 179) is amended by adding at the end the following new subsection: ``(c) Limitation.--For purposes of this section, qualified zone property shall not include any property substantially all of the use of which is in any parcel described in section 1391(g)(3)(A)(iii).'' (d) Conforming Amendments.-- (1) Subsections (e) and (f) of section 1391 are each amended by striking ``subsection (a)'' and inserting ``this section''. (2) Section 1391(c) is amended by striking ``this section'' and inserting ``subsection (a)''. SEC. 202. VOLUME CAP NOT TO APPLY TO ENTERPRISE ZONE FACILITY BONDS WITH RESPECT TO NEW EMPOWERMENT ZONES. (a) In General.--Section 1394 (relating to tax-exempt enterprise zone facility bonds) is amended by adding at the end the following new subsection: ``(f) Bonds for Empowerment Zones Designated Under Section 1391(g).-- ``(1) In general.--In the case of a new empowerment zone facility bond-- ``(A) such bond shall not be treated as a private activity bond for purposes of section 146, and ``(B) subsection (c) of this section shall not apply. ``(2) Limitation on amount of bonds.-- ``(A) In general.--Paragraph (1) shall apply to a new empowerment zone facility bond only if such bond is designated for purposes of this subsection by the local government which nominated the area to which such bond relates. ``(B) Limitation on bonds designated.--The aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any empowerment zone shall not exceed-- ``(i) $60,000,000 if such zone is in a rural area, ``(ii) $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and ``(iii) $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000. ``(C) Special rules.-- ``(i) Coordination with limitation in subsection (c).-- Bonds to which paragraph (1) applies shall not be taken into account in applying the limitation of subsection (c) to other bonds. ``(ii) Current refunding not taken into account.--In the case of a refunding (or series of refundings) of a bond designated under this paragraph, the refunding obligation shall be treated as designated under this paragraph (and shall not be taken into account in applying subparagraph (B)) if-- ``(I) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and ``(II) the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond. ``(3) New empowerment zone facility bond.--For purposes of this subsection, the term `new empowerment zone facility bond' means any bond which would be described in subsection (a) if only empowerment zones designated under section 1391(g) were taken into account under sections 1397B and 1397C.'' (b) Effective Date.--The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 203. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) Modifications Relating to Enterprise Zone Business.-- Paragraph (3) of section 1394(b) (defining enterprise zone business) is amended to read as follows: ``(3) Enterprise zone business.-- ``(A) In general.--Except as modified in this paragraph, the term `enterprise zone business' has the meaning given such term by section 1397B. ``(B) Modifications.--In applying section 1397B for purposes of this section-- ``(i) Businesses in enterprise communities eligible.-- References in section 1397B to empowerment zones shall be treated as including references to enterprise communities. ``(ii) Waiver of requirements during startup period.--A business shall not fail to be treated as an enterprise zone business during the startup period if-- ``(I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397B as modified by this paragraph) at the end of such period, and ``(II) such business makes bona fide efforts to be such a business. ``(iii) Reduced requirements after testing period.--A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397B if at least 35 percent of the employees of such business for such year are residents of an empowerment zone or an enterprise community. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397B(d). ``(C) Definitions relating to subparagraph (b).--For purposes of subparagraph (B)-- ``(i) Startup period.--The term `startup period' means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of-- ``(I) the date of issuance of the issue providing such property, or ``(II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). ``(ii) Testing period.--The term `testing period' means the first 3 taxable years beginning after the startup period. ``(D) Portions of business may be enterprise zone business.--The term `enterprise zone business' includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated.'' (b) Modifications Relating to Qualified Zone Property.-- Paragraph (2) of section 1394(b) (defining qualified zone property) is amended to read as follows: ``(2) Qualified zone property.--The term `qualified zone property' has the meaning given such term by section 1397C; except that-- ``(A) the references to empowerment zones shall be treated as including references to enterprise communities, and ``(B) section 1397C(a)(2) shall be applied by substituting `an amount equal to 15 percent of the adjusted basis' for `an amount equal to the adjusted basis'.'' [[Page S859]] (c) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 204. MODIFICATIONS TO ENTERPRISE ZONE BUSINESS DEFINITION FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1397B (defining enterprise zone business) is amended-- (1) by striking ``80 percent'' in subsections (b)(2) and (c)(1) and inserting ``50 percent'', (2) by striking ``substantially all'' each place it appears in subsections (b) and (c) and inserting ``a substantial portion'', (3) by striking ``, and exclusively related to,'' in subsections (b)(4) and (c)(3), (4) by adding at the end of subsection (d)(2) the following new flush sentence: ``For purposes of subparagraph (B), the lessor of the property may rely on a lessee's certification that such lessee is an enterprise zone business.'', (5) by striking ``substantially all'' in subsection (d)(3) and inserting ``at least 50 percent'', and (6) by adding at the end the following new subsection: ``(f) Treatment of Businesses Straddling Census Tract Lines.--For purposes of this section, if-- ``(1) a business entity or proprietorship uses real property located within an empowerment zone, ``(2) the business entity or proprietorship also uses real property located outside the empowerment zone, ``(3) the amount of real property described in paragraph (1) is substantial compared to the amount of real property described in paragraph (2), and ``(4) the real property described in paragraph (2) is contiguous to part or all of the real property described in paragraph (1), then all the services performed by employees, all business activities, all tangible property, and all intangible property of the business entity or proprietorship that occur in or is located on the real property described in paragraphs (1) and (2) shall be treated as occurring or situated in an empowerment zone.'' (b) Effective Dates.-- (1) In general.--The amendments made by this section shall apply to taxable years beginning on or after the date of the enactment of this Act. (2) Special rule for enterprise zone facility bonds.--For purposes of section 1394(b) of the Internal Revenue Code of 1986, the amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 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 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) which contains (or potentially contains) 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 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 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. ____ Section-by-Section Analysis Title I--Additional Empowerment Zones Section 101 would authorize the designation of an additional two urban empowerment zones under the 1994 first round. Title II--New Empowerment Zones and Enterprise Communities Section 201 authorizes a second round of designations, consisting of 80 enterprise communities and 20 empowerment zones. Of the 80 enterprise communities, 50 would be in urban areas and 30 would be in rural areas. Of the 20 empowerment zones, 15 would be in urban areas and 5 would be in rural areas. The designations would be made before January 1, 1999. Certain of the eligibility criteria applicable in the first round would be modified for the second round of designations. First, the poverty criteria would be relaxed somewhat, so that unlike the first round there would be no requirement that at least 50 percent of the population census tracts have a poverty rate of 35 percent or more. In addition, the poverty criteria will not be applicable to areas specified in the application as developable for commercial or industrial purposes (1,000 acres in the case of an enterprise community, 2,000 acres in the case of an empowerment zone), and these areas will not be taken into account in applying the size limitations (e.g., 20 square miles for urban areas, 1,000 square miles for rural areas). The Secretary of Agriculture will be authorized to designate up to one rural empowerment zones and five rural enterprise communities [[Page S860]] based on specified emigration criteria without regard to the minimum poverty rates set forth in the statute. Rural census tracts in excess of 1,000 square miles or including a substantial amount of governmentally owned land may exclude such excess mileage or governmentally owned land from the nominated area. Unlike the first round, Indian reservations will be eligible to be nominated (and the nomination may be submitted by the reservation governing body without the State government's participation). The empowerment zone employment credit will not be available to businesses in the new empowerment zones, and the increased expensing under section 179 will not be available in the developable acreage areas of empowerment zones. Section 202 authorizes a new category of tax-exempt financing for businesses in the new empowerment zones. These bonds, rather than being subject to the current State volume caps, will be subject to zone-specific caps. For each rural empowerment zone, up to $60 million in such bonds may be issued. For an urban empowerment zone with a population under 100,000, $130 million of these bonds may be issued. For each urban empowerment zone with a population of 100,000 or more, $230 million of these bonds may be issued. Section 203 liberalizes the current definition of an ``enterprise zone business'' for purposes of the tax-exempt financing available under both the first and second rounds. Businesses will be treated as satisfying the applicable requirements during a 2-year start-up period if it is reasonably expected that the business will satisfy those requirements by the end of the start-up period and the business makes bona fide efforts to that end. Following the start-up period a 3-year testing period will begin, after which certain enterprise zone business requirements will no longer be applicable (as long as more than 35 percent of the business' employees are residents of the empowerment zone or enterprise community). The rules under which substantially renovated property may be ``qualified zone property,'' and thereby be eligible to be financed with tax-exempt bonds, would also be liberalized slightly. Section 204 liberalizes the definition of enterprise business for purposes of both the tax-exempt financing provisions and the additional section 179 expensing by reducing from 80 percent to 50 percent the amount of total gross income that must be derived within the empowerment zone or enterprise community, by reducing how much of the business' property and employees' services must be located in or provided within the zone or community, and by easing the restrictions governing when rental businesses will qualify as enterprise zone businesses. A special rule is also provided to clarify how a business that straddles the boundary of an empowerment zone or enterprise community (e.g., by straddling a population census tract boundary) is treated for purposes of the enterprise zone business definition. title iii--expensing of environmental remediation costs Section 301 would provide a current deduction for certain remediation costs incurred with respect to qualified sites. Generally, these expenses would be limited to those paid or incurred in connection with the abatement or control of environmental contaminants. This deduction would apply for alternative minimum tax purposes as well as for regular tax purposes. Qualified sites would be limited to those properties that satisfy use, geographic, and contamination requirements. The use requirement would be satisfied if the property is held by the taxpayer incurring the eligible expenses for use in a trade or business or for the production of income, or if the property is of a kind properly included in the inventory of the taxpayer. The geographic requirement would be satisfied if the property is located in (i) any census tract that has a poverty rate of 20 percent or more, (ii) any other census tract (a) that has a population under 2,000, (b) 75 percent or more of which is zoned for industrial or commercial use, and (c) that is contiguous to one or more census tracts with a poverty rate of 20 percent or more, (iii) an area designated as a federal EZ or EC or (iv) an area subject to one of the 40 EPA Brownfields Pilots announced prior to February 1997. Both urban and rural sites may qualify. Superfund National Priority listed sites would be excluded. The contamination requirement would be satisfied if hazardous substances are present or potentially present on the property. Hazardous substances would be defined generally by reference to sections 101(14) and 102 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), subject to additional limitations applicable to asbestos and similar substances within buildings, certain naturally occurring substances such as radon, and certain other substances released into drinking water supplies due to deterioration through ordinary use. To claim the deduction under this provisions, the taxpayer would be required to obtain a statement that the site satisfies the geographic and contamination requirements from a State environmental agency designated by the Environmental Protection Agency for such purposes or, if no such agency has been designated by the EPA, by the EPA itself. This deduction would be subject to recapture under current- law section 1245. Thus, any gain realized on disposition generally would be treated as ordinary income, rather than capital gain, up to the amount of deductions taken with respect to the property. Mr. D'AMATO. Mr. President, I join my colleagues, Senators Moseley-Braun, Abraham, Jeffords, Daschle, Lieberman, and Murray, in introducing legislation that will provide a new tax incentive to encourage the private sector to clean up thousands of contaminated, abandoned sites known as brownfields. Brownfield sites are abandoned or vacant commercial and industrial properties suspected of being environmentally contaminated. Under current law, the IRS has determined that costs incurred to clean up land and ground water are deductible as business expenses, as long as the costs are incurred by the same taxpayer that contaminated the land, and that taxpayer plans to use the land after the cleanup for the same purposes used prior to the cleanup. That means that new owners who wish to use land suspected of environmental contamination for a new purpose, would be precluded from deducting the costs of cleanup in the year incurred. They would only be allowed to capitalize the costs and depreciate them over time. Therefore, it is time for us to recognize the need for aggressive economic development policies for the future economic health of communities around the country, and to recognize the inequity of current tax law. My colleagues and I believe that our legislation is the type of initiative the Federal Government needs to encourage development of once abandoned, unproductive sites that will bring real economic benefits to urban distressed and rural areas across the United States. By encouraging redevelopment, jobs will be created, economic growth will continue, property values will increase as well as local tax revenues. Mr. President, I am proud to say that in my State of New York, the city of Elmira has been selected as a fourth round finalist for the EPA's Brownfields Economic Redevelopment Initiative Demonstration Pilot Program. The city of Elmira has primed an unsightly and unsafe urban brownfield and is now in the final stages of turning it into a revenue- and jobs-producing venture. The city of Elmira initiated this important project with no guarantees of public or private funding and has done this at very minimal cost to taxpayers. Can you imagine what could and would be done if the public and private sector had the encouragement to also become involved? Mr. President, I urge my colleagues on both sides of the aisle to join us in cosponsoring this important legislation. Mr. JEFFORDS. Mr. President, I am pleased to join with Senators Moseley-Braun, D'Amato, Abraham, and Lieberman in sponsoring the Community Empowerment Act of 1997, which will encourage the cleanup of abandoned industrial sites known as brownfields in Vermont and across the country. The term ``brownfields'' refers to contaminated industrial sites. Most of these sites were abandoned during the 1970's and 1980's, as industrial development migrated away from urban areas to the greener landscape of the suburbs. One such site in Vermont is the Holden- Leonard Mill, a 20-building complex in Bennington, VT, that is poised to become a brownfields success story after 10 years of work. Once employing one-quarter of Bennington's work force, the mill shut down in 1939 and then was owned by a patchwork of owners until the 1980's. After soil tests disclosed high levels of pollutants, the mill sat empty after 1986. Fortunately, a buyer of the site came forward in 1992 and with cooperation between the business, State agencies, and the EPA the mill has been refurbished and over 200 new employees have been hired. The process, however, of revitalizing this site began in 1986 and is still going on. Our aim with this legislation is to provide tax incentives to businesses willing to clean up and redevelop brownfields sites so that more brownfield sites can be returned to productive use and so that the process doesn't have to take 10 years. Last November, I sponsored a forum on brownfields redevelopment in Burlington, VT. There is only one unpolluted site in Burlington available for industrial development. Yet there are currently 17 brownfields sites in the city, all with great potential for [[Page S861]] development. I toured several of these sites and saw this potential first hand. Burlington is both an EPA brownfields pilot city and an enterprise community. Under our legislation, businesses that acquire these sites would be able to claim tax deductions for their environmental cleanup costs. With tax incentives for brownfields redevelopment, I am hoping that we will see more of these abandoned sites returned to productive use. We treasure our open spaces in Vermont, and we are looking at ways to give incentives to companies to invest in our downtowns. When a company builds a facility on a brownfield site it takes advantage of existing infrastructure. the revitalization of a brownfield site means one less farm or field is paved over or forest cut down for the sake of a new plant or facility. I urge my colleagues to join us in supporting this bill. Mr. LIEBERMAN. Mr. President, I am delighted to join this distinguished group of Senators in introducing legislation to provide tax incentives for the cleanup of brownfields. This legislation will provide a powerful incentive to clean-up these sites. And that clean up will be followed by more jobs and more economic growth in areas that very much need both of those things. I am encouraged by the broad, bipartisan support both here in the Congress and in the administration and in the environmental community and in the business community, to provide tax incentives to get these sites cleaned up. Brownfield sites are abandoned commercial and industrial properties that are environmentally contaminated. Developers and lenders avoid these sites both for liability reasons and because the tax incentives for cleaning up these sites is so limited. The result is an urban landscape littered with vacant and abandoned properties--properties which invite crime, depress surrounding housing and commercial prices, and hinder economic growth in these areas. Additionally, by discouraging the clean-up of brownfields, we are encouraging the development of undeveloped areas known as greenfields. This bill is simple: it allows taxpayers who purchase contaminated properties to deduct the costs of cleaning up brownfields in the year that cleanup expenses occur. This tax incentive would apply to existing and future empowerment zones and enterprise communities, in areas with a poverty rate of 20 percent or more and in adjacent industrial and commercial areas and in existing brownfields pilot areas as designated by the Environmental Protection Agency. Currently, a taxpayer who buys a contaminated property and cleans it up must spread the costs of that cleanup over time. We expect the cost of this bill to be about $2 billion over 7 years. The administration has estimated that this proposal may bring as many as 30,000 brownfield sites back to productive use. In Connecticut, my home State, we know first hand about the problems these brownfield sites can pose for a community. In her soon to be released study of various brownfields sites, Edith M. Pepper of the Northeast-Midwest Institute included the Bryant Electric Plant in Bridgeport, CT, as one of her case studies. As she notes, the Bryant Electric Plant shut down in 1988 after 90 years of operating in Bridgeport's west end. It is no secret that Bridgeport is in difficult shape economically. Closing this 500,000 square foot facility did nothing to help that situation. However, as Ms. Pepper notes in her case study of this brownfields site, it appears that hope is on the way. A non-profit development group, the West End Community Development Corp. [CDC] is working to form a large business park on and around the Bryant site. Over $15 million has already been invested in the site, including a significant amount for cleanup. According to city officials, the developer plans to create 300-400 new jobs and invest $20-50 million in Bridgeport's west end. The brownfields bill we are introducing today could help in Bridgeport. Undoubtedly it could help in places like New Haven and Hartford as well. The bill we are introducing today expands upon a bill that Senator Abraham and I introduced in the last Congress, S. 1542. That bill limited these cleanup incentives to the 104 empowerment zones and enterprise communities that exist in 42 States across the country. I am delighted by today's effort to expand on the number of regions and sites that will be covered in the brownfields legislation and I urge my colleagues to join us in cosponsoring this important legislation. Mr. ABRAHAM. Mr. President, I join Senator Moseley-Braun, Senator Jeffords, Senator Lieberman, Senator D'Amato, and others in introducing the Community Empowerment Act of 1997. This legislation builds upon the legislation Senator Lieberman and I introduced last Congress, as well as the similar legislation introduced by Senators Moseley-Braun, D'Amato, and Jeffords. Having now joined forces for the new Congress, the Moseley-Braun- Abraham legislation will provide tax incentives for the environmental cleanup of brownfields located in economically distressed areas. There are between 100,000 and 300,000 of these sites across the country, Mr. President, and they are a blight on both the landscape and the economy of our communities. I am sponsoring this legislation because, in my view, too many of our troubled cities, towns, and rural areas have both environmental and economic problems. These problems conspire to produce an endless cycle of impoverishment. Contaminated sites are abandoned and new companies refuse to take over the property for fear of environmental lawsuits from government and/or private parties. As a result, contamination and joblessness continue and even get worse. For example, a survey of Toledo, OH businesses found that environmental concerns were affecting 62 percent of the area's commercial and industrial real estate transactions. These effects are all but universally negative in terms of job creation and economic development. Another example: Construction of a $3 million lumber treatment plant in Hammond, IN, was abandoned after low levels of contamination were found at the proposed site. The developer concluded that uncertain costs and potential liabilities outweighed the site's benefits. The city of Hammond lost construction jobs, 75 full-time lumber plant jobs, and any reasonable prospect that a developer would assume the risk of developing property anywhere on the 20 acre site. In Flint, the former site of Thrall Oil Co., now sits vacant. Economic development officials believe this property should attract future manufacturing development. Unfortunately, because the Michigan Department of Environmental Quality has labeled it ``contaminated,'' developers cannot be found. For decades now, Mr. President, the Federal Government has tried, with little success, to revitalize economically distressed areas. The blight remains. Urban renewal and various welfare programs too often have only made things worse by spawning dependency on government help. Environmental laws have fared little better. Intended to force cleanup of contaminated sites, these laws instead have scared away potential investors with potentially unlimited liability, including liability for contamination the investors did not cause or even know about. Environmental regulations and liability established under the Federal Superfund Program along with various other Federal and State environmental rules have helped create thousands of these brownfield properties in the United States. These are industrial or commercial sites suspected of being in some way environmentally contaminated. Although not serious threats to public health and safety, these properties have become unavailable for economic use, because legal rules make them too financially risky for investment and job creation. Potential liability scares businesses and investors away from these sites, creating permanently abandoned blights on the urban and rural landscape. Investors are afraid of being dragged into multimillion- dollar litigation and cleanup over contamination they did not cause. Worse, investors willing to shoulder the liability of a potential environmental cleanup find that they cannot write off the cost of environmental remediation of brownfields. Instead these costs must be spread over a number of years. Thus, the Tax Code and environmental laws combine to scare away potential sources of investment and growth, [[Page S862]] often from our most economically distressed areas. To help both our economy and our environment, the Moseley-Braun- Abraham legislation would target tax benefits at brownfields in economically distressed areas to encourage cleanup and job creation. We would allow investors in brownfields to expense their cleanup costs immediately--without having to split these costs up over a number of years. This will have three positive effects. First, these incentives will help our communities. By encouraging redevelopment of abandoned, unproductive sites, these tax incentives will reinvigorate economic growth in distressed communities across the country. They will provide economic opportunity rather than government dependence by encouraging investment and entrepreneurship where it is most needed. Second, this legislation will help the environment. These tax incentives will significantly improve our ability to clean up environmentally contaminated sites. The legacy of existing cleanup laws is a remarkable lack of progress. With thousands of sites across the country categorized as brownfields, we need to start cleaning them now, and we need private investment to get the job done. Furthermore, encouraging brownfields cleanup will save undeveloped land from unnecessary development. For every brownfield that is cleaned up and reused there will be a green field that remains clean and unused. Third, this solution, unlike those attempted in the past, utilizes the private sector to reclaim contaminated land and reinvigorate distressed communities. By encouraging private investment, rather than attempting to purchase or force cooperation with government mandates, we can free up private capital and initiative to do its job of revitalizing these distressed areas. By adopting this approach, the Senate will take a significant step toward revitalized, reinvigorated, and renewed urban and rural zones. With the incentives, included in this amendment, good jobs and a clean environment will go together, to everyone's benefit. I thank Senators Moseley-Braun, D'Amato, Lieberman, Jeffords, and our other cosponsors for joining me in this important effort, and I look forward to seeing meaningful brownfields reforms passed this Congress. By Mr. GRAMS (for himself, Mr. Abraham, Mr. Ashcroft, Mr. Faircloth, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. Stevens and Mr. Hagel): S. 236. A bill to abolish the Department of Energy, and for other purposes; to the Committee on Energy and Natural Resources. THE DEPARTMENT OF ENERGY ABOLISHMENT ACT Mr. GRAMS. Mr. President, I introduce legislation aimed at improving government as we know it. The Department of Energy Abolishment Act of 1997 comes after nearly two decades of debate. The basic question has always remained the same: Why should we expend taxpayer dollars on this Cabinet-level agency? And today, we ask the same question. Following a year's worth of discussions on the blueprint I am putting forth, much progress has been made. When the 104th Congress began to tackle this issue, we looked at three main issues. First, we examined the fact that the Department of Energy no longer has a mission--which is clearly reflected by the fact that nearly 85 percent of its budget is expended upon nonenergy programs. Next, we studied those programs charged to the DOE and reviewed its ability to meet the related job requirements. And finally, we looked at the DOE's bloated budget in light of the first two criterion--determining whether the taxpayers should be forced to expend over $16 billion annually on this hodge- podge collection. Nearly a year later, this Nation continues to grow increasingly dependent upon foreign oil--in total contrast to the DOE's core mission. Even in light of this administration's focus on alternative energy, the DOE expends less than one-fifth of its budget on energy- related programs. And after examining key DOE mission programs, such as the Civilian Nuclear Waste program, it is clear that the goals of those missions are not being met. So we are challenged to either accept the status quo or move to change it. I must admit that the status quo may be easier in the short- term. But in the context of the proverbial big picture, we cannot afford to turn our backs. Besides the fact that it is the role of Congress to oversee taxpayer expenditures and ensure a fair rate of return on their investments, this Nation is faced with a national debt in excess of $5.3 trillion. However, gaining consensus on the need for change is easier than effecting such change. So, last year I worked with the Senate Task Force on Government Agency Elimination to develop a blueprint. Under the direction of the former Senate Majority Leader, Senator Dole, I worked with Senators Faircloth, Abraham, and Stevens to study proposals on the DOE. After months of discussions with experts in the fields of energy and defense, we introduced legislation--legislation which is the core of the bill I am introducing today. Let me be the first to state that the ideas contained within this bill are not all of my own. Just as the idea to eliminate the Department of Energy is not a new one--since its creation in 1978, experts have been clamoring to abolish this agency in search of a mission. This bill represents the comments and input of many who have worked in these fields for decades, but like all things--I consider it a work in progress. As many of our colleagues will recall, the Senate Energy and Natural Resources Committee held a hearing on this very bill last September. During the hearing, we received testimony from such distinguished witnesses as the Former Assistant Energy Secretary Shelby Brewer and the Former Defense Secretary Caspar Weinberger in support of the proposal. Having either directly run these programs, or relied upon them, they provided strong firsthand evidence as to the detriment of leaving things as they are. The committee also received testimony from the current Acting Secretary and then-Assistant Energy Secretary, Charlie Curtis, who testified in support of improving the delivery of the Department's missions, at lower cost, for the benefit of the American people. His testimony focused upon how the DOE was working to improve its efforts to fulfill various missions, and how changing horses midstream would derail the DOE's efforts. In his remarks, Mr. Curtis dismissed the DOE Abolishment Act because the DOE did not believe it appropriate to entertain matters of this moment and complexity in the context of a bill which has as its proposed objective changing the organizational structure and fate of the Department of Energy. What the DOE fails to recognize is that the conclusions--to abolish the DOE--arise from an analysis of the Department's activities, rather than from any antigovernment ideology or mere desire to reduce government spending, as pointed out by Dr. Irwin Stelzer of the American Enterprise Institute. Supporters of the DOE Abolishment Act have always agreed that there are core functions performed by the DOE which must continue to be done, but the DOE has yet to provide a compelling argument as to why the DOE itself must continue to exist or successfully respond to our reasons for its elimination. But Mr. Curtis' objections are understandable when placed in the context of remarks by Nobel-prize economist, Dr. Milton Friedman: ``The Department of Energy offers an excellent example of a major difference between private and government projects. If a private project is a failure, it will be closed down; if a government project is a failure, it will be expanded. * * * It is in the self-interest of the Government officials in charge to keep the project alive; and they always have the ready excuse that the reason for failure was the lack of sufficient funds.'' So today, I am joined by my colleagues, Senator Abraham of Michigan, Senator Ashcroft of Missouri, Senator Faircloth of North Carolina, Senator Hutchinson of Arkansas, Senators Kyl and McCain of Arizona and Senator Stevens of Alaska, in reaffirming congressional intent to change the Department of Energy as we know it. Under the Department of Energy Abolishment Act of 1997, we dismantle the patchwork quilt of government initiatives--reassembling them into agencies better equipped

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - January 30, 1997)

Text of this article available as: TXT PDF [Pages S856-S897] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Ms. MOSELEY-BRAUN (for herself, Mr. Abraham, Mr. D'Amato, Mr. Jeffords, Mr. Lieber- man, Mr. Daschle and Mrs. Murray): S. 235. A bill to amend the Internal Revenue Code of 1986 to encourage economic development through the creation of additional empowerment zones and enterprise communities and to encourage the cleanup of contaminated brownfield sites; to the Committee on Finance. THE COMMUNITY EMPOWERMENT ACT OF 1997 Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure, together with my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle to reintroduce the Community Empowerment Act of 1997. This legislation is designed to create new jobs and spur economic growth by encouraging the cleanup and reuse of contaminated industrial and commercial sites known as Brownfields. This bill also creates 20 new additional empowerment zones and 80 new enterprise communities all across the Nation. I like to call them environmentally challenged sites. They are sites on which there has been some contamination but not to a level sufficient to reach Superfund status. But they are contaminated nonetheless. They are, on the one hand, excellent locations for industrial and commercial redevelopment because the transportation, more often than not, already exists. The infrastructure, the utilities, and the labor force already exists. However, these properties are often unattractive to potential redevelopers because of the known, unknown, or perceived contamination that may exist on the property. This factor creates an incentive for companies to locate and develop in greenfields, which are undeveloped areas generally in the suburbs. This urban flight contributes to urban sprawl, taking jobs away from the city. It also results in the paving off of many of the greenfield areas of our country. The challenge for all of us is to stop this trend. And one way to do that is by encouraging businesses through the Tax Code to redevelop and to reuse the existing brownfield sites; to reclaim, if you will, sites that have been contaminated which have been used or used up. At present, if an industrial property owner does environmental damage to their property and then cleans up the site, the owner is allowed to deduct the cost of that cleanup from a single year's earnings. However, in a strange twist of logic, someone who buys an environmentally damaged piece of property and cleans up that property is not allowed to expense these cleanup costs, but instead must capitalize the cost and depreciate the cleanup expense over many years. The result of this? The result has been an urban landscape littered with vacant or abandoned properties, properties that attract crime and bring down property values in surrounding neighborhoods. Confronting the brownfields issue can help to address many of the problems that face high unemployment in older communities, including job creation, economic renewal, environmental justice, and environmental improvement. The collective efforts of everyone, particularly the nonprofit community, the private sector, government at all levels, developers, and community groups, are essential to begin the process of returning brownfields property back to productive use and to bring economic growth back to disadvantaged cities and rural areas. Under the provisions of this legislation, qualifying brownfields will be provided full first-year expensing of environmental cleanup costs under the Federal Tax Code. Full first-year expensing simply means that a tax deduction will be allowed for the cleanup costs in the year that those costs are incurred. The Community Empowerment Act provides tax incentives that we hope will break through some of the current barriers preventing the private sector from investing in brownfields cleanup projects. So it provides a carrot, if you will, to the private sector to begin to help not only with the environmental cleanup but also with urban redevelopment. So it becomes a win-win in both regards in that way. In my own State of Illinois, the brownfields provisions will have a major impact on efforts to help restore neglected and abandoned industrial areas. It will facilitate the cleanup of some 300 to 500 sites in Illinois, each of [[Page S857]] which has a remediation cost ranging from $250,000 to $500,000 per site. The Treasury Department estimates that this act will provide $2 billion in tax incentives that will leverage an additional $10 billion in private investment, returning an estimated 30,000 brownfields across the country to productive use again. The $2 billion investment will be included in the President's balanced budget plan and so it will be paid for. The Federal assistance that this proposal envisions will be concentrated in neighborhoods with the most severe problems and that are truly in need of such investment. The bill targets four areas. First, the empowerment zones and enterprise communities across the country. Second, areas with a poverty rate of 20 percent or more that are near industrial or former industrial sites. Third, existing EPA brownfields pilot areas. The Environmental Protection Agency has already designated brownfields sites across the country. Fourth, areas with a population of under 2,000 or more than 75 percent of which is zoned for industrial or commercial use. So this is not just a big-city solution. This is something that will affect the cities, the suburbs, and the rural areas as well in providing an incentive to reclaim these environmentally challenged areas of our country. In my hometown, in Chicago, Mayor Daley has taken the initiative to establish a brownfields pilot program which has made public investment leverage substantial private investment dollars. One of these projects is known as the Scott Peterson Meats Co., in Chicago. The site had been tax delinquent for several years when Scott Peterson Meats and the city began to work together. The city conducted an assessment of potential hazards that were identified and which included asbestos-containing materials, lead-based paints, and some 11 underground storage tanks, some of which were filled with tar. The city paid for environmental investigation, cleanup, and building demolition, which totaled some $250,000 in contractor costs. Due to the city's investment, however, the company, Scott Peterson Meats, then turned around and invested an additional $5.2 million in a new smokehouse on its existing property, and it has hired over 100 additional employees to date. So with the win-win of environmental cleanup and urban reclamation we also have job creation coming out of this legislative initiative. Another example of a successful public-private partnership pulling people together to clean up a brownfields site is the Madison Equipment site located in Illinois. This abandoned industrial building was a neighborhood eyesore. Scavengers had stolen most of the wiring and plumbing, and illegal or what is called midnight dumping of trash and debris was rampant. Madison Equipment needed expansion space, but it feared the environmental liability. However, in 1993, the city of Chicago took the initiative to invest just a little over $3,000 in this project, in this environmental reclamation, this brownfields project, and 1 year later the company, Madison, put in $180,000 of its own to redevelop the building. The critical reason that lenders and investors look at this area now is because the city committed the public investment to spur private redevelopment and investment. When local government demonstrates the confidence to commit public funds, private financial institutions are more likely to follow suit. These types of examples show how a little investment can go a long way and how we can engage the partnership between the public and the private sector in nonbureaucratic ways in order to spur a result that truly is in the public interest. Chicago's pilot project will successfully return all the pilot sites to productive use for a total of about $850,000 in public money. This pilot project is a perfect example of what this legislation can accomplish on a national level. But in order to make it happen, cooperation is the key. Effective strategies require strong partnerships among government, industry, organized labor, community groups, developers, environmentalists, and financiers, who all realize that when their efforts are aligned, when we work together, progress is made easier. The second component of this legislation is the establishment of 20 more empowerment zones and 80 additional enterprise communities. They will receive a variety of tools for redevelopment from the Government. First, they receive a package of tax incentives and flexible grants available over a 10-year period. Second, they receive priority consideration for other Federal empowerment programs. Third, they receive assistance in removing bureaucratic redtape and regulatory barriers that prevent innovative uses of the Federal assistance that they have received. This approach recognizes that a top-down, big Government solution does not work in these times and what we have to do is enhance public- private partnerships and the involvement and engagement of all sectors in order to bring about again the public policy result that we are all desirous of seeing. Economic empowerment can be achieved, but it is best done, I believe, through these public-private partnerships. Economic revitalization in this Nation's most distressed communities is essential to the growth of our entire country. With the concept of team effort, we can rebuild cities by stimulating investments and creating jobs. Environmental protection used in this way can and will be good business. It is also good policy. With this legislation, we will begin the effort to restore economic growth back into our country's industrial centers and rural communities all the while improving our environment. Again, I wish to thank my colleagues, Senators Abraham, D'Amato, Jeffords, Lieberman, Murray, and Daschle for their original cosponsorship of this legislation and for making this legislation a truly bipartisan effort. I urge all of my colleagues to join in supporting the quick passage of this legislation. I ask unanimous consent that the full text of the bill and a section- by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 235 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. TITLE I--ADDITIONAL EMPOWERMENT ZONES SEC. 101. ADDITIONAL EMPOWERMENT ZONES. (a) In General.--Paragraph (2) of section 1391(b) (relating to designations of empowerment zones and enterprise communities) is amended-- (1) by striking ``9'' and inserting ``11'', (2) by striking ``6'' and inserting ``8'', and (3) by striking ``750,000'' and inserting ``1,000,000''. (b) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act, except that designations of new empowerment zones made pursuant to such amendments shall be made during the 180-day period beginning on the date of the enactment of this Act. TITLE II--NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES SEC. 201. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1391 (relating to designation procedure for empowerment zones and enterprise communities) is amended by adding at the end the following new subsection: ``(g) Additional Designations Permitted.-- ``(1) In general.--In addition to the areas designated under subsection (a)-- ``(A) Enterprise communities.--The appropriate Secretaries may designate in the aggregate an additional 80 nominated areas as enterprise communities under this section, subject to the availability of eligible nominated areas. Of that number, not more than 50 may be designated in urban areas and not more than 30 may be designated in rural areas. ``(B) Empowerment zones.--The appropriate Secretaries may designate in the aggregate an additional 20 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 15 may be designated in urban areas and not more than 5 may be designated in rural areas. ``(2) Period designations may be made.--A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 1999. [[Page S858]] ``(3) Modifications to eligibility criteria, etc.-- ``(A) Poverty rate requirement.-- ``(i) In general.--A nominated area shall be eligible for designation under this subsection only if the poverty rate for each population census tract within the nominated area is not less than 20 percent and the poverty rate for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent. ``(ii) Treatment of census tracts with small populations.-- A population census tract with a population of less than 2,000 shall be treated as having a poverty rate of not less than 25 percent 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 have a poverty rate of not less than 25 percent (determined without regard to this clause). ``(iii) Exception for developable sites.--Clause (i) shall not apply to up to 3 noncontiguous parcels in a nominated area which may be developed for commercial or industrial purposes. The aggregate area of noncontiguous parcels to which the preceding sentence applies with respect to any nominated area shall not exceed 1,000 acres (2,000 acres in the case of an empowerment zone). ``(iv) Certain provisions not to apply.--Section 1392(a)(4) (and so much of paragraphs (1) and (2) of section 1392(b) as relate to section 1392(a)(4)) shall not apply to an area nominated for designation under this subsection. ``(v) Special rule for rural empowerment zones and enterprise communities.--The Secretary of Agriculture may designate not more than 1 empowerment zone, and not more than 5 enterprise communities, in rural areas without regard to clause (i) if such areas satisfy emigration criteria specified by the Secretary of Agriculture. ``(B) Size limitation.-- ``(i) In general.--The parcels described in subparagraph (A)(iii) shall not be taken into account in determining whether the requirement of subparagraph (A) or (B) of section 1392(a)(3) is met. ``(ii) Special rule for rural areas.--If a population census tract (or equivalent division under section 1392(b)(4)) in a rural area exceeds 1,000 square miles or includes a substantial amount of land owned by the Federal, State, or local government, the nominated area may exclude such excess square mileage or governmentally owned land and the exclusion of that area will not be treated as violating the continuous boundary requirement of section 1392(a)(3)(B). ``(C) Aggregate population limitation.--The aggregate population limitation under the last sentence of subsection (b)(2) shall not apply to a designation under paragraph (1)(B). ``(D) Previously designated enterprise communities may be included.--Subsection (e)(5) shall not apply to any enterprise community designated under subsection (a) that is also nominated for designation under this subsection. ``(E) Indian reservations may be nominated.-- ``(i) In general.--Section 1393(a)(4) shall not apply to an area nominated for designation under this subsection. ``(ii) Special rule.--An area in an Indian reservation shall be treated as nominated by a State and a local government if it is nominated by the reservation governing body (as determined by the Secretary of Interior).'' (b) Employment Credit Not To Apply to New Empowerment Zones.--Section 1396 (relating to empowerment zone employment credit) is amended by adding at the end the following new subsection: ``(e) Credit Not To Apply to Empowerment Zones Designated Under Section 1391(g).--This section shall be applied without regard to any empowerment zone designated under section 1391(g).'' (c) Increased Expensing Under Section 179 Not To Apply in Developable Sites.--Section 1397A (relating to increase in expensing under section 179) is amended by adding at the end the following new subsection: ``(c) Limitation.--For purposes of this section, qualified zone property shall not include any property substantially all of the use of which is in any parcel described in section 1391(g)(3)(A)(iii).'' (d) Conforming Amendments.-- (1) Subsections (e) and (f) of section 1391 are each amended by striking ``subsection (a)'' and inserting ``this section''. (2) Section 1391(c) is amended by striking ``this section'' and inserting ``subsection (a)''. SEC. 202. VOLUME CAP NOT TO APPLY TO ENTERPRISE ZONE FACILITY BONDS WITH RESPECT TO NEW EMPOWERMENT ZONES. (a) In General.--Section 1394 (relating to tax-exempt enterprise zone facility bonds) is amended by adding at the end the following new subsection: ``(f) Bonds for Empowerment Zones Designated Under Section 1391(g).-- ``(1) In general.--In the case of a new empowerment zone facility bond-- ``(A) such bond shall not be treated as a private activity bond for purposes of section 146, and ``(B) subsection (c) of this section shall not apply. ``(2) Limitation on amount of bonds.-- ``(A) In general.--Paragraph (1) shall apply to a new empowerment zone facility bond only if such bond is designated for purposes of this subsection by the local government which nominated the area to which such bond relates. ``(B) Limitation on bonds designated.--The aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any empowerment zone shall not exceed-- ``(i) $60,000,000 if such zone is in a rural area, ``(ii) $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and ``(iii) $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000. ``(C) Special rules.-- ``(i) Coordination with limitation in subsection (c).-- Bonds to which paragraph (1) applies shall not be taken into account in applying the limitation of subsection (c) to other bonds. ``(ii) Current refunding not taken into account.--In the case of a refunding (or series of refundings) of a bond designated under this paragraph, the refunding obligation shall be treated as designated under this paragraph (and shall not be taken into account in applying subparagraph (B)) if-- ``(I) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and ``(II) the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond. ``(3) New empowerment zone facility bond.--For purposes of this subsection, the term `new empowerment zone facility bond' means any bond which would be described in subsection (a) if only empowerment zones designated under section 1391(g) were taken into account under sections 1397B and 1397C.'' (b) Effective Date.--The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 203. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) Modifications Relating to Enterprise Zone Business.-- Paragraph (3) of section 1394(b) (defining enterprise zone business) is amended to read as follows: ``(3) Enterprise zone business.-- ``(A) In general.--Except as modified in this paragraph, the term `enterprise zone business' has the meaning given such term by section 1397B. ``(B) Modifications.--In applying section 1397B for purposes of this section-- ``(i) Businesses in enterprise communities eligible.-- References in section 1397B to empowerment zones shall be treated as including references to enterprise communities. ``(ii) Waiver of requirements during startup period.--A business shall not fail to be treated as an enterprise zone business during the startup period if-- ``(I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397B as modified by this paragraph) at the end of such period, and ``(II) such business makes bona fide efforts to be such a business. ``(iii) Reduced requirements after testing period.--A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397B if at least 35 percent of the employees of such business for such year are residents of an empowerment zone or an enterprise community. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397B(d). ``(C) Definitions relating to subparagraph (b).--For purposes of subparagraph (B)-- ``(i) Startup period.--The term `startup period' means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of-- ``(I) the date of issuance of the issue providing such property, or ``(II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). ``(ii) Testing period.--The term `testing period' means the first 3 taxable years beginning after the startup period. ``(D) Portions of business may be enterprise zone business.--The term `enterprise zone business' includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated.'' (b) Modifications Relating to Qualified Zone Property.-- Paragraph (2) of section 1394(b) (defining qualified zone property) is amended to read as follows: ``(2) Qualified zone property.--The term `qualified zone property' has the meaning given such term by section 1397C; except that-- ``(A) the references to empowerment zones shall be treated as including references to enterprise communities, and ``(B) section 1397C(a)(2) shall be applied by substituting `an amount equal to 15 percent of the adjusted basis' for `an amount equal to the adjusted basis'.'' [[Page S859]] (c) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 204. MODIFICATIONS TO ENTERPRISE ZONE BUSINESS DEFINITION FOR ALL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. (a) In General.--Section 1397B (defining enterprise zone business) is amended-- (1) by striking ``80 percent'' in subsections (b)(2) and (c)(1) and inserting ``50 percent'', (2) by striking ``substantially all'' each place it appears in subsections (b) and (c) and inserting ``a substantial portion'', (3) by striking ``, and exclusively related to,'' in subsections (b)(4) and (c)(3), (4) by adding at the end of subsection (d)(2) the following new flush sentence: ``For purposes of subparagraph (B), the lessor of the property may rely on a lessee's certification that such lessee is an enterprise zone business.'', (5) by striking ``substantially all'' in subsection (d)(3) and inserting ``at least 50 percent'', and (6) by adding at the end the following new subsection: ``(f) Treatment of Businesses Straddling Census Tract Lines.--For purposes of this section, if-- ``(1) a business entity or proprietorship uses real property located within an empowerment zone, ``(2) the business entity or proprietorship also uses real property located outside the empowerment zone, ``(3) the amount of real property described in paragraph (1) is substantial compared to the amount of real property described in paragraph (2), and ``(4) the real property described in paragraph (2) is contiguous to part or all of the real property described in paragraph (1), then all the services performed by employees, all business activities, all tangible property, and all intangible property of the business entity or proprietorship that occur in or is located on the real property described in paragraphs (1) and (2) shall be treated as occurring or situated in an empowerment zone.'' (b) Effective Dates.-- (1) In general.--The amendments made by this section shall apply to taxable years beginning on or after the date of the enactment of this Act. (2) Special rule for enterprise zone facility bonds.--For purposes of section 1394(b) of the Internal Revenue Code of 1986, the amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 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 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) which contains (or potentially contains) 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 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 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. ____ Section-by-Section Analysis Title I--Additional Empowerment Zones Section 101 would authorize the designation of an additional two urban empowerment zones under the 1994 first round. Title II--New Empowerment Zones and Enterprise Communities Section 201 authorizes a second round of designations, consisting of 80 enterprise communities and 20 empowerment zones. Of the 80 enterprise communities, 50 would be in urban areas and 30 would be in rural areas. Of the 20 empowerment zones, 15 would be in urban areas and 5 would be in rural areas. The designations would be made before January 1, 1999. Certain of the eligibility criteria applicable in the first round would be modified for the second round of designations. First, the poverty criteria would be relaxed somewhat, so that unlike the first round there would be no requirement that at least 50 percent of the population census tracts have a poverty rate of 35 percent or more. In addition, the poverty criteria will not be applicable to areas specified in the application as developable for commercial or industrial purposes (1,000 acres in the case of an enterprise community, 2,000 acres in the case of an empowerment zone), and these areas will not be taken into account in applying the size limitations (e.g., 20 square miles for urban areas, 1,000 square miles for rural areas). The Secretary of Agriculture will be authorized to designate up to one rural empowerment zones and five rural enterprise communities [[Page S860]] based on specified emigration criteria without regard to the minimum poverty rates set forth in the statute. Rural census tracts in excess of 1,000 square miles or including a substantial amount of governmentally owned land may exclude such excess mileage or governmentally owned land from the nominated area. Unlike the first round, Indian reservations will be eligible to be nominated (and the nomination may be submitted by the reservation governing body without the State government's participation). The empowerment zone employment credit will not be available to businesses in the new empowerment zones, and the increased expensing under section 179 will not be available in the developable acreage areas of empowerment zones. Section 202 authorizes a new category of tax-exempt financing for businesses in the new empowerment zones. These bonds, rather than being subject to the current State volume caps, will be subject to zone-specific caps. For each rural empowerment zone, up to $60 million in such bonds may be issued. For an urban empowerment zone with a population under 100,000, $130 million of these bonds may be issued. For each urban empowerment zone with a population of 100,000 or more, $230 million of these bonds may be issued. Section 203 liberalizes the current definition of an ``enterprise zone business'' for purposes of the tax-exempt financing available under both the first and second rounds. Businesses will be treated as satisfying the applicable requirements during a 2-year start-up period if it is reasonably expected that the business will satisfy those requirements by the end of the start-up period and the business makes bona fide efforts to that end. Following the start-up period a 3-year testing period will begin, after which certain enterprise zone business requirements will no longer be applicable (as long as more than 35 percent of the business' employees are residents of the empowerment zone or enterprise community). The rules under which substantially renovated property may be ``qualified zone property,'' and thereby be eligible to be financed with tax-exempt bonds, would also be liberalized slightly. Section 204 liberalizes the definition of enterprise business for purposes of both the tax-exempt financing provisions and the additional section 179 expensing by reducing from 80 percent to 50 percent the amount of total gross income that must be derived within the empowerment zone or enterprise community, by reducing how much of the business' property and employees' services must be located in or provided within the zone or community, and by easing the restrictions governing when rental businesses will qualify as enterprise zone businesses. A special rule is also provided to clarify how a business that straddles the boundary of an empowerment zone or enterprise community (e.g., by straddling a population census tract boundary) is treated for purposes of the enterprise zone business definition. title iii--expensing of environmental remediation costs Section 301 would provide a current deduction for certain remediation costs incurred with respect to qualified sites. Generally, these expenses would be limited to those paid or incurred in connection with the abatement or control of environmental contaminants. This deduction would apply for alternative minimum tax purposes as well as for regular tax purposes. Qualified sites would be limited to those properties that satisfy use, geographic, and contamination requirements. The use requirement would be satisfied if the property is held by the taxpayer incurring the eligible expenses for use in a trade or business or for the production of income, or if the property is of a kind properly included in the inventory of the taxpayer. The geographic requirement would be satisfied if the property is located in (i) any census tract that has a poverty rate of 20 percent or more, (ii) any other census tract (a) that has a population under 2,000, (b) 75 percent or more of which is zoned for industrial or commercial use, and (c) that is contiguous to one or more census tracts with a poverty rate of 20 percent or more, (iii) an area designated as a federal EZ or EC or (iv) an area subject to one of the 40 EPA Brownfields Pilots announced prior to February 1997. Both urban and rural sites may qualify. Superfund National Priority listed sites would be excluded. The contamination requirement would be satisfied if hazardous substances are present or potentially present on the property. Hazardous substances would be defined generally by reference to sections 101(14) and 102 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), subject to additional limitations applicable to asbestos and similar substances within buildings, certain naturally occurring substances such as radon, and certain other substances released into drinking water supplies due to deterioration through ordinary use. To claim the deduction under this provisions, the taxpayer would be required to obtain a statement that the site satisfies the geographic and contamination requirements from a State environmental agency designated by the Environmental Protection Agency for such purposes or, if no such agency has been designated by the EPA, by the EPA itself. This deduction would be subject to recapture under current- law section 1245. Thus, any gain realized on disposition generally would be treated as ordinary income, rather than capital gain, up to the amount of deductions taken with respect to the property. Mr. D'AMATO. Mr. President, I join my colleagues, Senators Moseley-Braun, Abraham, Jeffords, Daschle, Lieberman, and Murray, in introducing legislation that will provide a new tax incentive to encourage the private sector to clean up thousands of contaminated, abandoned sites known as brownfields. Brownfield sites are abandoned or vacant commercial and industrial properties suspected of being environmentally contaminated. Under current law, the IRS has determined that costs incurred to clean up land and ground water are deductible as business expenses, as long as the costs are incurred by the same taxpayer that contaminated the land, and that taxpayer plans to use the land after the cleanup for the same purposes used prior to the cleanup. That means that new owners who wish to use land suspected of environmental contamination for a new purpose, would be precluded from deducting the costs of cleanup in the year incurred. They would only be allowed to capitalize the costs and depreciate them over time. Therefore, it is time for us to recognize the need for aggressive economic development policies for the future economic health of communities around the country, and to recognize the inequity of current tax law. My colleagues and I believe that our legislation is the type of initiative the Federal Government needs to encourage development of once abandoned, unproductive sites that will bring real economic benefits to urban distressed and rural areas across the United States. By encouraging redevelopment, jobs will be created, economic growth will continue, property values will increase as well as local tax revenues. Mr. President, I am proud to say that in my State of New York, the city of Elmira has been selected as a fourth round finalist for the EPA's Brownfields Economic Redevelopment Initiative Demonstration Pilot Program. The city of Elmira has primed an unsightly and unsafe urban brownfield and is now in the final stages of turning it into a revenue- and jobs-producing venture. The city of Elmira initiated this important project with no guarantees of public or private funding and has done this at very minimal cost to taxpayers. Can you imagine what could and would be done if the public and private sector had the encouragement to also become involved? Mr. President, I urge my colleagues on both sides of the aisle to join us in cosponsoring this important legislation. Mr. JEFFORDS. Mr. President, I am pleased to join with Senators Moseley-Braun, D'Amato, Abraham, and Lieberman in sponsoring the Community Empowerment Act of 1997, which will encourage the cleanup of abandoned industrial sites known as brownfields in Vermont and across the country. The term ``brownfields'' refers to contaminated industrial sites. Most of these sites were abandoned during the 1970's and 1980's, as industrial development migrated away from urban areas to the greener landscape of the suburbs. One such site in Vermont is the Holden- Leonard Mill, a 20-building complex in Bennington, VT, that is poised to become a brownfields success story after 10 years of work. Once employing one-quarter of Bennington's work force, the mill shut down in 1939 and then was owned by a patchwork of owners until the 1980's. After soil tests disclosed high levels of pollutants, the mill sat empty after 1986. Fortunately, a buyer of the site came forward in 1992 and with cooperation between the business, State agencies, and the EPA the mill has been refurbished and over 200 new employees have been hired. The process, however, of revitalizing this site began in 1986 and is still going on. Our aim with this legislation is to provide tax incentives to businesses willing to clean up and redevelop brownfields sites so that more brownfield sites can be returned to productive use and so that the process doesn't have to take 10 years. Last November, I sponsored a forum on brownfields redevelopment in Burlington, VT. There is only one unpolluted site in Burlington available for industrial development. Yet there are currently 17 brownfields sites in the city, all with great potential for [[Page S861]] development. I toured several of these sites and saw this potential first hand. Burlington is both an EPA brownfields pilot city and an enterprise community. Under our legislation, businesses that acquire these sites would be able to claim tax deductions for their environmental cleanup costs. With tax incentives for brownfields redevelopment, I am hoping that we will see more of these abandoned sites returned to productive use. We treasure our open spaces in Vermont, and we are looking at ways to give incentives to companies to invest in our downtowns. When a company builds a facility on a brownfield site it takes advantage of existing infrastructure. the revitalization of a brownfield site means one less farm or field is paved over or forest cut down for the sake of a new plant or facility. I urge my colleagues to join us in supporting this bill. Mr. LIEBERMAN. Mr. President, I am delighted to join this distinguished group of Senators in introducing legislation to provide tax incentives for the cleanup of brownfields. This legislation will provide a powerful incentive to clean-up these sites. And that clean up will be followed by more jobs and more economic growth in areas that very much need both of those things. I am encouraged by the broad, bipartisan support both here in the Congress and in the administration and in the environmental community and in the business community, to provide tax incentives to get these sites cleaned up. Brownfield sites are abandoned commercial and industrial properties that are environmentally contaminated. Developers and lenders avoid these sites both for liability reasons and because the tax incentives for cleaning up these sites is so limited. The result is an urban landscape littered with vacant and abandoned properties--properties which invite crime, depress surrounding housing and commercial prices, and hinder economic growth in these areas. Additionally, by discouraging the clean-up of brownfields, we are encouraging the development of undeveloped areas known as greenfields. This bill is simple: it allows taxpayers who purchase contaminated properties to deduct the costs of cleaning up brownfields in the year that cleanup expenses occur. This tax incentive would apply to existing and future empowerment zones and enterprise communities, in areas with a poverty rate of 20 percent or more and in adjacent industrial and commercial areas and in existing brownfields pilot areas as designated by the Environmental Protection Agency. Currently, a taxpayer who buys a contaminated property and cleans it up must spread the costs of that cleanup over time. We expect the cost of this bill to be about $2 billion over 7 years. The administration has estimated that this proposal may bring as many as 30,000 brownfield sites back to productive use. In Connecticut, my home State, we know first hand about the problems these brownfield sites can pose for a community. In her soon to be released study of various brownfields sites, Edith M. Pepper of the Northeast-Midwest Institute included the Bryant Electric Plant in Bridgeport, CT, as one of her case studies. As she notes, the Bryant Electric Plant shut down in 1988 after 90 years of operating in Bridgeport's west end. It is no secret that Bridgeport is in difficult shape economically. Closing this 500,000 square foot facility did nothing to help that situation. However, as Ms. Pepper notes in her case study of this brownfields site, it appears that hope is on the way. A non-profit development group, the West End Community Development Corp. [CDC] is working to form a large business park on and around the Bryant site. Over $15 million has already been invested in the site, including a significant amount for cleanup. According to city officials, the developer plans to create 300-400 new jobs and invest $20-50 million in Bridgeport's west end. The brownfields bill we are introducing today could help in Bridgeport. Undoubtedly it could help in places like New Haven and Hartford as well. The bill we are introducing today expands upon a bill that Senator Abraham and I introduced in the last Congress, S. 1542. That bill limited these cleanup incentives to the 104 empowerment zones and enterprise communities that exist in 42 States across the country. I am delighted by today's effort to expand on the number of regions and sites that will be covered in the brownfields legislation and I urge my colleagues to join us in cosponsoring this important legislation. Mr. ABRAHAM. Mr. President, I join Senator Moseley-Braun, Senator Jeffords, Senator Lieberman, Senator D'Amato, and others in introducing the Community Empowerment Act of 1997. This legislation builds upon the legislation Senator Lieberman and I introduced last Congress, as well as the similar legislation introduced by Senators Moseley-Braun, D'Amato, and Jeffords. Having now joined forces for the new Congress, the Moseley-Braun- Abraham legislation will provide tax incentives for the environmental cleanup of brownfields located in economically distressed areas. There are between 100,000 and 300,000 of these sites across the country, Mr. President, and they are a blight on both the landscape and the economy of our communities. I am sponsoring this legislation because, in my view, too many of our troubled cities, towns, and rural areas have both environmental and economic problems. These problems conspire to produce an endless cycle of impoverishment. Contaminated sites are abandoned and new companies refuse to take over the property for fear of environmental lawsuits from government and/or private parties. As a result, contamination and joblessness continue and even get worse. For example, a survey of Toledo, OH businesses found that environmental concerns were affecting 62 percent of the area's commercial and industrial real estate transactions. These effects are all but universally negative in terms of job creation and economic development. Another example: Construction of a $3 million lumber treatment plant in Hammond, IN, was abandoned after low levels of contamination were found at the proposed site. The developer concluded that uncertain costs and potential liabilities outweighed the site's benefits. The city of Hammond lost construction jobs, 75 full-time lumber plant jobs, and any reasonable prospect that a developer would assume the risk of developing property anywhere on the 20 acre site. In Flint, the former site of Thrall Oil Co., now sits vacant. Economic development officials believe this property should attract future manufacturing development. Unfortunately, because the Michigan Department of Environmental Quality has labeled it ``contaminated,'' developers cannot be found. For decades now, Mr. President, the Federal Government has tried, with little success, to revitalize economically distressed areas. The blight remains. Urban renewal and various welfare programs too often have only made things worse by spawning dependency on government help. Environmental laws have fared little better. Intended to force cleanup of contaminated sites, these laws instead have scared away potential investors with potentially unlimited liability, including liability for contamination the investors did not cause or even know about. Environmental regulations and liability established under the Federal Superfund Program along with various other Federal and State environmental rules have helped create thousands of these brownfield properties in the United States. These are industrial or commercial sites suspected of being in some way environmentally contaminated. Although not serious threats to public health and safety, these properties have become unavailable for economic use, because legal rules make them too financially risky for investment and job creation. Potential liability scares businesses and investors away from these sites, creating permanently abandoned blights on the urban and rural landscape. Investors are afraid of being dragged into multimillion- dollar litigation and cleanup over contamination they did not cause. Worse, investors willing to shoulder the liability of a potential environmental cleanup find that they cannot write off the cost of environmental remediation of brownfields. Instead these costs must be spread over a number of years. Thus, the Tax Code and environmental laws combine to scare away potential sources of investment and growth, [[Page S862]] often from our most economically distressed areas. To help both our economy and our environment, the Moseley-Braun- Abraham legislation would target tax benefits at brownfields in economically distressed areas to encourage cleanup and job creation. We would allow investors in brownfields to expense their cleanup costs immediately--without having to split these costs up over a number of years. This will have three positive effects. First, these incentives will help our communities. By encouraging redevelopment of abandoned, unproductive sites, these tax incentives will reinvigorate economic growth in distressed communities across the country. They will provide economic opportunity rather than government dependence by encouraging investment and entrepreneurship where it is most needed. Second, this legislation will help the environment. These tax incentives will significantly improve our ability to clean up environmentally contaminated sites. The legacy of existing cleanup laws is a remarkable lack of progress. With thousands of sites across the country categorized as brownfields, we need to start cleaning them now, and we need private investment to get the job done. Furthermore, encouraging brownfields cleanup will save undeveloped land from unnecessary development. For every brownfield that is cleaned up and reused there will be a green field that remains clean and unused. Third, this solution, unlike those attempted in the past, utilizes the private sector to reclaim contaminated land and reinvigorate distressed communities. By encouraging private investment, rather than attempting to purchase or force cooperation with government mandates, we can free up private capital and initiative to do its job of revitalizing these distressed areas. By adopting this approach, the Senate will take a significant step toward revitalized, reinvigorated, and renewed urban and rural zones. With the incentives, included in this amendment, good jobs and a clean environment will go together, to everyone's benefit. I thank Senators Moseley-Braun, D'Amato, Lieberman, Jeffords, and our other cosponsors for joining me in this important effort, and I look forward to seeing meaningful brownfields reforms passed this Congress. By Mr. GRAMS (for himself, Mr. Abraham, Mr. Ashcroft, Mr. Faircloth, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. Stevens and Mr. Hagel): S. 236. A bill to abolish the Department of Energy, and for other purposes; to the Committee on Energy and Natural Resources. THE DEPARTMENT OF ENERGY ABOLISHMENT ACT Mr. GRAMS. Mr. President, I introduce legislation aimed at improving government as we know it. The Department of Energy Abolishment Act of 1997 comes after nearly two decades of debate. The basic question has always remained the same: Why should we expend taxpayer dollars on this Cabinet-level agency? And today, we ask the same question. Following a year's worth of discussions on the blueprint I am putting forth, much progress has been made. When the 104th Congress began to tackle this issue, we looked at three main issues. First, we examined the fact that the Department of Energy no longer has a mission--which is clearly reflected by the fact that nearly 85 percent of its budget is expended upon nonenergy programs. Next, we studied those programs charged to the DOE and reviewed its ability to meet the related job requirements. And finally, we looked at the DOE's bloated budget in light of the first two criterion--determining whether the taxpayers should be forced to expend over $16 billion annually on this hodge- podge collection. Nearly a year later, this Nation continues to grow increasingly dependent upon foreign oil--in total contrast to the DOE's core mission. Even in light of this administration's focus on alternative energy, the DOE expends less than one-fifth of its budget on energy- related programs. And after examining key DOE mission programs, such as the Civilian Nuclear Waste program, it is clear that the goals of those missions are not being met. So we are challenged to either accept the status quo or move to change it. I must admit that the status quo may be easier in the short- term. But in the context of the proverbial big picture, we cannot afford to turn our backs. Besides the fact that it is the role of Congress to oversee taxpayer expenditures and ensure a fair rate of return on their investments, this Nation is faced with a national debt in excess of $5.3 trillion. However, gaining consensus on the need for change is easier than effecting such change. So, last year I worked with the Senate Task Force on Government Agency Elimination to develop a blueprint. Under the direction of the former Senate Majority Leader, Senator Dole, I worked with Senators Faircloth, Abraham, and Stevens to study proposals on the DOE. After months of discussions with experts in the fields of energy and defense, we introduced legislation--legislation which is the core of the bill I am introducing today. Let me be the first to state that the ideas contained within this bill are not all of my own. Just as the idea to eliminate the Department of Energy is not a new one--since its creation in 1978, experts have been clamoring to abolish this agency in search of a mission. This bill represents the comments and input of many who have worked in these fields for decades, but like all things--I consider it a work in progress. As many of our colleagues will recall, the Senate Energy and Natural Resources Committee held a hearing on this very bill last September. During the hearing, we received testimony from such distinguished witnesses as the Former Assistant Energy Secretary Shelby Brewer and the Former Defense Secretary Caspar Weinberger in support of the proposal. Having either directly run these programs, or relied upon them, they provided strong firsthand evidence as to the detriment of leaving things as they are. The committee also received testimony from the current Acting Secretary and then-Assistant Energy Secretary, Charlie Curtis, who testified in support of improving the delivery of the Department's missions, at lower cost, for the benefit of the American people. His testimony focused upon how the DOE was working to improve its efforts to fulfill various missions, and how changing horses midstream would derail the DOE's efforts. In his remarks, Mr. Curtis dismissed the DOE Abolishment Act because the DOE did not believe it appropriate to entertain matters of this moment and complexity in the context of a bill which has as its proposed objective changing the organizational structure and fate of the Department of Energy. What the DOE fails to recognize is that the conclusions--to abolish the DOE--arise from an analysis of the Department's activities, rather than from any antigovernment ideology or mere desire to reduce government spending, as pointed out by Dr. Irwin Stelzer of the American Enterprise Institute. Supporters of the DOE Abolishment Act have always agreed that there are core functions performed by the DOE which must continue to be done, but the DOE has yet to provide a compelling argument as to why the DOE itself must continue to exist or successfully respond to our reasons for its elimination. But Mr. Curtis' objections are understandable when placed in the context of remarks by Nobel-prize economist, Dr. Milton Friedman: ``The Department of Energy offers an excellent example of a major difference between private and government projects. If a private project is a failure, it will be closed down; if a government project is a failure, it will be expanded. * * * It is in the self-interest of the Government officials in charge to keep the project alive; and they always have the ready excuse that the reason for failure was the lack of sufficient funds.'' So today, I am joined by my colleagues, Senator Abraham of Michigan, Senator Ashcroft of Missouri, Senator Faircloth of North Carolina, Senator Hutchinson of Arkansas, Senators Kyl and McCain of Arizona and Senator Stevens of Alaska, in reaffirming congressional intent to change the Department of Energy as we know it. Under the Department of Energy Abolishment Act of 1997, we dismantle the patchwork quilt of government initiatives--reassembling them into agencies bette