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1 1 (November 29, 2021)

handle is hein.crs/goveexa0001 and id is 1 raw text is: C o n g r e s s i o n a l R e s e r h S e v c November 29, 2021 Superfund Tax Legislation in the 117th Congress Decades of industrial and commercial activities involving various chemicals resulted in environmental contamination at thousands of sites in the United States, including federal facilities that served national defense and other purposes. Some of this contamination occurred prior to environmental regulation. Allocation of financial responsibility for remediating environmental contamination has been a long- standing issue. At the federal level, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, P.L. 96-510) established the liability of certain categories of potentially responsible parties (PRPs) for the costs of remediating hazardous substances released into the environment, natural resource damages, and related federal public health studies. CERCLA authorized the Hazardous Substance Superfund Trust Fund to finance the remediation of sites without financially viable PRPs to fulfill their liability. The U.S. Environmental Protection Agency (EPA) administers and oversees the remediation of sites prioritized for federal involvement under the Superfund program, in coordination with the states in which the sites are located. Other federal laws apply to oil spills and petroleum contamination from underground tanks not covered under CERCLA. States also have established environmental remediation programs under their own laws. Under CERCLA and subsequent law, Congress established a three-part tax system to finance the Superfund Trust Fund: (1) an excise tax on crude oil and imported petroleum products, (2) an excise tax on certain domestic chemical feedstocks and imported chemical derivatives, and (3) a special environmental tax on corporate income. These taxes accounted for most of the receipts for the Superfund Trust Fund until the taxing authority expired at the end of 1995. Since the taxes expired, the Superfund Trust Fund has primarily been financed with transfers from the General Fund of the U.S. Treasury. Legislation to reauthorize Superfund taxes has been introduced in every Congress since 1995, including the 117th Congress. The President's FY2022 budget request also proposes to reauthorize the Superfund excise taxes. Enacted November 15, 2021, the Infrastructure Investment and Jobs Act (P.L. 117-58) reauthorizes the Superfund chemicals excise tax through December 31, 2031, at double the rates that were in effect in 1995. As passed by the House on November 19, 2021, the Build Back Better Act (H.R. 5376, also referred to as the reconciliation bill) would permanently reauthorize the Superfund petroleum excise tax, increase the rate in 2022, and annually adjust it for inflation. The effective date of these tax provisions in both P.L. 117-58 and H.R. 5376 is July 1, 2022. A brief history of Superfund taxes, eligible uses of receipts, tax reauthorization issues, and Superfund tax legislation in the 117th Congress are discussed further below. For more information on the history of Superfund taxes and CERCLA, see CRS Report R41039, Comprehensive Environmental Response, Compensation, and Liability Act: A Summary of Superfund Cleanup Authorities and Related Provisions of the Act, by David M. Bearden; and CRS In Focus IF11790, Liability Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), by Kate R. Bowers. Superfund Tax History As enacted in 1980, CERCLA authorized Superfund excise taxes on crude oil, imported petroleum products, and domestic chemical feedstocks. Congress chose 42 feedstocks from which many other chemicals were made, as a matter of efficiency to tax chemical production. The Superfund Amendments and Reauthorization Act of 1986 (P.L. 99-499) expanded the Superfund chemicals excise tax to include imported chemical derivatives and added the special environmental tax on corporate income. Congress based the excise taxes on the premise that petrochemicals from crude oil, and other commercial chemicals, were common sources of contamination. The tax on corporate income applied to any corporation that met the income threshold regardless of whether its activities involved hazardous substances. Subsequent laws through the 101 Congress reauthorized Superfund taxes until the end of 1995. Prior to expiration, Superfund taxes were * an excise tax on crude oil and imported petroleum products at a rate of 9.7 cents per barrel paid by U.S. refineries receiving crude oil and importers of petroleum products for consumption, use, or warehousing; * an excise tax on 42 chemical feedstocks paid by the manufacturers, and imported chemical derivatives paid by the importers, at a rate that varied from $0.22 per ton to $4.87 per ton depending on the substance; and * a special environmental tax on corporate income at the rate of 0.12% of alternative minimum taxable income in excess of $2 million annually. Superfund tax receipts were fully expended by the end of FY2003. General Fund transfers have since financed most of the annual appropriations from the Superfund Trust Fund. In addition to these transfers, the Superfund Trust Fund receives revenue from cost recoveries from PRPs, fines and penalties for violations of CERCLA, and interest on the balance of the trust fund. Appropriations from the trust fund have been roughly $1.2 billion annually for the past several fiscal years. The Tax Increase Prevention Act of 2014 (P.L. 113-295) repealed the expired Superfund special environmental tax on corporate income. The ttps://crsr

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