Superfund Tax Legislation in the 117th Congress




November 29, 2021
Superfund Tax Legislation in the 117th Congress
Decades of industrial and commercial activities involving
the 117th Congress are discussed further below. For more
various chemicals resulted in environmental contamination
information on the history of Superfund taxes and
at thousands of sites in the United States, including federal
CERCLA, see CRS Report R41039, Comprehensive
facilities that served national defense and other purposes.
Environmental Response, Compensation, and Liability Act:
Some of this contamination occurred prior to environmental
A Summary of Superfund Cleanup Authorities and Related
regulation. Allocation of financial responsibility for
Provisions of the Act, by David M. Bearden; and CRS In
remediating environmental contamination has been a long-
Focus IF11790, Liability Under the Comprehensive
standing issue. At the federal level, the Comprehensive
Environmental Response, Compensation, and Liability Act
Environmental Response, Compensation, and Liability Act
(CERCLA), by Kate R. Bowers.
of 1980 (CERCLA, P.L. 96-510) established the liability of
certain categories of potentially responsible parties (PRPs)
Superfund Tax History
for the costs of remediating hazardous substances released
As enacted in 1980, CERCLA authorized Superfund excise
into the environment, natural resource damages, and related
taxes on crude oil, imported petroleum products, and
federal public health studies. CERCLA authorized the
domestic chemical feedstocks. Congress chose 42
Hazardous Substance Superfund Trust Fund to finance the
feedstocks from which many other chemicals were made, as
remediation of sites without financially viable PRPs to
a matter of efficiency to tax chemical production. The
fulfill their liability. The U.S. Environmental Protection
Superfund Amendments and Reauthorization Act of 1986
Agency (EPA) administers and oversees the remediation of
(P.L. 99-499) expanded the Superfund chemicals excise tax
sites prioritized for federal involvement under the
to include imported chemical derivatives and added the
Superfund program, in coordination with the states in which
special environmental tax on corporate income. Congress
the sites are located. Other federal laws apply to oil spills
based the excise taxes on the premise that petrochemicals
and petroleum contamination from underground tanks not
from crude oil, and other commercial chemicals, were
covered under CERCLA. States also have established
common sources of contamination. The tax on corporate
environmental remediation programs under their own laws.
income applied to any corporation that met the income
threshold regardless of whether its activities involved
Under CERCLA and subsequent law, Congress established
hazardous substances. Subsequent laws through the 101st
a three-part tax system to finance the Superfund Trust
Congress reauthorized Superfund taxes until the end of
Fund: (1) an excise tax on crude oil and imported petroleum
1995. Prior to expiration, Superfund taxes were
products, (2) an excise tax on certain domestic chemical
feedstocks and imported chemical derivatives, and (3) a
 an excise tax on crude oil and imported petroleum
special environmental tax on corporate income. These taxes
products at a rate of 9.7 cents per barrel paid by U.S.
accounted for most of the receipts for the Superfund Trust
refineries receiving crude oil and importers of petroleum
Fund until the taxing authority expired at the end of 1995.
products for consumption, use, or warehousing;
Since the taxes expired, the Superfund Trust Fund has
primarily been financed with transfers from the General
 an excise tax on 42 chemical feedstocks paid by the
Fund of the U.S. Treasury.
manufacturers, and imported chemical derivatives paid
by the importers, at a rate that varied from $0.22 per ton
Legislation to reauthorize Superfund taxes has been
to $4.87 per ton depending on the substance; and
introduced in every Congress since 1995, including the
117th Congress. The President’s FY2022 budget request
 a special environmental tax on corporate income at the
also proposes to reauthorize the Superfund excise taxes.
rate of 0.12% of alternative minimum taxable income in
Enacted November 15, 2021, the Infrastructure Investment
excess of $2 million annually.
and Jobs Act (P.L. 117-58) reauthorizes the Superfund
chemicals excise tax through December 31, 2031, at double
Superfund tax receipts were fully expended by the end of
the rates that were in effect in 1995. As passed by the
FY2003. General Fund transfers have since financed most
House on November 19, 2021, the Build Back Better Act
of the annual appropriations from the Superfund Trust
(H.R. 5376, also referred to as the reconciliation bill) would
Fund. In addition to these transfers, the Superfund Trust
permanently reauthorize the Superfund petroleum excise
Fund receives revenue from cost recoveries from PRPs,
tax, increase the rate in 2022, and annually adjust it for
fines and penalties for violations of CERCLA, and interest
inflation. The effective date of these tax provisions in both
on the balance of the trust fund. Appropriations from the
P.L. 117-58 and H.R. 5376 is July 1, 2022.
trust fund have been roughly $1.2 billion annually for the
past several fiscal years. The Tax Increase Prevention Act
A brief history of Superfund taxes, eligible uses of receipts,
of 2014 (P.L. 113-295) repealed the expired Superfund
tax reauthorization issues, and Superfund tax legislation in
special environmental tax on corporate income. The
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Superfund Tax Legislation in the 117th Congress
Superfund excise taxes have remained codified in the
substance is not provided in a timely manner. Under prior
Internal Revenue Code, but have been inactive after 1995.
law, the Treasury Secretary, in consultation with the EPA
Administrator and the Commissioner of U.S. Customs and
Eligible Uses of Receipts
Border Protection, had authority to designate additional
Taxes and other receipts in the Superfund Trust Fund have
taxable substances for which taxable chemicals constituted
been subject to annual appropriations prior to expenditure.
more than 50% of the weight or value of the imported
Section 111 of CERCLA authorizes eligible uses of
substance. P.L. 117-58 reduces this threshold to 20% of the
appropriated receipts from the Superfund Trust Fund to
weight or value, expanding the potential applicability of the
remediate contaminated sites. Section 111 excludes federal
tax to a greater number of substances that contain a lower
facilities from eligible uses of receipts because Congress
proportion of taxable chemicals. If information on the
funds their remediation with separate appropriations. The
composition of an imported substance is limited, identifying
Internal Revenue Code (26 U.S.C. §9507) excludes natural
the proportion of taxable chemicals may present challenges
resource damages from eligible uses of receipts to focus
to determine the tax owed. The Superfund tax amendments
appropriations on remediation, but these damages remain
in P.L. 117-58 will take effect on July 1, 2022. The Joint
subject to liability under CERCLA. The expenditure of
Committee on Taxation (JCT) estimated that the Superfund
Superfund appropriations for CERCLA “remedial actions”
tax amendments included in P.L. 117-58 would increase
is limited to National Priorities List (NPL) sites on
federal revenues by $14.5 billion from FY2022 to FY2031.
nonfederal land, subject to cost-sharing with the state in
Division J, Title VI, Section 613 of P.L. 117-58 authorizes
which the site is located. Less extensive “removal” actions
the expenditure of future tax receipts from the Superfund
may be fully funded with Superfund appropriations at NPL
Trust Fund without further appropriation. Division J, Title
or non-NPL sites. Monies that EPA collects from PRPs
VI also provides $3.5 billion in emergency appropriations
under CERCLA settlements are held in site-specific
from the Superfund Trust Fund through a transfer from the
“special” accounts in the Superfund Trust Fund.
General Fund to increase resources for Superfund remedial
Expenditures from these accounts are limited to uses
actions while the reinstated excise tax ramps up. The $3.5
covered under the settlements and are not subject to
billion is exempt from state cost-share requirements.
appropriations.
Amendments Proposed in H.R. 5376
Reauthorization Issues
As passed by the House, Section 136701 in Part 7 of
Whether to reinstate Superfund taxes to increase resources
Subtitle F of Title XIII of H.R. 5376 would permanently
for remediating contaminated sites has been an issue for the
reinstate the Superfund excise tax on crude oil and imported
past quarter century. The reauthorization debate has
petroleum products beginning on July 1, 2022, increase the
centered upon funding needs at sites without viable PRPs
tax rate to 16.4 cents per barrel in 2022, and annually adjust
and how to allocate financial responsibility for remediation
the rate for inflation. H.R. 5376 would authorize borrowing
in a fair manner. Some proponents of Superfund taxes have
for the Superfund Trust Fund through repayable advances
observed that the taxes reflect the “polluter pays principle”
from the General Fund until the end of 2031. Repayable
to help ensure that those who may become PRPs contribute
advances could initially supplement the tax receipts, but
to the costs of remediation if they may be bankrupt or
H.R. 5376 requires the full amount borrowed plus interest
otherwise less financially capable in the future. Others have
to be repaid to the General Fund. This borrowing power
observed that Superfund taxes were not based on whether a
would alter the timing of the funds, but not increase the
company released any hazardous substances, and that a
total amount. The $3.5 billion in emergency appropriations
PRP subject to both liability under CERCLA and Superfund
provided in P.L. 117-58 may lessen the need for advances.
taxes may be required to pay an amount exceeding the costs
The JCT estimated that the Superfund tax amendments in
of remediating contamination that it caused or contributed
House-passed H.R. 5376 would increase federal revenues
at a site. Some also have raised various other issues
by $12.8 billion from FY2022 to FY2031.
associated with financial responsibility for remediation.
Other Superfund Tax Legislation
Amendments Enacted in P.L. 117-58
As introduced, H.R. 2674 and H.R. 2703 would reauthorize
Section 80201 of Title II of Division H of P.L. 117-58
the entire three-part Superfund tax system with increased
reinstates the Superfund excise tax on domestically
tax rates and annual adjustments for inflation. H.R. 2674
produced chemical feedstocks and imported chemical
would permanently reauthorize these taxes. H.R. 2703
derivatives through December 31, 2031, and decouples the
would reauthorize Superfund excise taxes through
application of this tax from the Superfund petroleum excise
December 31, 2025, and the Superfund corporate income
tax. Under prior law, the chemicals tax was in effect any
tax through December 31, 2026. As introduced, S. 2183
time that the petroleum tax was in effect. P.L. 117-58
would permanently reauthorize Superfund excise taxes with
doubles the tax rate for each chemical feedstock that
increased rates and annual adjustments for inflation, but
applied in 1995. For example, the highest tax is increased
would not reauthorize the Superfund corporate income tax.
from $4.87 to $9.74 per ton for acetylene and several other
chemicals, and the lowest tax is increased from $0.22 to
Anthony A. Cilluffo, Analyst in Public Finance
$0.44 per ton for potassium hydroxide. P.L. 117-58
David M. Bearden, Specialist in Environmental Policy
increases the penalty tax on importers from 5% to 10% of
the value of the substance if information on the
IF11982
constituency of taxable chemicals in an imported chemical


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Superfund Tax Legislation in the 117th Congress


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