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pay, any prior history of such violations, the degree of culpabil-
ity, economic benefit or savings (if any) resulting from the vio-
lation, and such other matters as justice may require.
(2) CLASS n ADMINISTRATIVE PENALTY.—A civil penalty of not
more than $25,000 per day for each day during which the viola-
tion continues may be assessed by the Administrator in the
case of a violation of the requirements of section 304. In the
case of a second or subsequent violation the amount of such
penalty may be not more than $75,000 for each day during
which the violation continues. Any civil penalty under this
subsection shall be assessed and collected in the same manner,
and subject to the same provisions, as in the case of civil penal-
ties assessed and collected under section 16 of the Toxic Sub-
stances Control Act. In any proceeding for the assessment of a
civil penalty under this subsection the Administrator may
issue subpoenas for the attendance and testimony of witnesses
and the production of relevant papers, books, and documents
and may promulgate rules for discovery procedures.
(3) JUDICIAL ASSESSMENT.—The Administrator may bring an
action in the United States District court for the appropriate
district to assess and collect a penalty of not more than $25,000
per day for each day during which the violation continues in
the case of a violation of the requirements of section 304. In
the case of a second or subsequent violation, the amount of
such penalty may be not more than $75,000 for each day
during which the violation continues.
(4) CRIMINAL PENALTIES.—Any person who knowingly and
willfully fails to provide notice in accordance with section 304
shall, upon conviction, be fined not more than $25,000 or im-
prisoned for not more than two years, or both (or in the case of
a second or subsequent conviction, shall be fined not more
than $50,000 or imprisoned for not more than five years, or
both).
(c) CIVIL AND ADMINISTRATIVE PENALTIES FOR REPORTING RE-
QUIREMENTS.—(1) Any person (other than a governmental entity)
who violates any requirement of section 312 or 313 shall be liable
to the United States for a civil penalty in an amount not to exceed
$25,000 for each such violation.
(2) Any person (other than a governmental entity) who violates
any requirement of section 311 or 323(b), and any person who fails
to furnish to the Administrator information required under section
322(aX2) or requested by the Administrator under section 322(d)
shall be liable to the United States for a civil penalty in an amount
not to exceed $10,000 for each such violation.
(3) Each day a violation described in paragraph (1) or (2) contin-
ues shall, for purposes of this subsection, constitute a separate vio-
lation.
(4) The Administrator may assess any civil penalty for which a
person is liable under this subsection by administrative order or
may bring an action to assess and collect the penalty in the United
States district court for the district in which the person from whom
the penalty is sought resides or in which such person's principal
place of business is located.
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(d) CIVIL, ADMINISTRATIVE, AND CRIMINAL PENALTIES WITH RE-
SPECT TO TRADE SECRETS.—
(1) CIVIL AND ADMINISTRATIVE PENALTY FOR FRIVOLOUS
CLAIMS.—If the Administrator determines—
(AXi) under section 322(dX4) that an explanation submit-
ted by a trade secret claimant presents insufficient asser-
tions to support a finding that a specific chemical identity
is a trade secret, or (ii) after receiving supplemental sup-
porting detailed information under section 322(dX3XA),
that the specific chemical identity is not a trade secret;
and
(B) that the trade secret claim is frivolous,
the trade secret claimant is liable for a penalty of $25,000 per
claim. The Administrator may assess the penalty by adminis-
trative order or may bring ah action in the appropriate district
court of the United States to assess and collect the penalty.
(2) CRIMINAL PENALTY FOR DISCLOSURE OF TRADE SECRET INFOR-
MATION.—Any person who knowingly and willfully divulges or
discloses any information entitled to protection under section
322 shall, upon conviction, be subject to a fine of not more
than $20,000 or to imprisonment not to exceed one year, or
both.
(e) SPECIAL ENFORCEMENT PROVISIONS FOR SECTION 323.—When-
ever any facility owner or operator required to provide information
under section 323 to a health professional who has requested such
information fails or refuses to provide such information in accord-
ance with such section, such health professional may bring an
action in the appropriate United States district court to require
such facility owner or operator to provide the information. Such
court shall have jurisdiction to issue such orders and take such
other action as may be necessary to enforce the requirements of
section 323.
(f) PROCEDURES FOR ADMINISTRATIVE PENALTIES.—
(1) Any person against whom a civil penalty is assessed
under this section may obtain review thereof in the appropri-
ate district court of the United States by filing a notice of
appeal in such court within 30 days from the date of such
order and by simultaneously sending a copy of such notice by
certified mail to the Administrator. The Administrator shall
promptly file in such court a certified copy of the record upon
which such violation was found or such penalty imposed. If
any person fails to pay an assessment of a civil penalty after it
has become a final and unappealable order or after the appro-
priate court has entered final judgment in favor of the United
States, the Administrator may request the Attorney General of
the United States to institute a civil action in an appropriate
district court of the United States to collect the penalty, and
such court shall have jurisdiction to hear and decide any such
action. In hearing such action, the court shall have authority
to review the violation and the assessment of the civil penalty
on the record.
(2) The Administrator may issue subpoenas for the attend-
ance and testimony of witnesses and the production of relevant
papers, books, or documents in connection with hearings under
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this section. In case of contumacy or refusal to obey a subpoe-
na issued pursuant to this paragraph and served upon any
person, the district court of the United States for any district
in which such person is found, resides, or transacts business,
upon application by the United States and after notice to such
person, shall have jurisdiction to issue an order requiring such
person to appear and give testimony before the administrative
law judge or to appear and produce documents before the ad-
ministrative law judge, or both, and any failure to obey such
order of the court may be punished by such court as a con-
tempt thereof.
SEC. 326. CIVIL ACTIONS.
(a) AUTHORITY To BRING CIVIL ACTIONS.—
(1) CITIZEN SUITS.—Except as provided in subsection (e), any
person may commence a civil action on his own behalf against
the following:
(A) An owner or operator of a facility for failure io_do
any of the following:
(i) Submit a followup emergency notice under sec-
tion 304(c).
(ii) Submit a material safety data sheet or a list
under section 31 Ha).
(iii) Complete and submit an inventory form under
section 312(a) containing tier I information as de-
scribed in section 312(dXl).
(iv) Complete and submit a toxic chemical release
form under section 313(a).
(B) The Administrator for failure to do any of the follow-
ing:
(i) Publish inventory forms under section 312(g).
(ii) Respond to a petition to add or delete a chemical
under section 313(eXD within 180 days after receipt of
the petition.
(iii) Publish a toxic chemical release form under
313(g).
(iv) Establish a computer database in accordance
with section 313(j).
(v) Promulgate trade secret regulations under sec-
tion 322(c).
(vi) Render a decision in response to a petition
under section 322(d) within 9 months after receipt of
the petition.
(C) The Administrator, a State Governor, or a State
emergency response commission, for failure to provide a
mechanism for public availability of information in accord-
ance with section. 324(a).
(D) A State Governor or a State emergency response
commission for failure to respond to a request for tier II
information under section 312(eX3) within 120 days after
the date of receipt of the request.
(2) STATE OR LOCAL surra.—
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(A) Any State or local government may commence a civil
action against an owner or operator of a facility for failure
to do any of the following:
(i) Provide notification to the emergency response
commission in the State under section 302(c).
(ii) Submit a material safety data sheet or a list
under section 311(a).
(iii) Make available information requested under
section 31 He).
(iy) Prepare and submit an inventory form under
section 312(a) containing tier I information.
(B) Any State emergency response commission or local
emergency planning committee may commence a civil
action against an owner or operator of a facility for failure
to provide information under section 303(d) or for failure
to submit tier II information under section 312(eXD.
(C) Any State may commence a civil action against the
Administrator for failure to provide information to the
State under section 322(g).
(b) VENUE.—
(1) Any action under subsection (a) against an owner or oper-
ator of a facility shall be brought in the district court for the
district in which the alleged violation occurred.
(2) Any action under subsection (a) against the Administra-
tor may be brought in the United States District Court for the
District of Columbia.
(c) RELIEF.—The district court shall have jurisdiction in actions
brought under subsection (a) against an owner or operator of a fa-
cility to enforce the requirement concerned and to impose any civil
penalty provided for violation of that requirement. The district
court shall have jurisdiction in actions brought under subsection (a)
against the Administrator to order the Administrator to perform
the act or duty concerned.
(d) NOTICE.—
(1) No action may be commenced under subsection (aXIXA)
prior to 60 days after the plaintiff has given notice of the al-
leged violation to the Administrator, the State in which the al-
leged violation occurs, and the alleged violator. Notice under
this paragraph shall be given in such manner as the Adminis-
trator shall prescribe by regulation.
(2) No action may be commenced under subsection (aXIXB) or
(aXIXC) prior to 60 days after the date on which the plaintiff
gives notice to the Administrator, State Governor, or State
emergency response commission (as the case may be) that the
plaintiff will commence the action. Notice under this para-
graph shall be given in such manner as the Administrator
shall prescribe by regulation.
(e) LIMITATION.—No action may be commenced under subsection
(a) against an owner or operator of a facility if the Administrator
has commenced and is diligently pursuing an administrative order
or civil action to enforce the requirement concerned or to impose a
civil penalty under this Act with respect to the violation of the re-
quirement.
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(f) COSTS.—The court, in issuing any final order in any action
brought pursuant to this section, may award costs of litigation (in-
cluding reasonable attorney and expert witness fees) to the prevail-
ing or the substantially prevailing party whenever the court deter-
mines such an award is appropriate. The court may, if a temporary
restraining order or preliminary injunction is sought, require the
filing of a bond or equivalent security in accordance with the Fed-
eral Rules of Civil Procedure.
(g) OTHER RIGHTS.—-Nothing in this section shall restrict or
expand any right which any person (or class of persons) may have
under any Federal or State statute or common law to seek enforce-
ment of any requirement or to seek any other relief (including
relief against the Administrator or a State agency).
(h) INTERVENTION.—
(1) By THE UNITED STATES.—In any action under this section
the United States or the State, or both, if not a party, may in-
tervene as a matter of right.
(2) BY PERSONS.—In any action under this section, any person
may intervene as a matter of right when such person has a
direct interest which is or may be adversely affected by the
action and the disposition of the action may, as a practical
matter, impair or impede the person's ability to protect that
interest unless the Administrator or the State shows that the
person's interest is adequately represented by existing parties
in the action.
SEC. 327. EXEMPTION.
Except as provided in section 304, this title does not apply to the
transportation, including the storage incident to such transporta-
tion, of any substance or chemical subject to the requirements of
this title, including the transportation and distribution of natural
gas.
SEC. 328. REGULATIONS.
The Administrator may prescribe such regulations as may be
necessary to carry out this title.
SEC. 329. DEFINITIONS.
For purposes of this title—
(1) ADMINISTRATOR.—The term "Administrator" means the
Administrator of the Environmental Protection Agency.
(2) ENVIRONMENT.—The term "environment" includes water,
air, and land and the interrelationship which exists among and
between water, air, and land and all living things.
(3) EXTREMELY HAZARDOUS SUBSTANCE.—The term "extremely
hazardous substance" means a substance on the list described
in section 302(aX2).
(4) FACILITY.—The term "facility" means all buildings, equip-
ment, structures, and other stationary items which are located
on a single site or on contiguous or adjacent sites and which
are owned or operated by the same person (or by any person
which controls, is controlled by, or under common control with,
such person). For purposes of section 304, the term includes
motor vehicles, rolling stock, and aircraft.
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(5) HAZARDOUS CHEMICAL.—The term "hazardous chemical"
has the meaning given such term by section 311(e).
(6) MATERIAL SAFETY DATA SHEET.—The term "material safety
data sheet" means the sheet required to be developed under
section 1910.1200(g) of title 29 of the Code of Federal Regula-
tions, as that section may be amended from time to time.
(7) PERSON.—The term "person" means any individual, trust,
firm, joint stock company, corporation (including a government
corporation), partnership, association, State, municipality, com-
mission, political subdivision of a State, or interstate body.
(8) RELEASE.—The term "release" means any spilling, leak-
ing, pumping, pouring, emitting, emptying, discharging, inject-
ing, escaping, leaching, dumping, or disposing into the environ-
ment (including the abandonment or discarding of barrels, con-
tainers, and other closed receptacles) of any hazardous chemi-
cal, extremely hazardous substance, or toxic chemical.
(9) STATE.—The term "State" means any State of the United
States, the District of Columbia, the Commonwealth of Puerto
Rico, Guam, American Samoa, the United States Virgin Is-
lands, the Northern Mariana Islands, and any other territory
or possession over which the United States has jurisdiction.
(10) Toxic CHEMICAL.—The term "toxic chemical" means a
substance on the list described in section 313(c).
SEC. 330. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for fiscal years begin-
ning after September 30, 1986, such sums as may be necessary to
carry out this title.
TITLE IV-RADON GAS AND INDOOR AIR QUALITY
RESEARCH
SEC. 401. SHORT TITLE.
This title may be cited as the "Radon Gas and Indoor Air Quality
Research Act of 1986".
SEC. 402. FINDINGS.
The Congress finds that:
(1) High levels of radon gas pose a serious health threat in
structures in certain areas of the country.
(2) Various scientific studies have suggested that exposure to
radon, including exposure to naturally occurring radon and
indoor air pollutants, poses a public health risk.
(3) Existing Federal radon and indoor air pollutant research
programs are fragmented and underfunded.
(4) An adequate information base concerning exposure to
radon and indoor air pollutants should be developed by the ap-
propriate Federal agencies.
SEC. 403. RADON GAS AND INDOOR AIR QUALITY RESEARCH PROGRAM.
(a) DESIGN OP PROGRAM.—The Administrator of the Environmen-
tal Protection Agency shall establish a research program with re-
spect to radon gas and indoor air quality. Such program shall be
designed to—
(1) gather data and information on all aspects of indoor air
quality in order to contribute to the understanding of health
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problems associated with the existence of air pollutants in the
indoor environment;
(2) coordinate Federal, State, local, and private research and
development efforts relating to the improvement of indoor air
quality; and
(3) assess appropriate Federal Government actions to miti-
. gate the environmental and health risks associated with indoor
air quality problems.
(b) PROGRAM REQUIREMENTS.—The research program required
under this section shall include—
(1) research and development concerning the identification,
characterization, and monitoring of the sources and levels of
indoor air pollution, including radon, which includes research
and development relating to—
(A) the measurement of various pollutant concentrations
and their strengths and sources,
(B) high-risk building types, and
(C) instruments for indoor air quality data collection;
(2) research relating to the effects of indoor air pollution and
radon on human health;
(3) research and development relating to control technologies
or other mitigation measures to prevent or abate indoor air
pollution (including the development, evaluation, and testing of
individual and generic control devices and systems);
(4) demonstration of methods for reducing or eliminating
indoor air pollution and radon, including sealing, venting, and
other methods that the Administrator determines may be ef-
fective;
(5) research, to be carried out in conjunction with the Secre-
tary of Housing and Urban Development, for the purpose of de-
veloping—
(A) methods for assessing the potential for radon con-
tamination of new construction, including (but not limited
to) consideration of the moisture content of soil, porosity of
soil, and radon content of soil; and
(B) design measures to avoid indoor air pollution; and
(6) the dissemination of information to assure the public
availability of the findings of the activities under this section.
(c) ADVISORY COMMITTEES.—The Administrator shall establish a
committee comprised of individuals representing Federal agencies
concerned with various aspects of indoor air quality and an adviso-
ry group comprised of individuals representing the States, the sci-
entific community, industry, and public interest organizations to
assist him in carrying out the research program for radon gas and
indoor air quality.
(d) IMPLEMENTATION PLAN.—Not later than 90 days after the en-
actment of this Act, the Administrator shall submit to the Con-
gress a plan for implementation of the research program under
this section. Such plan shall also be submitted to the EPA Science
Advisory Board, which shall, within a reasonable period of time,
submit its comments on such plan to Congress.
(e) REPORT.—Not later than 2 years after the enactment of this
Act, the Administrator shall submit to Congress a report respecting
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his activities under this section and making such recommendations
as appropriate.
SEC. 404. CONSTRUCTION OF TITLE.
Nothing in this title shall be construed to authorize the Adminis-
trator to carry out any regulatory program or any activity other
than research, development, and related reporting, information dis-
semination, and coordination activities specified in this title. Noth-
ing in this title shall be construed to limit the authority of the Ad-
ministrator or of any other agency or instrumentality of the
United States under any other authority of law.
SEC. 405. AUTHORIZATIONS.
There are authorized to be appropriated to carry out the activi-
ties under this title and under section 118(k) of the Superfund
Amendments and Reauthorization Act of 1986 (relating to radon
gas assessment and demonstration program) not to exceed
$5,000,000 for each of the fiscal years 1987, 1988, and 1989. Of such
sums appropriated in fiscal years 1987 and 1988, two-fifths shall be
reserved for the implementation of section 118(kX2).
TITLE V—AMENDMENTS OF THE INTERNAL REVENUE
CODE OF 1986
SEC. 501. SHORT TITLE.
This title may be cited as the "Superfund Revenue Act of 1986".
PART I—SUPERFUND AND ITS REVENUE SOURCES
SEC. 511. EXTENSION OF ENVIRONMENTAL TAXES.
(a) IN GENERAL.—Subsection (d) of section 4611 of the Internal
Revenue Code of 1986 (relating to termination) is amended to read
as follows:
"(d) APPLICATION OF TAXES.—
"(1) IN GENERAL.—Except as provided in paragraphs (2) and
(3), the taxes imposed by this section shall apply after Decem-
ber 31,1986, and before January 1,1992.
"(2) NO TAX IF UNOBLIGATED BALANCE IN FUND EXCEEDS
13,500,000,000.—If on December 31, 1989, or December 31,
1990—
"(A) the unobligated balance in the Hazardous Sub-
stance Superfund exceeds $3,500,000,000, and
"(B) the Secretary, after consultation with the Adminis-
trator of the Environmental Protection Agency, deter-
mines that the unobligated balance in the Hazardous Sub-
stance Superfund will exceed $3,500,000,000 on Decem-
ber 31 of 1990 or 1991, respectively, if no tax is imposed
under section 59A, this section, and sections 4661 and
4671,
then no tax shall be imposed under this section during 1990 or
1991, as the case may be.
"(3) NO TAX IF AMOUNTS COLLECTED EXCEED $6,650,000,000.—
"(A) ESTIMATES BY SECRETARY.—The Secretary as of the
close of each calendar quarter (and at such other times as
the Secretary determines appropriate) shall make an esti-
mate of the amount of taxes which will be collected under
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section 59A, this section, and sections 4661 and 4671 and
credited to the Hazardous Substance Superfund during the
period beginning January 1, 1987, and ending December
31, 1991.
"(B) TERMINATION IF $6,650,000,000 CREDITED BEFORE JAN-
UARY i, 1992.—If the Secretary estimates under subpara-
graph (A) that more than $6,650,000,000 will be credited to
the Fund before January 1, 1992, no tax shall be imposed
under this section after the date on which (as estimated by
the Secretary) $6,650,000,000 will be so credited to the
Fund.".
(b) TECHNICAL AMENDMENT.—Section 303 of the Comprehensive
Environmental Response Compensation, and Liability Act of 1980
is hereby repealed.
(c) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1, 1987.
SEC. 512. INCREASE IN TAX ON PETROLEUM.
(a) IN GENERAL.—Subsections (a) and Ob) of section 4611 of the In-
ternal Revenue Code of 1986 (relating to environmental tax on pe-
troleum) are each amended by striking out "of 0.79 cent a barrel"
and inserting in lieu thereof "at the rate specified in subsection
(b) INCREASE IN TAX.—Section 4611 of such Code is amended by
redesignating subsections (c) and (d) as subsections (d) and (e), re?
speetively, and by inserting after subsection (b) the following new
subsection:
"(c) RATE OF TAX.—
"(1) IN GENERAL.—Except as provided in paragraph (2), the
rate of the taxes imposed by this section is 8.2 cents a barrel.
"(2) IMPORTED PETROLEUM PRODUCTS.—The rate of the tax im-
posed by subsection (aX2) shall be 11.7 cents a barrel."
(c) ALLOWANCE OF CREDIT FOR CRUDE OIL RETURNED TO PIPE-
LINE.—Section 4612 of such Code (relating to definitions and special
rules) is amended by redesignating subsection (c) as subsection (d)
and by inserting after subsection (b) the following new subsection:
"(c) CREDIT WHERE CRUDE On, RETURNED TO PIPELINE.—Under
regulations prescribed by the Secretary, if an operator of a United
States refinery—
"(1) removes crude oil from a pipeline, and
"(2) returns a portion of such crude oil into a stream of other
crude oil in the same pipeline,
there shall be allowed as a credit against the tax imposed by sec-
tion 4611 to such operator an amount equal to the product of the
rate of tax imposed by section 4611 on the crude oil so removed by
such operator and the number of barrels of crude oil returned by
such operator to such pipeline. Any crude oil so returned shall be
treated for purposes of this subchapter as crude oil on which no tax
has been imposed by section 4611.'
(d) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1,1987.
SEC 513. CHANGES RELATING TO TAX ON CERTAIN CHEMICALS.
(a) INCREASE IN RATE OF TAX ON XYLENE.—The table contained in
subsection (b) of section 4661 of the Internal Revenue Code of 1986
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(relating to tax on certain chemicals) is amended by adding at the
end thereof the following new sentence:
"For periods before 1992, the item relating to xylene in the preced-
ing table shall be applied by substituting '10.13' for '4.87'."
(b) EXEMPTION FOR EXPORTS OF TAXABLE CHEMICALS.—
(1) Section 4662 of such Code (relating to definitions and spe-
cial rules) is amended by redesignating subsection (e) as subsec-
tion (f) and by inserting after subsection (d) the following new
subsection:
"(e) EXEMPTION FOR EXPORTS OF TAXABLE CHEMICALS.—
"(1) TAX-FREE SALES.—
"(A) IN GENERAL.—No tax shall be imposed under sec-
tion 4661 on the sale by the manufacturer or producer of
any taxable chemical for export, or for resale by the pur-
chaser to a second purchaser for export.
"(B) PROOF OF EXPORT REQUIRED.—Rules similar to the
rules of section 4221(b) shall apply for purposes of subpara-
graph (A).
"(2) CREDIT OR REFUND WHERE TAX PAID.—
"(A) IN GENERAL.—Except as provided in subparagraph
(B), if—
"(i) tax under section 4661 was paid with respect to
any taxable chemical, and
(iiXD such chemical was exported by any person, or
"(II) such chemical was used as a material .in the
manufacture or production of a substance which was
exported by any person and which, at the time of
export, was a taxable substance (as defined in section
4672(a)),
credit or refund (without interest) of such tax shall be al-
lowed or made to the person who paid such tax.
"(B) CONDITION TO ALLOWANCE.—No credit or refund
shall be allowed or made under subparagraph (A) unless
the person who paid the tax establishes that he—
"(i) has repaid or agreed to repay the amount of the
tax to the person who exported the taxable chemical
or taxable substance (as so defined), or
"(ii) has obtained the written consent of such export-
er to the allowance of the credit or the making of the
refund.
"(3) REGULATIONS.—The Secretary shall prescribe such regu-
lations as may be necessary to carry out the purposes of this
subsection."
(2) Paragraph (1) of section 4662(d) of such Code (relating to
refund or credit for certain uses) is amended—
(A) by striking out "the sale of which by such person
would be taxable under such section" and inserting in lieu
thereof "which is a taxable chemical", and
(B) by striking out "imposed by such section on the other
substance manufactured or produced" and inserting in lieu
thereof "imposed by such section on the other substance
manufactured or produced (or which would have been im-
posed by such section on such other substance but for sub-
section (b) or (e) of this section)".
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(c) SPECIAL RULE FOR XYLENE.—Subsection (b) of section 4662 of
such Code (relating to exceptions; other special rules) is amended
by adding after paragraph (6) the following new paragraph:
"(7) SPECIAL RULE FOR XYLENE.—Except in the case of any
substance imported into the United States or exported from
the United States, the term 'xylene' does not include any sepa-
rated isomer of xylene."
(d) EXEMPTION FOR CERTAIN RECYCLED CHEMICALS.—Subsection (b)
of section 4662 of such Code (relating to exceptions; other special
rules) is amended by adding after paragraph (7) the following new
paragraph:
"(8) RECYCLED CHROMIUM, COBALT, AND NICKEL.—
"(A) IN GENERAL.—No tax shall be imposed under sec-
tion 4661(a) on any chromium, cobalt, or nickel which is di-
verted or recovered in the United States from any solid
waste as part of a recycling process (and not as part of the
original manufacturing or production process).
"(B) EXEMPTION NOT TO APPLY WHILE CORRECTIVE ACTION
UNCOMPLETED.—Subparagraph (A) shall not apply during
any period that required corrective action by the taxpayer
at the unit at which the recycling occurs is uncompleted.
"(C) REQUIRED CORRECTIVE ACTION.—For purposes of sub-
paragraph (B), required corrective action shall be treated
as uncompleted during the period—
"(i) beginning on the date that the corrective action
is required' by the Administrator or an authorized
State pursuant to—
"(I) a final permit under section 3005 of the
Solid Waste Disposal Act or a final order under
section 3004 or 3008 of such Act, or
"(II) a final order under section 106 of the Com-
prehensive Environmental Response, Compensa-
tion, and Liability Act of 1980, and
"(ii) ending on the date the Administrator or such
State (as the case may be) certifies to the Secretary
that such corrective action has been completed.
"(D) SPECIAL RULE FOR GROUNDWATER TREATMENT.—In
the case of corrective action requiring groundwater treat-
ment, such action shall be treated as completed as of the
close of the 10-year period beginning on the date such
action is required if such treatment complies with the
permit or order applicable under subparagraph (CXi)
throughout such period. The preceding sentence shall
cease to apply beginning on the date such treatment
ceases to comply with such permit or order.
"(E) SOLID WASTE.—For purposes of this paragraph, the
term 'solid waste' has the meaning given such term by sec-
tion 1004 of the Solid Waste Disposal Act, except that such
term shall not include any byproduct, coproduct, or other
waste from any process of smelting, refining, or otherwise
extracting any metal."
(e) EXEMPTION FOR ANIMAL FEED SUBSTANCES.—
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(1) IN GENERAL.—Subsection (b) of section 4662 of such Code
(relating to exceptions; other special rules) is amended by
adding after paragraph (8) the following new paragraph:
"(9) SUBSTANCES USED IN THE PRODUCTION OP.ANIMAL FEED.—
"(A) IN GENERAL.—In the case of—
"(i) nitric acid,
"(ii) sulfuric acid,
"(iii) ammonia, or
"(iv) methane used to produce ammonia,
which is a qualified animal feed substance, no tax shall be
imposed under section 466l(a).
"(B) QUALIFIED ANIMAL FEED SUBSTANCE.—For purposes
of this section, the term 'qualified animal feed substance'
means any substance—
"(i) used in a qualified animal feed use by the manu-
facturer, producer, or importer,
"(ii) sold for use by any purchaser in a qualified
animal feed use, or
"(iii) sold for resale by any purchaser for use, or
resale for ultimate use, in a qualified animal feed use.
"(C) QUALIFIED ANIMAL FEED USE.—The term "qualified
animal feed use" means any use in the manufacture or
production of animal feed or animal feed supplements, or
of ingredients used in animal feed or animal feed supple-
ments.
"(D) TAXATION OF. NONQUALIFIED SALE OR USE.—For pur-
poses of section 466l(a), if no tax was imposed by such sec-
tion on the sale or use of any chemical by reason of sub-
paragraph (A), the 1st person who sells or uses such chemi-
cal other than in a sale or use described in subparagraph
(A) shall be treated as the manufacturer of such chemi-
cal."
(2) REFUND OR CREDIT FOR SUBSTANCES USED IN THE PRODUC-
TION OF ANIMAL FEED.—Subsection (d) of section 4662 of such
Code (relating to refunds and credits with respect to the tax on
certain chemicals) is amended by adding at the end thereof the
following new paragraph:
"(4) USE IN THE PRODUCTION OF ANIMAL FEED.—Under regula-
tions prescribed by the Secretary, if—
"(A) a tax under section 4661 was paid with respect to
nitric acid, sulfuric acid, ammonia, or methane used to
produce ammonia, without regard to subsection (bX9), and
"(B) any person uses such substance as a qualified
animal feed substance,
then an amount equal to the excess of the tax so paid over the
tax determined with regard to subsection (bX9) shall be allowed
as a credit or refund (without interest) to such person in the
same manner as if it were an overpayment of tax imposed by
this section."
(f) CERTAIN EXCHANGES BY TAXPAYERS Nor TREATED AS SALES.—
Subsection (c) of section 4662 of such Code (relating to use by
manufacturers) is amended to read as follows:
"(c) USE AND CERTAIN EXCHANGES BY MANUFACTURER, ETC.—
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"(1) USE TREATED AS SALE.—Except as provided in subsections
(b) and (e), if any person manufactures, produces, or imports
any taxable chemical and uses such chemical, then such
person shall be liable for tax under section 4661 in the same
manner as if such chemical were sold by such person.
"(2) SPECIAL RULES FOR INVENTORY EXCHANGES.—
"(A) IN GENERAL.—Except as provided in this paragraph,
in any case in which a manufacturer, producer, or import-
er of a taxable chemical exchanges such chemical as part
of an inventory exchange with another person—
"(i) such exchange shall not be treated as a sale, and
"(ii) such other person shall, for purposes of section
4661, be treated as the manufacturer, producer, or im-
porter of such chemical.
"(B) REGISTRATION REQUIREMENT.—Subparagraph (A)
shall not apply to any inventory exchange unless—
"(i) both parties are registered with the Secretary as
manufacturers, producers, or importers of taxable
chemicals, and
"(ii) the person receiving the taxable chemical has,
at such time as the Secretary may prescribe, notified
the manufacturer, producer, or importer of such per-
son's registration number and the internal revenue
district in which such person is registered.
"(C) INVENTORY EXCHANGE.—For purposes of this para-
graph, the term 'inventory exchange' means any exchange
in which 2 persons exchange property which is, in the
hands of each person, property described in section
1221(1).".
(g) SPECIAL RULES RELATING TO HYDROCARBON STREAMS CONTAIN-
ING ORGANIC TAXABLE CHEMICALS.—Subsection (b) of section 4662
of such Code (relating to exceptions; other special rules) is amended
by adding after paragraph (9) the following new paragraph:
"(10) HYDROCARBON STREAMS CONTAINING MIXTURES OF OR-
GANIC TAXABLE CHEMICALS.—
"(A) IN GENERAL.—No tax shall be imposed under sec-
tion 4661(a) on any organic taxable chemical while such
chemical is part of an intermediate hydrocarbon stream
containing a mixture of organic taxable chemicals.
"(B) REMOVAL, ETC., TREATED AS USE.—For purposes of
this part, if any organic taxable chemical on which no tax
was imposed by reason of subparagraph (A) is isolated, ex-
tracted, or otherwise removed from, or ceases to be part of,
au intermediate hydrocarbon stream—
"(i) such isolation, extraction, removal, or cessation
shall be treated as use by the person causing such
event, and
"(ii) such person shall be treated as the manufactur-
er of such chemical.
"(C) REGISTRATION REQUIREMENT.—Subparagraph (A)
shall not apply to any sale of any intermediate hydrocar-
bon stream unless the registration requirements of clauses
(i) and (ii) of subsection (cX2XB) are satisfied.
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"(D) ORGANIC TAXABLE CHEMICAL.—For purposes of this
paragraph, the term 'organic taxable chemical' means any
taxable chemical which is an organic substance."
(h) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided in this subsec-
tion, the amendments made by this section shall take effect on
January 1, 1987.
(2) REPEAL OF TAX ON XYLENE FOR PERIODS BEFORE OCTOBER i,
1985.—
(A) REFUND OF TAX PREVIOUSLY IMPOSED.—
(i) IN GENERAL.—In the case of any tax imposed by
section 4661 of the Internal Revenue Code of 1954 on
the sale or use of xylene before October 1, 1985, such
tax (including interest, additions to tax, and additional
amounts) shall not be assessed, and if assessed, the as-
sessment shall be abated, and if collected shall be
credited or refunded (with interest) as an overpay-
ment.
(ii) CONDITION TO ALLOWANCE.—Clause (i) shall not
apply to a sale of xylene unless the person who (but
for clause (i)) would be liable for the tax imposed by
section 4661 on such sale meets requirements similar
to the requirements of paragraph (1) of section 6416(a)
of such Code. For purposes of the preceding sentence,
subparagraph (A) of section 6416(aXl) of such Code
shall be applied without regard to the material preced-
ing "has not collected".
(B) WAIVER OF STATUTE OF LIMITATIONS.—If on the date
of the enactment of this Act (or at any time within 1 year
after such date of enactment) refund or credit of any over-
payment of tax resulting from the application of subpara-
graph (A) is barred by any law or rule of law, refund or
credit of such overpayment shall, nevertheless, be made or
allowed if claim therefor is filed before the date 1 year
after the date of the enactment of this Act.
(C) XYLENE TO INCLUDE ISOMEBS.—For purposes of this
paragraph, the term "xylene" shall include any isomer of
xylene whether or not separated.
(3) INVENTORY EXCHANGES.—
(A) IN GENERAL.—Except as otherwise provided in this
paragraph, the amendment made by subsection (f) shall
apply as if included in the amendments made by section
211 of the Hazardous Substance Response Revenue Act of
1980.
(B) RECIPIENT MUST AGREE TO TREATMENT AS MANUFAC-
TURER.—In the case of any inventory exchange before Jan-
uary 1, 1987, the amendment made by subsection (f) shall
apply only if the person receiving the chemical from the
manufacturer, producer, or importer in the exchange
agrees to be treated as the manufacturer, producer, or im-
porter of such chemical for purposes of subchapter B of
chapter 38 of the Internal Revenue Code of 1954.
(C) EXCEPTION WHERE MANUFACTURER PAID TAX.—In the
case of any inventory exchange before January 1, 1987, the
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amendment made by subsection (f) shall not apply if the
manufacturer, producer, or importer treated such ex-
change as a sale for purposes of section 4661 of such Code
and paid the tax imposed by such section.
(D) REGISTRATION REQUIREMENTS.—Section 4662(cX2XB) of
such Code (as added by subsection (f)) shall apply to ex-
changes made after December 31, 1986.
(4) EXPORTS OF TAXABLE SUBSTANCES.—Subclause (II) of sec-
tion 4662(eX2XAXii) of such Code (as added by this section)
shall not apply to the export of any taxable substance (as de-
fined in section 4672(a) of such Code) before January 1, 1989.
(5) SALES OF INTERMEDIATE HYDROCARBON STREAMS.—
(A) IN GENERAL.—Except as otherwise provided in this
paragraph, the amendment made by subsection (g) shall
apply as if included in the amendments made by section
211 of the Hazardous Substances Response Revenue Act of
1980.
(B) PURCHASER MUST AGREE TO TREATMENT AS MANUFAC-
TURER.—In the case of any sale before January 1, 1987, of
any intermediate hydrocarbon stream, the amendment
made by subsection (g) shall apply only if the purchaser
agrees to be treated as the manufacturer, producer, or im-
porter for purposes of subchapter B of chapter 38 of such
Code.
(C) EXCEPTION WHERE MANUFACTURER PAID TAX.—In the
case of any sale before January 1, 1987, of any intermedi-
ate hydrocarbon stream, the amendment made by subsec-
tion (g) shall not apply if the manufacturer, producer, or
importer of such stream paid the tax imposed by section
4661 with respect to such sale on all taxable chemicals
contained in such stream.
(D) REGISTRATION REQUIREMENTS.—Section 4662(bX10XC)
of such Code (as added by subsection (g)) shall apply to ex-
changes made after December 31, 1986.
SEC. 514. REPEAL OF POST-CLOSURE TAX AND TRUST FUND.
(a) REPEAL OF TAX.—
(1) Subchapter C of chapter 38 of the Internal Revenue Code
of 1986 (relating to tax on hazardous wastes) is hereby re-
pealed.
(2) The table of subchapters for such chapter 38 is amended
by striking out the item relating to subchapter C.
(b) REPEAL OF TRUST FUND.—Section 232 of the Hazardous Sub-
stance Response Revenue Act of 1980 is hereby repealed.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section shall
take effect on October 1, 1983.
(2) WAIVER OF STATUTE OF LIMITATIONS.—If on the date of the
enactment of this Act (or at any time within 1 year after such
date of enactment) refund or credit of any overpayment of tax
resulting from the application of this section is barred by any
law or rule of law, refund or credit of such overpayment shall,
nevertheless, be made or allowed if claim therefor is filed
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before the date 1 year after the date of the enactment of this
Act.
SEC. 515. TAX ON CERTAIN IMPORTED SUBSTANCES DERIVED FROM TAX-
ABLE CHEMICALS.
(a) GENERAL RULE.—Chapter 38 of the Internal Revenue Code of
1986 is amended by adding after subchapter B the following new
subchapter:
"Subchapter C—Tax on Certain Imported Substances
"Sec. 4671. Imposition of tax.
"Sec. 4672. Definitions and special rules.
"SEC. 4671. IMPOSITION OF TAX.
"(a) GENERAL RULE.—There is hereby imposed a tax on any tax-
able substance sold or used by the importer thereof.
"(b) AMOUNT OF TAX.—
"(1) IN GENERAL.—Except as provided in paragraph (2), the
amount of the tax imposed by subsection (a) with respect to
any taxable substance shall be the amount of the tax which
would have been imposed by section 4661 on the taxable
chemicals used as materials in the manufacture or production
of such substance if such taxable chemicals had been sold in
the United States for use in the manufacture or production of
. such taxable substance.
"(2) RATE WHERE IMPORTER DOES NOT FURNISH INFORMATION
TO SECRETARY.—If the importer does not furnish to the Secre-
tary (at such time and in such manner as the Secretary shall
prescribe) sufficient information to determine under paragraph
(1) the amount of the tax imposed by subsection (a) on any tax-
able substance, the amount of the tax imposed on such taxable
substance shall be 5 percent of the appraised value of such sub-
stance as of the time such substance was entered into the
United States for consumption, use, or warehousing.
"(3) AUTHORITY TO PRESCRIBE RATE IN LIEU OF PARAGRAPH (2)
RATE.—The Secretary may prescribe for each taxable substance
a tax which, if prescribed, shall apply in lieu of the tax speci-
fied in paragraph (2) with respect to such substance. The tax
prescribed by the Secretary shall be equal to the amount of tax
which would be imposed by subsection (a) with respect to the
taxable substance if such substance were produced using the
predominant method of production of such substance.
"(c) EXEMPTIONS FOR SUBSTANCES TAXED UNDER SECTIONS 4611
AND 4661.—No tax shall be imposed by this section on the sale or
use of any substance if tax is imposed on such sale or use under
section 4611 or 4661.
"(d) TAX-FREE SALES, ETC. FOR SUBSTANCES USED AS CERTAIN
FUELS OR IN THE PRODUCTION OF FERTILIZER OR ANIMAL FEED.—
Rules similar to the following rules shall apply for purposes of ap-
plying this section with respect to taxable substances used or sold
for use as described in such rules:
"(1) Paragraphs (2), (5), and (9) of section 4662(b) (relating to
tax-free sales of chemicals used as fuel or in the production of
fertilizer or animal feed).
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"(2) Paragraphs (2), (3), and (4) of section 4662(d) (relating to
refund or credit of tax on certain chemicals used as fuel or in
the production of fertilizer or animal feed).
"(e) TERMINATION.—No tax shall be imposed under this section
during any period during which no tax is imposed under section
4611(a).
"SEC. 4672. DEFINITIONS AND SPECIAL RULES.
"(a) TAXABLE SUBSTANCE.—For purposes of this subchapter—
"(1) IN GENERAL.—The term 'taxable substance' means any
substance which, at the time of sale or use by the importer, is
listed as a taxable substance by the Secretary for purposes of
this subchapter.
"(2) DETERMINATION OF SUBSTANCES ON LIST.—A substance
shall be listed under paragraph (1) if—
"(A) the substance is contained in the list under para-
graph (3), or
"(B) the Secretary determines, in consultation with the
Administrator of the Environmental Protection Agency
and the Commissioner of Customs, that taxable chemicals
constitute more than 50 percent of the weight of the mate-
rials used to produce such substance (determined on the
basis of the predominant method of production).
"(3) INITIAL LIST OF TAXABLE SUBSTANCES.—
Cumene
Styrene
Ammonium nitrate
Nickel oxide
Isopropyl alcohol
Ethylene glycol
Vinyl chloride
Polyethylene resins, total
Polybutadiene
Styrene-butadiene, latex
Styrene-butadiene, snpf
Synthetic rubber, not containing fillers
Urea
Ferronickel
Feirochromium nov 3 pet
Ferrochrome pv 3 pet carbon
Unwrought nickel
Nickel waste and scrap
Wrought nickel rods and wire
Nickel powders
Phenolic resins
Polyvinylchloride resins
Polystyrene resins and copolymers
Ethyl alcohol for nonbeverage use
Ethylbenzene
Methylene chloride
Polypropylene
Propylene glycol
Formaldehyde
Acetone
Acrylonitrile
Methanol
Propylene oxide
Polypropylene resins
Ethylene oxide
Ethylene dichloride
Cyclohexane
laophthalic acid
Maleic anhydride
Phthalic anhydride
Ethyl methyl ketone
Chloroform
Carbon tetrachloride
Chromic acid
Hydrogen peroxide
Polystyrene homopolymer resins
Melamine
Acrylic and methacrylic acid resins
Vinyl resins
Vinyl resins, NSPF.
"(4) MODIFICATIONS TO LIST.—
"(A) IN GENERAL.—The Secretary may add substances to
or remove substances from the list under paragraph (3) (in-
cluding items listed by reason of paragraph (2)) as neces-
sary to carry out the purposes of this subchapter.
"(B) AUTHORITY TO ADD SUBSTANCES TO LIST BASED ON
VALUE.—The Secretary may, to the extent necessary to
carry out the purposes of this subchapter, add any sub-
stance to the list under paragraph (3) if such substance
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would be described in paragraph (2KB) if 'value' were sub-
stituted for 'weight' therein.
"(b) OTHER DEFINITIONS.—For purposes of this subchapter—
"(1) IMPORTER.—The term 'importer' means the person enter-
ing the taxable substance for consumption, use, or warehous-
ing.
"(2) TAXABLE CHEMICALS; UNITED STATES.—The terms 'taxable
chemical' and 'United States' have the respective meanings
given such terms by section 4662(a).
"(c) DISPOSITION OF REVENUES FROM PUERTO Rico AND THE
VIRGIN ISLANDS.—The provisions of subsections (aX3) and (bX3) of
section 7652 shall not apply to any tax imposed by section 4671."
(b) CLERICAL AMENDMENT.—The table of subchapters for chapter
38 of such Code is amended by adding after the item relating to
subchapter B the following hew item:
"SuBCHAFTER C. Tax on certain imported substances."
(c) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1, 1989.
(d) STUDY.—
(1) IN GENERAL.—The Secretary of the Treasury or his dele-
gate shall conduct a study of issues relating to the implementa-
tion of—
(A) the tax imposed by the section 4671 of the Internal
Revenue Code of 1986 (as added by this section), and
(B) the credit for exports of taxable substances under
section 4661(eX2XAXiiXII) of such Code.
In conducting such study, the Secretary of the Treasury or his
delegate shall consult with the Environmental Protection
Agency and the International Trade Commission.
(2) REPORT.—The report of the study under paragraph (1)
shall be submitted not later than January 1, 1988, to the Com-
mittee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate.
SEC. 516. ENVIRONMENTAL TAX.
(a) IN GENERAL.—Subchapter A of chapter 1 of the Internal Reve-
nue Code of 1986 (relating to income taxes) is amended by adding
at the end thereof the following new part:
"PART VII—ENVIRONMENTAL TAX
"Sec. 59A. Environmental tax.
"SEC. S9A. ENVIRONMENTAL TAX.
"(a) IMPOSITION OF TAX.—In the case of a corporation, there is
hereby imposed (in addition to any other tax imposed by this sub-
title) a tax equal to 0.12 percent of the excess of—
"(1) the modified alternative minimum taxable income of
such corporation for the taxable year, over
"(2) $2,000,000.
"(b) MODIFIED ALTERNATIVE MINIMUM TAXABLE INCOME.—For
purposes of this section, the term 'modified alternative minimum
taxable income' means alternative minimum taxable income (as de-
fined in section 55(bX2)) but determined without regard to—
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"(1) the alternative tax net operating loss deduction (as de-
fined in section 56(d)), and
"(2) the deduction allowed under section 164(aX5).
"(c) SPECIAL RULES.—
"(1) SHORT TAXABLE YEARS.— The application of this section to
taxable years of less than 12 months shall be in accordance
with regulations prescribed by the Secretary.
"(2) SECTION is NOT TO APPLY.— Section 15 shall not apply to
the tax imposed by this section.
"(d) APPLICATION OF TAX.—
"(1) IN GENERAL. — The tax imposed by this section shall
apply to taxable years beginning after December 31, 1986, and
before January 1, 1992.
"(2) EARLIER TERMINATION. — The tax imposed by this section
shall not apply to taxable years —
"(A) beginning during a calendar year during which no
tax is imposed under section 461 l(a) by reason of para-
graph (2) of section 461 l(e), and
"(B) beginning after the calendar year which includes
the termination date under paragraph (3) of section
(b) TECHNICAL AMENDMENTS. —
(1) NO CREDITS ALLOWED AGAINST TAX.—
(A) Paragraph (2) of section 26(b) of such Code, as
amended by the Tax Reform Act of 1986, is amended by
redesignating subparagraphs (B) through (J) as subpara-
graphs (C) through (K), respectively, and by inserting after
subparagraph (A) the following new subparagraph:
"(B) section 59A (relating to environmental tax),".
(B) Paragraph (3) of section 936(a) of such Code, as so
amended, is amended by redesignating subparagraphs (A),
(B), and (C) as subparagraphs (B), (C), and (D), respectively,
and by inserting before subparagraph (B) (as so redesignat-
ed) the following new subparagraph:
"(A) section 59A (relating to environmental tax)/'.
(2) TAX TO BE DEDUCTIBLE FOR INCOME TAX PURPOSES.—
(A) Subsection (a) of section 164 of such Code (relating to
deduction for taxes), as so amended, is amended by insert-
ing after paragraph (4) the following new paragraph:
"(5) The environmental tax imposed by section 59A. '
(B) Subsection (a) of section 275 of such Code is amended
by adding at the end thereof the following new sentence:
"Paragraph (1) shall not apply to the tax imposed by sec-
tion 59A.
(3) LIMITATION IN CASE OF CONTROLLED CORPORATIONS.— Sub-
section (a) of section 1561 of such Code (relating to limitations
on certain multiple tax benefits in the case of certain con-
trolled corporations), as amended by the Tax Reform Act of
1986, is amended —
(A) by striking out "and" at the end of paragraph (2), by
striking out the period at the end of paragraph (3) and in-
serting in lieu thereof ", and", and by inserting after para-
graph (3) the following new paragraph:
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"(4) one $2,000,000 amount for purposes of computing the tax
imposed by section 59A.", and
(B) by striking out "(and the amount specified in para-
graph (3))" and inserting in lieu thereof ", the amount
specified in paragraph (3), and the amount specified in
paragraph (4)".
(4) AMENDMENTS TO ESTIMATED TAX PROVISIONS.—
(A) TAX LIABILITY MUST BE ESTIMATED.—
(i) Paragraph (1) of section 6154(c) of such Code, as
so amended, is amended by striking out "and" at the
end of subparagraph (A), by striking out "over" at the
end of subparagraph (B) and inserting in lieu thereof
"and", and by adding at the end thereof the following
new subparagraph:
"(C) the environmental tax imposed by section 59A,
over".
(ii) Subsection (a) of section 6154 of such Code is
amended by striking out "section 11" and inserting
"section 11, 59A,".
(C) CONFORMING AMENDMENT TO OVERPAYMENT OF ESTI-
MATED TAX.—Subparagraph (A) of section 6425(cXD of such
Code, as amended by the Tax Reform Act of 1986, is
amended by striking out "plus" at the end of clause (i), by
striking out "over" at the end of clause (ii) and inserting
in lieu thereof "plus", and by adding at the end thereof
the following new clause:
"(iii) the tax imposed by section 59A, over".
(D) CONFORMING AMENDMENT TO PENALTY FOR FAILURE TO
PAY ESTIMATED TAX.—Paragraph (1) of section 6655(f) of
such Code (defining tax), as so amended, is amended by
striking out "plus" at the end of subparagraph (A), by
striking out "over" at the end of subparagraph (B) and in-
serting in lieu thereof "plus", and by adding at the end
thereof the following new subparagraph:
"(C) the tax imposed by section 59A, over".
(5) CLERICAL AMENDMENT.—The table of parts for subchapter
A of chapter 1 of such Code is amended by adding at the end
thereof the following new item:
"Part VTi. Environmental tax."
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to taxable years beginning after December 31,1986.
SEC. 517. HAZARDOUS SUBSTANCE SUPERFUND.
(a) IN GENERAL.—Subchapter A of chapter 98 of the Internal Rev-
enue Code of 1986 (relating to establishment of trust funds) is
amended by adding after section 9506 the following new section:
-SEC. 9507. HAZARDOUS SUBSTANCE SUPERFUND.
"(a) CREATION OF TRUST FUND.—There is established in the
Treasury of the United States a trust fund to be known as the
'Hazardous Substance Superfund' (hereinafter in this section re-
ferred to as the 'Superfund'), consisting of such amounts as ma>
be—
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"(1) appropriated to the Superfund as provided in this sec-
tion,
"(2) appropriated to the Superfund pursuant to section 517(b)
of the Superfund Revenue Act of 1986, or
"(3) credited to the Superfund as provided in section 9602(b).
"(b) TRANSFERS TO SUPERFUND.—There are hereby appropriated
to the Superfund amounts equivalent to—
"(1) the taxes received in the Treasury under section 59A,
4611, 4661, or 4671 (relating to environmental taxes),
"(2) amounts recovered on behalf of the Superfund under the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (hereinafter in this section referred to as
'CERCLA'),
"(3) all moneys recovered or collected under section
311(bX6XB) of the Clean Water Act,
"(4) penalties assessed under title I of CERCLA, and
"(5) punitive damages under section 107(cX3) of CERCLA.
"(c) EXPENDITURES FROM SUPERFUND.—
"(1) IN GENERAL.—Amounts in the Superfund shall be avail-
able, as provided in appropriation Acts, only for purposes of
making expenditures—
(A) to carry out the purposes of—
"(i) paragraphs (1), (2), (5), and (6) of section 11 Ha) of
CERCLA as in effect on the date of the enactment of
the Superfund Amendments and Reauthorization Act
of 1986,
"(ii) section 11 He) of CERCLA (as so in effect), other
than paragraphs (1) and (2) thereof, and
"(iii) section 11 Km) of CERCLA (as so in effect), or
"(B) hereafter authorized by a law which does not au-
thorize the expenditure out of the Superfund for a general
purpose not covered by subparagraph (A) (as so in effect).
"(2) EXCEPTION FOR CERTAIN TRANSFERS, ETC., or HAZARDOUS
SUBSTANCES.—No amount in the Superfund or derived from the
Superfund shall be available or used for the transfer or dispos-
al of hazardous waste carried out pursuant to a cooperative
agreement between the Administrator of the Environmental
Protection Agency and a State if the following conditions
apply—
"(A) the transfer or disposal, if made on December 13,
1985, would not comply with a State or local requirement,
"(B) the transfer is to a facility for which a final permit
under section 300&Xa) of the Solid Waste Disposal Act was
issued after January 1, 1983, and before November 1, 1984,
and
"(C) the transfer is from a facility identified as the
McColl Site in Fullerton, California.
"(d) AUTHORITY To BORROW.—
"(1) IN GENERAL.—There are authorized to be appropriated to
the Superfund, as repayable advances, such sums as may be
necessary to carry out the purposes of the Superfund.
"(2) LIMITATION ON AGGREGATE ADVANCES.—The maximum
aggregate amount of repayable advances to the Superfund
which is outstanding at any one time shall not exceed an
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amount equal to the amount which the Secretary estimates
will be equal to the sum of the amounts appropriated to the
Superfund under subsection (bXD during the following 24
months.
"(3) REPAYMENT OF ADVANCES.—
"(A) IN GENERAL.—Advances made to the Superfund
shall be repaid, and interest on such advances shall be
paid, to the general fund of the Treasury when the Secre-
tary determines that moneys are available for such pur-
poses in the Superfund.
"(B) FINAL REPAYMENT.—No advance shall be made to
the Superfund after December 31, 1991, and all advances
to such Fund shall be repaid on or before such date.
"(C) RATE OF INTEREST.—Interest on advances made to
the Superfund shall be at a rate determined by the Secre-
tary of the Treasury (as of the close of the calendar month
preceding the month in which the advance is made) to be
equal to the current average market yield on outstanding
marketable obligations of the United States with remain-
ing periods to maturity comparable to the anticipated
period during which the advance will be outstanding and
shall be compounded annually.
"(e) LIABILITY OF UNITED STATES LIMITED TO AMOUNT IN TRUST
FUND.—
"(1) GENERAL RULE.—Any claim filed against the Superfund
may be paid only out of the Superfund.
"(2) COORDINATION WITH OTHER PROVISIONS.—Nothing in
CERCLA or the Superfund Amendments and Reauthorization
Act of 1986 (or in any amendment made by either of such Acts)
shall authorize the payment by the United States Government
of any amount with respect to any such claim out of any
source other than the Superfund.
"(3) ORDER IN WHICH UNPAID CLAIMS ARE TO BE PAID.—If at
any time the Superfund has insufficient funds to pay all of the
claims payable out of the Superfund at such time, such claims
shall, to the extent permitted under paragraph (1), be paid in
full in the order in which they were finally determined.'
(b) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to
be appropriated, out of any money in the Treasury not otherwise
appropriated, to the Hazardous Substance Superfund for fiscal
year—
(1) 1987, $250,000,000,
(2) 1988, $250,000,000,
(3) 1989, $250,000,000,
(4) 1990, $250,000,000, and
(5) 1991, $250,000,000,
plus for each fiscal year an amount equal to so much of the aggre-
gate amount authorized to be appropriated under this subsection
(and paragraph (2) of section 221(b) of the Hazardous Substance Re-
sponse Act of 1980, as in effect before its repeal) as has not been
appropriated before the beginning of the fiscal year involved.
(c) CONFORMING AMENDMENTS.—
(1) Subtitle B of the Hazardous Substance Response Revenue
Act of 1980 (relating to establishment of Hazardous Substance
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218
Response Trust Fund), as amended by section 204 of this Act, is
hereby repealed.
(2) Paragraph (11) of section 101 of the Comprehensive Envi-
ronmental Response, Compensation, and Liability Act of 1980
is amended to read as follows:
"(11) The term 'Fund' or 'Trust Fund' means the Hazardous
Substance Superfund established by section 9507 of the Inter-
nal Revenue Code of 1986."
(d) CLERICAL AMENDMENT.—The table of sections for subchapter
A of chapter 98 of such Code is amended by adding after the item
relating to section 9506 the following new item:
"Sec. 9507. Hazardous Substance Superfund."
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section shall
take effect on January 1,1987.
(2) SUPERFUND TREATED AS CONTINUATION OF OLD TRUST
FUND.—The Hazardous Substance Superfund established by the
amendments made by this section shall be treated for all pur-
poses of law as a continuation of the Hazardous Substance Re-
sponse Trust Fund established by section 221 of the Hazardous
Substance Response Revenue Act of 1980. Any reference in any
law to the Hazardous Substance Response Trust Fund estab-
lished by such section 221 shall be deemed to include (wherev-
er appropriate) a reference to the Hazardous Substance Super-
fund established by the amendments made by this section.
PART H-LEAKING UNDERGROUND STORAGE TANK TRUST
FUND AND ITS REVENUE SOURCES
SEC. 521. ADDITIONAL TAXES ON GASOLINE, DIESEL FUEL, SPECIAL
MOTOR FUELS, FUELS USED IN AVIATION, AND FUELS USED
IN COMMERCIAL TRANSPORTATION ON INLAND WATER-
WAYS.
(a) GENERAL RULE.—
(1) GASOLINE.—
(A) GASOLINE TAX BEFORE AMENDMENT BY TAX REFORM
ACT OF 1986.— .
(i) IN GENERAL.—Section 4081 of the Internal Reve-
nue Code of 1986 (relating to imposition of tax on gaso-
line), as in effect on the day before the date of the en-
actment of the Tax Reform Act of 1986, ia amended by
striking out subsections (a) and (b) and inserting in
lieu thereof the following:
"(a) IN GENERAL.—There is hereby imposed on gasoline sold by
the producer or importer thereof, or by any producer of gasoline, a
tax at the rate specified in subsection (b).
"(b) RATE OF TAX.—
"(1) IN GENERAL.—The rate of the tax imposed by this section
is the sum of—
"(A) the Highway Trust Fund financing rate, and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate.
"(2) RATES.—For purposes of paragraph (1)—
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219
"(A) the Highway Trust Fund financing rate is 9 cents a
gallon, and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate is 0.1 cents a gallon."
(ii) TERMINATION.—Section 4081 of such Code, as so
in effect, is amended by adding at the end thereof the
following new subsection:
'(d) TERMINATION.— ~
"(1) HIGHWAY TRUST FUND FINANCING RATE.—On and after
October 1, 1988, the Highway Trust Fund financing rate under
subsection (bX2XA) shall not apply.
"(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND FI-
NANCING RATE.—
"(A) IN GENERAL.—The Leaking Underground Storage
Tank Trust Fund financing rate under subsection (bX2XB)
shall not apply after the earlier of—
"(i) December 31, 1991, or
"(ii) the last day of the termination month.
"(B) TERMINATION MONTH.—For purposes of subpara-
graph (A), the termination month is the 1st month as of
the close of which the Secretary estimates that the net
revenues from the taxes imposed by this section (to the
extent attributable to the Leaking Underground Storage
Tank Trust Fund financing rate under subsection (bX2XB)),
section 404l(d), and section 4042 (to the extent attributable
to the Leaking Underground Storage Tank Trust Fund fi-
nancing rate under section 4042(b)) are at least
$500,000,000.
"(C) NET REVENUES.—For purposes of subparagraph (B),
the term 'net revenues' means the excess of gross revenues
over amounts payable by reason of section 9508(cX2) (relat-
ing to transfer from Leaking Underground Storage Tank
Trust Fund for certain repayments and credits)."
(iii) TECHNICAL AMENDMENTS.—Subsection (c) of section
4081 of such Code, as so in effect, is amended—
(I) by striking out "subsection (a)" in paragraph
(1) and inserting in lieu thereof "subsection (b)",
and
(ID by striking out "a rate" in paragraph (2) and
inserting in lieu thereof "a Highway Trust Fund
financing rate".
(B) GASOLINE TAX AS AMENDED BY TAX REFORM ACT OF
1986.—
(i) IN GENERAL.—Subsections (a) and (b) of section
4081 of the Internal Revenue Code of 1986 (relating to
imposition of tax on gasoline), as amended by the Tax
Reform Act of 1986, are each amended by striking out
"of 9 cents a gallon" and inserting in lieu thereof "at
the rate specified in subsection (d) .
(ii) INCREASE IN TAX.—Section 4081 of such Code, as
amended by the Tax Reform Act of 1986, is amended
by striking out subsection (d) and inserting in lieu
thereof the following new subsections:
"(d) RATE OF TAX.—
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220
"(1) IN GENERAL.— The rate of the tax imposed by this section
is the sum of—
"(A) the Highway Trust Fund financing rate, and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate.
"(2) RATES.— For purposes of paragraph (1) —
"(A) the Highway Trust Fund financing rate is 9 cents a
gallon, and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate is 0.1 cents a gallon.
(e) TERMINATION.—
"(1) HIGHWAY TRUST FUND FINANCING RATE.-<)n and after
October 1, 1988, the Highway Trust Fund financing rate under
subsection (dX2XA) shall not apply.
"(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND FI-
NANCING RATE. —
"(A) IN GENERAL.— The Leaking Underground Storage
Tank Trust Fund financing rate under subsection (dX2XB)
shall not apply after the earlier of—
"(i) December 31, 1991, or
"(ii) the last day of the termination month.
"(B) TERMINATION MONTH.— For purposes of subpara-
graph (A), the termination month is the 1st month as of
the close of which the Secretary estimates that the net
revenues from the taxes imposed by this section (to the
extent attributable to the Leaking Underground Storage
Tank Trust Fund financing rate under subsection (dX2XB)),
section 404 l(d), and section 4042 (to the extent attributable
to the Leaking Underground Storage Tank Trust Fund fi-
nancing rate under section 4042(b)) are at least
$500,000,000.
"(C) NET REVENUES.— For purposes of subparagraph (B),
the term "net revenues" means the excess of gross reve-
nues over amounts payable by reason of section 9508(cX2)
(relating to transfer from Leaking Underground Storage
Tank Trust Fund for certain repayments and credits)."
(iii) TECHNICAL AMENDMENTS. — Subsection (c) of sec-
tion 4081 of such Code, as amended by the Tax Reform
Act of 1986, is amended—
(I) by striking out "subsection (a)" in paragraph
(1) and inserting in lieu thereof "subsection (d)",
and
(II) by striking out "a rate" in paragraph (2) and
inserting in lieu thereof "a Highway Trust Fund
financing rate".
(2) DIESEL AND SPECIAL MOTOR FUELS; FUELS USED IN AVIA-
TION.— Section 4041 of such Code (relating to tax on special
fuels) is amended by redesignating subsection (d) as subsection
(e) and by inserting after subsection (c) the following new sub-
"(d) ADDITIONAL TAXES To FUND LEAKING UNDERGROUND STOR-
AGE TANK TRUST FUND.—
"(1) LIQUIDS OTHER THAN GASOLINE, ETC., USED IN MOTOR VEHI-
CLES, MOTORBOATS, OR TRAINS. — In addition to the taxes im-
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221
posed by subsection (a), there is hereby imposed a tax of 0.1
cents a gallon on benzol, benzene, naphtha, casing head and
natural gasoline, or any other liquid (other than kerosene, gas
oil, liquefied petroleum gas, or fuel oil, or any product taxable
under section 4081)—
"(A) sold by any person to an owner, lessee, or other op-
erator of a motor vehicle, motorboat, or train for use as a
fuel in such motor vehicle, motorboat, or train, or
"(B) used by any person as a fuel in a motor vehicle, mo-
torboat, or train unless there was a taxable sale of such
liquid under subparagraph (A).
"(2) LIQUIDS USED IN AVIATION.—In addition to the taxes im-
posed by subsection (c) and section 4081, there is hereby im-
posed a tax of 0.1 cents a gallon on any liquid—
"(A) sold by any person to an owner, lessee, or other op-
erator of an aircraft for use as a fuel in such aircraft, or
"(B) used by any person as a fuel in an aircraft unless
there was a taxable sale of such liquid under subpara-
graph (A).
The tax imposed by this paragraph shall not apply to any prod-
uct taxable under section 4081 which is used as a fuel in an
aircraft other than in noncommercial aviation.
"(3) TERMINATION.—The taxes imposed by this subsection
shall not apply during any period during which the Leaking
Underground Storage Tank Trust Fund financing rate under
section 4081 does not apply."
(3) FUEL USED IN COMMERCIAL TRANSPORTATION ON INLAND
WATERWAYS.—Subsection (b) of section 4042 of such Code (relat-
ing to amount of tax on fuel used in commercial transportation
on inland waterways) is amended to read as follows:
'(b) AMOUNT OF TAX.—
"(1) IN GENERAL.—The rate of the tax imposed by subsection
(a) is the sum of—
"(A) the Inland Waterways Trust Fund financing rate,
and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate.
"(2) RATES.—For purposes of paragraph (1)—
"(A) the Inland Waterways Trust Fund financing rate is
10 cents a gallon, and
"(B) the Leaking Underground Storage Tank Trust Fund
financing rate is 0.1 cents a gallon.
"(3) EXCEPTION FOR FUEL TAXED UNDER SECTION 404 i(d).—The
Tleaking Underground Storage Tank Trust Fund financing rate
under paragraph (2XB) shall not apply to the use.of any fuel if
tax under section 404 l(d) was imposed on the sale of such fuel
or is imposed on such use.
"(4) TERMINATION OF LEAKING UNDERGROUND STORAGE TANK
TRUST FUND FINANCING RATE.—The Leaking Underground Stor-
age Tank Trust Fund financing rate under paragraph (2KB)
shall not apply during any period during which the Leaking
Underground Storage Tank Trust Fund financing rate under
section 4081 does not apply."
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222
(b) ADDITIONAL TAXES Nor TRANSFERRED TO HIGHWAY TRUST
FUND, AIRPORT AND AIRWAY TRUST FUND, AND INLAND WATERWAYS
TRUST FUND.—
(1) HIGHWAY TRUST FUND.—
(A) IN GENERAL.—Subsection (b) of section 9503 of such
Code (relating to transfer to Highway Trust Fund of
amounts equivalent to certain taxes) is amended by adding
at the end thereof the following new paragraph:
"(4) CERTAIN ADDITIONAL TAXES NOT TRANSFERRED TO HIGH-
WAY TRUST FUND.—For purposes of paragraphs (1) and (2),
there shall not be taken into account the taxes imposed by sec-
tion 4041(d) and so much of the taxes imposed by section 4081
as is attributable to the Leaking Underground Storage Tank
Trust Fund financing rate."
(B) CONFORMING AMENDMENT.—Subparagraph (D) of sec-
tion 9503(cX4) of such Code (defining motorboat fuel taxes)
is amended by striking out "section 4081" and inserting in
lieu thereof "section 4061 (to the extent attributable to the
Highway Trust Fund financing rate)".
(2) AIRPORT AND AIRWAY TRUST FUND.—Subsection (b) of sec-
tion 9502 of such Code (relating to transfer to Airport and
Airway Trust Fund of amounts equivalent to certain taxes) is
amended—
(A) by striking out "subsections (c) and (d) of section
4041" in paragraph (1) and inserting in lieu thereof "sub-
sections (c) and (e) of section 4041", and
(B) by striking out "section 4081" in paragraph (2) and
inserting in lieu thereof "section 4081 (to the extent attrib-
utable to the Highway Trust Fund financing rate)".
(3) INLAND WATERWAYS TRUST FUND.—Paragraph (1) of sec-
tion 9506(b) of such Code is amended by adding at the end
thereof the following new sentence: "The preceding sentence
shall apply only to so much of such taxes as are attributable to
the Inland Waterways Trust Fund financing rate under section
4042(b)."
(c) REPAYMENTS FOR GASOLINE USED ON FARMS, ETC.—
(1) GASOLINE USED ON FARMS.—Subsection (h) of section 6420
of such Code (relating to termination) is amended by striking
out "This section" and inserting in lieu thereof "Except with
respect to taxes imposed by section 4081 at the Leaking Under-
ground Storage Tank Trust Fund financing rate, this section".
(2) GASOLINE USED FOR CERTAIN NONHIGHWAY PURPOSES OR BY
LOCAL TRANSIT SYSTEMS.—
(A) TERMINATION NOT TO APPLY TO ADDITIONAL o.i CE_NT
TAX.—Subsection (h) of section 6421 of such Code (relating
to effective date), as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986, is amended
by striking out "This section" and inserting in lieu thereof
"Except with respect to taxes imposed by section 4081 at
the Leaking Underground Storage Tank Trust Fund fi-
nancing rate, this section".
(B) REPAYMENT OF ADDITIONAL TAX FOR OFF-HIGHWAY
BUSINESS USE TO APPLY ONLY TO CERTAIN VESSELS.—SubseC-
tion (e) of section 6421 of such Code, as so in effect, is
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223
amended by adding at the end thereof the following new
"(4) SECTION NOT TO APPLY TO CERTAIN OFF-HIGHWAY BUSINESS
USES WITH RESPECT TO THE TAX IMPOSED BY SECTION 4081 AT THE
LEAKING UNDERGROUND STORAGE TANK TRUST FUND FINANCING
RATE.—This section shall not apply with respect to the tax im-
posed by section 4081 at the Leaking Underground Storage
Tank Trust Fund financing rate on gasoline used in any off-
highway business use other than use in a vessel employed in
the fisheries or in the whaling business."
(3) FUELS USED FOR NONTAXABLE PURPOSES.—
(A) Subsection (m) of section 6427 of such Code (relating
to termination), as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986, is amended
by striking out "Subsections" and inserting in lieu thereof
"Except with respect to taxes imposed by section 404 l(d)
and section 4081 at the Leaking Underground Storage
Tank Trust Fund financing rate, subsections".
(BXi) Section 6427 of such Code, as so in effect, is amend-
ed by redesignating subsection (n) as subsection (o) and by
inserting after subsection (m) the following new subsection:
"(n) PAYMENTS FOR TAXES IMPOSED BY SECTION 4041(d).—For pur-
poses of subsections (a), (b), and (c), the taxes imposed by section
404l(d) shall be treated as imposed by section 4041(a)."
(ii) Subparagraph (A) of section 1703(eXD of the Tax
Reform Act of 1986 is amended—
(I) by striking out "and (o)" and inserting in lieu
thereof "(o), and (p)", and
(II) by striking out "and (n)" and inserting in lieu
thereof "(n), and (o)".
(O Paragraph (1) of section 6427(0 of such Code (relating
to gasoline used to'produce certain alcohol fuels) is amend-
ed by striking out at the rate" and inserting in lieu there-
of "at the Highway Trust Fund financing rate".
(d) CONTINUATION OF CERTAIN EXEMPTIONS FROM ADDITIONAL
TAXES, ETC.—
(1) Subsection (b) of section 4041 of such Code (relating to ex-
emption for off-highway business use; reduction in tax for
qualified methanol and ethanol fuel) is amended by adding at
the end thereof the following new paragraph:
"(3) COORDINATION WITH TAXES IMPOSED BY SUBSECTION (d).—
"(A) OFF-HIGHWAY BUSINESS USE.—
"(i) IN GENERAL.—Except as provided in clause (ii),
rules similar to the rules of paragraph (1) shall apply
with respect to the taxes imposed by subsection (d).
"(ii) LIMITATION ON EXEMPTION FOR OFF-HIGHWAY
BUSINESS USE.—For purposes of subparagraph (A),
paragraph (1) shall apply only with respect to off-high-
way business use in a vessel employed in the fisheries
or in the whaling business.
"(B) QUALIFIED METHANOL AND ETHANOL FUEL.—In the
case of qualified methanol or ethanol fuel, subsection (d)
shall be applied by substituting '0.05 cents' for '0.1 cents'
in paragraph (1) thereof."
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224
(2) Paragraph (3) of section 4041(f) of such Code (relating to
exemption for farm use) is amended by striking out "On and
after' and inserting in lieu thereof "Except with respect to the
taxes imposed by subsection (d), on and after".
(3) The last sentence of section 404 l(g) of such Code (relating
to other exemptions) is amended by striking out "Paragraphs
and inserting in lieu thereof "Except with respect to the taxes
imposed by subsection (d), paragraphs".
(4XA) The last sentence of section 4221(a) of such Code (relat-
ing to certain tax-free sales) is amended by striking out "4081"
and inserting in lieu thereof "4081 (at the Highway Trust
Fund financing rate)".
(B) Subparagraph (C) of section 1703(cX2) of the Tax Reform
Act of 1986 is amended to read as follows:
"(C) Subsection (a) of section 4221 (relating to certain
tax-free sales) is amended—
"(i) by inserting 'or section 4081 (at the Highway
Trust Fund financing rate)' before 'section 4121' in the
1st sentence, and
"(ii) by striking out '4071, or 4081 (at the Highway
Trust Fund financing rate)' in the last sentence and
inserting in lieu thereof 'or 4071'."
(5) Paragraph (2) of section 6416fb) of such Code is amended
by inserting "or under paragraph (1XA) or (2XA) of section
4041(d)" after "section 4041(aT. '
(e) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1, 1987.
SEC. 522. LEAKING UNDERGROUND STORAGE TANK TRUST FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 of the Internal Rev-
enue Code of 1986 (relating to establishment of trust funds) is
amended by adding after section 9507 the following new section:
"SEC. 9508. LEAKING UNDERGROUND STORAGE TANK TRUST FUND.
"(a) CREATION OF TRUST FUND.—There is established in the
Treasury of the United States a trust fund to be known as the
'Leaking Underground Storage Tank Trust Fund', consisting of
such amounts as may be appropriated or credited to such Trust
Fund as provided in this section or section 9602(b).
"(b) TRANSFERS TO TRUST FUND.—There are hereby appropriated
to the leaking Underground Storage Tank Trust Fund amounts
equivalent to—
"(1) taxes received in the Treasury under section 404 l(d) (re-
lating to additional taxes on motor fuels),
"(2) taxes received in the Treasury under section 4081 (relat-
ing to tax on gasoline) to the extent attributable to the Leak-
ing Underground Storage Tank Trust Fund financing rate
under such section,
"(3) taxes received in the Treasury under section 4042 (relat-
ing to tax on fuel used in commercial transportation on inland
waterways) to the extent attributable to the Leaking Under-
ground Storage Tank Trust Fund financing rate under such
section, and
"(4) amounts received in'the Treasury and collected under
section 9003(hX6) of the Solid Waste Disposal Act.
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225
"(c) EXPENDITURES.—
"fl> IN GENERAL.—Except as provided in paragraph (2),
amounts in the Leaking Underground Storage Tank Trust
Fund shall be available, as provided in appropriation Acts,
only for purposes of making expenditures to carry out section
9003(h) of the Solid Waste Disposal Act as in effect on the date
of the enactment of the Superfund Amendments and Reauthor-
ization Act of 1986.
"(2) TRANSFERS FROM TRUST FUND FOR CERTAIN REPAYMENTS
AND CREDITS.—
"(A) IN GENERAL.—The Secretary shall pay from time to
time from the Leaking Underground Storage Tank Trust
Fund into the general fund of the Treasury amounts equiv-
alent to—
"(i) amounts paid under—
"(I) section 6420 (relating to amounts paid in re-
— spect of gasoline used on farms),
"(II) section 6421 (relating to amounts paid in
respect of gasoline used for certain npnhighway
purposes or by local transit systems), and
"(HI) section 6427 (relating to fuels not used for
taxable purposes), and
"(ii) credits allowed under section 34, with respect to
the taxes imposed by sections 404 l(d) and 4081 (to the
extent attributable to the Leaking Underground Stor-
age Tank Trust Fund financing rate under section
4081).
"(6) TRANSFERS BASED ON ESTIMATES.—Transfers under
subparagraph (A) shall be made on the basis of estimates
by the Secretary, and proper adjustments shall be made in
amounts subsequently transferred to the extent prior esti-
mates were in excess of or less than the amounts required
to be transferred.
"(d) LIABILITY OF THE UNITED STATES LIMITED TO AMOUNT IN
TRUST FUND.—
"(1) GENERAL RULE.—Any claim filed against the Leaking
Underground Storage Tank Trust Fund may be paid only out
of such Trust Fund.
"(2) COORDINATION WITH OTHER PROVISIONS.—Nothing in the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 or the Superfund Amendments and Reau-
thohzation Act of 1986 (or in any amendment made by either
of such Acts) shall authorize the payment by the United States
Government of any amount with respect to any such claim out
of any source other than the Leaking Underground Storage
Tank Trust Fund.
"(3) ORDER IN WHICH UNPAID CLAIMS ARE TO BE PAID.—If at
any time the Leaking Underground Storage Tank Trust Fund
has insufficient funds to pay all of the claims out of such Trust
Fund at such time, such claims shall, to the extent permitted
under paragraph (1), be paid in full in the order in which they
were finally determined.
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226
(b) CLERICAL AMENDMENT.—The table of sections for subchapter
A of chapter 98 of such Code is amended by adding after the item
relating to section 9507 the following new item:
"Sec. 9508. Leaking Underground Storage Tank Trust Fund."
(c) EFFECTIVE DATE.—The amendments made by this section shall
take effect on January 1, 1987."
-1
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APPENDIX G
GUIDANCE AND POLICY MEMORANDA
MEMORANDUM PAGE
Releasing Identities of Potentially Responsible G-l
Parties in Response to FOIA Requests.
Gene A. Lucero and Kirk F. Sniff.
January 26, 1984.
Participation of Potentially Responsible Parties G-5
in Development of Remedial Investigations and
Feasibility Studies under CERCLA.
Lee M. Thomas. March 20, 1984.
Liability of Corporate Shareholders and G-l 5
Successor Corporations for Abandoned Sites
Under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA).
Courtney M. Price. June 13, 1984.
Policy on Enforcing Information Requests G-31
in Hazardous Waste Cases.
Courtney M. Price. September 10, 1984.
Procedures for Issuing Notice Letters. G-4 1
Gene A. Lucero. October 12, 1984.
Interim CERCLA Settlement Policy. G-55
Lee M. Thomas, Courtney M. Price, and
F. Henry Habicht, II. December 5, 1984.
Hazardous Waste Enforcement Policy. G-75
Environmental Protection Agency.
February 5, 1985.
PRP Participation in RI/FS. G-87
Gene A. Lucero. March 27, 1985.
Timely Initiation of Responsible Party Searches, G-89
Issuance of Notice Letters, and Release of Information.
Gene A. Lucero. October 9, 1985.
Policy for Enforcement Actions Against G-93
Transporters under CERCLA.
Gene A. Lucero and Frederick F. Stiehl.
December 23, 1985.
G-l
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MEMORANDUM PAGE
Potentially Responsible Party Searches. G-97
Gene A. Lucero and Thomas P. Gallagher.
March 27, 1986.
Interim Guidance: Streamlining the CERCLA G-99
Settlement Decision Process.
J. Winston Porter.
February 12, 1987.
NOTE: Two additional references which may provide guidance, but are not included
here are:
o Freedom of Information Act (FOIA)
o RCRA Confidential Business Information Security Manual, Draft,
March 1984
I
G-2
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
JAN 26 1984
MEMORANDUM
SUBJECT',
FROM:
Releasing Identities of Potentially Responsible
Parties in Response to FOIA Bequests
Gene A. Lucero, Director (S?$VJL A.
Office of Waste Programs Enforcement
waste
nce Monitoring
Kirk P. Sniff
Associate Enforcement Counsel
Office of Enforcement and Compl
TO:
Directors, Waste Management Division, Regions I, V
Director, Office of Emergency & Remedial Response, Region II
Director, Hazardous Waste Management Division, Region III
Directors, Air & Waste Management Division,
Regions IV, VI, VII , VIII
Director, Toxics & Waste Management Division, Region IX
Director, Air & Waste Division, Region X
Regional Counsels - Regions I - X
PURPOSE
This memorandum states the policy of EPA for responding•to
requests under the Freedom of Information Act (FOIA) for the
names of potentially responsible parties (PRPs) at CERCLA sites.
II. BACKGROUND
On March 30, 1983, EPA issued guidance on releasing the
identities of potentially responsible parties under CERCLA.
This guidance provided for ewe—toy-case review and discretionary
disclosure of the identities of PRPs in certain limited circum-
stances. In general, before the March 30 guidance, EPA did not
release th« names of PRPs in response to FOIA requests.
On June 23, 1983, the Federal District Court for the
District of Columbia decided in Cohen v. EPA that EPA had not
met its burden of establishing that disclosing the identities
of PRPs would harm the Agency's enforcement efforts. The case
involved EPA's decision to withhold the identities of potentially
responsible parties as provided by FOIA exemptions under 5
U.S.C. SS552
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-2-
1. For Exemption 7(A) — notice letters are investigatory
records compiled for law enforcement purposes, but EPA did not
establish if disclosure of the notice letters would harm the
investigation.!
2. For Exemption 7(C) — the identities of the PRPs
who received notice letters does not fall into the category of
a protected privacy interest; and
3. For Exemption 5 — notice letters are not predecisional
documents.
III. POLICY
As a result of the Cohen decision and the Administrator's
policy of conducting business in a more open atmosphere, and
in light of the resource demands involved in case-by-case
review of the names of notice letter recipients, the March 30,
1983, guidance has been reevaluated. The new guidance is set
forth below.
1. In response to a FOIA request, EPA will release the
names of PRPs who have received notice letters about a CERCLA site.
2. An exception to the policy of disclosing the names of
PRPs who received notice letters may be made only when EPA
determines that disclosure of a particular name will cause such
interference with an ongoing enforcement proceeding that
discretionary disclosure is clearly unwarranted. If EPA decides
to withhold the name of a PRP who received a notice letter, EPA
must support the conclusion that disclosure will cause substantial
harm to the law enforcement proceeding in writing with concurrence
by the Regional Counsel. The written documentation may not
consist of general statements; it must include the particular
facts relating to the specific PRP and site that led to the
conclusion to withhold.
3. The names of parties who have not yet received notice
letters may be predecisional and therefore exempt.from disclosure
under Exemption 5 of the FOIA. These names also may be exempt as
investigatory records under Exemption 7(A). However, in its
discretion EPA aay release this material.
4. Although EPA usually will release the names of PRPs
only in response to FOIA requests, the Agency may elect to
release the information on its own initiative in appropriate
circumstances.
5. Disclosure of the names of PRPs and the names of sites
does not constitute a waiver of EPA's right to withhold other
information developed for an enforcement action that EPA determines
is exempt from disclosure. Even if information is exempt from
disclosure under Exemption 2, 5, or 7 of FOIA, EPA has discretion
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to release the information; however, EPA may exercise its discretion
to release the information only after the appropriate Regional Counsel
reviews the information to ensure that disclosure will not interfere
with an enforcement, action.
IV. PROCEDURES TO IMPLEMENT POLICY
EPA Headquarters or a Regional Office should follow the
procedure below to respond to a FOIA request for the names of
PRPs or other information about a CERCLA site.
1. Quality assure the list of PRPs regularly and particularly
before sending notice letters to PRPs for a site. Perform an
in depth quality assurance of PRP lists every 6 months. Headquarters
will hold Regional Offices accountable for inadequate quality
assurance of PRP information.
2. Immediately notify Headquarters whenever a Regional
Office decides, in accordance with the guidance in Item III. 2
above, that disclosing the name of a PRP will cause substantial
harm to an enforcement effort. Regional Offices also should
notify Headquarters if withholding a name is no longer required.
3. If additional information is requested about a PRP or
a site, consult with the Regional Counsel for a decision on
whether disclosure will interfere with enforcement at the site.
4. Submit the list of names, or names and information, to
the requester with a brief explanation of how EPA defines PRP
for purposes of sending notice letters.
5. Include with the list of names the following disclaimer:
This list represents EPA1 s preliminary findings on
the identities of potentially responsible parties.
EPA makes no assertions that parties on this list
are liable for any- hazard or contamination at any
site.
6. Us* the term "potentially responsible party" in
responses to FOIA requests if none of the parties named in a
notice letter has been found liable by a court.
V. FIRST RESPONSE TO FOIA REQUESTS
Ten working days after the date of this policy, Headquarters
will respond to the current backlog of requests for all PRP names
with the quality assured list.
Any Regional Office that intends to withhold any PRP names,
as provided by Item III. 2 above, must have completed the required
documentation and notified Headquarters before the FOIA response
date. If you have any questions about this policy, contact
Susan Cary Watfcins (FTS 382-2032).
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR
MEMORANDUM
SUBJECT:
FROM:
TO:
in
Participation of Potentially Responsible Partie< ...
levelopment of Remedial Investigations and Feasioility
? H-t»x i Ai'L"-^. 11«j-t a F- r* F or* r A
CERCLA
Lee M. Thomas, Assistant Administrator
ice of Solid-Waste and Emergency 'Response
^7" (*)— ~lJL^-
•tney\. Price, Assistant Administrator
Office of Enforcement and Compliance Monitoring
Regional Administrators, Regions I-x
r.
Introduction
This memorandum sets forth the policy and procedures
governing participation of poten'tially responsiole parties (PR?s)
in development of remedial investigations (RI) and feasibility
studies (F3) under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA). ^ It discusses:
o the circumstances in which RI/FS may be conducted by potentially
responsible parties,
o the procedures for notifying potentially responsible parties
when the Agency has identified target sites for the development
of RI/FS, and
o the principles governing PRP participation in Agency-financed
RI/FS.
1 .The Agency is currently developing a comprehensive policy
concerning EPA participation in state-Lead enforcement under
CERCLA. The applicability of the RI/FS policy to state-lead
enforcement actions will be fully discussed in this forthcoming
memorandum.
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- ~> _
11. previous Approaches to PRP Participation in RI/FS
Under .earlier policy, the Agency negotiated with potentially
responsible parties (PRPs) for individual phases of site response
(i.e., RI/FS, design, construction). PRPs could negotiate to
conduct the RI/FS without discussing the remedial d33ign and
construction. Fund-financed RI/FS were generally not performed
until the Agency concluded that negotiations with private parties
were unsuccessful. Negotiations concerning liter phases of
remedial action would oocur after the RI/FS was completed.
This approach was designed to secure cleanup oy PRPs instead
of Superfund financed cleanup, if privately financed cleanup
could be accomplished in a timely manner. This policy was
initially expressed by EPA in the "Guidelines for Using the
Imminent Hazarl, Enforcement and Emergency Response Authorities
of Superfund and Other Statutes" issued pursuant to §106(c) of
CERCLA at 47 Fed. Reg. 20664 (May 13, 1932).
Th-3 Agency identified several drawbacks to the approach
of negotiating for individual phases of the cleanup:
First, the negotiations for the RI/FS were often unsatisfactory
because of frequent disagreements on the nature and scope of tne
Rl/t-'S. In particular, protracted negotiations occurreu over the
details of investigating the hazard, both on ar.d off-site.
.Disagreements also arose over sampling locations and frequency,
well placement, analytical methods, quality control, and l^vel
of detection. Substantial delays occurred even when agro^mont w^
eventually reached.
Second, some RI/FS conducted by potentially responsiole
parties were inadequate and of little use to EPA in determining
the extant of the remedy for a site. Because the Agency had not
published guidance on conducting RI/FS, the only way to avoid
therfo problems was for the Agency to provide extensive oversignt
and review of tne RI/FS under development. In certain instances,
tne PRPs revised the completed RI/FS after further discussions
with the Agency, or the Agency redid the RI/FS using CERCLA
funds. These inadequacies and revisions demanded resources fron
tJ*.» Fund and delayed site response.
Third, the Agency's willingness to negotiate with potentially
responsible parties for the RI/FS for any or all sites affected
the pursuit of the Agen-cy's priorities. Occasionally, resources
wire diverted from on-going litigation, or the initiation oc
action at sites where prompt response was desirable. Priorities
for the use of the Agency's enforcement resources were e-stablished
on a "de facto" basis by PRPs, based upon their willingness to
negotiate at particular sites, rather than on the Agency's assessment
of the sites which needed to be addressed in a timely fasnion
and offersd the bost prospects for privately-financed response.
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Finally, multiple negotiations concerning each phase of site
response inefficiently used limited Agency and Department of
Justice resources and personnel.
In response to these concerns, the Agency established a
policy that precluded potentially responsible parties from conduct in-.
the RI/F3, unless they were also willing to commit to conducting
the remedial action.
The Agency has also identic iod drawoacks to this approach.
Some potentially responsible parties have wanted an opportunity
to prepare an RI/FS or participate in its development. They have
been reluctant to accept tne conclusions in the RI/Fo and to
assume " responsibi11ty tor conducting cleanup, because their views
were not reflected in the Agency-financed RZ/FS. This policy
also increased demands on the Fun.i, and ran contrary to the
Agency's preference for timely and effective private-party response.
In light of these drawoacks, the Agency has established a
new policy concerning the conduct of KI/FS by ppps. The Agency
will give potentially responsible parties an opportunity to
conduct the RI/FS, consistent with Agency priorities and with
new Agency procedures and guidance. The new approacn will netter
enable the Agency to target its enforcement priorities, reduce
tae possibility of unsuccessful or protracted negotiations wit'i
?R?s, and enhance the quality of private-party .-U/FS.
III. Situations where private parties may conduct RI/FS
The Agency will identify sites targeted for RI/FS devo Lopn-snt ,
"and give potentially responsible parties an opportunity to conduct
tne RI/FS. The Remedial Accomplishments Plan (RAP) developed by
tne Agency identifies candidate sites for enforcement or Fund-f ir,a-.c
response, and allocates the resources necessary to undertake
these activities. The Remedial Accomplishments Plan lists all
sites for whicn RI/FS will be developed.
Approximately 95 sites from the National Priorities List
have been identified as targets for development of .-U/F3 in r't1
1984, and about 115 will be identified for FY 1985. The Ager.jy
has allocated CERCLA funds for RI/FS for each of those sites.
CP^ will make available a list of the sites on the Remedial
Accomplishments Plan, and the scheduled dates tor obligation or
funds for RI/FS development by the Agency at these sites.
Potentially responsible parties will have an opportunity to
conduct the RI/FS for these sites, provided that they respond
before the scheduled date for obligation of funds.
The Agency will not engage in lengthy negotiations with PRPs
over whether PRPs will conduct the RI/FS. In setting a reasonable
negotiating period, the Agency will consider factors specific to
the site, such as tecnnical complexity and the number o£ parties
involved. Once funds for an Agency-financed RI/FS have been
obligated, PRPs will not be allowed to take over development of
the RI/FS.
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If potentially responsible parties are willing to perform the
RI/FS, the. Agency will identify the conditions under vhich tney
may do so. To assure that privately-f unaed RI/FS are done quickly
and in a manner that meets the applicable requirements of this
policy, potentially responsible parties will oe expected to meet
the following conditions:
1. Where several parties are involved at a site, they
must be able to quickly organize themselves into a
representative body to deal with tne Agency as a single
entity. To facilitate this process, tne Agency will
make the names of potentially responsible parties
available on request. { Soe guidance t rom Gene A. Lucero
and Kirk Sniff on Release of Names of Potentially
Responsible Parties in Response to r'OIA Requests published
January 26, 1984). A single ?Rt>, or an organized 'ir.v:p
of ?RPs, may assume respons i n 1 1 i ty for actual development
of the RI/L-'S.
2. PRPs must agree to follow the scope of work for the
RI/FS developed by the Agency. Tho A-J-JMC-/ will not
engage in ier.gtny negotiations ov-.-r "his n^ue.
3. PRPs must demonstrate to the Agency that they are aole
to follow the technical procedures described in Remed ial
Invest igat ion and Feas iDi 1 1 ty S tudy j-iiJance Tinjais
currently unaer development. -
If these conditions are met, tho Ageno/ will devote the
c-jo necessary to assure the so 1 1 s t vc-.-ir/ -:-.-vu lopment o:
l/rS by private parties. The conditions governing private-
party conduct o£ the RI/FS should be formalized as Administrative
Orders (either unilateral or on consent) or Consent Decrees
wherever possible. 3 The Agency is Developing a model "generic"
consent order for privately-conducted RI/FS so that consistenc
an ^moiete agraements can be expedi t lous ly negotiated.
.
2. The Feasibility Study guidance and the Remedial Investigat ion
guidance are scheduled for completion in tne summer oc I^o4.
3. EPA may issue orders under section 106 when it d-rterminc-s that
tnere may be an imminent and substantial endangerment to public
nealth or welfare or the environment. The Regions should
review and if necessary update the information gathered to
justify the listing of a site on the National Priorities List.
This information will oe valuable in developing the endan^ermeni
assessment needed to justify issuance of the order.
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If, in the Agency's judgment;, the potentially rc-sponsiblo
parties da not meet these criteria (that is, they are i yt aole
to properly conduct the RI/FS), the Agency will not commit rosou r re '5
to review the private-party RI/FS. instead, the Agency will
perform the work itself and seek to recover the costs oc the
PI/FS. PRPs will be given the opportunity to Discuss imp lemer. 1at ;on
of the selected remedy at a later date.
The Agency normally allocates th.i equivalent of about l.L
work-years for start-up, management, and selection jc r-^e-jy .;r
each Fund-financed RI/FS developed by a government contractor.
Tnese resources will be redirected to oversee and review tne
privately-conducted RI/FS. It is the Agency's view chat
responsiole parties are liable for coses of oversignt of RI/FS
development. A commitment to reimburse the Agency for overs.jht
costs should be negotiated in advance.
The Agency will review the completed work product, assess
the various alternatives under consideration, an-i choose the
remedial alternative that best meets all applicaole requ i r ?ment -->
of CERCLA. Development of private-party RI/FS will bo Sv-Oject
co c?A community relations requirements. •*
The Agency believes that this approach will ennance •ne
prospects for private-party implementation of the remedy 2nd
a'.so provide a mechanism 'to clean up additional sicc-3 in cn.e
f.:-jre. As • potent ially responsiole parcies become no re famil.^.r
•vi ch conducting RI/F.S under the Remed lal Investigation ana
Feasib 111 ty Study guidances, .ind Aguncy personnel live Lop ^.ori
experience in overseeing ana evaluating them, we anticipate -.nac
it will take less than a full Agency workyear to assure the
completion of a technically sound RI/t"S. As a result :f f\is
experience, EPA will be able to oversee additional pr i '/a te 1} - f i n ance
RI/PSs with a given level of resources and, consequent!/, iniciato
cne response process by private parties at more \'?L sites.
Iv. Applicaci1ity of Policy
Tnis policy is prospective. PRPs vili be allowed to contact
RI/'FS for targeted sites on the oasis of these criteria wh~n tae
Remed ial Investigation and Feasibility Study technical manuals
an 1 any other necessary techn ica L nTFTuals are final. We anticipate
th-^t these documents will oe completed in the summer of 1934.
This polircy will also be applicable to sites where States
have the lead in managing preparation of the RI/FS. Where possible,
States should be involved in the determination of whether PRPs
can properly conduct the RI/FS, and in review of the workplan.
States may also assume some responsibility for oversight of PRP
conduct of the RI/FS.
4. Requirements arc set tortn in Community Relations in Super:unc:
A Handbook (Interim Version,) Septemcer 1933.
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This policy is applicable to sites that the Agency has
identified as targets for RI/FS development in the Remedial
Accomplishments Plan. The Agency will not provide resources to
oversee and evaluate RI/FS for sites that have not oeen so
designated. While potentially responsible parties are free to
conduct their own RI/FS for other sites which nave not been
listed as priorities, the Agency do'es not have sufficient resources
to provide assistance or review the RI/FS during their levelocnent.
This exclusion is designed to allow the Agency to manage
its resources and assure that they are directed towards sites
that represent the Agency's priorities. Thus, the Agency cannot
review private-party RI/FS for non-targeted sites to provide
assurances tnat the remedy selected by potentially respondtole
parties will be adequate to meet the requirements of CERCLA.
V. Interim Policy and other situations for private-party RI/FS
Until the RI and FS guidance documents are made final,
potentially responsible parties may also develop tfl/FS if they
commit to follow workplans for RI/FS that have been prepared oy
che Agency contractors under the supervision of tne Agency. The
Agency will not negotiate the content of these wor'-:p lar.s.
Implementation of this interim policy is ^t the discretion :f
the Regions. Regions may allow ?R?s to conduct RI/FS under
workplans developed by Agency contractors if trie KI/FS can :~^
conducted without undue disruption to schedules for remedial r^sp.:.-.
in light of existing commitments Cjr activities to r;e j-. Je rta< .-n
un'-er the Fund. Regions should complete any negotiations cor.cer-.:.:-,
this interim policy before the -last month of tne fiscal year, co
assure that these negotiations will not interfere with ase oc
Funa resources. Where the State is managing the development Df
the RI/E-'S, this interim policy may be applied at tne discretion
of the State.
The Agency will sanction private-party RI/FS fjc sites cnat
are not identified on the Remedial Accompi isnm-encs Plan in two
other situations.
First, private parties-may perform the RI/FS if tney also
agree to design and implement the remeuy selected by cne Agency
for the site. The Agency will allow private party development
of the RI/FS because the resources that would have been deaicat .• :
to negotiations with potentially responsible parties for the
remedial design and construction can instead be used to oversee
and review the privately-conducted RI/FS. Thus, PRPs may conduct
tne RI/FS for any NPL site (even if the site is not listed in
the Remedial Accomplishments Plan) if they commit to the complete
clean up as well.
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Second, the Agency will allow a private party RI/FS for
dioxin sites that are active facilities, where the scooe of fie
remedial investigation has been comprehensively definei oy the
Federal government. The explicit requirements developed oy the
Federal government—coupled with the public innerest to move
quickly on recently discovered dioxin sites—warrant this approach.
VI. Arrangements for Notice to PRP3
PRPs will be notified of the opportunity to perform the
RI/FS in the following way:
First, the list of sites targetted for RI/FS development
and a schedule for action at those sites will be made available.
It vill be accompanied by a statement that the Agency plans to
conduct RI/FS for the sites. Any potentially rosponsiole pariy
fiat vants to undertake the RI/FS -can voluntarily come forward
and contact the Agency, before the scheduled date to obligate
fjnds for RI/FS development.
Second, prior to the scheduled start of the RI/FS, the
Agency will send notice letters to PRPs for sites listed on the
Remedial Action Plan. Notice letters should be issued as soon
as possible after the completion of the responsible parcy search.
The letters should normally be issued at least 60 days pecere
the scheduled date for ooligation of Funds for tne RI/FS^TR?S
(if multiple generators are involved) snoulj therefore nave
sufficient time to organize themselves and initiate prelimir^ry
contacts and discussions with Agency personnel. This will also
ivoia delay in beginning a Fund-f inanced Ki.'l-'S snould it oeco-ie
necessary.
The notice letters will inform the potentially respons 10 l->
parties that.:
1. Fund-financed PI/FS actions aro planned;
2. The results of the studies will be ;s«d to soi?ct
a remedy f:?r the site;
3. PRPs can meet with Agency personnel to discuss cn.^.r
participation in tne -U/FS;
4. PRPs may be liable for the costs of the RI/FS per: jrr:->.:
by -the government;
5. ?RPs will have an opportunity to meet with Agency
personnel to discuss design and implementation of the
remedy after completion of the RI/FS.
6. PRPs may conduct RI/FS if they comply with the conciti;
outlined in section III of this policy.
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The Agency will develop revised Notice Letter guidance in
the near future that will provide additional detail on these
requirements.
VII. Regional Role Ln RI/FS Development by PRPs
Regional review of privatc-party RI/FS will oe intensive
when this policy is first implemented. -Implementation will
require the ongoing involvement of the EPA project officer in
tne private-party RI/FS development. The PRPs must develop a
detailed statement of work and work plans describing the Activities
they will undertake at the site, based on the guidance ind the
scope of work daveloped by the Agency. Tho Regions must arrrinrje
to periodically review the work plans and work performed as par".
of the RI/FS. The Reg ions _mjjst assure that PRPs follow proper
chain of custody procedures in testing and sampling, and that
PRPs keep adequate records to enable the jovernment to u.se t.-ese
records as evidence in an enforcement case. In addition, ^mp lo v-i^3
of contractors or others who do the work must cooperate witn -inj
be maae available to the -jovernment in tne preparation dO'i f.rial ^
of any subsequent enforcement case. i
•7
The Agency will review the completed work product -»nd jriccse
a renedial alternative that meets all applicable re ;u i r^men-. s of
CERCLA, and all implementing regulations, policies ini jui:inc-?.
In addition, the Agency retains the right to reject PRP RI/F3
and sue PRPs for cost of developing its own Fund-financed Ri'Fo,
if tne RI/FS is inadequate. As no too e=»rlior, tiio igro^.nen t to
conduct a private-party RI/FS should be incorporated into an
a^-tin istrat ive order or consent decree. Section 107 of LK-.CLA
^utnorizes the imposition of treble damages for failure to cor-.pi/
witn an Administrative order. The Agency will develop 2 mod^l
orc^r providing additional detail re-jarding EPA involvement in
private party RI/FS development.
VIII. Private-party Participation in Agency-Financea RI/FS
Where potentially rosponsibie parties do not actually doveiop
tr.y P.I/F5, the Agency will allow private-oarty involvement in
Fund-financed RI/FS, if such participation can occur without
•j-.due delay, expense, or interference with Agency RI/FS develj^ment
Private partie"s may possess technical expertise or knowledge
uuout a site which would be useful in developing a sound RI/FS.
Involvement by PRPs in the development of a Fund-financed Rl/tS
may also expedita site cleanup by identifying and satisfactorily
resolving differences between the Agency and privace parties
that might otherwise be the subject of litigation.
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Potentialiy responsible parties may be allowed to:
1. Review the contractor' s technical wor'< plan;
2. Have access to the site (it" Legally feasible) to ocserve
well installation and the collection of samples, and to
split samples where appropriate;
3. Have access to raw data and to draft reports;
4. Have the option to comment on each major phase of trie RI/
during the conduct of the investigation.
The final decision whether to permit potentially responsible
parties to participate in the Fund- f inanced RI/FS (as .veil as
the scope of any participation) rests with the Regions. This
decision should be based on the ability of ?R?s to organic
themselves so that they can participate as a single entity,
and the ability of PRPs to participate without undue interference
with or delay in completion of the RI/FS, and other factors
that the Regions determine are relevant. The Region ma/ t3riinate
PRP participation in RI/FS development if unnecessary expenses
or delays occur.
Certain aspects of this policy are not applicable •.-'.mediately
and supplementary guidance will be published. [f you hiv-.- ^v
questions or comments concerning tnis policy, or proolons t,,at
need to be. addressed in further guidance to implement this :ol.;y,
•please contact Gene A. Lucero ( 332-4>31 4) , or Jonn Crosr, in ;. s
stare ( FTS 332-4829) .
cc : Regional Counsel
Regions I-X
Directors, Waste Management Division
Region I, V
Director, Office of Emergency and Remedial Response
Region II
Director, Hazardous Waste Management Division
Region III
Directors, Air and Waste Management Division
Regions IV, VI, VII, VIII, X
Director, Toxics and Waste Management Division
Region IX
G-13
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3 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
/ WASHINGTON, D.C. 20460
JUN 13 1984
Qil.Cc 0(
iN«oa/:;vikv
COMPLIANT; WG
MEMORANDUM
SUBJECT:
FROM:
TO:
Liability of Corporate Shareholders and Successor
Corporations For Abandoned Sites Under the Compre-
hensive Environmental Response, Compensation, and
Liability Act (CERCLA) /'
Courtney M. Price
Assistant Administrator for Enforcement
and Compliance Monitoring
Assistant Administrator for _
Solid Waste and Emergency Response
Associate Enforcement Counsel for Waste
Regional Administrators
Regional Counsels
Introduction
The following enforcement memorandum, which was prepared
in cooperation with the Office of General Counsel, identifies
legal principles bearing on the extent to which corporate
shareholders and successor corporations may be held liable
for response costs that arise as a result of a release of a
hazardous substance from an abandoned hazardous waste facility.
In the discussion section pertaining to each part, the memorandum
reviews the law on the subject from established traditional
jurisprudence to current evolving standards. Although general
rules of liability are delineated, these principles must be
carefully applied to the unique fact pattern of any given
case.
I. THE LIABILITY OF CORPORATE SHAREHOLDERS UNDER CERCLA
Background
Normally, it is the corporate entity that will be held
accountable for cleanup costs under CERCLA. In certain
G-15
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instances, however, EPA may want to extend liability to include
corporate shareholders. This may arise, for example, where a
corporation, which had owned or operated a waste disposal site
at the time of the contamination, is no longer in business.
TTie situation may also occur if a corporation is still in
existence, but does not have sufficient assets to reimburse
the fund for cleanup costs. There are two additional policy
reasons for extending liability to corporate shareholders.
First, this type of action would promote corporate responsibil-
ity for those shareholders who in fact control the corporate
decisicn-making process; it would also deter other shareholders
in similar situations from acting irresponsibly. Second, the
establishment of shareholder liability would aid the negotiation
process and motivate responsible parties toward settlement.
Traditional corporation law favors preserving the corporate
entity, thereby insulating shareholders from corporate liability.
Nevertheless, as will be discussed below, there are exceptions
to this general principle that would allow a court to disregard ,
corporate form and impose liability under CERCLA on individual
shareholders.
Issue
What is the extent of liability for a corporate share-
holder under CERCLA for response costs that arise as a result
of a release of a hazardous substance from an abandoned hazardous
waste facility?
Summary
The question of whether EPA can hold a shareholder of a
corporation liable under CERCLA is a decision that must turn
on the unique facts specific to given situation. Generally,
however, in the interests of public convenience, fairness, and
equity, EPA may disregard the corporate entity when the shareholder
controlled or directed the activities of a corporate hazardous
waste generator, transporter, or facility.
Discussion
Section 107(aH2) of CERCLA provides that any owner or
operator of a facility which releases a hazardous substance
shall be liable for all necessary response costs resulting
from such a release. Section 101(20)(A)(iii) of CERCLA clearly
states that the term "owner or operator" as applied to abandoned
facilities includes "any person who owned, operated, or otherwise
G-16
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-3-
controlled activities at such facility immediately prior to
such abandonment" (emphasis added).
In addition, Sections 107(a)(3) and 107(a)(4) of CERCLA
impose liability for response costs on any person who arranged
for the disposal or treatment of a hazardous substance (the
generator), as well as any person who accepted a hazardous
Substance for transport to the disposal or treatment facility
(the transporter).
The term "person" is defined in CERCLA Section 101(21)
as' Inter alia, an individual, firm, corporation, association,
partnership, or commercial entity. A shareholder may exist
as any of the forms mentioned in Section 101(21). Therefore, a
shareholder may be considered a person under CERCLA and, conse-
quently, held liable for response costs incurred as a result
of a release of a hazardous substance from a CERCLA facility
if the shareholder:
3 Owned, operated, or otherwise controlled activities
at such facility immediately prior to abandonment
[CERCLA Section 107(a)(2); Section 101 ( 20 ) (A) ( iii ) ] ;
0 Arranged for the disposal or treatment (or
arranged with a transporter for the disposal or
treatment) of the hazardous substance [CERCLA
Section 107(a)(3)]; or
0 Accepted the hazardous substance for transport to
the disposal or treatment facility selected by such
person [CERCLA Section i07(a)(4)J.
Notwithstanding CERCLA's statutory language, courts
normally seek to preserve the corporate form and thus maintain
the principle of limited liability for its shareholders. V
In fact, fundamental "to the theory of corporation law is
the concept that a corporation is a legal separate entity, a
legal being having an existence separate and distinct from
V See Pardo v. Wilson Line of Washington, Inc., 414 F.2d
1145, 1149 (D.C. Cir. 1969); Krivo Industrial Supply Co.
v. National Distillers & Chem. Corp., 483 F.2d 1098,
1102 (5th Cir. 1973), modified per curiam, 490 F.2d 916
(5th Cir. 1974); Homan and Crimen, Inc. v. Harris, 626
F.2d 1201r 1208 (5th Cir. 1980).
G-17
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that of its owners." £/ This concept permits corporate
shareholders "to limit their personal liability to the extent
of their investment." ^/ Thusr although a shareholder may
be considered a "person" under CERCLA (and therefore subject
to the Act's liability provisions), the application of corporate
law would tend to shield the shareholder from such liability.
Nevertheless, a court may find that the statutory language
itself is sufficient to impose shareholder liability notwith-
standing corporation law. V Alternatively, to establish
shareholder liability, a court may find that the general prin-
ciples of corporation law apply but, nonetheless, set aside
the limited liability principle through the application of
the" equitable doctrine of "piercing the corporate veil."
Simply stated, the doctrine of piercing the corporate
veil refers to the process of disregarding the corporate
£/ Krivo Industrial Supply Co. v. National Distillers & Chem.
Corp., 483 F.2d 1098, 1102 (5th Cir. 1973), modified per
curiam, 490 F.2d -916 (5th Cir. 1974).
V id. -
£/ See United States v. Northeastern Pharmaceutical and
Chemical Company, Inc., et al., 80-5066-CV-S-4, memorandum
op. (W.D. Mo., 1984). In Northeastern Pharmaceutical the
district court noted that a literal reading of Section
101(20)(A) "provides that a person who owns interest in a
facility and is actively participating in its management
can be held liable for the disposal of hazardous waste."
(Memorandum op. at 36.) The court went on to find that
there was sufficient evidence to impose liability on one
of the defendants pursuant to this statutory definition
of "owner and operator," and the Section 107(a)(l) liability
provision of the Act. The fact that the defendant was a
major stockholder did not necessitate the application of
corporate law, and thus the principle of limited liability:
"To hold otherwise and allow [the defendant] to be shielded
by the corporate veil 'would frustrate congressional purpose
by exempting from the operation of the Act a large class
of persons who are uniquely qualified to assume the burden
imposed by [CERCLA].1" (Memorandum op. at 37, citation
omitted.)
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entity to hold either corporate shareholders or specific
individuals liable for corporate activities. £/
In order to determine whether to disregard corporate form
and thereby pierce the corporate veil, courts generally have
sought to establish two primary elements. £/ First, that the
corporation and the shareholder share such a unity of interest
and ownership between them that the two no longer exist as
distinct entities. 7/ Second, that a failure to disregard the
corporate form would" create an inequitable result. £/
The first element may be established by demonstrating
that the corporation was controlled by an "alter ego." This
would not include "mere majority or complete stock control,
but complete domination, not only of finances, but of policy
and business practice in respect to the transaction attacked
V See Henn, LAW OF CORPORATIONS SS143, 146 (1961). This
doctrine applies with equal force to parent-subsidiary
relationships (i.e. , where one corporation owns the
• controlling stock of another corporation).
£/ Generally, courts have sought to establish these elements
in the context of various theories, such as the "identity,
"instrumentality," "alter ego," and "agency" theories.
Although these terms actually suggest different concepts,
each employs similiar criteria for deciding whether to
pierce the corporate veil.
States v. Standard Beauty Supply Stores,
_, 561 F.2d 774, 777 (9th Cir. 1977); FMC Fin. Corp.
Murphree, 632 F . 2d 413, 422 (5th Cir. 1980).
See Automotriz Del Golfo de Cal. S.A. v. Resnick, 47 Cal
2d 792, 796, 306 P.2d 1 (1957); DeWitt Truck Broker, Inc
v. W. Ray Flemming Fruit Co., 540 F . 2d 681, 689 (4th
Cir. 1976). Some jurisdictions require a third element.
for piercing the corporate veil: that the corporate
structure must have worked an injustice on, or was the
proximate cause of injury to, the party seeking relief.
See e.g. , Berger v. Columbia Broadcasting System, Inc.,
453 F.2d 991, 995 (5th Cir. 1972), cert, denied, 409
U.S. 848, 93 S.Ct. 54, 34 L.Ed.2d 89 (1972); Lowendahl
v. Baltimore & O.R.R. , 247 A.D. 144, 287 N.Y.S. 62, 76
(1933), aff 'd 272 N.Y. 360, 6 N.E.2d 56 (Ct. App. 1936),
but see, Brunswick Corp. v. Waxman, 599 F.2d 34, 35-36
(2d Cir. 1979).
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so that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own." V
In analyzing this first element, courts have generally
considered the degree to which corporate "formalities have
been followed [so as] to maintain a separate corporate iden-
tity." 1°/ For example, the corporate veil has been pierced
in instances where there had been a failure to maintain adequate
Corporate records, or where corporate finances had not been
kept separate from personal accounts. H/
The second element of the test is satisfied when the
failure to disregard the corporate entity would result in
fraud or injustice. ^£/ This would occur, for example, in
cases where there has been a failure to adequately capital-
ize for the debts normally assocated with the business
undertaking, ^/ or where the corporate form has been employed
to misrepresent or defraud a creditor. H/
£/ Berger v. Columbia Broadcasting System, Inc., 453 F.2d
991, 995 (5th Cir. 1972), cert, denied, 409 U.S. 848,
93 S.Ct. 54, 34 L.Ed.2d 89 (1972).
10/ Labadie Coal Co. v. Black, 672 F.2d 92, 96 (D.C. Cir.
1982) ; See DeWitt Truck Broker, Inc. v. W. Ray Flemming
Fruit Co., 540 F.2d 681, 686 n. 14 (collecting cases)
(4th Cir. 1976).
\1/ Lakota Girl Scout C., Inc. v. Havey Fund-Rais. Man., Inc.,
519 F.2d 634, 638 (8th Cir. 1975); Dudley v. Smith, 504
F.2d 979, 982 (5th Cir. 1974).
12/ Some courts require that there be actual fraud or injustice
akin to fraud. See Chengelis v. Cenco Instruments Corp.,
386 F. Supp 862 (W.D. Pa.) aff'd mem., 523 F.2d 1050 (3d
Cir. 1975). Most jurisdictions do not require proof of
actual fraud. See DeWitt Truck Brokers v. W. Ray Flemming
Fruit Co., 540 F.2d 681, 684 (4th Cir. 1976).
W See Anderson v. Abbot, 321 U.S. 349, 362, 64 S.Ct. 531,
88 L.Ed. 793 (L944); Machinery Rental,- Inc. v. Herpel
(In re Multiponics, Inc.), 622 F.2d 709, 717 (5th Cir.
1980).
See FMC Fin. Corp. v. Murphree, 632 F.2d 413, 423 (5th
CTr. 1980).
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In applying the dual analysis, courts act under consider-
ations of equity; therefore, the question of whether the
corporate veil will be lifted is largely one of factr unique
to a given set of circumstances. However, the substantive
law applicable to a case may also have great importance. For
^xample, in applying state corporation law, state courts have
been generally reluctant to pierce the corporate veil. 15/
Federal courts, however, in applying federal standards ,~n~ave
shown more willingness to disregard the corporate entity and
hold individuals liable for corporate actions. 16/
In many instances federal decisions do draw upon state
law and state interpretations of common law for guidance.
However, federal courts that are involved with federal
question litigation are not bound by state substantive law
or rulings. ££/ In such cases, either federal common law
5/ See discussion in Note, Piercing the Corporate Law veil;
The Alter Ego Doctrine Under Federal Common Law, 95
Harvard L.R. 853, 855 (1982).
_ It is well settled that a corporate entity must be dis-
regarded whenever it was formed or used to circumvent
the provisions of a statute. See United States v. Lehigh
Valley R.R., 220 U.S. 257, 259, 31 S.Ct. 387, 55 L.Ed.
458 (1911) ; Schenley Distillers Corp. v. United States,
326 U.S. 432, 437, 66 S.Ct. 247, 90 L.Ed. 181 (1945);
Kavanaugh v. Ford Motor Co., 353 F.2d 710, 717 (7th
Cir. 1965); Casanova Guns, Inc. v. Connally, 454 F.2d
1320, 1322 (7th Cir. 1972).
17/ See Seymour v. Hull & Moreland Eng'g, 605 F.2d 1105 (9th
Cir. 1979); Rules of Decision Act, 28 U.S.C. S1652 (1976).
Generally, federal courts will adopt state law when to
do so is reasonable and not contrary to existing federal
policy. United States v. Polizzi, 500 F.2d 856, 907 (1974)
See also discussion in note 19, infra.
18/ UNITED STATES CONSTITUTION art. VI, cl. 2.
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or specific statutory directives may determine whether or not
to pierce the corporate veil.
See Anderson v. Abbot, 321 U.S.. 349, 642 S.Ct. 531, 88
L.Ed. 793 (1944); Town of Brookline v. Gorsuch, 667 F.2d
215, 221 (1981). For a general discussion of federal
common law and piercing the corporate veil see, note 15,
supra. The decision as to whether to apply state law or
a federal standard is dependent on many factors:
"These factors include the extent to'which: (1) a
need exists for national uniformity; (2) a federal
rule would disrupt commercial relationships predicated
on state law; (3) application of state law would
frustrate specific objectives.of the federal program;
(4) implementation of a particular rule would cause
administrative hardships or would aid in administrative
conveniences; (5) the regulations lend weignt to the
application of a uniform rule; (6) the action in
question has a direct effect on financial obligations
of the United States; and (7) substantial federal
interest in the outcome of the litigation exists.
Even with the use of these factors, however, whether
state law will be adopted as the federal rule or
a unique federal uniform rule of decision will be
formulated remains unclear. The courts have failed
to either mention the applicable law or to state the
underlying rationale for their choice of which law to
apply." Note, Piercing the Corporate Veil in Federal
Courts: Is Circumvention of a Statute Enough?, 13 Pac.
L.J. 1245, 1249 (1982) (citations omitted).
In discussions concerning CERCLA, the courts and Congress
have addressed several of the above mentioned factors.
CERCLA. For example, the need for national uniformity to
carry out the federal superfund program has been clearly
stated in United States v. Chem-Dyne, C-l-82-840, slip op.
(S.D. Ohio, Oct. 11, 1983). In Chem-Dyne, the court stated
that the purpose of CERCLA was to ensure the development
of a uniform rule of law, and the court pointed out the
dangers of a variable standard on hazardous waste disposal
practices that are clearly interstate. (Slip op. at
11-13.) See also, Ohio v. Georgeoff, 562 F. Supp. 1300,
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The general rule applied by federal courts to cases in-
volving federal statutes is that "a corporate entity may be
disregarded in the interests of public convenience, fairness
and equity." ^O/ in applying this rule, "federal courts
Vill look closely at the purpose of the federal statute to
determine whether that statute places importance on the
corporate form." ££/ Furthermore, where a statute contains
specific directives on when the corporate entity may be
disregarded and indiviauals held liable for the acts or debts
of a valid corporation, courts must defer to the congressional
mandate. ££/
Thus, even under general principles of corporation law,
courts may consider the language of statute in determining
whether to impose liability on corporate shareholders.
Therefore, a court may use the statutory language of CERCLA
either as a rationale for piercing a corporate veil (when
corporation law is applied) or as an independent statutory
basis for imposing liability (notwithstanding the general
principles of corporation law). 23/
19 (continued)/
1312 (N.D. Ohio, 1983); 126 Cong. Rec. H. 11,787 (Dec.
3, 1983).
The Chem-Dyne court stated that "the improper disposal
or release of hazardous substances is an enormous and
complex problem of national magnitude involving uniquely
federal interests." (Slip op. at 11.) The court further
noted that "a driving force toward the development of
CERCLA was the recognition that a response to this
pervasive condition at the State level was generally
inadequate: and that the United States has a unique
federal financial interest in the trust fund that is
funded by general and excise taxes." (Slip op. at 11,
citing, 5 U.S. Code Cong. & Ad. News at 6,142.) See
also, 126 Cong. Rec. at H. 11,801.
20/ Capital Telephone Company, Inc. v. F.C.C. , 498 F.2d 734,
. 738 (D.C. Cir. 1974).
Town of Brook line v. Gorsuch, 667 F.2d 215, 221 (1981).
££/ Anderson v. Abbot, 321 U.S. 349, 365, 64 S.Ct. 531,
88 L.Ed 793 (1944) .
23/ See discussion, supra , note 4.
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Conclusion
The Agency should rely upon the statutory language of the
Act as the basis for imposing liability on any person who
controlled or directed the activities of a hazardous waste
facility immediately prior to abandonment, or on any person
Who is a generator or transporter, notwithstanding the fact
that that individual is a shareholder. Additionally, and
alternatively, the Agency may rely on the general principles
of corporation law to pierce the corporate veil by applying
the current federal standard of public convenience, fairness,
and equity. However, when seeking to pierce the corporate
veil, the Agency should be prepared to apply the traditional
dual test previously discussed in order to provide additional
support for extending liability to corporate shareholders.
II. THE LIABILITY OF SUCCESSOR CORPORATIONS UNDER CERCLA
Background
Section 107(a)(2) of CERCLA extends liability for response
costs to "any person who at the time of disposal of any hazardous
substance owned. or operated any. facility at which such hazardous
substances were disposed of." Situations may arise, however,
where a corporation, which previously had owned or operated a
hazardous waste facility, now transfers corporate .ownership to
another corporation. In such cases, it is important to determine
whether the liability of the predecessor corporation's action
regarding the disposal of hazardous waste is also transferred
to the successor corporation. 24/
Issue
What is the extent of liability for successor corporations
under CERCLA?
24/ The discussion that follows is equally applicable to
successor corporations of generators and transporters
associated with hazardous substances released from CERCLA
facility.
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SummarY
When corporate ownership is transferred from one cor-
poration to another, the successor corporation is liable for
the acts of its predecessor if the new corporation acquired
Ownership by merger or consolidation. If, however, the
Acquisition was through the sale or transfer of assets, the
successor corporation is not liable unless:
a) The purchasing corporation expressly or
impliedly agrees to assume such obligations;
b) The transaction amounts to a "de facto" consoli-
dation or merger;
c) The purchasing corporation is merely a continu-
ation of the selling corporation; or
d) The transaction was fraudulently entered into
in order to escape liability.
Notwithstanding the above criteria, a successor corpora-
tion may be held liable for the acts of the predecessor
corporation if the new corporation continues substantially
the same business operations as the selling corporation.
Discussion
The liability of a successor corporation, according to
traditional corporation law, is dependent on the structure of
the corporate acquistion. 2V Corporate ownership may be
transferred in one of three ways: 1) through the sale of stock
to another corporation; 2) by a merger or consolidation with
another corporation; or 3) by the sale of its assets to another
corporation. 26/ Where a corporation is acquired through the
"purchase of aTl of its outstanding stock, the corporate
entity remains intact and retains its liabilities, despite
25/ See N.J. Transp. Dep't v. PSC Resources, Inc., 175 N.J.
Super. 447, 419 A.2<3 1151 (Super. Ct. Law Div. 1980).
26/ Note, Torts - Product Liability - Successor Corporation
Strictly Liable for Defective Products Manufactured by.
the Predecessor Corporation, 27 Villanova L.R. 411, 412
(1980) (citations omitted) [hereinafter cited as Note,
Torts - Product Liability].
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the change of ownership." 27/ By the same token, a purchasing
corporation retains liability for claims against the predecessor
company if the transaction is in the form of a merger or con-
solidation. 28y where, however, the acquisition is in the form
of a sale or other transferance of all of a corporation's assets
to a successor corporation, the latter is not liable for the
debts and liabilities of the predecessor corporation. 29/
There are four exceptions to this general rule of non-
liability in asset acquisitions. A successor corporation
is liable for the actions of its predecessor corporation if
one of the following is shown:
1) The purchaser expressly or impliedly
agrees to assume such obligations;
2) The transaction amounts to a "de facto"
consolidation or merger;
3) The purchasing corporation is merely a
continuation of the selling corpor-
ation; or
4) The transaction is entered into fraudulently
in order to escape liability. 30/
The application of the traditional corporate law approach
to successor liability has in many instances led to particularly
N.J. Transp. Dep't v. PSC Resources, Inc. , 175 N.J.
Super. 447, 419 A.2d 1157 (Super. Ct. Law Div. 1980).
Id. A merger occurs when one of the combining corpor-
ations continues to exist; a consolidation exists when
all of the combining corporations are dissolved and an
entirely new corporation is formed.
29/
See N.J. Transpj
Super. 447, 419
citing, Jackson
488, 454 (Super,
N.J. 3JO (1979),
•
A
V
•
»
Dep
.2d
. N
Ct.
't V.
PSC Resources, Inc.,
1151 (Super.
.J. Manu. Ins.
App.
Div. 197
Ct.
Co
9),
Law
. , 16
cert
Div.
6 N.J
. den
175 N
1980)
. Sup
ied ,
e
8
J.
r .
1
30/ Id., Note, Torts - Product Liability, supra note, 26 at
413 n. 15-18.
G-26
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harsh and unjust results, especially with respect to product
liability cases. 31/ Therefore, in an effort to provide an
adequate remedy and to protect injured consumers, courts
have broadened the exemptions to the general rule by either
modifying or recasting the "de facto" and "mere continuation"
exemptions to include an element .of public policy. 32/
More recently, however, the general rule has been aban-
doned altogether by several jurisdictions and, in essence, a
new theory for establishing successor liability has evolved
based upon the similarity of business operations. £p_/ The
new approach has been cast by one court in the following way:
" (W]here ... the successor corporation acquires
all or substantially all of the assets of the
predecessor corporation for crash and continues
2£/ See McKee v. Harris-Seybold Co., 109 N.J. Super. 555,
264 A.2d 98 (Super. Ct. Law Div. 1970), aff 'd per curiam,
118 N.J. Super. 480, 288 A.2d 585 (Super. Ct. App. Div.
1972); Kloberdanz v. Joy Mfg. Co., 288 F.Supp. 817 (D.
Colo. 1968).
32/ see N.J. Transp. Dep't v. PSC Resources, Inc., 175 N.J.
Super. 447, 419 A.2d 1151 (Super. Ct. Law Div. 1980);
See also, Knapp v. North Am. Rockwell Corp., 506 F.2d
361 (3d Cir. 1974), cert, denied, 421 U.S. 965 (1975);
Cyr v. B. Of fen & Co., 501 F.2d 1145 (1st Cir. 1975);
Turner v. Bituminous Gas Co., 397 Mich. 406, 244 N.W.2d
873 (1976).
The theory has also been referred to as the "product-
line" approach. In adopting this new approach to
successor liability, some courts have abandoned the
traditional rule of non-liability in asset acquisitions.
See e.g., Ray v. Alad Corp., 19 Cal. 3d 22, 560 P.2d
3, 136 .Cal. Rptr. 574 (1977). Other courts have con-
sidered the new approach as an exemption to the general
rule. See e.g., Daweko v. Jorgensen Steel Co., 290 Pa.
Super. Ct. 15, 434 A.2d 106 (1981); Note, Torts - Product
Liability, supra note, 26 at 418 n. 38. And, a few
jurisdictions have rejected the new approach. See
Travis v. Harris Corp., 565 F.2d 443 (7th Cir. 1977);
Tucker v. Paxson Mach. Co., 645 F.2d 620 (8th Cir. 1981).
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essentially the same manufacturing operation
as the predecessor corporation the successor
remains liable for the products liability claims
of its predecessor." 34/
This theory of establishing successor liability differs
from the "de facto" and "mere continuation" exemptions in that
the new approach does not examine whether there is a continuity
of corporate structure or ownership (e.g., whether the predecessor
and successor corporation share a common director or officer).
Instead, according to the new theory, liability will be imposed
if the successor corporation continues essentially the same
manufacturing or business operation as its predecessor corporation
even if no continuity of ownership-exists between them. 35/
Until recently, this new approach for establishing successor
liability was confined mostly to product- liability cases.
However, a recent New Jersey decision extended its application
to the area of environmental torts. The Superior Court of New
Jersey, in N.J. Transportation Department v. PSC Resources,
Inc. _/, rejected the traditional corporate approach to
successor liability where the defendant and its predecessor
corporation had allegedly discharged hazardous wastes. The
court reasoned that the underlying policy rationale for
abandonment of the traditional approach in defective product
cases is applicable to environmental torts. Therefore, the
court held that a corporation which purchased assets of another
corporation and engaged in the practice of discharging hazar-
dous waste into a state-owned lake is strictly liable for
present and previous discharges made by itself and the prede-
cessor corporation because the successor continued the same
waste disposal practice as its predecessor.
34/ Ramirez v. Amstead Indus., Inc., 171 N.J. Super. 261, 278,
408 A.2d 818 (Super. Ct. App. Div. 1979), aff'd, 86 N.J.
332, 431 A.2d 811 (1981).
!!/ See Ray v« Alad Corp., 19 Cal. 3d 22, 560 P.2d 3, 136 Cal.
Rptr. 574 (1977); some form of acquisition, however, is
still required. See Meisal v. Modern Press, 97 Wash.
2d 403, 645 P.2d 693.
175 N.J. Super. 447, 419 A.2d 1151 (Super. Ct. Law Div.
1980);
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A similar "continuity of business operation" approach has
been used., in cases involving statutory violations. *'_/ The
Ninth Circuit, for example, held in a case involving the Federal
Insecticide, Fungicide, and Rodenticide Act [FIFRA] 38/r that
"EPA's authority to extend liability to successor corporations
stems from the purpose of the statute it administers, which is
to regulate pesticides to protect the national environment." 39/
furthermore, the court noted that "(t]he agency may pursue the""
Objectives of the Act by imposing successor liability where it
will facilitate enforcement of the Act." 40/ After establishing
that there had been violations of FIFRA by the predecessor
corporation, the court found that there was substantial continuity
of business operation between the predecessor and successor
corporations to warrant imposition of successor liability.
Although CERCLA is not primarily a regulatory statute,
public policy considerations and the legislative history of
the Act clearly indicate that federal law would be applicable
to CERCLA situations involving successor liability. *y
Therefore, it is reasonable to assume that courts would similarly-
adopt'the federal "continuity of business operation approach"
in cases involving CERCLA.
Conclusion
In establishing successor liability under CERCLA, the
See Golden State Bottling Co. v. NLRB, 414 U.S. 168, 94
S.Ct. 414, 38 L.Ed2d 388 (1973); Slack v. Havens, 522
F.2d 1091 (9th Cir. 1975).
38/ 7 U.S.C. $136 et_ seq.
/
Oner II, Inc. v. United States Environ. Protection
Agency, 597 F.2d 184, 186 (9th Cir. 1979).
See discussiont supra, n. 19; One of Congress1 primary
concerns in enacting CERCLA was to alleviate the vast
national health hazard created by inactive and abandoned
disposal sites. See e.g. , Remarks of Rep. Florio, 126
Cong. Rec. H. 9,154 (Sept. 19, 1980), 126 Cong. Rec.
H. 11,773 (Dec. 3. 1980).
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-16-
Agency should initially utilize the "continuity of business
operation" approach of federal law. However, to provide
additional support or an alternative basis for successor
corporation liability, the Agency should be prepared to apply
the traditional exemptions to the general rule of non-liability
in asset acquisitions.
cc: A. James Barnes, General Counsel
\
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1<1 , CL/OIM I cb tfWIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
SEP 1 0 1984
Of t