IRS Publishes List of Chemicals Subject to Superfund Tax

The Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 429 (November 15, 2021) reinstated the excise taxes imposed on certain chemical substances to help clean up hazardous waste sites (“the Superfund tax”).

Section 80201 of the IIJA identified more than 40 chemicals subject to the tax and the rates at which those substances will be taxed, including benzene, methane, xylene, toluene, and phosphorus.

Section 80201 also directed the IRS to publish an initial list of taxable substances under section 4672(a) of the Internal Revenue Code by January 1, 2022.  The initial list was published on December 13, 2021.   It comprises 101 chemical substances, including bisphenol-A, butyl benzyl phthalate, glycerine, pentaerythritol, perchloroethylene, tetrahydrofuran, and trichloroethylene.  The section also states the tax will last until December 31, 2031.

The IRS will publish guidance on the procedures by which importers or exporters may request a determination that the list of taxable substances be modified by either adding or removing a substance.

Limited exceptions are provided for chemicals that are part of an intermediate hydrocarbon stream and to the sale of any intermediate hydrocarbon streams.  Registration under section 4662(c)(2)(B) is required to qualify for these exceptions.

IIJA requires full implementation of the tax by July 1, 2022.

EPA Announces Superfund Task Force Recommendations

Environmental Protection Agency (EPA) Administrator Scott Pruitt assembled a task force to provide recommendations on how to restructure and improve the Superfund cleanup process. On July 25, 2017, the Task Force announced its recommendations. The Task Force Report to Administrator Pruitt identified 14 strategies and 42 specific recommendations to achieve the following five goals:

  1. Expediting cleanup and remediation;
  2. Reinvigorating responsible party cleanup and reuse;
  3. Encouraging private investment;
  4. Promoting redevelopment and community revitalization; and
  5. Engaging partners and stakeholders.

The Superfund Program governs the investigation and cleanup of the nation’s most complex hazardous waste sites. The National Priorities List (NPL) includes those sites that are of national priority among these sites because of known or threatened releases of hazardous substances. Currently, there are 1,336 sites on the NPL, of which 1,179 are privately owned sites and 157 are federal facilities. Sites on the NPL are in various stages of remediation.

The recommendations of the Superfund Task Force are meant to improve and expedite the process of site remediation and promote reuse of the remediated sites.

Administrator Pruitt also issued a memo outlining 11 specific actions that should be implemented expeditiously to improve the Superfund program. These include maximizing deletions and partial deletions of sites off the NPL.

The Task Force will be implementing the strategies and recommendations throughout the next year.

EPA Administer Assembles Task Force for Superfund Restructuring

On May 22, 2017, EPA Administrator Scott Pruitt created a task force to improve the Superfund remediation process. He asked the Superfund task force to find ways to “utilize alternative and non-traditional approaches for financing site cleanups.” The task force’s recommendations were due by June 21, 2017. EPA has not yet announced its recommendations.

Creation of the task force was announced one day before the Trump Administration released its budget proposal for fiscal year 2018. The proposal would cut the EPA’s budget by 31.4 percent. In the proposed budget, Superfund spending is reduced by 25 percent — $330 million. Such drastic cuts may not be approved by Congress.

Future management of the Superfund program may rely on called the “Superfund Alternative Approach” to streamline efforts. Under the Superfund Alternative Approach sites are not added to the National Priorities List. However, the Alternative Approach uses the same standards and investigation process as sites addressed under the conventional approach. The Superfund Alternative Approach can’t be used at every site, just those with a willing, capable potential responsible party who will negotiate and sign an agreement with EPA to perform the investigation or cleanup. In addition, sites managed under the Alternative Approach are not eligible for federal cleanup funds. This process cannot be used to remove sites from the National Priorities List, which may frustrate companies working towards permanent resolution of remediation obligations.