Although the Superfund taxes expired some time ago, there have been countless discussions over the years about whether they would – or should – be reinstated. That time has now come with President Biden and the current administration targeting quicker Superfund clean-ups, job creation, and a cleaner environment.
The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) was introduced in 1980 to address the cleanup of contaminated sites. The Superfund Trust Fund was generally used by the U.S. Environmental Protection Agency (EPA) to pay for cleaning hazardous substances if the agency could not identify the potentially responsible parties (PRPs) to take care of the situation. It included three specific taxes to help fund it: a Petroleum and Crude Oil tax, Chemical tax, and Corporate income tax – but these all expired in 1996.
In November 2021, Congress passed, and President Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law. The law includes the return of the Chemical tax, beginning July 1, 2022, and effective through December 31, 2031. It essentially doubles the tax rate per ton for taxable chemicals while lowering the threshold for taxable substances so more will come under the scope of the tax. Manufacturers, producers, and importers will now be responsible for an excise tax on 42 chemicals – or certain substances produced from them.
Our recent webinar, hosted by law firm Baker Botts and drawing on expertise from its tax and environmental teams, looked at the possible effects and repercussions for chemical manufacturers, importers, and distributors.
Expert panelists including Alexandra Dapolito Dunn, Michael Bresson, Barbara de Marigny, and Martha Thomsen outlined exactly what the tax reinstatement means, and advised on how it would be implemented and what chemical distributors should consider moving forward.
And there was certainly plenty to discuss. The hour-long webinar provided an abridged history of the Superfunds taxes and why they have now returned after such a long period. It also touched on policy considerations, how the new legislation works, and what it means to the industry.
The American Chemistry Council (ACC) has suggested the tax will harm manufacturing and could lead to job losses and supply chain issues. The ACC also said excise taxes ’would impose a $1.211 billion per year cost on American chemistry’. It noted that they would give an unfair advantage to foreign producers not affected by the tax and therefore be detrimental to U.S. production.
Reinstatement of the Superfund taxes will substantially impact many NACD members. In addition to our recent webinar, NACD is developing additional resources to help members navigate this. In the meantime, if you missed the presentation in January, you can access the webinar recording here.
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