READ FIRST TIME 02/07/06.   

     AN ACT Relating to excise tax exemptions for the handling and processing of livestock manure; amending RCW 82.08.890, 82.12.890, 82.08.900, and 82.12.900; amending 2001 2nd sp.s. c 18 s 1 (uncodified); creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   2001 2nd sp.s. c 18 s 1 (uncodified) is amended to read as follows:
     It is the intent of the legislature to provide tax exemptions to assist dairy farmers to comply with the dairy nutrient management act, chapter 90.64 RCW, to encourage owners of nondairy animal feeding operations to develop and implement approved nutrient management plans, and to assist public or private entities to establish and operate anaerobic digesters to treat ((dairy)) livestock nutrients on a regional or on-farm basis.

Sec. 2   RCW 82.08.890 and 2001 2nd sp.s. c 18 s 2 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales to eligible persons of services rendered in respect to operating, repairing, cleaning, altering, or improving of ((dairy)) livestock nutrient management equipment and facilities, or to sales of tangible personal property that becomes an ingredient or component of the equipment and facilities.
     (2)(a) To be eligible, the equipment and facilities must be used exclusively for activities necessary to maintain a ((dairy)) livestock nutrient management plan ((as required under chapter 90.64 RCW. This)).
     (b) The exemption applies to sales made after the ((dairy)) livestock nutrient management plan is: (i) Certified under chapter 90.64 RCW; (ii) approved as part of the permit issued under chapter 90.48 RCW; or (iii) approved as required under subsection (4)(c)(iii) of this section.
     (((2))) (3)(a) The department of revenue must provide an exemption certificate to an eligible person upon application by that person. The department of agriculture must provide a list of eligible persons, as defined in subsection (4)(c)(i) and (ii) of this section, to the department of revenue. Conservation districts must maintain lists of eligible persons as defined in subsection (4)(c)(iii) of this section to allow the department of revenue to verify eligibility. The application must be in a form and manner prescribed by the department and must contain information regarding the location of the dairy or animal feeding operation and other information the department may require.
     (b) A person claiming an exemption under this section must keep records necessary for the department to verify eligibility under this section. The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (((3))) (4) The definitions in this subsection apply to this section and RCW 82.12.890 unless the context clearly requires otherwise:
     (a) (("Dairy nutrient management equipment and facilities" means machinery, equipment, and structures used in the handling and treatment of dairy manure, such as aerators, agitators, alley scrapers, augers, dams, gutter cleaners, loaders, lagoons, pipes, pumps, separators, and tanks. The term also includes tangible personal property that becomes an ingredient or component of the equipment and facilities, including repair and replacement parts)) "Animal feeding operation" means a lot or facility, other than an aquatic animal production facility, where the following conditions are met:
     (i) Animals, other than aquatic animals, have been, are, or will be stabled or confined and fed or maintained for a total of forty-five days or more in any twelve-month period; and
     (ii) Crops, vegetation, forage growth, or postharvest residues are not sustained in the normal growing season over any portion of the lot or facility.
     (b) "Conservation district" means a subdivision of state government organized under chapter 89.08 RCW.
     (((b))) (c) "Eligible person" means a person (i) licensed to produce milk under chapter 15.36 RCW who has a certified dairy nutrient management plan ((by December 31, 2003)), as required by chapter 90.64 RCW; (ii) who owns an animal feeding operation and has a permit issued under chapter 90.48 RCW; or (iii) who owns an animal feeding operation and has a nutrient management plan approved by a conservation district as meeting natural resource conservation service field office technical guide standards.
     (d) "Livestock nutrient management equipment and facilities" means machinery, equipment, and structures used in the handling and treatment of livestock manure, such as aerators, agitators, alley scrapers, augers, dams, gutter cleaners, loaders, lagoons, pipes, pumps, separators, and tanks. The term also includes tangible personal property that becomes an ingredient or component of the equipment and facilities, including repair and replacement parts.
     (e) "Permit" means either a state waste discharge permit or a national pollutant discharge elimination system permit, or both.

Sec. 3   RCW 82.12.890 and 2003 c 5 s 15 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use by an eligible person of tangible personal property that becomes an ingredient or component of ((dairy)) livestock nutrient management equipment and facilities, as defined in RCW 82.08.890, or to labor and services rendered in respect to repairing, cleaning, altering, or improving eligible tangible personal property.
     (2)(a) To be eligible, the equipment and facilities must be used exclusively for activities necessary to maintain a ((dairy)) livestock nutrient management plan ((as required under chapter 90.64 RCW. This)).
     (b) The exemption applies to the use of tangible personal property or labor and services made after the ((dairy)) livestock nutrient management plan is: (i) Certified under chapter 90.64 RCW; (ii) approved as part of the permit issued under chapter 90.48 RCW; or (iii) approved as required under RCW 82.08.890(4)(c)(iii).
     (3) The exemption certificate and recordkeeping requirements of RCW 82.08.890 apply to this section. The definitions in RCW 82.08.890 apply to this section.

Sec. 4   RCW 82.08.900 and 2001 2nd sp.s. c 18 s 4 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales to an eligible person establishing or operating an anaerobic digester or to services rendered in respect to installing, constructing, repairing, cleaning, altering, or improving an anaerobic digester, or to sales of tangible personal property that becomes an ingredient or component of the anaerobic digester. The anaerobic digester must be used primarily to treat ((dairy)) livestock manure.
     (2)(a) The department of revenue must provide an exemption certificate to an eligible person upon application by that person. The application must be in a form and manner prescribed by the department and must contain information regarding the location of the facility and other information as the department may require.
     (b) A person claiming an exemption under this section must keep records necessary for the department to verify eligibility under this section. The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (3) The definitions in this subsection apply to this section and RCW 82.12.900 unless the context clearly requires otherwise:
     (a) "Anaerobic digester" means a facility that processes manure from ((cattle)) livestock into biogas and dried manure using microorganisms in a decomposition process within a closed, oxygen-free container.
     (b) "Eligible person" means any person establishing or operating an anaerobic digester to treat primarily ((dairy)) livestock manure.
     (c) "Primarily" means more than fifty percent measured by volume or weight.

Sec. 5   RCW 82.12.900 and 2003 c 5 s 16 are each amended to read as follows:
     The provisions of this chapter do not apply with respect to the use of anaerobic digesters, tangible personal property that becomes an ingredient or component of anaerobic digesters, or the use of services rendered in respect to installing, repairing, cleaning, altering, or improving eligible tangible personal property by an eligible person establishing or operating an anaerobic digester, as defined in RCW 82.08.900. The anaerobic digester must be used primarily to treat ((dairy)) livestock manure.

NEW SECTION.  Sec. 6   The conservation commission shall compile the following information on nutrient management plans written and approved by conservation districts for animal feeding operations during the 2005-2007 biennium: (1) The number of requests received to write or approve plans; (2) the number of plans completed and approved; (3) the total costs of writing and approving the plans, and the funding sources used; and (4) the relationship, if any, between the tax exemptions provided in this act and the number of plans written and approved. In its report, the commission shall compare the totals under subsections (1) through (3) of this section to the totals in the previous biennium. The conservation commission shall report this information to the appropriate committees of the legislature by December 1, 2007.

NEW SECTION.  Sec. 7   This act takes effect July 1, 2006.