BILL REQ. #:  H-3991.5 

Read first time 01/26/2006.   Referred to Committee on Finance.

     AN ACT Relating to excise tax exemptions for the handling and processing of livestock manure; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; repealing RCW 82.08.890, 82.08.900, 82.12.890, and 82.12.900; and providing an effective date.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.08 RCW to read as follows:
     (1) Eligible persons who have paid sales tax on qualifying investment projects are eligible for an exemption in the form of a remittance.
     (2)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed under RCW 82.08.020. The buyer may then apply to the department for remittance of all or part of the tax paid.
     (b) The department shall determine eligibility under this section based on information provided by the buyer and through audit and other administrative records. The department of agriculture must provide a list of eligible persons, as defined in subsection (5)(f)(i) through (iii) of this section, to the department. The conservation commission must provide a list of eligible persons, as defined in subsection (5)(f)(iv) of this section, to the department. The buyer shall on a quarterly basis submit an information sheet, in a form and manner as required by the department, specifying the amount of exempted tax claimed and the qualifying investment project for which the exemption is claimed. The buyer shall retain, in adequate detail to enable the department to determine whether the investment project meets the criteria under this section: Invoices; proof of tax paid; information regarding the location of the dairy, animal feeding operation, or anaerobic digester; documents describing the investment project; and any other information the department may require.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (3)(a) For a qualifying investment project that includes livestock nutrient management equipment and facilities, the equipment and facilities must be used exclusively for activities necessary to maintain a nutrient management plan and the exemption applies to sales made after the 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) verified as required under subsection (5)(f)(iv) of this section.
     (b) For a qualifying investment project that includes an anaerobic digester, the anaerobic digester must be used primarily to treat livestock manure.
     (4) The department shall keep a running total of the amount of exemptions by remittance claimed by eligible persons under subsection (5)(f)(iv) of this section during each fiscal year. The department shall not allow any exemptions by remittance to be claimed by eligible persons under subsection (5)(f)(iv) of this section which would cause the total to exceed two hundred thousand dollars in any fiscal year. If all or part of an exemption by remittance is disallowed under this subsection, the disallowed portion shall be carried over to the next fiscal year. However, the carryover into the next fiscal year is only permitted to the extent that the cap for the next fiscal year is not exceeded.
     (5) The definitions in this subsection apply to this section and section 2 of this act:
     (a) "Anaerobic digester" means a facility that processes manure from livestock into biogas and dried manure using microorganisms in a decomposition process within a closed, oxygen-free container.
     (b) "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.
     (c) "Concentrated animal feeding operation" has the same meaning as in 40 C.F.R. Sec. 122.23 (April 14, 2003), or as subsequently defined in federal regulations adopted in rule by the state department of agriculture.
     (d) "Conservation commission" means the conservation commission under chapter 89.08 RCW.
     (e) "Conservation district" means a subdivision of state government organized under chapter 89.08 RCW.
     (f) "Eligible person" means a person: (i) Licensed to produce milk under chapter 15.36 RCW who has a certified dairy nutrient management plan, as required by chapter 90.64 RCW; (ii) who owns an animal feeding operation and has a permit issued under chapter 90.48 RCW; (iii) establishing or operating an anaerobic digester to treat primarily livestock manure; or (iv) who owns a large or medium concentrated animal feeding operation and has a nutrient management plan verified by a conservation district as meeting natural resource conservation service practice standards.
     (g) "Large concentrated animal feeding operation" has the same meaning as in 40 C.F.R. Sec. 122.23 (April 14, 2003), or as subsequently defined in federal regulations adopted in rule by the state department of agriculture.
     (h) "Livestock nutrient management equipment and facilities" or "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.
     (i) "Medium concentrated animal feeding operation" has the same meaning as in 40 C.F.R. Sec. 122.23 (April 14, 2003), or as subsequently defined in federal regulations adopted in rule by the state department of agriculture, except that in addition either one of the following conditions are met:
     (i) Pollutants are discharged into waters of the state through a man-made ditch, flushing system, or other similar man-made device; or
     (ii) Pollutants are discharged directly into waters of the state that originate outside of and pass over, across, or through the facility or otherwise come into direct contact with the animals confined in the operation.
     (j) "Permit" means either a state waste discharge permit or a national pollutant discharge elimination system permit, or both.
     (k) "Primarily" means more than fifty percent measured by volume or weight.
     (l) "Qualifying investment project" means:
     (i) Livestock nutrient management equipment and facilities;
     (ii) Anaerobic digesters; or
     (iii) Services rendered in respect to:
     (A) Operating, repairing, cleaning, altering, or improving of livestock nutrient management equipment and facilities, or to sales of tangible personal property that becomes an ingredient or component of the equipment and facilities; or
     (B) 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.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.12 RCW to read as follows:
     (1) Eligible persons who have paid use tax on qualifying investment projects are eligible for an exemption in the form of a remittance.
     (2)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed under RCW 82.12.020. The buyer may then apply to the department for remittance of all or part of the tax paid.
     (b) The department shall on a quarterly basis remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (3) For the purposes of this section, the definitions, eligibility requirements, and other conditions in section 1 of this act apply to this section.

NEW SECTION.  Sec. 3   The following acts or parts of acts are each repealed:
     (1) RCW 82.08.890 (Exemptions -- Dairy nutrient management equipment and facilities) and 2001 2nd sp.s. c 18 s 2;
     (2) RCW 82.08.900 (Exemptions -- Anaerobic digesters) and 2001 2nd sp.s. c 18 s 4;
     (3) RCW 82.12.890 (Exemptions -- Dairy nutrient management equipment and facilities) and 2003 c 5 s 15 & 2001 2nd sp.s. c 18 s 3; and
     (4) RCW 82.12.900 (Exemptions -- Anaerobic digesters) and 2003 c 5 s 16 & 2001 2nd sp.s. c 18 s 5.

NEW SECTION.  Sec. 4   This act takes effect July 1, 2006.