S-1883

AN ACT Relating to tax exemptions and credits for dairy farmers and anaerobic digesters; adding new sections to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding a new section to chapter 82.04 RCW; adding a new section to chapter 84.36 RCW; creating a new section; and declaring an emergency.

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

NEW SECTION. Sec. 1. It is the intent of the legislature to provide tax exemptions and credits to assist dairy farmers to comply with the dairy nutrient management act, chapter 90.64 RCW, and to assist public or private entities to establish and operate anaerobic digesters to treat dairy nutrients on a regional or on‑farm basis.

NEW SECTION. Sec. 2. A new section is added to chapter 82.08 RCW 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 nutrient management equipment and facilities, or to sales of tangible personal property that becomes an ingredient or component of the equipment and facilities. The equipment and facilities must be used exclusively for activities necessary to maintain a dairy nutrient management plan as required under chapter 90.64 RCW. This exemption applies to sales made after the dairy nutrient management plan is certified under chapter 90.64 RCW.

(2)(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 to the department of revenue. The application must be in a form and manner prescribed by the department and must contain information regarding the location of the dairy and other information the department may require.

(b) 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 section 3 of this act 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.

(b) "Eligible person" means a person 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.

NEW SECTION. Sec. 3. A new section is added to chapter 82.12 RCW to read as follows:

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 nutrient management equipment and facilities, as defined in section 2 of this act. The equipment and facilities must be used exclusively for activities necessary to maintain a dairy management plan as required under chapter 90.64 RCW. This exemption applies to the use of tangible personal property made after the dairy nutrient management plan is certified under chapter 90.64 RCW. The exemption certificate and recordkeeping requirements of section 2 of this act apply to this section.

NEW SECTION. Sec. 4. A new section is added to chapter 82.08 RCW 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 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.

(3) The definitions in this subsection apply to this section and section 5 of this act unless the context clearly requires otherwise:

(a) "Anaerobic digester" means a facility that processes manure from cattle 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 manure.

NEW SECTION. Sec. 5. A new section is added to chapter 82.12 RCW to read as follows:

The provisions of this chapter do not apply with respect to the use of anaerobic digesters or tangible personal property that becomes an ingredient or component of anaerobic digesters to treat primarily dairy manure by an eligible person establishing or operating an anaerobic digester, as defined in section 4 of this act.

NEW SECTION. Sec. 6. A new section is added to chapter 82.04 RCW to read as follows:

(1) A person who is eligible for and takes the exemption under section 4 or 5 of this act may take a credit against tax imposed by this chapter, subject to the limitations in this section.

(2) The credit under this section is equal to fifty percent of the amount of money expended for constructing facilities or acquiring tangible personal property for which an exemption was taken under section 4 or 5 of this act.

(3) No application is necessary for the credit under this section. A person taking the credit must keep records necessary for the department to verify eligibility under this section. Tax credit may not be claimed for expenditures that occurred before the effective date of this section.

(4) No applicant is eligible for tax credits under this section in excess of the amount of tax that would otherwise be due under this chapter. The credit must be claimed by the due date of the last tax return for the calendar year in which the payment is made. Any unused credit expires. Refunds shall not be given in place of credits.

NEW SECTION. Sec. 7. A new section is added to chapter 84.36 RCW to read as follows:

(1) All real and personal property meeting the definition of dairy nutrient management equipment and facilities that is owned by an eligible person, as these terms are defined in section 2 of this act, and exclusively used as a component of a certified dairy nutrient management plan, as required under chapter 90.64 RCW, is exempt from property taxation for not more than six assessment years after a claim for the exemption is approved in accordance with subsection (3) of this section. To qualify for this exemption, the property must be acquired and/or construction or installation be completed prior to December 31, 2003.

(2) All real and personal property meeting the definition of anaerobic digester that is owned by an eligible person, as these terms are defined in section 4 of this act and primarily used for the treatment of manure from dairy cattle is exempt from property taxation for the six assessment years after it is acquired, constructed, or installed.

(3) A claim for exemption under this section must be filed annually with the county assessor on or before the first day of November for exemption from taxes levied for collection in the following year. The claim must be submitted on forms prescribed by the department of revenue and developed in consultation with the department of agriculture and the conservation commission. The claimant must certify each year that the property for which exemption is sought meets the definition of dairy nutrient management equipment and facilities and is exclusively used as a component of a certified dairy nutrient management plan as required under chapter 90.64 RCW. Alternatively, the claimant must certify each year that the property for which exemption is sought meets the definition of anaerobic digester and is primarily used for the treatment of manure from dairy cattle.

(4) If at any time during the six-year exemption period the property no longer qualifies for the exemption as granted in subsection (1) or (2) of this section, the property loses its exempt status.

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.