No. 38661 (Repeal and Reenact): Rule R317-12. General Requirements:Tax Exemption for Water Pollution Control Equipment

(Repeal and Reenact)

DAR File No.: 38661
Filed: 07/01/2014 04:30:41 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This is a revision of the rule in response to H.B. 31 (2014 General Legislative Session) concerning tax exemptions available for a Water Pollution Control Facility or Freestanding Pollution Control Property.

Summary of the rule or change:

H.B. 31 (2014) created a new class of equipment eligible for certification, the Freestanding Pollution Control Property. Additionally, H.B. 31 (2014) clarified the types of equipment that are intended to be eligible and ineligible. Substantive changes include: 1) the title of the rule has been changed from "General Requirements: Tax Exemption for Water Pollution Control Equipment" to "Certification of Water Pollution Control Facility or Freestanding Pollution Control Property" in order to clarify that the Division of Water Quality's (DWQ) roll is the issuance of certifications, not the granting of a tax exemption; 2) creation of an "Authority, Purpose, and Scope" section for consistency with other Title R317 rules; 3) creation of a "Definitions" section for consistency with other Title R317 rules; 4) Freestanding Pollution Control Properties are now eligible for certification according to H.B. 31 (2014); 5) "Conditions for Eligibility", "Limitations on Certification", "Exemptions from Certification", and "Duty to Issue Certification" have been combined into a single section titled "Issuance of Certification"; and 6) the wording of the rule is simplified and clarified to explain the role of DWQ in the tax exemption process for these types of equipment. No substantive elements were deleted.

State statutory or constitutional authorization for this rule:

• Sections 19-12-301 through 19-12-305
• Section 19-12-102
• Sections 19-12-201 through 19-12-203

Anticipated cost or savings to:

the state budget:

The state budget will not be affected by the changes to the certification process for pollution control facilities and the addition of freestanding pollution control properties now defined in the rule. The process will use existing staff and resources for completing the review process, but the number of additional requests are not expected to affect the overall cost or savings.

local governments:

Local governments will not be affected by the changes to the certification process for pollution control facilities and freestanding pollution control properties as they are not involved with this certification process.

small businesses:

Small businesses can potentially realize a cost savings because of the new eligibility of freestanding pollution control property for certification and the resulting tax savings.

persons other than small businesses, businesses, or local governmental entities:

Persons other than small businesses, businesses, or local government entities will not be affected because the rule and its supporting statutes have been written such that the only benefit is to businesses and small businesses.

Compliance costs for affected persons:

Generally, there are no compliance costs since this tax exemption may help the affected persons defray some of the expected costs of the pollution control equipment, but the Division of Water Quality can bill the time it takes to review the application for certification to the applicant according to the rates set forth in the approved fee schedule.

Comments by the department head on the fiscal impact the rule may have on businesses:

The rule change has a benefit for businesses because it provides them with a sales and use tax exemption for installing pollution control facilities and utilizing freestanding pollution control properties.

Amanda Smith, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Environmental Quality
Water QualityRoom DEQ, Third Floor
195 N 1950 W
SALT LAKE CITY, UT 84116

Direct questions regarding this rule to:

• Judy Etherington at the above address, by phone at 801-536-4344, by FAX at 801-536-4301, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/14/2014

This rule may become effective on:

08/21/2014

Authorized by:

Walter Baker, Director

RULE TEXT

R317. Environmental Quality, Water Quality.

[R317-12. General Requirements: Tax Exemption for Water Pollution Control Equipment.

R317-12-1. Application.

Application for certification shall be made on forms provided by the State Department of Environmental Quality, and shall include all information requested thereon and such additional reasonably necessary information as is requested by the executive secretary of the Water Quality Board.

 

R317-12-2. Eligibility for Certification.

Certification shall be made only for taxpayers who are owners, operators (under a lease) or contract purchasers of a trade or business that utilizes Utah property with a pollution control facility to prevent or minimize pollution.

 

R317-12-3. Review Period.

Date of filing shall be date of receipt of the final item of information requested and this filing date shall initiate the 120-day review period.

 

R317-12-4. Conditions for Eligibility.

(1) All materials, equipment and structures (or part thereof) purchased, leased or otherwise procured and services utilized for construction or installation in a water pollution control facility shall be eligible for certification, provided:

(a) such materials, equipment, structures (or part thereof), and services installed, constructed, or acquired result in a demonstrated reduction of pollutant discharges, and

(b) the primary purpose of such materials, equipment, structures (or part thereof), and services is preventing, controlling, reducing, or disposing of water pollution.

(2) The above includes expenditures which reduce the amount of pollutants produced as well as expenditures which result in removal of pollutants from waste streams. The materials, equipment, structures (or part thereof), and services that are necessary for the proper functioning of water pollution control facilities meeting the requirements of (1)(a) and (b) above, including equipment required for compliance monitoring, shall be eligible for certification.

 

R317-12-5. Limitations on Certification.

Applications for certification shall be certified by the executive secretary of the Water Quality Board after consultation with the State Tax Commission and only if:

(1) plans for the water pollution control facility in question require review and approval by the Director and have been so approved, or

(2) the water pollution control facility is specifically required by the Water Quality Board, including facilities constructed for pretreatment of wastes prior to discharge to a public sewerage system in accordance with R317-8-8.1, but excluding facilities which are permitted by rule under R317-6-6.2 (Ground Water Discharge Permit by Rule) unless required to obtain an individual permit by the Director, or

(3) the water pollution control facility is required and permitted by another Division within the Department of Environmental Quality, or

(4) the water pollution control facility eliminates or reduces the discharge of pollutants which would be regulated by the Division, if such pollutants were discharged.

 

R317-12-6. Exemptions from Certification.

The following items are specifically not eligible for certification:

(1) materials and supplies used in the normal operation or maintenance of the water pollution control facilities;

(2) materials, equipment, and services used to monitor water, unless required for a permit or approval from a Division within the Department of Environmental Quality;

(3) materials, equipment, and services for collection, treatment, and disposal of human wastes, unless the primary purpose of such materials, equipment and services is the treatment of industrial wastes;

(4) materials, equipment and services used in removal, treatment, or disposal of pollutants from contaminated ground water, if the applicant caused the ground water contamination by failing to comply with applicable permits, approvals, rules, or standards existing at the time the contamination occurred.

 

R317-12-7. Duty to Issue Certification.

Upon determination that facilities described in any application under R317-12-1 satisfy the requirements of these rules and Sections 19-2-123 through 19-2-127 the executive secretary of the Water Quality Board shall issue a certification of pollution control facility to the applicant.

 

R317-12-8. Appeal and Revocation.

(1) A decision of the executive secretary of the Water Quality Board may be reviewed by filing a Request for Agency Action as provided in R305-7.

(2) Revocation of prior certification shall be made for any of the circumstances prescribed in Section 19-2-126, after consultation with the State Tax Commission.]

R317-12. Certification of Water Pollution Control Facility or Freestanding Pollution Control Property.

R317-12-1. Authority, Purpose and Scope.

1.1 Authorization. These rules are administered by the division authorized by Title 19 Chapter 12.

1.2 Purpose. The purpose of this rule is to protect public health and the environment by encouraging industries to install Pollution Control Facilities and Freestanding Pollution Control Properties through sales and use tax incentives.

1.3 Scope. This rule shall apply to purchases described in Section 19-12-201.

 

R317-12-2. Definitions.

"Director" means the director as defined in Section R317-1-1.

"Freestanding Pollution Control Property" means freestanding pollution control property as defined in Subsection 19-12-102(6).

"Treatment Works" means treatment works as defined in Section R317-1-1.

"Waste" means waste as defined in Section R317-1-1.

"Water Pollution" means pollution as defined in Section R317-1-1.

 

R317-12-3. Application for Certification.

3.1 An application for certification shall be made on forms provided by the Director.

3.2 The application shall include all information requested thereon and such additional information as is requested by the Director. At a minimum, the application shall contain:

A. a description of the Pollution Control Facility or Freestanding Property;

B. a description of the property, product or service for a purchase or lease of property, a part, or a service for which a person seeks to claim a sales and use tax exemption under Section 19-12-201;

C. the existing or proposed operational procedure for the Pollution Control Facility or Freestanding Pollution Control Property; and

D. a statement of the purpose served or to be served by the Pollution Control Facility or Freestanding Pollution Control Property.

3.3 The Director may require an application to contain additional information that the Director finds necessary to determine whether to grant certification under Section 19-12-303.

 

R317-12-4. Issuance of Certification.

4.1 The date the application is filed shall be the date of receipt by the Director of the final item of information requested, and this filing date shall initiate the 120-day review period under Section 19-12-303.

4.2 The Director shall issue a certification of a Pollution Control Facility or a Freestanding Pollution Control Property to the applicant if the Director determines that:

A. the application meets the requirements of the Pollution Control Act in Section 19-12-101;

B. the facility or property that is the subject of the application is a Pollution Control Facility or a Freestanding Pollution Control Property as defined in Section 19-12-102;

C. the person who files the application is a person described in Section 19-12-301; and

D. the purchases or leases for which the person seeks to claim a sales and use tax exemption are exempt under Section 19-12-201.

4.3 If the Director denies certification under this Section to a person who files an application, the Director shall provide a written statement of the reason for the denial to the person no later than 120 days after the date described in Subsection R317-12-4.1.

4.4 The Director may issue one certification for one or more Pollution Control Facilities or Freestanding Pollution Control Properties that constitute an operational unit.

4.5 If the Director does not issue or deny a certification within 120 days of the date described in Subsection R317-12-4.1, the Director shall issue a certification to the person at the person's request.

 

R317-12-5. Revocation of Certification and Appeal.

5.1 Revocation of prior certification shall be made for any of the circumstances prescribed in Section 19-12-304.

5.2 An appeal of a denial of certification or a revocation of certification by the Director may be contested by filing a Request for Agency Action as provided in Rule R305-7.

 

KEY: water pollution, tax exemptions, equipment

Date of Enactment or Last Substantive Amendment: [September 24, 2013]2014

Notice of Continuation: January 25, 2012

Authorizing, and Implemented or Interpreted Law: [19-2-123; 19-2-124; 19-2-125; 19-2-126; 19-2-127]19-12-101, 19-12-102, 19-12-201 through 19-12-203, 19-12-301 through 19-12-305

 

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