71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
HA to A-Eng. SB 764
 
LC 3512/SB 764-A24
 
                       HOUSE AMENDMENTS TO
                   A-ENGROSSED SENATE BILL 764
 
     By COMMITTEE ON SCHOOL FUNDING AND TAX FAIRNESS/REVENUE
 
                             July 2
 
  On page 1 of the printed A-engrossed bill, line 2, after ' ORS'
insert '315.304,'.
  On page 2, line 30, delete 'two years' and insert 'one year'.
  In line 36, delete '2009' and insert '2008'.
  On page 4, after line 20, insert:
  ' (9) A certificate issued under this section shall state the
applicable percentage of the certified cost of the facility, as
determined under section 6 of this 2001 Act.
  ' (10) If the construction or installation of a facility is
commenced after December 31, 2005, the facility may be certified
only if the facility or applicant is described in section 6 (3)
of this 2001 Act. A facility described in section 6 (2) of this
2001 Act for which construction or installation is commenced
after December 31, 2005, may not be certified under this
section.'.
  Delete lines 35 through 45 and insert:
  '  { +  SECTION 4. + } ORS 315.304 is amended to read:
  ' 315.304. (1) A credit against taxes imposed by ORS chapter
316 (or, if the taxpayer is a corporation, under ORS chapter 317
or 318) for a pollution control facility or facilities certified
under ORS 468.170 shall be allowed if the taxpayer qualifies
under subsection (4) of this section.
  ' (2) For a facility certified under ORS 468.170, the maximum
credit allowed in any one tax year shall be the lesser of the tax
liability of the taxpayer or   { - one-half - }  { +  the
applicable percentage + } of the certified cost of the
facility { + , as determined under section 6 or 7 of this 2001
Act, + } multiplied by the certified percentage allocable to
pollution control, divided by the number of years of the
facility's useful life. The number of years of the facility's
useful life used in this calculation shall be the remaining
number of years of useful life at the time the facility is
certified but not less than one year nor more than 10 years.
  ' (3) To qualify for the credit the pollution control facility
must be erected, constructed or installed in accordance with the
provisions of ORS 468.165 (1) and must be certified for tax
relief under ORS 468.155 to 468.190.
  ' (4) To qualify for a tax credit under this section:
  ' (a) The taxpayer who is allowed the credit must be:
  ' (A) The owner, including a contract purchaser, of the trade
or business that utilizes Oregon property requiring a pollution
control facility to prevent or minimize pollution;
  ' (B) A person who, as a lessee or pursuant to an agreement,
conducts the trade or business that operates or utilizes such
property; or
  ' (C) A person who, as an owner, including a contract
purchaser, or lessee, owns or leases a pollution control facility
that is used:
  ' (i) In a business that is engaged in a production activity
described in 40 C.F.R. 430.20 (as of July 1, 1998); or
  ' (ii) For recycling, material recovery or energy recovery as
defined in ORS 459.005; and
  ' (b) The facility must be owned or leased during the tax year
by the taxpayer claiming the credit and must have been in use and
operation during the tax year for which the credit is claimed.
  ' (5) Regardless of when the facility is erected, constructed
or installed, a credit under this section may be claimed by a
taxpayer:
  ' (a) For a facility qualifying under ORS 468.165 (1)(a) or
(b), only in those tax years which begin on or after January 1,
1967.
  ' (b) For a facility qualifying under ORS 468.165 (1)(c), in
those tax years which begin on or after January 1, 1973.
  ' (c) For a facility qualifying under ORS 468.165 (1)(d), in
those tax years which begin on or after January 1, 1984.
  ' (6) For a facility certified under ORS 468.170, the maximum
total credit allowable shall not exceed one-half of the certified
cost of the facility multiplied by the certified percentage
allocable to pollution control.
  ' (7) The credit provided by this section is not in lieu of any
depreciation or amortization deduction for the facility to which
the taxpayer otherwise may be entitled under ORS chapter 316, 317
or 318 for such year.
  ' (8) Upon any sale, exchange or other disposition of a
facility, notice thereof shall be given to the Environmental
Quality Commission who shall revoke the certification covering
such facility as of the date of such disposition. Notwithstanding
ORS 468.170 (4)(c), the transferee may apply for a new
certificate under ORS 468.170, but the tax credit available to
such transferee shall be limited to the amount of credit not
claimed by the transferor. The sale, exchange or other
disposition of shares in an S corporation as defined in section
1361 of the Internal Revenue Code or of a partner's interest in a
partnership shall not be deemed a sale, exchange or other
disposition of a facility for purposes of this subsection.
  ' (9) Any tax credit otherwise allowable under this section
which is not used by the taxpayer in a particular year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such next succeeding tax year may be carried forward and used in
the second succeeding tax year, and likewise, any credit not used
in that second succeeding tax year may be carried forward and
used in the third succeeding tax year, but may not be carried
forward for any tax year thereafter. Credits may be carried
forward to and used in a tax year beyond the years specified in
ORS 468.170.
  ' (10) The taxpayer's adjusted basis for determining gain or
loss shall not be further decreased by any tax credits allowed
under this section.
  ' (11) A person described in subsection (4)(a)(C) of this
section may, but need not, operate the facility or conduct a
trade or business that utilizes property requiring the facility.
If more than one person has an interest under subsection
(4)(a)(C) of this section in the facility, only one person may
claim the credit allowed under this section. However, portions of
the facility may be certified separately in the same manner as
provided in ORS 468.170 (8) if ownership of the portions is in
more than one person. The person claiming the credit as between
an owner, including a contract purchaser, and lessee under this
subsection shall be designated in a written statement signed by
both the lessor and lessee of the facility. This statement shall
be filed with the Department of Revenue not later than the final
day of the first tax year for which a tax credit is claimed.
  '  { +  (12)(a) A taxpayer may not be allowed a tax credit
under this section for any tax year during which the taxpayer is
convicted of a felony under ORS 468.922 to 468.956 that is
related to the facility for which the tax credit would otherwise
be claimed, or for the four tax years succeeding the tax year
during which the taxpayer is convicted.
  ' (b) The amount of any tax credit that is otherwise allowable
under this section but for paragraph (a) of this subsection shall
be considered to be claimed by the taxpayer for purposes of
determining the amount of tax credit that may be claimed in a tax
year in which paragraph (a) of this subsection permits the
taxpayer to claim the credit. + }
  '  { +  SECTION 5. + }  { + Sections 6 to 8a of this 2001 Act
are added to and made a part of ORS 468.155 to 468.190. + }
  '  { +  SECTION 6. + }  { + For purposes of ORS 315.304, the
applicable percentage of the certified cost of a facility shall
be one of the following:
  ' (1) If the facility is certified under ORS 468.155 to 468.190
(1999 Edition) or if construction or installation of the facility
is commenced prior to January 1, 2001, and completed prior to
January 1, 2004, 50 percent.
  ' (2) Except as provided in subsection (1) or (3) of this
section, if the facility is certified pursuant to application for
certification filed on or after January 1, 2002, and:
  ' (a) Construction or installation of the facility is commenced
on or after January 1, 2001, and on or before December 31, 2003,
25 percent; or
  ' (b) Construction or installation of the facility is commenced
after December 31, 2003, and on or before December 31, 2005, 15
percent.
  ' (3) If certified pursuant to application for certification
filed on or after January 1, 2002, 35 percent if:
  ' (a) The applicant is certified under International
Organization for Standardization standard ISO 14001;
  ' (b) A Green Permit that applies to the facility has been
issued under ORS 468.501 to 468.521;
  ' (c) The facility is a nonpoint source or is regulated as a
confined animal feeding operation under ORS 468B.200 to 468B.230;
  ' (d) The facility is used for material recovery or recycling,
as those terms are defined in ORS 459.005;
  ' (e) The facility is used in an agricultural or forest
products operation and is used for energy recovery, as defined in
ORS 459.005;
  ' (f) The certified cost of the facility does not exceed
$200,000;
  ' (g) Construction or installation of the facility is entirely
voluntary and no portion of it is required in order to comply
with a federal law administered by the United States
Environmental Protection Agency, a state law administered by the
Department of Environmental Quality or a law administered by a
regional air pollution authority; or
  ' (h) The applicant demonstrates to the Department of
Environmental Quality that the applicant uses an environmental
management system at the facility. In order for the department to
determine that the applicant uses an environmental management
system at the facility:
  ' (A) The applicant must have the environmental management
system used at the facility reviewed by an independent third
party familiar with environmental management systems and submit a
report to the department stating that the provisions of this
paragraph have been met. The report shall be accompanied by
supporting materials that document compliance with the provisions
of this paragraph. The report shall include certification from a
registered or certified environmental management auditor employed
by, or under contract with, the independent third party that
reviewed the environmental management system; or
  ' (B) The department shall contract with an independent third
party familiar with environmental management systems to review
the environmental management system employed at the facility. The
third party shall review the environmental management system,
and, if the third party determines that the environmental
management system meets the provisions of this paragraph, a
registered or certified environmental management system auditor
employed by, or contracted with, the third party shall certify
that determination to the department. The department shall
recover from the applicant the costs incurred by the department
as prescribed in ORS 468.073.  An applicant shall be liable for
the costs of the department under this subparagraph without
regard to whether the department certifies the facility as a
pollution control facility. The department may not certify a
facility to which this subparagraph applies until the department
has received full payment from the applicant. + }
  '  { +  SECTION 6a. + }  { + As used in section 6 of this 2001
Act, ' environmental management system' means a continual cycle
of planning, implementing, reviewing and improving the actions
undertaken at the facility to meet environmental obligations and
improve environmental performance that meet:
  ' (1) The standards established by the International
Organization for Standardization under ISO 14001;
  ' (2) The standards established in the Green Permit program
established under ORS 468.501 to 468.521; or
  ' (3) Other standards that meet criteria established by the
Environmental Quality Commission by rule. + }
  '  { +  SECTION 7. + }  { + (1) If a person has obtained
pollution control facility certification in which the applicable
percentage is 35 percent because of issuance of a Green Permit
described under section 6 (3)(b) of this 2001 Act that applies to
the certified facility and the Green Permit is revoked, the
applicable percentage for any remaining tax credit to be claimed
under ORS 315.304 shall be the applicable percentage described
under section 6 (2) of this 2001 Act. If the construction or
installation of the facility is commenced on or after January 1,
2006, the pollution control facility certification shall be
revoked.
  ' (2) The Department of Environmental Quality shall inform the
Department of Revenue of the revocation. + }
  '  { +  SECTION 8. + }  { + If a person is convicted of a
felony under ORS 468.922 to 468.956, the county district attorney
or the Attorney General, whichever was the prosecuting officer,
shall give notice of the conviction to the Department of
Revenue. + }
  '  { +  SECTION 8a. + }  { + For purposes of ORS 468.155 to
468.190, the construction or installation of a facility is
commenced when the person constructing or installing the facility
has obtained all necessary preliminary approvals and has begun
continuous on-site modification, construction, installation or
other activity, the completion of which will cause the person to
be able to obtain certification under ORS 468.155 to 468.190.
Interruptions and delays resulting from natural disasters,
strikes, litigation or other matters beyond the control of the
owner shall be disregarded in determining whether the actions
undertaken by the person are continuous. The burden of
demonstrating that construction or installation of a facility is
commenced shall be borne by the person filing an application for
certification under ORS 468.165. + }
  '  { +  SECTION 9. + }  { + (1) The Legislative Assembly finds
that the concept of environmental responsibility has matured
beyond basic compliance with regulatory requirements to one in
which citizens and businesses voluntarily implement innovative
solutions to achieve shared environmental goals.
  ' (2) The Legislative Assembly declares that a pollution
control tax credit that shifts the majority of the incentive away
from compensation for basic regulatory compliance and toward
encouraging voluntary investment is an effective way to achieve
environmental goals.
  ' (3) The Legislative Assembly finds and declares that it is
the policy of this state to promote sustainability and provide
incentives for the voluntary prevention, elimination, reduction
or control of air pollution, water pollution, solid waste and
hazardous waste through the voluntary application of innovative
solutions to achieve the environmental goals of this state.
  ' (4) The Legislative Assembly declares it to be the policy of
this state to promote social, economic and environmental
principles of sustainability by providing incentives to
individuals and businesses that support social, economic and
environmental sustainability goals. + }
  '  { +  SECTION 10. + }  { + (1) There is created the Pollution
Control Tax Credit Improvement and Review Task Force. The task
force is charged with the following two primary undertakings:
  ' (a) To study and review the existing pollution control tax
credit program under ORS 468.155 to 468.190 and 315.304; and
  ' (b) To compare the pollution control tax credit program with
other types of incentives to see which type of incentive is most
efficient and effective in achieving the policies set forth in
section 9 of this 2001 Act.
  ' (2) In studying and reviewing the existing pollution control
tax credit program under subsection (1)(a) of this section, the
task force shall consider, but is not limited to considering:
  ' (a) Ways to achieve administrative efficiency;
  ' (b) Measures to simplify the existing program and reduce the
complexity faced by the applicant in the application and
certification process; and
  ' (c) Methods for measuring the environmental effectiveness or
economic development achieved as a result of the pollution
control tax credit program.
  ' (3) In studying pollution control incentives under subsection
(1)(b) of this section, the task force shall consider, but is not
limited to considering:
  ' (a) Incentives that promote sustainability, recycling or
reductions in harmful emissions and toxics;
  ' (b) Benefits to local economies and local government tax
revenues that are related to the incentives being reviewed; and
  ' (c) Incentives that simultaneously support community
economic, environmental and social sustainability objectives
through the collaborative efforts of business, government and
nonprofit organizations.
  ' (4) The Governor shall appoint to the task force:
  ' (a) Not more than seven members, with the concurrence of the
Speaker of the House of Representatives and the President of the
Senate. A member appointed under this section must represent one
of the following interests, each interest of which must be
represented on the task force:
  ' (A) Agriculture;
  ' (B) Business;
  ' (C) Environmental advocacy; and
  ' (D) The general public. A member of the general public
appointed under this paragraph must be knowledgeable about the
principles of sustainability.
  ' (b) One ex officio nonvoting representative from the Economic
and Community Development Department and one ex officio nonvoting
representative of the Department of Environmental Quality and the
Environmental Quality Commission.
  ' (5)(a) The President of the Senate shall appoint one senator
to the task force and the Speaker of the House of Representatives
shall appoint one member of the House of Representatives to the
task force.
  ' (b) A member of the Legislative Assembly appointed to the
task force shall be entitled to an allowance as authorized by ORS
171.072 from funds appropriated to the Legislative Assembly.
  ' (6)(a) The task force shall report on an ongoing and periodic
basis to the interim committees of the Seventy-first Legislative
Assembly having jurisdiction over revenue and environmental
matters.
  ' (b) The task force shall prepare a final written report of
the findings and recommendations of the task force and shall
present the report to the committees of the Seventy-second
Legislative Assembly having jurisdiction over revenue and
environmental matters.
  ' (7) The Legislative Revenue Officer shall provide the staff
and administrative support necessary for the performance of the
functions of the task force.
  ' (8) Official action by the task force created under this
section shall require the approval of a majority of the members
of the task force. All legislation recommended by official action
of the task force must indicate that it is introduced at the
request of the task force. Such legislation shall be prepared in
time for presession filing pursuant to ORS 171.130, for
presentation to the regular session of the Seventy-second
Legislative Assembly. + }
  '  { +  SECTION 11. + }  { + Section 10 of this 2001 Act is
repealed July 1, 2003. + } ' .
  On page 5, delete lines 1 through 22.
  In line 23, delete '10' and insert '12'.
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