75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 2066
 
                         House Bill 2725
 
Sponsored by Representative WINGARD; Representatives CAMERON,
  ESQUIVEL, FREEMAN, GILMAN, RICHARDSON, THATCHER, WEIDNER,
  Senator KRUSE
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Prohibits allowance of tax incentives for use of biofuel or
biomass that is fit for human consumption.
  Applies to tax years beginning on or after January 1, 2010, and
to preliminary certifications issued on or after January 1, 2010.
  Takes effect on 91st day following adjournment sine die.
 
                        A BILL FOR AN ACT
Relating to tax incentives for use of organic matter; creating
  new provisions; amending ORS 315.141, 315.354, 315.465 and
  469.790; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2009 Act is added to and made
a part of ORS chapter 305. + }
  SECTION 2.  { + A taxpayer may not claim any state tax benefit,
including a property tax exemption or special assessment, an
income tax subtraction, deduction or credit, including a credit
under ORS 315.141, 315.354, 315.465 or 315.469, based upon the
use or purchase of biomass, biofuel, alternative fuel, renewable
energy resources or similar material that is fit for human
consumption or directly derived from material that is fit for
human consumption. + }
  SECTION 3. ORS 315.141 is amended to read:
  315.141. (1) As used in this section:
  (a) 'Agricultural producer' means a person that produces
biomass that is used in Oregon as biofuel or to produce biofuel.
  (b) 'Biofuel' means liquid, gaseous or solid fuels derived from
biomass.
  (c) 'Biomass' means organic matter that is available on a
renewable or recurring basis and that is derived from:
  (A) Forest or rangeland woody debris from harvesting or
thinning conducted to improve forest or rangeland ecological
health and reduce uncharacteristic stand replacing wildfire risk;
  (B) Wood material from hardwood timber described in ORS 321.267
(3);
  (C) Agricultural residues;
  (D) Offal and tallow from animal rendering;
  (E) Food wastes collected as provided under ORS chapter 459 or
459A;
 
  (F) Yard or wood debris collected as provided under ORS chapter
459 or 459A;
  (G) Wastewater solids; or
  (H) Crops grown solely to be used for energy.
  (d) 'Biomass' does not mean { + :
  (A) Organic matter that is fit for human consumption or
directly derived from matter that is fit for human consumption;
or
  (B) + } Wood that has been treated with creosote,
pentachlorophenol, inorganic arsenic or other inorganic chemical
compounds.
  (e) 'Biomass collector' means a person that collects biomass to
be used in Oregon as biofuel or to produce biofuel.
  (2)(a) An agricultural producer or biomass collector shall be
allowed a credit against the taxes that would otherwise be due
under ORS chapter 316 or, if the taxpayer is a corporation, under
ORS chapter 317 or 318 for:
  (A) The production of biomass that is used in Oregon as biofuel
or to produce biofuel; or
  (B) The collection of biomass that is used in Oregon as biofuel
or to produce biofuel.
  (b) A credit under this section may be claimed in the tax year
in which the agricultural producer or biomass collector transfers
biomass to a biofuel producer.
  (c) Notwithstanding paragraph (a) of this subsection, a tax
credit is not allowed for grain corn, but a tax credit shall be
allowed for other corn material.
  (3) The amount of the credit shall be calculated as follows:
  (a) Determine the quantity of biomass transferred to a biofuel
producer during the tax year;
  (b) Categorize the biomass into appropriate categories; and
  (c) Multiply the quantity of biomass in a particular category
by the appropriate credit rate for that category, expressed in
dollars and cents, that is prescribed in ORS 469.790.
  (4) The amount of the credit claimed under this section for any
tax year may not exceed the tax liability of the taxpayer.
  (5)(a) A biofuel producer shall provide a written receipt to an
agricultural producer or biomass collector at the time biomass is
transferred from the agricultural producer or biomass collector
to the biofuel producer. The receipt must state the quantity and
type of biomass being transferred and that the biomass is to be
used to produce biofuel.
  (b) Each agricultural producer or biomass collector shall
maintain the receipts described in this subsection in their
records for a period of at least five years after the tax year in
which the credit is claimed or for a longer period of time
prescribed by the Department of Revenue.
  (6) The credit shall be claimed on a form prescribed by the
Department of Revenue that contains the information required by
the department.
  (7) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular tax year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
the 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, and any credit not used in
that third succeeding tax year may be carried forward and used in
the fourth succeeding tax year, but may not be carried forward
for any tax year thereafter.
  (8) In the case of a credit allowed under this section:
  (a) A nonresident shall be allowed the credit under this
section in the proportion provided in ORS 316.117.
  (b) If a change in the status of the taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117.
  (c) If a change in the taxable year of the taxpayer occurs as
described in ORS 314.085, or if the department terminates the
taxpayer's taxable year under ORS 314.440, the credit allowed
under this section shall be prorated or computed in a manner
consistent with ORS 314.085.
  SECTION 4. ORS 315.354 is amended to read:
  315.354. (1) A credit is allowed against the taxes otherwise
due under ORS chapter 316 (or, if the taxpayer is a corporation,
under ORS chapter 317 or 318), based upon the certified cost of
the facility during the period for which that facility is
certified under ORS 469.185 to 469.225. The credit is allowed as
follows:
  (a) Except as provided in paragraph (b) or (c) of this
subsection, the credit allowed in each of the first two tax years
in which the credit is claimed shall be 10 percent of the
certified cost of the facility, but may not exceed the tax
liability of the taxpayer. The credit allowed in each of the
succeeding three years shall be five percent of the certified
cost, but may not exceed the tax liability of the taxpayer.
  (b) If the certified cost of the facility does not exceed
$20,000, the total amount of the credit allowable under
subsection (4) of this section may be claimed in the first tax
year for which the credit may be claimed, but may not exceed the
tax liability of the taxpayer.
  (c) If the facility uses or produces renewable energy resources
or is a renewable energy resource equipment manufacturing
facility, the credit allowed in each of five succeeding tax years
shall be 10 percent of the certified cost of the facility, but
may not exceed the tax liability of the taxpayer.
  (2) Notwithstanding subsection (1) of this section:
  (a) If the facility is one or more renewable energy resource
systems installed in a single-family dwelling, the amount of the
credit for each system shall be determined as if the facility was
considered a residential alternative energy device under ORS
316.116, but subject to the maximum credit amount under
subsection (4)(b) of this section;
  (b) If the facility is a high-performance home, the amount of
the credit shall equal the amount determined under paragraph (a)
of this subsection plus $3,000; and
  (c) If the facility is a high-performance home or a
homebuilder-installed renewable energy system, the total amount
of the credit may be claimed in the first tax year for which the
credit is claimed, but may not exceed the tax liability of the
taxpayer.
  (3) In order for a tax credit to be allowable under this
section:
  (a) The facility must be located in Oregon;
  (b) The facility must have received final certification from
the Director of the State Department of Energy under ORS 469.185
to 469.225; and
  (c) The taxpayer must be an eligible applicant under ORS
469.205 (1)(c).
  (4) The total amount of credit allowable to an eligible
taxpayer under this section may not exceed:
  (a) 50 percent of the certified cost of a renewable energy
resources facility, a renewable energy resource equipment
manufacturing facility or a high-efficiency combined heat and
power facility;
  (b) $9,000 per single-family dwelling for homebuilder-installed
renewable energy systems;
  (c) $12,000 per single-family dwelling for
homebuilder-installed renewable energy systems, if the dwelling
also constitutes a high-performance home; or
  (d) 35 percent of the certified cost of any other facility.
  (5)(a) Upon any sale, termination of the lease or contract,
exchange or other disposition of the facility, notice thereof
shall be given to the Director of the State Department of Energy
who shall revoke the certificate covering the facility as of the
date of such disposition. The new owner, or upon re-leasing of
the facility, the new lessor, may apply for a new certificate
under ORS 469.215, but the tax credit available to the new owner
shall be limited to the amount of credit not claimed by the
former owner or, for a new lessor, the amount of credit not
claimed by the lessor under all previous leases.
  (b) The State Department of Energy may not revoke the
certificate covering a facility under paragraph (a) of this
subsection if the tax credit associated with the facility has
been transferred to a taxpayer who is an eligible applicant under
ORS 469.205 (1)(c)(A).
  (6) Any tax credit otherwise allowable under this section that
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 that
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, and likewise, any credit not
used in that third succeeding tax year may be carried forward and
used in the fourth succeeding tax year, and likewise, any credit
not used in that fourth succeeding tax year may be carried
forward and used in the fifth succeeding tax year, and likewise,
any credit not used in that fifth succeeding tax year may be
carried forward and used in the sixth succeeding tax year, and
likewise, any credit not used in that sixth succeeding tax year
may be carried forward and used in the seventh succeeding tax
year, and likewise, any credit not used in that seventh
succeeding tax year may be carried forward and used in the eighth
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 subsection (1) of this
section only as provided in this subsection.
  (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 for purposes of ORS
chapter 316, 317 or 318 for such year.
  (8) The taxpayer's adjusted basis for determining gain or loss
may not be decreased by any tax credits allowed under this
section.
  (9) If a homebuilder claims a credit under this section with
respect to a homebuilder-installed renewable energy system or a
high-performance home:
  (a) The homebuilder may not claim credits for both a
homebuilder-installed renewable energy system and a
high-performance home with respect to the same dwelling;
  (b) The homebuilder must inform the buyer of the dwelling that
the homebuilder is claiming a tax credit under this section with
respect to the dwelling; and
  (c) The buyer of the dwelling may not claim a credit under this
section that is based on any facility for which the homebuilder
has already claimed a credit.
  (10) The definitions in ORS 469.185 apply to this section.
   { +  (11) A taxpayer may not claim a credit under this section
for any portion of the cost of a facility that is attributable to
alternative fuel or renewable energy resources that are fit for
human consumption or directly derived from material that is fit
for human consumption. + }
  SECTION 5. ORS 315.465 is amended to read:
  315.465. (1) As used in this section and ORS 315.469:
  (a) 'Alternative fuel vehicle' means a motor vehicle that can
operate on a fuel blend.
  (b) 'Biodiesel' has the meaning given that term in ORS 646.905.
  (c) 'Biomass' has the meaning given that term in ORS 315.141.
  (d) 'Bone dry ton' means matter that is dried to less than one
percent moisture content and that weighs 2,000 pounds.
  (e) 'Fuel blend' means diesel fuel of blends equal to or
exceeding 99 percent biodiesel or gasoline of a blend equal to or
exceeding 85 percent methanol or ethanol. { +  'Fuel blend' does
not mean fuel that is fit for human consumption or produced from
material that is directly derived from material that is fit for
human consumption. + }
  (2)(a) A resident individual shall be allowed a credit against
the taxes otherwise due under ORS chapter 316 for costs paid or
incurred to purchase fuel blends for use in an alternative fuel
vehicle.
  (b) A resident individual shall be allowed a credit against the
taxes otherwise due under ORS chapter 316 for costs paid or
incurred to purchase forest, rangeland or agriculture waste or
residue densified and dried prepared solid biofuel that contains
100 percent biomass.
  (3) The amount of the credit shall be calculated as follows:
  (a) Determine the quantity of fuel blend or solid biofuel
purchased by the taxpayer during the tax year;
  (b) Categorize the fuel blend or solid biofuel as prescribed in
rules adopted under ORS 469.785; and
  (c) Multiply the quantity of fuel blend or solid biofuel in a
particular category by the appropriate credit rate for that
category, expressed in dollars and cents.
  (4) Notwithstanding subsection (3) of this section:
  (a) The credit allowed under this section for diesel blended
fuel is equal to $0.50 per gallon and in any one tax year may not
exceed $200 per Oregon registered motor vehicle that is owned or
leased by the taxpayer under a lease of greater than 30 days'
duration and that is capable of using a fuel blend.
  (b) The credit allowed for gasoline blended fuel is equal to
$0.50 per gallon and in any one tax year may not exceed $200 per
Oregon registered motor vehicle that is owned or leased by the
taxpayer under a lease of greater than 30 days' duration and that
is capable of using a fuel blend.
  (c) The credit allowed for forest, rangeland or agriculture
waste or residue densified and dried prepared solid biofuel is
equal to $10 per bone dry ton of solid biofuel and in any one tax
year may not exceed $200 per taxpayer.
  (d) The credit allowed in any one tax year may not exceed the
tax liability of the taxpayer and may not be carried forward to a
subsequent tax year.
  (5) For each tax year for which a credit is claimed under this
section, the taxpayer shall maintain records sufficient to
determine the taxpayer's purchase of qualifying fuel blends. A
taxpayer shall maintain the records required under this
subsection for at least five years.
  (6) A nonresident shall be allowed the credit under this
section in the proportion provided in ORS 316.117.
  (7) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's taxable year under ORS 314.440, the
credit allowed by this section shall be prorated or computed in a
manner consistent with ORS 314.085.
  (8) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117.
  (9) A husband and wife who file separate returns for a taxable
year may each claim a share of the tax credit that would have
been allowed on a joint return in proportion to the contribution
of each.
  SECTION 6. ORS 469.790 is amended to read:
  469.790. To be eligible for the tax credit under ORS 315.141,
the biomass must be produced or collected in Oregon as a
feedstock for bioenergy or biofuel production in Oregon. The
credit rates for biomass are:
  (1) For oil seed crops, $0.05 per pound.
  (2) For  { + the portion of + } grain crops { +  that is not
fit for human consumption + }, including but not limited to
wheat, barley and triticale, $0.90 per bushel.
  (3) For virgin oil or alcohol delivered for production in
Oregon from Oregon-based feedstock, $0.10 per gallon.
  (4) For used cooking oil or waste grease, $0.10 per gallon.
  (5) For wastewater biosolids, $10.00 per wet ton.
  (6) For woody biomass collected from nursery, orchard,
agricultural, forest or rangeland property in Oregon, including
but not limited to prunings, thinning, plantation rotations, log
landing or slash resulting from harvest or forest health
stewardship, $10.00 per green ton.
  (7) For  { + the portion of + } grass, wheat, straw or other
vegetative biomass from agricultural crops { +  that is not fit
for human consumption + }, $10.00 per green ton.
  (8) For yard debris and municipally generated food waste, $5.00
per wet ton.
  (9) For animal manure or rendering offal, $5.00 per wet ton.
  SECTION 7.  { + (1) Section 2 of this 2009 Act and the
amendments to ORS 315.141, 315.465 and 469.790 by sections 3, 5
and 6 of this 2009 Act apply to tax years beginning on or after
January 1, 2010.
  (2) The amendments to ORS 315.354 by section 4 of this 2009 Act
apply to tax years beginning on or after January 1, 2010, and to
preliminary certifications issued under ORS 469.210 on or after
January 1, 2010. + }
  SECTION 8.  { + This 2009 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fifth
Legislative Assembly adjourns sine die. + }
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