PRINTER'S NO. 773
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
622
Session of
2019
INTRODUCED BY SABATINA, STREET, FONTANA, TARTAGLIONE, SCHWANK,
SANTARSIERO, HUGHES, FARNESE, BREWSTER, COSTA, BAKER AND
BROWNE, MAY 13, 2019
REFERRED TO AGRICULTURE AND RURAL AFFAIRS, MAY 13, 2019
AN ACT
Amending Title 3 (Agriculture) of the Pennsylvania Consolidated
Statutes, providing for resource enhancement and protection
tax credits; and making related repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 3 of the Pennsylvania Consolidated Statutes
is amended by adding a part to read:
PART XI
INVESTMENT PROGRAMS
Chapter
123. Resource Enhancement and Protection Tax Credits
CHAPTER 123
RESOURCE ENHANCEMENT AND PROTECTION TAX CREDITS
Sec.
12301. Scope of chapter.
12302. Definitions.
12303. Resource Enhancement and Protection Tax Credit Program.
12304. Tax credits.
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12305. Project certification.
12306. Project maintenance and life expectancy.
12307. Application, review and authorization by commission.
12308. Grant of tax credit.
12309. Annual tax credits.
12310. Report and public information.
§ 12301. Scope of chapter.
This chapter relates to resource enhancement and protection
tax credits.
§ 12302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Agricultural erosion and sedimentation control plan." A
site-specific plan that:
(1) meets the requirements of the act of June 22, 1937
(P.L.1987, No.394), known as The Clean Streams Law, and 25
Pa. Code Ch. 102 (relating to erosion and sediment control);
and
(2) identifies best management practices to minimize
accelerated erosion and sediment from an agricultural
operation.
"Agricultural operation." Property on which occurs the
management and use of farming resources for the production of
crops, livestock or poultry or for equine activity.
"Animal concentration area." An exterior area of an
agricultural operation subject to rainfall where livestock
congregate. The term includes a barnyard, feedlot, loafing area,
exercise lot or other similar animal confinement area that does
not maintain a growing crop or where deposited manure nutrients
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are in excess of crop needs. The term does not include an area
managed as a pasture or other cropland and pasture accessway if
the area does not cause direct flow of nutrients to surface
water or groundwater.
"Best management practice." A practice or combination of
practices determined by the commission or USDA-NRCS to be
effective and practical, considering technological, economic and
institutional factors, to manage nutrients and sediment to
protect surface water and groundwater.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to the taxes imposed by Article III,
IV, VI, VII, VIII, IX or XV of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
"Commission." The State Conservation Commission.
"Conservation district." A county conservation district
established under the act of May 15, 1945 (P.L.547, No.217),
known as the Conservation District Law.
"Conservation plan." A plan, including a schedule for
implementation, that identifies site-specific conservation best
management practices on an agricultural operation.
"Department." The Department of Revenue of the Commonwealth.
"Eligible applicant." A business firm or an individual who
is subject to the taxes imposed by Article III, IV, VI, VII,
VIII, IX or XV of the Tax Reform Code of 1971.
"Equine activity." As follows:
(1) The term includes the following:
(i) The boarding of equines.
(ii) The training of equines.
(iii) The instruction of people in handling, driving
or riding equines.
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(iv) The use of equines for riding or driving
purposes.
(v) The pasturing of equines.
(2) The term does not include activity licensed under
former Article XXVIII-D of the act of April 9, 1929 (P.L.177,
No.175), known as The Administrative Code of 1929.
"Legacy sediment." Sediment that meets all of the following
conditions:
(1) Was eroded from upland areas after the arrival of
early Pennsylvania settlers and during centuries of intensive
land use.
(2) Was deposited in valley bottoms along stream
corridors, burying presettlement streams, floodplains,
wetlands and valley bottoms.
(3) Altered and continues to impair the hydrologic,
biologic, aquatic, riparian and water quality functions of
presettlement and modern environments.
"Manure management plan." A written site-specific plan that:
(1) outlines agreed-upon and acceptable practices for
the land application of manure and agricultural process
wastewaters; and
(2) is developed to meet the requirements of 25 Pa. Code
§ 91.36(b) (relating to pollution control and prevention at
agricultural operations).
"Nutrient management plan." As defined under Chapter 5
(relating to nutrient management and odor management).
"Nutrient management specialist." As defined under Chapter
5.
"Pass-through entity." A partnership as defined in section
301(n.0) of the Tax Reform Code of 1971, or a Pennsylvania S
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corporation as defined in section 301(n.1) of the Tax Reform
Code of 1971.
"Program." The Resource Enhancement and Protection Tax
Credit Program established in this chapter.
"Qualified tax liability." The liability for taxes imposed
upon an eligible applicant under Article III, IV, VI, VII, VIII,
IX or XV of the Tax Reform Code of 1971. The term shall not
include tax withheld by an employer from an employee under
Article III of the Tax Reform Code of 1971.
"Riparian forest buffer." An area of mostly trees or shrubs
that is adjacent to and up-gradient from watercourses or water
bodies and meets standards established or adopted by the
commission.
"Tax credit." The resource enhancement tax credit
established in this chapter.
"Technical service provider." An individual, entity or
public agency certified by the USDA-NRCS and placed on the
approved list to provide technical services to program
participants or to the United States Department of Agriculture
program participants.
"USDA-NRCS." The United States Department of Agriculture
Natural Resources and Conservation Service.
§ 12303. Resource Enhancement and Protection Tax Credit
Program.
(a) Establishment.--The Resource Enhancement and Protection
Tax Credit Program is established to encourage private
investment in the implementation of best management practices on
agricultural operations, the planting of riparian forest buffers
and the remediation of legacy sediment.
(b) Limits.--The following limits shall apply:
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(1) Except as specified in paragraph (5), an eligible
applicant may be granted a maximum of $250,000 in tax credits
in any consecutive seven-year period, calculated from the
date the tax credit is issued.
(2) An agricultural operation may be granted a maximum
of $250,000 in tax credits in any consecutive seven-year
period, calculated from the date the tax credit is issued.
(3) An eligible applicant may submit an application for
a single project or multiple applications for multiple
projects within the limits of this section.
(4) There shall be no limit on the amount of tax credits
that may be purchased from or be assigned from an eligible
applicant.
(5) Notwithstanding paragraph (1), there shall be no
limit on the amount of tax credits granted to a sponsor under
subsection (e), except the commission may establish annual
aggregate limits on tax credits awarded to sponsors to ensure
fair and equitable distribution of tax benefits to eligible
applicants.
(6) (Reserved).
(c) Carryover.--
(1) If an eligible applicant cannot use the entire
amount of the tax credit for the taxable year in which the
tax credit is first granted, then the excess may be carried
over to succeeding taxable years and used as a credit against
the qualified tax liability of the eligible applicant for
those taxable years. Each time that the tax credit is carried
over to a succeeding taxable year, it shall be reduced by the
amount that was used as a credit during the immediately
preceding taxable year. The tax credit may be carried over
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and applied to succeeding taxable years for no more than 15
taxable years following the first taxable year for which the
eligible applicant was entitled to claim the tax credit.
(2) A tax credit granted by the department shall be
applied against the taxpayer's qualified tax liability for
the current taxable year as of the date on which the tax
credit was granted before the tax credit is applied against
any tax liability under paragraph (1).
(3) A tax credit may not be carried back or refunded.
(d) Sale or assignment of credit.--
(1) An eligible applicant, upon application to and
approval by the commission, may sell or assign, in whole or
in part, a tax credit granted to the eligible applicant under
this chapter if no claim for allowance of the tax credit is
filed within one year from the date the tax credit is granted
under section 12308 (relating to grant of tax credit). The
commission, in consultation with the department, shall
establish guidelines for the approval of applications under
this subsection.
(2) The purchaser or assignee of a portion of a tax
credit shall immediately claim the tax credit in the taxable
year in which the purchase or assignment is made. The amount
of the tax credit that a purchaser or assignee may use
against a qualified tax liability may not exceed 75% of the
qualified tax liability for the taxable year. The purchaser
or assignee may not carry over, carry back, obtain a refund
of or sell or assign the tax credit. The purchaser or
assignee shall notify the department of the seller or
assignor of the tax credit in compliance with procedures
specified by the department.
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(3) Before an application is approved, the department
must make a finding that the applicant has filed all required
State tax reports and returns for all applicable taxable
years and paid any balance of State tax due as determined at
settlement, assessment or determination by the department.
(4) Notwithstanding any other provision of law, the
department shall settle, assess or determine the tax of an
applicant under this subsection within 90 days of the filing
of all required final returns or reports in accordance with
section 806.1(a)(5) of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code.
(e) Sponsorship.--An eligible applicant may be a sponsor by
applying for a tax credit for a project authorized under section
12307 (relating to application, review and authorization by
commission) if a written agreement between the eligible
applicant and the owner of property on which the project will be
completed is submitted to the commission and certifies that the
property owner will comply with all the provisions of this
chapter.
(f) Tax credits for pass-through entities.--
(1) If a pass-through entity has any unused tax credit,
it may elect in writing, according to procedures established
by the department, to transfer all or a portion of the tax
credit to shareholders, members or partners in proportion to
the share of the entity's distributive income to which the
shareholder, member or partner is entitled.
(2) The tax credit provided under paragraph (1) is in
addition to any tax credit to which the shareholder, member
or partner is otherwise entitled under this chapter. However,
a pass-through entity and its shareholders, members or
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partners may not claim a tax credit under this chapter for
the same project authorized under section 12307.
(3) A shareholder, member or partner of a pass-through
entity to whom a tax credit is transferred under paragraph
(1) shall immediately claim the credit in the taxable year in
which the transfer is made. The shareholder, member or
partner may not carry forward, carryback, obtain a refund of
or sell or assign the tax credit.
§ 12304. Tax credits.
(a) General eligibility.--Projects shall be eligible for a
tax credit as follows:
(1) Only best management practices completed after the
effective date of this section shall be eligible for a tax
credit.
(2) An agricultural operation shall have in place a
current conservation plan, a current agricultural erosion and
sediment control plan, if engaged in plowing and tilling, and
a current nutrient management plan or manure management plan,
if required, or the development of such plans shall be
included in an application for a tax credit.
(3) An agricultural operation with an animal
concentration area shall have implemented best management
practices necessary to abate storm water runoff, loss of
sediment, loss of nutrients and runoff of other pollutants
from the animal concentration area or the implementation of
such best management practices shall be included in an
application for a tax credit.
(4) An agricultural operation with an uncompleted best
management practice of either an agricultural erosion and
sediment control plan, if engaged in plowing and tilling, or
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a nutrient management plan or manure management plan, if
required, shall first include the remaining best management
practices included in such plans in an application for a tax
credit.
(5) A project shall meet the planning, design and
construction standards established by the commission. If
standards do not exist for a best management practice
approved by the commission, the commission may establish or
approve design, construction and certification standards for
such a best management practice.
(b) Amount of tax credit.--
(1) A tax credit equal to 75% of the eligible costs
under subsection (c) of a project authorized under section
12307 (relating to application, review and authorization by
commission) shall be granted for any of the following:
(i) Development of a voluntary or mandatory nutrient
management plan or manure management plan.
(ii) Development of an agricultural erosion and
sediment control plan or a conservation plan.
(iii) For an animal concentration area, design and
implementation of best management practices necessary to
abate storm water runoff, loss of sediment, loss of
nutrients and runoff of other pollutants.
(iv) Design and implementation of best management
practices necessary to restrict livestock access to
streams if there is established and maintained a riparian
forest buffer with a minimum width of 50 feet.
(v) Establishment of a riparian forest buffer with a
minimum width of 50 feet.
(2) A tax credit equal to 50% of the eligible costs
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under subsection (c) of a project authorized under section
12307 shall be granted for any of the following:
(i) For an agricultural operation, the design and
implementation of agricultural best management practices
or the installation and use of equipment, provided that
the best management practice or equipment is necessary to
reduce existing sediment and nutrient pollution to
surface waters. The best management practices and
equipment shall be identified by the commission and may
include manure storage systems, alternative uses for
manure, filter strips, grassed waterways, management
intensive grazing systems and no-till planting equipment.
(ii) The design and implementation of best
management practices necessary to exclude livestock
access to streams through fencing, stabilized crossings
and improved watering systems, if there is established
and maintained a vegetated riparian or riparian forest
buffer with a minimum width of 35 feet.
(iii) The remediation of legacy sediment, if the
legacy sediment is exposed and discharges or threatens to
discharge into surface waters as a result of acute stream
bank erosion. The project shall meet standards
established by the commission as being effective in
mitigating or eliminating the harmful effects of legacy
sediment.
(c) Costs of project.--
(1) The following shall be considered eligible costs of
a project to which a tax credit may be applied:
(i) Project design, engineering and associated
planning.
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(ii) Project management costs, including
contracting, document preparation and applications.
(iii) Project construction or installation.
(iv) Equipment, materials and all other components
of projects eligible under subsection (a).
(v) Postconstruction inspections.
(vi) Interest payments on loans for project
implementation for up to one year prior to the award of
the tax credit.
(2) A tax credit shall not be applied to that portion of
a project cost for which public funding was received.
(3) Eligible costs of a project shall include any of the
services listed in paragraph (1) that may be provided by a
conservation district.
(4) Notwithstanding any other provision of this chapter,
tax credits for annual maintenance best management practices
such as cover crops, buffer maintenance and other annual
practices approved by the commission shall be awarded based
on fixed rates or schedules established by the commission in
annual program guidelines.
§ 12305. Project certification.
A project shall be certified by the commission as meeting
standards under section 12304(a)(5)(relating to tax credits) by
the following:
(1) For a best management practice that currently
requires review and certification by a registered
professional engineer under current law or applicable
regulation, a registered professional engineer.
(2) For a riparian forest buffer, a technical service
provider or staff from a conservation district or USDA-NRCS
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approved by the commission.
(3) For a nutrient management plan or manure management
plan, a nutrient management specialist or any person trained
and experienced in manure and nutrient management planning
techniques and whose qualifications are acceptable to the
commission.
(4) For an agricultural erosion and sediment control
plan or conservation plan, a person trained and experienced
in erosion and sediment control or conservation methods and
techniques and whose qualifications are determined acceptable
by the commission.
§ 12306. Project maintenance and life expectancy.
(a) Best management practice.--
(1) An agricultural operation shall maintain a best
management practice for the life of the practice as
established by the commission.
(2) A riparian forest buffer shall be maintained for a
minimum of 15 years.
(b) Failure.--If the commission determines that a best
management practice is not maintained for the period required
under subsection (a), the owner of the property upon which the
project exists shall return to the department the amount of the
tax credit originally granted. Any amount paid to the department
under this subsection shall be deposited in the General Fund.
(c) Exception.--If the recipient of a tax credit provides
prior written notification to the commission that the recipient
will be unable to maintain a best management practice due to
sale of the property, cessation of an agricultural operation or
other factors, the commission may direct the department to
prorate the amount of the tax credit that shall be returned
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based on the remaining lifespan of the best management practice
in question.
§ 12307. Application, review and authorization by commission.
(a) Application process.--An eligible applicant shall apply
to the commission for authorization that a project is eligible
for a tax credit. An application shall be developed by the
commission and shall include:
(1) Type and location of project under section 12304(b)
(relating to tax credits).
(2) Total cost of project as outlined in section
12304(c).
(3) Verification of eligibility under section 12304(a).
(b) Review, notification and authorization.--The commission
shall, within 60 days of receipt, review each application and
notify an eligible applicant whether or not the eligible
applicant meets the requirements and is authorized to receive a
tax credit.
(c) Authorization of tax credit.--The commission may not
authorize tax credits that exceed the limits under sections
12303(b) (relating to Resource Enhancement and Protection Tax
Credit Program) and 12309 (relating to annual tax credits). The
commission shall authorize tax credits on a first-come, first-
served basis.
(d) Completion of project.--Upon completion of a project
authorized under this section, an eligible applicant shall
submit to the commission written notice of project completion.
The notice shall include:
(1) Proof of certification as required by section 12305
(relating to project certification) that the project is
complete.
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(2) A maintenance plan as required by subsection (a) for
each best management practice, if applicable to the project.
(3) Any other document that may be required by the
commission.
(e) Notification to department.--Upon determination that a
project authorized under this section is complete, the
commission shall provide notification to the department:
(1) that the eligible applicant has completed a project
which meets the criteria for a tax credit; and
(2) the amount of tax credit for the eligible applicant.
(f) Inspection.--Projects authorized under this section may
be subject to inspection by the commission or its designated
agent.
§ 12308. Grant of tax credit.
(a) General rule.--The department shall grant a tax credit
authorized under section 12307 (relating to application, review
and authorization by commission). The department shall, within
60 days of receipt of notice under section 12307(e), issue a
notice of grant of a tax credit to the eligible applicant.
(b) Finding required.--Before a tax credit may be granted,
the department must make a finding that the applicant has filed
all required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement or assessment by the department.
§ 12309. Annual tax credits.
(a) Cap.--The total amount of tax credits authorized by the
commission shall not exceed $13,000,000 in any fiscal year.
(b) Chesapeake Bay watershed prioritization.--
Notwithstanding any provision of this chapter to the contrary,
the commission may reserve and target up to $3,000,000 of the
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sum described in subsection (a) in any fiscal year for
geographic areas and best management practices for nutrient and
sediment reductions within the Chesapeake Bay watershed area.
§ 12310. Report and public information.
(a) General rule.--The commission, in consultation with the
department, shall annually report to the General Assembly on the
program as follows:
(1) The number of projects and the dollar amount of tax
credits granted in the aggregate, by best management practice
and per project.
(2) The types, locations and costs of projects.
(3) The estimated benefits of the projects, including
pollution reduction.
(b) Identity of taxpayers.--The identity of each taxpayer
utilizing a resource enhancement and protection tax credit under
this chapter and the amount of credits approved and utilized by
each taxpayer shall be made available annually within a year of
when the tax credits were granted and shall constitute a public
record, notwithstanding any law providing for the
confidentiality of tax records. Information regarding taxpayer
use of tax credits shall be made available in accordance with
the laws applicable to public information and public records
generally and need not be included in the annual report to the
General Assembly.
Section 2. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of 3
Pa.C.S. Ch. 123.
(2) Article XVII-E of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is repealed.
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Section 3. Continuation is as follows:
The addition of 3 Pa.C.S. Ch. 123 is a continuation of
Article XVII-E of the act of March 4, 1971 (P.L.128, No.43),
known as the Tax Reform Code of 1971. The following apply:
(1) Except as otherwise provided in 3 Pa.C.S. Ch.
123, all activities initiated under the Article XVII-E of
the Tax Reform Code of 1971 shall continue and remain in
full force and effect and may be completed under 3
Pa.C.S. Ch. 123. Orders, regulations, rules and decisions
which were made under Article XVII-E of the Tax Reform
Code of 1971 and which are in effect on the effective
date of section 16 of this act shall remain in full force
and effect until revoked, vacated or modified under 3
Pa.C.S. Ch. 123. Contracts, obligations and collective
bargaining agreements entered into under Article XVII-E
of the Tax Reform Code of 1971 are not affected nor
impaired by the repeal of the Article XVII-E of the Tax
Reform Code of 1971.
(2) Except as set forth in paragraph (3), any
difference in language between 3 Pa.C.S. Ch. 123 and
Article XVII-E of the Tax Reform Code of 1971 is intended
only to conform to the style of the Pennsylvania
Consolidated Statutes and is not intended to change or
affect the legislative intent, judicial construction or
administration and implementation of the Article XVII-E
of the Tax Reform Code of 1971.
(3) Paragraph (2) does not apply to the addition of
the following provisions:
(i) The definitions of "manure management plan"
and "riparian forest buffer" in 3 Pa.C.S. § 12302.
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(ii) 3 Pa.C.S. § 12303(b).
(iii) 3 Pa.C.S. § 12304.
(iv) 3 Pa.C.S. § 12305.
(v) 3 Pa.C.S. § 12309.
Section 4. This act shall take effect in 60 days.
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