April 2, 2012Newsletter

Update on State & Federal Regulation of Air Emissions from Agribusiness Waste; WI Tax Credit Opportunities

Agribusiness, Food and Beverage Newsletter

Wisconsin’s Regulatory Exemption for Air Emissions from Animal Agriculture Waste 


In Wisconsin, owner-operators of sources that emit hazardous air contaminants associated with agricultural waste were scheduled to be subject to emission limitation and potential air-emitting requirements as of July 31, 2011. The term agricultural waste includes livestock manure, wastewater contaminated with livestock manure, and animal-waste byproducts contaminated with, derived from, or mixed with livestock manure. The air pollutants at issue for agricultural operations are particulate matter, ammonia, and hydrogen sulfide.  When the Wisconsin Department of Natural Resources (DNR) established the rules to control ammonia and hydrogen sulfide emissions from livestock farms in 2004, it included an initial exemption that was subsequently extended until July 2011 with the intent that federal regulations for agricultural air emissions would be promulgated by that time. However, EPA still has not developed regulations regarding agricultural air emissions (see below for an update on EPA’s efforts).  Therefore, in March 2012 Governor Walker signed 2011 Senate Bill 138 into law as 2011 Wisconsin Act 122 which extends the exemption for air emissions from animal agriculture waste from DNR regulation. The legislation prohibits DNR from regulating the emission of hazardous air contaminants associated with agricultural waste except to the extent required by federal law.


EPA Releases Draft Emissions Estimating Calculations for Air Contaminants from Agricultural Waste


In January 2005, EPA announced a voluntary Air Compliance Agreement with animal feeding operations (AFOs). Under the Agreement, participating AFOs funded a National Air Emissions Monitoring Study (NAEMS) that gathered two years of data from animal confinement structures and manure storage systems for dairy, swine and chicken operations. The study’s purpose was to gather emissions data that EPA could use to develop emissions estimating methodologies (EEMs) for animal housing structures and manure storage and treatment units.  In March 2012, EPA’s draft documents were released. These reports, which provide draft EEMs for determining daily and annual emissions from a lagoon or basin located at a dairy or swine AFO or from a broiler chicken operation, are available for review here. Comments on the draft EPA rules must be received on or before June 11, 2012. The release of this information puts EPA one step closer to regulating air emissions from livestock operations.  


Wisconsin’s Manufacturing and Agriculture Tax Credit


Last June, Governor Walker signed into law a new tax credit program designed to encourage and strengthen manufacturing in Wisconsin. The credit, which will be phased in over a period of four years beginning with a 1.875% credit for tax year 2013, will virtually eliminate the tax on income derived from manufacturing activity in Wisconsin.  When fully phased in, the credit will be equal to 7.5% of a company's qualified production activities income (as defined under the Internal Revenue Code), that is derived from property assessed as manufacturing or agricultural property in Wisconsin (as defined under state property tax law). The tax credit can be taken against corporate income tax liability and for partnerships, LLCs or tax-option corporations, and against personal income tax liability of partners, members or shareholders in proportion to their ownership interests. The Wisconsin Department of Revenue has now released a fact sheet to provide additional information and guidance.


Extension of Wisconsin’s Dairy & Livestock Tax Credit 


Currently, the State of Wisconsin provides dairy and livestock farm investment credits that are non-refundable income and franchise tax credits that may be claimed for a portion of the cost of expanding or modernizing a dairy or livestock farm.  Governor Walker signed 2011 Senate Bill 9 into law as 2011 Wisconsin Act 15  which provides a five (5) year extension to claim an income and franchise tax credit for amounts paid for dairy farm or livestock farm modernization and expansion until January 1, 2017.  Qualified “dairy farm modernization or expansion” activities include the construction, improvement, or acquisition of buildings or facilities, or the acquisition of equipment, for dairy animal housing, confinement, animal feeding, milk production, or waste management, if used exclusively related to dairy animals. Similarly, “livestock farm modernization or expansion” means the construction, improvement, or acquisition of buildings or facilities, or the acquisition of equipment, for livestock housing, confinement, feeding, or waste management, if used exclusively related to livestock. Under the law, the claimant may claim as a credit, an amount equal to 10% of the costs incurred within the taxable year, for such activities.  The Wisconsin Department of Revenue has created a “Frequently Asked Questions” page to provide additional resources.

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