STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator JOHN F. MCKEON
District 27 (Essex and Passaic)
SYNOPSIS
Provides CBT credit for development of anaerobic digestion facilities that process food waste.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act providing a tax credit under the corporation business tax for the development of anaerobic digestion facilities that process food waste and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. (1) For privilege periods beginning on or after January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and for the next six privilege periods thereafter, a taxpayer who develops and constructs an anaerobic digestion facility that processes food waste within the State, shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for the costs incurred during the development and construction of the anaerobic digestion facility.
(2) The amount of the credit authorized shall not exceed the lesser of: (a) 50 percent of the costs incurred to develop and construct the anaerobic digestion facility, or (b) $250,000.
b. To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply to the commissioner for a certification that provides: (1) that the anaerobic digestion facility developed by the taxpayer is eligible for the tax credit; and (2) the amount of the tax credit calculated pursuant to subsection a. of this section. The application to the commissioner shall demonstrate that the anaerobic digestion facility was developed and constructed prior to applying for the tax credit provided in this section. The application shall include a receipt demonstrating the total cost of the development and construction of the anaerobic digestion facility, a certification that the anaerobic digestion facility will be used to process food waste, and any other information determined relevant by the department. Upon certification, the commissioner shall submit a copy thereof to the taxpayer and the director.
c. The director shall prescribe the order of priority of the application of the tax credit allowed pursuant to this section, and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period. The amount of the credit applied pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall not reduce a taxpayer's tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the tax credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried forward, if necessary, to the seven privilege periods following the privilege period for which the tax credit was allowed.
d. The value of tax credits provided over the six privilege periods by the director pursuant to this section shall not exceed a cumulative total of $15 million.
e. The department, in consultation with the director, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as are necessary to implement the provisions of this section.
f. No later than six years after the effective date of this section, the department shall prepare and submit to the Governor, the State Treasurer, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing the development and construction of anaerobic digestion facilities that process food waste in the State.
g. As used in this section:
Anaerobic digester means a device that promotes the decomposition of organic material into simple organics and gaseous biogas products, in the absence of elemental oxygen, by means of controlling temperature and volume, and that includes a methane recovery system.
Anaerobic digestion facility means a facility that operates and hosts an anaerobic digester.
Biogas means gas resulting from the decomposition of organic matter under anaerobic conditions, the principal constituents of which are methane and carbon dioxide.
Commissioner means the Commissioner of Environmental Protection.
Department means the Department of Environmental Protection.
Director means Director of the Division of Taxation in the Department of the Treasury.
Food waste means food processing vegetative waste, food processing residue generated from processing and packaging operations, overripe produce, trimmings from food, food product over-runs from food processing, soiled and unrecyclable paper generated from food processing, and used cooking fats, oil, and grease, but shall not include food donated by the generator for human consumption, any waste generated by a consumer after the generator issues or sells food to the consumer, or any waste regulated by 7 C.F.R. ss.330.400 through 330.403 and 9 C.F.R. s.94.5.
2. This act shall take effect
immediately.
STATEMENT
This bill would incentivize the development and construction of anaerobic digestion facilities that process food waste within the State by providing a tax credit against the corporation business tax to compensate a taxpayer for the costs incurred during the development and construction of the anaerobic digestion facility. The tax credit would be available for a period of six years.
The bill defines anaerobic digestion facility as a facility that operates and hosts an anaerobic digester. The bill defines anaerobic digester as a device that promotes the decomposition of organic material into simple organics and gaseous biogas products, in the absence of elemental oxygen, by means of controlling temperature and volume, and that includes a methane recovery system. The bill also defines food waste to mean food processing vegetative waste, food processing residue generated from processing and packaging operations, overripe produce, trimmings from food, food product over-runs from food processing, soiled and unrecyclable paper generated from food processing, and used cooking fats, oil, and grease. Food waste does not include food donated by the generator for human consumption, any waste generated by a consumer after the generator issues or sells food to the consumer, or any waste regulated by 7 C.F.R. ss.330.400 through 330.403 and 9 C.F.R. s.94.5.
The amount of the tax credit provided by the bill may not exceed the lesser of: (1) 50 percent of the costs incurred to develop and construct the anaerobic digestion facility, or (2) $250,000. The bill would also limit the cumulative total of tax credits awarded pursuant to the bill to $15 million.
To qualify for the tax credit allowed pursuant to this section, a taxpayer would be required to apply to the Commissioner of Environmental Protection (commissioner) for a certification that provides: (1) that the anaerobic digestion facility developed by the taxpayer is eligible for the tax credit; and (2) the amount of the tax credit. The application to the commissioner would be required to demonstrate that the anaerobic digestion facility was developed and constructed prior to applying for the tax credit. The application would also be required to include a receipt demonst