(d) "Treatment works" means any plant, pumping station, reservoir or other works used primarily for the purpose of treating, stabilizing, isolating or holding industrial, commercial or domestic waste.

(e) "Commercial waste" means any liquid, gaseous or solid waste substance capable of polluting the waters of the State and resulting from any activity which is primarily commercial in nature.

(f) "Domestic waste" means any liquid, gaseous or solid waste substance capable of polluting the waters of the State and resulting from any activity which is primarily domestic in nature.

(2) Air pollution control facilities, certified as such by the Commissioner of Environmental Protection, and all parts and accessories thereof.

As used in this paragraph, unless the context otherwise indicates, the following terms have the following meanings.

(a) "Facility" means any appliance, equipment, machinery, installation or structures installed, acquired or placed in operation primarily for the purpose of reducing, controlling, eliminating or disposing of industrial air pollutants.

Facilities such as air conditioners, dust collectors, fans and similar facilities designed, constructed or installed solely for the benefit of the person for whom installed or the personnel of that person shall are not be deemed air pollution control facilities.

(3) The Commissioner of Environmental Protection shall issue a determination regarding certification by April 1st for any air or water pollution control facility for which it has received a complete application by December 15th of the preceding year.

(4)__An exemption under subparagraph (1) or (2) is not available with respect to any property purchased, built, erected or installed for use or service on or after the effective date of this subparagraph.

Sec. 4. 36 MRSA §656, sub-§1, ¶K is enacted to read:

K.__Clean production systems.

(1)__As used in this paragraph, unless the context otherwise indicates, the following terms have the following meanings.

(a)__"Clean production system" means any equipment, production process, raw material, product formulation or procedure that significantly reduces, avoids or eliminates the generation of waste or air or water pollution through the use of pollution prevention or toxics use reduction.

(b)__"Pollution prevention" has the same meaning as "source reduction" as defined by the federal Pollution Prevention Act of 1990, 42 United States Code, Section 13102(5).

(c)__"Toxics use reduction" has the same meaning as in Title 38, section 2301, subsection 18.

(d)__"Beyond compliance" means environmental performance that is significantly in excess of that required by current law or by existing or reasonably anticipated regulations or license conditions.

(2)__Clean production systems that meet the standards of subparagraph (3) are exempt from taxation with respect to the tax years commencing on or after April 1, 2002 when installed or operated for the first time on or after the effective date of this paragraph.

(3)__Any clean production system qualifies for a tax exemption under this paragraph if certified by the Commissioner of Environmental Protection as likely to achieve the following environmental performance standards after proper installation and operation:

(a)__Ninety percent or greater reduction in air pollution or water pollution generated per unit of production or service as determined for the

appropriate unit, process or plant affected by the clean production system; and

(b)__Environmental results that are beyond compliance as determined at the date of certification of an application for a tax exemption.

(4)__A clean production system listed pursuant to this subparagraph qualifies for a tax exemption under subparagraph (2) if it meets the standards established under subparagraph (3), divisions (a) and (b).__A clean production system that qualifies under this subparagraph does not require certification by the Commissioner of Environmental Protection.__The list of clean production systems includes, but is not limited to, the following:

(a)__Advanced oxygen delignification and associated wastewater recycling that enables low- flow discharge in the pulp and paper industry;

(b)__Totally chlorine-free bleaching in kraft pulp and paper mills;

(c)__Powder coating systems that replace spray painting of metal parts and significantly reduce or eliminate volatile organic compounds; and

(d)__Water-based cleaning systems that replace solvent-based cleaning systems.

The Board of Environmental Protection shall adopt rules by April 1, 2002 to expand the list of clean production systems that qualify for a tax exemption under this subparagraph and to provide for an annual review and revision of the list.__ Additional clean production systems that meet the definition in subparagraph (1), division (a) must be added to the list if determined to be in actual use anywhere and to have a reasonable potential of being used by any person in this State.__A clean production system listed by rule by the Board of Environmental Protection pursuant to this subparagraph does not qualify for a tax exemption under subparagraph (2) if such a system is mandated by, or necessary to achieve compliance with, laws or rules enacted after the effective date of this subparagraph.__Any specific property that was exempted from taxation under this subparagraph continues to qualify after that type of clean production system no longer qualifies for a tax

exemption under subparagraph (2).__Rules adopted pursuant to this subparagraph are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

(5)__The Commissioner of Environmental Protection shall issue a determination regarding certification under subparagraph (3) by April 1st for any clean production system for which the Commissioner of Environmental Protection has received a complete application by December 15th of the preceding year.

The owner or operator of any property that qualifies for a tax exemption under this paragraph shall demonstrate achievement with respect to the performance standards in subparagraph (3), divisions (a) and (b) within one year after first placing the clean production system in use or service.__If the standards are not met to the satisfaction of the Commissioner of Environmental Protection, the tax exemption must be revoked until such time as the standards are met.

Sec. 5. 36 MRSA §1760, sub-§29, as amended by PL 1989, c. 890, Pt. A, §10 and affected by §40, is repealed.

Sec. 6. 36 MRSA §1760, sub-§30, as amended by PL 1989, c. 890, Pt. A, §11 and affected by §40, is repealed.

Sec. 7. 38 MRSA §352, sub-§5-A, as amended by PL 1999, c. 731, Pt. Z, §1, is further amended by amending Table I in that part relating to Title 36, section 656 to read:

TITLE 36 PROCESSING CERTIFICATION

SECTION FEE FEE

656, sub-§ subsection 1,

¶ paragraph E, Pollution

Control Facilities

A. Water pollution $250 $20

control facilities

with capacities at

least 4,000 gallons

of waste per day and

§ section 1760, sub-§

former subsection 29,

water pollution control

facilities

B. Air pollution 250 20

control and § section

1760, sub-§ former

subsection 30, air pollution

control facilities

Sec. 8. Task Force to Study Clean Production Tax Exemptions. The Task Force to Study Clean Production Tax Exemptions, referred to in this section as the "task force," is established to advise the Department of Environmental Protection and the Legislature on tax exemptions for clean production systems and pollution control equipment under the Maine Revised Statutes, Title 36, section 656, subsection 1.

1. Appointments. The task force consists of 13 members appointed as follows:

A. Two members from the Senate, appointed by the President of the Senate. When making the appointments, the President of the Senate shall give preference to a member who serves on the Joint Standing Committee on Natural Resources and a member who serves on the Joint Standing Committee on Taxation;

B. Two members from the House of Representatives, at least one of whom is a member of a political party that does not hold a majority of seats in that body, appointed by the Speaker of the House. When making the appointments, the Speaker of the House shall give preference to a member who serves on the Joint Standing Committee on Natural Resources and a member who serves on the Joint Standing Committee on Taxation;

C. Two members representing environmental interests, one of whom is appointed by the President of the Senate and one of whom is appointed by the Speaker of the House;

D. Two members representing municipal interests, one of whom is appointed by the President of the Senate and one of whom is appointed by the Speaker of the House;

E. Two members representing business interests, one of whom is appointed by the President of the Senate and one of whom is appointed by the Speaker of the House;

F. One member representing a statewide economic policy organization, appointed by the Speaker of the House;

G. One member representing environmental engineering interests, appointed by the President of the Senate; and

H. One member representing corporate accountability interests, appointed by the Speaker of the House.

The Commissioner of Environmental Protection or the commissioner's designee and the Executive Director of the Bureau of Revenue Services within the Department of Administrative and Financial Services or the director's designee serve as nonvoting members.

2. Chairs; appointments; convening of task force. The first named Senate member is the Senate chair and the first named House member is the House chair. All appointments must be made no later than 30 days following the effective date of this Act. The appointing authorities shall notify the Executive Director of the Legislative Council upon making their appointments. The chairs of the task force shall call and convene the first meeting of the task force within 30 days of the date the last member is appointed. The task force may hold up to 6 meetings.

3. Duties. The duties of the task force are as follows.

A. The task force shall develop recommendations for revisions to the initial list of clean production systems described in the Maine Revised Statutes, Title 36, section 656, subsection 1, paragraph K and review and comment on proposed rules by the Department of Environmental Protection to expand the initial list of clean production systems that qualify for a tax exemption.

B. The task force shall evaluate the effectiveness of tax exemptions in promoting clean production and continuous environmental improvement.

C. The task force shall evaluate the historic and projected property tax impacts of these tax exemptions and compare the incidence of those impacts on individual municipalities with the resulting environmental outcomes and the populations benefited. The task force shall develop recommendations on how to equitably share the burden of this tax expenditure among state and local taxpayers.

The task force may establish advisory working groups, which may include persons outside of the task force, as the task force considers appropriate.

4. Report. The task force shall complete its work by November 1, 2002 and submit its report to the joint standing committee of the Legislature having jurisdiction over taxation matters and the joint standing committee of the Legislature having jurisdiction over natural resources matters. The task force may submit its report and any necessary implementing legislation to the First Regular Session of the 121st Legislature

no later than November 15, 2002. If the task force requires an extension of time to make its report, it may apply to the Legislative Council, which may grant the extension.

5. Compensation. Members of the task force who are Legislators are entitled to receive the legislative per diem and reimbursement of necessary expenses for their attendance at authorized meetings of the task force. Members of the task force who are not Legislators and are not otherwise compensated by their employers or other entities whom they represent are entitled to receive reimbursement of necessary expenses for their attendance at authorized meetings of the task force.

6. Staff. Upon approval of the Legislative Council, the Department of Environmental Protection and the Bureau of Revenue Services within the Department of Administrative and Financial Services shall provide necessary staffing services to the task force.

7. Budget. The cochairs of the task force, with assistance from the task force staff, shall administer the task force's budget. Within 10 days after its first meeting, the task force shall present a work plan and proposed budget to the Legislative Council for approval. The task force may not incur expenses that would result in the task force's exceeding its approved budget.

SUMMARY

This bill establishes a property tax exemption for certain clean production systems and eliminates the sales tax exemption for water and air pollution control facilities. It also establishes the Task Force to Study Clean Production Tax Exemptions.