, Muskogee, OK

January 4, 2013

Tax credit back for purchases of poultry waste

Program’s goal is to ease load on watersheds

By D.E. Smoot
Phoenix Staff Writer

— Buyers of poultry litter produced within environmentally sensitive watersheds and transported elsewhere will be able to claim a state tax credit for part of their 2012 transactions.

Tax credits for such purchases began in 2005 as a way to protect streams, rivers and lakes from nutrient overloading, which leads to the degradation of water quality. Increased phosphorus and nitrogen promotes vegetative growth, depleting the amount of dissolved oxygen.

State lawmakers suspended the program, which is funded at $375,000 a year, in 2010. A trigger was included in the 2010 amendment, which reinstated the tax credit beginning July 1.

As a result, eligible buyers can claim the credit of $10 a ton for the 2012 tax reporting period for purchases made after June 30. The credit applies only to litter purchased from Oklahoma poultry feeding operations within nutrient-limited watersheds and registered with the state.

Officials of the Oklahoma Department of Agriculture’s environmental management service said the litter also must be applied by licensed poultry waste applicators. To qualify for the credit, applications must be made in watersheds that are not environmentally sensitive.

Because of the two-year moratorium, no credits may be claimed for litter purchases made between July 1, 2010, through June 30, 2012. If the tax credit exceeds the income tax owed by an eligible buyer, the unused credit may be carried over for up to five years.

Local nutrient limited watersheds from which litter purchases qualify for the tax credit include the Illinois River and the Eucha-Spavinaw watersheds. Both have been at the center of legal battles over pollution caused by the excessive litter applications within those watersheds or the failure to contain the wastes.

Josh Payne, an animal waste management specialist with the Oklahoma State University Extension Office in Muskogee and an adjunct assistant professor, said the demand for poultry wastes typically fluctuates with the price of commercial fertilizers. Payne said it is difficult to calculate any impact the moratorium might have had on poultry waste transfers.

“I don’t think we’ve seen a significant decline in the amount of poultry litter being bought and transferred outside the nutrient limited watersheds,” he said. “But I do know the credit was certainly missed by the producers who utilize it. I consider it a great subsidy to transport litter outside these watersheds — it is the only current subsidy we have.”

Regulators who track the production and transfer of poultry wastes within the state reported in 2012 that 88 percent of the material generated within the Illinois River watershed in 2010 was exported outside the basin. Of the 65,010 tons of poultry waste produced within the watershed that year, 7,774 tons were applied within the basin, and 57,236 tons were transported to other sites in Oklahoma, Arkansas and Kansas.

Ed Fite, administrator of the Oklahoma Scenic Rivers Commission, said the tax credit program has paid dividends not only by “moving poultry waste out of the basin, but by helping to start up a new local industry.”

“There were some naysayers who said there was no way to develop an industry to move poultry wastes outside the basin,” Fite said. “Now, I can name three or four local businesses moving an enormous amount of waste outside the watershed to areas that are short of phosphorus.”

Fite said the state is doing a good job tracking production, but he sees room for improvement in tracking poultry waste to application sites. Fite also said there needs to be more uniformity among states in the reporting procedures.

“Setting all that aside, the tax credit subsidy certainly has been a successful program,” he said. “At least we are managing the waste.”

Denise Deason-Toyne, president of Save the Illinois River, said the Tahlequah-based citizen coalition supports any program that removes poultry wastes from the watershed and reduces phosphorus loading of the Illinois River and its tributaries.

“An ongoing concern STIR has is the continuing increase in poultry houses in the watershed, which is done with no notice to neighbors and little, if any, oversight,” she said. “STIR would like to see legislation requiring prior notice and an opportunity to object with a hearing ... before new ... poultry houses can be built — something similar to requirements when someone within city limits seeks an exemption to zoning laws or ordinances.”

Reach D.E. Smoot at (918) 684-2901 or