Oklahoma Tax Credits for Hazardous Waste Source Reduction
Oklahoma industry needed an incentive to manage hazardous waste in new ways that would result in beyond compliance environmental performance and at the same time save money. The work of a new Pollution Prevention Incentives for States (PPIS) funded program manager, the efforts of veteran waste reduction advocates, the support of industry, and timing led to the amendment of a seldom used 1986 piece of legislation providing tax credits to industry for hazardous waste recycling, reuse, and ultimate destruction. Ultimate destruction or incineration was replaced with source reduction in the language of the Act, making industry investments in hazardous waste source reduction eligible for tax credits of up to fifty thousand dollars over three years. Modest amounts of PPIS funds were thereby leveraged to harness market forces, catalyzing an additional $7,005,000 of private investments in pollution prevention. EPA funding and workplan authorization and top level state administrative and legislative support were essential to the success of the program. The tax credit is still on the books today, with one to four applications filed annually.
Legislative action is always daunting and complex. The idea, the timing, and the coalition of support have to be in perfect alignment. In 1993, in Oklahoma, a shared plane ride between the P2 Program Manager and an environmentally conscious legislator led eventually to a special P2 joint committee in the State Legislature that year. With the political spotlight on P2, the program manager worked in the background with legislative aides to usher in Oklahoma's P2 Act on the heels of the tax credit legislation. A major resource used to enable success was the vocal support of several major industries with established pollution prevention programs.
Available facility based success stories of companies receiving tax credits are impressive. One of the U.S.'s largest horse trailer manufacturer's P2 journey began with a substantial hazardous waste fine. After paying the fine, guided by the technical assistance provided by the P2 program manager, the company completed two projects that were eligible for the tax credit. The facility received the maximum allowable tax credit available to them and invested more than a million dollars into a powder coating paint system. Today, this facility is a conditionally exempt generator due to process and raw material changes. Hazardous waste generation in 1995 was 40,900 pounds. In 2002, this was reduced to less than 7,000 pounds.
Another company, a major manufacturer of outboard and stern drive motors, took advantage of the tax credit and invested four and a half million dollars into a new paint system. Operating in an intensely competitive market, they were motivated as much by the market advantage earned by increased efficiency and reduced disposal costs as they were positive environmental impact. Their regulatory status went from a hazardous waste treatment storage and disposal facility to a large quantity generator with less than 90 day storage. The only hazardous waste stream from this facility is sent offsite for recycling and metals reclamation.
Tax credits totaling $323,000 for 14 projects have enabled greater than $7,000,000 of private investment in hazardous waste source reduction. A review of the applications for the tax credit, which requires estimates of environmental benefit, reveals that these investments were projected to produce immediate reductions of greater than 35,000 pounds of hazardous waste. Actual after-the-fact environmental results were impossible to monitor and aggregate because the legislation did not require reporting.
Since 1993, Oklahoma has experienced a >90% reduction in hazardous waste generation according to the biennial hazardous waste reports 1993 1999. While this cannot be attributed solely to the availability of this tax credit, this legislation is part of a configuration of P2 and economic influences resulting in an improvement of Oklahoma's environment.
Key Elements, Suggestions, and Challenges
The implementation of this tax credit program did not happen automatically after the passage of the legislation. Perhaps the most significant of the challenges encountered was getting the word out to industry that this benefit has been available for the taking. To accomplish this, the program manager has had to build external partnerships with industry related institutions that in turn promote the program: the Oklahoma Department of Commerce, the Oklahoma Alliance for Manufacturing Excellence, the Career Technical Schools, the Small Business Development Centers, and the Oklahoma Association of Certified Public Accountants. Another barrier to full use of this incentive has been the lack of true P2 integration - in spirit and in practice - into Oklahoma Department of Environmental Quality. This condition works in two ways to diminish the potential impact of the tax credit. Facilities are reticent to work collaboratively with the agency, and regulatory compliance staff are often reluctant to make suggestions to industry regarding P2 solutions and the tax credit program.
More InformationOklahoma Department of Environmental Quality - Pollution Prevention Page (with link to Tax Credit Legislation, application and checklist)