[Federal Register: September 3, 1999 (Volume 64, Number 171)] [Notices] [Page 48339-48340] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr03se99-42] ======================================================================== Notices Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains documents other than rules or proposed rules that are applicable to the public. Notices of hearings and investigations, committee meetings, agency decisions and rulings, delegations of authority, filing of petitions and applications and agency statements of organization and functions are examples of documents appearing in this section. ======================================================================== [[Page 48339]] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF AGRICULTURE Office of the Secretary South Dakota Petroleum Release Compensation Fund Program; Determination of Primary Purpose of Program Payments for Consideration as Excludable From Income Under Section 126 of the Internal Revenue Code of 1954 AGENCY: Office of the Secretary, USDA. ACTION: Notice of Determination. ----------------------------------------------------------------------- SUMMARY: The Secretary of Agriculture has determined that all grant payments made under the South Dakota Petroleum Release Compensation Fund program are made primarily for the purpose of conserving soil and water resources and protecting or restoring the environment. This determination is made in accordance with Section 126 of the Internal Revenue Code of 1954, as amended. The determination permits recipients of these payments to exclude them from gross income to the extent allowed by the Internal Revenue Service. FOR FURTHER INFORMATION CONTACT: Dennis D. Rounds, Executive Director, South Dakota Petroleum Release Compensation Fund, 124 E. Dakota, Pierre, South Dakota 57501; or Director, Conservation Operations Division, Natural Resources Conservation Service, USDA, P.O. Box 2890, Washington, D.C. 20013, (202) 720-1845. SUPPLEMENTARY INFORMATION: Section 126 of the Internal Revenue Code of 1954, as amended, 26 U.S.C. 126, provides that certain payments made to persons under state conservation programs may be excluded from the recipient's gross income for federal income tax purposes if the Secretary of Agriculture determines that the payments are made ``primarily for the purpose of conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife.'' The Secretary of Agriculture evaluates these conservation programs on the basis of criteria set forth in 7 CFR part 14, and makes a ``primary purpose'' determination for payments made under each program. Before there may be an exclusion, the Secretary of the Treasury must determine that payments made under these conservation programs do not substantially increase the annual income derived from the property benefited by the payments. The South Dakota petroleum Release Compensation Fund (PRCF) was enacted through HB 1253 in the 1988 South Dakota state legislature. From 1988 to 1995, the PRCF was attached to the Department of Commerce and Regulation and was administered by a five-member citizen's board appointed by the Governor. In 1995, through executive reorganization (Executive Order 95-5), the PRCF was attached to the Department of Transportation and the board's role was changed to advisory. Although attached to the Department of Transportation, the PRCF is temporarily administered by the Department of Commerce and Regulation through a joint-powers agreement. The program is funded by a petroleum release compensation and tank inspection fee of $20.00/1,000 gallons on products introduced and sold within the state. The fee is imposed on the first state licensed distributor who transfers title of a petroleum product to another within the state. The PRCF receives 58% of the revenues generated by the fee. The purpose of the program is to prevent and clean up petroleum spills through the establishment of a fund which financially assists owners or operators of storage tanks with necessary and reasonable expenses incurred in order to clean up pollution caused by the release of petroleum into the environment. The objectives of this program are achieved by reimbursing owners or operators of storage tanks for expenses incurred for the cleanup of petroleum released into the environment, thereby protecting the public from contamination of drinking water. Only expenses directly related to the cleanup are eligible for reimbursement under the PRCF. The following expenses are reimbursable if the director determines them to qualify under the criteria established in statute: (1) labor; (2) testing; (3) use of machinery; (4) materials and supplies; (5)professional services authorized by the director; (6) costs incurred by order of federal, state or local government; and (7) any other expenses that the board finds to be reasonable and necessary to remediate a petroleum spill or release Costs are eligible for reimbursement only if they are for activities that have been described in a site assessment plan or a corrective action plan and have received prior approval from the director. Procedural Matters The authorizing legislation, regulations, and operating procedures for the South Dakota PETROLEUM RELEASE COMPENSATION FUND have been examined using criteria set forth in 7 CFR part 14. The U.S. Department of Agriculture has concluded that the grant payments made under this program are made to provide financial assistance to eligible persons primarily for the purpose of conserving soil and water resources and protecting or restoring the environment. A ``Record of Decision, South Dakota PETROLEUM RELEASE COMPENSATION FUND: Primary Purpose Determination for Federal Tax Purposes'' has been prepared and is available upon request from the Director, Conservation Operations Division, Natural Resources Conservation Service, P.O. Box 2890, Washington, D.C. 20013, or Director, South Dakota Petroleum Release Compensation Fund, 124 E. Dakota, Pierre, S.D. 57501. Determination As required by Section 126(b) of the Internal Revenue Code of 1954, as amended, I have examined the authorizing legislation, regulations, and operating procedures regarding the South Dakota PETROLEUM RELEASE COMPENSATION FUND. In accordance with the criteria set out in 7 CFR Part 14, I have determined that all grant payments for cleanup of petroleum releases associated with petroleum storage tanks made under this program are primarily for the purpose of conserving soil and water resources and [[Page 48340]] protecting or restoring the environment. Subject to further determination by the Secretary of the Treasury, this determination permits grant payment recipients to exclude from gross income, for Federal income tax purposes, all or part of such payments made under the South Dakota Petroleum Release Compensation Fund. Signed at Washington, DC, on April 2, 1998. Dan Glickman, Secretary of Agriculture. [FR Doc. 99-23063 Filed 9-2-99; 8:45 am] BILLING CODE 3410-16-P