[Federal Register Volume 64, Number 171 (Friday, September 3, 1999)]
[Notices]
[Pages 48339-48340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23063]


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 Notices
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains documents other than rules 
 or proposed rules that are applicable to the public. Notices of hearings 
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 delegations of authority, filing of petitions and applications and agency 
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  Federal Register / Vol. 64, No. 171 / Friday, September 3, 1999 / 
Notices  

[[Page 48339]]


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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.

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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