October 01, 2020
Jordan P. Wimpy, Stuart L. Spencer
Arkansas Environmental, Energy, and Water Law
First published on ArkansasBusiness.com.
For most businesses, sustainability is no longer just a buzzword. It is now a matter of routine. Whether driven by corporate governance, shareholder proposal, customer demand, regulatory requirement or simple economic efficiency, sustainability as a part of business planning is here to stay. That said, we thought it useful to identify some of the tools available in Arkansas to help individuals and businesses turn sustainability goals into action. The following is a list of just five of the programs available in Arkansas to conserve water, promote aquatic resources, reduce waste, convert to greener energy and control pollution.
Water Resource Conservation and Development Incentives
The water resource conservation and development incentives allow an income tax credit equal to 50% of the cost of construction, installation or restoration of water impoundments or water control structures designed for the purpose of storing surface water (thereby conserving groundwater). Popular in agriculture, the credit also applies to storage for commercial or industrial purposes. Separately, the incentives also include a tax credit equal to 10% (projects outside critical groundwater areas) and 50% (projects inside critical groundwater areas) of the cost incurred for the reduction of groundwater by shifting to surface water for water used in industrial, commercial, agricultural or recreational purposes.
Wetland and Riparian Zone Creation and Restoration Incentive
This incentive involves an income tax credit equal to the project cost incurred in the development or restoration of private wetlands and riparian zones. The project must be maintained for a minimum life of ten years after the project is completed. In 2009, the legislature added a wetland and riparian zone conservation tax credit equal to 50% of the fair market value of qualified real property donated for a qualified conservation purpose to an eligible donee.
Waste Reduction and Recycling Equipment Credit
This tax credit can amount to 30% of the cost for “waste reduction, reuse or recycling equipment,” including the cost of installation. Eligible entities include those businesses “engaged in the business of reducing, reusing or recycling solid waste material for commercial purposes.” The credit used for a taxable year may not exceed the tax due; any unused credit may be carried over for a maximum of three consecutive years.
Arkansas Energy Technology Loan (AETL)
The AETL Program finances energy related cost reduction retrofits and green energy implementation for Arkansas companies. The AETL program encourages Arkansas companies to make investments in clean technology and improve the energy efficiency of their processes and facilities. Low interest rate loans are provided to assist those companies in financing their energy cost reduction efforts. The program's revolving loan mechanism allows borrowers to repay loans through the stream of cost savings realized from the project.
Tax Exemption for Pollution Control and Abatement Equipment
Arkansas law also provides a sales tax exemption for machinery and equipment required by state or federal law or regulations to be installed and utilized (directly or indirectly) by manufacturing and processing plants, cities or towns in this state to prevent or reduce air or water pollution or contamination that might otherwise result from the operation of the plant or facility.
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