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Benefits of Renting vs. Owning Air Pollution Control Equipment
We have a ready to use air pollution control fleet or can design a specialized system for your plant operations. Some of the available systems include:
Granulated Activated Carbon (GAC) Systems, Biological Oxidation Systems, NG Conditioning Systems, Wet Scrubbers, Regenerative,
Catalytic and Direct Fired Thermal Oxidizers
. Rentals range from 6 months to 5 years with flexible options.
Air Pollution Control Equipment - Tax Exemption
Many states within the United States are now offering tax exemption certificates on air pollution
control equipment
, however most states will require:

Equipment that is operated primarily for control, capture and/or removal of pollutants from
the air, suitable for the application and reasonably adequate, and meets the intent and
purposes of the States Tax Exemption Laws.

Often times the state will require the evaluation of the air pollution control equipment covered by the
application to determine that the equipment meets the definition of an air pollution control facility. This
definition is mean equipment installed or acquired for the primary purpose of controlling or disposing
of air pollution which, if released, would render the air harmful or detrimental to public health or to
property within the state. This includes process changes made to production equipment so as to
satisfy the requirements of the air pollution act and to the fuel burner of a fuel burning system which
has been installed, modified, or converted to effect air pollution control.

Some equipment may be exempted from the referenced definition as any equipment acquired or
installed for the benefit of personnel or of a business.

Generally, equipment which meets the definition of an air pollution control falls under one
of the following categories:

1.
Equipment which actually removes air contaminants from a gas-stream being exhausted to the      
atmosphere (e.g, bag houses, granulated activated carbon systems, biological oxidizers,scrubbers,
electrostatic precipitators, thermal oxidizers, etc.)
2. Equipment which prevents potential air contaminants from being emitted to the atmosphere
(e.g.dust control enclosures, etc.)
3. Equipment which alters the sources, thus eliminating the generation of the air contaminant
(e.g.process change or burner conversion)
4. Equipment which is ancillary to the operation of the air pollution control facility (e.g, dust hoppers,
waste conveyors, monitors, stacks, fans and motors)

When you are evaluating your specific equipment installation, most states use these general
guidelines to determine whether a piece of equipment will meet the definition of an air pollution control
facility. It is important to remember that:

1. Exceptions to your State Guidelines may occur,
2. Air pollution control facility means equipment installed or acquired for the primary purpose of
controlling or disposing of air pollution,
3. "Air pollution control facility" does not mean equipment which is for benefit of personnel or business,
4. For complex situations in which the equipment serves a number of functions, only one of which is
air pollution control, the state may apply an incremental cost approach. In such situations, the
incremental cost eligible for tax exemption is considered to be the difference between the actual cost
of the equipment and the estimated cost of the equipment which could perform all of the functions
other than air pollution control.
Control equipment includes, but is not limited to:
• Adsorption units • Bag Houses • Catalytic Afterburners • Condensers • Electrostatic Precipitators • Thermal oxidizers • Flame afterburners
• Flue gas De-Sulfurization units • Mist eliminators • Multi-Cyclones • Packed Scrubbers • Settling Chambers • Vapor Recovery Units • Granulated Activated Carbon Systems
• Wet Scrubbers, Biological Oxidizer Systems, Water Wash and dry filter collectors on paint spray booths (see separate discussion)

Control equipment which may not meet many of your State’s definition of an air pollution control facility are listed below (Note that control equipment that is part of a system re-circulating air inside the
plant is not excepted from the definition of air pollution control facility.)

This equipment is:

1. Control equipment which is used primarily for product recovery or for the benefit of business or personnel.
2. Control equipment which cleans process gases as a necessary process step for the benefit of business (e.g. ESP for blast furnace exhaust gases where the gases must be cleaned before being utilized
for heat recovery).

The water wash or dry filter section of a paint spray booth serves an air pollution control function and which may meet the definition of an air pollution control facility. However, often times the remainder of a
paint spray booth is necessary to the process or for ventilation to protect the worker’s health and therefore is considered a benefit to business or personnel. Additionally, paint reheat units, curing ovens, air
filters for incoming air, paint lines and other equipment associated with the spray system are considered process equipment which is also a benefit to business, and will generally not meet the States
requirements.

For water wash paint spray booths, the States generally estimate the cost of the water wash section to be 50% of the cost of the total paint spray booth. If you provide the actual cost breakdown for the
water wash section, that figure will be used instead of the States estimate.

For dry filter control, the State will generally require a cost breakdown for:
(a) The filters and filter supports and
(b) The fan and motor.

If you are unable to furnish a cost breakdown, none of the paint spray booth will be generally considered not to meet any of the State’s definition of an air pollution control facility.

Ancillary Equipment
Ancillary equipment which is integral or necessary to the operation of exempt control equipment that meets the States definition of an air pollution control facility will be included. Some ancillary equipment
included for the exemptions:

1. Foundations and structural equipment to the extent that they apply to exempt equipment
2. Equipment enclosures or buildings, if they provide weather protection for the exempt equipment
3. Electrical equipment to the extent that it applies to exempt equipment
4. Instrumental and other equipment for adequate or more reliable operation of exempt equipment (i.e., spare equipment to insure continuous operation of exempt equipment, transformers, control valves,
regulators, butterfly and slide gate valves, temperatures and humidity monitors, collector regulating monitors, control panels, O2 sensors, LEL monitors, etc.)
5. Instrumentation and other equipment for safer or quieter operation of exempt equipment (i.e. Noise attenuation equipment, fire protection equipment, etc.)
6. Equipment used for service or maintenance of exempt equipment (i.e., collector maintenance equipment, catwalks, stairs, hoists, service doors, etc.)
7. Equipment used to treat an exempt collector inlet gas stream (i.e., flue gas conditioning equipment, gas humidifying equipment, acid scrubbers, etc.)
8. Equipment used to prepare and supply the scrubber liquor to an exempt wet collector and equipment used to properly treat the effluent discharge from an exempt wet collector (i.e., water service
equipment, re-circulation, pH control equipment, pumps, piping, holding tanks, sludge treatment equipment, etc.)
9. Equipment used to properly transfer, store, handle, and prepare for disposal of, contaminants collected by exempt equipment (i.e., discharge hoppers, augers, conveyors and enclosures, belts and
enclosures, bucket elevators, storage hoppers, water sprays, and dust control enclosures)
10. Modifications to process equipment or buildings that were necessitated by the addition of exempt equipment
11. Fans, motors, ductwork, stacks, in-stack monitors, and ambient air monitors

Fans and Motors
The nature of most process operations requires some in-plant ventilation control to protect the health and comfort of the workers. The in-plant ventilation control system includes the fans and motors
needed to move the pollutant-laden air through the hoods and ductwork and out of the plant. Thus, the fans and motors are considered partially a benefit to personnel. Additionally, the nature of some
processes requires a forced or induced draft in order to function properly. Thus, in these situations, the fans and motors are considered partially a benefit to business.

The addition of an exempt collector adds resistance to the exhaust control system which must be overcome with a larger capacity fan and motor. Thus, portions of fans and motors may meet the definition
of an air pollution control facility. Certain fans and motors must be evaluated to estimate the relative importance that in-plant ventilation control, air pollution control, and process requirements have in
dictating the fan and motor capacities. Generally when the State is conducting this evaluation, the following list may be observed:

1. If the static pressure requirements of the process and/or in-plant ventilation control system far outweigh the static pressure requirement of the exempt air pollution control equipment, 0% of the fans
and motors are considered an air pollution control facility.

2. If the static pressure requirements of the exempt air pollution control equipment far out weight the static pressure requirements of the process and/or in-plant ventilation control system, 100% of the fans
and motors are considered an air pollution control facility.
3. If the relationship between the static pressure requirements of the process and /or in-plant ventilation control system and the static pressure requirements of the exempt air pollution control equipment
falls in between (1) and (2), 50% of the fans and motors are considered an air pollution control facility.
4. If you provide the actual cost breakdown for the portion of the fans and motors that is exempt, the State may choose to use this figure instead of the States estimate.

Ductwork and Hoods
The in-plant control system also includes the hoods and ductwork needed to confine, capture, and transport pollutant-laden air out of the plant. Thus the equipment is considered a benefit to personnel
working in the plant.

With the installation of an exempt collector, additional ductwork is usually needed to transport the pollutant-laden air to the collector. This additional ductwork generally meets the States definition of an air
pollution control facility. Generally, the State must review the plans of the ductwork submitted by the applicant and estimate the cost of the additional ductwork necessary to exhaust the contaminant gas
stream out of the plant via the shortest and cheapest route. The estimate of the cost of the ductwork necessary for air pollution control will be to the nearest increment of 25%. If you provide the actual cost
breakdown for the exempt ductwork, that dollar amount will be used instead of the States estimate.

In some situations, the in-plant ventilation control equipment has been installed to protect the health and comfort of the workers may not be an issue (e.g., process equipment located out of doors). The
hood and ductwork installation may not be necessary for in plant ventilation control and may have been acquired solely to confine, capture and transport pollutant-laden air to an exempt collector. In this
circumstance, all of the hood and ductwork generally will meet the definition of an air pollution control facility. Examples of this situation include:

• Push and charge control systems for coke batteries • Asphalt plant control systems • Lagoon control systems • Bulk storage silo control systems

Stacks
Flues, or chimneys, Stacks and related appurtenances which are for an exempt collector systems or which provide for dispersion of an air pollutant so as to prevent a nuisance, or to provide for attainment
and maintenance of ambient air quality or significant deterioration standards generally will meet the States definition of an air pollution control facility. Stacks, flues or chimneys and related appurtenances
that are used for general exhaust from a plant or process and that do not exhaust air contaminants in significant concentrations are considered a benefit to personnel or business. Monitors, In-stack
(Including stack testing equipment)

In-stack emission monitoring equipment used to monitor plume opacity, oxygen content or contaminant
concentrations usually meet the States definition of an air pollution control facility. Examples of this equipment include:

• Opacity monitors • Oxygen monitors • LEL monitors • Nitrogen oxide analyzers • Sulfur dioxide analyzers • Carbon monoxide analyzers
• Hydrogen sulfide monitors • Stack testing equipment • Television monitoring equipment

Emission monitoring equipment which indicates the loss of product or protects upstream process equipment is of benefit to business and will not meet most States definition of air pollution control facility.

Ambient Monitoring Equipment
Ambient air monitoring equipment that is required for compliance with a permit condition or with the federal Prevention of Significant Deterioration regulations meets the definition of an air pollution control
facility in most States.

Miscellaneous Costs
Various costs incurred during the installation of air pollution control equipment are considered part of the cost of the equipment itself. To the extent that these costs apply to exempt equipment, they usually
qualify for tax exemption. The plant should include these costs as part of the installed costs for the various component parts of the system. Examples of various costs that may qualify for tax exemption
include:

• Administrative fees • Contingency costs • Engineering costs • Feasibility costs • Freight charges • Installation costs • Insurance fees • Interest charges • Start-up costs • Legal fees • Taxes (generally do
not apply to exempt taxes)

Prevention of Air Pollution
Equipment which controls air pollution by preventing an air contaminant from being released into the air stream may meet the States definition of an air pollution control facility. Examples of equipment
which controls air pollution by prevention include:

1. Fuel de-sulfurization equipment that reduces the sulfur content of fuel to be burned in the process of fuel burning equipment. However, fuel de-sulfurization equipment used to desulfurize fuel which is
sold on the open market is considered to be process equipment which is of benefit to the business
2. Aerators used to aerate disposal lagoons for odor control. However, aerators necessary for the proper operation of aerobic lagoons reduce the lagoon size requirements and thus are a benefit.
3. Dust suppression equipment and practices such as sprinkler systems, storage pile enclosures, conveyor transfer points, dump hopper enclosures, etc.
4. Emergency chemical containment pits which prevent excessive vaporization and enable application of a scrubbing system
5. Street sweepers and related equipment used to prevent the re-entrainment of air contaminants

Process Change
A process change involving production equipment made to satisfy the Tax Exemption requirements, meets the definition of an air pollution control facility, the maximum cost allowed for most State tax
exemption will be the lesser of 25% of the cost of the new process unit plus 100% of the cost of its related air pollution control equipment or the cost of conventional equipment applied on the basis of the
new equipment process production rate on the pre-existing process. Conventional control equipment is considered to be the least expensive air pollution control facility required. An estimate of the cost of
conventional control equipment usually made by the State based on the actual cost estimate data submitted by the company. If there has been a change in the production rate concurrent with the process
change and the State is unable to otherwise estimate to its satisfaction the cost of conventional control equipment at the new production rate on the preexisting process, the State may use such rules of
thumb as it deems appropriate to estimate this cost. The most commonly used rule of thumb is the "six-tenths rule". By this rule, the production rate correction is:

Cost = (cost if control equipment at existing production rate) X R^0.6 WHERE
R = new process production rate old process production rate
The State usually does not deem it appropriate to use the "six-tenths rule" when R equals or
Exceeds 10.

Examples of process change which may qualify for some tax exemptions include:
1. Replacement of cupolas with electric furnaces
2. Replacement of larry car charging systems with pipeline charging systems on coke oven batteries
3. Replacement of coal fired boilers with compressors for supplying air to forging hammers

Burner Conversions
The fuel burner portion of a fuel burning system installed, modified, or converted to effect air pollution control meets the definition of an air pollution control facility. Many States consider a fuel burning
system installation, modification, or conversion to have effected air pollution control only if the new fuel burning system replaces an existing fuel burning system which burns less polluting fuel than was
previously burned (e.g., coal to oil, oil to gas, etc.) or by design reduces air contaminant levels. The installation of a new fuel burning system where previously none existed is of benefit to the applicant and
does not affect air pollution control.

In evaluating tax exemption applications, a fuel burner a device for the introduction of a flame by delivering fuel and its combustion air at desired velocities and turbulence to establish and maintain proper
ignition and combustion of the fuel. Based on this definition, the following equipment is recognized as burner components which may qualify for a tax exemption:

1. Auxiliaries to condition the temperature and viscosity of the fuel to promote better atomization and combustion
2. Flame safety devices
3. Steam, mechanical or other atomization equipment and associated piping
4. Fans or pumps and associated piping and ductwork, which move or pressurize a mixture of air and fuel that passes through the burner or combustion air

The following equipment, associated with fuel burning systems, is considered process equipment and thus of benefit to business:
• Fuel storage tanks • Natural gas piping and gas main lines • Fuel oil piping, fuel pumps necessary to transport the fuel from the storage equipment

Landfills
Collection systems for landfill gases can potentially will meet all of the State requirements of Tax exemptions. In a situation where a company has elected to install landfill gas-fired power generating
equipment to burn landfill gas, in lieu of a flare, an exemption will be granted for the portion of the power generating equipment cost equal to what it would have cost to install a flare.

Incinerators
The definition of an air pollution control facility was amended to include an incinerator equipped with a pollution abatement device provided the incinerator is not operated for the benefit of the business.
Thus a properly designed and operated incinerator used solely to incinerate waste generated by the company's own operations qualifies for tax exemption. If the incinerator is used to
incinerate another company's waste for a fee, the incinerator is considered process equipment and only the after burning (control) portion of the incinerator will qualify for tax exemption. The after
burning portion generally includes the secondary chamber, the afterburner and air pollution collectors.

Non-Exempt Equipment

Generally, the following equipment does not meet the definition of an air pollution control facility.

1. Equipment used to handle, convey, transport, transfer or store raw materials or finished products.
2. Equipment used for bypassing air pollution control equipment. This equipment does not perform an air pollution control function.
3. Cooling towers. This equipment normally serves a process function and thus is a benefit to business.
4. Make-up air units. This equipment is normally installed to improve employee comfort and working conditions inside the plant.
5. Fences. Fences are generally installed for safety and aesthetic reasons and thus are a benefit to personnel and/or business.
6. Process Equipment. This equipment does not perform an air pollution control function and is of benefit to business.
7. Equipment used to prepare and return collected contaminants to the process. This equipment serves a process function and is of benefit to business.
8. Equipment used to manufacture air pollution control equipment. This equipment is process equipment and is of benefit to business.

For more information about your specific State requirements, please refer to a tax consultant in your State. This information should not to be considered exhaustive for any specific State requirement.
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