[Federal Register Volume 61, Number 189 (Friday, September 27, 1996)]
[Notices]
[Page 50801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24811]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Skaneateles Lake Watershed Agricultural 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 payments
for implementation of best management practices made to individuals by
the City of Syracuse under the Skaneateles Lake Watershed Agricultural
Program (``SLWAP'') 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, 26 U.S.C. 126. This
determination permits recipients of these payments for implementation
of best management practices to exclude them from gross income to the
extent allowed by the Internal Revenue Service.
FOR FURTHER INFORMATION CONTACT: Lee Neville, Watershed Control
Coordinator, City of Syracuse Department of Water, 101 N. Beech St.,
Syracuse, NY 13210, (315) 473-2609 or Director, Land Treatment Program
Division, Soil Conservation Service, USDA, P.O. Box 2890, Washington,
DC 20013, (202) 720-1870.
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
recipients' gross income for Federal income tax purposes, if the
Secretary of Agriculture determines that 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 the conservation
programs on the basis of criteria set forth in 7 CFR Part 14, and makes
a ``primary purpose'' determination for the 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 City of Syracuse is authorized by Article 11 of the New York
State Public Health Law and 10 New York Code of Rules and Regulations
(NYCRR) part 131.1 to regulate and protect the Skaneateles Lake
Watershed. Skaneateles Lake is the City's prime source of drinking
water. It provides an average of 45 million gallons per day to 200,000
people. The City has been able to avoid the filtration mandate of the
Federal Safe Drinking Water Act by successfully implementing a
watershed protection program in accordance with 40 CFR Sec. 141.71.
Filtration avoidance is considered the proper option for the city to
pursue because of the high quality of Skaneateles Lake Water and the
City's belief that water quality should be maintained at the source and
not through the imposition of a chemical treatment process. One of the
City of Syracuse's water quality improvement programs establishes Best
Management Practices (BMPs) for agricultural operations, especially
dairy farms, in the Skaneateles Lake Watershed. The program is set
forth and authorized pursuant to City of Syracuse Ordinances #1994-93,
#1994-442, #1995-383, and #1995-392. The City of Syracuse has
jurisdiction over the Skaneateles Lake Watershed pursuant to 10 NYCRR
Sec. 131.1. The City's Watershed agricultural program is designed,
following the model set forth by New York City, to protect the Lake
from non-point source pollution while at the same time maintaining the
economic viability of agriculture in the watershed. Agriculture is
believed to be the best land use for the long term environmental health
of the Lake's watershed. The Program uses a ``whole farm planning''/
best management practices approach to watershed protection. Payments to
farmers participating in the Program for which the Section 126
exclusion is sought will be made for implementation of best management
practices which further the water quality goals of the Program. The
exclusion would not apply to incentive payments to farmers to be made
under the Program to encourage assistance in preparation of whole farm
plans and participation in demonstration field days or farm tours.
Procedural Matters
The authorizing legislation, regulations, and operating procedures
regarding the Skaneateles Lake Watershed Agricultural Program have been
examined using the criteria set forth in 7 CFR Part 14. The Department
of Agriculture has concluded that the payments made for implementation
of best management practices 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, Skaneateles Lake Watershed Agricultural
Program, Primary Purpose Determination for Federal Tax Purpose'' has
been prepared and is available upon request from the Director, Land
Treatment Program Division, Soil Conservation Service, P.O. Box 2890,
Washington, DC 20013, or from the Watershed Program Coordinator, City
of Syracuse Department of Water, 101 N. Beech St., Syracuse NY 13210.
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 Skaneateles Lake Watershed
Agricultural Program. In accordance with the criteria set out in 7 CFR
Part 14, I have determined that all payments for the implementation of
best management practices made under this program are primarily for the
purpose of conserving soil and water resources and protecting or
restoring the environment. Subject to further determination by the
Secretary of the Treasury, this determination permits payment
recipients to exclude from gross income, for Federal income tax
purposes, all or part of such payments for implementation of best
management practices made under said program.
Dan Glickman,
Secretary.
[FR Doc. 96-24811 Filed 9-26-96; 8:45 am]
BILLING CODE 3014-16-M
