To Clinton tax assessor Garnett Robinson, any industry making money from its real estate or property should pay its entire share in taxes to the municipality it’s based in.
Otherwise, Robinson says, the burden falls on individual taxpayers to fund the public services that businesses use.
That will not be the case for one of the small Maine town’s newer industries: Peaks Renewables, which owns a facility that captures methane gas from the manure of neighboring dairy cows, cleans the gaseous products, then sends it away via pipeline for sale and use.
The facility, which began operations under natural gas distributor Summit Utilities this fall, received a sizable tax exemption from the Maine Department of Environmental Protection in the spring of 2022 that Robinson said likely will allow it to save up to $300,000 in annual taxes that would have gone to the town.
He said as a result, Clinton taxpayers will shoulder more of the costs of maintaining roads and other services in town.
Although the facility’s property value has not yet been assessed, Robinson said based on the $22 million price tag Peaks gave him for building costs, “The taxes avoided by this exemption are significant.”
“These are income-producing properties … and that shouldn’t come off the tax rolls as a public benefit when they’re getting an income from that,” Robinson said.
The exemption granted to Peaks Renewables is for companies that install “pollution control” facilities to cut down their release of industrial air and water pollutants, according to the Maine DEP.
While officials in some towns see the decades-old exemption benefit as necessary for valuable, job-producing industries to stay in business and comply with environmental regulations, others, like Robinson, see it as a disservice to individual taxpayers.
In response to Robinson’s criticisms, Summit Utilities spokesperson Lizzy Reinholt highlighted the collaborative effort between Summit and the town of Clinton during the planning process for the facility.
That included an agreement that provides direct funding for the town and a separate “transportation agreement” to ensure the town benefited from the facility and “would not be unduly impacted by the tax exemption,” Reinholt said.
“In addition, the project provides several additional benefits, including local employment, utilizing local contractors, and supporting local family farmers, which are the lifeblood of this community,” Reinholt said.
She added that the largest manure contributor to the facility is Flood Brothers Farm, where the biogas digester is hosted, and does not require trucking.
“We truck smaller amounts from each of the remaining five farms, all of which are family owned and longstanding members of Maine’s dairy community,” Reinholt said.
The Clinton town manager, John Bellino, who began his tenure after the exemption was filed, said he sees no controversy with it.
Elsewhere, however, the exemption caused recent controversy in Wiscasset, where the town is going to court over the DEP’s issuance of the same exemption to the decommissioned Maine Yankee power plant for a facility that stores the reactor’s old nuclear waste.
Wiscasset officials estimate that if granted, the exemption would take away $1.6 million in annual tax revenue. Maine Yankee officials have disputed the property assessment that estimate is based on.
“A lot of small towns have these big facilities and they expect town services, but then use this as a way of getting out of paying town taxes,” said Dennis Simmons, the Wiscasset town manager.
In appeals, Wiscasset’s attorney has argued that the exemption was not intended for nuclear facilities, and a state legislator has introduced legislation to prevent nuclear facilities from receiving it.
The state statute that outlines the exemption provides a straightforward incentive for industrial companies in Maine to abide by environmental regulations: Install equipment that reduces your facility’s air or water pollution, and you’ll pay less in property or sales and use taxes.
Unlike other tax exemptions that fall under the auspices of the state tax agency, Maine Revenue Services, this “pollution control” exemption is administered by DEP. It requires no approval from the municipality that may be affected by it and lasts as long as the facility operates.
Companies are not required to recertify the exemption, but are susceptible to having it revoked, suspended or modified if any terms are violated, like if a company violates any law administered by DEP, according to DEP staff member Mark Margerum.
According to DEP data obtained by The Maine Monitor through a Freedom of Access Act request, the exemption has been granted 295 times since 1987. Slightly less than half were for facilities like Peaks Renewables, which is classified as an “air pollution control” exemption, while most are for facilities that limit water pollution.
The exemption can be applied to property taxes, which are tracked by individual communities, or sales and use taxes, which are tracked by Maine Revenue Services after the exemption is approved by the DEP.
Blue Triton Brands, Inc., which owns bottled water brand Poland Spring, received a sales tax exemption for a stormwater treatment system at its Poland facility in April 2023 for over $2 million in materials and equipment, according to its exemption application.
Many of the facilities receiving exemptions, like the ND Paper, Inc. mill in Rumford and Sappi North America, Inc. Somerset Mill in Skowhegan, have changed ownership numerous times since the exemptions were first granted. The exemptions remain in effect.
The Rumford mill has received 14 separate air pollution exemptions since 1989, the most recent in 2005, and has the most exemptions of any active facility, DEP records show. The Sappi Somerset Mill in Skowhegan, meanwhile, has received five of those exemptions and six water pollution control exemptions — amounting to $27 million in exempt property value each year, according to Skowhegan tax assessor William Van Tuinen.
That equates to roughly $480,000 in annual tax revenue that Sappi does not have to pay to Skowhegan. Van Tuinen, who also assesses for Rumford and handles ND Paper’s account with the town, said the exemption is a necessary part of business for aging mills to turn a profit and meet environmental standards.
Without the pollution control equipment, Van Tuinen said, there wouldn’t be a mill in Skowhegan that provides approximately 754 jobs for the surrounding community, and produces hundreds of thousands of tons of paper products and pulp each year.
“It’s just a necessary part of the infrastructure to open the door,” Van Tuinen said. “(The mills) would not operate without the exemption; they would be closed down.”
The pollution control exemption also only makes up a fraction of the overall exemptions that mills like Sappi Somerset have on their town’s commitment books. In all, the Sappi mill has roughly $403 million worth of tax-exempt property — taking its assessed value from $636 million down to $233 million for 2024, according to a Skowhegan commitment report.
Van Tuinen said a bulk of those exemptions come from separate Maine programs handled by Maine Revenue Services, like the Business Equipment Tax Exemption, which provides a 100% tax exemption for manufacturing equipment, including Sappi’s paper machines.
Spokesmen for Sappi and ND Paper did not respond to requests for comment for this story.
The pollution control tax exemption is one tool governments and regulators can use to ensure a company complies with environmental regulations, according to Nicole Hunter, professor of environmental economics for the University at Buffalo.
Though she was not specifically familiar with Maine’s pollution control exemption statute, she said it falls in line with other policies that incentivise good corporate behavior and keep companies from passing the costs of reducing pollution on to consumers.
“Giving that flexibility just gives companies more ability to meet these requirements at a lower cost,” Hunter told the Monitor. “And that passes on to consumers, of course. So really, it’s just about flexibility in compliance, and property tax exemptions are just one way you can do that.”