Solid Waste Disposal Facilities Regulations

1. Overview

The Internal Revenue Service recently released final regulations for determining whether a facility is a solid waste disposal facility under section 142(a)(6) of the Internal Revenue Code. When fully effective, the regulations will replace existing regulations that date back to 1972. The publication of the new rules brings to a close a decade-long process that began in large part as a result of controversy relating to audits of bonds issued to finance solid waste disposal facilities, particularly bonds issued to finance recycling facilities. The regulations explicitly state that they are implementing “a policy in favor of recycling through the use of solid waste disposal facilities.”

2. Definition of Solid Waste Disposal Facility

A “solid waste disposal facility” is a facility that processes solid waste in a qualified solid waste disposal process, performs a preliminary function, or is a functionally related and subordinate facility. A “preliminary function” is a function to collect, separate, sort, store, treat, process, disassemble or handle solid waste that is preliminary to and directly related to a qualified solid waste disposal process. The inclusion of this concept addresses concerns that the process of collecting and sorting solid waste might cause it to become a material that is not waste.

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