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S 2346Credits & Incentives

State Affairs and Government - Rhode Island Commerce Corporation

Creates a thirty-year sales tax exemption for large data centers that invest significantly in local facilities, labor, and renewable energy.

Held for study
Population
Affected
25
Email Legislator
Introduced Jan 30, 2026Committee Senate Commerce

Plain-English Summary

This legislation establishes a tax incentive program designed to attract large data centers to Rhode Island. To qualify, a facility must meet significant investment thresholds, ranging from $200 million to $400 million, and commit to spending at least $30 million on labor during construction. Additionally, the developer must invest $10 million in renewable energy or energy storage systems. In return, the state grants a sales and use tax exemption on data center equipment for thirty years. The bill also institutes ongoing labor spending requirements and mandates compliance with state labor standards for renewable energy projects.

For younger readers

This new law tries to get big computer companies to build "data centers" in Rhode Island. A data center is a giant building filled with powerful computers that store information for the internet. If a company promises to spend a lot of money building one here, hire local workers, and buy green energy equipment like solar power or batteries, the state promises not to charge them extra taxes when they buy their computer parts. This deal lasts for thirty years, provided the company keeps its promises to hire people and spend money in the state.

Who & Where It Applies

Impacted groups
Data center operatorsConstruction workersLabor unionsRenewable energy providersState taxpayers
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Mandates a ten million dollar investment in renewable energy resources or energy storage systems, directly supporting the transition to green energy infrastructure.
  • Classifies these data centers as "covered projects," ensuring that workers are protected by labor peace agreements and prevailing wage standards.
  • Requires substantial ongoing labor expenditures of five million dollars annually after the initial period, securing long-term employment rather than just temporary construction jobs.
  • Provides a massive thirty-year tax exemption to large corporations, potentially depriving the state of significant revenue that could fund public services.
  • Encourages the expansion of energy-intensive facilities that may put considerable strain on the power grid and environment, despite the renewable investment requirement.
  • Prioritizes economic development strategies focused on attracting outside corporate capital rather than supporting small, local businesses or community-based initiatives.
For Conservatives
  • Lowers the tax burden on businesses by eliminating sales tax on expensive equipment, encouraging private sector investment and economic growth.
  • Utilizes a performance-based incentive model where tax benefits are only granted after the company proves it has made significant capital investments.
  • Enhances the state's competitiveness in the high-tech sector, potentially attracting large-scale capital and modernizing the local economy.
  • Imposes strict government mandates on private companies regarding renewable energy investments, interfering with free-market operational decisions.
  • Forces businesses to adhere to labor peace agreements and union-friendly labor standards, reducing employer flexibility and potentially increasing costs.
  • Creates a special class of tax privileges for specific industries, rather than applying a broad-based tax reduction for all businesses.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 199 additions · 33 deletions

SECTION 1. Section 42-64-3 of the General Laws in Chapter 42-64 entitled "Rhode Island Commerce Corporation" is hereby amended to read as follows: 42-64-3. Definitions. As used in this chapter, the following words and terms shall have the following meanings, unless the context indicates another or different meaning or intent:

(1) “Administrative penalty” means a monetary penalty not to exceed the civil penalty specified in § 42-64-9.2.

(2) “Airport facility” means developments consisting of runways, hangars, control towers, ramps, wharves, bulkheads, buildings, structures, parking areas, improvements, facilities, or other real or personal property necessary, convenient, or desirable for the landing, taking off, accommodation, and servicing of aircraft of all types, operated by carriers engaged in the transportation of passengers or cargo, or for the loading, unloading, interchange, or transfer of the passengers or their baggage, or the cargo, or otherwise for the accommodation, use or convenience of the passengers or the carriers or their employees (including related facilities and accommodations at sites removed from landing fields and other landing areas), or for the landing, taking off, accommodation, and servicing of aircraft owned or operated by persons other than carriers. It also means facilities providing access to an airport facility, consisting of rail, rapid transit, or other forms of mass transportation which furnish a connection between the air terminal and other points within the state, including appropriate mass transportation terminal facilities at and within the air terminal itself and suitable offsite facilities for the accommodation of air passengers, baggage, mail, express, freight, and other users of the connecting facility.

(3) “BOCA code” means the BOCA basic building code published by building officials & code administrators international, inc., as the code may from time to time be promulgated by the building officials & code administrators international, inc.

(4) “Bonds” and “notes” means the bonds, notes, securities, or other obligations or evidences of indebtedness issued by the corporation pursuant to this chapter, all of which shall be issued under the name of and known as obligations of the “Rhode Island commerce corporation.”

(5) “Civic facility” means any real or personal property designed and intended for the purpose of providing facilities for educational, cultural, community, or other civic purposes.

(6) “Colocation tenant” means a person that contracts with the owner or operator of a qualified data center to use or occupy all or part of a qualified data center for a period of at least two (2) years.

(7) “Compliance schedule” means a schedule of remedial measures including an enforceable sequence of actions or operations leading to compliance with an effluent limitation or any other limitation, prohibition, or standard. (7)(8) “Corporation,” “port authority,” or “authority” means the governmental agency and public instrumentality, formerly known as the “Rhode Island port authority and economic development corporation” and/or also formerly known as the “Rhode Island economic development corporation,” and now known as the Rhode Island commerce corporation authorized, created, and established pursuant to § 42-64-4, or any subsidiary corporation thereof which is established pursuant to § 42-64-7.1. (8)(9) “Director” means the executive director of the economic development corporation until such time that the secretary of commerce is appointed. Upon the appointment of a secretary of commerce, “Director” means the chief executive officer of the Rhode Island commerce corporation, who shall also be the secretary of the Rhode Island executive office of commerce.

(10) “Eligible qualified data center costs” means expenditures made for the development, acquisition, construction, rehabilitation, including wages pursuant to § 39-26.9-5 for any direct and indirect qualified licensed labor for construction and installation of data center equipment, renovation, repair or operation of a facility to be used as a qualified data center, including the cost of land (including land for required parking and regulatory setbacks), buildings, site characterization and assessment, engineering services, design services and data center equipment acquisitions. “Eligible qualified data center costs” does not include expenditures made in connection with real or personal property that is located outside the boundaries of the facility.

(11) “Enterprise information technology equipment” means:

(i) Hardware that support computing, networking or data storage functions, including servers and routers;

(ii) Networking systems equipment that support computing, networking or data storage functions and have an industry designation as equipment within the enterprise class or data center class of networking systems; and

(iii) Generators and other equipment used to ensure an uninterrupted power supply for the hardware and networking systems equipment.

(12) “Facility” means one or more contiguous tracts of land in the state and any structure and personal property contained on such land. (9)(13) “Federal land” means real property within the state, now acquired or hereafter acquired by the Rhode Island commerce corporation which was formerly owned by the United States government, or any agency or instrumentality thereof, including without limiting the generality of the foregoing, any and all real property now or formerly owned or used by the United States government in the towns of North Kingstown, Portsmouth, Middletown, and Charlestown and the city of Newport as military installations or for other purposes related to the national defense. Without limiting the generality of the foregoing, federal land shall also mean and include certain land in the town of North Kingstown, or any portion thereof, which has or shall revert to the state pursuant to the provisions of Public Laws 1939, chapter 696 and is now or hereafter acquired by the corporation from the state. (10)(14) “Industrial facility” means any real or personal property, the demolition, removal, relocation, acquisition, expansion, modification, alteration, or improvement of existing buildings, structures, or facilities, the construction of new buildings, structures, or facilities, the replacement, acquisition, modification, or renovation of existing machinery and equipment, or the acquisition of new machinery and equipment, or any combination of the United States, which shall be suitable for manufacturing, research, production, processing, agriculture, and marine commerce, or warehousing; or convention centers, trade centers, exhibition centers, or offices (including offices for the government of the United States or any agency, department, board, bureau, corporation, or other instrumentality of the United States, or for the state or any state agency, or for any municipality); or facilities for other industrial, commercial, or business purposes of every type and description; and facilities appurtenant or incidental to the foregoing, including headquarters or office facilities, whether or not at the location of the remainder of the facility, warehouses, distribution centers, access roads, sidewalks, utilities, railway sidings, trucking, and similar facilities, parking areas, waterways, dockage, wharfage, and other improvements necessary or convenient for the construction, development, maintenance, and operation of those facilities. (11)(15) “Local governing body” means any town or city council, commission, or other elective governing body now or hereafter vested by state statute, charter, or other law, with jurisdiction to initiate and adopt local ordinances, whether or not these local ordinances require the approval of the elected or appointed chief executive officer or other official or body to become effective. (12)(16) “Local redevelopment corporation” means any agency or corporation created and existing pursuant to the provisions of chapter 31 of title 45. (13)(17) “Municipality” means any city or town within the state now existing or hereafter created, or any state agency.

(18) “Operator” means a person that contracts with the owner of a qualified data center to operate such a qualified data center.

(19) “Owner” means a person that holds a leasehold estate in excess of fifty (50) years or a fee title to a facility. (14)(20) “Parent corporation” means, when used in connection with a subsidiary corporation established pursuant to § 42-64-7.1, the governmental agency and public instrumentality created and established pursuant to § 42-64-4.

(21) “Person” means an individual, an estate, a trust, a receiver, a cooperative association, a corporation, a company, a firm, a partnership, a limited partnership, a limited liability company, a limited liability partnership or a joint venture. (15)(22) “Personal property” means all tangible personal property, new or used, including, without limiting the generality of the foregoing, all machinery, equipment, transportation equipment, ships, aircraft, railroad rolling stock, locomotives, pipelines, and all other things and rights usually included within that term. “Personal property” also means and includes any and all interests in the property which are less than full title, such as leasehold interests, security interests, and every other interest or right, legal or equitable. (16)(23) “Pollutant” means any material or effluent which may alter the chemical, physical, biological or radiological characteristics or integrity of water, including but not limited to, dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, cellar dirt, or industrial, municipal, agricultural or other waste petroleum or petroleum products, including, but not limited to, oil. (17)(24) “Pollution” means the discharge of any gaseous, liquid, or solid substance or combination thereof (including noise) into the air, water, or land which affects the physical, chemical, or biological properties (including temperature) of the air, water, or land in a manner or to an extent which renders or is likely to render the air, water, or land harmful or inimical to the public health, safety, or welfare, or to animal, bird, or aquatic life, or to the use of the air or water for domestic, industrial, or agricultural purposes or recreation including the man-made or man- induced alteration of the chemical, physical, biological or radiological integrity of water. (18)(25) “Pollution control facility” means any land or interest in land, the demolition, removal, relocation, acquisition, expansion, modification, alteration, or improvement of existing buildings, structures, or facilities, the construction of new buildings, structures, or facilities, the replacement, modification, or renovation of existing machinery and equipment, or the acquisition of new machinery and equipment, or any combination thereof, having to do with or the purpose of which is the abatement, control, or prevention of pollution, including industrial pollution, and all real and personal property incidental to that facility. (19)(26) “Port facility” means harbors, ports, and all real and personal property used in connection therewith, including, but not limited to, waterways, channels, wharves, docks, yards, bulkheads, slips, basins, pipelines, ships, boats, railroads, trucks, and other motor vehicles, aircraft, parking areas, shipyards, piers, quays, elevators, compressors, loading and unloading facilities, storage facilities, and warehouses of every type, buildings and facilities used in the manufacturing, processing, assembling, storing, or handling of any produce or products, other structures and facilities necessary for the convenient use of the harbors and seaports, including dredged approaches, railways, railroad terminals, side tracks, airports, roads, highways, tunnels, viaducts, bridges, and other approaches, useful in connection therewith, and any other shipping or transportation facility useful in the operation of a port or harbor. (20)(27) “Project” or “port project” means the acquisition, ownership, operation, construction, reconstruction, rehabilitation, improvement, development, sale, lease, or other disposition of, or the provision of financing for, any real or personal property (by whomever owned) or any interests in real or personal property, including without limiting the generality of the foregoing, any port facility, recreational facility, industrial facility, airport facility, pollution control facility, utility facility, solid waste disposal facility, civic facility, residential facility, water supply facility, energy facility or renewable energy facility, or any other facility, or any combination of two (2) or more of the foregoing, or any other activity undertaken by the corporation. (21)(28) “Project cost” means the sum total of all costs incurred by the Rhode Island commerce corporation in carrying out all works and undertakings, which the corporation deems reasonable and necessary for the development of a project. These shall include, but are not necessarily limited to, the costs of all necessary studies, surveys, plans, and specifications, architectural, engineering, or other special services, acquisition of land and any buildings on the land, site preparation and development, construction, reconstruction, rehabilitation, improvement, and the acquisition of any machinery and equipment or other personal property as may be deemed necessary in connection with the project (other than raw materials, work in process, or stock in trade); the necessary expenses incurred in connection with the initial occupancy of the project; an allocable portion of the administrative and operating expenses of the corporation; the cost of financing the project, including interest on all bonds and notes issued by the corporation to finance the project from the date thereof to one year from the date when the corporation shall deem the project substantially occupied; and the cost of those other items, including any indemnity or surety bonds and premiums on insurance, legal fees, real estate brokers and agent fees, fees and expenses of trustees, depositories, and paying agent for bonds and notes issued by the Rhode Island commerce corporation, including reimbursement to any project user for any expenditures as may be allowed by the corporation (as would be costs of the project under this section had they been made directly by the corporation), and relocation costs, all as the corporation shall deem necessary. (22)(29) “Project user” means the person, company, corporation, partnership, or commercial entity, municipality, state, or United States of America who shall be the user of, or beneficiary of, a port project.

(30) “Qualified data center” means a facility that is developed, acquired, constructed, rehabilitated, renovated, repaired or operated, to house a group of networked computer services in one physical location or multiple contiguous locations to centralize the storage, management and dissemination of data and information pertaining to a particular business or classification or body of knowledge and meets the following criteria by the sixth anniversary of the certification pursuant to § 42-64-43(c)(i):

(i) The owner or operator makes a qualified investment of at least:

(A) Two hundred million dollars ($200,000,000) if the data center is located in an enterprise zone designated pursuant to chapter 64.3 of title 42 (“distressed areas economic revitalization act”) or a federal qualified opportunity zone designated pursuant to the Tax Cuts and Jobs Act of 2017, Pub. L. 115-97, as amended from time to time; or

(B) Four hundred million dollars ($400,000,000) if the data center is not located in an enterprise zone designated pursuant to chapter 64.3 of title 42 (“distressed areas economic revitalization act”) or a federal qualified opportunity zone designated pursuant to the Tax Cuts and Jobs Act of 2017, Pub. L. 115-97, as amended from time to time;

(ii) The owner or operator expends a minimum of thirty million dollars ($30,000,000) on direct and/or indirect labor and this requirement shall be satisfied by work physically occurring at the facility; and

(iii) The owner or operator shall invest at least ten million dollars ($10,000,000) in a renewable energy resource, as defined in § 39-26-5, or an energy storage system, as defined in § 39-33-1(2), located in the state.

(31) “Qualified data center equipment” means computer equipment, software and hardware purchased or leased for the processing, storage, retrieval or communication of data, utilized at a qualified data center, including:

(i) Computer servers, routers, connections, chassis, networking equipment, switches, racking, fiber optics and copper cables, trays, conduits and other enabling machinery, equipment and hardware, regardless of whether such personal property is affixed to or incorporated into real property;

(ii) Equipment used in the operation of computer equipment or software for the benefit of a qualified data center, including component parts, replacement parts and upgrades, regardless of whether the personal property is affixed to or incorporated into real property;

(iii) Equipment necessary to the transformation, generation, distribution or management of electricity that is required to operate computer servers and related equipment, including substations, generators, uninterrupted energy equipment, supplies, conduits, fuel piping and storage, cabling, duct banks, switches, switchboards, batteries and testing equipment;

(iv) Equipment necessary to cool and maintain a controlled environment for the operation of computer servers and other equipment of a qualified data center, including chillers, mechanical equipment, refrigerant piping, fuel piping and storage, adiabatic and free cooling systems, cooling towers, water softeners, air handling units, indoor direct exchange units, fans, ducting and filters;

(v) Water conservation systems, including equipment designated to collect, conserve and reuse water;

(vi) Conduit, ducting and fiber optic and copper cables located outside the qualified data center, that are directly related to connecting one or more qualified data center locations;

(vii) Monitoring equipment and security systems;

(viii) Modular data centers and preassembled components of any item described in this subsection, including components used in the manufacturing of modular data centers; and

(ix) Any other personal property, exclusive of motor vehicles, that is essential to the operations of a qualified data center or that is acquired for incorporation into or used or consumed in the operation of the qualified data center.

(32) “Qualified investment” means the aggregate, nonduplicative eligible data center costs incurred and paid by an owner, operator and colocation tenant of a qualified data center. (23)(33) “Real property” means lands, structures (new or used), franchises, and interests in land, including lands under water, and riparian rights, space rights, and air rights, and all other things and rights usually included within the term. “Real property” shall also mean and include any and all interests in that property less than fee simple, such as easements, incorporeal hereditaments, and every estate, interest or right, legal or equitable, including terms for years and liens thereon by way of judgments, mortgages or otherwise, and also all claims for damages to that real property. (24)(34) “Recreational facility” means any building, development, or improvement, provided that building, facility, development, or improvement is designed in whole or in part to attract tourists to the state or to provide essential overnight accommodations to transients visiting this state, including, without limiting in any way the generality of the foregoing, marinas, beaches, bathing facilities, ski facilities, convention facilities, hotels, motels, golf courses, camp grounds, arenas, theatres, lodges, guest cottages, and all types of real or personal property related thereto as may be determined from time to time by the corporation. (25)(35) “Renewable energy facility” means any real or personal property, or any combination thereof, related to, or incidental to, any project, designed, intended, or utilized for an eligible renewable energy resource that meets the criteria set forth in §§ 39-26-5(a) and 39-26-5(c). (26)(36) “Revenues” means: (i) with respect to any project, the rents, fees, tolls, charges, installment payments, repayments, and other income or profit derived from a project or a combination of projects pursuant to any lease, conditional sales contract, installment sales contract, loan agreement, or other contract or agreement, or any combination thereof, and (ii) any receipts, fees, payments, moneys, revenues, or other payments received or to be received by the corporation in the exercise of its corporate powers under this chapter, including, without limitation, loan repayments, grants, aid, appropriations and other assistance for the state, the United States or any corporation, department or instrumentality of either or of a political subdivision thereof, bond proceeds, investment earnings, insurance proceeds, amounts in reserves and other funds and accounts established by or pursuant to this chapter or in connection with the issuance of bonds, and any other taxes, assessments, fees, charges, awards or other income or amounts received or receivable by the corporation. (27)(37) “Rule or regulation” means any directive promulgated by the Rhode Island commerce corporation not inconsistent with the laws of the United States or the state, for the improvement of navigation and commerce or other project purposes and shall include, but not be limited to, charges, tolls, rates, rentals, and security provisions fixed or established by the corporation. (28)(38) “Sewage” shall be construed to mean the same as “pollutant” as defined in subsection (16) above this section. (29)(39) “Sewage treatment facility” means the sewage treatment plant, structure, combined sewer overflows, equipment, interceptors, mains, pumping stations and other property, real, personal or mixed, for the treatment, storage, collection, transporting or disposal of sewage, or any property or system to be used in whole or in part for any of the aforesaid purposes located or operated within the boundaries of the Quonset Point/Davisville Industrial Park, or utilized by the corporation for the transport, collection, treatment, storage, or disposal of waste. (30)(40) “Solid waste” means garbage, refuse, and other discarded materials, including, but not limited to, solid waste materials resulting from industrial, recreational, utility, and commercial enterprises, hotels, apartments, or any other public building or private building, or agricultural, or residential activities. (31)(41) “Solid waste disposal facility” means any real or personal property, related to or incidental to any project, which is designed or intended or designated for the purpose of treating, compacting, composting, or disposing of solid waste materials, including treatment, compacting, composting, or disposal plants, site and equipment furnishings thereof, and their appurtenances. (32)(42) “Source” means any building, structure, facility, or installation from which there is or may be the discharge of sewage. (33)(43) “State” means the state of Rhode Island. (34)(44) “State agency” means any office, department, board, commission, bureau, division, authority, or public corporation, agency, or instrumentality of the state. (35)(45) “State guide plan” means the plan adopted pursuant to § 42-11-10, which establishes the statewide planning program. (36)(46) “Utility facility” means any real or personal property designed, intended or utilized for generating, manufacturing, producing, storing, transmitting, distributing, delivering, or furnishing natural or manufactured gas, steam, electrical, or nuclear energy, heat, light, or power directly or indirectly to or for any project, project user, or for the public, the collection and disposal of storm and sanitary sewage; any railroads necessary or desirable for the free flow of commerce to and from projects; any roads, highways, bridges, tunnels, viaducts, or other crossings necessary or desirable for the free flow of commerce to and from projects, and any public transportation systems or facilities, including, but not limited to, bus, truck, ferry, and railroad terminals, depots, tracked vehicles, and other rolling stock and ferries; and any appurtenances, equipment, and machinery or other personal property necessary or desirable for the utilization thereof. (37)(47) “Water supply facility” means any real or personal property, or any combination thereof, related to or incidental to any project, designed, intended, or utilized for the furnishing of water for domestic, industrial, irrigation, or other purposes and including artesian wells, reservoirs, dams, related equipment, and pipelines, and other facilities.

SECTION 2. Chapter 42-64 of the General Laws entitled "Rhode Island Commerce Corporation" is hereby amended by adding thereto the following section: 42-64-43. Qualified data center location incentive.

(a) The director, in consultation with the director of revenue, as defined in § 42-142-1(b), shall review applications of owners or operators of a data center to determine whether the data center qualifies for sales and use tax exemption pursuant to § 44-18-30.

(b) To apply for the sales and use tax exemption pursuant § 44-18-30, the owner or operator of a data center shall submit an application to the director, on a form prescribed by the corporation that shall include:

(1) The name, address and telephone number of the owner or operator;

(2) The address of the site where the qualified data center is or will be located;

(3) The anticipated aggregate square feet of the qualified data center for which the sales and use tax exemption is being sought;

(4) The anticipated investment associated with the qualified data center for which the sales and use tax exemption is being sought;

(5) The anticipated labor costs which the data center will maintain for the first six (6) years following the issuance of a certificate; and

(6) An affirmation, signed by an authorized representative representing the owner or operator, that the data center is expected to satisfy the certification requirements in this section as a qualified data center. (c)(1) Within sixty (60) days after receiving a completed application, the director shall review the application submitted by the owner or operator of a data center and certify the data center as a qualified data center provided the data center is expected to meet all requirements of the definition of a “qualified data center.”

(2) The director shall issue a written certification that the data center qualifies for the sales and use tax exemption or provide written reasons for its denial of the certificate and an opportunity for the applicant to cure any deficiencies.

(3) Failure to approve or deny the application within sixty (60) days after the date the owner or operator submits the application to the director shall constitute approval of the qualified data center, and the director shall issue written certification to the owner or operator within fourteen

(14) days.

(4) The certification shall provide the following information:

(i) The effective date of the certification;

(ii) The name of the owner or operator of the qualified data center;

(iii) The location of the qualified data center; and

(iv) The beginning and ending date of the sales and use tax exemption which shall begin on the effective date of the certification and be valid for thirty (30) years after the effective date.

(5) The director shall send a copy of the certification to the director of revenue.

(d) The effective date of the certification shall be the date on which the application was submitted to the corporation or a prospective date stated in the application that does not exceed five

(5) years after the date on which the application was submitted; provided that, the certification shall be valid for thirty (30) years after the effective date.

(e) On the sixth anniversary of the effective date of the certification, the owner or operator shall file a report with the corporation and documents necessary to evidence the owner or operator’s compliance with the requirements for a qualified data center as set forth in § 42-64-3(30). The corporation shall review the report and additional documents submitted to the corporation to determine compliance with § 42-64-3(30) within three (3) months of the owner or operator’s submission. The corporation shall assess the following penalties for noncompliance:

(1) If the owner or operator has failed to comply with § 42-64-3(30)(i), the owner or operator shall pay seven percent (7%) of the difference between the minimum required investment and the actual investment;

(2) If the owner or operator has failed to comply with § 42-64-3(30)(ii), the owner or operator shall pay seven-and-one half percent (7.5%) of the difference between the minimum required payroll and the actual payroll; and

(3) If the owner or operator has failed to comply with § 42-64-3(30)(iii), the owner or operator shall pay ten percent (10%) of the difference between the minimum required investment in a renewable energy system or energy storage system and the actual investment in renewable energy system or energy storage system.

(f) Any penalty assessed pursuant to subsection (e) of this section, shall be paid to the department, as established by chapter 142 of title 42. Any amount which is subject to penalty under more than one section of subsection (e) of this section, shall only be penalized once under the highest penalty rate.

(g) Within fourteen (14) days of the corporation’s completion of its review pursuant to subsection (e) of this section or, if applicable, the owner or operator’s payment of a penalty assessed pursuant to subsection (f) of this section, the corporation shall issue a certificate of compliance.

(h) For every year following the sixth anniversary of the effective date of the certification up to and including the thirtieth anniversary of the effective date of the certification, the owner or operator shall expend a minimum of five million dollars ($5,000,000) on direct and/or indirect labor. The owner or operator shall file, within forty-five (45) days after each anniversary following the sixth anniversary of the effective date of the certification, documents necessary for the corporation to confirm compliance with this section. If the owner or operator has failed to comply with this section, the owner or operator shall pay to the department seven and one-half percent (7.5%) of the difference between the minimum required labor expenditure and the actual labor expenditure. Within fourteen (14) days of the corporation’s completion of its review pursuant to this section or, if applicable, the owner or operator’s payment of a penalty assessed pursuant to this section, the corporation shall issue an annual certificate of compliance.

(i) The corporation, in consultation with the director of revenue, shall promulgate rules and regulations and shall issue instructions and forms necessary for implementation of this section within one year of the effective date of this section.

SECTION 3. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and Use Taxes — Liability and Computation" is hereby amended to read as follows: 44-18-30. Gross receipts exempt from sales and use taxes. There are exempted from the taxes imposed by this chapter the following gross receipts:

(1) Sales and uses beyond constitutional power of state. From the sale and from the storage, use, or other consumption in this state of tangible personal property the gross receipts from the sale of which, or the storage, use, or other consumption of which, this state is prohibited from taxing under the Constitution of the United States or under the constitution of this state.

(2) Newspapers.

(i) From the sale and from the storage, use, or other consumption in this state of any newspaper.

(ii) “Newspaper” means an unbound publication printed on newsprint that contains news, editorial comment, opinions, features, advertising matter, and other matters of public interest.

(iii) “Newspaper” does not include a magazine, handbill, circular, flyer, sales catalog, or similar item unless the item is printed for, and distributed as, a part of a newspaper.

(3) School meals. From the sale and from the storage, use, or other consumption in this state of meals served by public, private, or parochial schools, school districts, colleges, universities, student organizations, and parent-teacher associations to the students or teachers of a school, college, or university whether the meals are served by the educational institutions or by a food service or management entity under contract to the educational institutions.

(4) Containers.

(i) From the sale and from the storage, use, or other consumption in this state of:

(A) Non-returnable containers, including boxes, paper bags, and wrapping materials that are biodegradable and all bags and wrapping materials utilized in the medical and healing arts, when sold without the contents to persons who place the contents in the container and sell the contents with the container.

(B) Containers when sold with the contents if the sale price of the contents is not required to be included in the measure of the taxes imposed by this chapter.

(C) Returnable containers when sold with the contents in connection with a retail sale of the contents or when resold for refilling.

(D) Keg and barrel containers, whether returnable or not, when sold to alcoholic beverage producers who place the alcoholic beverages in the containers.

(ii) As used in this subdivision, the term “returnable containers” means containers of a kind customarily returned by the buyer of the contents for reuse. All other containers are “non-returnable containers.” (5)(i) Charitable, educational, and religious organizations. From the sale to, as in defined in this section, and from the storage, use, and other consumption in this state, or any other state of the United States of America, of tangible personal property by hospitals not operated for a profit; “educational institutions” as defined in subdivision (18) not operated for a profit; churches, orphanages, and other institutions or organizations operated exclusively for religious or charitable purposes; interest-free loan associations not operated for profit; nonprofit, organized sporting leagues and associations and bands for boys and girls under the age of nineteen (19) years; the following vocational student organizations that are state chapters of national vocational student organizations: Distributive Education Clubs of America (DECA); Future Business Leaders of America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers of America/Home Economics Related Occupations (FHA/HERD); Vocational Industrial Clubs of America (VICA); organized nonprofit golden age and senior citizens clubs for men and women; and parent-teacher associations; and from the sale, storage, use, and other consumption in this state, of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation.

(ii) In the case of contracts entered into with the federal government, its agencies, or instrumentalities, this state, or any other state of the United States of America, its agencies, any city, town, district, or other political subdivision of the states; hospitals not operated for profit; educational institutions not operated for profit; churches, orphanages, and other institutions or organizations operated exclusively for religious or charitable purposes, the contractor may purchase such materials and supplies (materials and/or supplies are defined as those that are essential to the project) that are to be utilized in the construction of the projects being performed under the contracts without payment of the tax.

(iii) The contractor shall not charge any sales or use tax to any exempt agency, institution, or organization but shall in that instance provide his or her suppliers with certificates in the form as determined by the division of taxation showing the reason for exemption and the contractor’s records must substantiate the claim for exemption by showing the disposition of all property so purchased. If any property is then used for a nonexempt purpose, the contractor must pay the tax on the property used.

(6) Gasoline. From the sale and from the storage, use, or other consumption in this state of: (i) Gasoline and other products taxed under chapter 36 of title 31 and (ii) Fuels used for the propulsion of airplanes.

(7) Purchase for manufacturing purposes.

(i) From the sale and from the storage, use, or other consumption in this state of computer software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, and water, when the property or service is purchased for the purpose of being manufactured into a finished product for resale and becomes an ingredient, component, or integral part of the manufactured, compounded, processed, assembled, or prepared product, or if the property or service is consumed in the process of manufacturing for resale computer software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water.

(ii) “Consumed” means destroyed, used up, or worn out to the degree or extent that the property cannot be repaired, reconditioned, or rendered fit for further manufacturing use.

(iii) “Consumed” includes mere obsolescence.

(iv) “Manufacturing” means and includes: manufacturing, compounding, processing, assembling, preparing, or producing.

(v) “Process of manufacturing” means and includes all production operations performed in the producing or processing room, shop, or plant, insofar as the operations are a part of and connected with the manufacturing for resale of tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water and all production operations performed insofar as the operations are a part of and connected with the manufacturing for resale of computer software.

(vi) “Process of manufacturing” does not mean or include administration operations such as general office operations, accounting, collection, or sales promotion, nor does it mean or include distribution operations that occur subsequent to production operations, such as handling, storing, selling, and transporting the manufactured products, even though the administration and distribution operations are performed by, or in connection with, a manufacturing business.

(8) State and political subdivisions. From the sale to, and from the storage, use, or other consumption by, this state, any city, town, district, or other political subdivision of this state. Every redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a subdivision of the municipality where it is located.

(9) Food and food ingredients. From the sale and storage, use, or other consumption in this state of food and food ingredients as defined in § 44-18-7.1(l). For the purposes of this exemption “food and food ingredients” shall not include candy, soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is:

(i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311, except sub-sector 3118 (bakeries);

(ii) Sold in an unheated state by weight or volume as a single item;

(iii) Bakery items, including: bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and is not sold with utensils provided by the seller, including: plates, knives, forks, spoons, glasses, cups, napkins, or straws.

(10) Medicines, drugs, and durable medical equipment. From the sale and from the storage, use, or other consumption in this state, of:

(i) “Drugs” as defined in § 44-18-7.1(h)(i), sold on prescriptions, medical oxygen, and insulin whether or not sold on prescription. For purposes of this exemption drugs shall not include over-the-counter drugs and grooming and hygiene products as defined in § 44-18-7.1(h)(iii).

(ii) Durable medical equipment as defined in § 44-18-7.1(k) for home use only, including, but not limited to: syringe infusers, ambulatory drug delivery pumps, hospital beds, convalescent chairs, and chair lifts. Supplies used in connection with syringe infusers and ambulatory drug delivery pumps that are sold on prescription to individuals to be used by them to dispense or administer prescription drugs, and related ancillary dressings and supplies used to dispense or administer prescription drugs, shall also be exempt from tax.

(11) Prosthetic devices and mobility enhancing equipment. From the sale and from the storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t), sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses, and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on prescription; and mobility enhancing equipment as defined in § 44-18-7.1(p), including wheelchairs, crutches, and canes.

(12) Coffins, caskets, urns, shrouds and burial garments. From the sale and from the storage, use, or other consumption in this state of coffins, caskets, burial containers, urns, urn liners, urn vaults, grave liners, grave vaults, burial tent setups, prayer cards, shrouds, and other burial garments that are ordinarily sold by a funeral director as part of the business of funeral directing.

(13) Motor vehicles sold to nonresidents.

(i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide nonresident of this state who does not register the motor vehicle in this state, whether the sale or delivery of the motor vehicle is made in this state or at the place of residence of the nonresident. A motor vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to its nonresidents is not exempt from the tax imposed under § 44-18-20. In that event, the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed in his or her state of residence not to exceed the rate that would have been imposed under § 44-18- 20. Notwithstanding any other provisions of law, a licensed motor vehicle dealer shall add and collect the tax required under this subdivision and remit the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. When a Rhode Island licensed, motor vehicle dealer is required to add and collect the sales and use tax on the sale of a motor vehicle to a bona fide nonresident as provided in this section, the dealer in computing the tax takes into consideration the law of the state of the nonresident as it relates to the trade-in of motor vehicles.

(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption provided in this subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the motor vehicle was the holder of, and had in his or her possession a valid out-of-state motor vehicle registration or a valid out-of-state driver’s license.

(iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage, or other consumption in this state, and is subject to, and liable for, the use tax imposed under the provisions of § 44-18-20.

(14) Sales in public buildings by blind people. From the sale and from the storage, use, or other consumption in all public buildings in this state of all products or wares by any person licensed under § 40-9-11.1.

(15) Air and water pollution control facilities. From the sale, storage, use, or other consumption in this state of tangible personal property or supplies acquired for incorporation into or used and consumed in the operation of a facility, the primary purpose of which is to aid in the control of the pollution or contamination of the waters or air of the state, as defined in chapter 12 of title 46 and chapter 23 of title 23, respectively, and that has been certified as approved for that purpose by the director of environmental management. The director of environmental management may certify to a portion of the tangible personal property or supplies acquired for incorporation into those facilities or used and consumed in the operation of those facilities to the extent that that portion has as its primary purpose the control of the pollution or contamination of the waters or air of this state. As used in this subdivision, “facility” means any land, facility, device, building, machinery, or equipment.

(16) Camps. From the rental charged for living quarters, or sleeping, or housekeeping accommodations at camps or retreat houses operated by religious, charitable, educational, or other organizations and associations mentioned in subsection (5), or by privately owned and operated summer camps for children.

(17) Certain institutions. From the rental charged for living or sleeping quarters in an institution licensed by the state for the hospitalization, custodial, or nursing care of human beings.

(18) Educational institutions. From the rental charged by any educational institution for living quarters, or sleeping, or housekeeping accommodations or other rooms or accommodations to any student or teacher necessitated by attendance at an educational institution. “Educational institution” as used in this section means an institution of learning not operated for profit that is empowered to confer diplomas, educational, literary, or academic degrees; that has a regular faculty, curriculum, and organized body of pupils or students in attendance throughout the usual school year; that keeps and furnishes to students and others records required and accepted for entrance to schools of secondary, collegiate, or graduate rank; and no part of the net earnings of which inures to the benefit of any individual.

(19) Motor vehicle and adaptive equipment for persons with disabilities.

(i) From the sale of: (A) Special adaptations; (B) The component parts of the special adaptations; or (C) A specially adapted motor vehicle; provided that the owner furnishes to the tax administrator an affidavit of a licensed physician to the effect that the specially adapted motor vehicle is necessary to transport a family member with a disability or where the vehicle has been specially adapted to meet the specific needs of the person with a disability. This exemption applies to not more than one motor vehicle owned and registered for personal, noncommercial use.

(ii) For the purpose of this subsection the term “special adaptations” includes, but is not limited to: wheelchair lifts, wheelchair carriers, wheelchair ramps, wheelchair securements, hand controls, steering devices, extensions, relocations, and crossovers of operator controls, power- assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices to auditory signals.

(iii) From the sale of: (a) Special adaptations, (b) The component parts of the special adaptations, for a “wheelchair accessible taxicab” as defined in § 39-14-1, and/or a “wheelchair accessible public motor vehicle” as defined in § 39-14.1-1.

(iv) For the purpose of this subdivision the exemption for a “specially adapted motor vehicle” means a use tax credit not to exceed the amount of use tax that would otherwise be due on the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the special adaptations, including installation.

(20) Heating fuels. From the sale and from the storage, use, or other consumption in this state of every type of heating fuel.

(21) Electricity and gas. From the sale and from the storage, use, or other consumption in this state of electricity and gas.

(22) Manufacturing machinery and equipment.

(i) From the sale and from the storage, use, or other consumption in this state of tools, dies, molds, machinery, equipment (including replacement parts), and related items to the extent used in an industrial plant in connection with the actual manufacture, conversion, or processing of tangible personal property, or to the extent used in connection with the actual manufacture, conversion, or processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification manual prepared by the Technical Committee on Industrial Classification, Office of Statistical Standards, Executive Office of the President, United States Bureau of the Budget, as revised from time to time, to be sold, or that machinery and equipment used in the furnishing of power to an industrial manufacturing plant. For the purposes of this subdivision, “industrial plant” means a factory at a fixed location primarily engaged in the manufacture, conversion, or processing of tangible personal property to be sold in the regular course of business;

(ii) Machinery and equipment and related items are not deemed to be used in connection with the actual manufacture, conversion, or processing of tangible personal property, or in connection with the actual manufacture, conversion, or processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification manual prepared by the Technical Committee on Industrial Classification, Office of Statistical Standards, Executive Office of the President, United States Bureau of the Budget, as revised from time to time, to be sold to the extent the property is used in administration or distribution operations;

(iii) Machinery and equipment and related items used in connection with the actual manufacture, conversion, or processing of any computer software or any tangible personal property that is not to be sold and that would be exempt under subdivision (7) or this subdivision if purchased from a vendor or machinery and equipment and related items used during any manufacturing, converting, or processing function is exempt under this subdivision even if that operation, function, or purpose is not an integral or essential part of a continuous production flow or manufacturing process;

(iv) Where a portion of a group of portable or mobile machinery is used in connection with the actual manufacture, conversion, or processing of computer software or tangible personal property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under this subdivision even though the machinery in that group is used interchangeably and not otherwise identifiable as to use.

(23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other consumption in this state of so much of the purchase price paid for a new or used automobile as is allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of the proceeds applicable only to the automobile as are received from the manufacturer of automobiles for the repurchase of the automobile whether the repurchase was voluntary or not towards the purchase of a new or used automobile by the buyer. For the purpose of this subdivision, the word “automobile” means a private passenger automobile not used for hire and does not refer to any other type of motor vehicle.

(24) Precious metal bullion.

(i) From the sale and from the storage, use, or other consumption in this state of precious metal bullion, substantially equivalent to a transaction in securities or commodities.

(ii) For purposes of this subdivision, “precious metal bullion” means any elementary precious metal that has been put through a process of smelting or refining, including, but not limited to: gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that its value depends upon its content and not upon its form.

(iii) The term does not include fabricated precious metal that has been processed or manufactured for some one or more specific and customary industrial, professional, or artistic uses.

(25) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use of the vessels including provisions, supplies, and material for the maintenance and/or repair of the vessels.

(26) Commercial fishing vessels. From the sale and from the storage, use, or other consumption in this state of vessels and other watercraft that are in excess of five (5) net tons and that are used exclusively for “commercial fishing,” as defined in this subdivision, and from the repair, alteration, or conversion of those vessels and other watercraft, and from the sale of property purchased for the use of those vessels and other watercraft including provisions, supplies, and material for the maintenance and/or repair of the vessels and other watercraft and the boats nets, cables, tackle, and other fishing equipment appurtenant to or used in connection with the commercial fishing of the vessels and other watercraft. “Commercial fishing” means taking or attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it for profit or by sale, barter, trade, or in commercial channels. The term does not include subsistence fishing, i.e., the taking for personal use and not for sale or barter; or sport fishing; but shall include vessels and other watercraft with a Rhode Island party and charter boat license issued by the department of environmental management pursuant to § 20-2-27.1 that meet the following criteria:

(i) The operator must have a current United States Coast Guard (U.S.C.G.) license to carry passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii) U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island boat registration to prove Rhode Island home port status; and (iv) The vessel must be used as a commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be able to demonstrate that at least fifty percent (50%) of its annual gross income derives from charters or provides documentation of a minimum of one hundred (100) charter trips annually; and (v) The vessel must have a valid Rhode Island party and charter boat license. The tax administrator shall implement the provisions of this subdivision by promulgating rules and regulations relating thereto.

(27) Clothing and footwear. From the sales of articles of clothing, including footwear, intended to be worn or carried on or about the human body for sales prior to October 1, 2012. Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including footwear, intended to be worn or carried on or about the human body up to two hundred and fifty dollars ($250) of the sales price per item. For the purposes of this section, “clothing or footwear” does not include clothing accessories or equipment or special clothing or footwear primarily designed for athletic activity or protective use as these terms are defined in § 44-18-7.1(f). In recognition of the work being performed by the streamlined sales and use tax governing board, upon passage of any federal law that authorizes states to require remote sellers to collect and remit sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012. The unlimited exemption on sales of clothing and footwear shall take effect on the date that the state requires remote sellers to collect and remit sales and use taxes.

(28) Water for residential use. From the sale and from the storage, use, or other consumption in this state of water furnished for domestic use by occupants of residential premises.

(29) Bibles. [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see Notes to Decisions.] From the sale and from the storage, use, or other consumption in the state of any canonized scriptures of any tax-exempt nonprofit religious organization including, but not limited to, the Old Testament and the New Testament versions.

(30) Boats.

(i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not register the boat or vessel in this state or document the boat or vessel with the United States government at a home port within the state, whether the sale or delivery of the boat or vessel is made in this state or elsewhere; provided, that the nonresident transports the boat within thirty (30) days after delivery by the seller outside the state for use thereafter solely outside the state.

(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption provided in this subdivision, including the affidavit of the seller that the buyer represented himself or herself to be a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state.

(31) Youth activities equipment. From the sale, storage, use, or other consumption in this state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island eleemosynary organizations, for the purposes of youth activities that the organization is formed to sponsor and support; and by accredited elementary and secondary schools for the purposes of the schools or of organized activities of the enrolled students.

(32) Farm equipment. From the sale and from the storage or use of machinery and equipment used directly for commercial farming and agricultural production; including, but not limited to: tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors, balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment, greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and other farming equipment, including replacement parts appurtenant to or used in connection with commercial farming and tools and supplies used in the repair and maintenance of farming equipment. “Commercial farming” means the keeping or boarding of five (5) or more horses or the production within this state of agricultural products, including, but not limited to, field or orchard crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or production provides at least two thousand five hundred dollars ($2,500) in annual gross sales to the operator, whether an individual, a group, a partnership, or a corporation for exemptions issued prior to July 1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2) levels. Level I shall be based on proof of annual, gross sales from commercial farming of at least twenty-five hundred dollars ($2,500) and shall be valid for purchases subject to the exemption provided in this subdivision except for motor vehicles with an excise tax value of five thousand dollars ($5,000) or greater. Level II shall be based on proof of annual gross sales from commercial farming of at least ten thousand dollars ($10,000) or greater and shall be valid for purchases subject to the exemption provided in this subdivision including motor vehicles with an excise tax value of five thousand dollars ($5,000) or greater. For the initial issuance of the exemptions, proof of the requisite amount of annual gross sales from commercial farming shall be required for the prior year; for any renewal of an exemption granted in accordance with this subdivision at either level I or level II, proof of gross annual sales from commercial farming at the requisite amount shall be required for each of the prior two (2) years. Certificates of exemption issued or renewed after July 1, 2002, shall clearly indicate the level of the exemption and be valid for four (4) years after the date of issue. This exemption applies even if the same equipment is used for ancillary uses, or is temporarily used for a non-farming or a non-agricultural purpose, but shall not apply to motor vehicles acquired after July 1, 2002, unless the vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for registration displaying farm plates as provided for in § 31-3-31.

(33) Compressed air. From the sale and from the storage, use, or other consumption in the state of compressed air.

(34) Flags. From the sale and from the storage, consumption, or other use in this state of United States, Rhode Island or POW-MIA flags.

(35) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether service connected or not. The motor vehicle must be purchased by and especially equipped for use by the qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under rules or regulations that the tax administrator may prescribe.

(36) Textbooks. From the sale and from the storage, use, or other consumption in this state of textbooks by an “educational institution,” as defined in subsection (18) of this section, and any educational institution within the purview of § 16-63-9(4), and used textbooks by any purveyor.

(37) Tangible personal property and supplies used in on-site hazardous waste recycling, reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible personal property or supplies used or consumed in the operation of equipment, the exclusive function of which is the recycling, reuse, or recovery of materials (other than precious metals, as defined in subdivision (24)(ii) of this section) from the treatment of “hazardous wastes,” as defined in § 23-19.1-4, where the “hazardous wastes” are generated in Rhode Island solely by the same taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the taxpayer in Rhode Island. The taxpayer shall procure an order from the director of the department of environmental management certifying that the equipment and/or supplies as used or consumed, qualify for the exemption under this subdivision. If any information relating to secret processes or methods of manufacture, production, or treatment is disclosed to the department of environmental management only to procure an order, and is a “trade secret” as defined in § 28-21-10(b), it is not open to public inspection or publicly disclosed unless disclosure is required under chapter 21 of title 28 or chapter 24.4 of title 23.

(38) Promotional and product literature of boat manufacturers. From the sale and from the storage, use, or other consumption of promotional and product literature of boat manufacturers shipped to points outside of Rhode Island that either: (i) Accompany the product that is sold; (ii) Are shipped in bulk to out-of-state dealers for use in the sale of the product; or (iii) Are mailed to customers at no charge.

(39) Food items paid for by food stamps. From the sale and from the storage, use, or other consumption in this state of eligible food items payment for which is properly made to the retailer in the form of U.S. government food stamps issued in accordance with the Food Stamp Act of 1977, 7 U.S.C. § 2011 et seq.

(40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39- 12-2(12) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed with the Rhode Island public utilities commission on the number of miles driven or by the number of hours spent on the job.

(41) Trade-in value of boats. From the sale and from the storage, use, or other consumption in this state of so much of the purchase price paid for a new or used boat as is allocated for a trade- in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards the purchase of a new or used boat by the buyer.

(42) Equipment used for research and development. From the sale and from the storage, use, or other consumption of equipment to the extent used for research and development purposes by a qualifying firm. For the purposes of this subsection, “qualifying firm” means a business for which the use of research and development equipment is an integral part of its operation and “equipment” means scientific equipment, computers, software, and related items.

(43) Coins. From the sale and from the other consumption in this state of coins having numismatic or investment value.

(44) Farm structure construction materials. Lumber, hardware, and other materials used in the new construction of farm structures, including production facilities such as, but not limited to: farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying houses, fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing rooms, machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos, feed storage sheds, and any other structures used in connection with commercial farming.

(45) Telecommunications carrier access service. Carrier access service or telecommunications service when purchased by a telecommunications company from another telecommunications company to facilitate the provision of telecommunications service.

(46) Boats or vessels brought into the state exclusively for winter storage, maintenance, repair, or sale. Notwithstanding the provisions of §§ 44-18-10, 44-18-11 and 44-18-20, the tax imposed by § 44-18-20 is not applicable for the period commencing on the first day of October in any year up to and including the 30th day of April next succeeding with respect to the use of any boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility in this state for storage, including dry storage and storage in water by means of apparatus preventing ice damage to the hull, maintenance, or repair; (ii) The actual process of storage, maintenance, or repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or vessel.

(47) Jewelry display product. From the sale and from the storage, use, or other consumption in this state of tangible personal property used to display any jewelry product; provided that title to the jewelry display product is transferred by the jewelry manufacturer or seller and that the jewelry display product is shipped out of state for use solely outside the state and is not returned to the jewelry manufacturer or seller.

(48) Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage, use, or other consumption in this state of any new or used boat. The exemption provided for in this subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal ten percent (10%) surcharge on luxury boats is repealed.

(49) Banks and regulated investment companies interstate toll-free calls. Notwithstanding the provisions of this chapter, the tax imposed by this chapter does not apply to the furnishing of interstate and international, toll-free terminating telecommunication service that is used directly and exclusively by or for the benefit of an eligible company as defined in this subdivision; provided that an eligible company employs on average during the calendar year no less than five hundred

(500) “full-time equivalent employees” as that term is defined in § 42-64.5-2. For purposes of this section, an “eligible company” means a “regulated investment company” as that term is defined in the Internal Revenue Code of 1986, 26 U.S.C. § 851, or a corporation to the extent the service is provided, directly or indirectly, to or on behalf of a regulated investment company, an employee benefit plan, a retirement plan or a pension plan, or a state-chartered bank.

(50) Mobile and manufactured homes generally. From the sale and from the storage, use, or other consumption in this state of mobile and/or manufactured homes as defined and subject to taxation pursuant to the provisions of chapter 44 of title 31.

(51) Manufacturing business reconstruction materials.

(i) From the sale and from the storage, use, or other consumption in this state of lumber, hardware, and other building materials used in the reconstruction of a manufacturing business facility that suffers a disaster, as defined in this subdivision, in this state. “Disaster” means any occurrence, natural or otherwise, that results in the destruction of sixty percent (60%) or more of an operating manufacturing business facility within this state. “Disaster” does not include any damage resulting from the willful act of the owner of the manufacturing business facility.

(ii) Manufacturing business facility includes, but is not limited to, the structures housing the production and administrative facilities.

(iii) In the event a manufacturer has more than one manufacturing site in this state, the sixty percent (60%) provision applies to the damages suffered at that one site.

(iv) To the extent that the costs of the reconstruction materials are reimbursed by insurance, this exemption does not apply.

(52) Tangible personal property and supplies used in the processing or preparation of floral products and floral arrangements. From the sale, storage, use, or other consumption in this state of tangible personal property or supplies purchased by florists, garden centers, or other like producers or vendors of flowers, plants, floral products, and natural and artificial floral arrangements that are ultimately sold with flowers, plants, floral products, and natural and artificial floral arrangements or are otherwise used in the decoration, fabrication, creation, processing, or preparation of flowers, plants, floral products, or natural and artificial floral arrangements, including descriptive labels, stickers, and cards affixed to the flower, plant, floral product, or arrangement, artificial flowers, spray materials, floral paint and tint, plant shine, flower food, insecticide, and fertilizers.

(53) Horse food products. From the sale and from the storage, use, or other consumption in this state of horse food products purchased by a person engaged in the business of the boarding of horses.

(54) Non-motorized recreational vehicles sold to nonresidents.

(i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to a bona fide nonresident of this state who does not register the non-motorized recreational vehicle in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this state or at the place of residence of the nonresident; provided that a non-motorized recreational vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed in his or her state of residence not to exceed the rate that would have been imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-motorized recreational vehicle dealer shall add and collect the tax required under this subdivision and remit the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided, that when a Rhode Island licensed, non-motorized recreational vehicle dealer is required to add and collect the sales and use tax on the sale of a non-motorized recreational vehicle to a bona fide nonresident as provided in this section, the dealer in computing the tax takes into consideration the law of the state of the nonresident as it relates to the trade-in of motor vehicles.

(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona fide nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption provided in this subdivision, including the affidavit of a licensed, non-motorized recreational vehicle dealer that the purchaser of the non-motorized recreational vehicle was the holder of, and had in his or her possession a valid out-of-state non-motorized recreational vehicle registration or a valid out-of-state driver’s license.

(iii) Any nonresident who registers a non-motorized recreational vehicle in this state within ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-motorized recreational vehicle for use, storage, or other consumption in this state, and is subject to, and liable for, the use tax imposed under the provisions of § 44-18-20.

(iv) “Non-motorized recreational vehicle” means any portable dwelling designed and constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use that is eligible to be registered for highway use, including, but not limited to, “pick-up coaches” or “pick-up campers,” “travel trailers,” and “tent trailers” as those terms are defined in chapter 1 of title 31.

(55) Sprinkler and fire alarm systems in existing buildings. From the sale in this state of sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials necessary and attendant to the installation of those systems that are required in buildings and occupancies existing therein in July 2003 in order to comply with any additional requirements for such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003 and that are not required by any other provision of law or ordinance or regulation adopted pursuant to that act. The exemption provided in this subdivision shall expire on December 31, 2008.

(56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44- 18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or other consumption in this state of any new or used aircraft or aircraft parts.

(57) Renewable energy products. Notwithstanding any other provisions of Rhode Island general laws, the following products shall also be exempt from sales tax: solar photovoltaic modules or panels, or any module or panel that generates electricity from light; solar thermal collectors, including, but not limited to, those manufactured with flat glass plates, extruded plastic, sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-water and water-to-air type pumps; wind turbines; towers used to mount wind turbines if specified by or sold by a wind turbine manufacturer; DC to AC inverters that interconnect with utility power lines; and manufactured mounting racks and ballast pans for solar collector, module, or panel installation. Not to include materials that could be fabricated into such racks; monitoring and control equipment, if specified or supplied by a manufacturer of solar thermal, solar photovoltaic, geothermal, or wind energy systems or if required by law or regulation for such systems but not to include pumps, fans or plumbing or electrical fixtures unless shipped from the manufacturer affixed to, or an integral part of, another item specified on this list; and solar storage tanks that are part of a solar domestic hot water system or a solar space heating system. If the tank comes with an external heat exchanger it shall also be tax exempt, but a standard hot water tank is not exempt from state sales tax.

(58) Returned property. The amount charged for property returned by customers upon rescission of the contract of sale when the entire amount exclusive of handling charges paid for the property is refunded in either cash or credit, and where the property is returned within one hundred twenty (120) days from the date of delivery.

(59) Dietary supplements. From the sale and from the storage, use, or other consumption of dietary supplements as defined in § 44-18-7.1(l)(v), sold on prescriptions.

(60) Blood. From the sale and from the storage, use, or other consumption of human blood.

(61) Agricultural products for human consumption. From the sale and from the storage, use, or other consumption of livestock and poultry of the kinds of products that ordinarily constitute food for human consumption and of livestock of the kind the products of which ordinarily constitute fibers for human use.

(62) Diesel emission control technology. From the sale and use of diesel retrofit technology that is required by § 31-47.3-4.

(63) Feed for certain animals used in commercial farming. From the sale of feed for animals as described in subsection (61) of this section.

(64) Alcoholic beverages. From the sale and storage, use, or other consumption in this state by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding beer and malt beverages; provided, further, notwithstanding § 6-13-1 or any other general or public law to the contrary, alcoholic beverages, as defined in § 44-18-7.1, shall not be subject to minimum markup.

(65) Seeds and plants used to grow food and food ingredients. From the sale, storage, use, or other consumption in this state of seeds and plants used to grow food and food ingredients as defined in § 44-18-7.1(l)(i). “Seeds and plants used to grow food and food ingredients” shall not include marijuana seeds or plants.

(66) Feminine hygiene products. From the sale and from the storage, use, or other consumption of tampons, panty liners, menstrual cups, sanitary napkins, and other similar products the principal use of which is feminine hygiene in connection with the menstrual cycle.

(67) “Breast pump collection and storage supplies” means items of tangible personal property used in conjunction with a breast pump to collect milk expressed from a human breast and to store collected milk until it is ready for consumption. “Breast pump collection and storage supplies” include, but are not limited to, breast shields and breast shield connectors; breast pump tubes and tubing adaptors; breast pump valves and membranes; backflow protectors and backflow protector adaptors; bottles and bottle caps specific to the operation of the breast pump; breast milk storage bags; and related items sold as part of a breast pump kit pre-packaged by the breast pump manufacturer. “Breast pump collection and storage supplies” does not include: bottles and bottle caps not specific to the operation of the breast pump; breast pump travel bags and other similar carrying accessories, including ice packs, labels, and other similar products, unless sold as part of a breast pump kit pre-packed by the breast pump manufacturer; breast pump cleaning supplies, unless sold as part of a breast pump kit pre-packaged by the breast pump manufacturer; nursing bras, bra pads, breast shells, and other similar products; and creams, ointments, and other similar products that relieve breastfeeding-related symptoms or conditions of the breasts or nipples.

(68) Trade-in value of motorcycles. From the sale and from the storage, use, or other consumption in this state of so much of the purchase price paid for a new or used motorcycle as is allocated for a trade-in allowance on the motorcycle of the buyer given in trade to the seller, or of the proceeds applicable only to the motorcycle as are received from the manufacturer of motorcycles for the repurchase of the motorcycle whether the repurchase was voluntary or not towards the purchase of a new or used motorcycle by the buyer. For the purpose of this subsection, the word “motorcycle” means a motorcycle not used for hire and does not refer to any other type of motor vehicle.

(69) Qualified data center equipment. From the sale and from the storage, use, or other consumption in this state, qualified data center equipment as defined in § 42-64-3 and as certified pursuant to § 42-64-43(c).

SECTION 4. Section 39-26.9-2 of the General Laws in Chapter 39-26.9 entitled "Labor Standards in Renewable Energy Projects" is hereby amended to read as follows: 39-26.9-2. Definitions. For the purposes of this chapter:

(1) “Approved apprenticeship program” or “apprenticeship program” means an apprenticeship program that has been approved by the U.S. Department of Labor, or by a recognized state apprenticeship agency, pursuant to 29 C.F.R. Parts 29 and 30; however, such programs shall not include those that have obtained only provisional approval status. The required apprenticeship programs may either be programs that have specifically allocated funding and are subject to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”), or non-ERISA programs financed by general funds of employers.

(2) “Covered project” means a qualified data center pursuant to § 42-64-3 or a renewable energy project that, which renewable energy project:

(i) Utilizes renewable energy resources;

(ii) Is situated on land;

(iii) Is situated on or in water;

(iv) Has a construction commencement date on or after April 1, 2023;

(v) Has a total nameplate capacity of one megawatt (1 MW) or more in aggregate size; and

(vi) Is constructed and/or operated pursuant to chapter 26.1, 26.4, or 26.6 of this title.

(3) “Department” means the department of labor and training.

(4) “Director” means the director of the department of labor and training.

(5) “Labor organization” means any organization that exists and is constituted for the purpose, in whole or in part, of collective bargaining, or of dealing with employers concerning grievances, terms or conditions of employment, or of other mutual aid or protection and that is not a company union as defined in § 28-7-3.

(6) “Labor peace agreement” means an agreement between an entity and a labor organization that, at a minimum, protects the state’s proprietary interest by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference during the deployment of a covered project. This agreement means that the applicant has agreed not to disrupt efforts by the labor organizations to communicate with, and attempt to organize and represent, the applicant’s employees. This requirement shall not be applicable to maintenance work performed on renewable energy solar projects or qualified data centers pursuant to § 42-64-3.

(7) “Renewable energy project” means the construction, installation, use, maintenance, operation, changing, or retiring of a renewable energy resource.

(8) “Renewable energy resources” means any renewable power generation source listed in § 39-26-5(a).

SECTION 5. This act shall take effect upon passage.