Solid Waste Disposal Facilities (Treas. Reg. 1.142(a)(6)-1)


The IRS issued final regulations regarding solid waste disposal facilities that are eligible for financing with tax-exempt private activity bonds.  See the reference below for a summary of the regulations prepared by Nixon Peabody LLP.

What is a Solid Waste Disposal Facility:

Under the final regulations, a “solid waste disposal facility” means any facility to the extent that the facility:

  • processes “solid waste” in a “qualified solid waste disposal process”;
  • performs a “preliminary function”; or
  • is functionally related and subordinate to a facility that performs either a qualified solid waste disposal process or a preliminary function.

What is a Preliminary Function:

A preliminary function is a function to collect, separate, sort, store, treat, disassemble or handle solid waste.  The function must be “preliminary” to and “directly related” to the qualified solid waste disposal process.  There is no longer a requirement that the input to the preliminary function facility consist of at least 50% solid waste.  I.e., there is no need to consider the input to determine whether the facility is a preliminary function facility.

What is Functionally Related and Subordinate:

Consider PLR 8618008 in which the IRS determined that a port road was not functionally related or subordinate to the exempt facility.

Mixed-Use Facilities

See Westrock Virginia Corp., U.S. Claims Court, (Feb. 16, 2018) for a discussion of allocating cost basis of a facility between electricity generation and process steam generation, in the context of the Section 1603 Grant. (United States Court of Federal Claims. No. 15-355C)


IRS issues final regulations on solid waste facilities,” August 22, 2011, Nixon Peabody LLP.

Exempt Facility Bonds,” February 14, 2012, McGuireWoods LLP.

PLR 9143036 (Jul. 29, 1991):  Taxpayer operates a polyester manufacturing business.  The plant includes sludge disposal facilities consisting of dewatering, incineration and emission control equipment.

PLR 9252011 (Sept. 24, 1992):  Whether solid waste treatment facilities to be located at a plant qualify as a solid waste disposal facility for purposes of section 142(a)(6) of the code.  The facility recovers waste in gases.  Refers to water as a transportation medium.  Identifies specific components of the facility that qualify.

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