Title: Veolia Energy Boston, Inc. v. Board of Assessors of Boston
Citation: N/A
Docket Number: SJC-12634
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: September 11, 2019

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SJC-12634 
 
VEOLIA ENERGY BOSTON, INC.  vs.  BOARD OF ASSESSORS OF BOSTON. 
 
 
 
Suffolk.     May 6, 2019. - September 11, 2019. 
 
Present:  Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, 
& Kafker, JJ. 
 
 
Taxation, Personal property tax:  abatement, Personal property 
tax:  machinery. 
 
 
 
 
Appeal from a decision of the Appellate Tax Board. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Anthony M. Ambriano for board of assessors of Boston. 
 
Kathleen S. Gregor (Erin R. Macgowan also present) for the 
taxpayer. 
 
 
 
CYPHER, J.  This is an appeal by the board of assessors of 
Boston (assessors) from a decision of the Appellate Tax Board 
(board) abating taxes on certain personal property in Boston 
owned by and assessed to Veolia Energy Boston, Inc. (Veolia), 
for fiscal year (FY) 2014.  The question presented is whether 
the taxed personal property, "consisting principally of pipes" 
2 
 
 
that Veolia used to produce, store, and distribute steam, is 
exempt from local taxation in accordance with G. L. c. 59, § 5, 
Sixteenth (3) (clause 16 [3]), which provides in pertinent part 
that all property owned by a manufacturing corporation, "other 
than real estate, poles and underground conduits, wires and 
pipes," is exempt from local taxation (emphasis added). 
 
Veolia produces and distributes steam through networks of 
pipes and appurtenant equipment.  The board found that these 
networks, including the pipes at issue here, operate in concert 
as a single, integrated machine, and, as a result, concluded 
that the pipes constituted machinery exempt from local taxation 
in accordance with clause 16 (3).  On appeal, the assessors 
argue that the board erroneously relied on the so-called "great 
integral machine" doctrine, stated for the first time by this 
court in Commonwealth v. Lowell Gas Light Co., 12 Allen 75, 78 
(1866), in concluding that the pipes constituted exempt 
machinery because such a conclusion is belied by the plain 
language of clause 16 (3), which explicitly excepts "pipes" from 
the exemption. 
 
For the reasons that follow, we conclude that pipes that 
constitute machinery are exempt from local taxation in 
accordance with clause 16 (3).  We further conclude that the 
great integral machine doctrine, which has endured without 
legislative interference for well over one hundred years, 
3 
 
 
remains an appropriate means by which to determine whether 
certain property constitutes machinery.  Accordingly, we affirm 
the decision of the board. 
 
Background.  The dispute between the parties began when 
Veolia was assessed a personal property tax of approximately $2 
million on certain pipes it used to produce, store, and 
distribute steam for FY 2014.1  Veolia paid the tax due and 
timely filed an application for abatement with the assessors, 
arguing that the pipes at issue were in fact machinery, and 
therefore exempt from local taxation in accordance with clause 
16 (3).2  The assessors denied the application for abatement, and 
Veolia appealed to the board, which reversed. 
 
The board held an evidentiary hearing over two days and 
considered testimony from four witnesses:  the director of 
system operations for Veolia North America, an affiliate of 
                     
 
1 In fiscal year (FY) 2014, the board of assessors of Boston 
(assessors) valued the subject property at $62,910,630, and 
assessed a tax at a rate of $31.18 per $1,000 of the assessed 
value, amounting to $1,961,553.44 in total taxes due.  See G. L. 
c. 59, §§ 18, 38; G. L. c. 63, § 39. 
 
 
2 At all times relevant to the fiscal year at issue, the 
Commissioner of Revenue (commissioner) classified Veolia Energy 
Boston, Inc. (Veolia), as a manufacturing corporation within the 
meaning of G. L. c. 63, §§ 39 and 42B, and 830 Code Mass. Regs. 
§ 58.2.1.  General Laws c. 58, § 2, provides a procedure to 
challenge a manufacturing classification made by the 
commissioner; the assessors did not avail themselves of this 
procedure for the times relevant to the fiscal year at issue, 
although they have done so with respect to Veolia's 
manufacturing classification effective January 1, 2016. 
4 
 
 
Veolia, who testified about Veolia's operations; a managing 
director of the energy practice at Navigant Consulting, who gave 
expert testimony regarding Veolia's operating systems; the vice-
president and head of finance for Veolia North America, who 
discussed Veolia's financial reporting; and a director of 
personal property for the assessing department of the city of 
Boston, who testified about the contested assessment.  The board 
also considered exhibits entered into evidence and a statement 
of agreed facts with attachments.  We summarize the board's 
findings.3 
 
Veolia owns and operates a "district energy network" in 
Boston and assists in the operation of a similar network in 
Cambridge.  The Boston network converts chemical energy from 
natural gas and fuel oil into high-pressure steam and then 
distributes the high-pressure steam to approximately 250 
commercial, healthcare, government, institutional, and 
hospitality customers.  Veolia's customers use the steam at 
customized pressures for various purposes, including power 
generation, sterilization, heating, and cooling. 
                     
 
3 The Appellate Tax Board (board) issued its decision 
concerning Veolia's appeal from the denial of its request for 
abatement in FY 2014 on November 18, 2016.  The assessors then 
requested findings of fact and a report under G. L. c. 58A, 
§ 13, and 831 Code Mass. Regs. § 1.32 (2007), which the tax 
board subsequently issued on June 5, 2018. 
5 
 
 
 
Veolia's steam manufacturing process begins at one of three 
generation facilities:  the Kneeland Facility, located on 
Kneeland Street in Boston; the Scotia Facility, located on 
Scotia Street in Boston; and the Kendall Station Facility, 
located in Cambridge.  These generation facilities perform a 
number of functions, including water treatment, fuel treatment 
and storage, and high-pressure steam generation.  The equipment 
varies from facility to facility, with two using boilers and one 
using boilers as well as a heat recovery steam generator as 
means to generate steam. 
 
Once one of the facilities generates steam, it enters a 
pressure-regulated network of distribution mains and appurtenant 
equipment.  The networks operate together to balance customer 
load and steam generation across the generation facilities to 
ensure equivalent rates of production and consumption.  The 
steam is stored and transported through pipes within the 
networks.  By design, these pipes expand, contract, and move to 
withstand pressure and heat fluctuations.  Also, they are 
equipped with valves to control pressure, to shed condensate 
(steam that has returned to liquid state), and to direct the 
flow of steam. 
 
The pressure of the steam is highest at the point of 
generation.  Once steam reaches a customer's site, a pressure 
reduction valve reduces that pressure to assure safety, to 
6 
 
 
comply with regulatory requirements, and to conform to customer 
equipment compatibility and use requirements.  After a customer 
uses the steam, the networks condense it into condensate, some 
of which the networks return to the generation facilities 
through condensate-return lines for further steam production. 
 
The networks employ a centralized supervisory control and 
data acquisition (SCADA) system to monitor their activity.  The 
SCADA system is accessible via the Internet and at several 
places in the networks.  Each of the generation facilities also 
has an internal control system that feeds data to the master 
SCADA system.  A system shift supervisor directs operations of 
the entire SCADA system, monitoring the networks, the status of 
the generation facilities, the status of multiple monitoring 
points in the networks, and the status at key customer sites. 
 
Veolia's system operations expert opined that the networks, 
including the pipes at issue, functioned as a single, integrated 
machine.  He noted the importance of the storage and system flow 
pressure functions served by the pipes, stating that "steam is 
not like an instantaneous product, like electricity.  When you 
flip a switch, you just don't have instant steam.  You have to 
build up pressure in the system, and so you have to have that 
stored amount of energy in the system to really operate it."  He 
emphasized also that the steam "is not a finished product until 
7 
 
 
it's delivered to the customer through their control valves and 
provided to them for use in their energy services." 
 
The board found the expert's testimony credible and agreed 
with his determination that the networks, including the pipes at 
issue, constituted and operated as a "single, integrated 
machine."  Relying on Lowell Gas Light Co., 12 Allen 75, and 
Lowell Gas Co. v. Commissioner of Corps. & Taxation, 377 Mass. 
255 (1979), for the proposition that property that would 
otherwise be regarded as taxable personal or real property will 
be exempt "when incorporated as an integral part of exempt 
machinery," the board concluded that the pipes were in fact 
machinery exempt from taxation pursuant to clause 16 (3). 
 
Discussion.  1.  Standard of review.  "We accord the 
board's decision great deference and will not disturb its 
decision if [it] is based on both substantial evidence and a 
correct application of the law" (quotation and citation 
omitted).  AA Transp. Co. v. Commissioner of Revenue, 454 Mass. 
114, 118 (2009).  A question of statutory interpretation is a 
question of law for us to resolve.  Id.  See WorldWide 
TechServices, LLC v. Commissioner of Revenue, 479 Mass. 20, 26 
(2018) (board's conclusions of law reviewed de novo).  
Nevertheless, "because the board is an agency charged with 
administering the tax law and has expertise in tax matters, we 
give weight to its interpretation of tax statutes, and will 
8 
 
 
affirm its statutory interpretation if that interpretation is 
reasonable" (quotation and citations omitted).  AA Transp. Co., 
supra at 119.  See Northeast Petroleum Corp. v. Commissioner of 
Revenue, 395 Mass. 207, 213 (1985) (noting court's "traditional 
deference to the expertise of the board in tax matters involving 
interpretation of the laws of the Commonwealth"); French v. 
Assessors of Boston, 383 Mass. 481, 482 (1981) ("We have long 
recognized the board's expertise in tax matters").  "[T]he 
decision of the board is 'final as to findings of fact'" 
(quotation omitted).  Commissioner of Corps. & Taxation v. 
Boston Edison Co., 310 Mass. 674, 676 (1942), citing G. L. (Ter. 
Ed.) c. 58A, § 13.  See Rosse v. Commissioner of Revenue, 430 
Mass. 431, 433 (1999) ("[G. L.] c. 58A, § 13, limits the scope 
of our review of the board's findings of fact").  In addition, 
the board's expertise is given due weight when mixed questions 
of fact and law are considered.  Raytheon Co. v. Commissioner of 
Revenue, 455 Mass. 334, 338 (2009).  See, e.g., Massachusetts 
Inst. of Tech. v. Assessors of Cambridge, 422 Mass. 447, 452 
(1996); McCarthy v. Commissioner of Revenue, 391 Mass. 630, 632 
(1984). 
 
The assessors argue that the board erroneously relied on 
the great integral machine doctrine stated in Lowell Gas Light 
Co., supra, in concluding that the pipes constituted exempt 
machinery because the plain language of clause 16 (3) explicitly 
9 
 
 
excepting "pipes" from exemption belies such a conclusion.  In 
the assessors' view, the Legislature's latter inclusion of 
"pipes" in the statute abrogates the great integral machine 
doctrine, at least to the extent it applies to pipes.4  Veolia 
responds that where pipes are components of machinery, they are 
exempt, notwithstanding the plain language of clause 16 (3) 
excepting pipes, because the great integral machine doctrine has 
retained its efficacy notwithstanding the addition of "pipes" to 
clause 16 (3). 
 
2.  Clause 16 (3) exemption for machinery.  General Laws 
c. 59, § 2, subjects all real and personal property situated 
within the Commonwealth to local taxation, unless such property 
is specifically exempt.  Specifically, "[u]nderground conduits, 
wires and pipes laid in public ways, . . . and poles, 
underground conduits and pipes, together with the wires thereon 
or therein, laid in or erected upon private property . . . shall 
be assessed to the owners thereof in the towns where laid or 
                     
 
4 The assessors also place particular emphasis on the fact 
that Veolia does not own every part of the networks, suggesting 
that Veolia should not receive an exemption with respect to a 
network that is, at least in part, owned and used by entities 
other than Veolia.  The assessors, however, have provided no 
persuasive authority in support of their position.  Further, as 
we stated in Boston Gas Co. v. Assessors of Boston, 334 Mass. 
549, 565 (1956), "[t]here is no requirement that 'one great 
integral machine' be exclusively owned by a single company any 
more than that it be contained within the boundaries of a single 
municipality." 
10 
 
 
erected."  G. L. c. 59, § 18, Fifth (governing assessment of 
personal property).  General Laws c. 59, § 5, details various 
exemptions to local taxation.  In the case of manufacturing 
corporations, clause 16 (3) exempts from local taxation all 
property owned by the corporation, "other than real estate, 
poles and underground conduits, wires and pipes."5  Said another 
way, manufacturing corporations are subject to local taxation on 
real estate, poles and underground conduits, and wires and 
pipes, and are exempt from local taxation on personal property, 
which by necessary implication includes machinery.  See, e.g., 
Boston Edison Co. v. Assessors of Boston, 402 Mass. 1, 22 (1988) 
(manufacturing corporation is not subject to local taxation on 
its machinery). 
 
Although commonly referred to as an exemption for 
machinery, clause 16 (3) is not a true exemption from taxation.  
As described infra, property not taxed to a corporation under 
G. L. c. 59, § 5, Sixteenth, is taxed indirectly because it is 
included in the measure of the excise tax imposed on the 
corporation under G. L. c. 63.  See York Steak House Sys., Inc. 
v. Commissioner of Revenue, 393 Mass. 424, 424–425 (1984) 
                     
 
5 In accordance with G. L. c. 59, § 5, Sixteenth (1), 
certain corporations that are not also manufacturing 
corporations are exempt from tax on their property except for 
"real estate, poles, underground conduits, wires, pipes and 
machinery used in manufacture or in supplying or distributing 
water." 
11 
 
 
(clause 16 [3] does not free corporation from all taxation; 
exempt machinery is not subject to local tax, but corporation is 
liable to taxation by Commonwealth under G. L. c. 63); Fernandes 
Super Mkts., Inc. v. State Tax Comm'n, 371 Mass. 318, 319 (1976) 
("Section 5, Sixteenth, read with the relevant sections of G. L. 
c. 63, merely determines which governmental unit may impose a 
tax upon, or measured by, particular property.  Property not 
taxed to a corporation under § 5, Sixteenth, is included in the 
measure of the excise imposed on the corporation under G. L. 
c. 63, and thus is indirectly taxed").  See generally C.K. Cobb, 
Tax Law in Massachusetts 1629-2000, at 21-22 (1999); P. Nichols, 
Taxation in Massachusetts 249-251 (3d ed. 1938) (Nichols). 
 
The legislative approach to corporate taxation generally, 
and, indeed, to taxation of machinery used in manufacturing 
specifically, has evolved over the years.  "Under the early tax 
acts a domestic corporation was assessed for its real estate 
only, while its personal property was reached for taxation only 
through an assessment upon the shareholders based upon the 
market value of the shares."  New England & Savannah S.S. Co. v. 
Commonwealth, 195 Mass. 385, 386 (1907), citing Salem Iron 
Factory, Co. v. Danvers, 10 Mass. 514, 517 (1813) (corporation 
is taxable for its real estate only in town where real estate 
lies).  By virtue of St. 1832, c. 158, all manufacturing 
machinery became taxable locally.  St. 1832, c. 158, § 2 ("all 
12 
 
 
the machinery employed in any branch of manufactory, and 
belonging to any corporation . . . shall be assessed in the 
respective cities, towns or other places, wherein such machinery 
may be situated or employed").  See generally Nichols, supra at 
281.  In the decades that followed, we explained that the 
meaning of this and other related statutes providing for local 
taxation of manufacturing machinery "must be ascertained from 
[their] words, interpreted according to the common and approved 
usage of the language, regard being given to the nature of the 
property involved, to the practical administration of tax laws 
and to the operation of the statute as a workable piece of 
legislation," and noted that such statutes "do not lend 
themselves to a narrow or technical construction."  Hamilton 
Mfg. Co. v. Lowell, 274 Mass. 477, 486 (1931).  See Boston & Me. 
R.R. v. Billerica, 262 Mass. 439, 447 (1928) ("the general words 
touching local taxation of machinery were intended to be given 
their natural scope and not to be interpreted in any constricted 
sense"). 
 
When the Legislature enabled local taxation of machinery, 
it simultaneously allowed corporations to deduct the value of 
the taxed machinery from the value of the shares taxable to the 
shareholders, prudently avoiding double taxation.  See St. 1832, 
c. 158, § 2 ("all machinery employed in any branch of 
manufactory, and belonging to any corporation, copartnership, 
13 
 
 
person or persons of this or any other State, shall be assessed 
in the respective cities, towns or other places, wherein such 
machinery may be situated or employed; and, in assessing the 
shares in any manufacturing corporation, there shall first be 
deducted from the value thereof, the value of the machinery and 
real estate belonging to such corporation"); Rev. St. 1836, 
c. 7, § 10, Second.  See Boston Edison Co., 310 Mass. at 681. 
 
In 1864, the Legislature moved from a local tax on 
corporate shares paid by shareholders to an excise tax on the 
market value of all shares paid by the corporation, collected 
centrally and distributed to cities and towns.  See St. 1864, 
c. 208 (requiring corporations to pay tax, in nature of excise 
on their franchise, upon excess of market value of capital stock 
or aggregate of shares over value of real estate and machinery 
assessed in town or city where situated).6  See Commissioner of 
Corps. & Taxation v. Springfield, 321 Mass. 31, 40 (1947) 
(discussing purpose and effect of corporate franchise tax).  See 
                     
 
6 "One of the purposes of the corporate franchise tax, which 
has continued since the enactment of St. 1864, c. 208, was to 
prevent the evasion of taxes by the nonresident holders of 
stock, and this was accomplished by eliminating a direct tax 
upon the shares and substituting an excise upon the 
corporation."  Commissioner of Corps. & Taxation v. Springfield, 
321 Mass. 31, 40 (1947).  "In order to reimburse the cities and 
towns for the loss resulting from the abolition of a property 
tax upon the shares, it was provided that they should share in 
the distribution of the new excise tax collected by the 
Commonwealth in the same proportion as if they had been 
permitted to assess the tax on the shares . . . ."  Id. 
14 
 
 
generally Nichols, supra at 579.  In making that change, the 
Legislature was careful to exclude real estate and machinery 
taxed locally from the value on which the corporate excise tax 
was levied.  See St. 1864, c. 208, §§ 5, 8, 15; Lowell Gas Light 
Co., 12 Allen at 76 (gas company's pipes, mains, and meters are 
"machinery," deducted from market value of capital stock in 
ascertaining taxable amount under St. 1864, c. 208).  
Thereafter, the Legislature authorized local taxation of 
underground conduits, wires, and pipes, and later poles, and 
added those items to the list of exclusions from the value 
subject to the excise.  See St. 1902, c. 342 (underground 
conduits, wires, and pipes); St. 1909, c. 439, § 2 (poles); 
Simplex Elec. Heating Co. v. Commonwealth, 227 Mass. 225, 229-
230 (1917) ("By St. 1902, c. 342, underground conduits, wires 
and pipes were made locally taxable and their value was deducted 
from the corporate franchise tax").  See generally Nichols, 
supra at 587-588.  See also St. 1921, c. 486, § 16 (inserting 
"poles, underground conduits, wires and pipes," in G. L. c. 59, 
§ 5, Sixteenth).  In 1924, the Legislature extended local 
taxation to machinery used by nonmanufacturing business 
corporations.  St. 1924, c. 321, § 1 (replacing "machinery used 
in manufacture" with "machinery used in the conduct of the 
business" in G. L. c. 59, § 5, Sixteenth).  See Assessors of 
Haverhill v. J.J. Newberry Co., 330 Mass. 469, 471 (1953). 
15 
 
 
 
In a marked shift in 1936, in the wake of the Great 
Depression and in response to an alarming decline in 
manufacturing within the Commonwealth, the Legislature enacted 
St. 1936, c. 362, "An Act exempting the machinery of 
manufacturing corporations from local taxation and changing the 
methods of determining certain corporation taxes and of 
distributing certain taxes," which had the effect of broadly 
exempting all machinery used in manufacturing from local 
taxation.7  See Commissioner of Corps. & Taxation v. Assessors of 
Boston, 321 Mass. 90, 95-96 (1947).  See also 1936 House Doc. 
No. 143 (detailing decline in manufacturing, resulting in 
unemployment for "hundreds of thousands of skilled workmen" and 
stating that "[i]dle factories and abandoned mills are the 
silent and convincing evidence of the disaster that has come 
upon our people").  See generally Nichols, supra at 224.  "The 
object of St. 1936, c. 362, § 1, was to encourage manufacturing 
in this Commonwealth by removing the burden of local taxation 
upon the machinery, and by substituting therefor a tax at the 
rate of [five dollars] per thousand in the assessment of the 
corporate franchise tax."  Commissioner of Corps. & Taxation, 
                     
 
7 The Legislature employed a similar tactic, briefly 
exempting machinery used to manufacture cotton, wool, and 
textiles in the early 1800s with the aim of encouraging textile 
production in the Commonwealth.  See St. 1828, c. 143.  See 
generally P. Nichols, Taxation in Massachusetts 235 (3d ed. 
1938). 
16 
 
 
supra at 95.  "It was apparently thought that this exemption 
would check the decrease in manufacturing which had for years 
been in progress, and that this change in taxation might attract 
new manufacturing to this State."  Id. at 95-96, 97 (aim of 
statute granting exemption to stimulate manufacturing).  See 
Assessors of Boston v. Commissioner of Corps. & Taxation, 323 
Mass. 730, 741 (1949) ("statutes granting exemption from the 
local tax on the machinery of corporations engaged in 
manufacturing must be fairly construed and reasonably applied in 
order to effectuate the legislative intent and purpose to 
promote the general welfare of the Commonwealth by inducing new 
industries to locate here and to foster the expansion and 
development of our own industries, so that the production of 
goods shall be stimulated, steady employment afforded to our 
citizens, and a large measure of prosperity obtained").  See 
generally Nichols, supra at 249-251. 
 
With this purpose in mind, we have not construed the 
exemption "technically or narrowly."  Assessors of Swampscott v. 
Lynn Sand & Stone Co., 360 Mass. 595, 597-598 (1971), citing 
Commissioner of Corps. & Taxation, 321 Mass. at 92-97 ("all 
machinery" of manufacturing corporation, "at least so far as 
reasonably related to and used in manufacturing operations," 
must be treated as exempt from local taxation by virtue of 
17 
 
 
clause 16 [3]).  Relatedly, we have not taken a narrow view of 
what constitutes "machinery." 
"Speaking broadly, we are of opinion that a mechanical 
device which can fairly be said to be a machine must be 
treated as 'machinery' under [G. L. c. 59, § 5, Sixteenth].  
To hold otherwise would render the statute unworkable.  
Until a given machine had been passed on by the board or 
this court, no one could say with any certainty whether it 
was or was not 'machinery.'  To say that one machine was 
'machinery' and another was not would often result in hair 
splitting distinctions which would be difficult, if not 
impossible, to reconcile.  Each classification made by the 
board or court would be an invitation to litigate in the 
next controversy, for there would always be the hope that 
the device involved would fall on the other side of the 
line.  Numerous decisions instead of bringing certainty 
into the statute would only create confusion.  It is to be 
remembered that this is a taxing statute which has to be 
administered in a practical way by local boards of 
assessors.  To place a construction on it that would 
challenge the dialectic ingenuity of a medieval philosopher 
could hardly have been intended by the Legislature.  Even 
under our construction there will still be difficulties.  
In these days when so many things are done with the aid of 
mechanical devices of one sort or another vexing questions 
as to whether a given device can be classed as a machine or 
machinery will undoubtedly arise.  But the present 
construction seems to us to furnish a practical working 
guide." 
 
J.J. Newberry Co., 330 Mass. at 472–473. 
 
The salient question before us then is whether, as the 
board found, the pipes at issue in this case are in fact exempt 
machinery. 
 
3.  Continued efficacy of the great integral machine 
doctrine.  The great integral machine doctrine relied on by the 
board precedes the Legislature's exemption for machinery used in 
manufacturing and stems from this court's holding in Lowell Gas 
18 
 
 
Light Co., 12 Allen at 78-79.  In that case, the question was 
whether, in ascertaining the State tax to be assessed upon a 
corporation established for the purpose of making and supplying 
gas, the commissioners appointed to value the corporation's 
shares or capital stock, and to deduct therefrom the value of 
the corporation's real estate and machinery (which at the time 
were taxed locally), had erred in determining that certain mains 
and pipes used for distributing gas throughout the city were not 
"machinery" and that, therefore, their value was not deductible.  
Id. 
 
We considered that the corporation had been established 
"for the purpose of manufacturing and disposing of gas," and 
that "[t]he mains or pipes laid down in the streets and 
elsewhere to distribute the gas among those who [were] to 
consume it were clearly a part of the apparatus necessary to be 
used by the corporation in order to accomplish the object for 
which it was established."  Id. at 78.  We reasoned that the 
mains and pipes 
"constituted a part of the machinery by means of which the 
corporate business was carried on, in the same manner as 
pipes attached to a pump or fire-engine for the 
distribution of water, or wheels in a mill which 
communicate motion to looms and spindles, or the pipes 
attached to a steam-engine to convey and distribute heat 
and steam for manufacturing purposes, make a portion of the 
machinery of the mill in which they are used." 
 
Id.  We added, 
19 
 
 
"in a broad, comprehensive and legitimate sense, the entire 
apparatus by which gas is manufactured and distributed for 
consumption throughout a city or town constitutes one great 
integral machine, consisting of retorts, station-meters, 
gas-holders, street-mains, service-pipes and consumers' 
meters, all connected and operating together, by means of 
which the initial, intermediate and final processes are 
carried on, from its generation in the retort to its 
delivery for the use of the consumers." 
 
Id. at 78-79.  We concluded that because the mains and pipes in 
that case were "a part of the machinery by means of which the 
corporate business was carried on," and in fact operated as "one 
great integral machine," the value of the mains and pipes was 
includable for purposes of the deduction.  Id.  See Assessors of 
Springfield v. Commissioner of Corps. & Taxation, 321 Mass. 186, 
190-192 (1947) (telephone company's "machinery, poles, wires and 
underground conduits, wires and pipes" not exempt as "one great 
integral machine" because property not "machinery employed in 
any branch of manufacture").  See also Dudley v. Jamaica Pond 
Aqueduct Corp., 100 Mass. 183, 184 (1868) ("A gas company is 
strictly a manufacturing corporation, and comes within the 
letter as well as the spirit of the [statute compelling local 
taxation of machinery employed in any branch of manufacture].  
Instead of sending its manufacture to its customers in packages, 
or by other vehicles, it distributes it through pipes which are 
connected with and form a necessary appendage to its works"). 
 
Ninety years later, we acknowledged the continued efficacy 
of the great integral machine doctrine in Boston Gas Co. v. 
20 
 
 
Assessors of Boston, 334 Mass. 549, 565 (1956).  In that case, 
we considered whether a gas manufacturing and distribution 
corporation's "gas meters, engines, compressors, and station 
governors, and electric meters and transformers" were "machinery 
used in manufacture" subject to local taxation.  Id. at 562.  We 
reiterated the holding in Lowell Gas Light Co., 12 Allen at 78-
79, stating that it "is a square holding that the mains, pipes, 
and meters were 'machinery employed in any branch of 
manufacture,'" and noted: 
"To us in 1956, [it] may seem like a curious type of 
machine, and as an original proposition we might have 
difficulty in conceiving of consumers' meters, for example, 
as part of such a machine or as machinery used in 
manufacture.  The Lowell Gas decision has, however, stood 
for ninety years unaffected by legislation." 
 
Boston Gas Co., supra at 565.  We stated that we were bound by 
the holding in Lowell Gas Light Co. and concluded that the 
disputed property was machinery used in manufacture subject to 
local taxation.  Id. 
 
Thereafter, in Lowell Gas Co., 377 Mass. at 256, we 
considered whether purchases of "gas mains, gas services, gas 
meters and meter installations" installed by gas manufacturing 
and distribution corporations as components of their gas 
distribution systems were subject to sales and use tax where 
sales of "machinery . . . used directly and exclusively . . . in 
the furnishing of gas, water, steam or electricity when 
21 
 
 
delivered to consumers through mains, lines or pipes" would be 
exempt from such tax.  See G. L. c. 64H, § 6.  We noted that 
taxing statutes should receive a "practical construction," and 
that "[t]here is no requirement that this type of exemption be 
interpreted narrowly."  Id. at 259, quoting Courier Citizen Co. 
v. Commissioner of Corps. & Taxation, 358 Mass. 563, 571 (1971).  
We framed the critical question as follows:  "Does the disputed 
item operate harmoniously with the admittedly exempt machinery 
to make an integrated and synchronized system?"  Lowell Gas Co., 
supra at 260.  With that in mind, we determined that the gas 
pipes and meters functioned, along with production, storage, and 
pressure regulating equipment, "as integral component parts 
required in the gas furnishing system," and as a result, were in 
fact exempt machinery.  Id.  We noted that our holding was 
consistent with our holding in Lowell Gas Light Co., 12 Allen at 
78-79, as well as our holding in Boston Gas Co., 334 Mass. at 
562-565, notwithstanding the fact that those cases dealt with 
different tax statutes.  Lowell Gas Co., supra at 261 n.11.  See 
Warner Amex Cable Communications, Inc. v. Assessors of Everett, 
396 Mass. 239, 241 (1985) (restating great integral machine 
doctrine and declining to extend it beyond manufacturing 
context). 
 
As we noted in Boston Gas Co., the great integral machine 
doctrine, while perhaps more expansive than what we might 
22 
 
 
conceive of today were we manufacturing the principle from 
scratch, has stood unaffected by legislation for well over one 
hundred years.  The assessors' argument that the doctrine was 
effectively abrogated by the Legislature's subsequent addition 
of "poles, underground conduits, wires and pipes" to the list of 
exceptions from the exemption, which already included real 
estate and machinery used in manufacture, is belied entirely by 
the fact that this court continued to apply the doctrine 
notwithstanding the change.  St. 1921, c. 486, § 16 (inserting 
"poles, underground conduits, wires and pipes" in G. L. c. 59, 
§ 5, Sixteenth).  Indeed, we applied the doctrine as recently as 
1956 and discussed the doctrine as recently as 1985.  See Warner 
Amex Cable Communications Inc., 396 Mass. at 241 (declining to 
extend great integral machine doctrine beyond manufacturing 
context); Boston Gas Co., 334 Mass. at 562-565 (applying great 
integral machine doctrine).  In short, we observe no persuasive 
reason to dismantle or alter the doctrine, or to restrict its 
application at this time; that is the purview of the Legislature 
alone.  See Lynn Sand & Stone Co., 360 Mass. at 599 ("If the 
broad purpose of the [machinery exemption] . . . is to be 
limited, that is a matter for legislative action").  See also 
Commissioner of Revenue v. Gillette Co., 454 Mass. 72, 76 (2009) 
(tax incentive statutes "must be fairly construed and reasonably 
applied in order to effectuate the legislative intent and 
23 
 
 
purpose to promote the general welfare of the Commonwealth" 
[citation omitted]).  In matters of taxation, consistency in 
application is of particular import.  See Verizon New England 
Inc. v. Assessors of Boston, 81 Mass. App. Ct. 444, 452 (2012) 
("we have grave doubts about judicial power to alter an 
established construction of a [tax] statute under circumstances 
like those this case presents and about the wisdom of doing so 
even if the power exists"); id. at 450, quoting Boston v. Mac-
Gray Co., 371 Mass. 825, 828 (1977) ("In matters of taxation 
[we] should follow the pattern of [our] decisions, leaving to 
the Legislature the opportunity to make responsive adjustments 
in the scope of the tax statutes"). 
 
Having concluded that the great integral machine doctrine 
enjoys continued vitality, we further conclude that the board 
based its decision in this case on both substantial evidence and 
a correct application of the law.  See AA Transp. Co., 454 Mass. 
at 118 (board decision based on substantial evidence and correct 
application of law will not be disturbed).  We are without 
reason to disturb the board's determinative finding, drawn from 
the extensive testimony of the energy system operations expert, 
that Veolia's pipes and appurtenant equipment "formed an 
essential part of a single integrated machine."  See Assessors 
of Springfield, 321 Mass. at 190 (board's finding that property 
was not machinery employed in any branch of manufacture "must 
24 
 
 
stand unless vitiated by error of law").  See also Boston Edison 
Co., 310 Mass. at 676 (board's decision final as to findings of 
fact).  Where the board's application of clause 16 (3) was 
entirely reasonable, we affirm.8  See AA Transp. Co., supra at 
119 (court will affirm board's interpretation if it is 
reasonable). 
 
Conclusion.  In this case, we agree with the reasoning of 
the board in all material respects and discern no basis for 
disturbing its decision.  Accordingly, we affirm. 
 
 
 
 
 
 
 
So ordered. 
 
                     
 
8 To the extent that the assessors suggest that Veolia 
cannot benefit from the exemption because some portions of the 
networks are owned or used by "non-manufacturing entities" that 
"do[] not qualify for Clause 16(3) treatment," the assessors 
have not provided any authority for this position and have not 
persuaded us to adopt it.  It is undisputed that Veolia owns the 
property at issue in this case -- the assessors have not made 
clear how applying the exemption to this property will have the 
effect of allowing otherwise taxable property to "escape 
taxation."