Opinion ID: 1114341
Heading Depth: 1
Heading Rank: 6

Heading: The Energy Sources ExemptionRefinery Gas

Text: Section 305D(1)(h), as amended in 1990 to exempt all energy sources when used for boiler fuel except refinery gas, now clearly excepts refinery gas from the energy sources exemption. However, Section 305D(1)(h) had been amended several times during the tax assessment periods at issue in this litigation (February of 1985 to October of 1990), and the confusion created by the 1985 amendment is at the heart of this issue. Prior to 1985, La.Rev.Stat. 47:305(4) (now 305D) exempted the following property from sales and use tax: (vii) Natural gas; (viii) All energy sources when used for boiler fuel except refinery gas when used for boiler fuel. Thus, all refinery gas was taxable between February 1, 1985 and July 6, 1985, whether used as boiler fuel or not, because there was no specific exemption of refinery gas and the energy sources exemption specifically excepted refinery gas. In 1985, a bill was filed in the Legislature to exempt refinery gas specifically. After the bill was amended several times during the legislative process, Act 258, as finally adopted, amended Subsection 305(4)(a)(vii) and (viii) to provide exemptions for: (vii) Natural gas and refinery gas, which gas shall also be exempt from any sales and use tax levied by any local governmental subdivision or school board, except that refinery gas shall be taxable to the extent specifically hereinafter provided; (viii) All energy sources when used for boiler fuel except refinery gas. Refinery gas used for any taxable purpose shall be subject to the tax imposed by this Chapter, and similar local taxes, provided [then follows the method of valuation of refinery gas used for any taxable purpose]. The dispute in this case involves the taxability of refinery gas used for purposes other than as boiler fuel during the period between the effective date of Act 258 and July 18, 1990, the effective date of La.Acts 1990, No. 476, which amended Subsection 305D(1)(g) (renumbered from 305[4](a)[vii]) to delete any reference in the exemption to refinery gas (leaving [n]atural gas as the only exemption). The Parish contends that the Legislature in 1990 merely clarified what it intended to do in 1985; that is, to exclude refinery gas from the energy sources exemption, no matter what its use. The Parish argues that various amendments during the legislative process took away the proposed exemption and added the valuation provision of the 1985 act, causing the confusion in the final bill. The trial court interpreted the two subsections in effect from 1985 to 1990 to exempt refinery gas except when used for boiler fuel. The court reasoned that since refinery gas was exempt under Section 305(4)(a)(vii), except to the extent it was taxable in later provisions, and Section 305(4)(a)(viii) thereafter provided that refinery gas was an exception to the exemption of energy sources used as boiler fuel, then refinery gas was only taxable when used for boiler fuel and was not taxable when used for other purposes. We agree with the trial court's interpretation. The Legislature in 1985 arguably intended to keep refinery gas subject to sales and use taxes when it amended the original bill (designed to exempt refinery gas) by adding provisos to two subsections of the exemptions. Nevertheless, the final bill clearly did not achieve that objective. Subsection 305(4)(a)(vii) clearly exempted refinery gas, unless taxable under later provisions. [16] Subsection 305(4)(a)(viii), the later provision, merely excluded refinery gas from the exemption of energy sources used as boiler fuel. Nothing in the 1985 Act removed Subsection 305(4)(a)(vii)'s general exemption of refinery gas when that property is used for purposes other than as boiler fuel. We therefore affirm the portion of the judgment of the trial court which exempted refinery gas when used for purposes other than as boiler fuel between July 6, 1985 and July 18, 1990, but otherwise denied the energy sources exemption for BP's use of refinery gas.