Opinion ID: 1810700
Heading Depth: 1
Heading Rank: 2

Heading: water pollution control facilities

Text: Leave to appeal was granted in this case limited to the following specific questions concerning the Palisades water pollution control facilities: (1) [W]hether the liquid radwaste system and the cooling towers at the Consumers Power Palisades plant are real property and are ineligible for tax exemption under 1966 PA 222 [the Water Exemption Act]; (2) whether the water pollution control facilities exemption act as construed to exempt from property taxation personal property used for control of water pollution, but not to exempt real property used for the same purpose, violates the Equal Protection Clause of the Michigan and United States Constitutions. 402 Mich 882. We find the Palisades water pollution facilities are real property and ineligible for tax exemption under the Water Exemption Act for all applicable tax years preceding 1977 PA 282 which amended the act to provide an exemption to qualifying facilities from real property taxes as well as personal property taxes. Further, we find that our construction of the Water Exemption Act does not violate the Equal Protection Clauses of either the Michigan or the United States Constitution.

The Water Exemption Act, MCL 323.351 et seq.; MSA 7.793(51) et seq., provides for the issuance of certificates by the State Tax Commission which exempt water pollution control facilities from certain taxes. Specifically, § 4 of that act provided, in part, at the time Consumers applied for exemption: For the period subsequent to the effective date of the certificate and continuing so long as the certificate is in force, a facility covered thereby is exempt from personal property taxes imposed under Act No. 206 of the Public Acts of 1893, as amended, being sections 211.1 to 211.157 of the Compiled Laws of 1948. MCL 323.354; MSA 7.793(54). (Emphasis supplied.) By 1977 PA 282, this section of the act was amended to provide that a facility covered thereby is exempt from real and personal property taxes   . (Emphasis supplied.) When Consumers Power applied for tax exemption certificates under the Water Exemption Act for the Palisades liquid radwaste system and cooling towers, the State Tax Commission granted the exemptions. In its official order of July 9, 1975, affirming the grants of these exemptions, the commission addressed the question of the real property nature of these facilities and held that reading the act as a whole and requiring that these facilities meet the other criteria of the act results in these facilities qualifying for the statutory tax exemption. In reaching this decision the commission adopted the rationale proffered by Consumers Power that a reading of the act as a whole, and specifically the statutory definitions of facility, treatment works, and disposal system, MCL 323.351; MSA 7.793(51), compel the conclusion that the Legislature intended to redefine the term personal property for exemption purposes to include within that term various types of immovable plant equipment coming within these definitions and normally used for water pollution control purposes, even though they might be regarded as real property for other purposes. Any other interpretation, according to the commission, would defeat the purpose of the act and would mean the Legislature wrote a useless law. The circuit court agreed, but the Court of Appeals reversed. Consumers Power elaborates on this same rationale before this Court. We find its reasoning unpersuasive particularly in light of one very specific amendment to this act while it was in bill form, being considered for enactment into law by our state Legislature. As originally introduced on January 19, 1966, House Bill No. 3075 (subsequently enacted as the Water Exemption Act), provided in part in § 4, beginning on page 3, line 21: (1) For the period subsequent to the effective date of the certificate and continuing so long as the certificate is in force, a facility covered thereby is exempt from real and personal property taxes imposed under Act No. 206 of the Public Acts of 1893, as amended, being sections 211.1 to 211.157 of the Compiled Laws of 1948. [8] (Emphasis supplied.) This bill was first referred to the Committee on Conservation and Recreation, 1 Michigan House J (1966) 63, which reported it back with recommended amendments. 1 Michigan House J (1966) 650. The amendments were adopted and the bill was referred to the Committee on General Taxation, 1 Michigan House J (1966) 703. The Committee on General Taxation reported the bill back to the full House with recommended amendments, including the specific recommendation to: 4. Amend page 3, line 24, by striking out `real and.' 2 Michigan House J (1966) 1468. These amendments were adopted by the full House and the bill was passed. 3 Michigan House J (1966) 2196. After adopting an additional amendment to the bill as passed by the House, which did not affect § 4(1), the Senate passed the bill. 2 Michigan Senate J (1966) 1947. The House concurred in the Senate amendment and the bill was sent to the Governor for signature. 4 Michigan House J (1966) 3244. On June 11, 1966, it was approved by the Governor and given immediate effect as 1966 PA 222. We find that tracing this legislative history makes clear that the intent of the Legislature in enacting this law was to provide exemption to qualifying water pollution facilities from personal property taxes only. We have no supporting documentation in the legislative history to provide an insight into the reason for striking the reference to exemption from real property taxes. Mere conjecture suggests that there may have been strong opposition to the bill as originally drafted by local units of government who could foresee the exemption of large water pollution control facilities from real property taxes as an erosion of their property tax base. Or the Legislature might simply have decided to proceed cautiously in granting these exemptions to determine whether granting exemptions from personal property taxes alone would provide adequate incentive for the acquisition and operation of socially desirable water pollution control facilities. But whatever the unpreserved legislative intent was in 1966, we can only conclude that the Legislature as a whole, and particularly the members of the House Committee on General Taxation, adopted this amendment to the bill as introduced deliberately and with a purpose. While the act's definitions of facilities, treatment works and disposal systems which may qualify for exemption appear to include many facilities that might normally be classified as real property, we do not read these definitions as an indication that the Legislature redefined personal property for purposes of the act. We do not think the brief legislative history of this bill warrants such a conclusion. We also disagree with Consumers Power's contention that the amendment to § 4 made by 1977 PA 282, to provide for exemption for water pollution facilities from real and personal property taxes was simply intended to clarify the purposes of the act. We hold that, prior to the effective date of 1977 PA 282, [9] qualifying water pollution control facilities were eligible for exemption from personal property taxes only under MCL 323.354(1); MSA 7.793(54)(1), and the Legislature did not redefine the term personal property for purposes of tax exemption under the act.
In the first issue on which leave to appeal was granted, we asked the parties in this case to address the question of whether the Palisades plant's liquid radwaste system and cooling towers are real property. In its brief, Consumers Power argued that these facilities are not real property for purpose of exemption under the act because the act contemplated a definition of personal property that included these facilities. We have decided this argument against Consumers. Next, Consumers contended that if common-law principles or the General Property Tax Act are determined to be material to a definition of real and personal property for purposes of this suit, then this matter should be remanded to the State Tax Commission for the development of a record as to the nature of these facilities. While we acknowledge that the commission's decision below appeared to render it unnecessary to decide whether these facilities were real or personal property for purpose of eligibility for exemption under the act, we find there is adequate evidence in the record for determining that these facilities are real property. Further, because this Court specifically invited the parties to address this issue, Consumers had the opportunity to refute the evidence we find in the record to support this conclusion, yet failed to do so. The most compelling evidence we find in the record to support the conclusion that these facilities are real property is found in Consumers Power's admitted failure to report any portion of these facilities on its personal property tax statements for 1974 and 1975. The personal property statement which Consumers properly filed, pursuant to MCL 211.18; MSA 7.18, specifically requests the reporting of the following information on page 2: 3. AIR POLLUTION CONTROL FACILITIES AND WATER POLLUTION CONTROL FACILITIES certified exempt by the Michigan State Tax Commission. Use cost installed. Attach rider giving certificate number, year of acquisition and cost by year of acquisition. At the hearing before the commission, counsel for Consumers stipulated that Consumers reported nothing in this provision in either its 1974 or 1975 personal property statement. In addition to this failure of Consumers to report any part of the water pollution control facilities as exempt personal property, the following unchallenged testimony of the Covert Township assessor (Mr. Sarno) supports the conclusion that these facilities are real property.  Q. Mr. Sarno, in 1973, did Consumers Power Company furnish you the estimated cost of the partial construction of the liquid radwaste system and cooling towers?  A. They did.  Q. What was the amount furnished you by Consumers Power?  A. $10,880,258.  Q. Was that represented to you to be real property?  A. It was included in the real [property] report.  Q. Furnished to you by Consumers Power?  A. That is correct.