Court Opinion

ID: 4713953
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:40:07.955529+00
Date Added: 2024-06-11T08:07:20.201105
License: Public Domain

C. Johnson, J.
¶29 (dissenting) — The majority misconstrues the purpose underlying the hazardous substance tax (HST) and consequently misinterprets the meaning of “taxable possession.” In doing so, the majority disregards the Department of Revenue’s (DOR) own interpretation of “taxable possession” and mistakenly concludes that Tesoro Refining and Marketing Company is responsible for tax on refinery gas it recycles and uses in its process and, importantly, does not pollute.
¶30 Tesoro correctly acknowledges that it should pay HST on the refinery gas flared into the atmosphere.7 Tesoro should not, however, have to pay HST on the refinery gas it does not vent off, but rather recycles and consumes as a heating source to run operations within its Anacortes refinery walls. This conclusion is supported by the statutory scheme and intent of chapter 82.21 RCW, which also is consistent with the DOR-created exemption in WAC 458--20-252(7)0») (Rule 252(7)(b)).
¶31 RCW 82.21.020(3) defines “ ‘[possession’ ” in terms of control, stating that “ ‘[c]ontrol’ means the power to sell or use a hazardous substance or to authorize the sale or use by another.” No dispute exists that Tesoro consumes refinery gas in its process but lacks the ability to sell and use the refinery gas. The question in this case is whether such gas is subject to the HST.
¶32 The majority acknowledges that ordinarily, the word “or” does mean “and” unless there is clear legislative intent to the contrary. Here, there is clear legislative intent to the contrary that supports reading the word “or” in RCW 82.21.020(3) as “and.” A party may not have the power to sell and use a hazardous substance but, like Tesoro, may have the power to use. Simple use may not result in pollution and so does not accord with the clear legislative intent of the HST: to tax those who pollute.
*327¶33 The intent to tax polluters is apparent throughout the statutory scheme of chapter 82.21 RCW, which was enacted as part of Initiative Measure 97 (1-97). 1-97 adopted a hazardous waste cleanup program partially funded by a tax on possession of hazardous substances. The intended result was to have polluters bear the burden of cleanup. Indeed, throughout the statement for approval of 1-97 contained in the voter’s pamphlet is discussion aimed at making polluters pay, forcing polluters to clean up their wastes, and creating a stronger toxic cleanup program to make the environment cleaner and safer. See 1988 Voters & Candidates Pamphlet, General Election, Initiative Measure 97, at 6 (Wash. Nov. 8, 1988).
¶34 Intent to target polluters is further evident in the definition of “ ‘[hjazardous substance’ ” in RCW 82.21.020(1). “Hazardous substance” is defined by four categories, each of which are substances and products that present a threat to human health or the environment if released into the environment. See, e.g., RCW 82.21.020(l)(a) (categorizing “hazardous substance” according to federal statute 42 U.S.C. § 9602, which defines “hazardous substance” as air pollutants and substances that when discharged present an imminent and substantial danger to the public health or welfare or the environment). Moreover, section titles in chapter 82.21 RCW refer to the tax itself as the “pollution tax.”
¶35 Tesoro and amicus curiae Association of Washington Business correctly conclude that the definition of a “taxable possession” is subject to more than one reasonable construction. It is reasonable to interpret “or” in the definition of “control” in the conjunctive because it furthers the legislative intent. As the majority recognizes, the rule of construction of tax laws requires us to resolve any ambiguity in favor of the taxpayer. Therefore, ambiguity in defining taxable possession should be resolved in Tesoro’s favor. Yet, the majority ignores this principle and expands the scope of the statute to include substances that do not fall within the aim of the statute.
*328¶36 At the Court of Appeals, Judge Quinn-Brintnall correctly observed in her concurrence/dissent that Rule 252(7)(b) exempts from taxation hazardous substances that become a component or ingredient of the product being manufactured or processed or that are otherwise consumed during the manufacturing or processing activity. Tesoro Ref. & Mktg. Co. v. Dep’t of Revenue, 135 Wn. App. 411, 429, 144 P.3d 368 (2006) (Quinn-Brintnall, J., concurrence/dissent). In other words, under this rule the DOR recognized that the statute exempts from taxation instances where the hazardous substance is not being released into the environment. While flaring off refinery gas does not fall within this exemption, recycling refinery gas to run operations within Tesoro’s refinery walls plainly does. Thus, Rule 252(7)(b) recognizes an exemption for nonpolluting activities that applies to the facts of this case. This exemption is consistent with the statutory purpose as well as reading “or” as “and” in RCW 82.21.020(3).8
¶37 In light of the clear legislative intent — to tax polluters — it is reasonable to interpret “or” in the definition of “control” in the conjunctive. Because this definition is ambiguous, the rule of construction applicable in these circumstances requires resolution of the ambiguity in favor of Tesoro. For these reasons, I dissent.
Sanders, Chambers, and J.M. Johnson, JJ., concur with C. Johnson, J.
Reconsideration denied December 18, 2008.

 Whereas the majority of refinery gas is utilized as a heating source within the refinery, in the flaring process, excess refinery gas is burned over an exposed pilot light outside the refinery. Clerk’s Papers (CP) at 160. This latter process creates emissions, which in turn, raises regulatory concerns. CP at 167-68.

 There is unfairness in the majority’s conclusion in light of the DOR’s rule. The DOR is authorized under RCW 82.32.300 to prescribe rules for the collection of taxes. Rule 252(7)(b) is one such rule, adopted in furtherance of administering the pollution tax. While the DOR concedes that the rule may create an extra-statutory exemption from the HST, it asserts that any exemption would be per se invalid. The DOR has not, however, gone through any procedure to repeal or amend the rule on this basis.