In order to encourage industries to construct pollution control facilities for the purpose of reducing, controlling or eliminating sources of air or water pollution, the legislature enacted RSA 72-12-a to offer tax incentives to property owners who put such facilities in place. The tax incentives are given in the form of property tax exemptions on qualifying pollution control facilities and the real estate needed to support them. This case is about the various tax exemptions granted by the Department of Environmental Services (DES) under RSA 72:12-a to North Country Environmental Services (NCES), a solid waste landfill facility located in Bethlehem.
The town appealed the DES decision on several grounds, chief among them that DES did not apply RSA 72-12-a properly in ruling that certain components of the facility are tax exempt. The town argued that DES was wrong when it determined that eight components of the facility qualified for tax exemptions because a landfill, in its entirety, may not be exempt from taxation under RSA 72:12-a, and DES misinterpreted and then misapplied RSA 72-12-a with respect to each of the components for which NCES sought an exemption.
The New Hampshire Supreme Court did not have to rule on the issue of whether the statute could cause an entire property to be exempted from property taxes because in this case, it found that exemptions were not given on the entire property. Rather, DES granted tax exemptions on eight of 12 components of the facility.
On the issue of DES misinterpreting and misapplying RSA 72:12-a, the town argued that the statute requires DES to evaluate the facility as a whole rather than as separate components and that even if DES could evaluate the individual components, DES erred when it determined that the components in question were part of an integrated system designed to reduce, control or eliminate a source of pollution as required by the statute. The Court ruled that the plain language of the statute does not indicate that each component of a landfill facility must reduce, control or eliminate a source of air or water pollution in order for any one part of that facility to qualify for a tax exemption under RSA 72:12-a. Pointing to the words contained in the statute—“any,” “or” and “or partly”—the Court ruled that the DES decision to evaluate whether particular components qualified for the tax exemption was not unjust, unlawful or unreasonable.
The town next argued that the exempted components did not effectuate “treatment” within the meaning of the statute. The Court explained that it is not enough that a component simply generates less pollution from the start; rather, the component must reduce, control or eliminate sources of air or water pollution that already have been created. The Court agreed with DES that the facility’s excavation and stormwater control measures, including the detention ponds, silt fencing, stone check dams, 4,000 feet of lined riprap and gabion swales, culverts, berms, grass seeding and fertilization were eligible for tax exemption under RSA 72:12-a because they control runoff and facilitate leachate pollutants, thereby improving the quality of the runoff, thus effectuating “treatment.” The remaining seven components were similarly found to meet the statutory requirements for tax exemption.
The town also argued that exempting one parcel of property from taxation, creating unequal benefits across the municipality, violated the state constitution. The Court said that taxing properties differently based on a statutory tax exemption does not in and of itself indicate a constitutional violation, adding that the constitutional requirement of uniformity and equality is met when the exemption is properly applied to all properties that meet the statutory requirements. Additionally, the Court ruled that the legislature possesses broad discretion to select certain property for taxation while exempting others, noting that such exemptions are constitutional if they are supported by just reasons and treasonably promote some proper object of public welfare or interest. According to the Court, RSA 72:12-a generally confers a public benefit and advances a public purpose by attempting to minimize or reduce pollution through the provision of tax incentives for industry to construct pollution control facilities.
The Court similarly disposed of arguments put forth by the townbased on alleged due process violations of the state constitution and violation of DES administrative rules. The Court affirmed the DES decision to grant tax exemptions to eight of 12 components of the landfill.