The Town of Rindge appealed to the Supreme Court from the Department of Environmental Services’ (DES) ruling that the full assessed value of the Franklin Pierce University wastewater treatment facility, including proposed improvements, once constructed, qualified for a tax exemption under RSA 72:12-a. That statute authorizes exemptions from real estate taxation for any treatment facility, device, appliance or installation whose purpose it is to reduce, control or eliminate any source of air or water pollution. The town argued that DES misinterpreted RSA 72:12-a and, further, that the exemption granted to the University violates the New Hampshire Constitution.
The town argued that the wastewater treatment facility that served the campus community was not eligible for the statutory tax exemption because the legislative intent of the statute was to create an incentive for industry, and not a university, to implement pollution control measures. The town also argued that because the University was required by state and federal law to construct the facility, no exemption is available. Finally, the town argued that human waste is not “pollution” within the meaning of the statute. On this point, the town argued that if the exemption were interpreted to permit an exemption in this case, it would create an absurd result because individual septic systems would, necessarily, also be eligible for the exemption.
The Court rejected the town’s arguments, pointing out that RSA 72:12-a expressly provides that any person, firm or corporation is entitled to an exemption for pollution control facilities. “It does not matter whether the available tax exemption provided the incentive to construct and maintain the facility. RSA 72:12-a imposes no such condition upon the tax exemption.” The Court refused to address the town’s claim concerning individual septic systems because the issue was not before the Court. The Court ruled that it was reasonable for DES to conclude that wastewater from a college campus is a source of water pollution within the meaning of RSA 72:12-a and thus eligible for the exemption.
The Court next turned to the constitutional arguments raised by the town. The town argued that the tax exemption violates Part II, Article 5 and Part I, Article 10 of the New Hampshire Constitution for two reasons. First, DES’s interpretation of RSA 72:12-a is not supported by just reasons and fails to promote a proper object of the public welfare or public interest. The town argued that “[n]o public interest is served when a tax break is given to a taxpayer who does nothing more except what the law requires.” Second, the granting of the exemption to the University creates an unconstitutional unequal benefit.
The Court pointed out that exemptions are constitutional so long as they are supported by just reasons and thereby reasonably promote some proper object of public welfare or interest, such as a potentially cleaner environment that results from pollution control devices. Additional public benefit could be inferred from the fact that a private wastewater treatment facility relieves the municipal taxpayer from its legal obligation to treat the wastewater. Finding adequate benefits to meet the burden of promoting the public welfare and public interest, the Court held that DES’s decision does not create an unconstitutional unequal benefit.