873 N.W.2d 342
Mich. Ct. App.2015Background
- Chrysler filed two air pollution control tax-exemption petitions (one ~$81M for a new paint building, one ~$5M for parts of an existing paint shop) and related water-exemption petitions. The State Tax Commission (STC) granted the air exemptions in full without referring the petitions to the Michigan Department of Environmental Quality (MDEQ).
- Sterling Heights appealed; the Macomb Circuit Court reversed and remanded, ordering the STC to refer the applications to the MDEQ for technical evaluation because the MDEQ had not made required findings.
- The core statutory framework requires MDEQ to find a facility is designed and operated primarily to control/capture/remove air pollutants (MCL 324.5903) and the STC to seek MDEQ approval before issuing certificates (MCL 324.5902(2)).
- Chrysler argued (1) it may obtain exemptions for parts of a structure whose primary purpose is pollution control and (2) the MDEQ had preapproved common equipment via a memorandum of understanding (MOU) and preapproved equipment list, so STC need not seek further MDEQ review.
- The Court of Appeals held: (a) portions of a building can qualify if primarily designed and operated for pollution control; (b) the MOU/approved-equipment list could allow preapproval only if the list clearly and specifically showed MDEQ findings under MCL 324.5903 — which the list here did not — so STC’s grant lacked substantial evidence and must be remanded for MDEQ evaluation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parts of a structure may qualify for air pollution tax exemption | Chrysler: yes — statute allows exemption for parts of structures that are primarily for pollution control | Sterling Heights: no — entire building must be primarily for pollution control; paint shop’s main purpose is painting | Held: Parts may qualify if designed and operated primarily to control/ remove air pollutants (statutory definition of "facility" includes parts) |
| Whether STC could issue certificates without referring petitions to MDEQ because of MDEQ’s preapproved equipment list/MOU | Chrysler: MOU and list create preapproval for commonly approved equipment, obviating the need for further MDEQ review | Sterling Heights: MDEQ must review and approve each petition; list cannot substitute for statutory MDEQ findings | Held: MDEQ may preapprove narrowly identified equipment, but the list here was too generic/ambiguous; STC lacked MDEQ findings required by statute, so remand for MDEQ evaluation was proper |
| Whether circuit court improperly affected water pollution certificates not appealed | Chrysler: circuit court voided water exemptions beyond appeal scope | Sterling Heights: circuit court did not void water certificates | Held: Circuit court’s written order addressed only air-exemption certificates; Chrysler’s argument fails |
| Whether STC decision was supported by competent, material, substantial evidence | Chrysler: STC decision was valid based on submissions and the list | Sterling Heights: no; MDEQ did not make required findings | Held: STC’s decision lacked substantial evidence because required MDEQ findings under MCL 324.5903 were absent; remand appropriate |
Key Cases Cited
- DaimlerChrysler Corp v State Tax Comm, 482 Mich 220 (distinguishing test-cell facts; exemption requires facility directly designed/operated to remove pollutants)
- Monroe v State Employees’ Retirement Sys, 293 Mich App 594 (standard of appellate review of circuit court’s application of substantial-evidence test)
- Dignan v Mich Pub Sch Employees Retirement Bd, 253 Mich App 571 (definition of substantial evidence)
- VanZandt v State Employees’ Retirement Sys, 266 Mich App 579 (substantial-evidence is more than scintilla but less than preponderance)
- In re Contempt of Henry, 282 Mich App 656 (court speaks through written orders, not oral statements)