Lafarge N. Am., Inc. v. Testa (Slip Opinion), 2018 Ohio 2047

Lafarge North America operates a Lordstown, Ohio facility that manufactures pelletized slag from a large, decades-old "slag mountain."
To produce marketable slag, Lafarge uses a bulldozer (which cuts and crushes slag), front-end loaders, and dump trucks to move material to an on-site screening plant where pieces are sorted by size.
Ohio Department of Taxation audited Lafarge (Apr 2009–Mar 2013) and assessed use tax, interest, and a 15% penalty on purchases of fuel and repair parts for the bulldozer, loaders, and trucks, concluding those activities preceded manufacturing.
The Tax Commissioner and the Board of Tax Appeals held that breaking up and transporting slag from the slag mountain is excavation/movement of raw material from storage and not part of the manufacturing operation, so the purchases were taxable.
The Ohio Supreme Court reviewed whether Lafarge’s breaking, crushing, and transporting of slag constitutes part of a "manufacturing operation" under R.C. 5739.02(B)(42)(g) and whether fuel/repair parts are used primarily in that operation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
When does manufacturing begin?	Lafarge: Manufacturing begins when slag is cut/crushed at the slag mountain because that changes the material into marketable form.	Tax Commissioner: Manufacturing begins at the screening plant; the prior work is excavation/storage handling.	Court held manufacturing begins when slag is cut/crushed at the mountain; those acts commit material to manufacturing.
Whether bulldozer/loaders/trucks are part of manufacturing	Lafarge: Equipment that breaks/crushes and transports slag is part of the continuous manufacturing operation.	Commissioner: Equipment merely moves raw material from initial storage to the mill and is taxable.	Court held the equipment’s breaking/crushing transport functions are part of the manufacturing operation.
Whether fuel and repair parts are exempt (primary use)	Lafarge: Purchases used primarily in manufacturing and thus exempt under R.C. 5739.02(B)(42)(g).	Commissioner: Purchases are taxable because equipment serves pre-manufacturing material handling and landfill operations.	Court remanded to BTA to quantify primary use under R.C. 5739.011(D) and allocate exemption/pro taxation.
Penalty abatement	Lafarge: Penalty should be abated for any tax erroneously assessed.	Commissioner: Penalty originally imposed.	Court remanded for BTA to abate penalty to the extent tax assessment is reversed.

Satullo v. Wilkins, 111 Ohio St.3d 399 (standard for deference to BTA factual findings)
Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150 (deference to agency factual findings when supported by reliable evidence)
Trans Rail Am., Inc. v. Enyeart, 123 Ohio St.3d 1 (statutory interpretation: illustrative clause versus operative definition)
Crown Communication, Inc. v. Testa, 136 Ohio St.3d 209 (reviewing legal issues de novo)
Cincinnati v. Testa, 143 Ohio St.3d 371 (application of de novo review where law applied to undisputed facts)