DaimlerChrysler Corporation, Ford Motor Company, and Detroit Diesel Corporation v. State Tax Commission and Department of Environmental Quality

Summary

The Michigan Supreme Court considered consolidated appeals concerning tax exemptions for motor-vehicle emissions test cells and an engine production line under Part 59 of Michigan’s Natural Resources and Environmental Protection Act. The Court held that qualifying equipment must have the primary purpose of controlling or disposing of air pollution and must actually and physically control, capture, and remove pollutants. It reversed the Court of Appeals in part, reinstated the denial of exemptions for the test cells, and affirmed the denial for Detroit Diesel’s engine line and the rejection of a due-process challenge.

Holdings

1. The test cells do not qualify as facilities because they were installed or acquired primarily to test engines and vehicles for compliance with federal regulations, not primarily to control or dispose of air pollution.
2. The test cells do not satisfy MCL 324.5903 because they are not designed and operated primarily to control, capture, and remove pollutants from the air and do not physically perform those functions.
3. The Equinox engine production line does not qualify for a part 59 tax exemption because its primary purpose was manufacturing engines for sale, not controlling or disposing of air pollution.
4. Detroit Diesel received due process because it was given notice and a full opportunity to present evidence and legal arguments at a hearing before an impartial decisionmaking process.

Questions Presented

1. Whether vehicle and engine emissions test cells qualify as tax-exempt air-pollution-control facilities under MCL 324.5901 and MCL 324.5903.
2. Whether Detroit Diesel's Equinox engine production line qualifies for a part 59 tax exemption.
3. Whether the State Tax Commission's hearing process violated Detroit Diesel's due-process rights.

Disposition

other