DaimlerChrysler Corporation v. State Tax Commission

Summary

The Michigan Supreme Court addresses whether motor-vehicle manufacturers’ emissions-testing test cells and an engine production line qualify for Michigan tax exemptions for air-pollution-control facilities under Part 59 of the Natural Resources and Environmental Protection Act. The Court holds that qualifying equipment must be installed or acquired primarily to control or dispose of air pollution and must actually and physically control, capture, and remove pollutants. It reverses the Court of Appeals as to the test cells, reinstates the State Tax Commission’s denials, and affirms the denial concerning Detroit Diesel’s engine line and the rejection of its due-process claim.

Holdings

1. The test cells do not qualify for the part 59 tax exemption because they were primarily used to test engines and vehicles for regulatory compliance, rather than to control or dispose of air pollution, and they did not themselves physically control, capture, and remove pollutants from the air.
2. The Equinox 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.
3. Detroit Diesel received due process because it received notice and a full hearing at which it could present evidence and legal arguments, and the Department of Environmental Quality considered the information developed at the hearing.

Questions Presented

1. Whether the manufacturers' emissions test cells qualified as tax-exempt facilities under MCL 324.5901 and MCL 324.5903.
2. Whether Detroit Diesel's Equinox engine-production line qualified as a tax-exempt facility under part 59 of the Natural Resources and Environmental Protection Act.
3. Whether the State Tax Commission's hearing process denied Detroit Diesel due process.

Disposition

other