Tesoro Refining & Marketing Co. v. Department of Revenue

Summary

The Washington Supreme Court held that Tesoro Refining & Marketing Company's possession and use of refinery gas as a heat source constituted a taxable possession of a hazardous substance under Washington's hazardous substance tax. The court rejected Tesoro's argument that the refinery gas qualified for an exemption under WAC 458-20-252(7)(b), concluding that the gas was not integrated into another product or otherwise consumed within the meaning of the regulation. The court also held that the Department of Revenue had not improperly repudiated an interpretive tax advisory because the advisory was superseded by later statutory changes.

Holdings

1. The hazardous substance tax unambiguously applies to Tesoro's possession of refinery gas because refinery gas is a petroleum product designated as a hazardous substance and control includes the power to use the substance, even without the power to sell it.
2. Rule 252(7)(b) does not exempt refinery gas that Tesoro burns as an independent heating agent because the gas does not become a component or ingredient of another product and is not otherwise consumed in the regulatory sense.
3. The Department of Revenue did not improperly repudiate its prior interpretation because the advisory guidance was superseded by later statutory amendments; an interpretation that conflicts with the current statute is void and cannot support reliance.

Questions Presented

1. Whether the hazardous substance tax applies to Tesoro's possession and use of refinery gas within its refinery.
2. Whether Washington Administrative Code Rule 252(7)(b) exempts refinery gas used as a heat source during refining.
3. Whether the Department of Revenue repudiated an interpretive regulation or advisory ruling on which Tesoro relied.

Disposition

affirmed