947 N.W.2d 731 (Neb. 2020), S-19-669, Ash Grove Cement Co. v. Nebraska Department of Revenue

Docket NºS-19-669, S-19-674, S-19-675.
Citation947 N.W.2d 731, 306 Neb. 947
Opinion JudgeFunke, J.
Party NameASH GROVE CEMENT COMPANY, appellee, v. NEBRASKA DEPARTMENT OF REVENUE et al., appellants. Lyman-Richey Corporation, appellant, v. Nebraska Department of Revenue et al., appellees.
AttorneyDouglas J. Peterson, Attorney General, and L. Jay Bartel, Lincoln, for Nebraska Department of Revenue et al. Nicholas K. Niemann, Kristopher Covi, and Matthew R. Ottemann, of McGrath, North, Mullin & Kratz, P.C., L.L.O., Omaha, for Ash Grove Cement Company and Lyman-Richey Corporation.
Judge PanelHeavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
Case DateAugust 28, 2020
CourtSupreme Court of Nebraska

Page 731

947 N.W.2d 731 (Neb. 2020)

306 Neb. 947

ASH GROVE CEMENT COMPANY, appellee,

v.

NEBRASKA DEPARTMENT OF REVENUE et al., appellants.

Lyman-Richey Corporation, appellant,

v.

Nebraska Department of Revenue et al., appellees.

Nos. S-19-669, S-19-674, S-19-675.

Supreme Court of Nebraska.

August 28, 2020.

Page 732

[Copyrighted Material Omitted]

Page 733

[Copyrighted Material Omitted]

Page 734

1. Administrative Law: Judgments: Appeal and Error. In an appeal under the Administrative Procedure Act, an appellate court may reverse, vacate, or modify the judgment of the district court for errors appearing on the record.

2. ___:___: ___ . When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

3. Administrative Law: Statutes: Appeal and Error. The interpretation of statutes and regulations presents questions of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.

4. Statutes: Legislature: Intent. In construing a statute, a court must determine and give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered in its plain, ordinary, and popular sense.

5. Statutes. A court must attempt to give effect to all parts of a statute, and if it can be avoided, no word, clause, or sentence will be rejected as superfluous or meaningless.

6. ___ . Statutes relating to the same subject matter will be construed so as to maintain a sensible and consistent scheme, giving effect to every provision.

[306 Neb. 948] 7. Taxation: Presumptions. An exemption from taxation is never presumed.

8. Taxation: Proof. The burden of showing entitlement to a tax exemption is on the applicant.

9. Statutes: Taxation. Statutory tax exemption provisions are to be strictly construed, and their operation will not be extended by judicial construction.

10. ___: ___. An exemption from taxation must be clearly authorized by the relevant statutory provision.

11. Judgments: Appeal and Error. An appellate court, in reviewing a district court's judgment for errors appearing on the record, will not substitute its factual findings for those of the district court where competent evidence supports those findings.

12. Administrative Law: Statutes. Agency regulations properly adopted and filed with the Secretary of State of Nebraska have the effect of statutory law.

13. Statutes: Words and Phrases: Appeal and Error. An appellate court attempts to give effect to each word or phrase in a statute and ordinarily will not read language out of a statute.

14. Statutes: Legislature: Intent. The intent of the Legislature may be found through its omission of words from a statute as well as its inclusion of words in a statute.

Appeals from the District Court for Lancaster County: John A. Colborn, Judge.

Douglas J. Peterson, Attorney General, and L. Jay Bartel, Lincoln, for Nebraska Department of Revenue et al.

Nicholas K. Niemann, Kristopher Covi, and Matthew R. Ottemann, of McGrath, North, Mullin & Kratz, P.C., L.L.O., Omaha, for Ash Grove Cement Company and Lyman-Richey Corporation.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Funke, J.

The Nebraska Department of Revenue; Tony Fulton, in his capacity as Tax Commissioner; and the State of Nebraska (collectively the Department) appeal the order of the district court for Lancaster County finding that the production of aggregate [306 Neb. 949] by Ash Grove Cement Company (Ash Grove) qualifies as "processing" under the Nebraska Advantage Act (NAA), Neb. Rev. Stat. §§ 77-5701 to 77-5735 (Reissue 2009 & Cum. Supp. 2016).

Lyman-Richey Corporation (Lyman-Richey), a wholly owned subsidiary of Ash Grove, separately appeals, challenging the court's finding that its aggregate production does not qualify as "manufacturing" under the NAA and denying its claims for overpayment of sales and use tax.

The appeals are without merit. We affirm.

BACKGROUND

In June 2012, Ash Grove and its subsidiaries applied to the Department for an agreement with the commissioner for a tier 2 project as defined under § 77-5725(1)(b). In December 2016, the commissioner and Ash Grove executed an agreement for the project, which included NAA tax incentives.

Ash Grove's project encompassed multiple locations, including administrative locations, cement manufacturing locations, maintenance locations, and concrete production locations. It is undisputed that one or more of the activities at these locations constitute qualified business under the

Page 735

NAA, making Ash Grove eligible for tax incentives. Under § 77-5715(1)(c), for a tier 2 project, "qualified business" means any business engaged in the "assembly, fabrication, manufacture, or processing of tangible personal property."

Because Lyman-Richey is wholly owned by Ash Grove, Ash Grove is eligible to include Lyman-Richey in its application for NAA tax incentives. The project included nine locations at which Lyman-Richey produces aggregate. Generally, aggregate consists of sand and gravel. Lyman-Richey sells aggregate products used for things like manufacturing concrete, manufacturing asphalt, masonry and mortar, road gravel, and golf course top dressing. A significant portion of Lyman-Richey's aggregate products are used by Lyman-Richey or a related entity at its concrete production locations.

[306 Neb. 950] To produce aggregate, Lyman-Richey uses excavation equipment at a designated site to expose the water table, forming a lake, and then extracts raw slurry from the lake. Raw slurry is a naturally occurring mixture consisting of sand and gravel particulates, mud, waste products, and debris. Lyman-Richey uses dredging equipment to initially break down, clean, and segregate sand and gravel. The dredging equipment includes a ladder with a "cutter head," which spins and loosens the raw slurry. Pumps transport the materials through inbound pipelines to a Lyman-Richey plant for further operations.

The particulates reach classifier tanks that sort the materials into different mixtures, producing various aggregate products according to the precise "recipe" or specification of customers. The plant equipment has rotary screens, which filter the particulates by size. The raw slurry hits the screens that catch gravel with dirt and clay in it and discharge mud, rocks, or waste. Larger materials are sent through a "log washer" to turn, scrub, and break up clay and dirt particles. The sand and gravel particulates pass through a dewatering operation, which mixes the sand and gravel back together and removes mud and clay particles. Pumps return waste products through outbound pipes to the lake. Conveyors stockpile the finished sand and gravel aggregate products, which are loaded into trucks and weighed on a scale. Customers are billed according to weight.

At times, Lyman-Richey uses crushing equipment on the sand and gravel. Lyman-Richey has three crushers, which are often transported and used to crush aggregate at customer locations.

In August 2016, the Department issued Ash Grove a notice of deficiency determination, stating that the aggregate production locations are not engaged in qualified business under the NAA. Ash Grove timely protested. While the dispute between Ash Grove and the Department over the scope of the NAA project was pending, Lyman-Richey filed claims for overpayment of sales and use tax for 2011 based on Nebraska's manufacturing machinery and equipment exemption under Neb. Rev. Stat. §§ 77-2701.47(1)(a) and (b) and 77-2704.22 [306 Neb. 951] (Reissue 2018). The commissioner consolidated the matters and conducted an administrative hearing lasting 3 days.

COMMISSIONER'S DECISION

The commissioner first considered whether the activities at the aggregate production locations constitute "manufacturing" under the NAA. Neb. Rev. Stat. § 77-2701.46 (Reissue 2018) defines "[m]anufacturing," in part, as "an action or series of actions performed upon tangible personal property ... which results in that tangible personal property being reduced or transformed into a different state, quality, form, property, or thing." (Emphasis supplied.) Ash Grove and Lyman-Richey argued that because they take raw slurry

Page 736

fro the ground, clean and sort the material, and extract desirable sizes of sand and gravel, they transform and reduce the raw slurry into a different state, quality, form, property, or thing. The commissioner disagreed and concluded that the aggregate production activities cannot be considered "manufacturing." The commissioner concluded that the aggregate products are not "reduced" or "transformed," but, rather, that they remain sand and gravel before and after extraction. The commissioner found that the aggregate production activities described mining, not manufacturing. Under 316 Neb. Admin. Code, ch. 1, § 107.03C (2017), manufacturing does not include "[m]ining, quarrying, and any other activity performed in severing raw materials or other property from the ground."

The commissioner conceded that Lyman-Richey's crushing activities do constitute "manufacturing." The commissioner also found that some, but not all, of the aggregate production locations qualified for NAA tax incentives on separate grounds, under § 77-5715(1)(e) and (4). Thus, the commissioner granted in part and denied in part Ash Grove's protest.

The commissioner denied Lyman-Richey's claims for overpayment, finding that because the aggregate production...

To continue reading

Request your trial
3 practice notes
  • Charles E. Lakin Found. v. Pribil (In re Lakin), 100821 NESC, S-20-093
    • United States
    • Supreme Court of Nebraska
    • October 8, 2021
    ...v. Entrex Comm. Servs., 279 Neb. 468, 778 N.W.2d 465 (2010). [14] Id. [15] Ash Grove Cement Co. v. Nebraska Dept. of Rev., 306 Neb. 947, 947 N.W.2d 731 (2020); Metropolitan Utilities Dist. v. Balka, 252 Neb. 172, 560 N.W.2d795 [16] See Marcovitz v. Rogers, 276 ......
  • Hinson v. Forehead, 072021 NECA, A-20-370
    • United States
    • Nebraska Court of Appeals of Nebraska
    • July 20, 2021
    ...We determine a statute's meaning based on its text, context, and structure. Ash Grove Cement Co. v. Nebraska Dept. of Rev, 306 Neb. 947, 947 N.W.2d 731 (2020). Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort t......
  • State v. Wines, 021921 NESC, S-20-445
    • United States
    • Nebraska Supreme Court of Nebraska
    • February 19, 2021
    ...no word, clause, or sentence will be rejected as superfluous or meaningless. Ash Grove Cement Co. v. Nebraska Dept. of Rev., 306 Neb. 947, 947 N.W.2d 731 (2020). Statutes relating to the same subject matter will be construed so as to maintain a sensible and consistent sc......
3 cases
  • Charles E. Lakin Found. v. Pribil (In re Lakin), 100821 NESC, S-20-093
    • United States
    • Supreme Court of Nebraska
    • October 8, 2021
    ...v. Entrex Comm. Servs., 279 Neb. 468, 778 N.W.2d 465 (2010). [14] Id. [15] Ash Grove Cement Co. v. Nebraska Dept. of Rev., 306 Neb. 947, 947 N.W.2d 731 (2020); Metropolitan Utilities Dist. v. Balka, 252 Neb. 172, 560 N.W.2d795 [16] See Marcovitz v. Rogers, 276 ......
  • Hinson v. Forehead, 072021 NECA, A-20-370
    • United States
    • Nebraska Court of Appeals of Nebraska
    • July 20, 2021
    ...We determine a statute's meaning based on its text, context, and structure. Ash Grove Cement Co. v. Nebraska Dept. of Rev, 306 Neb. 947, 947 N.W.2d 731 (2020). Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort t......
  • State v. Wines, 021921 NESC, S-20-445
    • United States
    • Nebraska Supreme Court of Nebraska
    • February 19, 2021
    ...no word, clause, or sentence will be rejected as superfluous or meaningless. Ash Grove Cement Co. v. Nebraska Dept. of Rev., 306 Neb. 947, 947 N.W.2d 731 (2020). Statutes relating to the same subject matter will be construed so as to maintain a sensible and consistent sc......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT