Appeal of City of Berlin
| Decision Date | 28 December 1988 |
| Docket Number | No. 87-224,87-224 |
| Citation | 131 N.H. 285,553 A.2d 758 |
| Parties | , 29 ERC 1175 APPEAL OF CITY OF BERLIN. (New Hampshire Air Resources Council) |
| Court | New Hampshire Supreme Court |
Upton, Sanders & Smith, Concord (Richard F. Upton, on the brief and orally), for plaintiff.
Sulloway, Hollis & Soden, Concord (Maureen D. Smith, orally, and Robert M. Larsen, on the brief), for defendant James River Corp.
This case presents an appeal by the City of Berlin from an administrative decision made by the State Air Resources Council (the agency) that certain facilities and real estate owned by the James River Corporation qualified for tax exemption under RSA 72:12-a (Supp.1988). For the reasons that follow, we affirm in part and reverse in part.
The James River Corporation (the company), successor company to the Brown Paper Company, has manufacturing facilities located in Berlin. In 1978, the federal Environmental Protection Agency (EPA) tested the air quality in the Berlin area and found that it did not meet the national air quality standards for sulfur dioxide (SO sub2 ) or particulate matter. See 42 U.S.C.A. § 7407(d)(1)(B) (1983). As a consequence of these findings, Berlin was designated a "non-attainment" area for SO sub2 and particulate matter, and the company was required to reduce SO sub2 and particulate output to levels which would achieve the ambient air quality standards set by the federally approved State Implementation Plan (SIP) for the Berlin area. See 42 U.S.C.A. § 7410 (1983).
In addition to the boiler involved in this case, the company uses several oil-burning boilers to generate heat for the manufacturing process. Oil-burning boilers emit SO sub2 into the atmosphere. Some paper companies have installed bark-burning boilers, which can be fueled by bark and wood waste removed from pulpwood in the paper manufacturing process. Bark-burning boilers emit virtually no SO sub2 when fueled with bark or other wood waste.
In 1981 the company completed construction of a bark-burning boiler, the No. 14 boiler, as a substitute for two existing oil-burning boilers (boilers Nos. 6 and 7). The No. 14 bark-burning boiler was completed, along with three new stacks and an ambient air monitoring system, pursuant to a consent decree entered into by the EPA, the State of New Hampshire, and the company in 1979. When fueled with bark, operation of the No. 14 boiler as a substitute for the oil-burning boilers had the effect of reducing the ambient SO sub2 levels in the Berlin area.
In March 1981, the company filed an application with the agency for a tax exemption on three new facilities, the No. 14 bark-burning boiler, three tall stacks, and an ambient air monitoring system. Shortly thereafter, the company agreed to withdraw its tax exemption application for several years as part of a negotiated settlement with the City of Berlin (the city) in a real property tax dispute. The settlement agreement expired on April 1, 1985. On December 31, 1985, the company resubmitted an application for a tax exemption.
After holding hearings to accept evidence from the company and the city, the agency ruled upon requests for findings of fact submitted by the parties and the specific requests for tax exemptions. The agency ruled as follows:
(1) The No. 14 bark-burning boiler stack is accorded a 100% exemption.
(2) The real estate associated with the bark-burning boiler and its integral components is entitled to a 73.21% exemption.
(3) The real estate associated with the mechanical dust collector is accorded a 100% exemption.
(4) The real estate associated with the I.D. [Induced Draft] fan motor building is accorded a 94% exemption.
(5) The real estate associated with the wet scrubber system is accorded a 100% exemption.
The city objected to the agency rulings and requested a rehearing. On May 21, 1987, the agency denied the city's motion for rehearing based on lack of new evidence, and this appeal challenging the agency's first two rulings ensued.
The city argues that the real estate associated with the No. 14 bark-burning boiler and its integral components is not entitled to any tax exemption under RSA 72:12-a (Supp.1988). In support of its argument, the city asserts that RSA 72:12-a (Supp.1988) presupposes the existence of a continuing source of pollution; that neither the boiler nor the bark burned in it is "... a treatment facility, device, appliance, or installation" as required by RSA 72:12-a (Supp.1988); and that the company built the bark-burning boiler primarily for economic rather than pollution control purposes.
Alternatively, the city argues that even if the real estate associated with the No. 14 boiler is entitled to a partial exemption, the agency erred in failing to reduce the allowed percentage by an additional amount to reflect the "substantial economic benefits" received by the company.
Additionally, the city claims that since the tall stack only performs very minor pollution control functions, the agency erred in granting it a 100% exemption.
The company argues that the agency properly applied the criteria of RSA 72:12-a (Supp.1988) to the facts contained in the record when it allowed a 73.21% partial tax exemption for bark-burning boiler No. 14 and a 100% tax exemption for the boiler stack.
The company points to the 80% drop in SO sub2 levels in the Berlin area after the installation of the No. 14 boiler as evidence that, when viewed as an integrated whole, the No. 14 boiler system acts as a pollution control facility within the meaning of RSA 72:12-a (Supp.1988). In its brief, the company further asserts that the statutory language, "... for the purpose of reducing, controlling, or eliminating any source of air or water pollution ...," does not limit exempt facilities to those which are "tacked onto existing machines, structures, or facilities with the single purpose and effect of reducing the pollution otherwise caused."
Our scope of review over agency decisions under RSA 72:12-a (Supp.1988) is narrow. See Appeal of Town of Hampton Falls, 126 N.H. 805, 812, 498 A.2d 304, 309 (1985). Agency findings are deemed prima facie lawful and reasonable, and this court will not sit as a trier of fact in reviewing them. Id. at 812-13, 498 A.2d at 309. However, this court will overturn agency decisions when the appellant shows by a clear preponderance of the evidence that the agency's decision is unjust, unreasonable or unlawful. Id.
The clear intent of RSA 72:12-a (Supp.1988) was to create tax incentives for industry to construct pollution control facilities. Appeal of Public Serv. Co. of N.H., 124 N.H. 79, 84, 470 A.2d 855, 858 (1983). However, we do not think that the...
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