When the legislature enacted RSA 72:12-a to provide for pollution control tax exemptions, it probably didn’t intend for the law to apply to the tens of thousands of septic systems that provide waste treatment for individual residential homes. But, unintended or not, that’s exactly what it did.
The plaintiffs applied to the Department of Environmental Services (DES) for an exemption under RSA 72:12-a for two septic systems on their residential properties. The DES investigated and concluded that the septic systems were pollution control facilities within the meaning of the statute, but nevertheless denied the application, reasoning that granting a tax exemption for individual septic treatment systems would not “reasonably promote some proper object of public welfare or interest.” DES relied on the Court’s decision in Appeal of Rindge, 158 N.H. 21 (2008), where the Court found Franklin Pierce University eligible for a tax exemption for its wastewater treatment facility under RSA 72:12-a. In Rindge, the Court found a public purpose (pollution control) to exist, thus finding the tax exemption constitutional. It also observed that there may be additional public benefits such as encouraging earlier installations or higher quality devices than required by law. DES mistakenly concluded that the Rindge decision requires a finding of additional public benefit, aside from pollution control, for the exemption. In response, the Court held “[a]s long as a facility qualifies under the plain meaning of the statute, and, thus, promotes the public benefit of controlling pollution, DES has no discretion to deny the applicant a tax exemption.”
House Bill 1439, which amends RSA 72:12-a by limiting the exemption to industrial and commercial pollution control facilities, has passed both houses and is on its way to the Governor’s desk for his signature. If signed, the holding in this case with respect to tax exemptions for individual septic systems will be moot.