Logging Case Analysis

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The decision has significant tax implications, not just for logging equipment, but for all of the exemptions in sec. 70.111.

The court of appeals’ opinion was arguably not limited to logging equipment, but adopted the “primary purpose” test for all business tax exemptions, holding, “The bottom line is we must ask ourselves the purpose for which the tax exemption was granted. If it was for a specific industry, then all of those who incidentally may come within the statute, but who are not part of that industry do not get the exemption.” Village of Lannon v. Wood-Land Contractors, 2003 WI App 7, 259 Wis.2d 879, 659 N.W.2d 95.

The Supreme Court’s reversal makes clear that each exemption must be examined individually based on the specific language used by the legislature in that exemption.

For many of the other exemptions that the court cited in its opinion, the “primary purpose” test could apply, because the text of the exemptions make clear that they are aimed at specific industries, rather than specific equipment.

A second noteworthy aspect of the decision is that it creates an anomaly that the court of appeals’ decision did not.

The exemption applies to equipment used for three purposes: “(1) to cut trees for the commercial use of forest products; (2) to transport trees in logging areas for the commercial use of forest products; or (3) to clear land of trees for the commercial use of forest products (emphasis added).”

Thus, the first and third types of equipment — used to cut trees or to clear land — may be eligible for the exemption, regardless of whether it is used in the traditional sense of logging, or, as Wood-Land does, in clearing trees for development. However, the second type of equipment — used to transport trees — appears to be limited to traditional logging because it only applies “in logging areas.”

Wood-Land apparently does not operate in traditional logging areas. Thus, while its $210,000 Timbco T-425 Feller Buncher machine, which cuts down trees, should be exempt, the $127,000 specialized tractor and transport trailer is probably not exempt, because equipment used for transporting trees is only exempt if used “in logging areas.”

Arguably, however, the most significant aspect of the court’s decision has nothing to do with tax exemptions, but with rules of statutory construction.

At the end of the court’s last term, it issued a flurry of decisions containing concurrences debating the “plain meaning rule.” State v. Peters, 2003 WI 88, 263 Wis.2d 475, 665 N.W.2d 171; Fox v. Catholic Knights Insurance, 2003 WI 87, 263 Wis.2d 207, 665 N.W.2d 181; State v. Byers, 2003 WI 86, 263 Wis.2d 113, 665 N.W.2d 729.

In each case, Chief Justice Abraham-son and now-retired Justice William A. Bablitch took issue with the “plain meaning rule,” arguing that language is inherently ambiguous, and thus, legislative history is always at least relevant to some degree. In each of the three cases, the opinion of the court held that the language in the various statutes at issue had a plain meaning and was unambiguous. Some of the concurrences were verbatim to each other.

Now, early in this term, the court has issued two decisions containing concurrences that are also verbatim (save only for the citations to the respective statutes at issue). The concurrence of Justice Roggensack in the case at bar is identical to her concurrence in Hubbard v. Messer, 2003 WI 145 (decided Nov. 20, 2003). That concurrence also was joined by Justices Wilcox and Crooks.

The concurring opinion’s complaint about the apparent change in statutory interpretation in Hubbard (without any response from the opinion of the court) could have been dismissed as an aberration.

With the release of the decision in the case at bar, however (also without any reference to the concurrence in the opinion of the court), it appears that a radical shift may have occurred in the Court’s method of statutory interpretation.

When the term ended last June, five justices to two accepted the plain meaning rule: “If the language is clear on its face, we need go no further and we simply apply it.”

Bruno v. Milwaukee County, 2003 WI 28, par. 20, 260 Wis.2d 633, 660 N.W.2d 656.

Then, Bablitch, one of the two justices asserting that language is inherently ambiguous, retired.

Yet, somehow, this term, it appears that only three of the seven justices adhere to the “plain meaning rule,” one of them being Roggensack, who replaced Bablitch over the summer, and the others being Crooks and Wilcox.

	Links Wisconsin Supreme Court Related Article ‘Primary purpose’ test abandoned for tax exemptions

With just two decisions containing this complaint, there is obviously not enough evidence from which to draw any firm conclusions. But, it may be that Justices Sykes, Prosser, and Bradley have all laid down the sword in the fight with Abrahamson over the plain meaning rule, only to have Roggensack, the new justice on the court, pick it back up again.

It is noteworthy that the court of appeals is already preparing itself for the possibility of a new order. In Turner v. Taylor, (No. 03-0705)(decided Nov. 25, 2003)(recommended for publication), the court of appeals stated in a footnote, “we understand the Supreme Court has recently resorted to reviewing legislative history when interpreting a statue without first determining the statute is ambiguous. See Hubbard v. Messer, 2003 WI 145, pars. 19-20. Although we are not employing this method for statutory interpretation, we do note that we have reviewed the legislative history and found nothing helpful…”

It is too early to know where this will lead. In the interim, however, attorneys would be wise to include legislative history in their briefs, even as they maintain that a statute has a plain meaning, and that resort to legislative history is unnecessary.

– David Ziemer

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David Ziemer can be reached by email.