Empire Iron Mining P'ship v. Tilden Twp.

337 Mich.App. 579

977 N.W.2d 128

EMPIRE IRON MINING PARTNERSHIP and Cleveland-Cliffs Iron Company, Petitioners-Appellees,

v.TILDEN TOWNSHIP and Township of Richmond, Respondents-Appellants.

No. 353098

Court of Appeals of Michigan.

Submitted June 9, 2021, at Lansing.

Decided June 17, 2021, at 9:05 a.m.

Taft Stettinius & Hollister LLP, Indianapolis (by Nathan J. Hagerman ) and Honigman LLP (by Michael B. Shapiro and Daniel L. Stanley ) for Empire Iron Mining Partnership and Cleveland-Cliffs Iron Company.

Foster Swift Collins & Smith, PC, Grand Rapids (by Jack L. Van Coevering and Thomas K. Dillon ) for Tilden Township and Township of Richmond.

Before: Jansen, P.J., and M. J. Kelly and Ronayne Krause, JJ.

Per Curiam.

In this action regarding the construction and application of the tax on low-grade iron ore mining property, MCL 211.621 et seq. , respondents, Tilden Township and the Township of Richmond, appeal as of right the final judgment of Michigan Tax Tribunal in favor of petitioners, Empire Iron Mining Partnership and Cleveland-Cliffs Iron Company. On appeal, respondents contend that the Tribunal erred by concluding that petitioners’ Empire Mine was not subject to the low-grade iron ore mining property tax (the iron ore tax). Alternatively, respondents argue that the Tribunal erred by dismissing the case before considering and allowing discovery regarding the issue of valuation of the property that was now subject to taxation under the General Property Tax Act (GPTA), MCL 211.1 et seq. For the reasons stated in this opinion, we affirm.

I. BASIC FACTS

The Empire Mine is partially located in each of the respondent townships. From its opening in 1963 until August 2016, low-grade iron ore was mined on the property at an average of 5.5 million tons per year. During that period of time, the property on which the Empire Mine existed was subject to the iron ore tax, which is assessed in lieu of ad valorem property taxes. In August 2016, petitioners idled Empire Mine for an indefinite period of time.

During the tax years at issue in this case, 2018 and 2019, no mining or production of mining products occurred at the Empire Mine. Despite the lack of production, respondents submitted evidence that petitioners were considering reopening, while petitioners presented evidence showing that it was physically impossible for mining to occur at the site.

On May 30, 2018, Michigan's Department of Environmental Quality (DEQ) issued letters to respondents, which indicated that because the Empire Mine had been, and would remain, idled during the 2018 tax year, the iron ore tax was not collectible. Respondents, however, reached the opposite conclusion and sent letters informing petitioners that the iron ore tax would still be assessed and collected for 2018. Respondents contended that, despite the fact that no iron ore was mined during those years, the statutory scheme permitted taxation on the basis of a five-year average, so there was still a basis for assessing a tax. Respondent Tilden Township calculated that the iron ore tax for 2018 would be $118,372, and respondent Richmond Township calculated the tax for that same year at $1,250,108. Petitioners appealed respondents’ decision to collect the iron ore tax, arguing that the iron ore tax was not applicable to the Empire Mine for the tax year in question because the mine was idled for that entire year.¹

Thereafter, on April 30, 2019, the DEQ wrote another letter to respondents, again stating that the idling of the Empire Mine meant that the iron ore tax should not be assessed against petitioners. Once more, respondents concluded that the iron ore tax was still statutorily required to be assessed in lieu of standard ad valorem property taxes under the GPTA. For 2019, Tilden Township calculated that petitioners owed $105,961.59 in iron ore taxes, while Richmond Township found that it was owed $1,124,841.01 for the same year. In response, petitioners appealed the assessment of iron ore taxes in 2019. The Tribunal consolidated the cases for both respondents and both tax years.

On August 9, 2019, respondents moved for summary disposition under MCR 2.116(C)(8) and (C)(10). Respondents asserted that there was no factual dispute in the case because it was clear that the Empire Mine had been idled temporarily and that no mining had been conducted during the tax years in question. Respondents believed, however, that the lack of mining did not preclude the iron ore tax from being assessed against petitioners. Because the iron ore tax permitted taxation on the basis of a five-year rolling average, and mining occurred in 2014, 2015, and 2016, there was still a tax base under the statute. Therefore, while the lack of mining in the subsequent years would reduce the five-year average, it did not eliminate the tax. Respondents argued that the temporary status of the idling was an important distinction under the law because it meant there was still merchantable iron ore on the property, which was a reason for subjecting petitioners to the tax. Respondents argued that for petitioners to escape the iron ore tax before the five-year average expired, petitioners would have to prove that there was no more merchantable low-grade iron ore on the property. Considering the documentary evidence suggesting that the Empire Mine would be reopening imminently, respondents contended that there was obviously still iron ore on the property.

In response, petitioners argued that respondents had overlooked whether the iron ore tax applied to petitioners, and instead, had improperly focused on how the tax should be calculated. Before reaching the issue of how to calculate the tax, petitioners contended, one must first consider whether they were subject to the tax. In order to do so, respondents were required to prove that there was specific statutory authority for assessing the iron ore tax. The act relied on by respondents in this case, creating the iron ore tax, provides that it is applicable to "low grade iron ore mining property." MCL 211.621 et seq. Despite that language, respondents did not provide any explanation regarding whether the property in question was a "low grade iron ore mining property." If they had, they would have found that the statute defines a "low grade iron ore mining property" as "mineral bearing land from which low grade iron ore is mined," MCL 211.621(b). Petitioners noted that the statute is written in the present tense, so it does not apply to property that was previously mined but was not presently being mined. Because the record showed that the property in question was not mined for the tax years in question, petitioners asserted that the iron ore tax was wholly inapplicable to the property. Further, because the tax did not apply, petitioners asserted that the method of calculation was irrelevant, the assessment of the tax must be canceled, respondents’ motion for summary disposition should be denied, and the Tribunal should grant summary disposition in favor of petitioners under MCR 2.116(I)(2).

Respondents countered that under the rules of statutory interpretation, the phrase "is mined" was not properly read as the present-tense form of a verb. Rather, it is merely a phrase describing the land subject to the statute. When considering the language of the statute in that light, it is clear that the Legislature intended the iron ore tax to apply to property that had been mined, is currently mined, or would imminently be mined in the future. Citing other statutes that pertain to mining, respondents argued that the Legislature had shown that when it wanted to refer only to property actively being mined, it would use phrases expressly stating that, such as "is being mined," "currently being mined," and "presently being mined." Alternatively, relying on caselaw, respondents argued that the Legislature's use of the present tense has often been construed to include the past tense as well. Finally, respondents argued that their interpretation of the phrase "is mined" avoided absurd results and did not render any part of the statute nugatory.

On November 14, 2019, an Administrative Law Judge (ALJ) issued a proposed opinion denying respondents’ motion for summary disposition, granting petitioners’ motion for summary disposition, and awarding a final judgment canceling the iron ore tax for petitioners. Respondents filed exceptions to the proposed orders and judgment in favor of petitioners. Thereafter, adopting the conclusion of the ALJ, the Tribunal denied respondents’ motion for summary disposition, granted summary disposition in favor of petitioners, canceled respondents’ assessment of the iron ore tax, and ordered respondents to cure the issues within 28 days. Respondents moved for reconsideration, which the Tribunal denied.

II. IRON ORE TAX

A. STANDARD OF REVIEW

"Unless there is fraud, this Court's review of [Tribunal] decisions is limited to determining whether the [Tribunal] erred in applying the law or adopted a wrong legal principle." West Mich. Annual Conference of United Methodist Church v. Grand Rapids , 336 Mich. App. 132, 137, 969 N.W.2d 813, (2021) (quotation marks and citation omitted). "Issues of statutory interpretation are reviewed de novo." Emagine Entertainment, Inc. v. Dep't of Treasury , 334 Mich. App. 658, 663, 965 N.W.2d 720 (2020). Although agency interpretations of a statute are entitled to "respectful consideration," "they are not binding on courts and cannot conflict with the plain meaning of the statute." In re Complaint of Rovas Against SBC Mich. , 482 Mich. 90, 117-118, 754 N.W.2d 259 (2008). "Additionally, we review de novo a decision on summary disposition." Emagine Entertainment , 334 Mich. App. at 663, 965 N.W.2d 720. It is proper to grant summary disposition to the opposing party under MCR 2.116(I)(2) "if it appears to the court that that party, rather than the moving party, is entitled to judgment." West Mich. Annual Conference of United Methodist Church , 336...