
    OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES OXFORD TIRE SUPPLY, INC. v. COMMISSIONER OF REVENUE SERVICES
    Superior Court Tax Session
    File Nos. CV960564091 CV960564092
    Memorandum filed December 16, 1998
    
      
      Cummings & Lockwood, for the plaintiff.
    
      Jonathon L. Ensign, assistant attorney general, with whom was Richard Blumenthal, attorney general, for the defendant.
   MCWEENY, J.

The plaintiff, Oxford Tire Supply, Inc., (Oxford), in these consolidated cases appeals the denial by the defendant, the commissioner of revenue services (commissioner), of Oxford’s protests and petitions for reassessments of sales and use taxes, interest and penalties. The taxes at issue relate to Oxford’s service of collecting scrap tires. A taxpayer’s appeal from such decisions is authorized pursuant to General Statutes § 12-422. The Superior Court has full equitable powers in such appeals and provides a trial de novo. Gallacher v. Commissioner of Revenue Services, 221 Conn. 166, 176, 602 A.2d 996 (1992); Kimberly Clark Corp. v. Dubno, 204 Conn. 137, 144, 527 A.2d 679 (1987).

The dispositive issue in these consolidated cases is whether the service of collecting scrap tires falls within the exemption from the sales and use tax of General Statutes § 12-407 (2) (i) (I) for “services rendered in the . . . removal of hazardous waste, as defined in [General Statutes §] 22a-115, or other contaminants of air, water or soil . . . .’’If such service falls within this exception, then the commissioner has improperly assessed all taxes at issue. The inquiry thus becomes whether the scrap tires removed by Oxford constitute “hazardous waste” or “other contaminants of air, water or soil . . . .” General Statutes § 12-407. The court finds that scrap tires are “hazardous waste” and rules for the plaintiff.

Oxford is a service company that annually collects millions of tires, which are delivered to a tire burning facility. The sources of tires (commercial gas stations, tire stores, etc.) pay Oxford a fee for removing and disposing of the tires. The department of environmental protection (department) classifies tires as “special waste,” which requires special handling, storage, disposal and processing. Regs., Conn. State Agencies § 22a-209-8.

Oxford argues that scrap tires are hazardous waste as defined in § 22a-115 (l) or other contaminant of air, water or soil. The commissioner claims that scrap tires are not hazardous waste but rather special waste pursuant to § 22a-209-l of the Regulations of Connecticut State Agencies.

The evidence at trial consisted of a stipulation of facts, substantial documentary evidence and testimony. At trial, Oxford was obligated to overcome the presumption of General Statutes § 12-410 (1) that all gross receipts are subject to sales tax, and the high burden on taxpayers claiming exemption. See Plastic Tooling Aids Laboratory, Inc. v. Commissioner of Revenue Services, 213 Conn. 365, 369, 567 A.2d 1218 (1990).

Oxford has met its burden of proving that scrap tire pickup services quality for the § 12-407 (2) (i) (1) exemption as hazardous waste.

At trial, Oxford introduced the testimony of John Schaub, who established the nature of the scrap tire disposal problem and the role of Oxford in the elimination of such waste. The commissioner’s witnesses did not dispute the problematic nature of scrap tires. Schaub testified to the fire hazard of scrap tires and their break down in the environment. He stated that “basically tires do leach several components and pretty much on a constant basis.” Schaub’s testimony further established that tires create problems with respect to fire potential. Tires burn and such fires are difficult to suppress. Tire fires release contaminants into the environment. Tires may combust spontaneously into fire in landfills. Tires are breeding sites for vectors such as mosquitoes, rodents and snakes.

The most critical evidence at trial was the testimony of Kirk Brown, an expert in waste management, and his incorporation of studies reflecting the hazardous nature of scrap tires. Brown is an agronomist with a special area of expertise in soil contamination. Brown testified that “[u]nder normal landfill conditions, under conditions where they’re placed in stacks . . . [ujnder all those conditions, it’s my opinion that they would leach hazardous substances.” Included within such leachate would be: (1) volatile chemicals, including carbon disulfide, toluene and methyl ethyl ketone; (2) metals including zinc, arsenic, chromium, cadmium, barium, lead, selenium and mercury; and (3) polynuclear aromatic hydrocarbons, including known chemical carcinogens as well as other components.

The testimony of Schaub and Brown confirmed the obvious observation that the leaching would increase over time as a tire was left in the environment. The department’s toxicity tests demonstrate that waste tires are generally not subject to leaking except for small quantities of barium. A department test of the water at the Hamden Tire Pond found grease, iron, turbidity and phenol. The department has ordered the Hamden Tire Pond closed and remedial action to be taken, including removal of all exposed tires.

A critical element of testimony by Brown concerned the composition of tires. He stated that the substances in tires leach because “[t]hey’re not chemically bound. Particularly, the volatile substances are going to diffuse out just along concentration gradients. And the metals are not chemically bound. They’re kind of residues left over as a result of the processing, and it’s just a matter of the tires breaking down or releasing those.” Thus, refusé tires that deteriorate under normal environmental conditions, are distinguishable from other products that may contain hazardous chemicals, which if encapsulated, are not readily released into the environment.

The Exeter tire burning plant discharges in its water runoff contaminants as evidenced by the department’s “fleas and minnows” test. The ash resulting from the burning of tires is classified as hazardous waste.

Brown, though not a chemist, is an expert in waste management. His opinions were supported by numerous studies. The scientific evidence provided by Brown meets the standard for admission of scientific evidence established in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993), and adopted for Connecticut courts in State v. Porter, 241 Conn. 57, 68, 698 A.2d 739 (1997), cert. denied, 523 U.S. 1058, 118 S. Ct. 1384, 140 L. Ed. 2d 645 (1998).

The hazardous waste definition of § 22a-115 (1) adopts the federal definition of hazardous waste contained in 40 C.F.R. § 261.2 (a) (2). The characteristics identified in federal regulations 40 C.F.R. §§ 262.21 through 262.24 are ignitability, corrosivity, reactivity or toxicity.

The combustion risk of tires (including the risk of spontaneous combustion) clearly satisfies the ignitability criteria as it “is capable, under standard temperature and pressure, of causing fire through friction, absorption of moisture or spontaneous chemical changes and, when ignited, burns so vigorously and persistently that it creates a hazard.” 40 C.F.R. § 261.21 (a) (2). The major component of tires is petroleum, which is highly flammable and creates noxious, hard to extinguish, conflagrations. The federal standard of hazardous waste is satisfied if a solid waste exhibits any of the four identified characteristics. 40 C.F.R. § 262.20 (a).

The essence of the definition of hazardous waste is waste material “which may pose a present or potential hazard to human health or the environment when improperly disposed of, treated, stored, transported or otherwise managed . . . .” General Statutes § 22a-115 (1).

Waste tires represent threats to the groundwater, air and soil. The evidence at trial indicated that in addition to the leaching into the soil and groundwater, tire components may vaporize into the air.

Garages, tire shops, etc., are mandated to dispose of tires by paying Oxford to remove and dispose of them in a regulated manner. Regs., Conn. State Agencies § 22a-209-8.

The department claims that the § 12-407 (2) (i) (I) exception is limited to specific hazardous waste site cleanup. The court, even reading the tax exemption narrowly, is unable to add such language of limitation. The clear meaning of the statute is to cover services rendered in the removal of hazardous waste. “In matters of statutory interpretation, we are guided by well established principles, paramount among which is the principle that [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. . . . In seeking to discern that intent, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter. . . . State v. Spears, 234 Conn. 78, 86-87, 662 A.2d 80, cert. denied, 516 U.S. 1009, 116 S. Ct. 565, 133 L. Ed. 2d 490 (1995).” (Internal quotation marks omitted.) Connecticut Assn. of Not-for-Profit Providers for the Aging v. Dept. of Social Services, 244 Conn. 378, 391, 709 A.2d 1116 (1998).

Based upon the persuasive evidence presented by Oxford that scrap tires are “hazardous waste,” the court enters judgment for Oxford. The commissioner is ordered to refund the sales and use taxes, interest and penalties paid under protest on January 30, 1997, for the tax years 1989 through 1994. 
      
       Exeter Energy at its facility in Sterling bums approximately ten million tires annually, disposing of the scrap tires and generating energy, which is sold to utilities.
     
      
       General Statutes § 22a-115 (1) provides: “ ‘Hazardous waste’ means any waste material, except by-product material, source material or special nuclear material, as defined in section 22a-151, which may pose a present or potential hazard to human health or the environment when improperly disposed of, treated, stored, transported, or otherwise managed, including (A) hazardous waste identified in accordance with Section 3001 of the federal Resource Conservation and Recovery Act of 1976 (42 USC 6901 et seq.), (B) hazardous waste identified by regulation by the Department of Environmental Protection and (C) polychlorinated biphenyls in concentrations greater than fifty parts per million . . . .” General Statutes § 12-407 (s) (i) (1), the sales tax statute, refers to “hazardous waste as defined in section 22a-115.”
     
      
       Section 22a-209-l of the Regulations of Connecticut State Agencies provides in pertinent part: “ ‘Special wastes’ means the following wastes, so long as they are not hazardous waste pursuant to. section 22a-115 of the Genej'al Statutes or radioactive material subject to section 22a-148 of the General Statutes: (1) water treatment, sewage treatment or industrial sludges, liquid, solids and contained gases; fly-ash and casting sands or slag; and contaminated dredge spoils; (2) scrap tires; (3) bulky waste, as defined in this section; (4) asbestos; (5) residue; and (6) biomedical waste.” (Emphasis added.) The commissioner considers asbestos to be a hazardous waste; therefore, asbestos removal, containment and disposal services are exempt from sales tax.
     
      
       Even if the court were to find that the scrap tires were not “hazardous waste,” they would certainly constitute “other contaminants of air, water and soil,” based upon the evidence presented at the trial as to their composition and propensity to break down.
     