                            STATE OF MICHIGAN

                            COURT OF APPEALS



TOMRA OF NORTH AMERICA, INC.,                                       FOR PUBLICATION
                                                                    July 17, 2018
               Plaintiff-Appellant,

V                                                                   No. 336871
                                                                    Court of Claims
DEPARTMENT OF TREASURY,                                             LC Nos. 16-000118-MT

               Defendant-Appellee.


TOMRA OF NORTH AMERICA, INC.,

               Plaintiff-Appellant,

v                                                                   No. 337663
                                                                    Court of Claims
DEPARTMENT OF TREASURY,                                             LC No. 14-000091-MT

               Defendant-Appellee.


Before: GADOLA, P.J., and K. F. KELLY and RIORDAN, JJ.

K. F. KELLY (dissenting.)

        I respectfully dissent. Because the machines are not involved in “industrial processing”
as that term is defined in MCL 205.54t(7)(a), I would affirm the Court of Claims well-reasoned
decision.

       The analysis in this case should begin and end with the statutory definition of “industrial
processing” as set forth in subsection 54t(7)(a), which provides:

       “Industrial processing” means the activity of converting or conditioning tangible
       personal property by changing the form, composition, quality, combination, or
       character of the property for ultimate sale at retail or for use in the manufacturing
       of a product to be ultimately sold at retail. Industrial processing begins when
       tangible personal property begins movement from raw materials storage to begin
       industrial processing and ends when finished goods first come to rest in finished
       goods inventory storage. [Emphasis added.]

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“When a statute specifically defines a given term, that definition alone controls.” Haynes v
Neshewat, 477 Mich 29, 35; 729 NW2d 488 (2007). However, rather than focusing on the
legislature’s definition of “industrial processing” in section 54t(7)(a), the majority mistakenly
looks to those activities specifically enumerated in subsection 54t(3). Contrary to the majority’s
conclusion, subsection 54t(3) does not expand the definition specifically set forth in subsection
54t(7)(a). Rather, as the Court of Claims aptly noted, subsection 54t(7)(a) has a temporal
requirement that must be met before the activities in subsection 54t(3) are even considered. That
is, only after the definition in subsection 54t(7)(a) is met do the activities set forth in subsection
54t(3) have any relevance. Those activities must occur within the statutory defined time period
in subsection 54t(7)(a).

        The Court of Claims correctly recognized that the machines perform activities before the
industrial process begins. The machines may sort, separate, and compress items and, in that
regard, some processing necessarily occurs. However, while some processing may occur, the
machines do not perform “industrial processing” as statutorily defined. Instead, the machines
simply facilitate the collection of raw materials. In order to be exempt, the machines must
perform an activity at some point after tangible personal property begins movement from raw
material storage and before the finished goods first come to rest in inventory. The machines in
this case are used before the start of the industrial process and, therefore, the equipment is not
exempt. Thus, any inspection, quality control, and recycling that the machines perform is
irrelevant because those activities take place before the industrial process begins.1

        The majority erroneously concludes that the Court of Claims made its decision contingent
on the existence of raw materials. However, it is clear that the Court of Claims made no such
finding. Instead, the Court of Claims appropriately recognized that where, as here, there is raw
material, then the industrial process begins when tangible personal property begins movement
from raw materials storage to begin industrial processing. In so doing, the Court of Claims was
faithful to the definition as set forth by our legislature.

         I find plaintiff’s reliance on Detroit Edison Co v Dep’t of Treasury, 498 Mich 28; 869
NW2d 810 (2015) unavailing. The focus in the Detroit Edison case involved electricity. The
issue was not whether there was raw storage, but whether electricity ever “came to rest” in
inventory storage. Our Supreme Court concluded “industrial processing of electricity does not
become complete until final distribution to the consumer because there is simply no point within
the electric system at which ‘finished goods first come to rest in finished goods inventory
storage’ before that point.” Id. at 42. Our Supreme Court further concluded that “the nonexempt
activities in MCL 205.94o(6)(b) are in no way within the scope of MCL 205.94o(7)(a), and the
exempt activity in MCL 205.94o(7)(a) is in no way within the scope of MCL 205.94o(6)(b).” Id.



1
  The record does not reflect whether any of these raw materials are ever, in fact, recycled into a
finished product. It is just as likely that they will come to rest in a landfill in the United States or
abroad. For example, see https://www.nytimes.com/2018/05/29/climate/recycling-landfills-
plastic-papers.html; https://www.npr.org/sections/goatsandsoda/2018/06/28/623972937/china-
has-refused-to-recycle-the-wests-plastics-what-now.


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at 45. Therefore, as applied to the statutes at issue here, once there is industrial processing as
defined in 54t(7)(a), the exclusions set forth in 54t(6) no longer apply. The only premise that
Detroit Edison confirmed was that subsection 54t(6) does not modify the definition in subsection
54t(7)(a). Again, the Court of Claims did not rely on subsection 54t(6), which excluded storage
of raw material as an industrial activity, and relied exclusively on the statutory definition of
industrial process in subsection 54t(7)(a).

       Because the machines perform activities that occur before an industrial process begins, I
would affirm.

                                                            /s/ Kirsten Frank Kelly




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