JAY – The state’s highest court has upheld a power plant’s state-certified tax exemption on a $3.9 million air pollution control system. The decision means the town won’t be able to collect an additional $60,840 in property taxes annually.

Androscoggin Energy LLC pays about $1.3 million in taxes yearly to the town. Its natural gas-fired power plant, located at International Paper’s Androscoggin Mill site in Jay, produces steam for sale to IP and electricity for sale to the regional power market and IP.

Jay selectmen appealed a Kennebec County Superior Court decision last summer that affirmed state environmental officials granting a property tax exemption for the plant’s dry low nitrogen oxide combustion systems.

Maine Judicial Supreme Court affirmed the Superior Court’s decision Thursday.

“Obviously, we are disappointed by the court’s ruling,” said Gerald Petruccelli, Jay’s environmental advisory counsel. “We hope that there will not be a lot more cases like this one. Our concern from the beginning has been the possibility that all kinds of manufacturing equipment will become tax exempt because its owners say it pollutes less than some alternative manufacturing equipment. If there are other questionable applications in the future, we will have to review them as they come.”

Androscoggin Energy’s attorney Pat Scully said the company was “pleased” with the decision.

“They pay about $1.3 million in property taxes to Jay, so they believe they are making a substantial contribution to the town’s tax burden,” Scully said. “And for that reason we think it’s appropriate that they should not pay additional property taxes on air pollution control equipment that they were required to install by the town of Jay and the DEP.”

The town’s attorney’s contended that the Board of Environmental Protection erred as a matter of law when it concluded that the power plant’s combustion system fits within the statutory definition of a “facility,” serves a pollution control function and was installed for the primary prose of pollution control.

The company’s attorney claimed the combustion system was installed to meet state and local regulations to reduce air pollution.

The high court agreed with the Bureau of Environmental Protection’s conclusion that the primary motivation behind installing the system was reduction of an industrial air pollutant and that system qualified as a tax-exempt air pollution control facility because its primary purpose was “reducing, controlling, eliminating or disposing of industrial air pollutants.”

The high court ruled that the BEP did not commit legal error in determining that the primary purpose of the system is pollution control when this upgrade brought turbines already owned by Androscoggin Energy into compliance with environmental regulations.

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