Despite multiple allegations of state and federal constitutional violations, the Indiana Tax Court decided Wednesday that a state tax statute requiring steel mills to operate blast furnaces in Indiana to receive a certain classification on their personal property taxes will stand.
The Indiana General Assembly enacted a statute in 2003 that allowed integrated steel mills to value their “special equipment” in according with a valuation table known as Pool 5 for purposes of the state’s personal property tax. A steel mill was defined as “a person that produces steel by processing iron ore and other raw materials in a blast furnace.”
AK Steel Corp., which opened its Rockport Works location in Rockport in 1998, used Pool 5 to report the value of its personal property in Indiana in 2004. However, a 2005 legislative amendment that retroactively went into effect Jan. 1, 2004, changed the definition of an integrated steel mill to require use of a blast furnace “in Indiana.”
AK Steel used blast furnaces at its Ohio and Kentucky locations, but not at its Rockport location. However, the steel company continued to report its personal property value under Pool 5. The Spencer County assessor rejected its personal property value in 2008 because it did not qualify for Pool 5, so AK Steel appealed to the county Property Tax Assessment Board of Appeals, which also rejected the company’s valuation.
AK Steel then appealed to the Indiana Board of Tax Review, claiming that the requirement that blast furnace use be in Indiana was unconstitutional. Although the board acknowledged that the steel company was eligible for Pool 5 on all accounts except for the “in Indiana” requirement, it also said it did not have authority to resolve a constitutional challenge and, thus, affirmed the appellate board’s decision.
The company then brought its constitutional challenge before the Tax Court in Spencer County Assessor and Grass Township Assessor v. AK Steel Corporation, 49T10-1306-TA-00057, with the assessors’ offices also filing appeals on the basis that other portions of the Indiana Code prohibit AK Steel from qualifying for Pool 5.
Specifically, the assessors said the code defines an integrated steel mill as a person, meaning a facility, and that the Rockport Works, as a facility, does not use a blast furnace.
But the Tax Court rejected the assessors’ arguments, writing that the statute never equates a person with only a facility.
However, the Tax Court also rejected AK Steel’s constitutional challenge, writing that the state had a legitimate purpose for adding the “in Indiana” language and that such language did not violate 14th Amendment rights to equal protection, as AK Steel had argued. Similarly, the court also found that the company’s due process rights were not violated because of the state Legislature’s legitimate reason for adding the language to the statute.
Further, the Tax Court wrote that the steel company also failed to show proof that the “in Indiana” requirement violated the federal commerce clause.
AK Steel also tried to further its case by alleging violations to portions of the Indiana Constitution prohibiting “special laws” and requiring “a uniform and equal rate of property assessment and taxation,” but the Tax Court rejected each of those arguments, as well.