# Pepcol Mfg. Co. v. Commissioner

> United States Tax Court · February 5, 1992 · 98 T.C. 127

URL: https://www.frixlaw.com/law-library/cases/4486628

## Case

- **Full name:** Pepcol Manufacturing Co. v. Commissioner of Internal Revenue
- **Court:** United States Tax Court
- **Decided:** February 5, 1992
- **Citations:** 98 T.C. 127; 98 T.C. No. 11; 1992 U.S. Tax Ct. LEXIS 14
- **Precedential status:** Published
- **Opinion:** Concurrence by Ruwe
- **Judges:** Tannenwald,Nims,Chabot,Korner,Shields,Hamblen,Cohen,Swift,Jacobs,Gerber,Wright,Parr,Wells,Ruwe,Whalen,Colvin,Beghe,Ruwe,Korner,Swift,Halpern
- **Cited by:** 8 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4486628

## Opinion text

RUWE, J., concurring: The process that transforms animals into finished products such as meat, hides, bone gelatin, and bone meal, appears to be an ongoing process that transforms raw materials (animals) into saleable products. Based on the facts presented, it is unclear whether any solid animal parts produced in the meat fabrication process are traditionally removed and disposed of as waste. Without such a finding, I would normally not be able to conclude that a legislative regulation excluding animal parts from being considered “solid waste” was arbitrary, capricious, or manifestly contrary to the statute which is the standard that must be met for invalidating a legislative regulation. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-844 (1984); Peoples Federal Savings & Loan Association of Sidney v. Commissioner, 948 F.2d 289 (6th Cir. 1991).
I am not convinced that section 1.48-9, Income Tax Regs., requires the result reached by the majority. To be sure, the use of the term “animal waste” in the regulation is confusing, but the result of excluding all animal parts from being considered as “solid waste”, for purposes of defining “recovery equipment”, is not unreasonable if all parts of the slaughtered animal are traditionally used as raw material to be processed into a finished product. The regulation's inclusion of “animal waste” as “solid waste”, for purposes of defining “conversion equipment”, could be justified on the grounds that if animal parts are converted to fuel or energy, their use for that purpose is so unusual that it justifies the conclusion that such animal parts had no other use in a forwarding-moving process of transforming raw materials into a finished product. Under such circumstances, animal parts converted into fuel or energy could be considered waste and the equipment used to convert them into fuel or energy would, by statute, be included within the term “recycling equipment”.
Any possibility of justifying the validity of the regulation by employing this rationale and then applying the regulation to the facts in this case was effectively eliminated by respondent's concession that animal bone is a “solid waste”. This concession completely undercuts respondent's arguments. In the context of a manufacturing or processing cycle, waste is something that is of no further use in the manufacturing or processing cycle. Waste would either be disposed of as garbage or “recycled”. Thus, respondent's concession takes animal bone out of the traditional processing cycle in the meat fabrication business. Any further use of the bones would be “recycling” of solid waste and the equipment so used would fall within the explicit statutory definition of “recycling equipment”.
KÓRNER and Swift, JJ., agree with this concurring opinion.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4486628. Public record. Not legal advice.