Reed Smith Marcellus Shale Tax Update

Pennsylvania's broad mining exemption from sales and use tax also includes an exemption for pollution-control devices that is less well known than the general exemption for mining equipment. The pollution-control exemption covers all purchases or use of equipment, machinery, and supplies used to control, abate or prevent air, water, or noise pollution generated in mining operations.¹ In fact, in an often-cited decision, the Pennsylvania Commonwealth Court held that the sales and use tax exemption for pollution-control devices is very broad.² In Kelly Run, for example, the court held that bulldozers, cranes, containers, and a "Trashmaster," were exempt from tax under the pollution-control exemption.³ The court stated that the "items are used only to dispose of industrial wastes, two-thirds of which are hazardous. Since these pieces of equipment are used as pollution control devices more than half of the time, [they are] exempt from the sales tax."⁴ Thus, under the case