## Facts

- Government regulators oversaw remediation of contaminated sediment in the Lower Fox River.
- Lower Fox River Remediation LLC contracted with Tetra Tech EC, Inc. to dredge and treat contaminated river sediment.
- Tetra Tech’s work included dredging sediment and using mechanical and hydraulic methods to separate it into reusable sand, wastewater for treatment, and waste sludge for disposal.
- The Wisconsin Department of Revenue assessed sales and use tax on the portion of Tetra Tech’s contract it treated as taxable “processing” under Wis. Stat. § 77.52(2)(a)11 (2007–08).
- Tetra Tech challenged the assessment through the Tax Appeals Commission and judicial review, arguing the work was not “processing” and that courts should not defer to the agency’s statutory interpretation.

## Issues

1. Whether separating dredged river sediment into reusable sand, water, and waste sludge constitutes taxable “processing” of tangible personal property under Wis. Stat. § 77.52(2)(a)11.
2. Whether Wisconsin courts should continue applying “controlling weight” and “great weight” deference to administrative agencies’ interpretations of statutes consistent with the Wisconsin Constitution’s vesting of judicial power in the courts.

## Decision

- The Wisconsin Supreme Court affirmed the court of appeals and upheld the tax assessment.
- The court held that “processing” in Wis. Stat. § 77.52(2)(a)11 includes separating river sediment into its component parts; Tetra Tech’s activities were taxable “processing.”
- The court ended the doctrines of “controlling weight” and “great weight” deference to agency conclusions of law.
- Going forward, courts independently decide questions of law, while giving “due weight” to an agency’s experience, technical competence, and specialized knowledge under Wis. Stat. § 227.57(10).

## Legal Principles

- “Processing” under Wis. Stat. § 77.52(2)(a)11 is construed broadly and can include sophisticated separation of mixed material into distinct components, even if the outputs are familiar substances in different proportions or purities.
- Statutory interpretation is an exercise of judicial power; courts may not cede authoritative interpretive control to an administrative agency through binding deference doctrines.
- Under Wis. Stat. § 227.57(10), agency expertise may be considered as persuasive “due weight,” but courts decide legal questions de novo and do not defer in the sense of yielding interpretive authority.

## Conclusion

The court held that Tetra Tech’s sediment-separation work was taxable “processing” under Wisconsin’s sales and use tax statute and simultaneously reoriented Wisconsin administrative law by rejecting controlling and great-weight deference, requiring independent judicial interpretation with only nonbinding consideration of agency expertise.


Tetra Tech EC, Inc. v. Wis. Dep’t of Revenue, 2018 WI 75, 382 Wis. 2d 496, 914 N.W.2d 21 (2018)