A New York appellate court denied a nuclear power company’s bid for manufacturing tax credits, finding that equipment used at two power plants to produce steam and water during the electricity generation process was not used for manufacturing. The taxpayer argued that the process of creating steam and water – both qualifying “goods” for purposes of the credit – should be viewed separately from the process of generating electricity, which is excluded from the credit. In rejecting the taxpayer’s claim, the court explained that the power plants were engaged in the “unitary process” of generating electricity, and that it was inappropriate to “artificially divide” the production of water and steam from the production of electricity for tax purposes. Even after analyzing the claimed equipment in isolation, the court found that it was not used for manufacturing: “Here, the water that is converted to steam by petitioner’s assets is then converted back to its original form as water and then to steam again in an ongoing, continuous cycle that makes no permanent change in the water and yields no final product. This is more akin to recycling than to manufacturing.” Constellation Nuclear Power Plants LLC v. Tax Appeals Tribunal, 2015 NY Slip Op. 06183 (N.Y. App. Div. July 16, 2015).