Sterigenics International v. County of Orange

Sterigenics International appeals a judgment entered in favor of the County of Orange, arguing the trial court erred in finding the cobalt 60 it uses to irradiate its customers’ products fails to come within the business inventory exemption of Revenue and Taxation Code section 219. We affirm because, as used by Sterigenics, the cobalt 60 functions not as inventory, but as material used in the process of providing a service to its customers and is not an item regularly delivered as part of the provided service.

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Exposing naturally occurring cobalt 59 to high levels of neutron radiation results in the production of cobalt 60, which gives off radiation as it decays, altering the atomic structure of items exposed to it. This process, known as irradiation, is used to cure wood products, strengthen plastics, and improve the color of precious stones. It is also used to sterilize medical equipment products. The amount of radioactivity an item receives is determined by its proximity to the cobalt 60 and the duration of exposure.

Sterigenics stores cobalt 60 in cylindrical containers, exposing its customers’ products to the resulting radiation. In 1989, the county assessed…