A New York State Administrative Law Judge has held that Costco was not entitled to an exemption from sales tax for the purchase of utilities used to power the pan, pot, and kettle washers that it employed to clean production equipment that was used in producing baked goods sold in its stores. Matter of Costco Wholesale Corporation, DTA No. 825882 (N.Y.S. Div. of Tax App., Aug. 27, 2015). The ALJ rejected Costco’s argument that the utilities consumed by the pan washers, which were needed to comply with federal Food and Drug Administration sanitary requirements, qualified for the exemption from sales tax because they were used to create conditions necessary to complete the production process. The ALJ found that, under the statute and regulations, in order to qualify as exempt, the utilities must be used during the production phase of the process, and the utilities in question did not qualify because they “were used to clean and sanitize equipment before it ever came into contact with raw materials in the production process.”