Cleco Evangeline v. Louisiana Tax Com'n

• Decision Date: 03 April 2002
• Docket Number: No. 2001-C-2162.,2001-C-2162.
• Citation: 813 So.2d 351
• Parties: CLECO EVANGELINE, LLC, v. LOUISIANA TAX COMMISSION.
• Court: Louisiana Supreme Court

813 So.2d 351

CLECO EVANGELINE, LLC, v. LOUISIANA TAX COMMISSION.

No. 2001-C-2162.

Supreme Court of Louisiana.

April 3, 2002.

Brian A. Eddington, Theodore L. Jones, Baton Rouge, Counsel for Applicant.

Robert S. Angelico, Cheryl M. Kornick, Liskow & Lewis, New Orleans, Counsel for Respondent.

William M. Backstrom, Jr., Edward H. Bergin, Miriam W. Henry, New Orleans, David M. Mackintosh, Counsel for Louisiana Generating LLC (Amicus Curiae).

Luke F. Piontek, Baton Rouge, Counsel for Sempra Energy Resources (Amicus Curiae).

Christopher J. Dicharry, Phyllis D. Sims, Counsel for Williams Energy Marketing & Trading Co., Dynegy Inc., Louisiana Mid-Continent Oil & Gas Association, Louisiana Association of Business (Amicus Curiae).

Walter R. House, Jr., Daryl K. Manning, Baton Rouge, Counsel for Louisiana Department of Economic Development (Amicus Curiae).

WEIMER, Justice.

We granted a writ in this matter to resolve an issue of first impression that arises from the interpretation of a state taxing provision. Specifically, we must determine if Cleco Evangeline, LLC, a wholesale electric-power generating plant, is an "electric power company," as defined in LSA-R.S. 47:1851(E), thus having its property constitute "public service properties," as defined in LSA-R.S. 47:1851(M), or whether its property constitutes "other property" for purposes of assessing ad valorem taxes pursuant to La. Const. Art. VII, § 18(B). For the following reasons, we affirm the decisions of the trial court and the court of appeal, which found the property at issue is not public service property.

BACKGROUND

The following facts, including the structure of various Cleco entities, are undisputed. Cleco Evangeline, LLC (Cleco Evangeline) is constructing a new, wholesale electric-power manufacturing facility in Evangeline Parish (Evangeline plant). The parent, Cleco Corporation, is a holding company that owns both regulated and non-regulated entities. Cleco Utility Group, Inc., is the parent of the entities that are regulated by the Louisiana Public Service Commission (LPSC). On the other side of the corporate structure, Cleco Midstream Resources is the parent company of Cleco's non-regulated entities, including Cleco Evangeline. The non-regulated companies are separate from the regulated companies. Cleco Evangeline was specifically formed to own and build the Evangeline wholesale facility (Evangeline plant), and it has no involvement with the regulated side of the Cleco companies. The completed Evangeline plant will be funded separately by private investors. By order issued March 25, 1999, the LPSC declined to exercise its regulatory jurisdiction over the new facility, determining that the property should not be included in the valuation of the rate base for the regulated entity, Cleco Utility Group, Inc.

In sum, the new Evangeline plant is a non-regulated entity owned by another non-regulated entity. Eventually, the Evangeline plant will be funded by private investors and will be operated separately from Cleco Utility Group, Inc., the regulated public utility company. When it is operational, the Evangeline plant will engage primarily in the business of manufacturing, generating and supplying electricity for sale exclusively on the wholesale market, not to the general public or to the ultimate consumer.

On March 30, 1999, Robert A. Pulaski, controller for Cleco Corporation, sent a letter to the Evangeline Parish Assessor regarding the assessment locally of the Evangeline plant at the ad valorem property tax rate of 15 percent of the property's fair market value. On June 8, 1999, the Louisiana Tax Commission (LTC) notified Cleco of its finding that the Evangeline plant was "public service property," which must be assessed centrally by the State at an ad valorem property tax rate of 25 percent of the property's fair market value. Thus, the determination to we made is whether the property will be assessed locally at 15 percent or by the State at 25 percent.

Cleco Evangeline filed a formal protest of the LTC's determination, and the matter was heard before the LTC on November 3, 1999. On February 22, 2000, the LTC issued a ruling that the Evangeline plant was public service property and would be centrally assessed by the LTC at 25 percent of fair market value.

Cleco Evangeline sought review of the LTC ruling in the Nineteenth Judicial District Court for the Parish of East Baton Rouge. On January 29, 2001, the district court, with the Honorable John Perry, Jr., Judge Pro Tempore presiding, reversed the LTC's ruling, holding the Evangeline plant was not public service property and should be assessed locally at 15 percent.

The LTC perfected an appeal to the Court of Appeal, First Circuit. On June 22, 2001, the appellate court rendered an opinion affirming the decision of the district court. LTC filed an application for writ of certiorari.

DISCUSSION

The sole issue before us is a question of law which seeks the correct interpretation of definitions of "electric power company" in LSA-R.S. 47:1851(E) and "public service properties" in LSR.S. 47:1851(M) and their application in the ad valorem tax provision of La. Const. Art. VII, § 18(B). We review the matter de novo, and render judgment on the record, without deference to the legal conclusions of the tribunals below. This court is the ultimate arbiter of the meaning of the laws of this state. Washington-St.-Tammany Electrical Cooperative, Inc. v. Louisiana Public Service Commission, 95-1932, p. 6 (La.4/8/96), 671 So.2d 908, 912.

The Louisiana Constitution, Article VII, § 18 provides in pertinent part:

(A) Assessments. Property subject to ad valorem taxation shall be listed on the assessment rolls at its assessed valuation, which ... shall be a percentage of its fair market value. The percentage of fair market value shall be uniform throughout the state upon the same class of property.

(B) Classification. The classifications of property subject to ad valorem taxation and the percentage of fair market value applicable to each classification for the purpose of determining assessed valuation are as follows:

Classifications Percentages 1. Land 10% 2. Improvements for residential purposes 10% 3. Electric cooperative properties excluding land 15% 4. Public service properties, excluding land 25% 5. Other property 15%

The legislature may enact laws defining electric cooperative properties and public service properties.

. . . .

(D) Valuation. Each assessor shall determine the fair market value of all property subject to taxation within his respective parish or district except public service properties, which shall be valued at fair market value by the Louisiana Tax Commission or its successor.

Pursuant to this constitutional provision, the legislature has defined public service properties in LSA-R.S. 47:1851(M), which provides in pertinent part:

"Public service properties" means the immovable, major movable, and other movable property owned or used but not otherwise assessed in this state in the operations of each airline, electric membership corporation, electric power company, express company, gas company, pipeline company, railroad company, telegraph company, telephone company and water company. [Emphasis provided.]

Section (E) of LSA-R.S. 47:1851 provides the definition of electric power company:

"Electric power company" means a company primarily engaged in the business of manufacturing, generating, supplying, or manufacturing, generating and supplying electricity for light, heat, or power to consumers in this state.

Cleco and LTC agree that the Evangeline plant will be primarily engaged in the business of manufacturing, generating, and supplying electricity, but the output of its electric-power manufacturing facility is destined for sale to wholesalers and/or tollers,¹ rather than to retail customers. The disagreement arises from different interpretations of the phrase "to consumers in this state" which the legislature has used in LSA R.S. 47:1851(E), but has not defined.

It is a well-established principle of statutory construction that absent clear evidence of a contrary legislative intention, a statute should be interpreted according to its plain language. See United States v. Apfelbaum, 445 U.S. 115, 121, 100 S.Ct. 948, 952, 63 L.Ed.2d 250 (1980)

. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. LSA-C.C. art. 9. This principle applies to tax statutes. Tarver v. E.I. Du Pont De Nemours and Company, 93-1005, p. 3 (La.3/24/94), 634 So.2d 356, 358.

In interpreting statutes, the court must give the words of a law their generally prevailing meaning. Cox Cable New Orleans, Inc. v. City of New Orleans, 624 So.2d 890, 894 (La.1993). The operative word in this matter is "consumer." The word is defined in BLACK'S LAW DITIONARY 316, (6th Ed. Rev....