Shell Western E&P, Inc. v. Dolores County Bd. of Com'rs

• Decision Date: 17 November 1997
• Docket Number: No. 96SC150,96SC150
• Citation: 948 P.2d 1002
• Parties: 97 CJ C.A.R. 2776 SHELL WESTERN E&P, INC., Petitioner, v. DOLORES COUNTY BOARD OF COMMISSIONERS, and Board of Assessment Appeals, State of Colorado, Respondents.
• Court: Colorado Supreme Court

Page 1002

948 P.2d 1002

97 CJ C.A.R. 2776

SHELL WESTERN E&P, INC., Petitioner, v. DOLORES COUNTY BOARD OF COMMISSIONERS, and Board of

Assessment Appeals, State of Colorado, Respondents.

No. 96SC150.

Supreme Court of Colorado,

En Banc.

Nov. 17, 1997.

As Modified on Denial of Rehearing

Dec. 15, 1997.

Holland & Hart LLP, Alan Poe, Elizabeth A. Phelan, Englewood, for Petitioner.

Dyer & Dilts, P.C., Nicki L. Green, Guy B. Dyer, Jr., Nancy Agro, Cortez, Groves & Price, John W. Groves, David A. Price, Grand Junction, for Respondent Dolores County Board of Commissioners.

Gale A. Norton, Attorney General, Martha Phillips Allbright, Chief Deputy Attorney General, Richard A. Westfall, Solicitor General, Merrill Shields, Deputy Attorney General, Richard Djokic, First Assistant Attorney General, Eugene C. Cavaliere, Senior Assistant Attorney General, Regulatory Law Section, Denver, for Respondent Board of Assessment Appeals.

Justice SCOTT delivered the Opinion of the Court.

The principal question presented by this case is whether the owner of gas wells subject to an ad valorem tax based solely on mineral production value, which owner has failed to give the county assessor the notice of production mandated by statute, may avoid its tax obligations by asserting a statute of limitations defense against the county. ¹ We hold that the running of the statute of limitations is equitably tolled and the tax obligation may not be avoided.

We therefore affirm the court of appeals; however, we do so on grounds different from its rationale. We conclude that the statute of limitations provided by section 39-10-101(2)(b)(I), 11 C.R.S. (1997), was equitably tolled due to the taxpayer's failure to timely file any schedules reporting mineral production to the county assessor. In addition, because the schedules were untimely filed and assessments made after the effective date of amendments to the delinquent interest calculation of section 39-10-101(2)(d), 11 C.R.S. (1997), the application of that statute in this case is not retrospective or unlawfully retroactive.

I.

A.

The facts below are derived from the "Agreed Statement of Facts" filed in the proceedings before the Dolores County Board of Commissioners (County Board) and the Board of Assessment Appeals (BAA). Petitioner, Shell Western E & P, Inc. (SWEPI), operates and owns an interest in the McElmo Dome Carbon Dioxide Production Unit (Unit), which encompasses oil and gas leaseholds in both Montezuma County and Dolores County. All of the producing wells, production equipment, and facilities related to the Unit, however, are located in Montezuma County. For tax years 1985 through 1990, SWEPI filed Oil and Gas Real and Personal Property Declaration Schedules (Tax Declaration Schedules) with the Montezuma County Assessor pursuant to section 39-7-101, 11 C.R.S. (1997).

While a portion of the carbon dioxide (CO sub2 ) production from the Unit should have been reported to Dolores County for each of the tax years 1985 through 1990, SWEPI did not allocate any CO sub2 production to, nor did it file notice of such production with, the Dolores County Assessor. SWEPI did, however, report 100% of its CO sub2 production from the Unit in its filings with Montezuma County and did pay all taxes assessed by Montezuma County for the tax years 1985 to 1990. For purposes of this case, all parties agree that failure to file the schedules with, or pay taxes to, Dolores County from 1985 to 1990 was not attributable to "willful" or "fraudulent" conduct and that SWEPI did not act with the intent to evade payment of any tax. It was not until December 1992 that SWEPI filed Tax Declaration Schedules with the Dolores County Assessor regarding its leasehold interest and CO sub2 production attributable to Dolores County.

On December 24, 1992, pursuant to section 39-10-101(2)(a)(I), 11 C.R.S. (1997), the Dolores County Treasurer issued a tax notice (assessment) for tax years 1985 through 1990, making the first assessment on SWEPI's property payable to Dolores County. ² On June 7, 1993, SWEPI filed petitions for abatement of taxes with the County Board. SWEPI later withdrew its petitions for abatement of taxes for tax years 1986 through 1990 concerning the taxes assessed and the delinquent interest on the taxes assessed on December 24, 1992, through the date of payment. SWEPI did not, however, withdraw its abatement petition for tax year 1985 or its request for abatement of interest that accrued prior to December 24, 1992. On August 31, 1993, SWEPI paid the taxes due to Dolores County for tax years 1986 through 1990 as well as the interest due on such tax from the period December 24, 1992 through the date of payment. ³ In effect, therefore, the issues before us relate only to the ad valorem taxes assessed and delinquent interest calculated for CO sub2 production in 1985.

B.

After an evidentiary hearing, on December 6, 1993, the County Board issued its order on SWEPI's petition for abatement. In its order, the County Board denied SWEPI's request for abatement of its tax obligation. The County Board expressly found that SWEPI did not file the Tax Declaration Schedules or operating statements that were required to be filed under section 39-7-101, 11 C.R.S. (1997), until 1992. The County Board further found that SWEPI had "an affirmative duty" to file the Tax Declaration Schedules required under section 39-7-101 with the Dolores County Assessor and that SWEPI's "own acts or omissions contributed to the running of the statute, if in fact the same was determined to have run." The County Board concluded SWEPI was thus "estopped from raising the statute of limitations as a defense."

With regard to delinquent interest, the County Board found that taxes and interest were assessed in December 1992, after section 39-10-101(2)(d), which altered the method of calculating interest, became effective. Calculating delinquent interest from 1986, the date that the omitted taxes were originally due, the County Board concluded, as a matter of law, that Dolores County had a right to interest that accrued from 1986 and not from December 1992, when the additional assessment was made. The County Board ruled that such a result did not constitute a retroactive application of section 39-10-101(2). Therefore, the County Board denied the petition for abatement.

SWEPI appealed the County Board's order to the BAA. On September 9, 1994, the BAA denied SWEPI's petition for abatement. The BAA reasoned that, under the doctrine of equitable estoppel, SWEPI could not assert the statute of limitations in section 39-10-101(2)(b) because SWEPI failed to fulfill its statutory duty to file a property declaration schedule with the Dolores County Assessor pursuant to section 39-7-101, 11 C.R.S. (1997). The BAA also ruled that the "Dolores County Treasurer's calculation of interest on the additional assessments for the tax years 1986 through 1990 was not a retrospective application of the amendments to section 39-10-101(2)." The BAA's decision on retroactivity was premised on two rationales: (1) interest is a part of the remedy imposed by the General Assembly and statutes which create remedies do not come within the prohibition against retrospective legislation; and (2) the additional assessments were not made until after the amendments to section 39-10-101(2) became effective on April 10, 1992. After the BAA issued its ruling upholding the order of the County Board, SWEPI sought review by the court of appeals.

The court of appeals affirmed the BAA's order and held that the Agreed Statement of Facts was sufficient to support the BAA's conclusion that SWEPI's failure to file the Tax Declaration Schedules prejudiced the county such that SWEPI could not claim the protections contemplated by the statute of limitations. See Shell Western E & P, Inc. v. Board of County Comm'rs, 923 P.2d 251, 254 (Colo.App.1995). Finding no abuse of discretion, the court of appeals held that the use of section 39-10-101(2)(d), as amended and in effect after April 10, 1992, was appropriate and that delinquent interest should begin accruing "at the time SWEPI's obligation to pay taxes ... first became due," concluding that such a calculation was not an unconstitutional or retrospective application of the statute. Id. at 254-55. SWEPI then filed its petition for review before us.

II.

A.

Under section 39-7-101, 11 C.R.S. (1997), every owner or operator of any oil or gas leasehold or lands within the state must file a statement with the county assessor providing information for valuation and assessment of ad valorem tax obligations. Section 39-7-107, 11 C.R.S. (1997), provides that whenever any oil and gas leaseholds or lands are situated partly in one county and partly in another, the person obligated to file the statement under section 39-7-101 shall allocate the production value between such counties in proportion to surface acreage. The county assessor has the responsibility of using the information provided to compile a tax list and related warrants, and must transmit that information to the county treasurer.

Pursuant to section 39-7-101, the treasurer then collects the taxes. Section 39-10-101(2)(a) authorizes the treasurer to make additional assessments if, after having received the tax list and warrant, the treasurer discovers taxable property omitted from the tax list and warrant for the current year or for any prior year that has not been valued for assessment. Any such additional assessment is valid for all purposes, just as if it had been performed by the assessor.

However, this taxing authority is not unrestricted. Section 39-10-101(2)(b), 11 C.R.S. (1997), a statute of limitations, provides:

The taxes for any period, together with interest thereon, imposed by this section shall not be assessed, nor shall any lien be filed or distraint warrant issued or suit for collection be instituted or any other action to collect the same be commenced, more than six...