Amoco Production Co. v. State, 87-231

• Decision Date: 09 March 1988
• Docket Number: No. 87-231,87-231
• Citation: 751 P.2d 379
• Parties: AMOCO PRODUCTION COMPANY, a Delaware corporation and Exxon Corporation, a New Jersey corporation, and Chevron U.S.A. Inc., a Pennsylvania corporation, Appellants (Plaintiffs), v. STATE of Wyoming, State Board of Equalization and its members Tom Trowbridge, Shirley Whittler, and Carroll Orrison in their official capacities; and the Department of Revenue and Taxation, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 379

751 P.2d 379

AMOCO PRODUCTION COMPANY, a Delaware corporation and Exxon Corporation, a New Jersey corporation, and Chevron U.S.A. Inc., a Pennsylvania corporation, Appellants (Plaintiffs), v. STATE of Wyoming, State Board of Equalization and its members Tom Trowbridge, Shirley Whittler, and Carroll Orrison in their official capacities; and the Department of Revenue and Taxation, Appellees (Defendants).

No. 87-231.

Supreme Court of Wyoming.

March 9, 1988.

Marilyn S. Kite (argued) and Lawrence J. Wolfe of Holland & Hart, Cheyenne, for appellants Amoco and Exxon, and William J. Thomson, II (argued) of Dray, Madison & Thomson, Cheyenne, for appellant Chevron.

Joseph B. Meyer, Atty. Gen., and Michael L. Hubbard (argued) Sr. Asst. Atty. Gen., for appellees.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

CARDINE, Justice.

This was a declaratory judgment action in which each of the parties moved for summary judgment. The summary judgment motion of appellants, Amoco, Exxon and Chevron was denied, and the summary judgment motion of appellee, State of Wyoming was granted, the court declaring the severance tax upon non-hydrocarbon gases to be six percent of the value of the gross product extracted. This appeal is from the summary judgment in favor of appellee, State of Wyoming.

The single issue presented for our determination, as stated by appellants, is:

"Can the State, by interpretation, extend the severance taxes on 'natural gas' and 'oil and gas' to all gaseous minerals?"

and, as stated by appellee:

"Did the district court properly grant the State's motion for summary judgment in that there were no genuine issues of material fact and as a matter of law W.S. § 39-6-302 imposes a six percent excise tax upon the privilege of severing or extracting non-hydrocarbon gases, such as carbon dioxide, hydrogen sulfide, helium, nitrogen, etc.?"

We affirm.

Appellate review of summary judgment requires that we examine the judgment in the same light as the district court, using the same material and information as was before the district court, to determine whether summary judgment is appropriate. Kobielusz v. Wilson, Wyo., 701 P.2d 559 (1985). Summary judgment is appropriate only if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Rule 56, W.R.C.P. The facts in this case are not in dispute. The question presented is one of law involving only the interpretation of our statute imposing an excise tax upon the privilege of severing and extracting valuable deposits.

Appellants, Amoco, Exxon, and Chevron have long been engaged in leasing, exploring for, drilling, developing, producing, and marketing oil and gas in the State of Wyoming. The gas stream produced from wells in Wyoming generally consists of varying percentages of hydrocarbons and one or more of such non-hydrocarbons as carbon dioxide (CO sub2 ), hydrogen sulphide (H sub2 S), nitrogen (N) and helium (He). In 1983, the Wyoming Oil and Gas Conservation Commission permitted Exxon to vent CO sub2 produced in the LaBarge project into the atmosphere. That was because prior to 1986, except for H sub2 S, the non-hydrocarbon gases had no commercial value and were separated from the hydrocarbon gases and wasted. Prior to 1986, when H sub2 S was separated from the produced gas, reduced to raw sulphur, marketed, and sold, an excise tax in the amount of six percent was assessed by the State of Wyoming and paid without protest. Commencing with the first quarter in 1986, Amoco and Chevron, for the first time, paid the six percent severance tax on non-hydrocarbon gas under protest, and Exxon filed a statement of opposition to the six percent severance tax with the Board of Equalization.

Also in 1986, Exxon's LaBarge project in southwest Wyoming was producing a gas stream consisting of approximately 66% CO sub2 , 22% methane, 4% H sub2 S, 8% nitrogen and other inert gases. The CO sub2 gas now had commercial value and was being marketed and sold to Chevron and Amoco for use in tertiary oil recovery in the Rangely Field in Colorado and in the Lost Soldier and Wertz fields in Carbon and Sweetwater counties, Wyoming. The State of Wyoming contends that the correct excise tax upon the privilege of severing or extracting CO sub2 gas is six percent. Appellants contend that CO sub2 is not natural gas, that the correct tax is two percent, and that they should have a refund of tax paid of more than $615,000.

Subsections (a), (b), and (g) of § 39-6-302, W.S.1977, provide for this excise tax as follows:

"(a) Except as otherwise provided in subsection (h) of this section, there is levied an excise tax of two percent (2%) of the value of the gross product extracted upon the privilege of severing or extracting uranium, trona, coal except underground coal, petroleum, natural gas, oil shale or any other fossil fuel in the state. * * *

"(b) Except as otherwise provided in subsection (h) of this section, in addition to the excise tax imposed by subsection (a) of this section there is levied an excise tax of two percent (2%) of the value of the gross product extracted upon the privilege of severing or extracting any valuable deposit in the state except stripper production and underground coal. * * *

* * *

* * *

"(g) Except as otherwise provided in subsection (h) of this section, in addition to other excise taxes provided by this section there is levied a tax of two percent (2%) of the value of the gross product extracted upon the privilege of severing or extracting oil and gas." (Emphasis added.)

The parties agree that the term "any valuable deposit" as used in subparagraph (b) of the statute includes the CO sub2 gas being marketed and sold and that the 2% excise tax was correctly levied. They disagree upon whether the term "natural gas" in subparagraph (a) and "gas" in subparagraph (g) includes CO sub2 gas.

Section 39-6-302, supra, provides for the levy of an excise tax upon "the value of the gross product extracted." The State suggests that "gross product" means anything of value produced from the well. We disagree. It is plain that gross product clearly refers to the specific minerals subsequently listed as "uranium, trona, coal except underground coal, petroleum, [and] natural gas" in subsection (a) and "gas" in subsection (g). The effect of the plain language of the statute is to tax the value of the total product, which in this case is gas and natural gas as used in § 39-6-302.

We discuss first the meaning of the term "gas" as used in subparagraph (g) of § 39-6-302. We initially look to determine whether the language of the statute is plain and unambiguous or whether it is of doubtful meaning. A statute that is

"clear and unambiguous on its face, need not and cannot be interpreted by a court and * * * only statutes which are of doubtful meaning are subject to the process of statutory interpretation." 2A Sutherland Statutory Construction § 45.02 (1984 Rev'n).

"[T]he meaning of the statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain, * * * the sole function of the courts is to enforce it according to its terms." Caminetti v. United States, 242 U.S. 470, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917).

If the language of the statute is clear and unambiguous, we do not resort to rules of statutory construction, nor search out another meaning for the words used. Amoco Production Company v. Hakala, Wyo., 644 P.2d 785 (1982). Words in a statute will be given their plain and ordinary meaning. State Board of Equalization v. Tenneco Oil Company, Wyo., 694 P.2d 97 (1985). A statute is ambiguous if its meaning is uncertain, doubtful, or if a single term can fairly be said to mean different things. 73 Am.Jur.2d Statutes § 195 at 392 (1974).

It was claimed in Northern Natural Gas Company v. Grounds, 441 F.2d 704 (10th Cir.1971), that because "gas" followed "oil" in the document leasing "oil and gas," the rule of ejusdem generis applied, the meaning of "gas" was restricted by the word "oil" and included, therefore, only hydrocarbons. The argument was rejected, the court holding the word gas was effective to grant to lessee hydrocarbons and helium, a non-hydrocarbon. By analogy, we might conjecture that if this were litigation over whether the word gas in appellants' lease included just hydrocarbons, appellants surely would be taking an opposite position urging that the word gas included both hydrocarbons and non-hydrocarbons such as CO sub2 --otherwise they would have no title or right to produce and market CO sub2 . The State suggests that appellants, by taking inconsistent positions, are hunting with the hounds and running with the foxes; but we think the correct statement of the proverb is to "hold with the hare and run with the hounds."

Appellants in their brief acknowledge that

"while standing alone, the term 'gas' can encompass non-hydrocarbon gas, hydrocarbon gas or a mixture of both (Cf., 30 U.S.C. § 181); the same is not true for 'natural gas' which has always meant gaseous hydrocarbons."

We agree and construe the word gas in the statute as standing alone, identifying no particular gas but encompassing all gas. By definition, included are:

Carbon dioxide: "a heavy colorless gas CO sub2 that does not support combustion, dissolves in water to form carbonic acid * * *." Webster's Ninth New Collegiate Dictionary (1987).

Hydrogen sulfide: "a flammable poisonous gas H sub2 S that has an odor suggestive of rotten eggs and is found esp. in many mineral waters and in putrefying matter." Id.

Helium: "a light colorless non-flammable gaseous element found esp. in natural gases and used chiefly for inflating airships and balloons, for filling incandescent lamps, and for cryogenic research." Id.

Nitrogen: "a colorless tasteless odorless gaseous element that constitutes 78 percent of the atmosphere by volume and occurs as a constituent of all living tissues in combined...