Basin Elec. Power Co-op., Inc. v. Department of Revenue, State of Wyo., s. 97-3

CourtUnited States State Supreme Court of Wyoming
Citation970 P.2d 841
Docket NumberNos. 97-3,97-4,s. 97-3
PartiesBASIN ELECTRIC POWER COOPERATIVE, INC., as operating agent for the Participant-Owners of the Missouri Basin Power Project, Petitioner (Plaintiff), v. DEPARTMENT OF REVENUE, STATE OF WYOMING; Board of County Commissioners for Platte County; Platte County Clerk, Respondents (Defendants). The Board of County Commissioners for Platte County, Wyoming, Cross-Petitioner (Defendant), v. Basin Electric Power Cooperative, Inc., as operating agent for the Participant-Owners of the Missouri Basin Power Project; and the Wyoming Board of Equalization, Cross-Respondents (Plaintiffs).
Decision Date16 December 1998

Richard G. Smith and Eugene A. Ritti of Hawley Troxell Ennis & Hawley LLP, Boise, Idaho; W. Perry Dray and Brandin Hay of Dray, Thomson & Dyekman, P.C., Cheyenne, Wyoming; and James W. Gusea of Gusea, Pattno and White, Cheyenne, Wyoming, Representing Basin Electric Power Cooperative. Argument by Mr. Smith.

William U. Hill, Attorney General; Michael D. Basom, Assistant Attorney General, Representing State of Wyoming Department of Revenue. Argument by Mr. Basom.

David F. Palmerlee of Omohundro, Palmerlee and Durrant, Buffalo, Wyoming; and Bruce A. Hellbaum of Jones, Jones, Vines & Hunkins, Wheatland, Wyoming, Representing Board of County Commissioners of Platte County, Wyoming. Argument by Mr. Palmerlee.

No brief was filed, Representing Wyoming Board of Equalization.

Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN and TAYLOR, * JJ.

GOLDEN, Justice.

This case involves a petition and a cross-petition for review filed with the district court and subsequently certified to this Court pursuant to Rule 12.09 of the Wyoming Rules of Appellate Procedure. In Case No. 97-3 Basin Electric Power Cooperative (Basin) seeks review of that portion of the Wyoming State Board of Equalization's (Board) Findings of Fact, Conclusions of Law and Order (Decision), which affirmed the Department of Revenue's (Department) valuation of Basin's Wyoming property for ad valorem tax purposes. In Case No. 97-4 the Board of County Commissioners for Platte County (Platte County) appeals from the Board's reversal of the Department's determination that tax benefit transfers are part of the property's taxable value for ad valorem tax purposes.

Before 1994, the Department's valuation methods for Basin and other non-profit rural electric cooperatives (RECs) were similar to the valuation methods used for investor-owned utilities (IOUs). In 1994, the Board required the Department to change its valuation methods for the RECs. However, neither the Department nor the Board provided a reasonable basis in the record for valuing non-profit RECs and IOUs differently. Therefore, the Department's valuation of Basin's property was not based on uniform taxation principles, in violation of Article 15, Section 11 of the Wyoming Constitution. 1 Additionally, the valuation, and the methodology used to obtain it, were not supported by substantial evidence or by statutory or regulatory authority. Therefore, we reverse that portion of the Board's Decision from which Basin appeals in Case No. 97-3.

In Case No. 97-4, Platte County petitions for review of the tax benefit transfer issue.

However, pursuant to WYO. STAT. 39-1-306 (1990) and the Wyoming Administrative Procedure Act, Platte County is without standing to wage an attack on the Board's Decision. In the absence of jurisdiction to review the Board's Decision on the basis of Platte County's petition for review, we dismiss the same.

ISSUES

Petitioner Basin presents the following issues in its petition for review in Case No. 97-3:

I. Did the State Board err in failing to conclude that the 1994 assessment of Basin Electric's operating property violates Article 15, Section 11 of the Wyoming Constitution?

II. Did the State Board err in affirming the Department's 1994 assessment of Basin Electric's operating property?

III. Did the State Board err in granting Platte County's motion to intervene as a party to this proceeding?

Respondent Platte County contends the principal issue is:

[W]hether the Wyoming State Board of Equalization ("Board") correctly concluded in its Final Decision that the Department of Revenue ("Department") properly imputed and capitalized a for-profit income to capture the return on equity which Basin Electric Power Cooperative, Inc.'s ("Basin") members receive in the noncash form of lower cost of electric service, which resulted in the Department's 1994 appraised value of Basin of $2,083,000,000.

In its brief, Respondent Department submits the following issues:

1. Whether substantial evidence exists to support the Board of Equalization's action ("Board") upholding the Department's 1994 valuation of Basin Electric's operating property within the State of Wyoming?

2. Whether the Department's valuation of Basin Electric's electric operating property within the State of Wyoming for 1994 represents fair market value?

3. Whether the Board properly determined that the Department's valuation of Basin Electric for 1994 did not violate Article 15, Section 11, of the Wyoming Constitution?

In Case No. 97-4, Petitioner Platte County

seeks review of that portion of the Findings of Fact, Conclusions of Law and Order of the Wyoming State Board of Equalization ("State Board") dated the 28th day of June, 1996 ("State Board Decision") relating to the subject of tax benefit transfers.

Respondent Basin presents an additional issue for review, concerning whether this Court has jurisdiction to hear Case No. 97-4, because the County allegedly failed to timely file its cross-petition for review. The Department, satisfied with the Board's Decision, did not petition for review of the tax benefit transfer issue.

FACTS

Before 1961, rural electric cooperatives in the Great Plains region depended on power generated by hydroelectric facilities in the Missouri River Basin. The facilities were owned and operated by the Federal Bureau of Reclamation, which in turn sold power to its "preference customers," defined as "the rural electric customers and municipals in the region." However, by 1959, the hydroelectric facilities in the Missouri River Basin could not provide enough power to satisfy the increasing demand for electricity from the preference customers. The Bureau of Reclamation warned its preference customers that they needed to commence building, buying or acquiring additional power resources for their projected power requirements.

As a result, rather than continuing to depend upon federal power or investor-owned utilities (IOUs), several generation and transmission cooperatives and distribution cooperatives banded together to supplement their power resources and to provide alternative sources of power. Basin was formed in 1961 to provide an alternative source of power generation to its member cooperatives. Basin is currently owned by eight generation and transmission cooperatives which, together with a group of distribution cooperatives, comprise Basin's Class A membership. The eight generation and transmission cooperatives Basin operates four major generating facilities, including its 42.27% interest in Laramie River Station, located in Platte County, Wyoming. The other owners of the Laramie River Station are Tri-State Generation and Transmission Association, Lincoln Electric System, Heartland Consumers Power District, Western Minnesota Municipal Power Agency, and Wyoming Municipal Power Agency.

are, in turn, owned by over one hundred distribution cooperatives, which provide electricity to ultimate consumers.

Procedural background

Valuation of electric utilities for ad valorem tax purposes is governed by WYO. STAT. § 39-2-201(a)(iii) (Cum. Supp 1993). Pursuant to the statutes in effect in 1994, 2 the Department was to value and assess the property of electric utilities at fair market value for annual taxation purposes. "Fair market value" is

the amount in cash, or terms reasonably equivalent to cash, a well informed buyer is justified in paying for a property and a well informed seller is justified in accepting, assuming neither party to the transaction is acting under undue compulsion, and assuming the property has been offered in the open market for a reasonable time....

WYO. STAT. § 39-1-101(a)(vi) (Cum.Supp.1993). The statutes in effect at the time of the 1994 assessment directed the Board to perform the duties specified in Article 15, Section 10 of the Wyoming Constitution, 3 to review Department assessments of property and tax determinations, and to hear appeals from any person aggrieved by any final administrative decision of the Department. WYO. STAT. §§ 39-1-304(a) and 302 (Cum.Supp.1993). The Board also possessed the authority to prescribe, by rule and regulation, the appraisal methods and systems for determining fair market value, but only after recommendation from the director of the Department. WYO. STAT. § 39-2-102 (Cum.Supp.1993).

In 1991, Platte County appealed from the Department's valuation of the six non-profit owners of the Laramie River Station and later filed another appeal challenging the appraisals for the years 1988 through 1993. Both appeals were settled in early October 1993. On October 11, 1993, the Board entered an Order Initiating Review, "[p]ursuant to Article 15, Section 10, [of the] Wyoming Constitution, W.S. 39-1-304(a)(xiii), and W.S. § 39-1-304(a)(xx)." The order directed the Department to:

report in writing to the Board all information relating to the assessment of property of all Wyoming rural electric cooperative utilities as will be necessary and desirable to afford the Board a reasonable opportunity to review the state assessment practices, methodology, formulas or systems, and to determine whether such practices, methodologies, formulas or systems comprise a fair and reasonable approach for uniformly establishing fair market value of such property as required by law.

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