Belco Petroleum Corp. v. State Bd. of Equalization

• Decision Date: 24 November 1978
• Docket Number: No. 4917,4917
• Citation: 587 P.2d 204
• Parties: BELCO PETROLEUM CORPORATION, Appellant (Petitioner below), v. The STATE BOARD OF EQUALIZATION for the State of Wyoming, Appellee (Respondent below).
• Court: Wyoming Supreme Court

Page 204

587 P.2d 204

BELCO PETROLEUM CORPORATION, Appellant (Petitioner below), v. The STATE BOARD OF EQUALIZATION for the State of Wyoming, Appellee (Respondent below).

No. 4917.

Supreme Court of Wyoming.

Nov. 24, 1978.

Edwin H. Whitehead of Urbigkit, Mackey & Whitehead, P.C., Cheyenne, on brief and Walter C. Urbigkit, Jr. and Edwin H. Whitehead, Cheyenne, argued for appellant.

V. Frank Mendicino, Atty. Gen., and James D. Douglass, Senior Asst. Atty. Gen., on brief. James D. Douglass, Senior Asst. Atty. Gen., argued for appellee.

Before GUTHRIE, C. J., RAPER, THOMAS and ROSE, JJ., and ARMSTRONG, District Judge, Retired.

RAPER, Justice.

This appeal arises from a review by the district court of an administrative hearing conducted by the State Board of Equalization (hereinafter Board), wherein the Board denied any relief to the appellant, Belco Petroleum Company (hereinafter Belco), which company claimed that an increase in the severance tax enacted by the Wyoming Legislature in 1975 could not be applied to Belco's tax liability for the year 1975 because to so apply the increase would be to give the 1975 tax increase an illegal and unconstitutional retroactive effect. The district court affirmed the Board. The issues, as set out by Belco, are:

"(1) The trial court erred in finding the legislature intended that the severance tax imposed by Chapter 125 Session Laws 1975 be levied upon gross production for the preceding year, 1974.

"(2) The fact that § 39-227.1, W.S. (Laws 1974, Ch. 19) was repealed by § 39-227.1:1 (Laws 1975, Ch. 125) does not preclude the Board from collecting the tax levied by the section of the act repealed by the 1975 enactment.

"(3) The trial court erred in affirming the decision of the Board of Equalization as the Board failed to articulate a rational connection between the facts found and the choice made."

We will affirm.

The tax in question was first imposed in 1969 and was denominated a severance tax, Ch. 193, S.L.Wyo.1969. ¹ The provision we are most concerned with is found in Section 2: "The tax levied * * * shall be payable * * * annually, beginning in 1969, on the first day of July * * * The amount of the tax so payable shall be computed upon the gross production for the preceding calendar year * * *."

The taxing provisions were amended in 1974. Ch. 19, S.L.Wyo.1974. ² The effect was to retain the tax at the same rate of 1% On stripper wells (wells producing 10 or less barrels per day, § 39-6-301(a)(ii)), § 39-227.1(a), and increase the tax from 1% To 3% On other oil production, § 39-227.1(b), as far as Belco is concerned. Oil and gas production is the subject matter of this case. The provision of primary concern here is found in § 39-227.2: "The tax levy * * * shall commence as of January 1, 1974 and shall be payable * * * annually, beginning in 1974, on the first day of July * * * The amount of the tax so payable shall be computed upon the gross production for the preceding calendar year * * *."

The taxing provisions were again amended in 1975, Chapters 120 and 125, S.L.Wyo.1975. ^{3 3} The combined effect of § 39-227.1:1(b) and (c) was to increase the tax to 2% On stripper production and 4% On all other production. Here the provision of principal concern is found in § 39-227.2: "The tax levy provided for by W.S. 39-227.1 through 39-227.11, is payable * * * annually, on July 1 * * * The amount of the tax shall be computed upon the gross production for the preceding calendar year, as described in W.S. 39-227.1."

Belco is engaged in the production of petroleum. The essential facts were stipulated to by Belco and the Board as part of the administrative proceedings before the Board. In compliance with § 39-227.3, W.S.1957, 1975 Cum.Supp., ⁴ Belco reported its gross production in Wyoming of oil and gas for 1974 to the Wyoming Department of Revenue and Taxation before the second Monday in February, 1975. Belco's total gas production was 19,071,650 mcf in 1974 its total oil production was 1,309,647 barrels in the same year. The Department of Revenue and Taxation computed the value of Belco's reported gross production and, on June 3, 1975, notified Belco of the amount of severance tax due for 1975 on the basis of the reported 1974 production. The excise tax due was calculated as follows:

Belco thereupon regularly filed its protest pursuant to § 39-227.5, W.S.1957, 1975 Cum.Supp. ⁵

The foregoing statutory history and factual situation gave rise to this litigation. We now proceed to a disposition of the issues. Belco contends that it should have been taxed in 1975 at the rate established by the 1974 legislature which would have resulted in an assessment which it computed to be about $176,000.00 less.

Belco's argument is essentially that in 1969 and in 1974, the legislature specifically stated that the tax in question was to apply to the year in which the enactment was passed; but, in 1975 they failed to specifically provide in the amendment that the increased tax was to be applied to the current tax year. Belco maintains that if the tax was to be applied in 1975, a specific statement to that effect is required in the amendment; and, further, the fact that such language was not used in 1975, when it had been used in 1969 and 1974, is a clear indication that the legislature's intent was that the tax increase was not to be applied in 1975. With that argument and interpretation of statutes then extant, we cannot agree.

The words "there is Hereby levied an excise tax" appearing in § 39-227.1:1(a) and (b) in the 1975 amendment have significance. When coupled with § 3, Ch. 120, S.L.Wyo.1975, stating, "This act is effective immediately upon passage," there is expressed a clear intent to make the increased tax effective March 1, 1975. (See footnote 3.) Effect must be given to every part of a statute or act. Wheatland Irrigation Dist. v. Short, 1959, 80 Wyo. 136, 339 P.2d 403; Coady v. Batchelder, 1959, 79 Wyo. 447, 335 P.2d 443, 75 A.L.R.2d 1030. That explains why, in 1975, the legislature amended § 39-227.2 to read, "(t)he tax levy provided for by W.S. 39-227.1 through 39-227.11, is payable * * * annually, on July 1 * * *." That combination of expressions states the same as, "(t)he tax levy provided for by this act shall commence as of January 1, 1974 and shall be payable * * * annually, beginning in 1974, on the 1st day of July * * *," as it appeared in the 1974 act. It also expresses the same direction as "(t)he tax levied by the provisions of this act shall be payable * * * annually, beginning in 1969, on the first day of July * * *." All versions use different combinations of words to reach the same result. Words and phrases used in a statute shall be taken in their ordinary and usual sense. Johnson v. Safeway Stores, Inc., Wyo.1977, 568 P.2d 908.

Belco contends that in 1975 the legislative "enactment contains no dates, contains no statement, no suggestion that the Legislature intended that its application be retroactive." We note no authority in appellant's brief, and we have found no pertinent authority, that requires such specific dates to be placed in the statute. If it can be determined from the plain words of the statute when it is to become operative, such dates or statements would be helpful perhaps, but cannot be raised to the level of an absolute requirement. Much of the authority cited by Belco, as well as other authority we have found, places special importance on a statement by the legislature that the tax is to be effective on a given date for a given tax year. What Belco fails to take into account is the fact that in those cases the taxes were clearly retroactive. Estate of Kennett v. State, 1975, 115 N.H. 50, 333 A.2d 452; Philadelphia Life Ins. Co. v. Commonwealth, 1973, 454 Pa. 157, 309 A.2d 811; Mecham v. State Tax Commission, 1966, 17 Utah 2d 321, 410 P.2d 1008; Shirks Motor Exp. Corp. v. Messner, 1953, 375 Pa. 450, 100 A.2d 913; Milliken v. United States, 1931, 283 U.S. 15, 51 S.Ct. 324, 75 L.Ed. 809; Welch v. Henry, supra; Untermyer v. Anderson, 1928, 276 U.S. 440, 48 S.Ct. 353, 72 L.Ed. 645; Brushaber v. Union Pacific RR Co., 1916, 240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493. This has great importance because we will hold that the tax in question is not retroactive insofar as it utilizes antecedent facts for its operation. What is important with regard to this specific argument is that the tax was effective March 1, 1975. The statute is very clear in its language that the tax is payable on July 1 annually. (See footnote 3.)

Belco correctly points out that as a general rule tax measures, as well as other statutes, will be construed prospectively only if there is a doubt whether the statute was intended to be retroactive. Cooley, Taxation, Vol. 2, § 513 (4th Ed., 1924); Bemis v. Texaco, Inc., Wyo.1965, 400 P.2d 529, rehearing denied 401 P.2d 708; State ex rel. Lynch v. Board of County Commissioners, 1956, 75 Wyo. 435, 296 P.2d 986; Mustanen v. Diamond Coal and Coke Co., 1936, 50 Wyo. 462, 62 P.2d 287. ⁶ Further, as a general rule, revenue laws will be construed in favor of the taxpayer if they are ambiguous or doubtful. Kelsey v. Taft, 1953, 72 Wyo. 210, 263 P.2d 135, 138; Equitable Life Assurance Society of the United States v. Thulemeyer, 1935, 49 Wyo. 63, 52 P.2d 1223. However, these rules of statutory construction are not applicable here.

We find the 1975 amendment has no retroactive effect whatsoever; rather, it is prospective. The tax is not levied upon the preceding year's production, and that production is not called upon to bear the burden of the tax. The tax is not an ad valorem tax. ⁷ The statute is very plain in stating that it is an excise tax laid upon the present and continuing Privilege of extracting minerals. The value of the privilege is measured by applying a certain percentage figure to the gross production of the previous year. A statute is not necessarily retroactive because it draws on antecedent facts for its operation. John...