BOARD OF COUNTY COM'RS v. Exxon Mobil Corp.

• Decision Date: 09 October 2002
• Docket Number: No. 01-122.,01-122.
• Citation: 55 P.3d 714,2002 WY 151
• Parties: BOARD OF COUNTY COMMISSIONERS FOR SUBLETTE COUNTY, Wyoming, Petitioner, v. EXXON MOBIL CORPORATION, Respondent.
• Court: Wyoming Supreme Court

55 P.3d 714

2002 WY 151

BOARD OF COUNTY COMMISSIONERS FOR SUBLETTE COUNTY, Wyoming, Petitioner, v. EXXON MOBIL CORPORATION, Respondent.

No. 01-122.

Supreme Court of Wyoming.

October 9, 2002.

Rehearing Denied November 5, 2002.

John C. McKinley and Nancy D. Freudenthal of Davis & Cannon, Cheyenne, WY, Representing Petitioner. Argument by Mr. McKinley.

Lawrence J. Wolfe and Patrick R. Day of Holland & Hart, Cheyenne, WY; and Brent R. Kunz of Hathaway, Speight & Kunz, Cheyenne, WY, Representing Respondent. Argument by Mr. Day.

Vicci M. Colgan, Chief Deputy Attorney General, Representing Amicus Curiae Wyoming Department of Revenue in support of Respondent.

Before HILL, C.J., and GOLDEN, LEHMAN,¹ and VOIGT, JJ., and KAUTZ, D.J.

KAUTZ, District Judge.

[¶ 1] The Wyoming Department of Revenue (DOR) determined and certified valuations of Exxon Mobil's gas production for the tax year 1998. That certification was dated June 24, 1998. Apparently unhappy with the amount of tax Sublette County would receive, the Sublette County Commissioners filed an administrative contested case with the Wyoming State Board of Equalization (SBOE) on July 14, 1998. In that case the County claimed that 1998 tax assessments against Exxon Mobil were incorrect because Exxon Mobil improperly reported gas production in the county, because improper deductions were allowed in valuing the production, and because flared or vented gas was not included in Exxon Mobil's production.

[¶ 2] During the course of the case, Sublette County sought to compel discovery from Exxon Mobil about its gas production. The County sought records regarding production for years prior to 1997 as well as the year in question. Exxon Mobil objected and resisted that discovery, claiming it was beyond the scope of the contested case. The SBOE issued an order compelling discovery, and Exxon Mobil filed a petition for writ of review of the discovery order with the district court. The district court determined that Sublette County's administrative case was improper because it failed to identify specific errors on the part of the DOR. The district court held that the administrative case improperly challenged the conduct of Exxon Mobil and attempted to invade the statutory duties of the DOR. Further, the district court required substantial modification of the County's claims before discovery could proceed.

[¶ 3] Sublette County then petitioned this court for a Writ of Review of the district court's decision. We granted that Petition to address, in part, the "County's role in a contested case before the Board of Equalization pursuant to Wyo. Stat. Ann. § 39-11-102.1(c) (LexisNexis 2001)."

[¶ 4] We affirm the district court to the extent of its order and remand the case to the district court to require dismissal.

ISSUES

[¶ 5] Petitioner Board of County Commissioners for Sublette County lists the following issues:

I. Whether the district court Order on Writ of Review violates the Wyoming Administrative Procedure Act ("WAPA"), Wyoming Tax Statutes, Wyoming case law, and Sublette County's due process rights?

II. Whether the State Board of Equalization's discovery order in this contested case was consistent with law and within the Board's authority?

III. Whether the district court had subject matter jurisdiction of the State Board of Equalization's discovery order?

Respondent, Exxon Mobil Corporation, states the issues as:

1. Does Sublette County have statutory authority to appeal decisions of the Wyoming Department of Revenue to the State Board of Equalization?

2. If the County has such authority, what final decisions may the County appeal?

3. Did the district court correctly determine that the State Board failed to limit the scope of the County's appeal to errors by the Department of Revenue, as required by law?

4. Did the district court properly accept Exxon Mobil's Petition for Writ of Review?

[¶ 6] We granted the Petition for Writ of Review in this case finding that it presented an issue of importance relating to a county's role in a contested case before the Board of Equalization pursuant to Wyo. Stat. Ann. § 39-11-102.1(c) (LexisNexis 2001). The central issue here is whether Sublette County has statutory authority to bring the contested case before the SBOE. A secondary issue is whether the district court properly defined the scope of such a contested case. A final issue is whether the district court properly accepted Exxon Mobil's petition for writ of review.

STANDARD OF REVIEW

[¶ 7] Sublette County's right (or lack thereof) to an appeal is statutory and jurisdictional. Basin Elec. Power Coop., Inc. v. Dep't of Rev., 970 P.2d 841, 847 (Wyo.1998) (citing Pritchard v. State Div. of Voc. Rehab., Dep't of Health & Social Servs., 540 P.2d 523, 524 (Wyo.1975)). Statutory interpretation is a question of law, for which the standard of review is de novo. Sellers v. Dooley Oil Transp., 2001 WY 44, ¶ 10, 22 P.3d 307, ¶10 (Wyo.2001) (quoting Cargill v. State, Dep't of Health, Div. of Health Care Financing, 967 P.2d 999, 1001 (Wyo.1998)).

[¶ 8] This court is directed to "decide all relevant questions of law." Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2001). We are not bound by the decision of the district court, but conduct an independent inquiry into the matter just as if it had proceeded directly to us from the agency. Hat Six Homes, Inc. v. State, Dep't of Employment, 6 P.3d 1287, 1291 (Wyo.2000).

MINERAL TAXATION IN WYOMING

[¶ 9] The Wyoming Constitution mandates that mineral taxes be assessed differently than normal property taxes. Wyo. Const. art. 15, § 3, entitled Taxation of mines and mining claims, reads:

All mines and mining claims ... shall be taxed in addition to the surface improvements, and in lieu of taxes on the lands, on the gross product thereof, as may be prescribed by law; provided, that the product of all mines shall be taxed in proportion to the value thereof.

(Emphasis added.) This has been called "[t]he most noteworthy feature of the Wyoming property tax ...." E. George Rudolph, Wyoming Local Government Law 230 (1985). Commenting on Wyo. Const. art. 15, § 3, two other authors indicate:

This section provides for a gross products tax on all valuable minerals in proportion to their value. This tax [is] in addition to taxes paid on surface improvements, but it is in lieu of taxes on the land. The legislature is responsible for determining the appropriate tax rate.

Robert B. Keiter and Tim Newcomb, The Wyoming State Constitution 218 (1993).

[¶ 10] It is interesting to note that Dean Rudolph wrote, "In spite of its importance, the gross products tax has not, over the years, presented many legal issues of a fundamental nature. Most of the issues that do arise are beyond the scope of this work because assessments are handled entirely at the state level." E. George Rudolph, Wyoming Local Government Law 230 (emphasis added and footnote omitted). At the risk of pointing out the obvious, Rudolph's book is about Wyoming local government, with many chapters about counties, and yet he felt the gross products tax to be beyond the scope of his work.

[¶ 11] The process of "valuing" mineral production for tax purposes is lengthy, involving these steps:

1. The taxpayer files monthly severance tax returns. Wyo. Stat. Ann. § 39-14-207(a)(v) (LexisNexis 2001).

2. The taxpayer files an ad valorem tax return by February 25 in the year following production, and certifies its accuracy under oath. Wyo. Stat. Ann. § 39-14-207(a)(i) (LexisNexis 2001).

3. The Department of Revenue values the production at its fair market value based on the taxpayer's ad valorem return. Wyo. Stat. Ann. § 39-14-202(a)(ii) (LexisNexis 2001).

4. The Department of Revenue then certifies the valuation to the county assessor of the county the minerals were produced in to be entered on the assessment rolls of the county. Wyo. Stat. Ann. § 39-14-202(a)(iii) (LexisNexis 2001).

5. The taxpayer then has one year to file an amended ad valorem return requesting a refund. Wyo. Stat. Ann. § 39-14-209(c)(i) (LexisNexis 2001).

6. The Department of Audit has five years from the date the return is filed to begin an audit, and must complete the audit within two years. Wyo. Stat. Ann. § 39-14-208(b)(iii), (v)(D), (vii) (LexisNexis 2001).

7. Any assessment resulting from an audit must be issued within one year after the audit is complete. Wyo. Stat. Ann. § 39-14-208(b)(v)(E) (LexisNexis 2001).

[¶ 12] During the valuation process the taxpayer and the DOR are statutorily provided with rights to appeal. Wyo. Stat. Ann. § 39-14-203(b)(viii) and (ix) (LexisNexis 2001) provide for the taxpayer and the DOR to be involved in deciding the valuation method used. These statutes specify that the taxpayer or the DOR may appeal the valuation method to the SBOE. Wyo. Stat. Ann. §XX-XX-XXX(n) (LexisNexis 2001) specifies that the taxpayer may object to the certified valuation. Wyo. Stat. Ann. § 39-14-208(b)(v)(F) specifies that a taxpayer may file a response or appeal to an audit. If a dispute arises during the valuation process, the DOR and the taxpayer may reach a compromise and settlement about the amount of tax due. Wyo. Stat. Ann. § 39-11-103(a)(ii). None of these specific statutes about appeals or settlement give any appeal rights to counties. Counties are not involved in the valuation process.

DISCUSSION

I. Judicial Estoppel.

[¶ 13] The parties' dispute predates this case. In Exxon Corp. v. Bd. of County Comm'rs, Sublette County, 987 P.2d 158 (Wyo.1999), Exxon argued that the County should have appealed to the SBOE (as it did here) rather than petitioning under Wyo. Stat. Ann. § 39-1-304(a)(xiv) (Michie 1997) (Repealed, now Wyo. Stat. Ann. § 39-11-102.1(c)(x) (Lexis 2001)). The County now asserts that Exxon is estopped from arguing that a county cannot appeal, because it took an opposite position in the prior case.

[¶ 14] This argument is fatally flawed because "in no event will judicial estoppel apply to legal...