Burlington Northern, Inc. v. Johnston

• Decision Date: 08 December 1977
• Docket Number: No. 44056,44056
• Citation: 89 Wn.2d 321,572 P.2d 1085
• Court: Washington Supreme Court
• Parties: BURLINGTON NORTHERN, INC., Cascade Natural Gas Corporation, El Paso Natural Gas Company, General Telephone Company of the Northwest, Inc., Chicago, Milwaukee, St. Paul and Pacific Railroad Co., Pacific Northwest Bell Telephone Co., Puget Sound Power & Light Company, Pacific Power and Light Company, et al., Respondents, v. Ken JOHNSTON, Pierce County Assessor, Harley H. Hoppe, King County Assessor, J. B. Haines, Snohomish County Assessor, R. C. Rutherford, Kitsap County Assessor, et al., Appellants.

Page 321

89 Wn.2d 321

572 P.2d 1085

BURLINGTON NORTHERN, INC., Cascade Natural Gas Corporation El Paso Natural Gas Company, General Telephone Company of the Northwest, Inc., Chicago, Milwaukee, St. Paul and Pacific Railroad Co., Pacific Northwest Bell Telephone Co. Puget Sound Power & Light Company, Pacific Power and Light Company, et al., Respondents, v. Ken JOHNSTON, Pierce County Assessor, Harley H. Hoppe, King County Assessor, J. B. Haines, Snohomish County Assessor, R. C. Rutherford, Kitsap County Assessor, et al., Appellants.

No. 44056.

Supreme Court of Washington, En Banc.

Dec. 8, 1977.

Robert E. Schillberg, Pros. Atty., Elmer Johnston, Jr., Deputy Pros. Atty., Everett, John Merkel, Pros. Atty., W. Daniel Phillips, Deputy Pros. Atty., Port Orchard, Patrick R. McMullen, Pros. Atty., William Nielsen, Deputy Pros. Atty., Mount Vernon, Craig Ritchie, Pros. Atty., Port Angeles, David F. Thiele, Pros. Atty., Coupeville, H. N. Woolson, Pros. Atty., Dayton, Christopher T. Bayley, Pros. Atty., Norman Maleng, William C. Severson, Deputy Pros. Attys., Seattle, Don F. Herron, Pros. Atty., Terrence F. McCarthy, Deputy Pros. Atty., Tacoma, for appellants.

Cummings, Durkan & McCabe, James McCabe, Lane, Powell, Moss & Miller, G. Keith Grim, Woodrow L. Taylor, Seattle, Slade Gorton, Atty. Gen., Matthew J. Coyle, Asst. Atty. Gen., Olympia, for respondents.

ROSELLINI, Associate Justice.

Before the Board of Tax Appeals, eight county assessors challenged the Department of Revenue's 1972 equalization of real and personal properties of utilities and private car companies (hereinafter called the companies). They contended that the method used was unconstitutional and that it was not authorized by RCW 84.12.350 and RCW 84.16.110, which provide for equalization of such properties. Under that method, instead of equalizing company real property at the same level as locally assessed real property and company personal property at the same level as locally assessed personal property, the department used what it termed an "indicated ratio." This percentage figure was computed by dividing the total assessed value of the two kinds of property by their total indicated market value.

It appears that in a period of inflation such as we have been experiencing in recent years, the 4-year cycle of revaluation of real property provided for in RCW 84.41.030 and approved by this court in Snohomish County Bd. of Equalization v. Department of Revenue, 80 Wash.2d 262, 493 P.2d 1012 (1972), results in a declining ratio of assessed to true value with respect to each property during the interim between valuations. Personal property, which is valued every year, maintains a consistent ratio of 50 percent of true and fair value; but the ratio of assessed value to true value, with respect to any one piece of real property, falls below that ratio after the valuation has been made. Consequently, the average ratio of assessed value of real property is less than 50 percent of true value. Because there is more taxable value in real property, generally, than in personal property, the declining real property ratio causes the composite ratio of real and personal property to fall below 50 percent and closer to the real property ratio than to the personal property ratio.

Company operating property is predominantly personal property. If all of the property which is classified as personal property under the statute is equalized as such, the equalization will be at a higher ratio than the composite ratio adopted by the department. Use of the indicated ratio means that the companies' tax liabilities are less than they would be if the real and personal properties were equalized separately. Consequently it results in a loss of revenues to the counties.

The board held that the method used violated Const. art. 7, §§ 1 and 2. ¹ In its opinion, it found that the method was not authorized by statute. However, it did not base its decision on that finding.

The board ordered that the department certify all of the operating property to the counties at 50 percent of its true and fair value, and that the property be assessed at that value. Realizing that the case would probably be appealed to the Superior Court and anticipating a possible reversal on this holding, the board adopted as its alternative decision the dissenting opinion of its chairman, who concluded that the department should equalize the values of real and personal property separately, according to the average ratio at which such property was valued locally.

The Department of Revenue and intervening utilities petitioned the Superior Court for Thurston County for review of this decision. ² After reviewing the record, that court reversed the Board of Tax Appeals. It held that the use of the indicated ratio did not violate constitutional provisions and that it was authorized by statute, giving conclusive weight to the fact that the legislature had not seen fit to amend the provision relied upon as authority after the method of equalization was adopted in 1963. The county assessors have appealed from that decision.

The first question before us is one of statutory interpretation. It is settled that an administrative agency has only those powers which are expressly granted to it by statute, or necessarily implied in the grant. Ortblad v. State, 85 Wash.2d 109, 530 P.2d 635 (1975). While such an agency has some discretion in interpreting ambiguous statutes, it may not alter or amend an act, and its interpretation must be within the framework and policy of the statute. Allen v. Employment Security Dep't, 83 Wash.2d 145, 516 P.2d 1032 (1973); and see Smith v. Greene, 86 Wash.2d 363, 545 P.2d 550 (1976).

In interpreting a statute, it is the duty of the court to ascertain and give effect to the intent and purpose of the legislature, as expressed in the act. The act must be construed as a whole, and effect should be given to all the language used. Also, all of the provisions of the act must be considered in their relation to each other and, if possible, harmonized to insure proper construction of each provision. Publishers Forest Prods. Co. v. State, 81 Wash.2d 814, 505 P.2d 453 (1973).

The equalizing of company property is one of a series of duties enjoined upon the Department of Revenue under RCW 84.12 and RCW 84.16, with respect to the valuation of such properties and the apportioning of the value of the operating property of any such company to the state and to the counties within which it operates. Those duties include: (1) determining the true cash value of the operating property of each company operating in Washington (RCW 84.12.270 and RCW 84.16.040); (2) apportioning to Washington that part of the value of each interstate company which represents the value of its property in Washington (RCW 84.12.300 and RCW 84.16.050); (3) apportioning the value of the operating property of each company equitably to the counties in which it operates (RCW 84.12.350 and .360, and RCW 84.16.110 and .120); (4) determining the equalized value of the property apportioned to each county (RCW 84.12.350 and RCW 84.16.110); and (5) certifying the equalized value to the local assessors for placement on the tax rolls (RCW 84.12.370 and RCW 84.16.130). It is the fourth duty, that of equalization, with which we are concerned here.

For purposes of assessment of the operating properties of public utilities, and the apportionment and taxation thereof, the legislature has expressly classified such properties as either personal or real in RCW 84.12.280. For example, all railroad equipment which is stationary is classified as real property, while all movable property is classified as personal property. All of the operating property other than lands or buildings of electric light and power companies, telephone companies, gas companies, and heating companies is to be "assessed and taxed" as personal property. Under RCW 84.16.010 all of the operating property of a private car company is deemed to be personal property.

Factors which the department may take into consideration in valuing the operating property of a company are set forth in RCW 84.12.300 and RCW 84.16.040 and .050, and the department is authorized to take into consideration the value of the property as a unit.

The controversy before us focuses upon the term "general property", as used in RCW 84.12.350 and RCW 84.16.110.

Upon determination by the department of revenue of the true and correct actual cash value of the property appearing on such rolls it shall apportion such value to the respective counties entitled thereto, as hereinafter provided, and shall determine the equalized assessed valuation of such property in each such county and in the several taxing districts therein, by applying to such actual apportioned value the same ratio as the ratio of assessed to actual value of the general property in such county: Provided, That, whenever the amount of the true and correct value of the operating property of any company otherwise apportionable to any county or other taxing district shall be less than two hundred fifty dollars, such amount need not be apportioned to such county or taxing district but may be added to the amount apportioned to an adjacent county or taxing district.

RCW 84.12.350.

Upon determination by the department of revenue of the true and correct actual cash value of the property appearing on such rolls the department shall apportion such value to the respective counties entitled thereto as hereinafter provided, and shall determine the equalized or assessed valuation of such property in such counties by applying to such actual apportioned value the same ratio as the ratio of assessed to actual value of the general property of the respective counties: Provided, That, whenever the amount of the true and correct value of the operating property of any company otherwise apportionable to any county shall be less than two hundred fifty dollars, such...