Clarkson and Co. v. Harding County, 20265

• Court: Supreme Court of South Dakota
• Writing for the Court: KONENKAMP
• Citation: 1998 SD 74,581 N.W.2d 499
• Parties: CLARKSON AND COMPANY and William Clarkson and Shirley Clarkson, Appellees, v. HARDING COUNTY, Appellant. . Considered on Briefs
• Docket Number: No. 20265,20265
• Decision Date: 01 June 1998

Page 499

581 N.W.2d 499 1998 SD 74 CLARKSON AND COMPANY and William Clarkson and Shirley
Clarkson, Appellees,
v.
HARDING COUNTY, Appellant. No. 20265. Supreme Court of South Dakota. Considered on Briefs June 1, 1998.
Decided July 8, 1998.

Kenneth E. Barker, Michael C. Loos, of Quinn, Eiesland, Day & Barker, Belle Fourche, for appellee.

Robert A. Haivala, Harding County State's Attorney, Buffalo, for appellant.

KONENKAMP, Justice.

¶1 In appraising agricultural real estate, are long-term conditions impairing livestock growth and reproduction, such as oil well facilities on grazing land, a valid factor in valuation? Because statutes controlling the assessment of agricultural land require consideration of the capacity of the land to produce agricultural products, including livestock, this factor justified a lower valuation than the one given by the taxing authorities. The circuit court's order upholding a reduced assessment is affirmed.

Facts

¶2 Clarkson & Co. and William and Shirley Clarkson (Clarksons) operate a sheep and cattle ranch in Harding County, where they own approximately 7,100 acres and lease another 3,600 acres. Deployed across most of this property are sixty oil wells with attendant storage tank batteries, twenty-nine miles of service roads, and other oil facilities. Having no mineral rights, the Clarksons hold no financial interest in the oil produced, but receive compensation for the placement of the wells on their property and recompense if damage occurs to their land or livestock. By recent geological estimates, oil production

Page 501

will continue there for another forty to fifty years.

¶3 The Harding County Director of Equalization valued the land at $42.99 per acre, for a total of $488,040, based on soil values. ¹ In performing the valuation, the Director did not consider the presence of active oil operations and any resultant decreases in livestock production. At the time, the Clarksons ran approximately 1,000 head of breeding ewes and 400 head of cattle. Based on averages over a period of years, these numbers represented a reduction in their normal livestock carrying capacity by fifteen percent on sheep and twenty-five percent on cattle. The Clarksons appealed the valuation to the Office of Administrative Hearings. They offered evidence that problems associated with the oil fields, including noise, water pollution, dust, spillage, and the release of certain toxic chemicals, reduced livestock productivity on their ranch. As part of their case, they submitted a report from a veterinarian specializing in livestock reproduction, Dr. Ralph Miller, who indicated that the conception rates of the cows and ewes and the weaning weights of the calves and lambs were markedly lower on Clarksons' property when compared with livestock on neighboring land having no active oil operations. In the veterinarian's opinion, the stress on the animals created by oil field activity, including loud noise, heavy traffic, and dust, led to these consequential differences in conception rates and weight gains. Thus the land's capacity to sustain livestock was diminished.

¶4 The hearing examiner, Robert K. Krogstad, concluded the Clarksons overcame the assessment's presumption of correctness and valued the subject property at $40 per acre across the whole unit, for a total of $428,486. Harding County then appealed to the circuit court. At first, the court proceeded with a de novo trial, but later determined that as this was an administrative appeal, it should have been resolved in accordance with the provisions set forth in SDCL ch 1-26. ² Under either procedure, the court decided the result would be the same and upheld the hearing examiner's ruling. On appeal before us, Harding County contends the circuit court erred in affirming the hearing examiner's decision to decrease the valuation of the Clarkson property.

Standard of Review

¶5 This is an appeal of a tax assessment pursuant to SDCL 10-11-43 and thus it is governed by SDCL ch. 1-26. ³ Under SDCL 10-11-42.1, the hearing examiner tries the issues de novo, then on appeal both the circuit court and this Court review that decision as set forth in SDCL 1-26-36. This review standard requires us to accord great weight to the findings and inferences made by the hearing examiner on factual questions. Sopko v. C & R Transfer Co., Inc., 1998 SD 8, p 6, 575 N.W.2d 225, 228; Helms v. Lynn's, Inc., 1996 SD 8, pp 9-10, 542 N.W.2d 764, 766; Finck v. Northwest Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D.1988). "We examine agency findings in the same manner as the circuit court to decide whether they were clearly erroneous in light of all the evidence." In re Northwestern Bell Tel. Co., 382 N.W.2d 413, 415 (S.D.1986). We will only reverse "if after a careful review of the entire record[,] we are definitely and firmly convinced a mistake has been committed...." Spitzack v. Berg Corp., 532

Page 502

N.W.2d 72, 75 (S.D.1995)(citing Day v. John Morrell & Co., 490 N.W.2d 720, 723 (S.D.1992)). Questions of law remain fully reviewable. Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D.1992); Egemo v. Flores, 470 N.W.2d 817, 820 (S.D.1991).

Analysis and Decision

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