Columbia Gas Transm. Corp. v. Levin

Decision Date14 February 2008
Docket NumberNo. 2006-1443.,2006-1443.
Citation117 Ohio St.3d 122,2008 Ohio 511,882 N.E.2d 400
PartiesCOLUMBIA GAS TRANSMISSION CORPORATION, Appellee and Cross-Appellant, v. LEVIN, Tax Commr., Appellant and Cross-Appellee.
CourtOhio Supreme Court

Taft, Stettinius & Hollister, L.L.P., and Fred J. Livingstone, Cleveland, urging reversal for amicus curiae Ohio School Boards Association.

Thelen, Reid, Brown, Raysman & Steiner, L.L.P., and Andrea Wolfman, Washington, DC, urging affirmance for amicus curiae Interstate Natural Gas Association of America.

CUPP, J.

{¶ 1} In this matter, the Tax Commissioner appeals from a decision of the Board of Tax Appeals ("BTA") that reversed the Tax Commissioner's determination that Columbia Gas Transmission Corporation ("Columbia") is an interstate-pipeline company as defined in R.C. 5727.01(D)(5) for the purpose of taxing the personal property of an Ohio public utility. The BTA held instead that Columbia satisfied the definition of a natural gas company in R.C. 5727.01(D)(4) and was thus entitled to have its personal property assessed at the 25 percent valuation rate for such companies in R.C. 5727.111(C), rather than the 88 percent rate for pipeline companies in R.C. 5727.111(D). After review, we have determined that the BTA's decision was unreasonable and unlawful, and therefore, in accordance with R.C. 5717.04, it is reversed. We further find that Columbia's cross-appeal is without merit, and it is overruled.

{¶ 2} In 2000, the General Assembly amended R.C. 5727.111 to reduce the assessment rate on the value of public-utility personal property of Ohio natural gas companies from 88 percent to 25 percent. The 25 percent rate became effective beginning with the 2001 tax year. See Am.Sub.S.B. No. 287, 148 Ohio Laws, Part V, 11536, 11549-11550.

{¶ 3} Columbia operates a natural gas pipeline that runs through a number of states. Columbia also maintains an underground system for storing natural gas. For the 2000 and 2001 tax years,1 the Tax Commissioner assessed Columbia's personal property at the 88 percent rate for natural-gas-pipeline companies.

{¶ 4} Columbia objected to having its taxable property assessed at the 88 percent rate. Columbia claimed that it is a natural gas company under R.C. 5727.01(D)(4), and it requested that the Tax Commissioner reassess its personal property at the 25 percent rate for natural gas companies in R.C. 5727.111(C).

{¶ 5} The Tax Commissioner found that Columbia was not a natural gas company under R.C. 5727.01(D)(4) because it does not supply or distribute natural gas directly to end-use consumers; rather, Columbia transports natural gas interstate through a network of pipelines. Specifically, the Tax Commissioner stated that Columbia's "transportation and storage services are for local gas distribution companies and industrial and commercial customers that contract for gas with producers or marketers. Therefore, [Columbia] is properly classified as a pipeline company under R.C. 5727.01(D)(5)."

{¶ 6} The Tax Commissioner also found that Columbia does not fit the profile of a typical natural gas company. Such companies usually operate in one state only, while pipeline companies tend to be interstate businesses. The Tax Commissioner further noted that the Public Utilities Commission of Ohio ("PUCO") regulates natural gas companies that operate in Ohio, and PUCO does not consider Columbia a natural gas company. Instead, the Federal Energy Regulatory Commission ("FERC") regulates interstate-pipeline companies, and Columbia is subject to regulation by FERC, not PUCO.

{¶ 7} Columbia appealed the Tax Commissioner's final determination to the BTA. The BTA reversed the Tax Commissioner, finding that Columbia satisfied the definition of a natural gas company in R.C. 5727.01(D)(4). The BTA found that R.C. 5727.01(D)(4) was unambiguous and that Columbia satisfied the statutory definition by directly supplying "natural gas to industrial, power-generating, residential, and farm customers for the purposes (i.e., lighting, power, or heating) delineated in R.C. 5727.01(D)(4)." The BTA also determined that, while Columbia may satisfy the definition of a pipeline company in R.C. 5727.01(D)(5), neither R.C. 5727.01(D)(4) nor (5) imposes a "primary business" test as an element in determining under which definition an entity should be classified for tax purposes. Accordingly, the BTA held that Columbia was entitled to have its property assessed at 25 percent.

{¶ 8} Columbia also argued that applying the pipeline assessment rate to its property violates the Equal Protection and Due Process Clauses of the United States and Ohio Constitutions and the Commerce and the Supremacy Clauses of the United States Constitution. The BTA recognized that it lacked jurisdiction to decide the merits of Columbia's constitutional challenges. See Cleveland Gear Co. v. Limbach (1988), 35 Ohio St.3d 229, 231, 520 N.E.2d 188.

{¶ 9} The Tax Commissioner appealed from the BTA's decision. Columbia filed a protective cross-appeal, again raising its constitutional arguments.

Standard of Review

{¶ 10} In reviewing a decision of the BTA, we determine whether it is "reasonable and lawful." Columbus City School Dist. Bd. of Edn. v. Zaino (2001), 90 Ohio St.3d 496, 497, 739 N.E.2d 783. We "will not hesitate to reverse a BTA decision that is based on an incorrect legal conclusion." Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino (2001), 93 Ohio St.3d 231, 232, 754 N.E.2d 789. However, we will affirm the BTA's determinations of factual issues if the record contains reliable and probative evidence to support the BTA's findings. Am. Natl. Can Co. v. Tracy (1995), 72 Ohio St.3d 150, 152, 648 N.E.2d 483.

{¶ 11} The burden rests on the taxpayer "to show the manner and extent of the error in the Tax Commissioner's final determination." Stds. Testing Laboratories, Inc. v. Zaino, 100 Ohio St.3d 240, 2003-Ohio-5804, 797 N.E.2d 1278, ¶ 30. The Tax Commissioner's findings "are presumptively valid, absent a demonstration that those findings are clearly unreasonable or unlawful." Nusseibeh v. Zaino, 98 Ohio St.3d 292, 2003-Ohio-855, 784 N.E.2d 93, ¶ 10.

The Tax Commissioner's Appeal
Is a Primary-Business Test Applicable to R.C. 5727.01?

{¶ 12} The Tax Commissioner contends that for determining the proper assessment rate to apply to public-utility property under R.C. 5727.111, an interstate-pipeline company that primarily transports natural gas through pipelines from production and wholesale sources to natural gas distribution systems is a "pipeline company" as defined by R.C. 5727.01(D)(5), and not a "natural gas company" as defined by R.C. 5727.01(D)(4).

{¶ 13} For purposes of taxing a public utility, a person includes "a natural gas company when engaged in the business of supplying natural gas for lighting, power or heating purposes to consumers within this state." See former R.C. 5727.01(D)(4).2 According to R.C. 5727.01(D)(5), a person also includes "a pipe-line company when engaged in the business of transporting natural gas, oil, or coal or its derivatives through pipes or tubing, either wholly or partially within this state."

{¶ 14} The Tax Commissioner maintains that the BTA overlooked the dispositive statute on this issue: R.C. 5727.02. The Tax Commissioner argues that R.C. 5727.02(A) expressly establishes a primary-business test for purposes of defining "natural gas company" under R.C. 5727.01(D)(4). In contrast, Columbia argues that R.C. 5727.02 does not address how to distinguish between types of public utilities (e.g., between pipeline and natural gas companies). Rather, it establishes a test for determining whether an entity is a "public utility" at all.3

{¶ 15} The BTA found that "[n]either R.C. 5727.01(D)(4) nor (5) imposes a `primary business' test as an element in determining under which definition an entity should be classified for tax purposes." The BTA mentioned R.C. 5727.02 in passing, indicating that the statute differentiated "between `primary' and `incidental' business activities of various public utilities referenced within R.C. Chapter 5727." Yet the BTA did not analyze or apply R.C. 5727.02 to this matter. We find that the BTA erred in failing to construe R.C. 5727.01 in pari materia with R.C. 5727.02.

{¶ 16} For the 2001 tax year, R.C. 5727.02 provided:

{¶ 17} "As used in this chapter, `public utility,' `electric company,' `natural gas company,' `pipe-line company,' `water-works company,' `water transportation company' or `heating company' does not include any of the following:

{¶ 18} "(A) Any person that is engaged in some other primary business to which the supplying of electricity, heat, natural gas, water, water transportation, steam, or air to others is incidental." See Am.Sub. S.B. No. 3, 148 Ohio Laws, Part IV, 7962, 8080.

{¶ 19} The first rule of statutory construction is to look at the statute's language to determine its meaning. If the statute conveys a clear, unequivocal, and definite meaning, interpretation comes to an end, and the statute must be applied according to its terms. Lancaster Colony Corp. v. Limbach (1988), 37 Ohio St.3d 198, 199, 524 N.E.2d 1389. Courts may not delete words used or insert words not used. Cline v. Ohio Bur. of Motor Vehicles (1991), 61 Ohio St.3d 93, 97, 573 N.E.2d 77.

{¶ 20} We hold that R.C. 5727.02 establishes a primary-business test for determining whether an entity is a public utility for tax purposes and also for distinguishing between types of public utilities. "Public utility" is one of the entities to which the statute ...

To continue reading

Request your trial
102 cases
  • Gabbard v. Madison Local Sch. Dist. Bd. of Educ.
    • United States
    • Ohio Supreme Court
    • 23 Junio 2021
    ... ... Columbia Gas Transm. Corp. v. Levin , 117 Ohio St.3d 122, 2008-Ohio-511, 882 ... ...
  • Everhart v. Coshocton Cnty. Mem'l Hosp.
    • United States
    • Ohio Court of Appeals
    • 3 Marzo 2022
    ... ... language." (Citation omitted.) Gabbard at 13, citing Columbia Gas Transm. Corp. v. Levin , 117 Ohio St.3d 122, 2008-Ohio-511, 882 ... ...
  • Hurst v. Hurst
    • United States
    • Ohio Court of Appeals
    • 24 Junio 2013
    ... ... Republic Steel Corp., 153 Ohio St. 349, 91 N.E.2d 690(1950), paragraph three of the syllabus ... similarly situated individuals be treated in a similar manner." Columbia Gas Transm. Corp. v. Levin, 117 Ohio St.3d 122, 882 N.E.2d 400, ... ...
  • Rowitz v. McClain
    • United States
    • Ohio Court of Appeals
    • 31 Diciembre 2019
    ... ... Corp. v. Zaino , 10th Dist. No. 04AP-322, 2005-Ohio-1021, 2005 WL 564073, 7 ... Levin , 10th Dist. No. 11AP-349, 2012-Ohio-5768, 2012 WL 6062851, 22. { 14} ... Columbia Gas of Ohio , 152 Ohio St.3d 73, 2017-Ohio-7566, 93 N.E.3d 902 ; United ... " Columbia Gas Transm. Corp. v. Levin , 117 Ohio St.3d 122, 2008-Ohio-511, 882 N.E.2d 400, 92, ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT