Enbridge Energy, Limited Partnership v. Commissioner of Revenue
| Decision Date | 05 November 2019 |
| Docket Number | 8858-R,8984-R |
| Parties | Enbridge Energy, Limited Partnership, Appellant, v. Commissioner of Revenue, Appellee. |
| Court | Tax Court of Minnesota |
This matter came before The Honorable Joanne H. Turner, Judge of the Minnesota Tax Court, on the motion of appellant Enbridge Energy, Limited Partnership (EELP), for rehearing.
Paul B. Kilgore and Eric S. Johnson, Fryberger, Buchanan, Smith & Frederick, P.A., Duluth, Minnesota, represent Enbridge Energy, Limited Partnership.
Jennifer A. Kitchak and Kristine K. Nogosek, Assistant Minnesota Attorneys General, represent appellee Commissioner of Revenue.
On June 25, 2019, we filed findings of fact, conclusions of law, and order for judgment as to the market value of the Minnesota portion of an interstate crude oil pipeline owned by appellant Enbridge Energy, Limited Partnership as of January 2, 2015, and January 2, 2016. On July 9, 2019, EELP timely filed a motion for rehearing, asking that we amend our decision in four respects: (1) reducing the amount of construction work in process (CWIP) included in value under the cost approach; (2) decreasing our finding of value under the cost approach to reflect economic obsolescence; (3) increasing the weight given to the dividend growth model in our determination of the cost of capital; and (4) giving the cost approach only "nominal weight" and the income approach no less than 80% weight in our final reconciliation of value. The Commissioner opposed EELP"s motion in all respects.
Based upon all the files, records, and proceedings herein, the court now makes the following:
EELP's motion for rehearing is denied. IT IS SO ORDERED. THIS IS A FINAL ORDER. LET JUDGMENT BE ENTERED ACCORDINGLY.
At issue in this consolidated case is the market value of the Minnesota portion of the Enbridge Energy, Limited Partnership crude oil interstate pipeline system as of January 2, 2015 and January 2, 2016. After a five-day trial, we issued findings of fact, conclusions of law, and an order for judgment finding that the Commissioner had understated the market value of the system as of each valuation date. EELP filed a timely motion for rehearing asking that we amend our findings "by determining the fair market value of EELP's entire pipeline system to be as estimated by EELP's expert witness ... and advocated by EELP in its post-trial submissions; and by determining the Minnesota apportionable values to be as advocated by EELP, also in its post-trial submissions." [1] For the reasons we explain, we deny EELP's motion.
On a proper motion, a court may "amend its findings or make additional findings." Minn. R. Civ. P. 52.02; see also Minn. Stat. § 271.08, subd. 1 (2018) (authorizing motions for rehearing, including motions for amended findings of fact and conclusions of law). A party seeking amended findings must do more than simply show that there is record evidence that might support those findings. Nielsen v. City of St. Paul, 252 Minn. 12, 29, 88 N.W.2d 853, 864 (1958). Rather, the moving party must "show that there is no substantial evidence reasonably tending to sustain" the court's findings. Id., 88 N.W.2d at 864. "If the evidence as a whole tends to support the findings they should not be disturbed." Id., 88 N.W.2d at 864.
A motion for amended findings authorizes a court "to review all of the evidence and all of [its] findings" and to revise its findings in a manner either favorable or unfavorable to the moving party. McCauley v Michael, 256 N.W.2d 491, 500 (Minn. 1977). The moving party "should address the record evidence, explain why the record does not support the [ ] court's findings, and explain why the proposed findings are appropriate." Lewis v. Lewis, 572 N.W.2d 313, 316 (Minn.App. 1997), abrogated on other grounds by Madson v. Minn Mining & Mfg. Co., 612 N.W.2d 168, 171-72 (Minn. 2000). A motion for amended findings must be based on the files and exhibits in the case, though, not on evidence that is not part of the record. Zander v. Zander, 720 N.W.2d 360, 364 (Minn.App. 2006). The moving party "may not 'pick and choose' among the findings in the hope of thereby limiting the court's review of the record only to those parts supporting the motion." McCauley, 256 N.W.2d at 500. Rather, the court must be "free to examine all of the evidence ..., and then to enter amended findings as appear ... warranted by [its] review of the record as a whole." Id.
"The rules of civil procedure do not authorize a motion for 'reconsideration' ...." Carter v Anderson, 554 N.W.2d 110, 113 (Minn.App. 1996) (). A motion styled as one for amended findings but that is in substance a motion for reconsideration is therefore improper. Lewis, 572 N.W.2d at 316 ().
In this case, EELP asks us to amend our findings of fact and conclusions of law in several respects: (1) reducing the amount of construction work in progress reflected in the value determined under the cost approach; (2) further reducing value under the cost approach to reflect economic obsolescence; (3) giving the dividend growth model greater weight in our determination of the cost of equity capital under the income approach; and (4) giving the value determined under the income approach significantly more weight than the value determined under the cost approach. The Commissioner opposes EELP's motion in all respects. We deny EELP's motion.
Personal property is generally not subject to tax in Minnesota. Minn. Stat. § 272.02, subd. 9 (2018). However, "personal property which is part of... (2) a pipeline system transporting or distributing products" is subject to tax. Minn. Stat. § 272.02, subd. 9(a). Such property is assessed not by the local taxing authority but by the Commissioner of Revenue. Minn. Stat. § 273.33, subd. 2 (2018) ().
The Commissioner has interpreted section 273.33's requirement of "attachment" as requiring personal property be "installed" as of the assessment date. See Minn. R. 8100.0300, subp. 3.A. (2017) . Because we are bound by Rule 8100, Enbridge Energy, L.P. v. Comm'r of Revenue, 923 N.W.2d 17, 22 (Minn. 2019), we must likewise value CWIP that is "installed" on each assessment date.
CWIP actually installed.
EELP first asserts that we erred by including in the cost of its pipeline system all construction work in progress (CWIP), rather than only that which was actually installed on the assessment date.[2] According to EELP, "uncontroverted evidence demonstrates that significant portions of [] CWIP were clearly not installed as of the assessment dates, and therefore not taxable." [3] This "uncontroverted evidence," according to EELP, is a schedule of entries in EELP's CWIP account showing "a cluster of in-service dates subsequent to the ... assessment date." [4] The Commissioner opposes EELP's motion on this point, noting that the record indicates "in-service" dates may differ from the date on which items were installed.[5]
Testimony at trial established that EELP's CWIP account was a place to record "dollars while something is being done or under construction." [6] EELP recorded expenditures in CWIP "until such time as the project is done" or "when the project is completed or in service," then moved those expenditures to plant-in-service.[7] During trial, EELP introduced into evidence several schedules of entries in its CWIP account.[8] Some of those entries had an "in-service" date either before or after the assessment dates at issue here, [9] although the vast majority of entries had no "in-service" date at all. An in-service date before the date of the schedule indicated that the cost related to "some sort of maintenance or update to a project that has already gone into service." [10] But EELP conceded during argument on its motion for rehearing that there could be a difference between the date on which a particular item was installed in the pipeline system and the date on which the larger project, of which it was a part, was placed in service.[11] In other words, "in-service" dates relate to entire projects, rather than to specific items or expenditures.
Minnesota law makes items taxable once they are "part of the pipeline system. Minn. Stat. § 272.02, subd. 9(a); see also Minn. R. 8100.0300, subp. 3.A ("installed by the assessment date"). In other words, Minnesota taxes items of pipeline property once they are "part of the pipeline system or "installed," regardless of when the overall project of which the items are a part is completed. The burden was on...
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