G-p Gypsum Corp.. v. State Of Wash., 81995-5.

• Decision Date: 29 July 2010
• Docket Number: No. 81995-5.,81995-5.
• Court: Washington Supreme Court
• Parties: G-P GYPSUM CORPORATION, Respondent, v. STATE of Washington, DEPARTMENT OF REVENUE, Petitioner.

169 Wash.2d 304

237 P.3d 256

G-P GYPSUM CORPORATION, Respondent,

v.STATE of Washington, DEPARTMENT OF REVENUE, Petitioner.

No. 81995-5.

Supreme Court of Washington,En Banc.

Argued Nov. 17, 2009.

Decided July 29, 2010.

Peter B. Gonick, Office of the Attorney General, Olympia, WA, for Petitioner.

Franklin G. Dinces, The Dinces Law Firm, Gig Harbor, WA, Geoffrey P. Knudsen, Attorney at Law, Seattle, WA, for Respondent.

Sheila Marie Gall, Olympia, WA, amicus counsel for Association of Washington Cities.

Kent Charles Meyer, Seattle City Attorney's Office, Seattle, WA, amicus counsel for City of Seattle.

Elizabeth Ann Pauli, Debra Ellen Casparian, Tacoma City Attorney's Office, Tacoma, WA, amicus counsel for City of Tacoma.

Judith Martha Zeider, Vancouver City Attorneys Office, Vancouver, WA, amicus counsel for Washington State Association of Municipal Attorneys.

STEPHENS, J.

¶ 1 This case presents an issue of statutory construction requiring us to determine whether G-P Gypsum Corporation (Gypsum) “uses” natural gas for the purpose of a local use tax statute. We reverse the Court of Appeals and hold that Gypsum does “use” natural gas within Tacoma city limits and is therefore subject to Tacoma's local use tax.

FACTS AND PROCEDURAL HISTORY

¶ 2 Gypsum manufactures wallboard at its Tacoma plant. In its operations, it consumes natural gas within Tacoma city limits. Gypsum purchases its natural gas from various brokers, taking delivery at two points: a pipeline hub outside the city of Sumas in Whatcom County and a pipeline hub outside the city of Sumner in unincorporated Pierce County. Gypsum exercises dominion and control over the gas when it reaches the stations. From the stations, the gas Gypsum anticipates needing for manufacturing activities is transported to its Tacoma plant; excess gas might be sold to third parties with delivery to those parties occurring at one of the stations. Gas that is transported to Gypsum's Tacoma plant is burned in the production of wallboard.

¶ 3 For several years, Tacoma assessed a brokered natural gas (BNG) tax against Gypsum for use of natural gas within city limits, pursuant to RCW 82.14.230. Gypsum claimed a refund of the tax for the period January 1, 1996 to December 31, 2001. It argued that under former RCW 82.12.010(2) (1994), “use” means the first instance of dominion and control in the state, and because Gypsum initially takes dominion and control of the gas outside Tacoma city limits, Tacoma has no taxing authority over it.

¶ 4 Gypsum's refund request was directed to the Department of Revenue (Department) because the Department administers the local BNG tax for municipalities. The Department denied the refund request.

¶ 5 After exhausting its administrative remedies, Gypsum filed a complaint for a tax refund in Thurston County Superior Court. At a bench trial, the superior court held in favor of the Department, reasoning that the definition of “use” under chapter 82.12 RCW, governing state use taxes, did not apply for the purposes of local use tax under chapter 82.14 RCW. Gypsum appealed. Division Two of the Court of Appeals reversed, concluding that the plain language of the statutes at issue resolves the case in Gypsum's favor. G-P Gypsum Corp. v. Dep't of Revenue, 144 Wash.App. 664, 671, 183 P.3d 1109 (2008). The Department petitioned for review by this court, which we granted.

G-P Gypsum Corp. v. Dep't of Revenue, 165 Wash.2d 1023, 203 P.3d 380 (2009). The Department is supported by amici city of Seattle, Association of Washington Cities, city of Tacoma, and the Washington State Association of Municipal Attorneys.

ANALYSIS

¶ 6 We begin with the texts of the relevant statutes. Under chapter 82.14 RCW, municipalities may impose a BNG use tax:

The governing body of any city, while not required by legislative mandate to do so, may, by resolution or ordinance for the purposes authorized by this chapter, fix and impose on every person a use tax for the privilege of using natural gas or manufactured gas in the city as a consumer.

RCW 82.14.230(1) (emphasis added). “Use” is not defined in chapter 82.14 RCW, which deals with local retail and use taxes. However, “use” is defined in chapter 82.12 RCW, which deals with state use taxes:

“Use,” “used,” “using,” or “put to use” shall have their ordinary meaning, and shall mean the first act within this state by which the taxpayer takes or assumes dominion or control over the article of tangible personal property (as a consumer), and include installation, storage, withdrawal from storage, or any other act preparatory to subsequent actual use or consumption within this state.

Former RCW 82.12.010(2) (emphasis added). By statute, the definitions in chapter 82.12 RCW are made applicable to chapter 82.14 RCW, but this incorporation of definitions is limited:

The meaning ascribed to words and phrases in chapter[ ] ... 82.12 RCW, as now or hereafter amended, insofar as applicable, shall have full force and effect with respect to taxes imposed under authority of this chapter.

Former RCW 82.14.020(7) (1983) (emphasis added).

¶ 7 The question here is what part of the definition of “use” in former RCW 82.12.010(2), if any, is applicable to chapter 82.14 RCW. Gypsum focuses on the language defining “use” as the first act of dominion and control. While Gypsum does not dispute that it consumes natural gas within Tacoma city limits, Clerk's Papers at 84, it claims that the use tax authorized under RCW 82.14.230(1) does not apply to it because its “use” of the gas as defined by former RCW 82.12.010(2) occurs before the gas is brought within the city limits. It reads “use” as restricted to the first act of exercising dominion and control over the gas within the state. Because Gypsum first takes possession of the gas in Whatcom County or unincorporated Pierce County, it argues no use (i.e., first act) occurs in Tacoma subjecting it to the city's use tax.

¶ 8 The Department counters that the definition of “use” under former RCW 82.12.010(2) must be read in harmony with former RCW 82.14.020(7), which states that the definitions under chapter 82.12 RCW apply to chapter 82.14 RCW only insofar as they are applicable. The phrase “in the state” in the definitional statute is not applicable to a local use tax, which is concerned only with use that occurs within the municipality. Further, the Department argues, the definition of “use” in former RCW 82.12.010(2) includes the ordinary meaning of use as well as the “dominion and control” provision upon which Gypsum relies. The ordinary meaning of “use” includes consumption, and Gypsum indisputably consumes the gas. Thus, contends the Department, the only applicable definition of “use” under RCW 82.12.010(2) for the purposes of chapter 82.14 RCW is its ordinary meaning: consumption. In support of its reading of the statutes at issue, the Department offers an overview of the legislative purpose behind the local gas use tax. Suppl. Br. of Pet'r at 5-9; Br. of Resp't at 8-11, 15-18.

¶ 9 “The meaning of a statute is a question of law reviewed de novo.” Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 9, 43 P.3d 4 (2002). In any question of statutory construction, we strive to ascertain the intention of the legislature by first examining a statute's plain meaning. Id. at 9-10, 43 P.3d 4. “ ‘ “Statutes must be interpreted and construed so that all the language used is given effect, with no portion rendered meaningless or superfluous.” ’ ”

State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003) (quoting Davis v. Dep't of Licensing, 137 Wash.2d 957, 963, 977 P.2d 554 (1999) (quoting Whatcom County v. City of Bellingham, 128 Wash.2d 537, 546, 909 P.2d 1303 (1996))).

¶ 10 Turning first to the question of the purpose of the local BNG tax, the Court of Appeals declined to consider any expression of legislative intent, stating that it could not “resort to extrinsic sources in interpreting a statute unless we find more than one reasonable interpretation of the statutory language.” Gypsum, 144 Wash.App. at 670, 183 P.3d 1109. We have previously criticized such a crabbed notion of statutory interpretation, holding instead that a statute's plain meaning should be “discerned from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question.”

Campbell, 146 Wash.2d at 11, 43 P.3d 4. Moreover, an enacted statement of legislative purpose is included in a plain reading of a statute. C.J.C. v. Corp. of Catholic Bishop, 138 Wash.2d 699, 712-14, 985 P.2d 262 (1999) (plurality opinion) (relying upon legislature's adopted finding and intent provision in construing definitional statute). ¹

¶ 11 Here, we have the benefit of an enacted statement of legislative purpose passed as part of the session law that became RCW 82.14.230(1). Laws of 1989, ch. 384, § 1. This statement makes it clear the legislature intended to grant cities the authority to impose a use tax on entities that purchase natural gas outside city limits but consume it within city limits.

Due to a change in the federal regulations governing the sale of brokered natural gas, cities have lost significant revenues from the utility tax on natural gas. It is therefore the intent of the legislature to adjust the utility and use tax authority of the state and cities to maintain this revenue source for the municipalities and provide equality of taxation between intrastate and interstate transactions.

Laws of 1989, ch. 384, § 1. The change in federal regulations to which the provision refers was deregulation of the mechanism of sale for natural gas. As the Department explains, after deregulation, consumers began to purchase gas directly from producers instead of local distribution companies. Suppl. Br. of Pet'r at 6. That meant localities lost revenue on gas sales because when gas was purchased from a local distribution company, the sales were subject to a state public utility tax...