General Chemical Corp. v. Wyoming State Bd. of Equalization, 91-46

• Decision Date: 28 October 1991
• Docket Number: No. 91-46,91-46
• Citation: 819 P.2d 418
• Parties: GENERAL CHEMICAL CORPORATION, Appellant (Petitioner), v. WYOMING STATE BOARD OF EQUALIZATION, Appellee (Respondent).
• Court: Wyoming Supreme Court

Page 418

819 P.2d 418

GENERAL CHEMICAL CORPORATION, Appellant (Petitioner), v. WYOMING STATE BOARD OF EQUALIZATION, Appellee (Respondent).

No. 91-46.

Supreme Court of Wyoming.

Oct. 28, 1991.

Robert H. Johnson, Rock Springs, for appellant. Argument presented by Mr. Johnson.

Joseph B. Meyer, Atty. Gen., Michael L. Hubbard, Sr. Asst. Atty. Gen., Matthew D.C.P. Meuli (argued), Asst. Atty. Gen., for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, Justice.

Appellant General Chemical Corporation challenges an order of the State Board of Equalization setting the amount of exemption from 1989 ad valorem tax attributable to pollution control equipment at appellant's facility. Appellant filed a petition for review of the Board's order in the district court. The district court certified the case to this court for determination pursuant to W.R.A.P. 12.09.

We affirm the order of the State Board of Equalization.

Appellant mounts several procedural and substantive challenges to the State Board's determination. We believe the substantive issues can be boiled down to the single, basic issue stated by appellee:

"Did the Wyoming State Board of Equalization correctly interpret W.S. 35-11-1103 by not considering operating costs in determining the amount of value of the pollution control equipment for ad valorem taxation?"

We also consider the procedural issue urged by appellant:

"In determining the tax exemption of pollution control equipment, must the State Board of Equalization consider the recommendation of the county assessor, as provided in its own rules?"

On January 13, 1989, General Chemical Corporation submitted an application to the Sweetwater County Assessor for ad valorem tax exemption. The exemption was sought for pollution control equipment at General Chemical's facility near Green River, Wyoming having a total installed cost of $38,166,770. The county assessor, by regulation, reviewed the application before making a recommendation to the State Board of Equalization through the Director of the Ad Valorem Tax Division (Division).

The county assessor recommended an exemption of $32,404,448. Robert E. Williams, the Supervisor of Local Assessments for the Division, reviewed the assessor's recommendation and recommended reduction, and the State Board of Equalization reduced the total exemption to $26,122,938. Part of this reduction was due to a difference in how Williams calculated the non-exempt portion of the equipment's valuation attributable to production of trona dust and other marketable by-products. The county assessor had used the net income from operation of the pollution control equipment to arrive at the capitalized value of the income stream from sale of marketable by-product. Williams used the gross income from sale of the by-product to make his calculation.

The difference produced by these methodologies is striking because, in nearly every case, the cost of operating the pollution control machinery far exceeds the value recovered from sale of by-products. For example, the 5,718 tons of trona dust collected annually by the "Calciner Dust Control GR-2" had a market value of $97,206. However, the annual operation, maintenance and power requirements of that unit totalled $269,001. The county assessor recommended a 100% exemption, or $1,304,995, for the calciner; the State Board reduced this, due to the capitalized gross value of the trona, to 53%, or $691,647. Other components of pollution control machinery were similarly re-evaluated, leading to the State Board's recommended exemption of $26,122,938.

General Chemical filed an internal appeal from the Board's determination. The parties agreed to submit the matter to the Board on written briefs. On December 3, 1990, the Board issued findings of fact, conclusions of law and an order. It found that the Board's method of calculating value of the pollution control equipment as a source of marketable by-product was correct and that the Board acted reasonably by not allowing a deduction for the equipment's current operating expenses.

General Chemical appealed the Board's determination to the district court. The district court then certified the appeal to this court pursuant to W.R.A.P. 12.09.

Appellant contests the Board's failure to consider the costs of operation of its pollution control equipment when determining the amount of exemption which should be allowed. We review the Board's action in light of the following well-established principles:

"We review the decision of an administrative agency as if we were a reviewing court of the first instance [which in this case we are]; petitioners have the burden of proving that the agency's actions are arbitrary, capricious or an abuse of discretion; the reviewing court must examine whether the decision made by an administrative agency has been reached on relevant factors and was rational; agency decisions are to be reversed only for errors of law; and courts will not substitute their judgment for that of an administrative agency." McGuire v. State, Dept. of Revenue and Taxation, 809 P.2d 271, 274 (Wyo.1991).

The relevant statutory authorization in force at the time the State Board made its determination reads as follows:

"The following property is exempt from ad valorem taxation pursuant to the provisions of this act and includes facilities, installations, machinery or equipment attached or unattached to real property and designed, installed and utilized primarily for the elimination, control or prevention of air, water or land pollution, or in the event such facility, installation, equipment or machinery shall also serve other beneficial purposes and use, such portion of the assessed valuation thereof as may be reasonably calculated to be necessary for and devoted to elimination, control or prevention of air, water and land pollution. The state board of equalization shall determine such exempt portion, and shall not include as exempt any portion of any facilities which have value as the specific source of marketable byproducts." W.S. 35-11-1103 (June 1988 Repl.). (emphasis added)

The parties urge differing interpretations of this statute. Appellant claims that it requires consideration of net value of the marketable by-products, while appellee insists that we follow the pre-1990 agency interpretation in allowing only gross value. In Allied-Signal, Inc. v. State Board of Equalization, 813 P.2d 214 (Wyo.1991), we summarized our rules for construction of statutes as follows:

"[T]his court looks only to the intent of the legislature when enforcing or construing statutes. * * *

"Legislative intent must be ascertained initially and primarily from the words used in the statute. * * * If the language selected by the legislature is sufficiently definitive, that language establishes the rule of law. Any additional construction can be resorted to only if the wording is ambiguous or unclear to the point of demonstrating obscurity with respect to the legislative purpose or mandate. * * *

"We previously have articulated the proposition that a statute is ambiguous only if it is found to be vague or uncertain and subject to varying interpretations. The converse of this proposition is that the statute is unambiguous if its wording is such that reasonable persons are able to agree as to its meaning with consistency and predictability. The question of whether an ambiguity exists in a statute is a matter of law to be determined by the court." Allied-Signal, 813 P.2d at 219-20. (citations omitted)

The Board argues that W.S. 35-11-1103 is unambiguous and that its plain language supports the agency interpretation. The plain language of this statute, however, says nothing about whether gross or net value is to be used for purposes of valuation. Appellant, in arguing for ambiguity, notes that the Board changed its interpretation of the pertinent portion of the statute by published guidelines during the pendency of this litigation. This may certainly be additional evidence of ambiguity, but it does not create the ambiguity. See State Board of Equalization v. Tenneco Oil Co., 694 P.2d 97, 99 (Wyo.1985) (agency's later different interpretation of statute as evidence of ambiguity); see also Allied-Signal, 813 P.2d 214 (changing agency interpretation of statute alone not conclusive evidence of ambiguity; court retains ultimate power to determine ambiguity; agency interpretation cannot be used to render an unambiguous statute ambiguous).

Appellant argues, and we agree, that it is not the value of the marketable by-product itself which is denied exemption, but rather the value of the equipment as a source of the by-product. Since no by-product can be produced without incurring operational expenses, appellant reasons, the value of the equipment "as a source" of by-product cannot be properly calculated unless necessary operational expenses are factored into the equation. We think appellant reads more into the statute than is actually there. The language certainly suggests that the value of by-product is relevant in determining the value of the non-exempt portion of the facility. However, the statute itself does not give us a formula for arriving at the actual valuation. We think the statute is silent on the method of evaluation and thus ambiguous. Therefore, since we cannot discern the legislative intent on this question from the plain language of the statute, we must make additional inquiry as to its proper interpretation.

W.S. 39-1-304(a)(iv) (July 1990 Repl.), gives the State Board of Equalization the power to

"[d]ecide all questions that may arise with reference to the construction of any statute affecting the assessment, levy and collection of taxes, in accordance with the advice and opinion of the attorney general, whose...