Laramie County Bd. of Equalization v. Wyoming State Bd. of Equalization
| Decision Date | 30 April 1996 |
| Docket Number | Nos. 95-96,95-134,s. 95-96 |
| Citation | 915 P.2d 1184 |
| Parties | LARAMIE COUNTY BOARD OF EQUALIZATION, Appellant (Petitioner), v. WYOMING STATE BOARD OF EQUALIZATION; and Frontier Refining, Inc., Appellees (Respondents). (Two Cases.) |
| Court | Wyoming Supreme Court |
Kathy Karpan, Acting Laramie County Attorney; Margy White, Acting Laramie County Attorney, Cheyenne; Theodore E. Lauer, Director, and David C. Holtz, Student Intern, Prosecution Assistance Program, Laramie, for appellant.
Lawrence J. Wolfe, P.C., and Susan E. Laser-Bair of Holland & Hart, Cheyenne, for appellee Frontier Refining Inc.
William U. Hill, Attorney General; Michael L. Hubbard, Deputy Attorney General; Cheyenne, for appellee Wyoming State Board of Equalization.
Wade E. Waldrip and Thomas A. Thompson of Williams, Kelly & Waldrip, Rawlins, for Wyoming County Commissioners Association as Amicus Curiae.
Mark R. Stewart of Hickey, Mackey, Evans, Walker & Stewart, Cheyenne, for Laramie County School District No. One as Amicus Curiae.
Before GOLDEN, C.J., THOMAS, MACY and TAYLOR, JJ., and VOIGT, District Judge.
The Laramie County Board of Equalization appeals two Wyoming State Board of Equalization decisions concerning the desulfurization equipment recently added to Frontier Refining, Inc.'s refinery. Reversing the Laramie County Board of Equalization, the Wyoming State Board of Equalization determined the equipment was primarily installed for pollution control purposes and is exempt from ad valorem taxes pursuant to WYO.STAT. § 35-11-1103.
We reverse.
Appellant Laramie County Board of Equalization (County Board) presents the following issues:
I. Whether this Court should accord any deference, in fact or law, to the State Board of Equalization's decision or whether it should treat it as an intermediate level of review and focus on the decision of the Laramie County Board of Equalization as if on appeal for the first time.
II. Whether there is a well-founded doubt that the exemption applies to Frontier Refinery's desulfuring equipment and thus any ambiguity is resolved in favor of taxation.
III. Whether the county board's denial of a tax exemption for Frontier Refinery's desulfuring equipment is supported by substantial evidence and is not contrary to law.
Appellee Frontier Refining, Inc. (Frontier) presents only one issue:
1. Whether the State Board of Equalization correctly concluded that equipment at Frontier's refinery is exempt from ad valorem tax as pollution control equipment under W.S. 35-11-1103.
Appellee State Board of Equalization (State Board) presents the issue as:
Did the State Board of Equalization correctly conclude that the equipment was entitled to pollution control exemption under W.S. 35-11-1103 and therefore properly order remand to the county for determination of marketable by-product exclusion?
The Wyoming County Commissioners Association filed an amicus curiae brief supporting the County Board's position and presented the following issue:
Whether this Court should adopt an objective test or a subjective test in determining whether property is "primarily designed, installed and utilized" for pollution control?
Finally, Laramie County School District Number One also filed an amicus curiae brief supporting the County Board's position and presenting the following issues:
A. Did the State Board of Equalization fail to give appropriate deference to the B. Did the State Board of Equalization fail to apply the presumption against tax exemptions in overturning the decision of the Laramie County Board of Equalization which denied the pollution control tax exemptions sought by Frontier Refining?
decision of the Laramie County Board of Equalization's decision denying the tax exemptions sought by Frontier Refining for pollution control equipment?
C. Did the State Board of Equalization err in granting the tax exemptions on the basis that the equipment was designed, installed and utilized primarily for pollution control?
Frontier Refining, Inc. owns and operates a refining facility in Cheyenne, Laramie County, Wyoming, which processes crude oil primarily for the production of diesel fuel and gasoline. In 1990, Congress amended the Clean Air Act to reduce the amount of sulfur allowed in diesel fuel sold for on-road use, effective October 1, 1993. The amendment restricted the amount of sulfur allowed in Frontier's main product, on-road diesel. Frontier responded by making several modifications to its refining plant. The modifications included a new sulfur recovery unit, a sulfur recovery plant, which was built in 1984, but its capacity is augmented by the new sulfur recovery unit, an amine treater, 1 a hydrogen plant and a diesel hydrotreater. 2 For simplicity, we shall refer to all of the equipment at issue in this appeal as "desulfurization equipment" or the "sulfur management system."
In 1993 and 1994, 3 Frontier filed applications for exemptions from the county ad valorem tax. WYO.STAT. § 35-11-1103 (1994) allows ad valorem tax exemptions for equipment "designed, installed and utilized primarily for the elimination, control or prevention of air, water or land pollution." This exemption is commonly known as the "pollution control exemption." The Laramie County Assessor's office, upon advice from its expert, denied the pollution control exemption for Frontier's sulfur management system. After hearing evidence from Frontier and the Assessor, the County Board upheld the Assessor's denial of the pollution control exemption for Frontier's sulfur management system.
Frontier appealed the County Board's denial of the pollution control exemption to the State Board. The State Board vacated the County Board's decisions concerning the desulfurization equipment with orders dated October 6, 1994, and April 10, 1995. The County Board appealed to the District Court of the First Judicial District, filing petitions for writ of review pursuant to WYO.R.APP.P. 12.09. The district court certified the cases to this Court and on June 1, 1995, we signed an order consolidating both appeals.
Statutory framework
A brief review of the statutory framework may be helpful to understand the procedural posture in this case. "Generally, all property in Wyoming is subject to taxation based upon a system of uniform valuation." State Board of Equalization v. City of Lander, 882 P.2d 844, 847 (Wyo.1994); WYO. CONST. Art. 15, § 11. The legislature affirmed its intent to make all property subject to taxation, unless prohibited by law or expressly exempted, when it passed WYO.STAT. § 39-1-102 (1994), which states:
All property within Wyoming is subject to taxation as provided by this act except as prohibited by the United States or Wyoming constitutions or expressly exempted by W.S. 39-1-201 WYO.STAT. § 39-1-201(a)(xx) (1994) exempts from taxation "[p]roperty used for pollution control to the extent provided by W.S. 35-11-1103." WYO.STAT. § 35-11-1103 (1994) provides:
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 department of revenue shall determine the exempt portion on all property assessed pursuant to W.S. 39-2-201 through 39-2-213. The county assessor shall determine the exempt portion on all property assessed pursuant to W.S. 39-2-301 through 39-2-304. The determination shall not include as exempt any portion of any facilities which have value as the specific source of marketable byproducts.
The county assessor is responsible for assessing and determining the exemptions for the property involved in this case. WYO.STAT. §§ 39-2-301(c) and 39-2-201(a) (1994); WYO.STAT. § 35-11-1103 (1994). WYO.STAT. § 39-2-301 (1994 and Cum.Supp.1995) supplies the procedure for the taxpayer to submit a statement of all taxable property and for the county assessor to notify the taxpayer of its assessment. WYO.STAT. § 39-2-302 (1994 and Cum.Supp.1995) provides for protests of assessments to the County Board. WYO.STAT. § 39-1-304 (1994 and Cum.Supp.1995) requires the State Board to hear appeals from the County Board and to decide all questions concerning the construction of any statute affecting the assessment of taxes. WYO.STAT. § 39-1-306 (1994) allows the County Board to appeal a decision of the State Board which reverses or modifies a County Board decision.
Union Pacific Railroad v. Wyoming State Bd. of Equalization, 802 P.2d 856 (Wyo.1990), appropriately described the standard of review for cases arising from a county board contested case proceeding, appealed to a state agency and finally arriving in this Court on appeal.
Since in this case the county board was the finder of the fact and the state board heard no additional testimony, we will treat the state board as an intermediate level of review and accord deference only to the county board's findings of fact. Thus, the primary focus of our review will be whether the county board's decision was lawful and supported by substantial evidence.
Union Pacific, 802 P.2d at 859.
The party challenging the sufficiency of the evidence has the burden of demonstrating the agency's decision is not supported by substantial evidence. If the agency action is supported by substantial evidence, its decision should be reversed only for errors of law. If the agency did not apply the correct...
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