Lincoln County v. Sanders County, 93-008
| Decision Date | 02 November 1993 |
| Docket Number | No. 93-008,93-008 |
| Parties | LINCOLN COUNTY, Montana, Petitioner and Appellant, v. SANDERS COUNTY, The Hard-Rock Mining Impact Board, The City of Libby, and Noranda Minerals Corporation, Inc., Respondents and Respondents. |
| Court | Montana Supreme Court |
Richard M. Weddle, Sp. Asst. Atty. Gen., Dept. of Commerce, Helena, for Montana Hard-Rock Min. Impact Bd.
Robert Slomski, Sanders County Atty., Thompson Falls, Alan L. Joscelyn, Gough, Shanahan, Johnson & Waterman, Helena, for Noranda Minerals Corp.
Mark J. Fennessy, Libby City Atty., Libby, for City of Libby.
This is an appeal from a decision of the Nineteenth Judicial District Court, Lincoln County, affirming a decision of the Hard-Rock Mining Board. We affirm.
We restate the issues as follows:
1. Did the District Court err in ruling that Lincoln County could not challenge the standing of Sanders County's objection to the Mining Board's decision?
2. Did the District Court err in determining that the Mining Board did not exceed In 1989, Noranda Minerals Corp. Inc. (Noranda), applied to the Montana Department of State Lands under § 82-4-335, MCA, for an operating permit for its Montanore Project, a proposed silver and copper mine to be located in Lincoln and Sanders Counties. While the ore body lies beneath the Cabinet Mountain Wilderness Area in Sanders County, access is gained through roads originating in Lincoln County. Surface facilities are also in Lincoln County. The Metal Mine Reclamation Act and the Hard Rock Mining Impact Act (Impact Act) require developers of large scale hard-rock minerals to prepare an "impact plan" identifying any increased costs to local government units for public services and facilities which will be needed as a result of the proposed project. Such costs must be paid by the developer in the form of grants, proceeds of special facility impact bonds, or prepayments of property taxes as may be appropriate pursuant to § 82-4-335(5) and 90-6-307, MCA.
its authority pursuant to § 90-6-307(8), MCA, of the Hard-Rock Mining Impact Act and § 90-6-404(5), MCA, of the Property Tax Base Sharing Act when it amended the Montanore Plan's allocation of taxes?
Under the Impact Act, an affected local government unit may file an objection to the Impact Plan with the Hard-Rock Mining Board (the Mining Board) when the unit disagrees with an aspect of the Impact Plan, or contends the plan fails to address certain issues adequately. Section 90-6-307, MCA. The Impact Act encourages parties to resolve disputes among themselves, but where resolution has not occurred, the Mining Board is given jurisdiction to resolve the dispute by holding a contested case hearing. Section 90-6-307, MCA.
Also pertinent to this cause is the Hard-Rock Mining Impact Property Tax Base Sharing Act (Tax Base Sharing Act), found at §§ 90-6-401 through 90-6-406, MCA. Operating in conjunction with the Impact Act, it addresses those situations in which the proposed project will have adverse financial impacts on local government units other than those localities in which the mine is located. Because of our tax system in Montana, these adjacent localities would not receive property tax to compensate for the adverse impact of the mine. Therefore, Montana's system allocates a portion of the taxes paid on the valuation of the mine to these adjacent localities. The allocation under the Tax Base Sharing Act is required when the impact plan identifies an adverse financial situation result which affects neighboring local units of government.
The Tax Base Sharing Act in part provides that the real property tax on the mine shall be spread over all governmental units affected based upon the residence of the mine's employees and school age children of such employees. This act was in effect when Noranda submitted its impact plan.
The Montanore Impact Plan predicted that a majority of the project's employees would reside in the Libby area and that Libby would incur significant costs because of the mine development but would not receive a corresponding increase in taxable valuation from the mine to offset the cost. Based on the foregoing analysis, the Impact Plan determined that the Tax Base Sharing Act was applicable and, therefore, the project's taxable valuation should go to Libby and the rest of Lincoln County and not Sanders County.
House Bill 832, Chapter 760, Laws 1991, requires that taxable valuation be assigned to Sanders County. Under this bill, a minimum of 20% of the gross proceeds from the taxable valuation of the project is allocated to those local governments within which the ore body is located.
House Bill 832, which became § 90-6-404, MCA, provides:
90-6-404. Allocation of taxable valuation for local taxation purposes. When property of a large-scale mineral development is subject to the provisions of 90-6-403, the increase in taxable valuation must be allocated by the department of revenue as follows:
(1) If the board determines that the local government unit in which the ore body or the mineral deposit being mined is located is not affected by the development (2) The remaining increase in taxable valuation of the mineral development must be allocated between affected counties and affected municipalities according to the following formula based on the place of residence of mineral development employees:
and if this determination is shown on the impact plan, 20% of the total increase in taxable valuation of the gross proceeds must be allocated to that local government unit. This provision is intended to establish a minimum allocation for the units and does not prohibit proof by a unit [261 Mont. 348] that actual direct impacts would exceed 20% of the total impacts of the development
(a) A portion, not to exceed 20%, to affected municipalities, based on that percentage of the total number of mineral development employees that reside within municipal boundaries. The taxable valuation allocated to affected municipalities must be distributed to each municipality according to its percentage of the total number of mineral development employees who reside within municipal boundaries. That portion of the taxable valuation distributed to a municipality pursuant to this section is subject to the same county mill levy as other taxable properties located in the municipality.
(b) The remaining portion of the taxable valuation must be distributed to each affected county according to its percentage of the total number of mineral development employees that reside within the county.
(3) The increase in taxable valuation equal to that subject to subsection (2) must be distributed pro rata among each affected high school district according to the percentage of the total number of mineral development high school students that reside within each district.
(4) The increase in taxable valuation equal to that subject to subsection (2) must be distributed pro rata among each affected elementary school district according to the percentage of the total number of mineral development elementary school students that reside within each district.
(5) The distribution formula specified in subsections (2) through (4) may be modified by an impact plan approved as provided in 90-6-307 or amended as provided in 90-6-311, if the modification is needed in order to ensure a reasonable correspondence between the occurrence of increased costs resulting from the mineral development and the allocation of taxable valuation resulting from the mineral development.
During a 90-day review period established by § 90-6-307(6), MCA, the Sanders County Board of Commissioners filed an objection to the Montanore Impact Plan with the Mining Board. This objection challenged 1) the Impact Plan's conclusion that the proposed mining development held no potential for future adverse impacts on Sanders County and, 2) the manner in which the Impact Plan proposed to implement the Tax Base Sharing Act. The parties resolved issue one so that only issue two went before the Mining Board.
When negotiations between the parties broke down, the Mining Board held an informal contested case hearing concerning Sanders County's objection. The Mining Board considered the following issues:
1. Whether the Noranda Minerals Corporation Impact Plan for the proposed Montanore mine accurately identified the increased capital and operating costs which would be experienced by the City of Libby, Montana, as a result of the development of the Montanore mine;
2. Whether, if the Plan did accurately identify the increased capital and operating costs which would be experienced by the City of Libby, these increased costs warranted or required application of the Property Tax Base Sharing Act, as the Plan proposed; and
3. Whether, if the effects of the mining development on the City of Libby did warrant or require the application of the Property Tax Base Sharing Act, the Plan correctly described the manner in which the Act should apply.
The Mining Board concluded that the Impact Plan was correct in its projections concerning the impacts to Libby. Further, the Mining Board concluded that these increased costs required application of the Tax Base Sharing Act and that the triggering of the act meant that all affected counties and municipalities must be considered, which here includes Libby, Lincoln County and Sanders County.
The Mining Board finally concluded that the Impact Plan did not correctly reflect a reasonable correspondence between the occurrence of increased costs and the allocation of taxable valuation. It, therefore, modified the Impact Plan's allocation of such funds pursuant to § 90-6-404(5), MCA. Under the modified plan adopted by the Mining Board, Sanders County would receive 20% of the anticipated gross proceeds of the taxable valuation of the...
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