MAPCO Ammonia Pipeline, Inc. v. State Bd. of Equalization and Assessment

• Decision Date: 10 July 1991
• Docket Number: 90-874,90-873,MID-AMERICA,Nos. 90-871,90-872,s. 90-871
• Citation: 238 Neb. 565,471 N.W.2d 734
• Parties: MAPCO AMMONIA PIPELINE, INC., Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.PIPELINE COMPANY, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee. TRAILBLAZER PIPELINE COMPANY, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee. NATURAL GAS PIPELINE COMPANY OF AMERICA, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.
• Court: Nebraska Supreme Court

Page 734

471 N.W.2d 734

238 Neb. 565

MAPCO AMMONIA PIPELINE, INC., Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

MID-AMERICA PIPELINE COMPANY, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

TRAILBLAZER PIPELINE COMPANY, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

NATURAL GAS PIPELINE COMPANY OF AMERICA, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

Nos. 90-871, 90-872, 90-873, 90-874.

Supreme Court of Nebraska.

July 10, 1991.

Syllabus by the Court

1. State Equalization Board: Taxation: Valuation: Appeal and Error. In an application before the State Board of Equalization and Assessment, a taxpayer may employ any factual or legal argument in support of his, her, or its position requesting equalization, subject to the final determination of questions of law on a de novo basis by the Supreme Court on appeal.

2. Constitutional Law: Legislature: Statutes: Presumptions. In every constitutional challenge, it is presumed that all acts of the Legislature are constitutional, and all reasonable doubts are resolved in favor of constitutionality.

3. Constitutional Law: Legislature: Taxation. Although the Legislature has broad power to define property for tax purposes, its power to define is limited, since the Legislature cannot abrogate or contradict an express constitutional provision and the legislative definition must be reasonable, and cannot be arbitrary or unfounded.

4. Constitutional Law: Legislature. The Legislature's power of definition may not be employed to nullify or circumvent the provisions of the Nebraska Constitution.

5. Constitutional Law: Taxation: Valuation: Property: Words and Phrases. Personal property and real property are both "tangible property" under Nebraska law and must be equalized and taxed uniformly pursuant to Neb. Const. art. VIII, § 1.

6. Constitutional Law: Statutes: Special Legislation. A legislative act can violate Neb. Const. art. III, § 18, as special legislation (1) by creating a totally arbitrary and unreasonable method of classification or (2) by creating a permanently closed class.

7. Taxation: Valuation: Words and Phrases. Equalization is the process of ensuring that all taxable property is placed on the assessment rolls at a uniform percentage of its actual value.

8. Taxation: Valuation. The purpose of equalization of assessments is to bring the assessment of different parts of a taxing district to the same relative standard, so that no one of the parts may be compelled to pay a disproportionate part of the tax.

9. Taxation: Valuation. The process of equalization cannot be applied to property that is not taxed.

10. Constitutional Law: Federal Acts: States. U.S. Const. art. VI, cl. 2, the supremacy clause, binds the several states; subordinates state law, whether constitutional, statutory, or judicially enunciated, to a congressional enactment; and supersedes state law which conflicts with federal law.

11. Courts: Jurisdiction: Taxation. Courts do not have jurisdiction to grant tax exemptions.

12. Taxation: Discrimination: Federal Acts. Tax exemptions are to be considered in determining whether there has been discriminatory treatment under § 306(1)(d) of the Railroad Revitalization and Regulatory Reform Act of 1976.

13. Case Overruled. Stahmer v. State, 192 Neb. 63, 218 N.W.2d 893 (1974), is overruled.

14. Constitutional Law: Statutes: Appeal and Error. Although the parties ordinarily must raise constitutional issues before they will be considered on appeal, where the invalidity of the act is plain, and such a determination is necessary to a reasonable and sensible disposition of the issues presented, we are required by necessity to notice the plain error in the premise on which the case was tried.

15. State Equalization Board: Taxation: Valuation: Constitutional Law. If the State Board of Equalization and Assessment arbitrarily undervalues a particular class of property so as to make another class of property disproportionately higher, or achieves the same result because of legislative action, complaining taxpayers are entitled to relief pursuant to Neb. Const. art. VIII, § 1.

16. Constitutional Law: Taxation. The property tax exemptions enumerated in Neb.Rev.Stat. § 77-202(6) through (9) (Reissue 1990) are unconstitutional under Neb. Const. art. VIII, § 1.

William R. Johnson, of Kennedy, Holland, DeLacy & Svoboda, Bruce J. McWhirter, of Ross & Hardies, and Charlene H. Sinclair, for appellants.

Don Stenberg, Atty. Gen., and L. Jay Bartel, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

PER CURIAM.

These are appeals from the findings and order of the State Board of Equalization and Assessment (State Board) dated August 15, 1990, denying claims for property tax relief submitted by various centrally assessed and locally assessed claimants. Pursuant to our order of September 17, 1990, the parties filed a "case stated" in accordance with Neb.Ct.R. of Prac. 5 L (rev. 1989), separately setting forth the rulings of the State Board complained of by the appellants and the exceptions and contentions of the parties with respect to those issues.

The appellants are public service entities within the meaning of Neb.Rev.Stat. § 77-801.01 (Reissue 1990) and are centrally assessed for purposes of personal property taxation. Due to an identity of issues and counsel, we have consolidated the appeals of MAPCO Ammonia Pipeline, Inc. (case No. 90-871), Mid-America Pipeline Company (case No. 90-872), Trailblazer Pipeline Company (case No. 90-873), and Natural Gas Pipeline Company of America (case No. 90-874) for disposition.

Following our decision in Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989), cert. denied 493 U.S. 1078, 110 S.Ct. 1130, 107 L.Ed.2d 1036 (1990), but prior to our decision in Natural Gas Pipeline Co. v. State Bd. of Equal., 237 Neb. 357, 466 N.W.2d 461 (1991), the appellants appeared before the State Board requesting equalization of their real and personal property (1) with railroad rolling stock, which had been exempted from taxation by the passage of L.B. 7 on November 17, 1989 (codified at Neb.Rev.Stat. § 77-202(11) (Reissue 1990)), and (2) with center pivot and other irrigation systems used for agricultural purposes and equipment and machinery used for business purposes that had been excluded from the definition of real property by L.B. 1, also passed November 17, 1989 (now codified at Neb.Rev.Stat. § 77-103 (Reissue 1990)).

I

The record shows that the State Board convened on August 8, 1990, for the purpose of determining the value of the appellants' property for 1990 and to equalize such valuations for tax purposes within the state. The evidence presented at the August 8 hearing consisted of essentially the same record as that considered by the State Board in 1988 and 1989. Dennis Donner, a manager in the property tax division of the Nebraska Department of Revenue, testified he was of the opinion that 75 percent of commercial and industrial personal property remained exempt from taxation in Nebraska in tax year 1990. In light of the passage of L.B. 7 on November 17, 1989, which exempted railroad rolling stock from taxation, the State Tax Commissioner did not value, assess, or tax any rolling stock of railroad or carline companies operating in Nebraska. The State Board also considered issues related to L.B. 1, which changed the statutory definition of "fixture." The appellants contended that L.B. 7 and L.B. 1 were unconstitutional.

During the August 8 hearing, the State Board declined to grant the relief sought by the appellants and set the statewide equalization rate at 92.13 percent of actual value. The State Tax Commissioner subsequently adjusted the total taxable value of the appellants' property and certified those values to the various counties using the 92.13-percent figure as determined by the State Board.

In its findings and order of August 15, 1990, the State Board described the appellants' requests as "purported claims for 'equalization' ... which are, in fact, based on a request of the State Board to declare unconstitutional [certain] acts of the Nebraska Legislature...." The State Board then found that it did not have jurisdiction to consider claims for equalization of property within a class of taxable property to property which is separately classified and exempted from taxation, and that the constitutionality of legislative acts granting exemptions from property taxation may not be raised before and decided by the State Board.

Although the State Board found it did not have subject matter jurisdiction to hear and decide various claims made based on the alleged unconstitutionality of certain legislative acts, several issues of this nature were presented to the State Board. These issues included the constitutionality of L.B. 7, pertaining to the classification of railroad rolling stock as tax exempt, and L.B. 1, which amended the statutory definition of "fixture."

We held in Natural Gas Pipeline Co., supra at 371, 466 N.W.2d at 470, that the portion of L.B. 7 exempting railroad rolling stock from taxation was unconstitutional because the Legislature had

no reasonable basis for treating railroads differently from other common carriers; therefore, the distinction, as a classification and basis for an exemption from personal property tax, reflected in L.B. 7, result[ed] from special legislation, prohibited by Neb. Const. art. III, § 18, and violat[ed] the uniformity clause of Neb. Const. art. VIII, § 1.

With respect to L.B. 1, the State Board found that

the Legislature has broad powers to define the nature of property for tax purposes, so long as the definitions established are reasonable.... [T]he Board further finds that the evidence presented shows that the valuation of irrigated agricultural land (real property), is subject to taxation, and reflects...