Mississippi State Tax Com'n v. Moselle Fuel Co.

• Decision Date: 03 October 1990
• Docket Number: 07-CA-59079,Nos. 07-CA-59077,s. 07-CA-59077
• Citation: 568 So.2d 720
• Parties: MISSISSIPPI STATE TAX COMMISSION v. MOSELLE FUEL COMPANY and Laurel Fuel Company. MISSISSIPPI STATE TAX COMMISSION v. FRM, INC.
• Court: Mississippi Supreme Court

Page 720

568 So.2d 720

MISSISSIPPI STATE TAX COMMISSION v. MOSELLE FUEL COMPANY and Laurel Fuel Company.

MISSISSIPPI STATE TAX COMMISSION v. FRM, INC.

Nos. 07-CA-59077, 07-CA-59079.

Supreme Court of Mississippi.

Oct. 3, 1990.

Mike C. Moore, Atty. Gen., Stephen J. Kirchmayr, Deputy Atty., Bobby R. Long, Jackson, for appellant.

Luther M. Thompson, Heidelberg & Woodliff, Jackson, for appellee.

Before HAWKINS, P.J., and ROBERTSON and BLASS, JJ.

ROBERTSON, Justice, for the court:

I.

These consolidated appeals present a question of law of the definitional species: What does the term "public service corporation" mean as it appears in our constitution which classifies property for assessment and ad valorem tax purposes? The importance of the answer to Taxpayers ¹--three privately-owned single customer natural gas pipeline companies--is the difference between having their property assessed at fifteen (15%) percent of value as opposed to thirty (30%) percent. To the State of Mississippi and the counties in which such property may be found, the importance is a possible reduction in the amount of ad valorem tax revenues they may collect from these Taxpayers as well as those similarly situated.

II.

A.

Moselle Fuel Company was incorporated on July 3, 1973. Its stock is owned by Howard E. Berry, Joan Berry and Forest Berry. At the request of South Mississippi Electric Power Association (SMEPA), Moselle constructed a pipeline through Jones and Covington Counties to transport natural gas to SMEPA's Moselle Generating Station. SMEPA was the only customer of Moselle with Moselle providing the transportation of natural gas purchased from the producers by SMEPA. Moselle Fuel Company's pipeline has been in disuse since 1983, when SMEPA shut down its Moselle Generating Station.

Laurel Fuel Company was incorporated July 18, 1976, and is owned by the same persons who own Moselle Fuel Company. Laurel's pipeline, also traversing Jones and Covington Counties, was constructed for the purpose of transporting natural gas to the Masonite Corporation's hardboard plant in Laurel. Laurel purchased the natural gas from producers and sold to Masonite at the price paid the producers. Masonite paid Laurel to transport the natural gas for a contract fee.

FRM, Inc. was incorporated April 30, 1975. It is a wholly-owned subsidiary of First Mississippi Corporation. FRM's pipeline begins at the edge of Covington County, crosses Jefferson Davis County and terminates in Lawrence County near Monticello. FRM built the pipeline to transport natural gas to the St. Regis Paper Company for use at its Roy K. Ferguson Paper Mill. St. Regis later sold the paper mill to Georgia-Pacific Corporation. FRM transported natural gas only to the paper mill with one exception in 1977 and 1978 when it transported for and sold to Transcontinental Pipeline Company on an emergency basis.

Moselle, Laurel and FRM are the Taxpayers in these consolidated appeals. Taxpayers are excluded from the definition of "Public Utilities" pursuant to Miss.Code Ann. Sec. 77-11-301 et seq. (Supp.1990). The Public Service Commission has no jurisdiction over Taxpayers except to inspect their lines for safety purposes. None of the companies is required to have a certificate of public convenience and necessity from the Public Service Commission and, except for their respective charters of incorporation, none is required to obtain any other franchise, license or certificate from the State of Mississippi in order to construct or operate their pipelines. Additionally, none has ever exercised the power of eminent domain to take property over which to construct its pipelines. Instead, each negotiated with the individual land owners for easements and, when unsuccessful through this process, routed its pipeline around the property.

B.

This taxation dispute began in 1984 when the Mississippi State Tax Commission ruled that for the tax year 1985 the property of each of these Taxpayers was subject to the Commission's assessment authority and assessed the property of each at thirty (30%) percent of true value. The Commission assessed Moselle's and Laurel's property at $18,000.00 and $45,000.00, respectively, for the year 1985. The Commission assessed FRM's property at $349,050.00. Prior to 1984, none of these Taxpayers had filed schedules with the Commission reporting its property. Miss.Code Ann. Sec. 27-35-303 (1972).

On September 30, 1985, Moselle and Laurel together, and FRM, Inc., acting independently, filed their objections to assessment. More specifically, Taxpayers argued that the Commission had erroneously designated their intrastate, intercounty natural gas pipelines as Class IV property pursuant to Article 4, Section 112 of the Mississippi Constitution (as amended 1982). ²

On November 20, 1985, the Commission confirmed its original assessments and denied the objections. On December 10, 1985, Taxpayers filed their Petition for Appeal and Review with the Circuit Court of the First Judicial District of Hinds County.

On January 21, 1988, the Circuit Court reversed and held that Taxpayers' properties are not Class IV public utility property, but instead are Class II real property. The Circuit Court further held, for ad valorem tax purposes, that Taxpayers are not "public service corporations" and that thus, their pipeline properties should be assessed at fifteen (15%) percent of true value.

On February 11, 1988, the Commission perfected its appeal in both cases.

III.

Our question is whether the Circuit Court was correct when it held that these three Taxpayers are not "public service corporations" within the meaning and contemplation of Miss. Const. Art. 4, Sec. 112 (as amended), and its implementing statute, Miss.Code Ann. Secs. 27-35-301 et seq. (Supp.1990). Our focus is upon the constitutional language, for the meaning given the term public service corporation in the statutes must perforce conform to constitutional mandate.

In 1982 the people amended Section 112 of the Constitution to authorize the discriminatory classification of taxable property for purposes of valuation and assessment. In 1986 the people again amended Section 112, but without effect on today's question. Section 112, in relevant part, now reads

For purposes of assessment for ad valorem taxes, taxable property shall be divided into five (5) classes and shall be assessed at a percentage of its true value as follows:

* * * * * *

Class II. All other real property, except for real property included in Class I or IV, at fifteen percent (15%) of true value.

* * * * * * Class IV. Public utility property, which is property owned or used by public service corporations required by general laws to be appraised and assessed by the state or the county, excluding railroad and airline property and motor vehicles, at thirty percent (30%) of true value.

* * * * * *

The phrase "public service corporations" in the language quoted above was central to the litigation before the Circuit Court, and we review that Court's decision de novo. Miss.Code Ann. Sec. 27-35-163 (1972). The question is one of law and in such contexts we have always eschewed any notion of deference to the Court below. See, e.g., Planters Bank & Trust Co. v. Sklar, 555 So.2d 1024, 1028 (Miss.1990); Cole v. National Life Insurance Co., 549 So.2d 1301, 1303 (Miss.1989); Boggs v. Eaton, 379 So.2d 520, 522 (Miss.1980); Mississippi State Highway Commission v. Dixie Contractors, Inc., 375 So.2d 1202, 1206 (Miss.1979); S & A Realty Co. v. Hilburn, 249 So.2d 379, 382 (Miss.1971); see also Pullman-Standard, a Division of Pullman, Inc. v. Swift, 456 U.S. 273, 287, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66, 79 (1982).

There is another context, institutional in nature, generating policy considerations arguably at loggerheads with what we have just said. We have before us a matter of constitutional and statutory interpretation committed initially to an administrative agency, here the State Tax Commission. Notwithstanding our ordinarily de novo review of questions of law, we have accepted an obligation of deference to agency interpretation and practice in areas of administration by law committed to their responsibility, expertise and concern, although no one has ever articulated the precise content of that duty of deference. See, e.g., Grant Center Hospital of Mississippi, Inc. v. Health Group of Jackson, Mississippi, Inc. d/b/a Riverside Hospital, 528 So.2d 804, 808 (Miss.1988); General Motors Corp. v. Mississippi State Tax Commission, 510 So.2d 498, 502 (Miss.1987); M.E.S.C. v. Philadelphia M.S.S.D., 437 So.2d 388, 394 n. 6 and 398 n. 13 (Miss.1983); Gully v. Jackson International Co., 165 Miss. 103, 145 So. 905, 907 (1933); see also Red Lion Broadcasting Co. v. Federal Communications Commission, 395 U.S. 367, 380-81, 89 S.Ct. 1794, 1801-02, 23 L.Ed.2d 371, 383-84 (1969). Whatever that duty, it has no material force where the agency interpretation is contrary to the statutory (or, in this case, constitutional) language. See, e.g., Mississippi State Tax Commission v. Dyer Investment Co., Inc., 507 So.2d 1287, 1289 (Miss.1987); Universal Manufacturing Corp. v. Brady, 320 So.2d 784, 786 (Miss.1975).

In the end our search is of the law as it is given us by the state. Rebelwood, Ltd. v. Hinds County, Miss., 544 So.2d 1356, 1363 (Miss.1989); General Motors Corp. v. State Tax Commission, 510 So.2d 498, 500 (Miss.1987). We accept that the positive law may define a term or phrase in a manner not necessarily consonant with common understanding, see General Motors Corp. v. Mississippi State Tax Commission, 510 So.2d at 500, although when it does so it must do so with relative certainty. We do not doubt, for example, the power of the state, acting through its legislature in the case of statutes and through the people in the case of the constitution, to define "public service corporation" as any corporation owning property in two or more counties. The question is whether the state has...