Ozark Gas Pipeline Corp. v Ar Public Service Comm., 99-915

• Decision Date: 09 November 2000
• Docket Number: 99-915
• Citation: 29 S.W.3d 730
• Parties: OZARK GAS PIPELINE CORPORATION v. ARKANSAS PUBLIC SERVICE COMMISSION 99-915 ___ S.W.3d ___ Opinion delivered
• Court: Arkansas Supreme Court

OZARK GAS PIPELINE CORPORATION v ARKANSAS PUBLIC SERVICE COMMISSION

99-915 ___ S.W.3d ___

Opinion delivered November 9, 2000

Supreme Court of Arkansas

Appeal from Pulaski Circuit Court; Morris Thompson, Judge; affirmed.

1. Public Service Commission -- order -- standard of review. -- The General Assembly has provided the applicable standard of review of an Arkansas Public Service Commission order by an appellate court in Ark. Code Ann. § 23-2-423(c)(3) and (4) (Repl. 1997), which provides that "[t]he finding of the commission as to the facts, if supported by substantial evidence, shall be conclusive" and that "[t]he review shall not be extended further than to determine whether the commission's findings are supported by substantial evidence and whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violated any right of the petitioner under the laws or Constitution of the United States or of the State of Arkansas."

2. Taxation -- assessment of property -- courts may review but not assess. --It is not within the province of the courts of this state to assess property, but only to review those assessments.

3. Taxation -- assessment of property -- burden of proof on protesting party. -- The burden is on the person or entity protesting the assessment to show that the assessment is manifestly excessive, clearly erroneous, or confiscatory.

4. Statutes -- construction -- basic rule. -- The basic rule of statutory construction is to give effect to the intent of the legislature; where the language of a statute is plain and unambiguous, the supreme court determines legislative intent from the ordinary meaning of the language used; in considering the meaning of a statute, the court construes it just as it reads, giving the words their ordinary and usually accepted meaning in common language; the court construes the statute so that no word is left void, superfluous, or insignificant; and meaning and effect are given to every word in the statute if possible.

5. Taxation -- assessment of property -- supreme court found no fault in January 1 as cutoff point for determination of assessed value. -- Concluding that Ark. Code Ann. § 26-26-1602(b)(2) (Repl. 1997) provided for a determination of assessed value as of January 1 of each year, the supreme court found no fault in appellee's procedure in this regard where the intent that January 1 would be the cutoff date for valuation purposes was clear; where the contract in question was signed in February 1995, but the sale did not close until May; and where it would have been illogical to require appellee's Tax Division to contemplate in March, when meeting as required by statute to determine assessments, a sale that did not close until May.

6. Taxation -- determination of company's fair market value -- factors to consider. -- Arkansas Code Annotated section 26-26-1607(b) (Repl. 1997) provides that, in determining a company's fair market value, the Tax Division shall consider: (1) Original cost less depreciation, replacement cost less depreciation, or reconstruction cost less depreciation; (2) the market value of all outstanding capital stock and funded debt, but where capital stock is not traded or capable of reasonably accurate determination, book values may be substituted; (3) operating income to be determined by the company's historical income stream with consideration to the future income stream; (4) other information that will assist in determining fair market value.

7. Taxation -- determination of value -- stock-&-debt method was viable method. -- Where appellant had liabilities for valuation purposes, even though it did not have publicly traded stock, the supreme court concluded that the stock-and-debt method was a viable method for determining value.

8. Taxation -- assessment of property -- no error found in appellee's methods -- appellee properly considered exit fees as part of purchase price. -- The supreme court found no error in the methods used by appellee in its assessment of appellant's property for 1995; the court further concluded that appellee properly considered the exit fees as part of the purchase price of appellant.

9. Taxation -- assessment of property -- appellee's reliance on cost method of valuation affirmed. -- Witnesses for appellee's Tax Division were as convincing to the supreme court as they were to appellee that the cost method was the preferred method for assessing value in 1996, particularly in light of the sale to another entity and the uncertainties associated with new ownership; the fact that appellant was in transition in 1995 and 1996 presented a highly unusual circumstance that made reliance on past income or predicting future income questionable and unreliable; the supreme court concluded that appellee's analysis appeared entirely reasonable, and the court affirmed on the question of appellee's reliance on the cost method of valuation in arriving at the assessment for the year 1996.

10. Statutes -- construction -- general must yield to specific. -- The rule is well settled that a general statute must yield when there is a specific statute involving the particular matter.

11. Statutes -- construction -- statutory sections on assessing value for utilities must control. -- Where Ark. Code Ann. § 26-3-302(a) (Repl. 1997) dealt generally with exemptions for intangible personal property, and where Ark. Code Ann. § 26-26-1606(b) (Repl. 1997) and Ark. Code Ann. § 26-26-1611(1) and (2) (Repl. 1997) dealt specifically with the assessment of the intangible property of utilities, the supreme court, under the principle that the specific statute controls over the general, concluded that statutory sections relating to fixing value for utilities, which included tangible and intangible property, must control.

12. Statutes -- absence of later change by General Assembly -- supreme court's interpretation remains law. -- The absence of a later change by the General Assembly of statutes interpreted a certain way by the supreme court means the court's interpretations of the statutes remain the law; the same should be equally true of statutes that are clear but that have not been changed by the General Assembly.

13. Taxation -- unit value -- determination of. -- The supreme court concluded that the duty of appellee's Tax Division was to "take into consideration the value of all the property of the company as a unit" [Ark. Code Ann. § 26-26-1605(c) (Repl. 1997)]; the determination of unit value for a utility company must include the value of substantial accounts receivable such as the contemplated income that was termed "exit fees."

14. Appeal & error -- no reversal on issue not developed. -- The supreme court will not reverse on an issue not developed before it.

15. Taxation -- assessment of property -- exit fees properly assessed. -- Where it was clear that the exit fees were a definite asset of the company and an integral part of its unit value, the supreme court held that the exit fees were properly assessed as appellant's property.

16. Evidence -- substantial evidence -- defined. -- Substantial evidence is evidence that a reasonable mind would accept as sufficient to support a conclusion and force the mind beyond speculation and conjecture; substantial evidence is defined as evidence of sufficient force and character to compel a conclusion one way or the other with reasonable certainty; it must force the mind to pass beyond suspicion or conjecture.

17. Evidence -- sufficiency of -- determination of. -- When determining the sufficiency of the evidence, the appellate court reviews the evidence and all reasonable inferences arising therefrom in the light most favorable to the party on whose behalf judgment was entered.

18. Evidence -- substantial evidence -- expert testimony qualifies as. --Expert testimony qualifies as substantial evidence unless it is shown that the opinion is without reasonable basis.

19. Public Service Commission -- order -- supported by substantial evidence. --Where appellee's Tax Division considered the three methods fordetermining assessed value -- cost less depreciation, stock-and-debt, and historical and future income -- for purposes of both the 1995 and 1996 assessments, this was what the law required under Ark. Code Ann. § 26-26-1607(b); where expert appraisers testified for both parties in a hearing before an administrative law judge, and where appellee gave more credence to testimony and analysis that supported the methodologies considered and used by the Tax Division in 1995 and 1996, the supreme court held that substantial evidence supported appellee's order.

Wright, Lindsey & Jennings LLP, by: N.M. Norton, for appellant.

Lee McCulloch, for appellee.

Robert L. Brown, Justice.

This case involves the assessment of the ad valorem property tax by the Tax Division of the appellee Arkansas Public Service Commission (APSC) in 1995 and 1996, and specifically raises the question of whether $20.8 million in exit fees should have been taxed. The property assessed was a natural gas pipeline owned by appellant Ozark Gas Pipeline Corporation which extends from Pittsburg County, Oklahoma, to White County, Arkansas. The pipeline was completed in 1982, and approximately sixty-five percent of it is located in Arkansas.

Originally, there were four partners who owned Ozark: Columbia Gulf Transmission Co. (Columbia), Tennessee Gas Pipeline Co. (Tennessee), USX Corp., and ONEOK, Inc. Ozark was formed in 1978 and began delivering gas through the pipeline in 1982. In 1982, Columbia and Tennessee entered into contracts with Ozark and obligated themselves for fifteen years to pay for fifty percent of the pipeline's capacity, whether they used the pipeline or not. Payments made under those contracts were $18.5 million annually. In 1993, the partners decided to put the pipeline up for sale. After soliciting bids in 1994, the partners and a buyer (a...