Solvay Chems., Inc. v. Dep't of Revenue, S-17-0324

Decision Date21 November 2018
Docket NumberS-17-0324
Parties SOLVAY CHEMICALS, INC., Petitioner, v. DEPARTMENT OF REVENUE, State of Wyoming, Respondent.
CourtWyoming Supreme Court

Representing Petitioner: Walter F. Eggers, III and JoAnn S. DeWald, Holland & Hart LLP, Cheyenne, Wyoming. Argument by Mr. Eggers.

Representing Respondent: Peter K. Michael, Wyoming Attorney General; Ryan T. Schelhaas, Deputy Attorney General; Karl D. Anderson, Senior Assistant Attorney General; Daniel P. Solish, Senior Assistant Attorney General. Argument by Mr. Anderson.


FOX, Justice.

[¶1] Solvay Chemicals, Inc. (Solvay) appealed the Department of Revenue’s (DOR) assessment of the taxable value of soda ash produced at its Sweetwater County trona mine to the Wyoming Board of Equalization (Board). Solvay disputed the calculations the DOR used to determine the amount of the deduction for bagging some of the soda. After the contested case hearing, the Board requested supplemental briefs to address a question of statutory construction that had not been raised by either party, and the Board ultimately decided that the issue was not the amount Solvay was entitled to deduct for bagging costs, but rather, whether it was entitled to any bagging deduction at all. The Board concluded that the issue disputed by the parties throughout the proceeding was moot, reasoning that the governing statute did not allow for a separate deduction for bagging. We decline the parties’ request that we decide the issue of statutory interpretation as it applies to bagging cost deductions, because we find that the Board exceeded its authority when it decided an issue that was not before it.


[¶2] One issue raised by the parties is dispositive: Whether the Board acted without observance of the procedure required by law when it based its order on an issue not contested or addressed by either party during the contested case hearing.


[¶3] Solvay mines trona ore from its mine in Sweetwater County, Wyoming, and then processes it as soda ash and other products. Solvay sells the majority of its soda ash in bulk, and transports it to the customer by rail or truck. A small amount of Solvay’s soda ash is bagged and provided to customers in that form, at a higher charge. Solvay incurs increased costs for the bagging, and it historically deducted those costs from the sales value for tax purposes. Solvay’s practice was to report the taxable value of its bagged product based on the bulk product value. But, after an audit of Solvay’s 2010-2012 production and tax payments, the Department of Audit (DOA) rejected Solvay’s approach and instead arrived at a lower bagging deduction, based on its calculation of Solvay’s actual bagging costs. The DOR adopted the DOA’s calculations and issued its final determination assessment notice of additional severance tax due, notifying Solvay of an additional $24,524 due in severance taxes, and interest in the amount of $13,160.1 The DOR did not dispute that Solvay was entitled to a deduction for bagging costs; rather, it used a different calculation for determining the amount of the deduction. Solvay appealed the DOR’s final determination to the Board.

[¶4] The primary issue identified in Solvay’s Notice of Appeal was "Solvay believes DOR and DOA may not have properly valued a portion of Solvay’s trona/soda ash production known as ‘bagged product.’ " In its Preliminary Statement, Solvay again summarized its contention as "DOR’s and DOA’s valuation of Solvay’s ‘bagged product’ is erroneous." The DOR agreed, identifying the first issue of fact and law in its Preliminary Statement as "Did the [DOR] correctly value the bagged sales of soda ash in accordance with the law?" The correct valuation of Solvay’s deduction for bagging soda ash to determine taxable value continued to be the central issue identified by both parties in their pre-hearing filings, at the hearing, and in the parties’ post-hearing briefs and proposed findings of fact and conclusions of law.

[¶5] Nearly five months after the hearing, the Board, in its Order for Supplemental Briefing, signaled that it did not consider the calculation of the deduction for Solvay’s bagged product to be the issue; instead, the Board ordered the parties to submit briefs answering its questions on statutory interpretation regarding an entirely different methodology. The Board ordered the parties to submit supplemental briefs on these issues:

1. Are relevant parts of Wyoming Statutes sections 39-14-301 and 303 (2009-2012) ambiguous and, if so, in what respect?
2. Do the provisions in Wyoming Statute section 39-14-303(b) (2009-2012) identify multiple valuation methods, or a single valuation method? If you argue that subsection (b) prescribes one valuation method, please explain and reconcile the remaining subsection (b) provisions in support of your interpretation. If you argue that subsection (b) offers more than one valuation method, please identify and explain the application of those methods and how those differ from, or relate to, subsection (b)(ii).

[¶6] The parties agreed that the statutes were unambiguous, so the first issue was not in dispute. As to the second question, a brief discussion of the statutory interpretation issue is necessary to set the stage.

Wyo. Stat. Ann. § 39-14-303(b) (LexisNexis 2017) provides:

(b) Basis of tax (valuation). The following shall apply:
(i) Trona shall be valued for taxation as provided in this section;
(ii) The department shall calculate the value of trona ore for severance and ad valorem tax purposes by using the individual producer’s fair market value of soda ash f.o.b. plant multiplied by the industry factor divided by the individual producer’s trona to soda ash ratio less exempt royalties. The industry factor shall be thirty-two and five-tenths percent (32.5%);
(iii) The value of the gross product shall be the fair market value of the product at the mouth of the mine where produced, after the mining or production process is completed;
(iv) Except as otherwise provided, the mining or production process is deemed completed when the mineral product reaches the mouth of the mine. In no event shall the value of the mineral product include any processing functions or operations regardless of where the processing is performed;
(v) Except as otherwise provided, if the product as defined in paragraph (iv) of this subsection is sold at the mouth of the mine, the fair market value shall be deemed to be the price established by bona fide arms-length sale;
(vi) When the taxpayer and department jointly agree that the application of the methods listed in paragraphs (i) through (v) of this subsection does not produce a representative fair market value for the product, a mutually acceptable alternative method may be applied. Not later than October 1 of each year, the department shall report to the joint minerals, business and economic development interim committee and the joint revenue interim committee on any action taken under this paragraph.

[¶7] Section (b)(ii) adopts an "industry factor" test whose objective was to standardize the deductions for all trona companies and simplify what had been complicated calculations by the producers, the DOA, and the DOR. Up until the Board’s Order for Supplemental Briefing, Solvay and the DOR had agreed that Solvay was entitled to a deduction for bagging costs under (b)(iv), in addition to the "industry factor" deduction at (b)(ii). The DOR’s new position, in response to the Board’s Order for Supplemental Briefing, was that Solvay was entitled to no additional deductions for bagging costs under (b)(iv), because "a more reasoned (and legally accurate) approach is to consider any and all incurred bagging expenses to be encompassed within the scope of the 32.5% industry factor" at (b)(ii) (a single valuation method). Solvay continued to argue that section 303(b)(iv) allowed it to deduct the costs of bagging, in addition to the industry factor deduction at 303(b)(ii) (multiple valuation methods), and it urged the Board to order the DOR to apply its approach to calculating those costs. Solvay filed a response brief, in which it strenuously objected to the DOR’s new position, as well as to the timing of raising the new approach.

[¶8] The Board heard oral argument on the new issue. Solvay again objected to the substance and the procedure of the DOR’s new approach. At that hearing, the Board chairman expressed his concerns about the Board’s jurisdiction in light of the DOR’s new assessment.

I just know that we don’t have jurisdiction if there -- if the parties are no longer disputing from a final action. So at that point -- I mean, I know what the answer is from our perspective. We don’t have jurisdiction.

[¶9] The Board apparently resolved those jurisdictional concerns to its satisfaction, and in its Findings of Fact, Conclusions of Law, Decision and Order, it concluded that Solvay was not entitled to any deduction for bagging soda ash, and it held that the parties’ dispute "over how to calculate an additional processing deduction ... is moot in light of our determination that the [DOR] and Solvay initially misinterpreted the underlying valuation methodology." It ordered that the DOR’s audit assessment was "reversed and remanded to the [DOR] for reassessment in accordance with" its decision. (Emphasis omitted.)

[¶10] Solvay timely petitioned for review of the Board’s action, the district court granted the partiesjoint motion to certify the case to the Wyoming Supreme Court, and this Court accepted the certified case pursuant to W.R.A.P. 12.09.


[¶11] Judicial review of administrative actions is generally governed by Wyo. Stat. Ann. § 16-3-114(c), but "[w]hether a court or agency has jurisdiction to decide a particular matter is a question of law, subject to de novo review." Exxon Mobil Corp. v. Wyo. Dep’t of Revenue , 2011 WY 161, ¶ 24, 266 P.3d 944, 951 (Wyo. 2011) (citing Dir. of the Office of State...

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