State Dept. of Revenue and Taxation v. Pacificorp

• Decision Date: 15 April 1994
• Docket Number: No. 93-134,93-134
• Citation: 872 P.2d 1163
• Parties: STATE of Wyoming; DEPARTMENT OF REVENUE AND TAXATION; and State Board of Equalization, Appellants (Defendants), v. PACIFICORP, d/b/a Pacific Power and Light Company and Utah Power Company; and Idaho Power Company, and Basin Electric Power Cooperative, in its own behalf, and as operating agent in behalf of Tri-State Generation and Transmission Association, Inc.; Western Minnesota Municipal Power Agency; City of Lincoln, Nebraska; Heartland Consumers Power District; and the Wyoming Municipal Power Agency, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

Page 1163

872 P.2d 1163

STATE of Wyoming; DEPARTMENT OF REVENUE AND TAXATION; and State Board of Equalization, Appellants (Defendants), v. PACIFICORP, d/b/a Pacific Power and Light Company and Utah Power Company; and Idaho Power Company, and Basin Electric Power Cooperative, in its own behalf, and as operating agent in behalf of Tri-State Generation and Transmission Association, Inc.; Western Minnesota Municipal Power Agency; City of Lincoln, Nebraska; Heartland Consumers Power District; and the Wyoming Municipal Power Agency, Appellees (Plaintiffs).

No. 93-134.

Supreme Court of Wyoming.

April 15, 1994.

Joseph B. Meyer, Atty. Gen., and Michael L. Hubbard, Sr. Asst. Atty. Gen., for appellants.

Rex E. Johnson of Sherard, Sherard & Johnson, Wheatland, and Stanley K. Hathaway of Hathaway, Speight, Kunz & Trautwein, Cheyenne, for appellees.

Peter C. Maxfield, Laramie, for amici curiae Carbon, Lincoln, Sublette, Sweetwater, and Uinta Counties.

Before MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.

MACY, Chief Justice.

Appellants State of Wyoming, Department of Revenue and Taxation, and State Board of Equalization (the State) appeal from the order granting a summary judgment in favor of Appellees Pacificorp, Idaho Power Company, and Basin Electric Power Cooperative (the taxpayers).

We affirm in part and reverse in part.

The State raises the following issues on appeal:

Are the rules and regulations concerning ad valorem tax exemption for pollution control equipment beyond the board's statutory authority:

(1) Because they incorporate the requirement that the property be required by state or federal pollution control authorities?

(2) Because they require allocation of the exemption for equipment that serves other beneficial purposes or use and eliminate exemption if the property does not eliminate, control or prevent pollution?

(3) Because they incorporate the requirement that machinery be treated by the company as an owned asset, i.e., capitalized, prior to exemption?

The taxpayers owned interests in certain power plants located in Wyoming. In June of 1992, the taxpayers filed two complaints in the district court against the State. Pacificorp and Idaho Power Company filed a complaint seeking a declaratory judgment. Basin Electric Power Cooperative filed a similar complaint seeking a declaratory judgment which also requested injunctive relief.

Both complaints challenged the rules which had been promulgated by the State pertaining to the ad valorem tax exemption for pollution control property, claiming that the State exceeded its statutory authority when it promulgated the rules. The challenged rules went into effect on February 26, 1992. The taxpayers alleged that the State had granted the ad valorem tax exemption to them in previous years on certain pollution control property but that, under the new regulations, the State denied the exemption as to specific property.

The district court consolidated the two cases on November 9, 1992. On January 28, 1993, the taxpayers filed a motion for a summary judgment. Soon thereafter, the State filed a motion to dismiss the taxpayers' complaints. After holding a hearing on the parties' motions, the district court granted a summary judgment in favor of the taxpayers, holding that certain provisions of the rules were invalid, and denied the State's motion to dismiss. This appeal followed.

Property which is "used for pollution control to the extent provided by W.S. 35-11-1103" is exempt from property taxation. WYO.STAT. § 39-1-201(a)(xx) (Supp.1993). WYO.STAT. § 35-11-1103 (Supp.1993) provides:

The following property is exempt from ad valorem taxation pursuant to the provisions of this act and includes facilities, installations, machinery or equipment attached or unattached to real property and designed, installed and utilized primarily for the elimination, control or prevention of air, water or land pollution, or in the event such facility, installation, equipment or machinery shall also serve other beneficial purposes and use, such portion of the assessed valuation thereof as may be reasonably calculated to be necessary for and devoted to elimination, control or prevention of air, water and land pollution. The department of revenue shall determine the exempt portion on all property assessed pursuant to W.S. 39-2-201 through 39-2-213. The county assessor shall determine the exempt portion on all property assessed pursuant to W.S. 39-2-301 through 39-2-304. The determination shall not include as exempt any portion of any facilities which have value as the specific source of marketable byproducts.

The State promulgated regulations in 1992 to further define property which was exempt under the statute. The portions of those regulations which are relevant to this appeal were:

Section 9. Pollution control property--W.S. 39-1-201(a)(xx) and 35-11-1103.

....

(b) "Property necessary for and devoted to elimination, control or prevention of air, water and land pollution" or "pollution control property" means facilities, installations, capitalized machinery or equipment required by the Wyoming Department of Environmental Quality or federal environmental protection agencies by permit, license or legal requirement and which are primarily used for the elimination, control or prevention of air, water or land pollution ...:

....

(iv) This phrase does not include equipment or areas associated with protection of stock, wildlife or habitat, prevention of noise pollution, operation of landfills other than measures to protect water quality, worker safety measures, or water or septic systems operated for employee benefit. This phrase also does not include pollution monitoring devices which merely detect the presence of pollution unless such devices are an integral part of pollution control equipment and they automatically activate or deactivate equipment which eliminates, controls or prevents pollution.

(v) The presence of a permit or license condition or legal requirement by federal environmental protection agencies or the Wyoming Department of Environmental Quality does not, by itself, qualify equipment or areas as exempt.

RULES AND REGULATIONS, WYOMING STATE BOARD OF EQUALIZATION ch. XXX, § 9(b) (1992). ¹

The district court's order declared that the following provisions in Chapter XXX, Section 9 of the rules were unlawful and void because the State exceeded its statutory authority when it promulgated them:

a. The following language in Section (b):

1. "capitalized machinery"

2. "or equipment required by the Wyoming Department of Environmental Quality or federal environmental protection agencies by permit, license or legal requirement"

b. All of Section (b)(iv) and (v).²

"[A]n agency enjoys only those powers which the legislature has expressly conferred." Jackson v. State ex rel. Wyoming Workers' Compensation Division, 786 P.2d 874, 878 (Wyo.1990). See also State Board of Equalization v. Jackson Hole Ski Corporation, 737 P.2d 350, 356, on reh'g, 745 P.2d 58 (Wyo.1987). An administrative agency may not exceed the authority expressly delegated to it by the Legislature when the agency is promulgating regulations.

The Legislature granted general rule-making powers to the State Board of Equalization in WYO.STAT. § 39-1-304(a)(xxvii) (Supp.1993). The rules and regulations promulgated by the State Board of Equalization must be "necessary to the enforcement of the provisions of any or all tax and other revenue measures which are administered by the department and the board." Section 39-1-304(a)(xxvii).

In order to determine whether the agency acted within its statutory limits, we must interpret the relevant statute. We endeavor to interpret statutes in accordance with the Legislature's intent. We begin by making an " 'inquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection.' " Parker Land and Cattle Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1042 (Wyo.1993) (quoting Rasmussen v. Baker, 7 Wyo. 117, 133, 50 P. 819, 823 (1897)). We construe the statute as a whole, giving effect to every word, clause, and sentence, and we construe together all parts of the statute in pari materia. 845 P.2d at 1042.

A statute may be ambiguous or clear. 845 P.2d at 1043. It is unambiguous "if its wording is such that reasonable persons are able to agree as to its meaning with consistency and predictability." Allied-Signal, Inc. v. Wyoming State Board of Equalization, 813 P.2d 214, 220 (Wyo.1991). A "statute is ambiguous only if it is found to be vague or uncertain and subject to varying interpretations." 813 P.2d at 219-20. The task of determining whether a statute is clear or whether it is ambiguous is assigned to the court, and the court makes the determination as a matter of law. If the court determines that a statute is clear and unambiguous, it gives effect to the plain language of the statute and does not resort to rules of statutory construction. Parker Land and Cattle Company, 845 P.2d at 1043. See also Thunder Basin Coal Company v. Study, 866 P.2d 1288 (Wyo.1994).

Section 9(b) defined the terms " '[p]roperty necessary for and devoted to elimination, control or prevention of air, water and land pollution' " or " 'pollution control property' " as being "facilities, installations, capitalized machinery or equipment required by the Wyoming Department of Environmental Quality or federal environmental protection agencies by permit, license or legal requirement and which are primarily used for the elimination, control or prevention of air, water or land pollution." The district court declared that the provisions in Section 9(b) were invalid insofar as they exempted only property which was required by the Department of Environmental Quality or federal environmental protection agencies by permit, license, or legal requirement.

The State argues that the district court was incorrect because § 35-11-1103...