TRANSCONTINENTAL PIPELINE v. LA. TAX COM'N
| Citation | 32 So.3d 199 |
| Decision Date | 16 March 2010 |
| Docket Number | 2009-CA-1991,2009-CA-1992.,No. 2009-CA-1988,2009-CA-1989,2009-CA-1990,2009-CA-1988 |
| Parties | TRANSCONTINENTAL GAS PIPELINE CORPORATION, et al. v. LOUISIANA TAX COMMISSION, Frank Granger, III, in His Official Capacity as the Assessor of East Baton Rouge Parish. Florida Gas Transmission Company v. Louisiana Tax Commission, et al. and all other Consolidated Cases. Centerpoint Energy Transmission Company f/k/a Reliant Energy Gas Transmission v. Louisiana Tax Commission, et al. and all Other Consolidated Cases. Centerpoint Energy Mississippi River Transmission Corporation f/k/a Mississippi River Transmission Corporation v. Louisiana Tax Commission, et al. and all other Consolidated Cases. Florida Gas Transmission Company v. Louisiana Tax Commission, et al. and all Other Consolidated Cases. |
| Court | Supreme Court of Louisiana |
32 So.3d 199
TRANSCONTINENTAL GAS PIPELINE CORPORATION, et al.
v.
LOUISIANA TAX COMMISSION, Frank Granger, III, in His Official Capacity as the Assessor of East Baton Rouge Parish.
Florida Gas Transmission Company
v.
Louisiana Tax Commission, et al. and all other Consolidated Cases.
Centerpoint Energy Transmission Company f/k/a Reliant Energy Gas Transmission
v.
Louisiana Tax Commission, et al. and all Other Consolidated Cases.
Centerpoint Energy Mississippi River Transmission Corporation f/k/a Mississippi River Transmission Corporation
v.
Louisiana Tax Commission, et al. and all other Consolidated Cases.
Florida Gas Transmission Company
v.
Louisiana Tax Commission, et al. and all Other Consolidated Cases.
Nos. 2009-CA-1988, 2009-CA-1989, 2009-CA-1990, 2009-CA-1991, 2009-CA-1992.
Supreme Court of Louisiana.
March 16, 2010.
COPYRIGHT MATERIAL OMITTED
Brian Andrew Eddington, Baton Rouge, for Appellant & Cross-Appellee.
James D. Caldwell, Attorney General, Michael James Vallan, Assistant Attorney General, Robert Dean Hoffman, Jr., for Appellee.
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Christopher J. Dicharry, Linda Sarradet Akchin, Phelps Dunbar, Harry Alston Johnson, III, Baton Rouge, for Appellee & Cross-Appellant.
KIMBALL, Chief Justice.
This is an appeal from a declaration of unconstitutionality by the Louisiana First Circuit Court of Appeal. This court has jurisdiction over this appeal pursuant to La. Const. art. V, § 5(D). The plaintiffs include a number of interstate natural gas pipeline companies ("interstate companies"), and the defendants are the Louisiana Tax Commission ("LTC") and various local sheriffs and assessors throughout the State. At issue is whether the Louisiana ad valorem tax scheme, in particular La. R.S. 47:1851(K) & (M), violates the Commerce Clause of the United States Constitution by classifying rate-regulated interstate and intrastate natural gas pipeline companies as "public service property," subject to ad valorem taxes on 25 percent (25%) of their property's assessed fair market value, while non rate-regulated intrastate natural gas pipeline companies ("intrastate companies") are classified as "other property," subject to ad valorem taxes on 15 percent (15%) of their property's assessed fair market value.
The district court granted a partial motion for summary judgment finding the Louisiana ad valorem tax scheme's assessment rates were unconstitutional in violation of the United States Commerce Clause. However, the district court found it unnecessary to rule on the constitutionality of the actual statutes in question, while granting relief in accordance with previous circuit case law concerning the remedy for unequal treatment under the tax scheme.1 The court of appeal affirmed the decision of the district court that found the Louisiana ad valorem tax scheme's assessment rates violate the Commerce Clause, but reversed the district court's finding that it was unnecessary to rule on the constitutionality of the statutes in question. The court of appeal ruled that both La. R.S. 47:1851(K), which defines "pipeline company," and the inclusion of the phrase "pipeline company" in the definition of "public service property" in La.
After due consideration, the judgment of the district court finding the Louisiana ad valorem tax scheme's assessment rates violate the Commerce Clause of the U.S. Constitution and the court of appeal's finding that La. R.S. 47:1851(K) and the inclusion of "pipeline company" in La. R.S. 47:1851(M) is unconstitutional are hereby reversed. The plaintiffs failed to carry their burden of proof that the tax scheme discriminates against or burdens interstate commerce, because there is insufficient evidence in the record that the plaintiff companies actually pay higher taxes than the non rate-regulated intrastate companies with whom they compete.
The Louisiana Ad Valorem Tax Scheme
Article VII, § 18(B)2 of the Louisiana Constitution, provides the classifications for property subject to ad valorem taxes and the percentage at which their assessed values are taxed. The classifications at issue in this case include: property classified as "public service properties," assessed at a rate of 25 percent (25%) of its fair market value; and property classified as "other property," assessed at a rate of 15 percent (15%) of its fair market value.3 Article VII, § 18(B) goes on to provide that the legislature may enact laws to define "public service properties." In accordance with this pronunciation, the legislature enacted La. R.S. 47:1851(M), which defines "public service properties" as "immovable, major movable, and other movable property owned or used but not otherwise assessed in this state in the operations of each ... pipeline company...."4 The "public service property" classification then includes companies that qualify as "pipeline companies." The Louisiana Legislature defined "pipeline company" in La R.S. 47:1851(K) as:
Any company that is engaged in the business of transporting oil, natural gas, petroleum products, or other products within, through, into, or from this state, and which is regulated by (1) the Louisiana Public Service Commission, (2) the Interstate Commerce Commission, or (3) the Federal Power Commission, as a
"natural gas company" under the Federal Natural Gas Act, 15 U.S.C. §§ 717-717w, because that person is engaged in the transportation of natural gas in interstate commerce, as defined in the Natural Gas Act.
According to federal law, all interstate natural gas pipelines are subject to rate-regulation by the Federal Energy Regulatory Commission ("FERC"), which is the successor to the Federal Power Commission,5 which in effect qualifies all interstate companies as "pipeline companies" under La. R.S. 47:1851(K) and thus "public service property" under La. R.S. 47:1851(M). Concerning intrastate companies, according to La. R.S. 30:551(A):
The Department of Natural Resources shall be the authority to regulate natural gas and natural gas transporters... as provided in this Chapter; provided, however, that the Louisiana Public Service Commission shall remain the authority to regulate the sale of natural gas moving by pipeline to local distributing systems for resale.
This statute provides that only intrastate companies that sell to local distributing systems are rate-regulated by the Louisiana Public Service Commission ("LPSC"). Thus, only those intrastate companies that sell to local distributing systems fall into the definitions of "pipeline company" and "public service property" under La. R.S. 47:1851(K) & (M). Therefore, both interstate companies and intrastate companies, who sell natural gas to local distributing systems, are assessed at 25 percent (25%) of their property's fair market value as determined by the LTC, because they are regulated by the FERC or the LPSC, respectively, under La. R.S. 47:1851(K).
Intrastate pipeline companies that do not sell natural gas to local distributing systems for resale are not assessed at 25 percent (25%) of fair market value, because these companies do not fall within the definition of "pipeline company" in La. R.S. 47:1851(K), as they are not regulated by one of the designated agencies. Instead these companies are considered "other property" under La. Const. art. VII § 18(B). As such, these non rate-regulated intrastate companies are subject to a 15 percent (15%) assessment of fair market value to be performed by each local parish assessor in the parishes in which their property rests.
As to the methodology used in determining the fair market value of property subject to ad valorem taxation, La. Const. art. VII, § 18(D) provides that "each assessor shall determine the fair market value of all property subject to taxation within his respective parish or district except public service properties, which shall be valued at fair market value by the Louisiana Tax Commission or its successor." Therefore, all "public service properties" are subject to taxes on 25 percent (25%) of the fair market value of their property as determined centrally by the LTC. The LTC then apportions to each parish taxing unit its respective share of the fair market value of the property and it is taxed at the given rate. See La. R.S. 47:1855(A). All remaining unclassified property subject to ad valorem taxation located in Louisiana is considered "other property" and is subject to taxes on 15 percent (15%) of its fair market value as determined by the individual parish assessors in each parish in which the property is located.
The substantive facts of these consolidated cases are largely undisputed. Plaintiffs
Each plaintiff is classified as a "pipeline company," as defined in La. R.S. 47:1851(K). As "pipeline companies," the plaintiffs are classified as "public service property," pursuant to La. R.S. 47:1851(M). As "public service property" the plaintiffs are subject to ad valorem tax based on 25 percent (25%) of the assessed fair market value of their property in Louisiana as determined centrally by the LTC. La. Const. art. VII, § 18(B).
The plaintiffs all paid their ad valorem taxes under protest for the years in dispute and alleged "the Louisiana ad valorem tax scheme is unconstitutional, in violation of the Commerce Clause, in that it imposes an...
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