United Power Ass'n v. Board of County Com'rs, McLean County, 4
| Decision Date | 21 November 1980 |
| Docket Number | No. 9783,No. 4,4,9783 |
| Citation | 300 N.W.2d 36 |
| Court | North Dakota Supreme Court |
| Parties | In the Matter of the Appeal from an Order of the North Dakota Tax Appeals Board granting an Application for Abatement of Taxes of United Power Association and Cooperative Power Association, Elk River, Minnesota, and Minneapolis, Minnesota, Respectively. UNITED POWER ASSOCIATION and Cooperative Power Association, Applicants and Appellants, v. BOARD OF COUNTY COMMISSIONERS, McLEAN COUNTY, North Dakota, Respondent andAppellee, and State of North Dakota; Byron Dorgan, State Tax Commissioner; Allen I. Olson, Attorney General; Washburn School District; Washburn Rural FireProtection District; Board of County Park Commissioners of McLean County; andGarrison DiversionConservancy District; Additional Parties Pursuant to N.D.C.C. § 57-23.1-02, asamended; Respondents and Appellees. Civ. |
Paul G. Kloster and James D. Geyer, of Mackoff, Kellogg, Kirby & Kloster, Dickinson, for applicants and appellants.
John Romanick, State's Atty., Washburn and Kenneth M. Jakes, Sp. Asst. Atty. Gen., State Tax Dept., Bismarck, for respondents and appellees McLean County and State of North Dakota; argued by Kenneth M. Jakes, Sp. Asst. Atty. Gen., Bismarck.
Michael J. Hinman and Mark Foss, Bismarck, for Basin Electric Power Co-op., amicus curiae (on brief).
This is an appeal by United Power Association and Cooperative Power Association (hereinafter "UPA-CPA") from the judgment of the McLean County District Court entered February 20, 1980, reversing an order of the North Dakota Tax Appeals Board which granted UPA-CPA's application for abatement of real property ad valorem taxes assessed by McLean County for 1976 and 1977 against its Coal Creek electrical generating plant. We reverse the district court judgment.
During 1976 and 1977, the Coal Creek facility was under construction. The facility did not commence to produce electrical power until August 1979. McLean County, for 1976 and 1977, assessed, as omitted property pursuant to Chapter 57-14, N.D.C.C., the land upon which the facility was located and the improvements thereon, and real property ad valorem taxes were levied against the property.
The land was assessed at $2,280 for 1976 and $16,000 for 1977. UPA-CPA does not dispute the assessment of taxes on the land.
For 1976, the assessed value of the improvements on the land, which consisted of four buildings, was $42,294. For 1977, the assessment of the improvements included a value for the generating station and related facilities in the amount of $6,750,000. This resulted in a total tax on the improvements for 1977 in the amount of $599,933.04.
Although no tax was levied against the facility for 1978, the facility was assessed at $12,656,000 with a potential tax burden of $1,115,057.
UPA-CPA paid the 1976 tax under protest and then made application for an abatement with the McLean County Board of County Commissioners (hereinafter "McLean County"). UPA-CPA did not pay the 1977 taxes but also filed an application for abatement of those taxes with McLean County. Both applications for abatement were rejected by McLean County by order dated May, 2, 1978. UPA-CPA then appealed the board's decision to the North Dakota Tax Appeals Board.
The Tax Appeals Board determined that from the commencement of construction the Coal Creek facility was a "coal conversion facility" as defined under Chapter 57-60, N.D.C.C., classified as personal property exempt from all ad valorem taxes. Accordingly, the Tax Appeals Board entered an order abating all taxes assessed against the Coal Creek facility by McLean County for 1976 and 1977 with the exception of those taxes assessed on the land.
McLean County appealed from the Tax Appeals Board's order to the district court. The district court concluded that during the period of construction the Coal Creek facility did not constitute a "coal conversion facility" under Chapter 57-60, N.D.C.C., and therefore was not exempted by that chapter from ad valorem taxation by the County. Accordingly, the district court reversed the order of the Tax Appeals Board.
UPA-CPA has now appealed to this court from the district court's judgment. Although UPA-CPA has raised a number of issues on appeal, we believe the following issue is dispositive:
Whether or not the Coal Creek electric generating facility was a "coal conversion facility" under Chapter 57-60, N.D.C.C., during the period of its construction, so as to be exempted, under Section 57-60-06, N.D.C.C., from all ad valorem taxes.
Chapter 57-60, N.D.C.C., enacted by the 1975 Legislature, imposes upon the operator of each "coal conversion facility" an annual tax for the privilege of producing products of such coal-conversion facility. The provisions of that chapter pertinent to the issue raised on this appeal are Sections 57-60-01(2) (b) and 57-60-06, N.D.C.C., which provide:
The parties do not dispute that fact that the Coal Creek facility, upon commencement of production, is a coal-conversion facility as defined under Chapter 57-60, N.D.C.C., which is exempt from all ad valorem taxes by virtue of Section 57-60-06, N.D.C.C. However, McLean County asserts that prior to the commencement of production (i. e., during the construction period) the Coal Creek facility was not a coal-conversion facility under Chapter 57-60, N.D.C.C., and during that period of time was not classified as personal property exempt from ad valorem taxes by virtue of Section 57-60-06, N.D.C.C. The contrary position is asserted by UPA-CPA: that from the commencement of construction the Coal Creek facility was a coal-conversion facility under Chapter 57-60, N.D.C.C., exempt from all ad valorem taxes.
This court has been asked to resolve the issue raised by construing the pertinent provisions of Chapter 57-60, N.D.C.C. In a case such as this we will independently construe the statutory provisions involved to determine whether or not the decision of the Tax Appeals Board is in accordance with the law. See N. D. Conf. A. of 7th-D. Adv. v. B. of C. Com'rs, 234 N.W.2d 912 (N.D.1975).
Section 57-60-06, N.D.C.C., is clear and unambiguous in that, except for the land on which it is located, a coal-conversion facility is classified as personal property and is exempt from all ad valorem taxes. On its face, Section 57-60-01(2), N.D.C.C., which defines "coal conversion facility," also appears to be unambiguous, but an ambiguity manifests itself when one considers the issue of whether or not an electrical generating plant under construction is included within that definition. There is no reference in the provision to plants under construction nor to the necessity that a plant commence production as a requisite to being deemed a coal-conversion facility. Thus a rational interpretation could be made in support of the view that a plant must commence production in order to be deemed a coal-conversion facility as well as in support of the view that upon commencement of construction a plant is deemed to be a coal-conversion facility. The ambiguity of Section 57-60-01(2), N.D.C.C., requires us to resort to appropriate rules of statutory construction.
Section 57-60-01(2)(b), N.D.C.C., defines a "coal conversion facility" as an...
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