Wilburn Quarries, LLC v. State Dept. of Revenue
Decision Date | 07 May 2010 |
Docket Number | 2090522. |
Citation | 50 So.3d 1078 |
Parties | WILBURN QUARRIES, LLC, et al. v. STATE DEPARTMENT OF REVENUE. |
Court | Alabama Court of Civil Appeals |
John F. DeBuys and R. Rhett Owens of Burr & Forman LLP, Birmingham, for appellant Wilburn Quarries, LLC.
Ron Bowden, chief counsel, and John J. Breckenridge, asst. counsel, Alabama Department of Revenue, for appellee.
Wilburn Quarries, LLC, and its members appeal from a judgment of the circuit court upholding the decision of an administrative law judge ("ALJ") in favor of the State Department of Revenue ("the Department"). Specifically, the ALJ found that the Alabama Uniform Severance Tax ("the severance tax"), § 40-13-50 et seq., Ala.Code 1975, applied to severed materials purchased from a site that Wilburn Quarries owned in Cullman County and that, therefore, Wilburn Quarries owed $52,176.87 in taxes and interest, as assessed by the Department.
The record indicates the following. In the 1960s and 1970s, King Coal Company leased certain property in Cullman County from T.J. Pate. King Coal Company operated a strip mine on the property. As part of its mining operation, King Coal Company removed "overburden," including sandstone and other natural materials, and left it in what the parties referred to as "spoil piles." A second strip-mining operation on adjoining property, which Pate also owned, discarded its overburden in spoil piles as well. The spoil piles from both mining operations were left on Pate's property.
In 2005, Pate and two of his sons formed Wilburn Quarries. Wilburn Quarries is in the business of removing certain materials from the spoil piles on Pate's property, processing that material into different grades of crushed sandrock, then selling the processed materials for use in gravel, cement, and asphalt.
In 2005, Wilburn Quarries registered with the Department to pay the severance tax. It collected the severance tax for the first quarter of 2005 but failed to pay it from April 2005 to August 2007. In a letter that Wilburn Quarries' office manager Kris Broadhead sent to the Department dated October 22, 2007, Wilburn Quarries recognized that it was delinquent in its payment of the severance tax and sought to work out a payment plan. In the letter, Broadhead estimated that Wilburn Quarriesowed approximately $50,000 in severance taxes. On March 7, 2008, the Department entered a final assessment against Wilburn Quarries for $52,176.87, the severance tax owed from April 2005 to August 2007.
Wilburn Quarries and its members appealed the final assessment to the Department's administrative law division. The basis for its appeal was that it had never been engaged in mining or quarrying operations in Cullman County; therefore, it argued, it was not subject to the severance tax. After a hearing on the matter, the ALJ upheld the final assessment. Wilburn Quarries and its members then appealed to the Cullman Circuit Court, which also affirmed the final assessment. Wilburn Quarries and its members appealed to the Alabama Supreme Court. Our supreme court transferred the appeal to this court, which has exclusive jurisdiction over appeals from decisions of administrative agencies other than the Alabama Public Service Commission. See § 12-3-10, Ala.Code 1975.
On appeal Wilburn Quarries and its members argue, as they did before the ALJ and the circuit court, that Wilburn Quarries was not subject to the severance tax because, they say, it was not engaged in mining or quarrying. Specifically, they assert that because Wilburn Quarries processed materials that had already been removed from their natural state during the mining operations, it was not responsible for severance taxes when it sold the materials taken from those operations' spoil piles. The facts of this case are not disputed. Instead, resolution of this issue requires us to apply the rules of statutory construction; thus, our standard of review is de novo.
Ex parte Birmingham Bd. of Educ., 45 So.3d 764, 767 (Ala.2009). Further, oursupreme court has said recently of statutory construction:
Fluker v. Wolff, 46 So.3d 942, 953 (Ala.2010).
The severance tax applicable to mining and quarrying reads as follows:
For purposes of the severance tax, a "purchaser" is defined as "[a] person acquiring severed materials from a producer and liable for the tax imposed hereunder." § 40-13-51(7), Ala.Code 1975. In turn, a "producer" is defined as "[a]n operator engaged in the sale of severed materials." § 40-13-51(6), Ala.Code 1975. An "operator" is defined as "[a]ny person engaged in mining or quarrying operations in the state, whether individually, jointly, or through a parent, subsidiary, or affiliated company, or by agent, employee, or contractor." § 40-13-51(4), Ala.Code 1975. The terms "mining" and "quarrying" are not defined in the statute, and there is no caselaw regarding the definitions of those terms as they are used in the statute authorizing the severance tax.
In determining, under the facts of this case, that the severance tax applied to Wilburn Quarries, the ALJ noted that the legislature's stated purpose in levying the severance tax was "primarily to compensate the county for the use of its roads and infrastructure and also for the benefit, health, safety, and economic development of the county in which the severed material is severed...." The ALJ then went on to find as follows:
In affirming the decision of the ALJ, the circuit court stated:
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