Wyoming State Tax Com'n v. BHP Petroleum Co. Inc.
| Citation | 856 P.2d 428 |
| Decision Date | 23 June 1993 |
| Docket Number | Nos. 92-154,s. 92-154 |
| Parties | WYOMING STATE TAX COMMISSION; and State Board of Equalization and its members Nancy Freudenthal, Marvin Applequist and Charles Brown, III, in their official capacities, Appellants (Defendants), v. BHP PETROLEUM COMPANY INC., and Monsanto Company, Appellees (Plaintiffs). W.A. MONCRIEF, Jr., Appellant (Defendant), v. WYOMING TAX COMMISSION; and State Board of Equalization and its members Nancy Freudenthal, Marvin Applequist and Charles Brown, III, in their official capacities; Lorraine Ocenas, in her official capacity as the Assessor for Fremont County, Wyoming; Paula Merryman, in her official capacity as the Treasurer for Fremont County, Wyoming; Gary Shoemaker, Jane Adamson, Ralph Urbigkeit, Tom Satterfield and Clayton Hull in their official capacities as the County Commissioners of Fremont County, Wyoming, Appellees (Defendants). BHP PETROLEUM COMPANY, INC.; Monsanto Company; North Central Oil Corporation; and Inexco Oil Company, Appellants (Plaintiffs/Defendant), v. WYOMING STATE TAX COMMISSION; State Board of Equalization and its members Nancy Freudenthal, Marvin Applequist, and Charles Brown, III, in their official capacities; Lorraine Ocenas in her official capacity as Assessor for Fremont County, Wyoming; Paula Merryman, in her official capacity as the Treasurer for Fremont County, Wyoming; Gary Shoemaker, Jane Adamson, Ralph Urbigkeit, Tom Satterfield and Clayton Hull in their official capacities as the County Commissioners of Fremont County, Wyoming, Appellees (Defendants). to 92-156. |
| Court | United States State Supreme Court of Wyoming |
Joseph B. Meyer, Atty. Gen. and Michael L. Hubbard, Sr. Asst. Atty. Gen., argued for State Tax Com'n and State Bd. of Equalization and its members.
R. Garth Ferrell of Parcel, Mauro, Hultin & Spaanstra, Denver, CO, Robert T. McCue and William J. Thomson, II of Dray, Madison & Thomson, Cheyenne, for BHP Petroleum, et al. Morris R. Massey, argued, of Brown & Drew, Casper, for W.A. Moncrief, Jr., Peter A. Bjork, argued, Gregory R. Danielson and Alan B. Cameron of Poulson, Odell & Peterson, Denver, CO; and David D. Uchner, Cheyenne, for Inexco Oil Co.
Before MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.
This appeal involves issues relating to payment and collection of ad valorem taxes from the Madden Deep oil and gas unit. Both the State and taxpayers (appellants in appeals number 155 and 156 and appellees in appeal number 154), appeal a summary judgment entered by the district court. In the first appeal, the State contends that the district court incorrectly ruled that the State could not collect taxes from the unit operator when the taxes are owed by the working interest owners. In the second appeal, the taxpayers contend that Wyoming's omitted property statute, W.S. 39-2-403(c) (1990), prohibits the State from retroactively revaluing and reassessing production when the original value did not include ad valorem tax reimbursements. The district court held that the omitted property statute did not prohibit reassessment for ad valorem tax reimbursements. Taxpayers also contend that this court's decision in Enron Oil & Gas Co. v. Dep't of Revenue & Taxation, 820 P.2d 977 (Wyo.1991), should not be retroactively applied.
We affirm the district court's decision.
The Madden Deep Unit (Unit) is a large federal oil and gas unit and includes leases in Fremont and Natrona Counties. BHP Petroleum Co., Inc. v. Wyoming Tax Comm'n, 766 P.2d 1162, 1163 (Wyo.1989). From 1975 until October 1990, BHP (formerly Monsanto Oil Company) was the unit operator of the Madden Deep Unit. During 1985, all of the stock of Monsanto Oil Company was sold and transferred to the parent company of BHP Petroleum Company, Inc. (BHP). BHP managed the entire unit for parties owning interests in production derived from Unit leases; BHP also owned a small percentage of the oil and gas produced from the Unit. BHP Petroleum, 766 P.2d at 1163. Currently the Unit is operated by the Louisiana Land and Exploration Company.
For each of the years from 1976 through 1987, the Wyoming State Board of Equalization (now the Department of Revenue) valued the production from the Madden Deep Unit and certified the valuation to the Fremont County Assessor. The valuations were entered upon the Fremont County assessment rolls, and ad valorem taxes were levied and then paid.
In the spring of 1988, the Department of Revenue audited the Madden Deep Unit and determined that the fair market value of the natural gas produced from the Unit for the years 1976 through 1987 was greater than the amount originally certified to the county assessor. The increased value resulted from reimbursements of ad valorem taxes that were made to certain working interest owners. As a result of the audit, the State Board of Equalization sent two Special Directives to the Fremont County Assessor which directed the assessor to increase the value of the production from the Unit on the county's supplemental tax roll and issue ad valorem tax notices to BHP. The additional ad valorem tax notices for the years 1976 through 1987 issued to BHP showed the amount due as $1,092,082.01. A portion of that amount, $1,002,483.79, has been paid and placed in a protest account. There remains due $89,598.22.
In February of 1991, BHP and Monsanto brought an action against the State Tax Commission, the State Board of Equalization, the Fremont County Assessor and Treasurer as well as the Fremont County Commissioners. The suit also listed working interest owners in the Madden Deep Unit as defendants. Monsanto and BHP sought declaratory and injunctive relief.
The State and the Counties filed answers to the complaint. Inexco Oil Company and North Central Oil Corporation filed an answer and a cross-claim against the State and the County defendants. Their cross-claim alleged that the value information supplied to the county assessor by the Board of Equalization was incorrect and too high. They also requested that the State and County be enjoined from collecting additional ad valorem taxes for production for the years 1976 through 1987. W.A. Moncrief, Jr., filed an answer and also argued that the government defendants should be enjoined from collecting additional ad valorem taxes from the Unit. Tex/Con Oil & Gas Company, Chevron U.S.A. Inc., and Coastal Oil & Gas Corporation filed similar answers.
Later W.A. Moncrief, Jr., Inexco Oil Company and North Central Oil Corporation filed cross-claims against the government defendants. Their cross-claim alleged that the additional assessment of ad valorem taxes was illegal because there was no statutory authority to retroactively change values of personal property for prior years and because ad valorem tax reimbursements received by working interest owners were not a part of the fair cash market value. They also argued that a unit operator is not required to remit ad valorem taxes owed by the working interest owners. Later they filed a motion for summary judgment on their cross-claim.
Eventually Tex/Con Oil and Gas Company was dismissed from the action without prejudice. BHP and Monsanto, the plaintiffs, moved for summary judgment. They argued that, as a matter of law, the government defendants cannot assess additional ad valorem taxes for incorrect valuation that occurred in prior years. They also argued that the government defendants could not collect the taxes from the unit operator as the statute only allows for collection against the working interest owners. BHP and Monsanto also claimed that they were entitled to reimbursement from the working interest owners for their respective portions of the taxes, interest and penalties paid by BHP and Monsanto.
The district court, after hearing, issued a decision letter and an order. Inexco Oil Company, North Central Oil Corporation and W.A. Moncrief, Jr. (cross-claimants) and BHP Petroleum Company, Inc. and Monsanto Company (plaintiffs) filed a motion to amend the order. The district court entered a final amended order which granted partial summary judgment to the State and County defendants and partial summary judgment to plaintiffs. The State and County defendants and the unit operator and working interest owners appeal portions of the summary judgment entered by the court.
When this court reviews summary judgments, we have said that summary judgment is proper only when there are no genuine issues as to any material fact and the prevailing party is entitled to judgment as a matter of law. Sheridan Commercial Park, Inc. v. Briggs, 848 P.2d 811, 814 (Wyo.1993); see W.R.C.P. 56(c). In both of these appeals, the facts are not seriously disputed. Therefore we review the district court's determinations on questions of law. This court is not bound by the trial court's determinations on issues of law. True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781, 789 (Wyo.1989). Using this standard of review, we consider separately the different issues raises by the different appellants.
The State of Wyoming raises this issue:
Under Wyoming law, may delinquent ad valorem taxes on mineral production be assessed and collected from the unit operator of a federal exploratory unit as opposed to the working interest owners?
The district court held that the unit operator, in that capacity, is not a "taxpayer" of ad valorem taxes on production under W.S. 39-3-101(d) or the operating agreements governing the unit. The State appeals that portion of the district court's ruling. We will examine the statute and the unit agreements in order to address the State's arguments.
Wyoming Statute 39-3-101(d) (1990) provides:
(d) In the case of the gross product of all mines and mining claims produced under lease, the lessor is liable for the payment of property taxes on the product removed only to the extent of the lessor's retained interest under the lease, whether royalty or otherwise, and the lessee or his assignee is liable for all...
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