Summary 2006 WY 44

Summary of Decision issued April 12, 2006

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Case Name: Thunder Basin Coal Co. v. Campbell County, WY, Assessor

Citation: 2006 WY 44

Docket Number: 05-117, 05-118 and 05-119

Appeal from the District Court of Campbell County, The Honorable Dan R. Price, II, Judge (05-117) and The Honorable John R. Perry, Judge (05-118 and 05-119)

Representing Appellant (Petitioner): Lawrence J. Wolfe of Holland & Hart, LLP, Cheyenne, Wyoming.

Representing Appellee (Respondent): Carol Seeger, Deputy Campbell County Attorney, Gillette, Wyoming.

Date of Decision: April 12, 2006

Issue: Tax cases are complex therefore I have included the issues and only the briefest summary. Please read the full decision at the link provided below.

In Case No. 05-117, Thunder Basin presented the following issues for review: In determining the value of personal property and improvements to real property, the County Assessor is required by Department of Revenue rules to account for all three forms of depreciation: physical depreciation, functional obsolescence and economic obsolescence. Campbell County’s Assessor completely ignored economic obsolescence in arriving at the value of the property of the Black Thunder Mine for tax year 2001. The State Board’s decision affirming the County Board and Assessor is erroneous and must be reversed. Campbell County’s Appraiser treated all property at both mines as new on June 1, 1998, the date Arch acquired TBCC from ARCO. This ignored the physical depreciation of the property and is not in accordance with generally accepted appraisal techniques. The State Board decision failed to correct this appraisal defect, which constitutes appropriate grounds to reverse the State Board’s ruling. The State Board and County Board decisions are fatally flawed as they do not contain sufficiently detailed findings of fact and conclusions of law to adequately explain their decision regarding economic obsolescence.
The County Assessor articulated the issue in Case No. 05-117 as follows: Whether the decision of the Board affirming the 2001 assessed value of petitioner’s personal property established by the Campbell County Assessor was (a) arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; (b) contrary to constitutional right, power, privilege or immunity; (c) in excess of statutory jurisdiction or authority; (d) without observance of procedures required by law; or (e) unsupported by substantial evidence.
In Case No. 05-118, Thunder Basin posed the following issues on appeal: Is the Campbell County Board of Equalization’s decision fatally flawed because it failed to set forth the rationale for its decision? Did the State Board of Equalization exceed its authority when it acted as an expert appraiser, thereby poisoning further review by the Campbell County Board of Equalization? Are the Campbell County Board of Equalization’s findings of fact regarding the life of the facility contrary to substantial evidence? Is the Campbell County Assessor’s determination of physical depreciation, which has the effect of treating the property as new in 1998, contrary to appraisal practice and the Department of Revenue’s instructions? Whether the appraisal judgments of the Campbell County Board of Equalization and State Board of Equalization, particularly as to economic obsolescence, are wrong, contrary to substantial evidence and arbitrary and capricious? Whether the decisions of the Campbell County Board of Equalization and State Board of Equalization violate Wyoming Constitution Article 15, § 11 because the fair market value of the property was not determined using a rational method, equally applied, that results in essential fairness?
In Case No. 05-119, Thunder Basin’s issues are similar to those in Case No. 05-118: A.) Is the Campbell County Board of Equalization’s decision fatally flawed because it failed to set forth the rationale for its decision? B.) Is the Campbell County Assessor’s determination of physical depreciation, which has the effect of treating the property as new in 1998, contrary to appraisal practice and the Department of Revenue’s instructions? C.) Whether the appraisal judgments of the Campbell County Board of Equalization and State Board of Equalization, particularly as to economic obsolescence, are wrong, contrary to substantial evidence and arbitrary and capricious? D.) Whether the decisions of the Campbell County Board of Equalization and State Board of Equalization violate Wyoming Constitution Article 15, § 11 because the FMV of the property was not determined using a rational method, equally applied, that results in essential fairness?
The County Assessor does not provide a separate statement of the issues in either Case No. 05-118 or Case No. 05-119.

Facts: Case No. 05-117 – Black Thunder and Coal Creek Mines – Tax Year 2001: For the tax year 2001, the Campbell County Assessor contracted with Pickett to appraise the personal property located at the mines. Pickett used the cost based approach to appraise the personal property at the mines based upon the information it had received from Thunder Basin. Thunder Basin disagreed with the valuation and employed Ernst who arrived at different valuations. The disparity resulted from differences in their respective calculations of physical depreciation and economic obsolescence. The County Board held a hearing on June 20, 2001 and issued findings of fact and conclusions of law upholding the County Assessor’s determinations.
Case Nos. 05-118 & 05-119 – Black Thunder and Coal Creek Mines – Tax Year 2002: In 2002, Campbell County contracted with Pickett to appraise property at Black Thunder and Coal Creek Mines. The County Assessor issued property tax valuations based on the Pickett appraisals. Thunder Basin disagreed with the valuations and again hired Ernst to conduct an individual appraisal at both mines. Thunder Basin appealed the Black Thunder valuation and the County Board upheld the County Assessor’s valuation. Thunder Basin appealed to the SBOE who ultimately concluded that the County Assessor’s valuation did not comply with the law. SBOE ordered the decision affirming the valuation be remanded. Thunder Basin filed a petition for review with the district court who affirmed the SBOE’s decision. Thunder Basin then brought this appeal to the Supreme Court. Thunder Basin also appealed the Coal Creek Mine 2002 assessment. The County Board concluded the County Assessor’s valuations complied with law and affirmed the valuations. The SBOE also affirmed. The district court affirmed as well, leading to the appeal to the Supreme Court.

Holdings: Case No. 005-117 – Black Thunder and Coal Creek Mines – Tax Year 2001: The standard for appellate review of agency decisions is found in Wyo. Stat. Ann. § 16-3-114(c). The Court examines the entire record to determine if the agency’s findings are supported by substantial evidence. If so, the Court will not substitute their judgment for that of the agency and will uphold the factual findings on appeal. The petitioner has the initial burden to present sufficient credible evidence to overcome the presumption. If successful, then the Board is required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof. Once overcome, the burden of going forward shifts to the DOR to defend its valuation. The County Assessor’s choice of appraisal methods is reviewed under the substantial evidence standard. The Court reviews an agency’s conclusions of law de novo.
1998 Values: Wyo. Stat. Ann § 39-13-103(b)(ii) states that all property must be valued at its fair market value for property tax purposes. The rules and regulations of the DOR provide three methods of appraisal and the County Assessor and Thunder Basin agreed to the cost approach method. The County Assessor used the acquisition cost of the property as the starting place. Nothing in the statutes, regulations or guidelines prohibits the use of the acquisition cost of used personal property as the starting place for the cost method of appraisal. The County Board concluded that the County Assessor’s method was in accordance with the law and was a “rational method of appraisal, equally applied to all property.”
The Court concluded the record supported the County Board’s conclusion. The taxpayer bears the burden of providing accurate information to the assessor for preparation of a valuation of its properties. Thunder Basin failed to carry its burden to overcome the presumption that the County Assessor’s reliance on the 25% residual value limit was proper.
Economic Obsolescence: The County Board concluded Thunder Basin did not meet its burden of showing the County Assessor’s appraisal was flawed or did not comply with generally accepted appraisal practices. As to the issue of the economic obsolescence calculation for Coal Creek Mine, Thunder Basin failed to carry its burden with regard to overcoming the presumption of correctness enjoyed by the County Assessor’s valuation in this regard.
Adequacy of County Board’s Findings and Conclusions: The Court held that the County Board’s order was adequate to conduct their review because the evidence upon which the County Assessor relied in concluding an economic obsolescence deduction was not appropriate was not contested.
Case No. 05-118 – Black Thunder Mine – Tax Case No. 05-118 – Black Thunder Mine – Tax Year 2002: The Court dismissed Thunder Basin’s appeal for a lack of jurisdiction. In accordance with SBOE’s order, the matter remains remanded to the County Board for further proceedings.
Case No. 05-119 – Coal Creek Mine – Tax Year 2002: The County Assessor used the same procedures for his 2002 assessment as he did in 2001 and consequently, the Court’s analysis of those issues remained applicable in 2002.
Physical Depreciation – 1998 Values: The Court reviewed the Price Waterhouse appraisal and found nothing that would have prevented the County Board from relying upon the information submitted to it by Thunder Basin as the book value of the property at issue. The Court found there was substantial evidence to support the appraiser’s approach and consequently found no basis upon which to reverse the County Board’s decision.
Economic Obsolescence: The Court reviewed the record and noted that the two methods used to determine economic obsolescence were “differences of opinion” and not a sufficient basis on which to reverse the decision of the County Board.
Adequacy of County Board’s Findings and Conclusions: The County Board concluded after explaining both parties used acceptable appraisal methods, the differences were primarily the result of differing professional opinions. Thunder Basin failed to overcome the presumption the value assigned by the County Assessor was valid and correct. The Court concluded that the Board’s findings and conclusions adequately explained their decision.

The Court affirmed the decisions in Cases No. 05-117 and 05-119. The Court concluded that Case No. 05-118 was not properly before the Court and dismissed it for lack of jurisdiction.

J. Kite delivered the opinion for the court.

Link to the case: http://tinyurl.com/ropoo .