Summary 2008 WY 139

Summary of Decision issued November 25, 2008

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Bd. Of County Comm., Campbell County, WY v. Rio Tinto Energy America, Inc.

Citation: 2008 WY 139

Docket Number: S-08-0052

Appeal from the District Court of Campbell County, the Honorable Dan R. Price II, Judge.

Representing Appellant Campbell County: Carol Seeger, Deputy Campbell County Attorney, Gillette, Wyoming.

Representing Appellee Rio Tinto Energy America, Inc.: Hadassah M. Reimer of Holland & Hart LLP, Jackson, Wyoming and Patrick R. Day of Holland & Hart LLP, Cheyenne, Wyoming.

Facts/Discussion: This was an appeal from a district court’s reversal of a county’s calculation of statutory interest owed upon underpaid taxes. The question to the court: does Wyo. Stat. Ann. § 39-14-108(c)(i) require counties to offset overpaid taxes against underpaid taxes across tax years in an audit when calculating interest on underpaid taxes.
Rio Tinto operates two coal mines in Campbell County. After an audit covering the tax years 1999, 2000 and 2001, the Wyoming Department of Audit concluded that Rio Tinto had undervalued its production at both the mines for tax years 1999 and 2000 but that it had overvalued production for tax year 2001. The Department of Revenue certified to Campbell County notices of the valuation changes for the three tax years. Campbell County issued tax notices to Rio Tinto for the additional ad valorem taxes and interest due. The County Treasurer did not credit the 2001 overpayment against the 1999 and 2000 underpayments under the theory that the statute contemplated netting overpayments and underpayments during an audit period only between mines for the same tax year and not between tax years.
The County Treasurer would apply the statute by assessing interest on the 1999 underpayment from the due date until paid, would assess interest against the 2000 underpayment form the due date until paid, and would remit to Rio Tinto the 2001 overpayment upon receipt of notice form the Department of Revenue of the overpayment in the form of a rebate check and it would have no effect on the interest accrued during the audit period.
Rio Tinto would apply the statute by assessing interest on the 1999 underpayment from its due date and interest on the 2000 underpayment from its due date until receipt of the notice of the 2001 overpayment at which time it would subtract the overpayment from the total and assess interest only on the balance due form that point.
The Court agreed with the district court’s conclusion that the statute is unambiguous. The unequivocal mandate of the statute is that a net deficiency be computed, and that any offsetting credit be subtracted in determining the net deficiency for computing interest during the audit. This was the only reading of the statute that gave effect to both its requirement for the determination of a net deficiency and for its requirement that any offsetting credit be subtracted if within the cope of the audit period.

Holding: The district court correctly applied the statute to require the Campbell County Treasurer to determine Rio Tinto’s net ad valorem tax deficiency for the audit period by subtracting a 2001 overpayment credit from the gross deficiencies for 1999 and 2000.

Affirmed and remanded to apply the 2001 offsetting overvaluation credit in determining Rio Tinto’s net deficiency.

C.J. Voigt delivered the decision.

Link: http://tinyurl.com/68pb54 .

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. Please note when you look at the opinion that all of the paragraphs are numbered. When you pinpoint cite to a quote, you should cite to this paragraph number rather than to any page number. If you need assistance in putting together a citation using the Universal Citation form, please contact the Wyoming State Law Library.]

Summary 2007 WY 112

Summary of Decision issued July 18, 2007

[SPECIAL NOTE: This opinion uses "Universal Citation" and was given an "official" citation when issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. You will note that all of the paragraphs are numbered. When you need to provide a pinpoint citation, the universal portion of the citation will use that paragraph number. The pinpoint citation in the P.3d portion should include the reporter page number. If you need assistance, please contact the Wyoming State Law Library.]

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Wyoming Department of Revenue v. Exxon Mobil Corp.

Board of County Commissioners, County of Sublette v. Exxon Mobil Corp.

Citation: 2007 WY 112

Docket Number: 06-41 & 06-42

Appeal from the District Court of Laramie County, Honorable Dan Spangler, Judge, Retired

Representing Appellant Wyoming Department of Revenue: Patrick J. Crank, Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General; and William F. Russell, Assistant Attorney General.

Representing Appellant Board of County Commissioners of the County of Sublette: John C. McKinley of Davis & Cannon, Cheyenne, Wyoming.

Representing Appellee Exxon Mobil Corporation: Lawrence J. Wolfe, Patrick R. Day, and Walter F. Eggers, III of Holland & Hart LLP, Cheyenne, Wyoming; and Brent R. Kunz of Hathaway & Kunz, P.C., Cheyenne, Wyoming.

Date of Decision: July 16, 2007

Issues: Whether the district court correctly concluded that the doctrines of res judicata and collateral estoppel do not bar Appellee from challenging the imposition of ad valorem or severance tax on helium produced from Appellee’s federal leases. Whether the district court properly concluded that Appellee does not owe ad valorem taxes to Sublette County for helium produced from Appellee’s federal leases. Whether the district court properly concluded that Appellee does not owe severance taxes on helium produced from Appellee’s federal leases

Facts/Discussion: The doctrines of res judicata and collateral estoppel incorporate a universal legal principle of common-law jurisprudence to the effect that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction cannot be disputed in a subsequent suit between the same parties or their privies. The issue in the present action, as to the application of severance and ad valorem taxes to helium produced from Appellee’s federal lease, is not identical nor does it arise from the same transaction or series of transactions as were litigated in the previous action Amoco Prod. Co. v. State, 751 P.2d 379. In that action a declaratory judgment action was filed in which the parties sought a determination as to the severance tax rate to be applied to non-hydrocarbon gases under Wyo. Stat. 9-6-302 (1977). The district court correctly concluded that the doctrines of collateral estoppel and res judicata do not apply to bar Appellee’s declaratory judgment action.
The imposition of an ad valorem property tax on mineral production is authorized pursuant to the Wyoming Constitution [Wyo. Const. art 15, sec. 3]. The Wyoming Legislature holds the exclusive authority to define a taxpayer under Wyoming law. For purposes of ad valorem taxes on natural gas the legislature has defined taxpayer as the lessor, lessee, or the lessee’s assignee. Under the Mineral Leasing Act of 1920, the United States Congress determined that it should reserve the ownership and right to extract helium from all gas produced from federal mineral leases. Consistent with this reservation, the federal leases at issue in this case reserved unto the federal government the ownership and right to extract helium from all gas produced under these federal leases. Due to these restrictions, which were imposed by the federal government without regard to Wyoming severance or ad valorem taxes, Appellee is actually required to purchase the helium from the federal government following its extraction from the natural gas stream. Moreover, the point at which this purchase occurs under the Helium Agreement is in Lincoln County because of engineering requirements and the physical properties of helium. Thus, due to the unique circumstances created by Congress’ reservation of helium in the Mineral Leasing Act of 1920, and the federal leases issued pursuant thereto, Appellee does not fit within any of the definitions of taxpayer for purposes of ad valorem taxes on natural gas. Accordingly, the district court correctly concluded that Appellee does not owe ad valorem taxes to Sublette County for helium produced from Appellee’s federal leases.
The language under the statutes, and the unique reservation under the federal leases, precludes assessment of severance taxes upon Appellee for the helium produced from these federal leases. Under Wyo. Stat. Ann. § 39-14-203(a)(i), a severance tax is imposed “on the value of the gross product extracted for the privilege of severing or extracting . . . natural gas in the state.” Under Appellee’s federal leases, at the time they were issued, the United States reserved “the ownership of and the right to extract helium from all gas produced from lands leased . . . .” 30 U.S.C.181 (2007). This language was also contained in the actual leases which are the subject of this litigation. Appellee does not possess the privilege of removing, extracting, severing or producing the helium. By virtue of Congress’ limitations under the Mineral Leasing Act of 1920, the privilege of severing or extracting helium has not and cannot be assigned or conveyed to Appellee. This legal limitation necessitated the 1985 Helium Agreement, under which the federal government sells the crude helium, following its extraction from the gas stream.
Moreover, there is no evidence that this unique factual and legal situation was manipulated by Appellee for purposes of tax avoidance. The unambiguous language under Wyo. Stat. 39-14-203(a) (2007) supports the district court’s determination that Appellee was not subject to severance taxes for helium purchased from the federal government. Accordingly, the decision of the district court is affirmed.

Holdings: The district court did not err in finding that the doctrines of collateral estoppel and res judicata did not apply to bar Appellee’s declaratory judgment action. Furthermore, the district court did not err in determining that severance and ad valorem taxes do not apply to the helium produced from these federal leases and purchased by Appellee pursuant to the Helium Agreement.

Affirmed.

District Judge Skavdahl, delivered the opinion for the court.

Link: http://tinyurl.com/26webp .