Contested case against Exxon dismissed

by Cat Urbigkit

The Wyoming Supreme Court issued a ruling last Wednesday that Sublette County's contested case before the State Board of Equalization for ExxonMobil's gas production for the tax year 1998 cannot proceed.

But Sublette County Commissioners said Tuesday that they will ask the state's highest court to reconsider the matter.

Sublette County has long been involved in a tax dispute with Exxon (which has since merged with Mobil) over the company's LaBarge wellfield production tax valuations. The county's challenge of the Department of Revenue's valuation of the Exxon gas production has occurred both before the BOE and in the judicial system.

The DOR is the state agency charged with determining the value of mineral production for tax purposes, and certifies the ad valorem tax values to Wyoming counties. The counties then levy and collect the tax.

The central issue in the case decided last week was whether Sublette County had the statutory authority to bring a contested case proceeding before the BOE. The court ruling noted: "No statute expressly grants counties in Wyoming the authority to file contested cases appealing ad valorem tax decisions. Several statutes allow the taxpayer or the Department of Revenue to appeal at various points in the ad valorem tax process, but none of those statutes mention counties."

According to Wyoming's highest court, "Tax statutes are to be construed in favor of the taxpayer and are not to be extended absent the clear intent of the legislature."

Although relevant state statutes have been amended several times in recent years, the high court concluded "the legislature intended to grant counties the authority to file contested cases from final decisions of the DOR. Unfortunately, the legislature left intact several statutes which specify only the taxpayer and the DOR as having rights to appeal. It did not indicate what decisions could be challenged by the county, or when. It failed to indicate how county appeals fit into the amended return and audit process."

The decision continued: "By granting counties the right to appeal, the legislature may have effectively eliminated any possibility of settlement of tax disputes ... because, even if a dispute is settled, there is the risk of an appeal by a county. We urge the legislature to remedy these problems by clearly indicating its intent with respect to county appeals of ad valorem taxes and by clearly defining the scope and process for such appeals."

The Supreme Court ruling discussed the vagueness of the tax statutes in Wyoming and problems in construing the legislative intent in defining the scope of a county's authority to appeal.

Sublette County is not able to contest a valuation certification, the court ruled, because it is not a final agency action. In addition, according to the court, final agency action in a tax dispute involving a county may not take place for nearly a decade after a valuation certification has been issued.

"The taxpayer can still file an amended return. An audit can occur, and the value or tax can be adjusted over an eight-year period. ... It is only after the time for an audit has expired, or an audit is complete, and the DOR has assessed on the basis of the audit that there is nothing more to be accomplished. Only then has the DOR made a final decision that a county can appeal."

Commission Chairman Bill Cramer said in an interview Tuesday that while the county may not have the authority to file contested case proceedings, the appeal process is still available to it in conjunction with the audit provisions in the statute.

While the commission is naturally disappointed with the decision, Cramer said, "The practical effect is not that great," because the county has systematically filed appeals within its 30-day appeal period of each tax year for the LaBarge field production.

The ruling concludes with instructions that the contested case be dismissed, but commissioners pledged Tuesday to ask the court to reconsider the ruling.

Commissioner Gordon Johnston said, "It's not over."

In addition to requesting the case be reconsidered, Johnston also said the commission will "take steps to try to get the legislature to rectify the mess" of ambiguity included in state statutes.

"The decision is just flat wrong," Cramer said.