Case Title: BP AMERICA PRODUCTION COMPANY; CHEVRON U.S.A., INC.; AND ANADARKO E & P CO, LP V. DEPARTMENT OF REVENUE, STATE OF WYOMING; AND BOARD OF COUNTY COMMISSIONERS FOR UNITA COUNTY, WYOMING

Citation: 

Docket Number: 03-191

State: wyoming

Court: Wyoming Supreme Court

Date: 2005-05-31T00:00:00Z

Document:
BP AMERICA PRODUCTION COMPANY; CHEVRON U.S.A., INC.;  AND ANADARKO E & P CO, LP V. DEPARTMENT OF REVENUE, STATE OF WYOMING; AND BOARD OF COUNTY COMMISSIONERS FOR UNITA COUNTY, WYOMING2005 WY 60112 P.3d 596Case Number: NO. 03-191Decided: 05/31/2005
 
 
APRIL TERM, 
A.D. 2005

 
 
                                                                                                                        

BP AMERICA 
PRODUCTION COMPANY;           

CHEVRONU.S.A., INC.; AND ANADARKO         

E & P COMPANY, 
LP,         

Appellants 
(Petitioners),       

 
 
                   
v.              

 
 
DEPARTMENT OF 
REVENUE, STATE OF         

WYOMING; and BOARD OF COUNTY      

COMMISSIONERS FORUINTACOUNTY,           

WYOMING,    

 Appellees (Respondents).  

 
 
 
 
W.R.A.P. 
12.09(b) Certification from the DistrictCourtofUintaCounty

The Honorable 
Dennis L. Sanderson, Judge 

 
 
Representing Appellant BP America 
Production Company:

Robert A. Swiech, John L. Bordes, Jr., 
and Nicole Crighton of Oreck, Bradley, Crighton, Adams & Chase, Boulder, 
Colorado

 
 
Representing Appellant Chevron 
U.S.A., 
Inc.:

William J. Thomson II and Randall B. 
Reed of Dray, Thomson & Dyekman, P.C., Cheyenne, Wyoming

 
 
Representing Appellant Anadarko E&P 
Company, LP:

Lawrence J. Wolfe and Walter F. Eggers, 
III, of Holland & Hart, LLP, Cheyenne, Wyoming; Russell W. Miller, Assistant 
General Counsel of Anadarko Petroleum Corp., Houston, Texas.  Argument by Mr. 
Wolfe.

 
 
Representing Appellee Wyoming 
Department of Revenue:

Patrick J. Crank, Wyoming Attorney 
General; Michael L. Hubbard, Deputy Attorney General; Karl D. Anderson, Senior 
Assistant Attorney General; Martin L. Hardsocg, Senior Assistant Attorney 
General, Cheyenne, Wyoming.  
Argument by Mr. Hardsocg.

 
 
Representing Appellee Board of 
CountyCommissioners of UintaCounty:

Bruce A. Salzburg of Freudenthal, 
Salzburg & Bonds, P.C., Cheyenne, Wyoming

 
 
Before HILL, C.J., and GOLDEN, LEHMAN,* 
KITE, and VOIGT, JJ.

 
 
* Justice Lehman concurred prior to his 
death on December 10, 2004

 
 

GOLDEN, Justice.

 
 
[§1] BP America Production Company, 
Chevron USA, Inc., and Anadarko E & P Co. LP (" Taxpayers") appeal a State 
Board of Equalization (the Board) decision upholding the Department of Revenue's 
(the Department) decision to use the comparable value method for determining the 
fair market value of their year 2000 natural gas production from the Whitney 
Canyon Field.  See Wyo. Stat. 
Ann. § 39-14-203(b)(vi)(B) (LexisNexis 2003)1  Taxpayers primarily contend that the 
Department cannot use the comparable value method in the absence of rules 
defining what Taxpayers allege to be ambiguous terms in the statute (§ 
39-14-203(b)(vi)(B)).  Taxpayers 
also contend that, under the particular facts and circumstances of their 
WhitneyCanyon production, there 
are no comparable processing fee agreements, again prohibiting the Department 
from using the comparable value method.

 
 
[§2] During the hearing before the 
Board, the Board allowed UintaCounty to intervene in the administrative 
proceedings.  After a full hearing, 
the Board upheld the Department's use of the comparable value method for 
Taxpayers' production.  Taxpayers 
then appealed the Board's decision to the district court.  The district court certified the appeal 
to this Court pursuant to W.R.A.P. 12.09(b).  This Court accepted certification and 
hereby affirms the order of the Board.  
On the issue regarding intervention of Uinta County, however, we reverse 
on the authority of Amoco Production Co. v. Wyoming Dept. of Revenue, et al., 
2004 WY 89, ¶¶9-27, 94 P.3d 430, ¶¶9-27 (Wyo. 2004).

 
 
 
 
ISSUES

 
 
[§3] Taxpayers state these 
issues:

 
 
A.  Did the Department and Board incorrectly 
interpret and apply the comparable value statute, Wyo. Stat. Ann. § 
39-14-203(b)(vi)(B)?

 
 
1.  Should the Board have prevented the 
Department from using the comparable value method in the absence of rules 
defining the terms of the comparable value statute?

 
 
2.  Did the Board erroneously construe the 
statutory terms "other parties," "like quantity, " and "taking into 
consideration the quality, terms and conditions"?

 
 
B.  Did the Department's actions and the Board's 
justifications for those actions violate the Appellants' rights to substantive 
and procedural due process?

 
 
C.  Has the Department treated the Appellants 
differently from similarly situated taxpayers, thereby violating these 
Appellants' Equal Protection rights?

 
 
D.  Did the Board err when it allowed UintaCounty to intervene in this case?

 
 
The Department responds with these issues:

 
 
1.  Did the State Board of Equalization correctly 
affirm the Department of Revenue's selection of the comparable value method, 
pursuant to Wyo. Stat. § 39-14-203(b)(vi)(B), as the method which most 
accurately reflected the taxable fair market value of Appellants' 2000 Whitney 
Canyon production?

 
 
2.  Did the State Board of Equalization correctly 
affirm the Department of Revenue's application of a comparable value processing 
fee of 25% of the product paid in-kind, the maximum fee paid by any producer 
regardless of any circumstance, to value Appellants' 2000 WhitneyCanyon production?

 
 
3.  Did the State Board correctly determine that 
Appellants failed to carry their burden of proof when they failed to offer any 
evidence that their application of proportionate profits, pursuant to Wyo. Stat. 
§ 39-14-203(b)(vi)(D), reflected the most accurate fair market value for 
taxation purposes, as required by Wyo. Stat. § 39-14-203(b)(viii)?

 
 
4.  Did the State Board of Equalization correctly 
affirm the Department's rejection of Appellants' application of proportionate 
profits, pursuant to Wyo. Stat. § 39-14-203(b)(vi)(D), which resulted in 
processing deductions far in excess of the actual costs to process and which 
bore no relationship to actual processing costs?

 
 
5.  Did the State Board of Equalization correctly 
determine that Appellants ' due process rights were not violated?

 
 

Uinta County, permitted 
intervention by the State Board of Equalization and also by the district court, 
states its issue to be whether the Board erred when it permitted that 
intervention in the contested case pending before that Board.

 
 
 
 
FACTS

 
 
[§4] Taxpayers own working interests in sour natural gas 
production from wells in the Whitney Canyon Field. Taxpayers also are joint 
owners in the Whitney Canyon Processing Plant (the Plant), along with one other 
entity that is also a producer in the Whitney Canyon Field (the Plant 
Owners).  The 
Plant was built by these four owners to process their WhitneyCanyon sour natural gas production prior 
to its sale.  
The Plant Owners are governed by a construction and operating agreement 
(the C&O Agreement).  Attached to the C&O Agreement is a 
processing agreement entered into separately by each of the four producers who 
also are the Plant Owners.  The processing agreement provides that the 
Plant charges a processing fee of 25% of each individual producer's production 
volume in kind.  
In turn, the joint Plant Owners agree to receive that fee paid in-kind to 
the Plant in proportion to each Plant Owner's ownership interest in the Plant, 
and to separately market the production received in-kind.

 
 
[§5] The Wyoming Legislature has charged the Wyoming 
Department of Revenue with the task of determining the fair market value for 
natural gas production for severance tax purposes. Wyo. Stat. Ann. § 39-14-202(a)(i) (LexisNexis 
2003). The Wyoming Legislature has provided the Department with specific 
guidance on how it should determine the fair market value of natural gas 
production.  See generally Wyo. Stat. Ann. § 39-14-203 (LexisNexis 
2003).  
Pertinent to this appeal, the legislature has directed the Department to 
value natural gas production that is not sold at or prior to the point of 
valuation by bona-fide arms-length sale pursuant to one of four methods: 1) 
comparable sales; 2) comparable value; 3) netback; and 4) proportionate 
profits.  § 
39-14-203(b)(vi).

 
 
[§6] In exercising its statutory authority to determine the 
fair market value for Taxpayers' gas production, the Department identified and 
instructed Taxpayers to apply the comparable value method to value their year 
2000 through 2002 natural gas production.  The legislature describes the comparable 
value method in this language:

 
 
Comparable value  The fair market value is the arms-length 
sales price less processing and transportation fees charged to other parties for 
minerals of like quantity, taking into consideration the quality, terms and 
conditions under which the minerals are being processed or transported[.]

 
 
§ 39-14-203(b)(vi)(B).  As applied to the instant case, the object of 
the comparable value method is to determine a processing fee (no transportation 
fee is at issue).  
Once determined, that fee is subtracted by the Department from the value 
of the actual sale of processed gas, thereby arriving at a fair market value for 
the gas after production is complete but before processing.  It is fair to say 
that in using this method, the Department is to make reasonable inferences based 
on reliable information about processing fees paid by other taxpayers in similar 
situations.

 
 
[§7] In applying the comparable value method to the 
production of Taxpayers, the Department treated the processing agreements 
between the WhitneyCanyon producers, 
including Taxpayers, and the Plant as four separate agreements.  The Department 
obtained two other processing agreements in addition to the processing 
agreements between the Plant and the Taxpayers, which contain terms and 
conditions incorporating some variations from Taxpayers' processing 
agreements.  
All the processing agreements, however, provide that the processing fee 
is not to exceed 25%, in kind, of product volume processed.  The Department 
accepted the 25% processing fee contained in the agreements as adequate 
comparables and used the 25% fee in the comparable value method to determine the 
fair market value of each Taxpayer's gas production2  Taxpayers objected, 
claiming the processing agreements between themselves as producers and 
themselves as Plant Owners could not be used as separate comparables since they 
were all between the same entities.  Specifically, Taxpayers challenged the 
Department's construction and application of the specific statutory language 
that Taxpayers as producers qualify as "other parties" with regard to processing 
agreements with the Plant.  Taxpayers also argued that the processing fee 
agreements do not pertain to gas of "like quantity," and that the quality, terms 
and conditions of the processing fee agreements are not comparable.  The Department 
maintained its decision to apply the comparable value method.

 
 
[§8] Taxpayers appealed to the Board.  UintaCounty was allowed to intervene in that 
appeal and present argument.  In a lengthy written decision, the Board 
found that the Plant owners were an entity governed by a construction and 
operating agreement (the C&O Agreement).  Through individual processing agreements, 
each producer contracted with the plant individually for processing and each 
processing agreement set a maximum 25% processing fee under all 
circumstances.  
This set fee applied to each producer regardless of the quantity of gas 
processed.  
Some of the contracts had terms and conditions that differed but had no 
effect upon the maximum processing fee to be charged; it never exceeded 
25%.  Finding 
that each processing agreement was between the Plant Owners as an individual 
entity and the individual producer, the Board compared the contracts and 
rejected the claim that it used the producer's own contract as a comparable 
against the producer.  
The Board agreed that the 25% processing fee relied upon by the 
Department was determined by the processing fee agreements and use of that 
comparable value accurately reflected fair market value. 

 
 
[§9] The Board examined other taxpayers who were permitted 
to use the proportionate profits methodology and determined that those 
situations were sufficiently distinct to allow the different treatment.  The Board found no 
constitutional violation occurred because uniformly achieving taxation based 
upon accurate fair market value may well require application of different 
methodologies to similarly situated mineral taxpayers if comparable values 
differ in processing agreements or different cost structures exist.  This appeal 
followed.

 
 
 
 
STANDARD OF 
REVIEW

 
 
[§10] This Court reviews administrative actions pursuant to 
the standard articulated by Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2003) of 
the Wyoming Administrative Procedure Act, which provides in pertinent part:

 
 
(c) To the extent necessary to make a decision and when 
presented, the reviewing court shall decide all relevant questions of law, 
interpret constitutional and statutory provisions, and determine the meaning or 
applicability of the terms of an agency action.  In making the following determinations, the 
court shall review the whole record or those parts of it cited by a party and 
due account shall be taken of the rule of prejudicial error.  The reviewing court 
shall:

            
. . . .

 
 
(ii) Hold unlawful and set aside agency action, findings 
and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or 
otherwise not in accordance with law;

                                                
. . . .

 
 
(C) In excess of statutory jurisdiction, authority or 
limitations or lacking statutory right[.]

 
 
This Court reviews appeals certified to this Court from the 
district court under the appellate standards applicable to a reviewing court of 
the first instance.  
Wyodak Resources Devel. Corp. v. Wyoming Dept. of 
Revenue, 2002 WY 181, ¶9, 60 P.3d 129, ¶9 (Wyo. 
2002) (citing Amax Coal Co. v. Wyoming State Bd. of 
Equalization, 819 P.2d 825, 828 (Wyo. 1991)) ("When an administrative agency case is certified to 
this court under W.R.A.P. 12.09(b), we review the decision under the appellate 
standards applicable to a reviewing court of the first instance.").  We review both the 
agency's findings of fact and law:

 
 
Considerable deference is accorded to the findings of fact 
of the agency, and this Court does not disturb them unless they are contrary to 
the overwhelming weight of the evidence.  Amoco Production Co. 
v. WyomingState Bd. of Equalization, 12 P.3d 668, 671 (Wyo. 
2000).  An 
agency's conclusions of law can be affirmed only if they are in accord with the 
law.  
Id. at 672.   Our function 
is to correct any error that an agency makes in its interpretation or 
application of the law.

 
 

EOG Resources, 
Inc. v. Wyoming Dep't of Revenue, 2004 WY 35, ¶12, 86 P.3d 1280, ¶12 (Wyo. 
2004).

 
 
[§11] Regarding review of agency findings of fact:

 
 
[W]e will disturb an agency's decision when it is clearly 
contrary to the overwhelming weight of the evidence on the record.  The district court 
and this Court are charged with reviewing an agency's decision for substantial 
evidence.   
That duty requires a review of the entire record to determine if there is 
relevant evidence that a reasonable mind might accept in support of the agency's 
decision.  
Occasionally, the process of review will necessarily require the 
reviewing court to engage in an assessment of the facts adduced during the 
administrative hearing. That assessment does not usually involve a reweighing or 
reconsideration of the basic facts found by the agency.  However, as a 
by-product of that process, the reviewing court may arrive at an ultimate 
conclusion derived from those basic facts that is different from the 
agency's.  A 
court will reach a different conclusion based on the evidence only in those 
situations where the agency's conclusion is clearly contrary to the weight of 
the evidence.

 
 

McTiernan 
v.Scott, 2001 WY 
87, ¶16, 31 P.3d 749, ¶16 (Wyo. 
2001) (citations and footnote omitted).

 
 
[§12] We review agency conclusions of law de novo:

 
 
The construction and interpretation of statutes are 
questions of law which we review de novo.  Powder River Coal 
Company v. Wyoming State Board of Equalization, 2002 WY 5, ¶6, 38 P.3d 423, ¶6 (Wyo. 
2002); Osenbaugh v. State ex rel. Wyoming Workers' 
Safety and Compensation Division, 10 P.3d 544, 547 (Wyo. 
2000).  We 
affirm an agency's conclusions of law when they are in accordance with the 
law.  Powder River Coal Company, 2002 WY 5, ¶6, 38 P.3d 423.  However, when the 
agency has failed to properly invoke and apply the correct rule of law, we 
correct the agency's error.  Id.

 
 

Wyodak Resources 
Dev. Corp., ¶9.  Thus, our standard of review for agency 
actions involves two steps, as necessary:

 
 
Our review of an agency's findings of fact and conclusions 
of law is simple.  
First, if we can find from the evidence preserved in the record a 
rational view for the findings of fact made by the agency, we then say the 
findings are supported by substantial evidence.  See Holdings' Little 
America v. Board of CountyCom'rs. of 
LaramieCounty, 670 P.2d 699, 704 
(Wyo. 1983).  Using judicial reliance upon and deference to 
agency expertise in its weighing of the evidence, a reviewing court will not 
disturb the agency determination unless it is "clearly contrary to the 
overwhelming weight of the evidence on record."  Southwest WyomingRehabilitationCenter [v. Emp. Sec. 
Com'n], 781 P.2d [918] at 921 [(Wyo. 
1989)].  (Accord Cody Gas Co. v. Public 
Service Com'n of Wyoming, 748 P.2d 1144, 1146 (Wyo. 1988).)   See Ohlmaier v. 
Industrial Com'n of Arizona, 161 Ariz. 113, 776 P.2d 791 (1989).  
See also for a drug test unemployment compensation award review, Grace Drilling Co. v. Board of Review of Indus. Com'n of 
Utah, 776 P.2d 63 (Utah. App. 
1989).  Second, 
we ask if the conclusions of law made by the agency are in accordance with 
law.  Belle Fourche Pipeline Co. v. State, 766 P.2d 537 (Wyo. 1988).

 
 
When we review agency conclusions of law, we are alert to 
three possibilities.  
The agency may correctly apply their findings of fact to the correct rule 
of law.  Belle Fourche Pipeline Co., 766 P.2d 537.  In such case, the 
agency's conclusions are affirmed.  But the agency could apply their findings of 
fact to the wrong rule of law or they could incorrectly apply their findings of 
fact to a correct rule of law.  Ballard v. Wyoming Pari-Mutuel Com'n of State of 
Wyoming, 750 P.2d 286 (Wyo. 1988).  In either case, we correct an agency 
conclusion to ensure accordance with law.  Rocky Mountain Oil 
& Gas Ass'n v. State Board of Equalization, 749 P.2d 221 (Wyo. 1987).  Our standard of review for any conclusion of 
law is straightforward.  If the conclusion of law is in accordance 
with law, it is affirmed, [Wyoming 
Dep't of Revenue v.] Casper Legion Baseball Club, 
Inc., 76[7] P.2d 608 [(Wyo. 1989)]; if it is 
not, it is to be corrected, Rocky Mountain Oil & Gas 
Ass'n, 749 P.2d 221.

 
 

Employment Sec. 
Comm'n of Wyoming v. 
Western Gas Processors, Ltd., 786 P.2d 866, 871 
(Wyo. 1990).  Findings of ultimate fact are reviewed de 
novo:

 
 
When an agency's determinations contain elements of law and 
fact, we do not treat them with the deference we reserve for findings of basic 
fact.  When 
reviewing an "ultimate fact," we separate the factual and legal aspects of the 
finding to determine whether the correct rule of law has been properly applied 
to the facts.  
We do not defer to the agency's ultimate factual finding if there is an 
error in either stating or applying the law.

 
 

Basin Elec. Power 
Co-op., Inc. v. Dep't of Revenue, State of Wyo., 970 P.2d 841, 850-51 (Wyo. 
1998) (citations omitted).

 
 
[§13] The party asserting an improper valuation method 
bears the burden of proof.  Amoco Production Co. 
v. WyomingState Bd. of 
Equalization, 899 P.2d 855, 858 (Wyo. 1995).  In reviewing a 
valuation method, the task of the appellate court is not to determine which of 
various appraisal methods is best or most accurately estimates fair market 
value.  The 
reviewing court only determines whether substantial evidence exists to support 
use of the chosen method.  Id.

 
 
 
 
DISCUSSION

 
 
Intervention by 
UintaCounty

 
 
[§14] This Court can easily dispose of the issue of the 
standing of UintaCounty to intervene 
in the instant proceedings before the Board.  Taxpayers contend that the Board erred when 
it allowed UintaCounty to intervene 
in these proceedings.  
We have recently settled this issue in Amoco 
Production Co. v. Dept. of Revenue, 2004 WY 89, 94 P.3d 430 (Wyo. 
2004).  We held 
that the Board has authority to allow a county to intervene in a contested case 
before the Board if the county qualifies for intervention as of right.  Id. at ¶13. We determined that 
a county's challenge to the Department's findings is limited to only the 
quantity of taxable product or similar error and does not allow intervention 
into a contested case brought by a taxpayer against the Department challenging 
substantive methodology decisions by the Department regarding valuation. 
Id.  at ¶¶18-19. 
UintaCounty was allowed to intervene in this 
case brought by Taxpayers to challenge the Department's choice of methodology 
and the rule set forth in Amoco prohibits the 
county's intervention.  We find that the Board has erred and reverse 
the order allowing intervention.  UintaCounty 
is dismissed from this appeal.

 
 
 
 
Construction of § 
39-14-203(b)(vi)(B) 

 
 
[§15] Taxpayers first contend that the Board misconstrued 
the language of the comparable value statute.  The main thrust of Taxpayers' argument is 
that specific, individual words in the statute ("other parties," "quantity," 
"quality, terms and conditions") are ambiguous.  Taxpayers analyze these words in isolation 
from the statute as a whole.  The flaw with this argument is that it loses 
the forest for the trees.  This Court considers the entire statute in 
determining if the language of a statute is ambiguous:

 
 
In interpreting statutes, our primary consideration is to 
determine the legislature's intent.  All statutes must be construed in pari materia and, in ascertaining the meaning of a 
given law, all statutes relating to the same subject or having the same general 
purpose must be considered and construed in harmony.  Statutory 
construction is a question of law, so our standard of review is de novo.  We endeavor to 
interpret statutes in accordance with the legislature's intent.  We begin by making 
an inquiry respecting the ordinary and obvious meaning of the words employed 
according to their arrangement and connection.  We construe the statute as a whole, giving 
effect to every word, clause, and sentence, and we construe all parts of the 
statute in pari materia.  When a statute is 
sufficiently clear and unambiguous, we give effect to the plain and ordinary 
meaning of the words and do not resort to the rules of statutory 
construction.  
Wyoming Board of Outfitters and Professional 
Guides v. Clark, 2001 WY 
78, ¶12, 30 P.3d 36, ¶12 (Wyo. 
2001); Murphy v. State Canvassing Board, 12 P.3d 677, 679 (Wyo. 
2000).  
Moreover, we must not give a statute a meaning that will nullify its 
operation if it is susceptible of another interpretation.  Billis v. State , 800 P.2d 401, 413 
(Wyo. 1990) (citing McGuire v. McGuire, 608 P.2d 1278, 1283 
(Wyo. 1980)).

 
 
Moreover, we will not enlarge, stretch, expand, or extend a 
statute to matters that do not fall within its express provisions.  Gray v. Stratton Real Estate, 2001 WY 125, ¶5, 36 P.3d 1127, ¶5 (Wyo. 
2001); Bowen v. State, Wyoming Real Estate 
Commission, 900 P.2d 1140, 1143 (Wyo. 
1995).

 
 

Loberg v. Wyo. 
Workers' Safety & Comp. Div., 2004 WY 48, ¶5, 88 P.3d 1045, ¶5 (Wyo. 
2004) (quoting Board of County Comm'rs of Teton County 
v. Crow, 2003 WY 40, ¶¶40-41, 65 P.3d 720, ¶¶40-41 (Wyo. 
2003)).  Only 
if we determine the language of a statute is ambiguous will we proceed to the 
next step, which involves applying general principles of statutory construction 
to the language of the statute in order to construe any ambiguous language to 
accurately reflect the intent of the legislature.  If this Court determines that the language of 
the statute is not ambiguous, there is no room for further construction.  We will apply the 
language of the statute using its ordinary and obvious meaning.

 
 
[§16] To put the language of § 39-14-203(b)(vi)(B) into 
context, we quote section (b) in its entirety:

 
 
(b) Basis of tax.  The following shall apply:

(i) Crude oil, lease condensate and natural gas shall be 
valued for taxation as provided in this subsection;

(ii) The fair market value for crude oil, lease condensate 
and natural gas shall be determined after the production process is 
completed.  
Notwithstanding paragraph (x) of this subsection, expenses incurred by 
the producer prior to the point of valuation are not deductible in determining 
the fair market value of the mineral;

(iii) The production process for crude oil or lease 
condensate is completed after extracting from the well, gathering, heating and 
treating, separating, injecting for enhanced recovery, and any other activity 
which occurs before the outlet of the initial storage facility or lease 
automatic custody transfer (LACT) unit;

(iv) The production process for natural gas is completed 
after extracting from the well, gathering, separating, injecting and any other 
activity which occurs before the outlet of the initial dehydrator.  When no dehydration 
is performed, other than within a processing facility, the production process is 
completed at the inlet to the initial transportation related compressor, custody 
transfer meter or processing facility, whichever occurs first;

(v) If the crude oil, lease condensate or natural gas 
production as provided by paragraphs (iii) and (iv) of this subsection are sold 
to a third party, or processed or transported by a third party at or prior to 
the point of valuation provided in paragraphs (iii) and (iv) of this subsection, 
the fair market value shall be the value established by bona fide arms-length 
transaction;

(vi) In the event the crude oil, lease condensate or 
natural gas production as provided by paragraphs (iii) and (iv) of this 
subsection is not sold at or prior to the point of valuation by bona fide 
arms-length sale, or, except as otherwise provided, if the production is used 
without sale, the department shall identify the method it intends to apply under 
this paragraph to determine the fair market value and notify the taxpayer of 
that method on or before September 1 of the year preceding the year for which 
the method shall be employed.  The department shall determine the fair 
market value by application of one (1) of the following methods:

(A) Comparable sales -- The fair market value is the 
representative arms-length market price for minerals of like quality and 
quantity used or sold at the point of valuation provided in paragraphs (iii) and 
(iv) of this subsection taking into consideration the location, terms and 
conditions under which the minerals are being used or sold;

(B) Comparable value -- The fair market value is the 
arms-length sales price less processing and transportation fees charged to other 
parties for minerals of like quantity, taking into consideration the quality, 
terms and conditions under which the minerals are being processed or 
transported;

(C) Netback -- The fair market value is the sales price 
minus expenses incurred by the producer for transporting produced minerals to 
the point of sale and third party processing fees.  The netback method 
shall not be utilized in determining the taxable value of natural gas which is 
processed by the producer of the natural gas;

(D) Proportionate profits -- The fair market value is:

(I) The total amount received from the sale of the minerals 
minus exempt royalties, nonexempt royalties and production taxes times the 
quotient of the direct cost of producing the minerals divided by the direct cost 
of producing, processing and transporting the minerals; plus

(II) Nonexempt royalties and production taxes.

(vii) When the taxpayer and department jointly agree, that 
the application of one (1) of the methods listed in paragraph (vi) of this 
subsection does not produce a representative fair market value for the crude 
oil, lease condensate or natural gas production, a mutually acceptable 
alternative method may be applied;

(viii) If the fair market value of the crude oil, lease 
condensate or natural gas production as provided by paragraphs (iii) and (iv) of 
this subsection is determined pursuant to paragraph (vi) of this subsection, the 
method employed shall be used in computing taxes for three (3) years including 
the year in which it is first applied or until changed by mutual agreement 
between the department and taxpayer.  If the taxpayer believes the valuation method 
selected by the department does not accurately reflect the fair market value of 
the crude oil, lease condensate or natural gas, the taxpayer may appeal to the 
board of equalization for a change of methods within one (1) year from the date 
the department notified the taxpayer of the method selected;

(ix) If the department fails to notify the taxpayer of the 
method selected pursuant to paragraph (vi) of this subsection, the taxpayer 
shall select a method and inform the department.  The method selected by the taxpayer shall be 
used in computing taxes for three (3) years including the year in which it is 
first applied or until changed by mutual agreement between the taxpayer and the 
department.  If 
the department believes the valuation technique selected by the taxpayer does 
not accurately reflect the fair market value of the crude oil, lease condensate 
or natural gas, the department may appeal to the board of equalization for a 
change of methods within one (1) year from the date the taxpayer notified the 
department of the method selected;

(x) If crude oil is enhanced prior to the point of 
valuation as defined in paragraph (iii) of this subsection by either a blending 
process with a higher grade hydrocarbon or through a refining process such as 
cracking, then the fair market value shall be the fair market value of the crude 
oil absent the blending or refining process;

(xi) For natural gas, the total of all actual 
transportation costs from the point where the production process is completed to 
the inlet of the processing facility or main transmission line shall not exceed 
fifty percent (50%) of the value of the gross product without approval of the 
department based on documentation that the costs are due to environmental, 
public health or safety considerations, or other unusual circumstances.

 
 
[§17] Taxpayers begin their argument by claiming that this 
Court has already determined that the language of § 39-14-203(b)(vi)(B) is 
ambiguous and rulemaking is required before the Department can apply the 
method.  
Taxpayers rely upon certain language in Amoco 
Production v. State Bd. of Equalization, 882 P.2d 866 (Wyo. 1994) (Amoco I), to support their argument.  The issue in Amoco I was whether the Department could use 
confidential processing fee agreements as comparables pursuant to § 
39-14-203(b)(vi)(B).  
The Amoco I court determined the Department 
could not use facts unavailable to the instant taxpayer to determine the fair 
market value of that taxpayer's product as such would deprive the taxpayer of 
due process of law.

 
 
[§18] In the process of presenting its opinion in Amoco I, the Amoco I court 
stated, "We note in passing that some of the statutory factors are amorphous to 
a degree.  The 
comparable value method is to be used for minerals of like quantity,' and it is 
to take into consideration the quality' and terms and conditions' under which 
the minerals are being processed or transported." 882 P.2d  at 871. After 
explaining that rules might help alleviate any existing ambiguity, that court 
went on to say, "We simply suggest, given the language of the statute, there 
might be some wisdom in pursuing [rulemaking]."  Id. 
This language in Amoco I, relied upon by Taxpayers in this appeal, is the purest 
form of dicta.  
The language of the statute was not at issue in that appeal.  The only issue was 
the Department's use of confidential information in determining fair market 
value.  The Amoco I court qualified the discussion Taxpayers cite 
from beginning to end.  The Amoco I court 
begins the discussion by stating, "we note in passing" and ended the discussion 
with "we simply suggest" and "there might be some wisdom."  These equivocal 
statements in the context of dicta have no precedential value.

 
 
[§19] Returning, then, to our de novo review of § 
39-14-203(b)(vi)(B), Taxpayers argue that the terms "other parties," "like 
quantity" and "quality, terms and conditions" are ambiguous.  By focusing their 
argument on these specific terms, Taxpayers examine only the trees.  Looking at the 
context of these words, we find that the objective of the comparable value 
statute is for the Department to find reliable information about processing fees 
paid by other taxpayers in similar situations, from which the Department can 
make reasonable inferences as to a particular taxpayer's processing costs.

 
 
[§20] Given this context, and the particular facts of this 
case, this Court finds no necessity to construe the statutory terms Taxpayers 
wish to put at issue.  
The statute requires the Department find processing fee agreements from 
similarly situated producers.  Taxpayers are clearly similarly situated 
producers.  
They produce gas from the same field and process the gas at the same 
Plant pursuant to identical processing agreements.  Given four 
identical processing fee agreements, there is no need to further define the 
terms "quantity" or "quality, terms and conditions."  There is no 
difference in the agreements as to how the processing fee is determined.  When looking for 
comparable processing fee contracts, one simply cannot get more comparable than 
four identical contracts.  Since finding comparable processing fees is 
the ultimate goal, that goal is reached if these agreements are truly four 
separate agreements.3

 
 
[§21] The most relevant issue for this case, therefore, is 
the definition and application of the term "other parties."  Taxpayers argue 
that "other parties" means "third parties engaging in arms-length negotiations" 
to determine a processing fee agreement.  Taxpayers continue that they are not third 
parties to the processing agreements between themselves as producers and 
themselves as Plant Owners.  Taxpayers further allege that the processing 
agreements they entered into were not negotiated at arms-length but rather were 
an integral part of the negotiation of the terms of the C&O agreement.

 
 
[§22] We find no support for Taxpayers' argument on the 
term "other parties" as used in the statute.  We find that the legislature did not intend 
that an "other party" has to be a "third party engaged in arms-length 
negotiations."  
The legislature uses the term "third party" several times within 
subsection (b), for instance in (b)(v).  Most importantly for our current purpose, the 
legislature uses the term in (b)(vi)(C) in establishing the netback method of 
valuation.  The 
statutory language specifically states that "third party processing fees"  are to be deducted 
from the sales price in using the netback method.  The legislature did not add such a provision 
to the comparable value method.  The legislature's omission of the term "third 
party" must be given effect.  Merrill v. 
Jansma, 2004 WY 26, ¶29, 86 P.3d 270, ¶29 (Wyo. 
2004) ("[O]mission of words from a statute is considered to be an intentional 
act by the legislature, and this court will not read words into a statute when 
the legislature has chosen not to include them.").  Construing all 
parts of the statute in pari materia, paying particular attention to the 
statutory language used, and more specifically the statutory language not used, 
we find the legislature did not intend for comparable processing fee contracts 
to necessarily be arms-length, third-party contracts in order to achieve the 
ultimate statutory goal of taxation based upon accurate fair market value.

 
 
[§23] Finding that the language of the statute is not 
ambiguous as applied to the instant facts, we must reject Taxpayers' general 
argument that the terms of the comparable value statute are so ambiguous as to 
make the component parts of the method incomprehensible in the absence of 
departmental rules providing more precise definitions.  We find no 
requirement for rulemaking to resolve any statutory ambiguity at issue in this 
case.  
Taxpayers believe that, in the absence of rulemaking, the Department is 
empowered with unfettered discretion to determine comparable value on an ad hoc 
basis.  This 
argument goes too far.  It is probably impossible to draft statutes 
with sufficient precision and foresight to resolve each of the hundreds of 
issues that are likely to arise during the life of a statute.  This does not, 
however, make a statute void for vagueness or unenforceable barring 
rulemaking.  In 
the instant case, Taxpayers were advised of the processing fee agreements the 
Department intended to use as comparables and had no difficulty presenting 
argument against the application of the comparable value method under the 
circumstances.

 
 
Application of § 
39-14-203(b)(vi)(B) to the Instant Facts

 
 
[§24] Taxpayers present limited argument regarding the 
application of the statutory language to their particular facts.  The primary 
argument put forward by Taxpayers is that the Plant is not a separate 
entity.  Thus, 
the argument continues, Taxpayers as producers factually are not distinct from 
themselves as Plant Owners.  The Department disagreed and concluded that 
each Taxpayer entered into each processing contract as a separate and distinct 
entity.  The 
Department determined that the Taxpayers as producers were competitors in the 
applicable marketplace and the processing contracts had resulted from a willing 
processor and a willing producer negotiating fairly in that marketplace.  The Department 
found these parties were positioned in their respective contracts as "other 
parties" for purposes of comparison under the statute.

 
 
[§25] The Board reached the same result from slightly 
different reasoning.  
The Board, after a careful review of the terms of the C&O agreements, 
found that the Plant operated as a business entity separate from each 
producer.  The 
Board "characterized that entity as a partnership based on the evidence in the 
record."  
Taxpayers take particular umbrage with the Board determination that the 
Plant Ownership arrangement is a "partnership."  Taxpayers misread the Order of the 
Board.  The 
Board only "characterized" the ownership arrangement as a partnership, it did 
not determine that the Plant Ownership arrangement was a partnership under 
Wyoming law.  The pertinent holding was that the Plant 
operated as an entity separate and distinct from Taxpayers as producers.  After conducting 
our own review of the C&O agreement, this Court agrees that the Plant 
operates as an entity separate from Taxpayers as producers.

 
 
[§26] Ultimately, substantial evidence supports the 
Department's selection of the comparable value method, and Taxpayers have not 
carried their burden of proving that the Department erred in choosing the 
comparable value method to determine the fair market value of their year 2000 
production:

 
 
The Department's valuations for state-assessed property are 
presumed valid, accurate, and correct. Chicago, Burlington & Quincy R.R. Co. v. Bruch, 400 P.2d 494, 498-99 
(Wyo. 1965).  This presumption can only be overcome by 
credible evidence to the contrary.  Id. In the absence of evidence 
to the contrary, we presume that the officials charged with establishing value 
exercised honest judgment in accordance with the applicable rules, regulations, 
and other directives that have  passed public scrutiny, either through 
legislative enactment or agency rule-making, or both.  Id.

 
 
The petitioner has the initial burden to present sufficient 
credible evidence to overcome the presumption, and a mere difference of opinion 
as to value is not sufficient.  Teton Valley Ranch v. State Board of Equalization, 735 P.2d 107, 113 (Wyo. 1987); 
Chicago, Burlington & Quincy R.R., 400 P.2d  at 499.  If the petitioner 
successfully overcomes the presumption, then the Board is required to equally 
weigh the evidence of all parties and measure it against the appropriate burden 
of proof.  Basin [Electric Power Coop., 
Inc. v. Dep't of Revenue], 970 P.2d [841,] at 851 [(Wyo. 1998)]. Once the presumption is 
successfully overcome, the burden of going forward shifts to the Department to 
defend its valuation.  
Id. The 
petitioner, however, by challenging the valuation, bears the ultimate burden of 
persuasion to prove by a preponderance of the evidence that the valuation was 
not derived in accordance with the required constitutional and statutory 
requirements for valuing state-assessed property.  Id.

 
 

Amoco Production 
Co. v. Dep't of Revenue, State of Wyo., 2004 WY 89, ¶¶7-8, 94 P.3d 430, ¶¶7-8 (Wyo. 
2004).  This 
Court finds no mistake of law or fact in the Department's selection of the 
comparable value method to calculate the fair market value of the production of 
Taxpayers at issue.

 
 
 
 
Substantive and 
Procedural Due Process

 
 
[§27] Taxpayers contend that the Department's decisions in 
this case, combined with the Board's justifications for those decisions, 
violated their rights to both procedural and substantive due process.

 
 
The pertinent provisions of the Fifth and Fourteenth 
Amendments to the United States Constitution and Wyo. Const. art. 1, § 6 
essentially provide that no person shall be deprived of life, liberty or 
property without due process of law.

 
 

Reiter v. State, 
2001 WY 
116, ¶19, 36 P.3d 586, ¶19 (Wyo. 
2001).  Due 
process is both procedural and substantive.  Id. (citing Mills v. Reynolds, 807 P.2d 383, 395 
(Wyo. 1991)).  Procedural due process is satisfied "if a 
person is afforded adequate notice and an opportunity to be heard at a 
meaningful time and in a meaningful manner." Robbins v. 
South Cheyenne Water and Sewage Dist., 792 P.2d 1380, 1385 
(Wyo. 1990).

 
 
[§28] Taxpayers contend that the Department did not provide 
the comparable value until months after the appropriate time, provided no 
justification that the specified contracts were comparable within the meaning of 
the statute, and provided no explanation how the statutory terms were met by 
using these processing contracts.  Without appropriate action by the Department, 
Taxpayers claim they were uncertain what evidence sufficed to disprove the 
Department's action was statutorily authorized and the hearing they received did 
not meet procedural due process requirements.  The Department contends that Taxpayers did 
not require this information and suffered no prejudice because they have 
previously applied the comparable value method with no information at all from 
the Department, did not request rule-making, and did not request any 
explanation.  
The Department maintains that Taxpayers' complaints about ambiguity and 
lack of rule-making spring from their determination to preserve the favorable 
tax treatment derived from using the proportionate profits methodology despite 
its inapplicability.

 
 
[§29] Taxpayers presented all of these objections at a 
contested case proceeding and received a decision based upon a thorough 
examination of the facts, arguments, rules, and law.  The law requires no 
more to satisfy procedural due process, and we find no constitutional 
violation.  
Taxpayers' substantive due process claim stems from the Board's alleged 
arbitrary actions because of a failure to provide guidance on how the statutory 
terms are defined.  
We have already stated that it is impossible to draft statutes to 
anticipate every scenario.  We believe that to also be true of 
regulations.  
The record shows that the Department has a long history of reviewing 
contracts because contracts between taxpayers impact determinations of fair 
market value.  
We have rejected the notion that the legislature intended such a 
restrictive definition of the statutory terms that these processing contracts 
cannot establish a comparable value for taxation purposes.  Taxpayers used the 
processing contracts to establish the processing fee.  Their having used 
the contracts to establish the processing fee market, we do not accept the 
premise that agency use of those contracts violates Taxpayers' due process 
rights.

 
 
Equal 
Protection

 
 
[§30] In this argument, Taxpayers claim that they have been 
treated differently from other taxpayer-producers who also own an interest in a 
processing plant.  
Taxpayers reject the Board's decision that they differ from other 
"taxpayer-producers-processors" because they believe the Board erroneously 
determined they were a "partnership entity."    Taxpayers claim this conclusion 
is wrong because the plant had no revenues and was not titled in the name of a 
partnership.  
The Board's review indicates that the Department has selected the 
comparable value methodology for all taxpayer-producers for sales away from the 
point valuation and all of them responded that no comparable value existed.  The Department 
investigated and found that while that was true for some taxpayer-producers, 
that was not the case for these taxpayers.  The Board concluded that the evidence 
supported distinguishing the operations at WhitneyCanyon 
from the other facilities.  Our review shows that this finding is 
supported by substantial evidence, and we agree with the legal conclusion that 
neither the statute nor the constitution has been violated.  We agree with the 
Board's conclusion that uniformly achieving taxation based upon accurate fair 
market value may well require application of different methodologies to 
similarly situated mineral taxpayers if comparable values differ in processing 
agreements or different cost structures exist.

 
 
CONCLUSION

 
 
[§31] We affirm 
the order upholding the Department's use of the challenged comparable value 
methodology and find no constitutional violation occurred in the contested case 
proceedings.  
We reverse the order allowing the county to intervene in these 
proceedings; however, the Board's decision is upheld in all other respects.

FOOTNOTES

1BP and Chevron also appealed the Department's ultimate 
valuation determination.  They present no argument to this Court, 
however, that the final valuation number does not accurately reflect the fair 
market value of their respective production.

 
 
 
 

2Taxpayers proposed the proportionate profit method of 
determining fair market value, under which Taxpayers calculated processing fees 
in excess of 60%.  
The Department's low processing fee necessarily resulted in a 
dramatically higher taxable fair market value than that calculated by the 
Taxpayers' proportionate profits methodology.  

 
 

3The Department did rely upon a few other processing fee 
agreements with the Plant as further comparables.  The statute does not qualify how many 
processing fee contracts the Department needs to analyze.  Determining what 
number of processing fee contracts the Department must analyze for comparison is 
a fact driven decision to be made on a case-by-case basis.  In this case, the 
Department had what it deemed to be four separate processing agreements as well 
as the other processing agreements.  This Court finds that the four identical 
agreements between four separate producers and the Plant present adequate 
comparables to enable the Department to fairly estimate Taxpayers' processing 
costs. In making this finding under these particular facts, we expressly reject 
Taxpayers' contention that the processing fee agreement pool is too small to 
allow for comparison between the different agreements.  Further, because 
determination of this case does not require use of any other agreements beyond 
the base four, we expressly decline, at this time, to analyze the other 
processing fee agreements used by the Department for their comparability under 
the statute.