Case Title: STATE BOARD OF EQUALIZATION v. TENNECO OIL COMPANY

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1985-01-24T00:00:00Z

Document:
STATE BOARD OF EQUALIZATION v. TENNECO OIL COMPANY1985 WY 11694 P.2d 97Case Number: 84-46Decided: 01/24/1985Supreme Court of Wyoming
STATE BOARD OF 
EQUALIZATION, APPELLANT (RESPONDENT), 

v. 

TENNECO OIL COMPANY, 
APPELLEE (PETITIONER).

 
 
Appeal from the 
Department of Revenue and Taxation.

 
 
A.G. McClintock, 
Atty. Gen., and Ronald P. Arnold, Sr. Asst. Atty. Gen., for appellant; oral argument by Ronald 
P. Arnold.

Stanley K. Hathaway and Rick A. 
Thompson of Hathaway, Speight & Kunz, Cheyenne, for appellee; oral argument by Stanley 
K. Hathaway.

Before THOMAS,* C.J., and ROSE, ROONEY,** BROWN and CARDINE, JJ.

* Became Chief Justice 
January 1, 1985.

** Chief Justice at time of 
oral argument.

CARDINE, 
Justice.

[¶1.]     Appellee, Tenneco Oil 
Company, is the owner of a trona mine and soda ash plant in southwestern 
Wyoming which 
was constructed during the years 1980, 1981, and part of 1982. Pursuant to 
requirements of state law, Tenneco purchased and installed pollution control 
equipment at the plant. Start-up operations for the plant were commenced in 
February 1982, and the entire plant has been in full operation since June 1982. 
Tenneco was advised by the Department of Revenue and Taxation that the pollution 
control equipment would not be exempt from taxation for the year 1982 because of 
a change in interpretation of the applicable exemption statute. Prior to this 
time the department had not taxed pollution control equipment. Tenneco appealed 
this decision to the Board of Equalization which upheld the department's 
interpretation of the statute although modifying the decision. Tenneco then 
appealed to the district court which reversed the State Board of Equalization, 
holding that Tenneco was entitled to the ad valorem tax exemption for the 
pollution control equipment. The State Board of Equalization now appeals that 
decision.

[¶2.]     Appellant raises the 
following issue:

"Does W.S. 35-11-1103 
exempt from ad valorem taxation pollution control devices under 
construction?"

[¶3.]     Appellee raises an 
additional issue contending that the interpretation by the State Board of 
Equalization was arbitrary, capricious and contrary to law. However, since we 
affirm the district court's decision, we need not address appellee's 
contention.

[¶4.]     The statute in 
question, § 35-11-1103, W.S. 1977, states:

"The following property 
is exempt from ad valorem taxation pursuant to the provisions of this act and 
includes facilities, installations, machinery or equipment attached or 
unattached to real property and designed, 
installed and utilized primarily for the elimination, control or prevention 
of air, water or land pollution, or in the event such facility, installation, 
equipment or machinery shall also serve other beneficial purposes and use, such 
portion of the assessed valuation thereof as may be reasonably calculated to be 
necessary for and devoted to elimination, control or prevention of air, water 
and land pollution. The state board of equalization shall determine such exempt 
portion, and shall not include as exempt any portion of any facilities which 
have value as the specific source of marketable byproducts." (Emphasis 
added.)

Appellant 
contends that the word "utilize" must be given its plain and ordinary meaning, 
i.e., "to make use of: turn to practical use or account," Webster's New 
Collegiate Dictionary (1979). The State contends, therefore, that the pollution 
control devices are not being "utilized" while a plant is being constructed and, 
therefore the pollution equipment is not exempt until the plant is 
operational.

[¶5.]     The fundamental rules 
for statutory interpretation and construction are applicable. Words in a statute 
must be given their plain and ordinary meaning. When the meaning is plain, 
construction or interpretation is unnecessary. Jahn v. Burns, Wyo., 593 P.2d 828 
(1979). The words contained in a statute must be considered in relation to one 
another.

"`It is an elementary 
rule of construction that effect must be given, if possible, to every word, 
clause and sentence of a statute.'" 2A Sutherland Statutory Construction § 46.06 
(4th Ed. 1984) (quoting State, ex rel. 
First Nat. Bank of Crete v. Bartley, 39 Neb. 353, 58 N.W. 172 
(1894)).

"Moreover, a statute 
should be construed as a whole because it is not to be presumed that the 
legislature has used any useless words, and because it is a dangerous practice 
to base the construction upon only a part of it, since one portion may be 
qualified by other portions." (Footnote omitted.) Crawford Statutory 
Construction § 165, p. 260 (1940).

When a word or 
phrase in a statute is susceptible of more than one meaning, it must be 
considered ambiguous. State, ex rel. 
Albany County Weed and Pest Dist. v. Board of County Com'rs of Albany 
County, Wyo., 592 P.2d 1154 (1979); DeHerrera v. Herrera, Wyo., 565 P.2d 479 
(1977).

[¶6.]     Appellant contends that 
the language of this statute is unambiguous and, therefore, does not lend itself 
to construction. We are at a loss to understand how appellant can so argue since 
the agency itself interpreted the statute in the manner appellee contends for 
from the time of its enactment in 1967 until 1982. We have stated that the 
divergent contentions of the parties are in themselves evidence of the ambiguity 
of a statute. Basin Electrical Power 
Cooperative v. State Board of Control, Wyo., 578 P.2d 557 (1978). Throughout the 
period from 1967 to 1982, the Department of Revenue and Taxation did not tax 
pollution control equipment during construction. We have adhered to the 
principle that administrative interpretations are entitled to deference 
particularly when, following those interpretations, the legislature has failed 
to make changes in the statute. Public 
Service Comm'n v. Formal Complaint of WWZ Co., Wyo., 641 P.2d 183 
(1982). The acquiescence of the legislature in the interpretation of the agency 
is indicated by their failure to amend or alter the existing statute. Town of Pine 
Bluffs v. State Board of Control of State of Wyoming, Wyo., 647 P.2d 1365 (1982). Since the Department of 
Revenue and Taxation exempted pollution control equipment for a considerable 
period of time without the legislature's making any statutory changes, we must 
infer that this interpretation was consistent with legislative 
intent.

[¶7.]     Appellant also contends 
that even if the statute is appropriate for construction, exceptions are to be 
strictly construed and, therefore, the pollution control devices should not be 
exempt until the plant is actually in operation. It is true that tax exemptions 
are not favored. The general rule is taxation; exemptions are the exception. 
There is a presumption created against granting exceptions and in favor of 
taxation. State Board of Equalization v. 
Wyoming Automobile Dealers Ass'n, 
Wyo., 395 P.2d 741 (1964).

"When it is said that 
exemptions must be strictly construed in favor of the taxing power, this does 
not mean that if there is a possibility of a doubt it is to be at once resolved 
against the exception. It simply means that if, after the application of all 
rules of interpretation for the purpose of ascertaining the intention of the 
legislature, a well founded doubt exists, then an ambiguity occurs which may be 
settled by the rule of strict construction." Cooley, The Law of Taxation § 674, 
p. 1415 (1924).

[¶8.]     Legislative intent is 
the primary and foremost consideration in statutory 
construction.

"When the language is not 
clear or is ambiguous, the court must look to the mischief the statute was 
intended to cure, the historical setting surrounding its enactment, the public 
policy of the state, the conclusions of law, and other prior and contemporaneous 
facts and circumstances, making use of the accepted rules of construction to 
ascertain a legislative intent that is reasonable and consistent." State, ex rel. Motor Vehicle Division v. 
Holtz, Wyo., 674 P.2d 732, 736 
(1983).

It is axiomatic 
that a statute be viewed in terms of the object and purpose to be accomplished. 
State v. Stovall, Wyo., 648 P.2d 543 (1982); Wyoming State Treasurer v. City of Casper, Wyo., 
551 P.2d 687 (1976).

[¶9.]     Applying these 
fundamental rules to this statute, we find that the statute must be considered 
ambiguous. This is evidenced not only by the opposing contentions of the parties 
but by the fact that the agency has interpreted the statute in two different 
ways. The word "utilize" must be read in conjunction with the entire phrase 
"designed, installed and utilized primarily." This phrase describes and defines 
the type of equipment which is exempted. It does not designate the time at which 
an exemption takes effect. This exemption was obviously intended to provide a 
tax incentive that would encourage the design, installation and utilization of 
pollution control equipment and devices for the beneficial public purpose of 
reducing or eliminating environmental pollution to the extent practical. Our 
decision in this case accomplishes that purpose.

[¶10.]  We hold, therefore, that pollution 
control equipment is exempt upon acquisition if of a type that is ordinarily 
designed, installed and utilized primarily for pollution control. Appellant 
expresses a concern that a decision upholding the district court would mean 
that, as stated by appellant,

"a taxpayer does not have 
to install a device which actually controls pollution. A taxpayer can design, 
install and merely intend that the device does the job. Under this scenario 
there would still be pollution, but the taxpayer would receive the 
exemption."

We do not share 
the fear expressed by appellant. Other statutes, such as title 35, chapter 11, 
W.S. 1977, establishing a state Department of Environmental Quality with power 
to investigate, hold hearings, issue and enforce orders to prevent, control and 
abate pollution, effectively preclude this from occurring. The decision of the 
district court is, therefore, affirmed.

THOMAS, Chief Justice, specially 
concurring.

[¶11.]  I agree with the rationale of the 
majority opinion, particularly the conclusion that this statute is ambiguous. I 
would, however, also invoke the rule alluded to by this court but not applied in 
Smith v. City of Casper, Wyo., 419 P.2d 704, 706 (1966):

"* * * In the 
multitudinous cases which have discussed interpretation of the word `or' as 
`and' and vice versa, it seems to be the general rule that the interchange can 
be made only when it is necessary to harmonize the provisions of a statute, give 
effect to all its provisions, save it from unconstitutionality or to effectuate 
the obvious intent of the legislature. 50 Am.Jur. Statutes § 282 [now found in 
79 Am.Jur.2d § 241]; 82 C.J.S. Statutes § 335. * * *"

I have some 
difficulty perceiving how the devices described in § 35-11-1103, W.S. 1977, 
could be "utilized" without being "installed," and it seems to me that reading 
the statute so that it says "designed, installed or utilized" does have the 
effect of harmonizing the provisions of the statute and giving effect to all its 
provisions. I also am persuaded that this reading does effectuate the obvious 
intent of the legislature. I would therefore make that construction of the 
statute as another reason for affirming the district 
court.