Title: Union Pacific Resources Co. v. State Bd. of Equalization for State of Wyo.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Union Pacific Resources Co. v. State Bd. of Equalization for State of Wyo.1995 WY 72895 P.2d 464Case Number: 93-265Decided: 05/18/1995Supreme Court of Wyoming

UNION 
PACIFIC RESOURCES COMPANY, Appellant (Petitioner),

v.

STATE BOARD OF EQUALIZATION FOR the STATE OF WYOMING, 
Appellee (Respondent).

 

Appeal 
from District Court, Uinta County, John D. Troughton, 
J.

Dennis W. Lancaster of 
Phillips & Lancaster, P.C., Evanston, for appellant.

Joseph B. Meyer, Atty. Gen., 
Michael L. Hubbard, Deputy Atty. Gen., for appellee.

Before GOLDEN, C.J., and THOMAS, CARDINE,* 
MACY and TAYLOR, JJ.

* 
Retired July 6, 1994.

THOMAS, 
Justice.

[¶1]      Union Pacific 
Resources Company (UPRC) here charges the Wyoming State Board of Equalization 
(Board) with acting illegally in declining to exercise jurisdiction to decide 
UPRC's petition for a declaration concerning the point of valuation to determine 
taxable value for oil and gas production. After this court's decision in Union 
Pacific Resources Co. v. State of Wyoming, 839 P.2d 356 (Wyo. 1992), (UPRC I), 
UPRC filed its petition seeking a determination of the point of valuation, which 
the Board dismissed. The Board ruled, in the absence of appropriate rules for 
proceedings in which declaratory relief was sought, it would decline 
jurisdiction even though Wyo. Stat. § 39-1-304(a)(iv) (Supp. 1992) might support 
its authority to grant such relief. The Board concluded it was not permitted by 
statute to undertake the appropriate rulemaking unless there was a petition 
filed by an interested party or by the Department of Revenue. When judicial 
review of the order of dismissal was pursued in the district court, that court 
affirmed the Board. We are satisfied the Board was not required to conduct a 
declaratory proceeding and issue an advisory ruling in this situation. The 
judgment of the district court is affirmed.

[¶2]      In its Brief of 
Appellant, UPRC frames these issues:

(1) The State Board of Equalization acted illegally 
by declining to exercise jurisdiction to decide appellant's petition, and acted 
contrary to the Board's own rules and regulations.

(2) The State Board of Equalization erred by 
concluding that it "lacked the rules in this area" to consider the appellant's 
petition and in dismissing it.

(3) The State Board of Equalization's conclusions are 
arbitrary, an abuse of discretion, and are not in accordance with Wyoming law, 
or this court's decision in UPRC I.

In the Brief of the State 
Board of Equalization, the articulated issues are:

Under Wyoming law is the Board of Equalization 
required to engage in advisory decision-making upon the request of the taxpayer, 
and thereby circumvent this court's holding that UPRC exhaust its administrative 
remedies?

Do the doctrines of res judicata and collateral 
estoppel apply in this case and bar relitigation of the same issue by 
UPRC?

Is this case rendered moot by the completion of the 
audits?

[¶3]      This case is an 
aftermath of UPRC I, in which UPRC sought a declaratory judgment with respect to 
the proper point of valuation for oil and gas production for purposes of tax 
assessment. We held UPRC had failed to exhaust its administrative remedies and, 
therefore, judicial relief was not available. Following precedent, we recognized 
primary jurisdiction with respect to tax assessment matters lies with the 
administrative agencies. Consequently, the effort to have an adjudication of the 
proper point of valuation in the courts prior to the completion of the 
administrative proceedings was futile.

[¶4]      Subsequent to 
that determination, UPRC filed a Petition for Declaration with the Board of 
Equalization asking it to determine that the point of valuation be at the 
wellhead. Nothing in the record indicates that, when the petition was filed, the 
undisputed facts recited in UPRC I, upon which the summary judgment and the 
appeal were decided, had changed. The Department of Audit still had not 
completed its audit, and the Department of Revenue had not made any changes to 
the tax assessments for 1987 and 1988, the years in question. In its brief, UPRC 
explained that, "[a]nticipating the auditors were going to include some post 
wellhead transportation and processing costs as a part of the taxable value, on 
May 29, 1990, Appellant affirmatively filed a [request for] refund with the 
Department of Revenue and Taxation for mineral production for the years 1987 and 
1988 pursuant to W.S. § 39-6-304 and W.S. § 39-4-101." Later, in justifying its 
position, UPRC said: "In filing it's [sic] Petition, Appellant anticipated that 
if a point of value could be set by the State Board, the taxable value 
established in the audits would then be completed in compliance with the 
law."

[¶5]      The petition 
sought an order from the Board to require the Department of Audit and Department 
of Revenue to utilize the wellhead as the proper point of valuation. The 
Department of Revenue filed a motion to dismiss for lack of jurisdiction. Oral 
arguments were held on the motion, but no evidentiary hearing was held. The 
Board dismissed UPRC's petition with prejudice, and UPRC's Motion to Reconsider 
filed with the Board was denied.

[¶6]      UPRC then filed 
its Petition for Review in the Third Judicial District. After briefs were filed 
and a hearing was held, the court ruled "the decision of the Board of 
Equalization declining to exercise jurisdiction was neither arbitrary, 
capricious, an abuse of discretion, not in accordance with law, nor unsupported 
by substantial evidence." The district court affirmed the Board, but held the 
dismissal should be without prejudice. UPRC appeals from that 
order.

[¶7]      It seems UPRC 
concluded the thrust of UPRC I was to direct it to seek the declaratory relief 
before the Board, and such a course would demonstrate the exhaustion of its 
administrative remedies necessary to permit judicial review. We must correct 
that misperception. In UPRC I, we quoted from Rocky Mountain Oil and Gas Ass'n 
v. State, 645 P.2d 1163, 1168 (Wyo. 1982), where the majority 
said:

However, there is a restriction on the availability 
of a declaratory judgment action with reference to its applicability to 
administrative matters. Where the action would result in a prejudging of issues 
that should be decided in the first instance by an administrative body, it 
should not lie. This is because, if it be otherwise, all decisions by the 
several agencies could be by passed, and the district court would be 
administering the activities of the executive branch of the government. Public 
Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 73 S. Ct. 236, 97 L. Ed. 291 (1952); and City of Cheyenne v. Sims, Wyo., 521 P.2d 1347 (1974). * * 
*.

Accordingly, where the relief desired is in the 
nature of a substitution of judicial decision for that of the agency on issues 
pertaining to the administration of the subject matter for which the agency was 
created, the action should not be entertained.

[¶8]      We perceive no 
reason the same justification for the refusal of judicial relief should not 
apply to the Board in the context of our current structure for the assessment of 
taxes. In 1991, the legislature separated the Department of Revenue from the 
Board, creating two agencies: one for the valuation of property for tax 
assessments, and the other for reviewing the valuation in an administrative 
forum. The valuation function was assigned to the Department of Revenue and 
Taxation, while the Board "became an independent quasi-judicial organization 
with constitutional and statutory duties to equalize valuation and decide 
disagreements regarding statutory provisions affecting the assessment, levy and 
collection of taxes." UPRC I, 839 P.2d  at 363.

[¶9]      In UPRC I, we 
cited to and quoted from City of Cheyenne v. Sims, 521 P.2d 1347, 1349-50 (Wyo. 
1974). We can apply what is said in Sims:

In absence of the original power of the [Board] to 
assess property or levy taxes - the original responsibility lying with the 
[Department of Revenue] - the doctrine of exhaustion of remedies as contrasted 
to the primary jurisdiction doctrine is applicable because when the sole 
original determination lies with another body than the [Board] it is proper to 
apply such doctrine.

*           
*           
*           
*           
*           
*

Declaratory judgment should not be used to usurp or 
replace specific administrative relief, particularly when the initial decision 
is committed to [another] administrative body. No reason has been pointed out to 
this court by the [UPRC] why justice requires the exercise of declaratory 
judgment power [by the Board] in this case. (Footnotes 
omitted.)

The very reasons articulated 
in UPRC I for withholding declaratory relief by the judiciary are fully 
applicable to the withholding of any declaratory relief by the Board. It would 
be infringing upon the administrative function specifically assigned to the 
Department of Revenue if it offered the relief claimed by 
UPRC.

[¶10]   UPRC urges this case falls within 
WYO. STAT. § 16-3-114(c)(ii)(A) (1990), in that the decision of the Board is 
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance 
with law. Our rule is simple. If the Board's conclusion of law accords with law, 
it is to be affirmed and, if not, it is to be corrected. Enron Oil and Gas Co. 
v. Freudenthal, 861 P.2d 1090 (Wyo. 1993), and cases cited there. We are 
satisfied the conclusion of law invoked by the Board is correct and in 
accordance with law.

[¶11]   We perhaps go further than the 
Board with respect to its tentative conclusion of its authority to afford a 
declaratory adjudication. UPRC presses the proposition that, pursuant to WYO. 
STAT. § 39-1-304(a) (1990), particularly subparagraphs (i), (iv), (ix), (xiii), 
(xviii)[sic],1 the Board not only has the 
authority, but is required, to afford the declaratory adjudication. None of the 
statutory provisions pressed by UPRC say that precisely.

[¶12]   Historically, a declaratory 
judgment was not a remedy available under common law, either at law or in 
equity. See cases cited in 26 C.J.S. Declaratory Judgments § 2 (1956). The 
remedy is statutory in nature and, appropriately, is confined by the legislative 
promulgation of the remedy, which is found in Wyoming in the adoption of the 
Uniform Declaratory Judgments Act, WYO. STAT. §§ 1-37-101 to -115 (1988). In the 
absence of this statute, the power of a court to award declaratory relief would 
be suspect. None of the provisions relied upon by UPRC includes a specific grant 
to the Board to afford declaratory relief. The adoption of the Uniform 
Declaratory Judgments Act demonstrates the legislature knew how to structure 
such a remedy in a judicial context and, had it intended to do so, it would have 
so structured it in the administrative context by specifically incorporating 
that power in WYO. STAT. § 39-1-304 (1994), the statutory provision establishing 
the powers of the Board. Even subparagraph (a)(iv) of WYO. STAT. § 39-1-304, 
when read in context, simply affords authority to the Board to decide "questions 
that may arise with reference to the construction of any statute" in proceedings 
otherwise properly before the Board in its hearing 
capacity.

[¶13]   There was no unlawful, arbitrary, 
or capricious action on the part of the Board in this case and, had it responded 
to UPRC's invitation, it would have then invaded the powers statutorily assigned 
to the Department of Revenue. We affirm the order of the district court 
affirming the Board's dismissal of UPRC's Petition for Declaration, not only 
because the decision was correct but, in addition, because we find no creation 
of any power in the Board to afford declaratory relief. While we affirm the 
order of the district court, it should have let stand the dismissal with 
prejudice by the Board.

[¶14]   We affirm the judgment of the 
district court, but remand the case so the district court may enter an order 
affirming the order of the Board without modification.

MACY, 
Justice, dissenting.

[¶15]   I dissent from the majority's 
decision in this case because I am of the opinion that the Board was derelict in 
its duties when it declined to exercise jurisdiction over Union Pacific's 
petition. I would reverse and remand the case to the Board for a decision on the 
merits.

[¶16]   The plain language of WYO. STAT. § 
39-1-304(a)(iv) (1994) establishes that the Board has the responsibility to 
interpret the applicable statutes to determine the proper point of valuation. 
Section 39-1-304(a)(iv) directs the Board to "[d]ecide all questions that may 
arise with reference to the construction of any statute affecting assessment, 
levy and collection of taxes." In order to answer the question posited in Union 
Pacific's petition, the Board had to interpret WYO. STAT. § 39-2-202 (1994) to 
determine the proper point of valuation.

[¶17]   The Board recognized that "W.S. 
39-1-304(a)(iv) may [have been] a sufficiently broad grant of authority to 
support [Union Pacific's] argument on Board jurisdiction." However, the Board 
declined to exercise jurisdiction over the petition. The Board could not simply 
refuse to perform one of its statutory directives. Like all administrative 
agencies are, the Board was bound to follow the applicable statutes. See Fullmer 
v. Wyoming Employment Security Commission, 858 P.2d 1122, 1124 (Wyo. 
1993).

[¶18]   I am not persuaded by the Board's 
argument that it did not have appropriate rules in place with which to decide 
Union Pacific's petition. The Board's rules of procedure are sufficiently broad 
to cover this situation. Further, the "[s]tatutory designation of an 
administrative agency function encompasses a reasonable delegation of process 
determination required or adopted for performance." Cody Gas Company v. Public 
Service Commission of Wyoming, 748 P.2d 1144, 1147-48 (Wyo. 1988). When the 
Legislature directed the Board to decide questions which involve the 
interpretation of relevant statutes, it necessarily delegated sufficient 
procedural powers for the Board to fulfill that mandate.

[¶19]   I would hold that the Board's 
decision to decline to exercise jurisdiction over Union Pacific's petition was 
arbitrary, capricious, and otherwise not in accordance with the law. WYO. STAT. 
§ 16-3-114(c)(ii)(A) (1990). 

 

FOOTNOTE

1 The pertinent provisions of WYO. STAT. 
§ 39-1-304 (1990) read:

(a) The state 
board of equalization shall perform the duties specified in article 15, section 
10 of the Wyoming constitution and shall hear appeals from county boards of 
equalization, review state excise taxes and review their own assessments of 
property and tax determinations. In addition, the board 
shall:

(i) Manage its 
internal affairs and prescribe rules of practice and 
procedure;

* * * * * 
*

(iv) Decide all 
questions that may arise with reference to the construction of any statute 
affecting the assessment, levy and collection of taxes, in accordance with the 
advice and opinion of the attorney general, whose opinion and the rules, 
regulations, orders and instructions prescribed by the board are binding until 
reversed, annulled or modified by a court of competent 
jurisdiction;

* * * * * 
*

(ix) Hold 
hearings after due notice in the manner and form provided in the Wyoming 
Administrative Procedure Act and its own rules and regulations of practice and 
procedure;

* * * * * 
*

(xiii) 
Prescribe the system of establishing the fair market value of all property 
valued for property taxation to ensure that all property within a class is 
uniformly valued. The county assessor and the facilities of his office, together 
with the deputy assessors and clerical assistants in each county, at the 
direction of the board, shall give full aid in the installation of the 
prescribed system in the county. The county shall also furnish the necessary 
supplies and records for installing the system;

* * * * * 
*

(xvii) Direct 
proceedings, actions and prosecutions to be instituted to enforce the laws 
relating to the liability and punishment of persons for failure or neglect to 
comply with the provisions of the laws of this state governing the return, 
assessment and taxation of property, and cause complaints to be made against 
county assessors, members of county boards of equalization, or any other 
assessing or taxing officers, to the proper authority, for their removal from 
office for misconduct or neglect of duty; * * *.

In 1991, the 
statute was amended, but subsection (xvii), which is quoted in the brief of UPRC 
as subsection (xviii) has remained substantially the same since its adoption in 
1982. 1982 WYO. SESS. LAWS, ch. 57, § 1. We are satisfied that the brief has a 
typographical error.