Title: WYOMING DEPARTMENT OF REVENUE v. EXXON MOBIL CORPORATION ; BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF SUBLETTE v. EXXON MOBIL CORPORATION

State: wyoming

Issuer: Wyoming Supreme Court

Document:

WYOMING DEPARTMENT OF REVENUE v. EXXON MOBIL CORPORATION ; BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF SUBLETTE v. EXXON MOBIL CORPORATION2007 WY 112162 P.3d 515Case Number: Nos. 06-41, 06-42Decided: 07/18/2007
APRIL 
TERM, A.D. 2007

 
 
WYOMING 
DEPARTMENT OF REVENUE,

 
 
Appellant

(Defendant),

 
 
v.

 
 
EXXON 
MOBIL CORPORATION,

 
 
Appellee

(Plaintiff).

 
 
BOARD 
OF COUNTYCOMMISSIONERS OF THE COUNTY OF SUBLETTE,

 
 
Appellant

(Defendant),

 
 
v.

 
 
EXXON 
MOBIL CORPORATION,

 
 
Appellee

(Plaintiff).

 
 
Appeals 
from the DistrictCourtofLaramieCounty

 
 
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.  
Argument by Mr. Hardsocg.

 
 
Representing 
Appellant Board of CountyCommissioners 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.  Argument by Mr. 
Day.

 
 
Before 
VOIGT, C.J., and GOLDEN and BURKE, JJ., and SKAVDAHL and PARK, 
D.J.J.

 
 
SKAVDAHL, 
District Judge.

 
 
[¶1]      In these two 
consolidated appeals the Department of Revenue ("Department") and the Board of 
County Commissioners of the County of Sublette ("Sublette County") appeal a 
declaratory judgment entered by the district court in favor of Exxon Mobil 
Corporation ("ExxonMobil"), wherein the district court determined that helium 
produced from federal oil and gas leases in Sublette County is not subject to 
severance and ad valorem taxation.  
We will affirm.

 
 
Issues

 
 
[¶2]      The Department 
presents the following statement of issues:

 
 
I.      Did the District 
Court incorrectly rule that because Exxon does not possess title to helium at 
the moment of extraction, that Exxon is not liable for severance 
tax?

 
 
II.     Does Exxon's production 
and severance of helium pursuant to a federal lease and "Sale and Disposition" 
agreement, in which the federal government briefly retains legal title to the 
helium, relieve Exxon of severance tax liability?

 
 
III.    Did the District Court 
incorrectly conclude that Exxon possesses no contractual or other privilege to 
sever and extract helium?

 
 
IV.   Did the District Court incorrectly 
rule that because Exxon does not possess title to helium at the moment of 
extraction, that Exxon is not liable for ad valorem tax?

 
 
V.    Does federal law relieve 
Exxon of state severance or county ad 
valorem tax liability?

 
 
VI.   Did the District Court err when it 
failed to determine that the doctrines of res judicata and collateral estoppel 
barred Exxon's Declaratory Judgment action against the 
Department?

 
 
[¶3]      SubletteCounty identifies a single 
issue:

 
 
I.      Whether the 
helium produced by ExxonMobil Corporation from federal lands located in 
Sublette County, Wyoming is subject to ad valorem (gross 
products) tax?

 
 
[¶4]      ExxonMobil 
identifies two issues:

 
 
A.    Does ExxonMobil owe severance 
taxes on federal helium owned exclusively by the federal 
government?

 
 
B.    Does ExxonMobil owe ad 
valorem production taxes to SubletteCounty on federal helium that 
ExxonMobil buys from the federal government in LincolnCounty?

 
 
[¶5]      We perceive the 
issues presented and which we address to be as follows:

 
 

1.         
Did 
the district court correctly conclude that the doctrines of res judicata and 
collateral estoppel do not bar ExxonMobil from challenging the imposition of ad 
valorem or severance tax on helium produced from ExxonMobil's federal 
leases?

 
 

2.         
Did 
the district court properly conclude that ExxonMobil does not owe ad valorem 
taxes to SubletteCounty for helium produced 
from ExxonMobil's federal leases? 

 
 

3.         
Did 
the district court properly conclude that ExxonMobil does not owe severance 
taxes on helium produced from ExxonMobil's federal leases?

 
 
Facts

 
 
[¶6]      ExxonMobil 
operates deep natural gas wells in SubletteCounty, referred to as the LaBarge 
project.  A discussion of the 
complexities surrounding gas production from the LaBarge project was recently 
detailed by this court in Wyoming 
Department of Revenue v. Exxon Mobil Corp., 2007 WY 21, 150 P.3d 1216 (Wyo. 
2007).  In addition to being a 
prolific source of various valuable gasses, the wells in the LaBarge project 
have also been a prolific source of tax litigation.1  The nature of the taxation issues in 
this case requires a brief discussion of the factual and legal basis upon which 
ExxonMobil produces helium from wells in the LaBarge project and the litigation 
history concerning taxation issues.

 
 
[¶7]      ExxonMobil 
produces natural gas from deep wells completed into the Madison Formation.  The composition of the natural gas 
stream produced from these deep wells is 65% carbon dioxide, 22% methane, 7.4% 
nitrogen, 5% hydrogen sulfide, and .6% helium.  The subject of this appeal is limited to 
the .6% helium produced from wells located on federal leases.2  Due to the unique components of this gas 
stream, it is gathered and transported via various pipelines to the 
BlackCanyon dehydration plant in SubletteCounty.  At the BlackCanyon plant all but .02% of the water in 
the gas stream is removed.  This 
dehydration is necessary because the carbon dioxide and hydrogen sulfide, when 
mixed with water, form highly corrosive acids that would damage the 
pipeline.  This gas stream is then 
transported via pipeline forty miles to the Shute Creek processing facility, 
located in LincolnCounty.  

 
 
[¶8]      At Shute Creek 
the constituents of the gas stream are separated.  This complex process removes the 
constituents in the following order: hydrogen sulfide, carbon dioxide, methane, 
nitrogen, and, finally, helium.  This separation process results in the 
helium being liquefied, which is the point at which ExxonMobil purchases the 
helium from the federal government.

 
 

[¶9]      Pursuant to the 
Mineral Leasing Act of 1920, 30 U.S.C.A. § 181 (West 2007)3 and 43 C.F.R. 3100.1 (West 2007),4 the United States 
reserved the ownership and the right to extract helium from all gas produced 
from mineral leases of federal lands.  
The reservation of helium was originally motivated by national security 
interests.  See Helium Act of March 3, 1925, c. 426, 
43 Stat. 1110.5  The federal leases applicable to the 
wells from which helium and other natural gases are produced were issued prior 
to 1965 and expressly provide that ExxonMobil "is granted the exclusive right 
and privilege to drill for, mine, extract, remove, and dispose of all of the oil 
and gas deposits, except 
helium gas 
. . . ."  (Emphasis added).  These leases reserve to the federal 
government "the ownership and the right to extract helium from all gas produced 
under this lease . . . ."  The 
leases reserve to the federal government the right to construct and operate 
facilities on the leased premise to remove helium from the gas stream produced 
under the lease:

 
 

Section 
3(d).  Helium. -- Pursuant to 
section 1 of the act, and section 1 of the act of March 3, 1927 (44 Stat. 1387), 
as amended, the 
[federal government reserves] ownership and the right to extract helium from all 
gas produced under this lease, 
subject to such rules and regulations as shall be prescribed by the Secretary of 
the Interior.  In case the lessor 
elects to take the helium the lessee shall deliver all gas containing same, or 
portion thereof desired, to the lessor at any point on the leased premises in 
the manner required by the lessor, for the extraction of the helium in such 
plant or reduction works for that purpose as the lessor may provide, whereupon 
the residue shall be returned to the lessee with no substantial delay in the 
delivery of gas produced from the well to the purchaser thereof.  The lessee shall not suffer a diminution 
of value of the gas from which the helium has been extracted, or loss otherwise, 
for which he is not reasonably compensated, save for the value of the helium 
extracted.  The lessor further 
reserves the right to erect, maintain, and operate any and all reduction works 
and other equipment necessary for the extraction of helium on the premises 
leased.

 
 
(Emphasis 
added).  Thus, ownership of the 
helium contained in the gas stream produced from ExxonMobil's wells located on 
these federal leases remains with the federal government, which also retains the 
right to extract it from the gas stream.

 
 
[¶10]   At the time ExxonMobil was 
constructing the Shute Creek processing facilities in the mid-1980s, it 
contemplated the value in constructing facilities which would allow for the 
extraction and sale of helium.  
Thus, due to the federal government's ownership and right of extraction 
of the helium, ExxonMobil sought to purchase the helium from the federal 
government.  Negotiations were 
successful and on June 1, 1985, ExxonMobil and the federal government entered 
into a "Helium Sale and Disposition Agreement" ("Helium Agreement.")  

 
 
The 
Helium Agreement provides in pertinent part:

 
 
Article 
II

Transfer 
of Title

 
 
2.1 
Seller retains title to and ownership of helium underlying Said Lands, but 
during the term of this Agreement Buyer shall have the exclusive right and 
privilege to (i) take possession of the gas stream produced from Said 
Lands for the purpose of extracting helium from said gas stream to the extent 
the gas stream is processed in the Shute Creek Gas Processing Plants constructed 
or to be constructed in Lincoln and Sweetwater Counties, Wyoming and (ii) 
extract in the form of crude helium, in such gas processing plants, the 
helium component of not to exceed 511 billion standard cubic feet of raw inlet 
gas per Contract Year during the term of this Agreement.  Seller agrees to sell to Buyer the 
helium contained in such crude helium so extracted by Buyer during the term of 
this Agreement, for the consideration set forth hereinbelow.  Buyer shall be granted title to such 
helium purchased by Buyer hereunder at the point where the crude helium is 
extracted from said gas stream.  
Both parties agree that this grant does not increase or decrease the 
rights of lessees under oil and gas leases covering any of Said Lands.  Helium to which Buyer obtains title 
under this Agreement does not constitute "Bureau of Mines helium" or "Bureau 
helium" for purposes of 50 U.S.C. §167d and 30 C.F.R. Part 602. 

 
 
(Emphasis 
in original).  The Helium Agreement 
initially had a primary term of 20 years, but has since been amended to a 
primary term of 25 years, until November 1, 2011.  Under the Helium Agreement, ExxonMobil 
pays the federal government a percentage of the proceeds received from its 
resale of the helium.

 
 
[¶11]   ExxonMobil extracts the crude 
helium from the gas stream at the outlet of the nitrogen recovery unit at the 
Shute Creek plant in LincolnCounty, which is the final step in 
processing.  Due to the significant 
amount of helium that unavoidably escapes prior to processing and extraction, 
ExxonMobil did not want to purchase helium from the federal government any 
sooner in the process than necessary, thus avoiding this risk of loss between 
the wellhead and ultimate extraction.6  Under the terms of the Helium Agreement, 
this is the point at which the federal government conveys title of the helium to 
ExxonMobil.

 
 
[¶12]   As noted, in November of 1986, 
ExxonMobil first began selling helium extracted from the gas stream produced 
from the federal leases.  Almost 
immediately, disputes began to arise over the taxation of the various components 
of this gas stream.  These taxation 
disputes ultimately culminated in a January 12, 1989, Tax Settlement Agreement 
("TSA"), between the Department, SubletteCounty, and ExxonMobil.  The details surrounding the development 
of the TSA were most recently explored by this Court in Wyo. Dep't of Revenue v. Exxon Mobil 
Corp., 150 P.3d 1216.

 
 
[¶13]   Pertinent to the issues presently 
before this Court, the TSA provided that in exchange for ExxonMobil's payment of 
$12 million to the State of Wyoming and 
SubletteCounty, ExxonMobil's 
severance and ad valorem tax liability for 1986, 1987, and 1988 would be 
considered satisfied.  The TSA also 
provided that specific valuation methods would be used, for severance and ad 
valorem taxes, for LaBarge production from January 1, 1989 through August 31, 
1991.  In exchange for the State and 
Sublette County's agreement, ExxonMobil agreed that, during this time period, it 
would not contest the applicability of ad valorem and severance taxes to federal 
helium.  The TSA also set forth the 
valuation methodology to be used after August 31, 1991, and provided that if the 
State utilized any other method "the Parties agree that the question of future 
taxability, for severance and ad valorem purposes, and value of future helium 
production remain open and are not resolved by this Agreement." See Exxon Corp. v. Bd. of CountyComm'rs, SubletteCounty, 987 P.2d 158, 161 (Wyo. 1999).  By letter dated May 21, 2004, the 
Department advised ExxonMobil that it would no longer recognize the January 12, 
1989, TSA.  The Department further 
demanded that ExxonMobil report and pay production taxes on all products, 
including helium.  Predictably, in 
response, ExxonMobil filed suit seeking a declaratory judgment as to the 
applicability of ad valorem and severance taxes to the helium produced from 
these federal leases.  

 
 
[¶14]   On cross-motions for summary 
judgment the district court concluded that the Department and SubletteCounty could not lawfully impose severance 
and ad valorem taxes on sales proceeds obtained by ExxonMobil from the resale of 
the helium purchased from the federal government under the Helium 
Agreement.  The Department and 
SubletteCounty separately appealed 
the district court's order.  Due to 
the similarity of issues presented, this Court consolidated both 
appeals.

 
 
Standard 
of Review

 
 
[¶15]   This Court's standard for the 
review of summary judgments applies equally in declaratory judgment 
actions.  Laughter v. Bd. of CountyComm'rs, 2005 WY 54, ¶ 9, 110 P.3d 875, 879 (Wyo. 2005).  Under that 
standard, summary judgment is proper "if the pleadings, depositions, answer to 
interrogatories, and admissions on file, together with the affidavits, if any, 
show that there is no genuine issue as to any material fact and that the moving 
party is entitled to a judgment as a matter of law."  W.R.C.P. 56(c).  A genuine issue of material fact exists 
when a disputed fact, if proven, would establish or refute an essential element 
of a cause of action or a defense that a party has asserted.  Metz Beverage Co. v. Wyo. Beverages, 
Inc., 2002 WY 21, ¶ 9, 39 P.3d 1051, 1055 (Wyo. 2002).  We evaluate the propriety of a summary 
judgment by employing the same standards and examining the same material as the 
district court.  This Court examines 
the record de novo, in the light most 
favorable to the party opposing the motion, affording that party the benefit of 
all favorable inferences that may be drawn from the record.  If, after a review of the record, any 
doubt exists as to the presence of issues of material fact, that doubt must be 
resolved against the party seeking summary judgment.  See Thompson-Green v. Estate of Drobish, 
2006 WY 126, ¶ 5, 143 P.3d 897, 899 (Wyo. 2006).  Issues of statutory interpretation 
present questions of law, which are reviewed de novo.  See Powder River Coal Co. v. Wyo. Dep't of 
Revenue, 2006 WY 137, ¶ 9, 145 P.3d 442, 446 (Wyo. 2006).  As to issues of law, this Court affords 
no deference to the district court's determinations.  See Colo. Cas. Ins. Co. v. Sammons, 2007 WY 
75, ¶ 11, 157 P.3d 460, 465 (Wyo. 2007).

 
 
Discussion

 
 
1.         
Did the district court correctly conclude that the doctrines of res 
judicata and collateral estoppel do not bar ExxonMobil from challenging the 
imposition of ad valorem or severance tax on helium produced from ExxonMobil's 
federal leases?

 
 
[¶16]   The Department asserts that in Amoco Production Co. v. State, 751 P.2d 379 (Wyo. 
1988), ExxonMobil, along with other parties, challenged the Department's 
taxation of helium and lost.  Thus, 
the Department contends that ExxonMobil is barred from revisiting the taxability 
of helium produced from these federal leases.  ExxonMobil contends that the ordinary 
rules regarding res judicata are inapplicable to declaratory judgment 
actions.  Nonetheless, ExxonMobil 
contends that its request for a declaration that severance and ad valorem taxes 
may not be imposed on helium from these federal leases is a new claim.  A review of the issues presented 
demonstrates that the principles of collateral estoppel and res judicata do not 
bar ExxonMobil's declaratory judgment action in this case.

 
 
[¶17]   The doctrines of res judicata 
(claim preclusion) and collateral estoppel (issue preclusion) 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."  See Osborn v. Kilts, 2006 WY 142, ¶ 9, 
145 P.3d 1264, 1266 (Wyo. 2006) (quoting Osborn v. Manning, 798 P.2d 1208, 1210 
(Wyo. 1990)). 

 
 
[¶18]   The application of res judicata or 
collateral estoppel requires an evaluation of similar factors.  Res judicata may be applied where four 
factors are found to exist:  (1) 
identity in parties; (2) identity in subject matter; (3) the issues are the same 
and relate to the subject matter; and (4) the capacities of the persons are 
identical in reference to both the subject matter and the issues between them. 
 Markstein v. Countryside I, L.L.C., 2003 
WY 122, ¶ 15, 77 P.3d 389, 394 (Wyo. 2003).  Res judicata also precludes a party from 
raising issues that could have been raised in the first action.  Wyodak Res. Dev. Corp. v. Wyo. Dep't of 
Revenue, 2002 WY 181, ¶ 12, 60 P.3d 129, 135 (Wyo. 
2002).

 
 
[¶19]   Application of collateral estoppel 
is dependent upon consideration of four similar factors: (1) whether the issue 
decided in the prior adjudication was identical with the issue presented in the 
present action;  (2) whether the 
prior adjudication resulted in a judgment on the merits;  (3) whether the party against whom 
collateral estoppel is asserted was a party or in privity with a party to the 
prior adjudication;  and (4) whether 
the party against whom collateral estoppel is asserted had a full and fair 
opportunity to litigate the issue in the prior proceeding.  Phillips v. Toner, 2006 WY 59, ¶ 7, 
133 P.3d 987, 990 (Wyo. 2006).  The 
issue, as to the very application of severance and ad valorem taxes to helium 
produced from ExxonMobil's federal lease, is not identical nor does it arise 
from the same transaction or series of transactions as were litigated in Amoco Prod. Co. v. State, 751 P.2d 379.

 
 
[¶20]   In Amoco Prod. Co. v. State, see supra ¶¶ 16, 19, Amoco, Chevron, and 
Exxon filed a declaratory judgment action in which they sought a determination 
as to the severance tax rate to be applied to non-hydrocarbon gases under Wyo. 
Stat. Ann. § 39-6-302 (Michie 1977).  
Id. at 380.  That determination was dependent upon 
what constituted "natural gas" as used in the statute.  This Court summarized the contentions of 
the parties in 1988:

 
 
The 
State of Wyoming contends that the correct excise tax 
upon the privilege of severing or extracting CO2 gas is six 
percent.  Appellants contend that 
CO2 is not natural gas, that the correct tax is two percent, and that 
they should have a refund of tax paid of more than 
$615,000.

 
 

Id. 
at 380.  This tax was imposed on the 
CO2 produced by appellants during the first quarter of 1986.  This Court went on to determine whether 
carbon dioxide, as well as other constituents including helium, was "natural 
gas" as that term was used under Wyo. Stat. Ann. § 39-6-302(a) (Michie 
1977).  The issue of whether the 
helium produced from ExxonMobil's federal leases was subject to severance or ad 
valorem taxes was not raised or even considered.  In fact, the only taxes at issue were 
those assessed on CO2 for the first quarter of 1986.  

 
 
[¶21]   The undisputed facts in this case 
establish that ExxonMobil first began selling helium extracted from the gas 
stream produced from federal leases in November of 1986.  Thus, unlike the circumstances in Wyodak Res. Dev. Corp. v. Wyo. Dep't of 
Revenue, 60 P.3d 129, ExxonMobil is not seeking to make yet another 
challenge to the taxes that were imposed in the first quarter of 1986 on 
CO2 production.  There is 
no evidence to suggest or support that the present declaratory judgment filed by 
ExxonMobil is an attempt to raise an additional or alternative challenge to the 
taxation that was at issue or that could have been raised in Amoco Prod. Co. v. State, 751 P.2d 379.  To the contrary, ExxonMobil, the State, 
and SubletteCounty entered into the TSA 
which, until now, put to rest issues concerning the imposition of severance and 
ad valorem taxes to helium produced from ExxonMobil's federal 
leases.

 
 
[¶22]   The history between these parties 
clearly indicates that ExxonMobil has always taken the position that helium 
produced from its federal leases is not subject to severance or ad valorem 
taxes.  As recited in the TSA 
between these parties:

 
 
5.     Exxon has not paid, 
except for severance tax on helium produced from State lands, severance and ad 
valorem tax for production occurring in 1986 or 1987 because the State and Exxon 
had not agreed on a taxable value. 

 
 
6.     Exxon is acquiring 
helium produced from federal lands pursuant to an agreement with the federal 
government, which owns that helium.  
Because Exxon contends that the Wyoming statutes cannot tax helium owned by 
the federal government, Exxon has not paid tax on the helium produced from 
Federal lands in 1986, 1987, and 1988.  
Exxon has paid taxes on helium produced from State lands in the amount of 
$42,474.15.

 
 
The 
TSA further expressly reserved to ExxonMobil the right, in the future, to 
challenge the taxability of helium produced from these federal leases in the 
event the State no longer applied the valuation methodology under the TSA.  This Court has previously recognized 
that parties may enter into settlements or consent judgments without being 
subject to later claims of collateral estoppel.  See Amoco Prod. Co. v. Bd. of County Comm'rs 
of Sweetwater County, 2002 WY 154, ¶¶ 12-15, 55 P.3d 1246, 1250-52 (Wyo. 
2002).  By virtue of the TSA the 
parties reserved until another day a determination as to the imposition of 
severance and/or ad valorem taxes on the helium produced from ExxonMobil's 
federal leases.

 
 
[¶23]   The issues presented in this case 
are not identical to those presented or decided in Amoco Prod. Co. v. State, 751 P.2d 379.  The district court correctly concluded 
that the doctrines of collateral estoppel and res judicata do not apply to bar 
ExxonMobil's declaratory judgment action.  
Given this resolution, we find no need to address the applicability or 
inapplicability of the doctrine of res judicata to declaratory judgment 
actions.

 
 
2.         
Did the district court properly conclude that ExxonMobil does not owe ad 
valorem taxes to SubletteCounty for helium produced from 
ExxonMobil's federal leases? 

 
 
[¶24]   The imposition of an ad valorem 
property tax on mineral production is authorized pursuant to the Wyoming 
Constitution:

 
 

All 
mines and mining claims from which gold, . . . coal, mineral oil or other 
valuable deposit, is or may be produced shall be taxed in addition to the 
surface improvements, and in lieu of taxes on the lands, on the gross product 
thereof, as 
may be prescribed by law; 
provided, that the product of all mines shall be taxed in proportion to the 
value thereof.

 
 

Wyo. 
Const. art. 15, § 3 (emphasis added).  
The ad valorem tax is a property tax which is based upon the full value 
of the property when produced.  Wyo. 
Stat. Ann. § 39-13-101(a)(ii) (LexisNexis 2007); see Union Pac. Res. Co. v. State, 839 P.2d 356, 361 n.1 (Wyo. 1992).  The Wyoming Legislature has defined 
taxpayer for purposes of ad valorem taxes on natural gas:

 
 
            
In the case of ad valorem taxes on crude oil, lease condensate or natural 
gas produced under lease, the lessor is liable for the payment of ad valorem 
taxes on crude oil, lease condensate or natural gas production removed only to 
the extent of the lessor's retained interest under the lease, whether royalty or 
otherwise, and the lessee or his assignee is liable for all other ad valorem 
taxes due on production under the lease[.]

 
 

Wyo. 
Stat. Ann. § 39-14-203 (c)(i) (LexisNexis 2007).  In this case, SubletteCounty contends that the Helium Agreement 
between ExxonMobil and the federal government is simply a ruse to manipulate the 
state and county taxation system.  
SubletteCounty contends that the Helium Agreement vests in 
ExxonMobil all the incidents of ownership in SubletteCounty and, therefore, imposition of the ad valorem 
tax on the helium produced from these leases in SubletteCounty is appropriate.  This argument is not supported by either 
the facts or law.

 
 
[¶25]   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. 
 30 U.S.C.A. § 181 (West 2007).  Consistent with this reservation, the 
federal leases at issue in this case reserve 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, ExxonMobil is required to purchase the helium following its 
extraction from the natural gas stream.  
Moreover, the point at which this purchase occurs under the Helium 
Agreement is in LincolnCounty because of engineering requirements 
and the physical properties of helium.  
Thus, it cannot be concluded that the Helium Agreement is a ruse, simply 
created for the purpose of tax manipulation.  Given federal law, it was and is 
necessary to convey the helium to ExxonMobil once it is extracted from the gas 
stream.  This point is located at 
the Shute Creek facility in LincolnCounty.

 
 
[¶26]   The Wyoming Legislature holds the 
exclusive authority to define a taxpayer under Wyoming law.  Wyo. State Tax Comm'n v. BHP Petroleum Co., 856 P.2d 428, 434 (Wyo. 
1993).  For purposes of ad valorem 
taxes on natural gas the legislature has defined taxpayer as the lessor, lessee, 
or the lessee's assignee.  Wyo. Stat. Ann. § 39-14-203(c)(i).  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, ExxonMobil does not fit within any of 
these categories.  Accordingly, the 
district court correctly concluded that ExxonMobil does not owe ad valorem taxes 
to SubletteCounty for helium produced 
from ExxonMobil's federal leases.

 
 
3.         
Did the district court properly conclude that ExxonMobil does not owe 
severance taxes on helium produced from ExxonMobil's federal 
leases?

 
 
[¶27]   Severance taxes are imposed 
pursuant to Wyo. Stat. Ann. § 39-14-203(a)(i) (LexisNexis 
2007):

 
 
There 
is levied a severance tax on the value of the gross product extracted for the 
privilege of severing or extracting crude oil, lease condensate or natural gas 
in the state. . . .

 
 
The 
legislature has defined "taxpayer" for the purposes of severance taxes 
as

 
 
. 
. . any person extracting crude oil, lease condensate or natural gas and any 
person owning an interest in the crude oil, lease condensate or natural gas 
production to the extent of their interest ownership are liable for the payment 
of the severance taxes together with any penalties and 
interest.

 
 
Wyo. 
Stat. Ann. § 39-14-203(c)(ii) (LexisNexis 2007).  The Department contends under these 
statutes that a severance tax is imposed upon the entity severing or extracting 
minerals, which is not dependent or contingent upon contractual rights or 
ownership.  Thus, by having 
physically severed or extracted helium from the ground, ExxonMobil is liable for 
severance taxes on the helium.  
ExxonMobil contends that under the applicable statues, severance taxes 
are imposed on the exercise of a legal privilege to sever or produce gas arising 
out of mineral ownership, which ExxonMobil lacks due to the reservations under 
the federal leases.  We find that 
the language under the statutes, and the unique reservation under the federal 
leases, precludes assessment of severance taxes upon Exxon Mobil for the helium 
produced from these federal leases.

 
 
[¶28]   The issues presented require an 
interpretation of the controlling statutes.  Our rules of statutory interpretation 
are well established:

 
 
            
In the conduct of statutory interpretation, we begin by inquiring into 
the ordinary and obvious meaning of the words employed by the legislature 
according to the manner in which those words are arranged.  If more than one reasonable 
interpretation exists, we resort to general principles of statutory 
construction.  When the legislature 
has spoken in unambiguous terms, however, we are bound to the results so 
expressed.

 
 

Wyodak, 
¶ 18, 60 P.3d  at 137 (citations omitted).  
This Court has an obligation to make sense out of a statute and give full 
force and effect to the legislative product; in construing statutes, intention 
of the law-making body must be ascertained from the language of the statute as 
nearly as possible.  A statute must 
not be given a meaning which would nullify its operation if it is susceptible to 
another interpretation.  Hasser v. Flint Eng'g, 647 P.2d 66, 69-70 (Wyo. 1982).  Likewise, we will not construe a statute 
in a way that renders a portion of it meaningless.

 
 
[¶29]   This Court must also be mindful of 
the principles related to tax imposition statutes.  Under our precedent, tax imposition 
statutes are to be construed in favor of the taxpayer and are not to be extended 
absent clear intent of the legislature.  Qwest Corp. v. State ex rel. Wyo. Dep't of 
Revenue, 2006 WY 35, ¶ 8, 130 P.3d 507, 511 (Wyo. 2006).  In interpreting statutes levying taxes, 
it is the established rule not to extend their provisions by implication, beyond 
the clear import of the language used, or to enlarge their operations so as to 
embrace matters not specifically pointed out.  "In case of doubt, they are construed 
most strongly against the government and in favor of the citizen."  Amoco Prod. Co. v. Dep't of Revenue, 2004 WY 89, ¶ 18, 94 P.3d 430, 438 (Wyo. 2004).  As summarized 
in Qwest Corp.,

 
 
taxes 
may not be imposed by any means other than a clear, definite and unambiguous 
statement of legislative authority.  
Chevron U.S.A., Inc. [v. State], 918 P.2d [980,] 984 
[(Wyo. 1996)]; 
Amoco Production Co. [v. Dep't of Revenue, 2004 WY 89], ¶ 18[, 
94 P.3d 430, 438 (Wyo. 2004)].  See also Wyo. Const. art. 15, § 13 
(stating "[n]o tax shall be levied, except in pursuance of law, and every law 
imposing a tax shall state distinctly the object of the same, to which only it 
shall be applied.").

 
 
¶ 
9, 130 P.3d  at 511.

 
 
[¶30]   In State ex rel. Department of Revenue v. Union 
Pacific Railroad Co., 2003 WY 54, ¶ 12, 67 P.3d 1176, 1182 (Wyo. 2003) 
(citations omitted), we recognized:

 
 
When 
the words are clear and unambiguous, a court risks an impermissible substitution 
of its own views, or those of others, for the intent of the legislature if any 
effort is made to interpret or construe statutes on any basis other than the 
language invoked by the legislature.  
Moreover, "[a]ll statutes must be construed in pari materia; and in ascertaining the 
meaning of a given law, all statutes relating to the same subject or hav[ing] 
the same general purpose must be considered and construed in harmony."  

 
 
Therefore, 
in performing our review, we look first to the plain and ordinary meaning of the 
words to determine if the statute is ambiguous.  A statute is clear and unambiguous if 
its wording is such that reasonable persons are able to agree on its meaning 
with consistency and predictability.  
Conversely, a statute is ambiguous if it is found to be vague or 
uncertain and subject to varying interpretations.  We have said that divergent opinions 
among parties as to the meaning of a statute may be evidence of ambiguity.  However, the fact that opinions may 
differ as to a statute's meaning is not conclusive of ambiguity.  Ultimately, whether a statute is 
ambiguous is a matter of law to be determined by the court.  Id., ¶12, 67 P.3d  at 1182-83.

 
 
[¶31]   In determining whether these 
statutes are ambiguous it is helpful to note the construction the Department 
placed on the statutes which it is charged with administering.  This Court has previously held that an 
agency's interpretation of the statutory language which the agency normally 
implements is entitled to deference, unless clearly erroneous.  Buehner Block Co. v. Wyo. Dep't of 
Revenue, 2006 WY 90, ¶ 11, 139 P.3d 1150, 1153 (Wyo. 2006).  Moreover, this Court generally defers to 
the construction placed on a statute by the agency that is charged with its 
execution, provided that construction does not conflict with the legislature's 
intent.  Qwest, ¶ 8, 130 P.3d  at 511; see also Loberg v. State ex rel. Wyo. Workers' Safety 
& Comp. Div., 2004 WY 48, ¶ 9, 88 P.3d 1045, 1049 (Wyo. 2004) (one 
measure of a statute's meaning is the interpretation placed on it by the agency 
charged with its administration); State 
ex rel. Sublette County Bd. of County Comm'rs v. State, 2001 WY 91, ¶ 16, 33 P.3d 107, 113 (Wyo. 2001).  In this 
case, the Department's own rule, at the time ExxonMobil filed the declaratory 
judgment, provided:

 
 

The 
severance tax is an excise tax 
imposed on the present 
and continuing 
privilege of removing, extracting, severing or producing 
any mineral in this state, and the incidence of the severance tax is upon all 
interest owners in proportion to their ownership shares, . . 
.

 
 
Department 
of Revenue Rules and Regulations, ch. 6, §5(a)(ii) (2006) (emphasis added). As 
analyzed below, this interpretation does not appear inconsistent with the 
statutory provisions.

 
 

[¶32]   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 ExxonMobil'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.A. 181 (West 2007).  This language was also contained in the 
actual leases which are the subject of this litigation.  ExxonMobil 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 ExxonMobil.7  This legal limitation necessitated the 
1985 Helium Agreement, under which the federal government sells the crude 
helium, following its extraction from the gas stream.

 
 
[¶33]   This unique situation is unlike 
that presented in BHP Petroleum Co., Inc. 
v. State, 784 P.2d 621 (Wyo. 1989), where BHP owned a percentage of the gas 
produced and, by virtue of the operating agreement, was conveyed the privilege 
or right to sever or extract the oil and gas produced from the unit it operated 
and managed on behalf of various working interest owners.  BHP Petroleum Co., v. State of Wyo. Tax Comm'n, 766 P.2d 1162, 1163 (Wyo. 1989); Wyo. State Tax Comm'n v. BHP Petroleum Co., 856 P.2d  at 430.  Moreover, there is no 
evidence that this unique factual and legal situation was manipulated by 
ExxonMobil for purposes of tax avoidance.  
The unambiguous language under Wyo. Stat. Ann. § 39-14-203(a) (LexisNexis 
2007) supports the district court's determination that ExxonMobil was not 
subject to severance taxes for helium purchased from the federal government. 
 Accordingly, the decision of the 
district court is affirmed.

 
 
Conclusion

 
 
[¶34]   The district court did not err in 
finding that the doctrines of collateral estoppel and res judicata did not apply 
to bar ExxonMobil'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 ExxonMobil pursuant 
to the Helium Agreement.

 
 
FOOTNOTES

 
 

1Wyo. 
Dep't of Revenue v. Exxon Mobil Corp., 150 P.3d 1216; State ex rel. Sublette County Bd. of County 
Comm'rs v. State, 2001 WY 91, 33 P.3d 107 (Wyo. 2001); Exxon Corp. v. Bd. of County Comm'rs, 
Sublette County, 987 P.2d 158 (Wyo. 1999); Amoco Prod. Co. v. State, 751 P.2d 379 
(Wyo. 
1988).

 
 

2The 
issues in this appeal are limited to helium that is produced from federal 
leases.  Pursuant to state leases, 
ExxonMobil is granted the right to explore and produce helium.  Thus, ExxonMobil does not challenge the 
imposition of severance and ad valorem taxes for that portion of helium produced 
from state leases.

 
 

3The 
applicable portion of 30 U.S.C.A. § 181 (West 2007) provides: 

 
 
Deposits 
of coal, phosphate, sodium, potassium, oil, oil shale, gilsonite (including all 
vein-type solid hydrocarbons), or gas, and lands containing such deposits owned 
by the United States, . . . except as hereinafter provided, shall be subject to 
disposition in the form and manner provided by this chapter to citizens of the 
United States, or to associations of such citizens, or to any corporation 
organized under the laws of the United States, or of any State or Territory 
thereof, or in the case of coal, oil, oil shale, or gas, to 
municipalities.

 
 
 . . . .

 
 
The 
United States reserves the ownership of and the right to extract helium from all 
gas produced from lands leased or otherwise granted under the provisions of this 
chapter, under such rules and regulations as shall be prescribed by the 
Secretary of the Interior: Provided further, That in the extraction of 
helium from gas produced from such lands it shall be so extracted as to cause no 
substantial delay in the delivery of gas produced from the well to the purchaser 
thereof.

 
 

443 C.F.R. 
§ 3100.1 (West 2007) provides:

 
 
The 
ownership of and the right to extract helium from all gas produced from lands 
leased or otherwise disposed of under the Act have been reserved to the 
United 
States.

 
 

5Current 
Act can be found at 50 U.S.C.A. ¶¶ 167, et. seq.

 
 

6Elemental 
helium is so small and light that it can migrate through steel 
pipelines.

  

7As noted 
by the parties, Congress passed the Helium Privatization Act of 1996, Pub. L. 
No. 104-273, 1996 U.S.C.C.A.N. (110 Stat.) 3315.  This Act allows the leasing of helium, 
but does not apply and obviously was not in effect at the time the leases were 
issued or the Helium Agreement was entered into between the federal government 
and ExxonMobil.