Opinion ID: 859466
Heading Depth: 2
Heading Rank: 1

Heading: Whether the statute of limitations applies.

Text: ¶70. The Plaintiffs assert that Article 4, Section 104 of the Mississippi Constitution and Section 15-1-51 of the Mississippi Code are clear that the statutes of limitation do not run against the state or any of its subdivisions. They argue that the Constitution governs this issue. Newell v. State, 308 So. 2d 71, 77 (Miss. 1975); Chevron U.S.A., Inc. v. State, 578 So. 2d 644, 648 (Miss. 1991); Town of Crenshaw v. Panola County, 115 Miss. 891, 76 So. 741 (1917). Further, they contend that the chancellor erred in relying upon Hinds County 31 Board of Supervisors in reaching his decision, as the statutes of limitations were not at issue in that case. ¶71. The Department of Revenue, on the other hand, asserts that the Oil Companies — not the School District — are the taxpayers; therefore, the statute of limitations is not being applied to the State or its subdivisions. It argues further that the state and its subdivisions, on occasion, have been deemed subject to statutes of limitation. It cites three cases as support: Town of Tutwiler v. Gibson, 117 Miss. 879, 78 So. 926 (1918); Tallahatchie County v. Little, 93 Miss. 88, 46 So. 257 (1908); and Gully v. Bew, 170 Miss. 427, 154 So. 284 (1934). The Department of Revenue also warns that failure to apply a statute of limitations could result in “a severe blow to the state’s coffers.” Additionally, it asserts that records dating back beyond three years have been destroyed under the “State Document Retention Policy.” ¶72. We already have addressed the Department of Revenue’s contention that the Oil Companies — not the School District — are the taxpayers and found that argument to be without merit. See, supra Issue I.A. California Co. is clear that the severance taxes are levied upon the School District in the first instance. California Co., 74 So. 2d at 858. Even though the Oil Companies may remit these taxes, the taxes are deducted from the School District’s ownership share; any refund, therefore, would belong to the School District. ¶73. Article 4, Section 104 of the Mississippi Constitution states that: “[s]tatutes of limitation in civil causes shall not run against the state, or any subdivision or municipal corporation thereof.” Miss. Const. art. IV, § 104. Section 15-1-51 repeats this same language. Miss. Code Ann. § 15-1-51 (Rev. 2012). 32 ¶74. This Court has said that the purpose of Sections 104 and 15-1-51 “is that the body politic should not suffer because of the neglect or procrastination of its public servants in promptly asserting and protecting rights of the general public in civil matters.” Miss. State Highway Comm'n v. New Albany Gas Sys., 534 So. 2d 204, 207 (Miss. 1988). Since Section 104 was enacted, this Court consistently has upheld the “immunity” a governmental entity enjoys from these provisions. Enroth v. Mem’l Hosp. at Gulfport, 566 So. 2d 202, 206 (Miss. 1990); see also Murphree v. Aberdeen-Monroe County Hosp., 671 So. 2d 1300 (Miss. 1996); State Highway Comm'n v. New Albany Gas Sys., 534 So. 2d 204, 207 (Miss. 1988); Board of Educ. of Itawamba County v. Loague, 405 So. 2d 122, 124-25 (Miss. 1981); Nugent & Pullen v. Robertson, 126 Miss. 419, 88 So. 895, 897-98 (1921); Grenada Lumber Co. v. State, 98 Miss. 536, 54 So. 8, 9 (1911); Adams v. Illinois Cent. R. Co., 71 Miss. 752, 15 So. 640 (1894). ¶75. None of the cases cited by the Department of Revenue is persuasive to the contrary. In Gibson, the Court held that a municipality was subject to the time limitations for filing an appeal. Gibson, 78 So. at 926-27. The Court said that “the time within which appeals to the Supreme Court must be taken is not a statute of limitation in the ordinary sense.” Id. at 926. Therefore, it found that Article 4, Section 104 of the Constitution had no bearing upon that case. Id. In Little, the Court held only that the two-year period allowed for redemption from a tax sale did not constitute a “statute of limitations” under Article 4, Section 104. Little, 46 So. at 258. Finally, in Gully, the Court held that the state tax collector was subject to a sixyear statutory limitations period for filing suit to foreclose two mortgages securing illegal loans made by a county. Gully, 154 So. at 288. The Court said that the county’s cause of 33 action had accrued as soon as the loans had been made, and it noted that, under Article 4, Section 104 of the Mississippi Constitution, the statute of limitations did not run against the county. Id. But, it found that the six-year statute of limitations applied in that case, because that particular statute of limitations was “not a limitation on the cause of action but a limitation on the right of the [state tax collector] to sue on an existing cause of action in favor of the county.” Id. ¶76. All of the above-mentioned cases, however, involved suits between governmental and private entities. Here we have a suit between governmental entities. The only case that appears to address the question before us is Town of Crenshaw v. Panola County, 115 Miss. 891, 76 So. 741 (1917). ¶77. There, the Town of Crenshaw had presented a claim to the Panola County Board of Supervisors in 1915 for its share of the ad valorem taxes Panola County had collected for the years 1907 and 1908. Id. After the board of supervisors rejected the claim, the Town sued in justice court, which rendered judgment in favor of the Town. Id. Panola County appealed to the circuit court, asserting that the Town’s suit was barred by a six-year statute of limitations. Id. 741-42. The circuit court agreed with Panola County. Id. at 742. Like the chancery court here, the court took the position that Section 104 prohibited the Legislature only from authorizing a statute of limitations against the state, its subdivisions, and municipal corporations when private parties are involved. Id. This Court rejected the circuit court’s interpretation of Section 104 and held that the statute of limitations did not apply against the town: 34 Section 104 of our Constitution expressly provides that the statutes of limitation shall not run against municipal corporations. The plaintiff in this case is a municipal corporation, and we can find nothing in the Constitution to warrant the exception sought to be made in this case. The county could, of course, invoke the statute against a natural person or private corporation, but the Constitution closes the door when the plaintiff is a municipal corporation. Town of Crenshaw, 76 So. at 743. Town of Crenshaw thus supports that Section 104 applies even when the state, or any of its subdivisions, is either plaintiff or defendant. ¶78. That said, because the chancellor based his decision on the statute of limitations, he did not reach the question of whether the doctrines of waiver and/or estoppel should apply in this case.7 We believe they warrant consideration in this instance. Accordingly, we remand this issue to the chancery court to allow these doctrines to be considered fully. III. Whether the School District is liable for administrative expense taxes on its royalty interests derived from oil and gas production on sixteenth-section land. ¶79. A trial court’s grant of summary judgment is reviewed de novo. Hooker v. Greer, 81 So. 3d 1103, 1108 (Miss. 2012) (citing Waggoner v. Williamson, 8 So. 3d 147, 152 (Miss. 2009)). Summary judgment is proper when “the pleadings, depositions, answers to interrogatories and admissions on file . . . 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.” Miss. R. Civ. P. 56(c). The evidence is considered in the light most favorable to the nonmoving party. Hooker, So. 3d at 1108 (citing Waggoner, 8 So. 3d at 152). The movant has the 7 We acknowledge that the doctrine of laches was raised below, but the well-settled law in Mississippi is that neither the state nor its entities is subject to the statutes of limitations or chargeable with the laches of its officials. Board of Education of Lamar County v. Hudson, 585 So. 2d 683, 688 (Miss.1991); Hill v. Thompson, 564 So. 2d 1, 14 (Miss. 1989). 35 burden of showing that no genuine issue of material fact exists, and the nonmoving party is given the benefit of the doubt as to the existence of a material fact. Hooker, 81 So. 3d at 1108 (citing Waggoner, 8 So. 3d at 152-53). ¶80. The chancellor found that the School District was required to pay administrative expense taxes on its sixteenth-section royalty interests. The chancellor relied on Bidart Brothers v. California Apple Commission, 73 F.3d 925, 927 (9th Cir. 1996), to determine that these assessments are fees, not taxes. The chancellor said that these fees fund the regulatory and enforcement functions of the Oil and Gas Board and that the Plaintiffs benefitted directly from the Oil and Gas Board’s services. He noted that the Oil and Gas Board ensures that the School District is paid its fair royalty share. ¶81. Once again, we note that the Secretary of State does not appeal the chancellor’s grant of summary judgment for the Oil and Gas Board. The School District and School Board, however, assert that the chancellor’s tax-fee distinction is inconsequential: All monies, whether taxes or fees, must go to the School District. Alternatively, the School District and School Board challenge that these fees are not reasonably related to sixteenth-section lands. The operations of the Oil and Gas Board, they argue, are expansive and serve the broad interests of the public, not just sixteenth-section lands. ¶82. Section 53-1-73 of the Mississippi Code levies an administrative expense tax on each barrel of oil produced in the state. Miss. Code Ann. § 53-1-73 (Rev. 2003). The moneys collected are to be “used exclusively to pay the expenses and other costs in connection with the functioning of the State Oil and Gas Board and the administration of the oil and gas conservation laws of the State of Mississippi now in force or hereafter enacted and the rules, 36 regulations and orders of said board.” Miss. Code. Ann. § 53-1-73 (Rev. 2003). The Oil and Gas Board has the power to increase or reduce the amount charged within the limits set forth in Section 53-1-73. Id. ¶83. All “persons” owning a royalty interest are liable for administrative expense taxes in proportion to their ownership at the time of production. Miss. Code Ann. § 53-1-75 (Rev. 2003). Unlike the definition of “person” under the oil-and-gas-severance-tax statutes, the definition of “person” for the purposes of administrative expense taxes does include the state and its political subdivisions. Miss. Code Ann. § 53-1-71 (Rev. 2003). Section 53-1-71 states, in pertinent part, that the term “person,” as used in Section 53-1-73, “shall mean any individual, corporation, partnership, association, or any state, municipality, political subdivision of any state . . . .” Miss. Code. Ann. § 53-1-71 (Rev. 2003). The Legislature first included individuals, partnerships, associations, states, municipalities, political subdivisions of a state, and any agency, in the statute in 2009 Miss. Code. ¶84. The School District is required to pay administrative expense taxes to the Oil and Gas Board. The assessments levied under Section 53-1-73 are labeled more appropriately as fees rather than taxes. ¶85. In San Juan Cellular Telephone Co. v. Public Service Commission of Puerto Rico, 967 F.2d 683 (1st Cir. 1992), then-Chief Judge Breyer discussed the general approach that courts have used to distinguish taxes from fees: Courts have had to distinguish “taxes” from regulatory “fees” in a variety of statutory contexts. Yet, in doing so, they have analyzed the legal issues in similar ways. They have sketched a spectrum with a paradigmatic tax at one end and a paradigmatic fee at the other. The classic “tax” is imposed by a legislature upon many, or all, citizens. It raises money, contributed to a general 37 fund, and spent for the benefit of the entire community. The classic “regulatory fee” is imposed by an agency upon those subject to its regulation. It may serve regulatory purposes directly by, for example, deliberately discouraging particular conduct by making it more expensive. Or, it may serve such purposes indirectly by, for example, raising money placed in a special fund to help defray the agency’s regulation-related expenses. Courts facing cases that lie near the middle of this spectrum have tended (sometimes with minor differences reflecting the different statutes at issue) to emphasize the revenue’s ultimate use, asking whether it provides a general benefit to the public, of a sort often financed by a general tax, or whether it provides more narrow benefits to regulated companies or defrays the agency’s costs of regulation. San Juan Cellular Tel. Co., 967 F.2d at 685 (1st Cir. 1992) (citations omitted). The United States Court of Appeals for the First Circuit held that the “period rate” or “periodic fee” in that particular case was a fee, and not a tax, because: (1) a regulatory agency assessed the fee; (2) the agency placed the money in a special fund; and (3) the money was used to defray the expenses of agency rather than for a general purpose. Id. at 686. ¶86. The administrative expense tax levied under Section 53-1-73 is more a fee than a tax. The Oil and Gas Board fixes the actual charge and collects the assessments. Miss. Code Ann. § 53-1-73 (Rev. 2003). The money is then deposited into a special fund known as the “Oil and Gas Conservation Fund.” Miss. Code Ann. § 53-1-77(1) (Rev. 2003). That money is “held in trust for the use of the board to pay the expenses and costs incurred in connection with the administration and enforcement of the oil and gas conservation laws of the State of Mississippi and the rules, regulations and orders” of the Oil and Gas Board. Miss. Code Ann. § 53-1-77(2) (Rev. 2003). The Oil and Gas Board is self-funded and relies heavily on these assessments. These assessments accounted for $2.88 million of the Oil and Gas Board’s $3.62 million budget for fiscal year 2009, and $1.96 million of its $2.24 million budget for 38 fiscal year 2010. Excess money within the Oil and Gas Conservation Fund is used to plug oil or gas “orphan” wells that present imminent threats to the environment. Miss. Code Ann. § 53-1-77(4)-(7) (Rev. 2003). ¶87. The assessments under Section 53-1-73 satisfy all the criteria of a fee: The Oil and Gas Board assesses the fee, the money goes into a special fund, and the money is used to defray the Oil and Gas Board’s costs of operation. ¶88. If the assessments under Section 53-1-73 are fees, no constitutional provision or law would preclude the School District from having to pay these fees. Section 206A of the Mississippi Constitution, discussed supra, Issue I.B.1., does not require that every cent derived from sixteenth-section property be used for the local schools. Other statutes support this as well. See supra, Issue I.B.1. ¶89. In the absence of any constitutional or other lawful barrier, the School District can be required to pay the administrative expense tax because it is expressly included within the statute. The School District fits within the definition of “person” owing administrative expense taxes. Unlike the oil-and-gas-severance-tax statutes, the Legislature has expressly made the state and its political subdivisions subject to this assessment. ¶90. For these reasons, the chancellor did not err in granting summary judgment for the Oil and Gas Board.