Court Opinion

ID: 9786786
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:02:39.666049+00
Date Added: 2024-06-11T07:36:48.636831
License: Public Domain

KAUGER, J.
concurring in result.
T1 Although the majority invites the Legislature to alter the statutory definitions to avoid the loss of revenue from failure to tax the pipeline rights of way, it provides no context for consideration of the issue. I write separately because without the history concerning the manner in which pipeline rights of way have generally been assessed, the Legislature cannot make an informed decision to leave in place or to revise the taxation scheme.
2 I agree with the majority that in defining real property for taxation purposes, the definition utilized by the Legislature is sufficiently broad to include a pipeline right of way. Nevertheless, were the definition of real property found in 68 O.S. Supp.1992 § 2806 1 less fluid, the facts surrounding the *908cause would lead to the conclusion that the Legislature's failure to include pipeline rights of way in § 2807s definition of personal property 2 was merely a lacuna-a gap in the law3 by public service corporations 4 in association with a finding in an unpublished Court of Civil Appeals opinion 5 to avoid assessment on pipeline right of way properties by the State Board of Equalization.
13 We arrive at the point we find ourselves today via an unpublished Court of Civil Appeals opinion promulgated on April 5, 1996-Texaco Exploration & Prod., Inc. v. State Bd. of Equalization, No. 85,256 (1996) cert. denied. The sole issue considered in the cause was whether Texaco Exploration was a public service corporation for purposes of ad valorem taxation under 68 O.S.1991 § 28086 Finding that Texaco Exploration was not a public service corporation, the appellate court determined that Texaco Exploration should be assessed by local county assessors rather than by the State Board of Equalization.
€4 Before 1994, Texaco Exploration, a subsidiary of Texaco, Inc., was locally assessed. However, in 1994, the Oklahoma Tax Commission learned that Texaco Exploration owned and was operating gas gathering pipelines. Determining that Texaco Exploration was a public service corporation, the Tax Commission ordered Texaco Exploration to file reports for the purpose of central assessment. The Tax Commission ree-ommended a value to the State Board of Equalization which was certified for central assessment. Texaco Exploration filed an action for declaratory and injunctive relief asserting that it was not a public corporation subject to assessment by the State Board of Equalization. Both the trial court and the Court of Civil Appeals agreed and county assessors were left with the responsibility of assessing property owned by the gas gathering companies.
15 The Legislature apparently recognized that the Texaco Exploration ruling had the potential of causing some confusion as to *909what properties should be taxed centrally by the State Board or locally by county assessors. The Court of Civil Appeals opinion issued on April 5, 1996. Thereafter, the Legislature amended the statute relating to assessments for public service corporations to provide that any gas gathering system assessed by the State Board of Equalization after January 1, 1997, would continue to be assessed by the State Board through ad valo-rem tax year 1998.7 The amendment created a status quo-all pipeline gathering companies subject to central assessment as public service corporations maintained that status through the 1998 tax year. Because the State Board of Equalization is required to assess "all property ... of public service corporations" 8 for certification to the State Auditor and Inspector, it would make no difference whether the rights of way associated with pipelines were real or personal interests, they remained taxable properties.9 Once certified by the Auditor and Inspector to the county assessor, the assessments are entered on the county tax roll.10
T6 Following the Texaco Exploration ruling, it appears that public service corporations like Oklahoma Natural Gas began to spin off gathering companies similar to the appellee, Oneok Field Services Gathering, LLC [Oneok]. These gathering companies then began to take advantage of scheduling their property under the personal property statutes, omitting the value of rights of way on the basis that they were real property interests taxable to the fee owner. Because these gathering companies were not considered public service corporations, they were no longer required to schedule "all" 11 property interests for assessment as public service corporation property.
T7 Presumably in an attempt to maintain their local tax base, county assessors hired consulting firms to assist in the valuation of the gathering companies' property. The methodologies recommended by these consultants provided for the addition of $2.00 per foot of pipe as value attributable to the right of way.12
T8 Today, the bottom-line-result of the majority decision is that property which was *910once assessed on the state level by the State Board of Equalization, le. rights of way as property of a public service corporation, will not be taxed to the gathering companies which have spun off from their parent corporations. Instead, the value of these rights of way will be omitted from the gathering companies' tax schedules and will be taxed as real property interests of the fee owner. No one contends that the rights of way add any value to the real property interests. Public service corporations will get an indirect tax break while the counties suffer a tax loss. The result is supported by the current statutory scheme. It is for the Legislature to determine whether the scheme should be altered.

. Title 68 O.S. Supp.1992 § 2806 provides:
"Real property, for the purpose of ad valorem taxation, shall be construed to mean the land itself, and all rights and privileges thereto be*908longing or in any wise appertaining, such as permanent irrigation, or any other right or privilege that adds value to real property, and all mines, minerals, quarries and trees on or under the same, and all buildings, structures and improvements or other fixtures, including but not limited to improvements such as barns, bins or cattle pens, or other improvements or fixtures of whatsoever kind thereon, exclusive of such machinery and fixtures on the same as are, for the purpose of ad valorem taxation, defined as personal property."

. Title 68 O.S. Supp.1995 § 2807 provides in pertinent part:
"Personal property, for the purpose of ad valo-rem taxation, shall be construed to include: . 12 ... b. All oil, gas, water or other pipelines ...
13. All other property, having an actual, constructive or taxable situs in this state, and not included within the definition of real property."

. City of Oklahoma City v. Oklahoma Tax Comm'n, 1990 OK 27, § ¶ 10, 789 P.2d 1287; State v. Goforth, 1989 OK. 37, ¶ 9, 772 P.2d 911; Maule v. Independent School Dist. No. 9, 1985 OK 110, ¶ 11, 714 P.2d 198; R. Aldisert, "Hard Core Judicial Process Problems Facing Judges in the 80's", p. 34 (1982).

. Title 68 O.S. Supp.1997 § 2808 provides in pertinent part:
"A. As used in the Ad Valorem Tax Code:
1. 'Public service corporation' means all transportation companies, transmission companies, all gas, electric, light, heat and power companies and all waterworks and water power companies, and all persons authorized to exercise the right of eminent domain or to use or occupy any right-of-way, street, alley, or public highway, along, over or under the same in a manner not permitted to the general public;
... C. Any real or personal property used by any company, corporation, trustee, receiver, or other person owning, leasing, or operating for hire any pipeline or oil or gas gathering system which was assessed by the State Board of Equalization after January 1, 1997, shall continue to be assessed by the State Board of Equalization through ad valorem tax year 1998."

._ Texaco Exploration & Prod., Inc. v. State Bd. of Equalization, No. 85,256 (1996), cert. denied. Court of Civil Appeal opinions not ordered for publication by this Court are persuasive only and have no precedential effect. Rule 1.200, Supreme Court Rules, 12 O.S. Supp.1997, Ch. 15, App. 1.

. Although the Legislature has amended § 2808 of title 68 twice since it's consideration in Texaco Exploration & Prod., Inc. v. State Bd. of Equalization, see note 5, supra, its provisions are substantially similar to the current version of the statute, *909see note 4, supra. Therefore, references are to the current statute.

. Title 68 O.S. Supp.1997 § 2808 (C), see note 4, supra.

. Title 68 O.S. Supp.1995 § 2860 provides:
"A. The State Board of Equalization, after having assessed all property of railroads, air carriers and public service corporations in this state according to the provisions of the Ad Valorem Tax Code, shall cause the assessed valuations to be certified by the State Auditor and Inspector to the county assessors of each county in which any portion of the property of any such railroad, air carrier or public service corporation may be located. Such certificates of assessment shall show the various portions of the property of such corporations located and taxable in each county, and in every city, town, school district or other municipal subdivision thereof, and shall include a full statement of all property of such corporations located in each of the said several subdivision, together with the assessed value thereof. Said valuations shall be certified by the State Auditor and Inspector to the assessors of the several counties wherein such property is located on or before July 31 of each year.
B. The county assessor shall enter on his assessment roll in its appropriate place the assessed valuation of each railroad, air carrier and public service corporation, and at the proper time, place such assessment on the proper tax roll of his county, subject to the levies as provided by law."

. Pipeline companies are specifically required to schedule rights of way to the Oklahoma Tax Commission in Oklahoma. Title 68 O.S. Supp. 1992 § 2851 provides in pertinent part:
''Each pipeline company doing business in this state shall return to the Oklahoma Tax Commission a sworn statement or schedule as follows:
1. The right-of-way and main line ...
5. A correct detailed statement of all other personal property, including oil in storage, and giving the location thereof."

. Title 68 O.S. Supp.1995 § 2860, see note 8, supra.

. Title 68 O.S. Supp.1995 § 2860, see note 8, supra.

. Transcript of proceedings, October 5, 2000, providing in pertinent part at pp. 3-4:
[argument of counsel] "... What has happened is in the past year or so certain counties have hired a consulting firm to assist them in valuing the personal property of gas gathering companies. One of the methodologies used by that consulting firm which is VLS-that's the name of the first-is to add two dollars per foot of pipe as value attributable to right-of-way...."