Court Opinion

ID: 4391818
Source: CourtListenerOpinion
Date Created: 2019-04-29 19:03:10.656573+00
Date Added: 2024-06-11T14:51:55.425970
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                January 2019 Term
                                                                          FILED
                                                                       April 29, 2019
                                                                          released at 3:00 p.m.
                                  No. 18-0018                         EDYTHE NASH GAISER, CLERK
                                                                      SUPREME COURT OF APPEALS
                                                                           OF WEST VIRGINIA

                   MURRAY ENERGY CORPORATION and
                    CONSOLIDATION COAL COMPANY,

                          Plaintiffs Below/Petitioners

                                       v.

   DALE W. STEAGER, STATE TAX COMMISSIONER OF WEST VIRGINIA;
        THE COUNTY COMMISSION OF MARSHALL COUNTY; and
          CHRISTOPHER J. KESSLER, Assessor of Marshall County,

                        Respondents Below/Respondents

                Appeal from the Circuit Court of Marshall County
                   The Honorable Jeffrey D. Cramer, Judge
                           Civil Action No. 16-P-16

                                  AFFIRMED

                         Submitted: February 13, 2019
                            Filed: April 29, 2019

Mark Gaydos, Esq.                           Patrick Morrisey, Esq.
Buddy Turner, Esq.                          Attorney General
McNeer, Highland, McMunn, and               Katherine A. Schultz, Esq.
Varner, L. C.                               Senior Deputy Attorney General
Kingwood, WV                                Cassandra L. Means, Esq.
Counsel for Petitioners                     Assistant Attorney General
                                            Charleston, WV
                                            Counsel for Respondents Dale W.
                                            Steager, State Tax Commissioner of
                                            West Virginia, and Christopher J.
                                            Kessler, Assessor of Marshall County
Joseph R. Canestraro, Esq.
Rhonda L. Wade, Esq.
Office of the Marshall County Prosecuting Attorney
Moundsville, WV
Counsel for Respondent County Commission
of Marshall County

Kelli D. Talbott, Esq.
Senior Deputy Attorney General
Charleston, WV
Counsel for Amicus Curiae Steven L. Paine,
West Virginia State Superintendent of Schools

JUSTICE WORKMAN delivered the Opinion of the Court.
JUSTICE JENKINS dissents and reserves the right to file a separate opinion.
                              SYLLABUS BY THE COURT

              1.     “As a general rule, there is a presumption that valuations for taxation

purposes fixed by an assessor are correct. Thus, a tax assessment of coal property will be

presumed to be correct when the assessor, in assessing the coal property: (1) relies upon

the legislative rules prescribing the methods by which property is to be assessed; and (2)

uses, as a guide, information furnished by the tax department, such as a list of comparable

sales of similar property. The burden is on the taxpayer challenging the assessment to

demonstrate by clear and convincing evidence that the tax assessment is erroneous.” Syl.

Pt. 2, W. Pocahontas Properties, Ltd. v. Cty. Comm’n of Wetzel Cty., 189 W. Va. 322, 431
S.E.2d 661 (1993).

              2.     “In a case involving the assessment of property for taxation purposes,

which does not involve the violation of a statute governing the assessment of property, or

a violation of a constitutional provision, or in which a question of the constitutionality of a

statute is not involved, this Court will not set aside or disturb an assessment made by an

assessor or the county court, acting as a board of equalization and review, where the

assessment is supported by substantial evidence.” Syl. Pt. 2, In re Tax Assessments Against

the South Land Co., 143 W. Va. 152, 100 S.E.2d 555 (1957), overruled in part by In re

Kanawha Val. Bank, 144 W. Va. 346, 109 S.E.2d 649 (1959).

                                               i
              3.     “Interpreting a statute or an administrative rule or regulation presents

a purely legal question subject to de novo review.” Syl. Pt. 1, Appalachian Power Co. v.

State Tax Dep’t of W. Va., 195 W. Va. 573, 466 S.E.2d 424 (1995).

              4.     “It is fundamental law that the Legislature may delegate to an

administrative agency the power to make rules and regulations to implement the statute

under which the agency functions. In exercising that power, however, an administrative

agency may not issue a regulation which is inconsistent with, or which alters or limits its

statutory authority.” Syl. Pt. 3, Rowe v. W. Va. Dep’t of Corr., 170 W. Va. 230, 292 S.E.2d
650 (1982).

              5.     “Judicial review of an agency’s legislative rule and the construction

of a statute that it administers involves two separate but interrelated questions, only the

second of which furnishes an occasion for deference.              In deciding whether an

administrative agency’s position should be sustained, a reviewing court applies the

standards set out by the United States Supreme Court in Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).

The court first must ask whether the Legislature has directly spoken to the precise question

at issue. If the intention of the Legislature is clear, that is the end of the matter, and the

agency’s position only can be upheld if it conforms to the Legislature’s intent. No

deference is due the agency’s interpretation at this stage.” Syl. Pt. 3, Appalachian Power

Co. v. State Tax Dep’t of W. Virginia, 195 W. Va. 573, 466 S.E.2d 424 (1995).

                                              ii
              6.     “If legislative intent is not clear, a reviewing court may not simply

impose its own construction of the statute in reviewing a legislative rule. Rather, if the

statute is silent or ambiguous with respect to the specific issue, the question for the court

is whether the agency’s answer is based on a permissible construction of the statute. A

valid legislative rule is entitled to substantial deference by the reviewing court. As a

properly promulgated legislative rule, the rule can be ignored only if the agency has

exceeded its constitutional or statutory authority or is arbitrary or capricious. W. Va. Code,

29A–4–2 (1982).” Syl. Pt. 4, Appalachian Power Co. v. State Tax Dep’t of W. Va., 195
W. Va. 573, 466 S.E.2d 424 (1995).

              7.     The methodology of calculating and use of the annual average Steam

Coal Price Per Ton and coal seam thickness averages for ad valorem tax valuation

purposes, as set forth in West Virginia Code of State Rules § 110-1I-1 et seq. (2006), does

not violate the requirement contained in West Virginia Code § 11-6K-1(a) (2010) that

natural resources property be assessed based upon its “true and actual value.”

              8.     “West Virginia's constitutional equal protection principle is a part of

the Due Process Clause found in Article III, Section 10 of the West Virginia Constitution.”

Syl. Pt. 4, Israel by Israel v. W. Va. Secondary Sch. Activities Comm’n, 182 W. Va. 454,

388 S.E.2d 480 (1989).

                                             iii
              9.     “‘“Where economic rights are concerned, we look to see whether the

classification is a rational one based on social, economic, historic or geographic factors,

whether it bears a reasonable relationship to a proper governmental purpose, and whether

all persons within the class are treated equally. Where such classification is rational and

bears the requisite reasonable relationship, the statute does not violate Section 10 of Article

III of the West Virginia Constitution, which is our equal protection clause.” Syllabus Point

7, [as modified,] Atchinson v. Erwin, [172] W.Va. [8], 302 S.E.2d 78 (1983).’ Syllabus

Point 4, as modified, Hartsock-Flesher Candy Co. v. Wheeling Wholesale Grocery Co.,

174 W.Va. 538, 328 S.E.2d 144 (1984).” Syl. Pt. 4, Gibson v. W. Virginia Dep't of

Highways, 185 W. Va. 214, 406 S.E.2d 440 (1991), holding modified by Neal v. Marion,

222 W. Va. 380, 664 S.E.2d 721 (2008).

               10.   The valuation methodology contained in West Virginia Code of State

Rules § 110-1I-1 et seq. (2006) for the calculation and use of an average Steam Coal Price

Per Ton and average coal seam thickness does not violate the equality provision of West

Virginia Constitution Article X, Section 1 or the equal protection provisions of the West

Virginia and United States Constitutions.

                                              iv
WORKMAN, Justice:

              This is an appeal from the Circuit Court of Marshall County’s order affirming

the Board of Equalization and Review’s determination that petitioners Murray Energy

Corporation and Consolidation Coal Company’s coal interests were properly valued and

assessed by respondents Dale W. Steager, State Tax Commissioner of West Virginia, the

County Commission of Marshall County, and Christopher J. Kessler, Assessor of Marshall

County. The circuit court concluded that the method of valuing coal properties as

prescribed in the Code of State of Rules violated neither the statutory requirement of

assessment at “true and actual value” nor the constitutional equality requirements of Article

X, Section 1 of the West Virginia Constitution and the Equal Protection provisions of the

United States and West Virginia Constitutions.

              Upon careful review of the briefs of the parties and amicus curiae, 1 the

appendix record, the arguments of the parties, and the applicable legal authority, we agree

with the circuit court’s legal conclusions and therefore affirm the December 7, 2017, order

of the Circuit Court of Marshall County, West Virginia.

       1
         Respondent County Commission of Marshall County submitted a summary
response in support of the circuit court’s order. Amicus curiae Steven L. Paine, West
Virginia State Superintendent of Schools, likewise submitted a brief in support of the
circuit court’s order. The Court acknowledges and expresses its appreciation for the
amicus curiae’s submission.
                                            1
                      I. FACTS AND PROCEDURAL HISTORY

              Petitioners Murray Energy Corporation and Consolidation Coal Company

(hereinafter “petitioners”) are owners of coal interests in Marshall County. These coal

interests are appraised for ad valorem tax purposes by respondent Dale Steager, State Tax

Commissioner of West Virginia (hereinafter “Tax Department”) and assessed by the

respondents County Commission of Marshall County through its Assessor, Christopher J.

Kessler. The Tax Department utilizes a “statewide mass appraisal system” for valuation

of active and reserve coal properties, as described in West Virginia Code of State Rules §

110-1I-1 et seq. (2006).2 This case involves the Tax Department’s use of certain averages

for purposes of valuing petitioners’ coal interests through the mass appraisal system.

THE MASS APPRAISAL SYSTEM AND LEGISLATIVE RULES

              The mass appraisal system utilized by the Tax Department for valuation of

coal property values the coal inside the mine, rather than the mine itself; it uses the income

approach to value, which assumes that property is worth its future income, discounted to

present value. The Tax Department similarly uses mass appraisal systems for the valuation

of oil and gas, timber, and residential properties. The Tax Department explains that a mass

       2
         Mass appraisal has been aptly described as “‘the process of valuing a universe of
properties as of a given date utilizing standard methodology, employing common data, and
allowing for statistical testing[.]’” In re Johnson Cty. Appraiser/Privitera Realty Holdings,
283 P.3d 823, 834 (Kan. 2012) (quoting Uniform Standard of Professional Appraisal
Practices, Definitions, p. 8 (1992)). It is the methodology and “common data” which is at
issue in this case.
                                                2
appraisal system is utilized because the Tax Department does not have the resources to

annually reassess each individual property inasmuch as there are more than 240,000 coal

parcels requiring appraisal. The methodology for valuation of coal interests, as outlined in

the Code of State Rules, was developed through the legislative rule-making process.

              As indicated, the appraisal system uses averages for certain values necessary

to calculate the value of the minerals, rather than individualized data. The two averages

being challenged herein—the statewide Steam Coal Price Per Ton average (“SCPPT”) and

the seam thickness average—are calculated by using the sources and formulas prescribed

by regulation. These averages are then filed with the West Virginia Secretary of State as

“natural resource valuation variables” and made available for public comment annually.

              According to the Tax Department, the SCPPT average for any particular year

is calculated by using 1) confidential data3 concerning purchases of coal obtained from the

West Virginia Public Service Commission and reports of fuel purchases from the Federal

       3
         See W.V.C.S.R. § 11-1I-4.10 (“Confidentiality -- All information provided by or
on behalf of a natural resources property owner or by or on behalf of an owner of an interest
in natural resources property to any state or county representative for use in the valuation
or assessment of natural resources property or for use in the development or maintenance
of a legislatively funded mineral mapping or geologic information system is confidential.
The information is exempt from disclosure under provisions of West Virginia Code § 29B-
1-4, and shall be kept, held, and maintained confidential except to the extent the
information is needed by the State Tax Commissioner to defend an appraisal challenged
by the owner or lessee of the natural resources property subject to the appraisal . . . .”)

                                             3
Energy Regulatory Commission/the U. S. Energy Information Administration; 2)

published information from major coal companies; 3) royalty information derived from

county courthouses; and 4) industry publications. 4 Only West Virginia-sourced coal

information is utilized from these databases. The SCPPT average for any particular tax

year is derived by averaging the price per ton for the three years preceding the tax year,

i.e., a “three-year rolling average.”5

                In this case, the 2016 tax year SCPPT is being challenged, which was

calculated by using the variables provided in tax years 2012 through 2014—the three years

preceding the assessment date of July 1, 2015—for the 2016 tax year. On June 30, 2015,

the Tax Department filed the variables for the 2016 tax year and declared the SCPPT to be

$60.35/ton.     This figure was left open for public comment until August 15, 2015.

Petitioners did not provide comment.

                As for the coal seam thickness average, seams of coal vary in thickness and

density, which obviously determines the amount of coal at any particular location. The

       4
           See W.V.C.S.R. § 110-1I-4 (“Valuation Methods”), generally.
       5
         See W.V.C.S.R. § 110-1I-3.12 (“‘Average coal price’ for purposes of the reserve
coal valuation model, means the arithmetic mean of the sum of the last three calendar years
of total FOB-source (point of sale, no transportation) values of steam coal mined in West
Virginia and sold on the spot market as reported on FERC Form 423 to the United States
Department of Energy (USDOE) and to the West Virginia Public Service Commission
(WVPSC) . . . .”).

                                              4
Legislature determined that use of an average to estimate the seam thickness at any given

location based on acreage was appropriate; the formula provided by legislative rule

calculates the average seam thickness to be approximately 1,800 tons per acre foot, which

figure is published by the United States Geologic Survey. 6 This coal seam thickness

average is expressly set forth in the regulation and does not vary from year to year. Other

neighboring states’ geological surveys (Kentucky, Ohio, and Pennsylvania) likewise use

this figure.

               On January 22, 2016, petitioners protested the Tax Department’s valuation

of their Marshall County coal interests for the 2016 tax year to the Marshall County

Commission sitting as the Board of Equalization and Review (the “Board”). Petitioners

challenged the Tax Department’s use of the coal seam thickness average and rolling three-

year average to determine the average steam coal price per ton rather than the “spot price”

of coal as of the July 1, 2015, assessment date. Petitioners argued that these methodologies

and averages did not reflect the “true and actual” value of their coal properties, causing

them to be over-valued for ad valorem taxation purposes.

               Before the Board, John L. Weiss, a mineral extraction consultant, testified

on behalf of petitioners. He stated that the average price per ton for petitioners’ coal

       6
          The regulations define “1800 tons per acre foot” as “the weight, in tons, of a
relatively clean coal bed one (1) foot in thickness (Thk) and covering one (1) acre, that has
an assumed specific gravity of 1.32. The formula for calculating ‘1800 tons per acre foot’
is set forth in Appendix A, Formula 2 of this rule.” W.V.C.S.R. § 110-1I.3.61.
                                               5
reserves as of the assessment date of July 1, 2015 was actually $41.08/ton, which figure

was derived from well-recognized industry publications. He further testified that this

amount was consistent with his industry knowledge and experience and that the $60.35/ton

price set by the Tax Commissioner for the 2016 tax year was inflated. Even utilizing the

three-year rolling average, but including only publicly-available rather than confidential

data, Mr. Weiss testified that the average price per ton was $51.50, rather than $60.35/ton.

              Jeffrey Kern, a mineral appraisal expert who helped design the State’s mass

appraisal system during its legislative development, testified on behalf of the Tax

Department. Mr. Kern explained that the coal property mass appraisal system was

designed to eliminate “peaks and valleys” in the price of coal and allow for greater

predictability of tax burdens and revenues by the taxpayer and the State, respectively. Mr.

Kern further explained that this method was carefully constructed through the legislative

rule-making process and extensively involved stakeholders like petitioners’ predecessor in

interest, Consolidation Coal Company. He testified that this averaging system—utilizing

the rolling three-year historical average—resulted in the $60.35/ton price upon which

petitioners were taxed for the 2016 tax year. He explained that use of a mass appraisal

system is necessary because the State “can’t, on an annual basis, have assessors go out and

reassess every individual property as though you were hiring a real estate agent[.]”

              Mr. Kern further testified that the average seam thickness figure—calculated

pursuant to regulation to equate to precisely 1,793.97 tons per foot per acre—is “rounded
                                             6
up” to 1,800 by legislative rule because it is a “published piece of information . . . [and]

[t]here was no sense in reinventing the wheel there.” 7 He testified that taxpayers may

supply specific data regarding their seam thicknesses and mineability for inclusion in the

state database, but that petitioners had historically failed to do so. Further, Mr. Kern noted

that taxpayers are also permitted to provide an appendix (“Table F”) with their return which

states how much coal they sold and at what price, but petitioners had not historically

provided this information either.8

              Critically, Mr. Kern admitted that the $60.35/ton is in fact higher than what

the average price per ton was as of the assessment date of July 1, 2015, by design and was

the result of using the three-year rolling average. He explained that using an historical

rolling average serves to even out highs and lows in the price of coal and that the “inflated”

$60.35/ton price was an effort to even out the “valley” currently occupied by coal prices.

Mr. Kern explained, “[W]e’re doing a mass appraisal system. Some places are getting less

tax than they could, and some places are getting a little more tax than they could.”

       7
        Mr. Kern indicated that other entities use this figure including the United States
Geologic Survey, the Kansas Geologic Survey, the Pennsylvania Geologic Survey, “2 or 3
mineral economics courses,” and the State of Kentucky. We note that West Virginia Code
§ 11-1C-10(d)(2) (1994) provides that “[f]ormulas for natural resources valuation may
contain differing variables based upon known geological or other common factors.”
       8
         Neither Mr. Kern (nor the Tax Department in its briefing) indicated how this
information would be utilized if provided; in fact, Mr. Kern cautioned against considering
this information because it cannot be verified.

                                              7
(emphasis added). Mr. Kern conceded that the information provided by the PSC, FERC,

and published data by Platts, Coal Week, and S & L9 placed the average coal price per ton

“substantially lower” than $60.35/ton for the specific assessment year of 2015, but that the

difference in the SCPPT was occasioned by use of the three-year rolling average as required

by legislative rule.

               Upon consideration of the foregoing testimony, 10 the Board denied the

protest. Petitioners appealed to the circuit court and, after briefing by the parties, the circuit

court likewise denied the appeal, affirming the Board’s rejection of petitioners’ protest.

Adopting the Tax Department’s position wholesale, the circuit court concluded that

because the Constitution provides that “value” is “to be ascertained as directed by law,”

the legislative rules are the Legislature’s manner of directing the determination of value.

It found that petitioners failed to establish that the Tax Department’s calculations were

inaccurate, but rather proposed new methodologies to displace the one prescribed by

legislative rule. As to petitioners’ equal protection argument, the circuit court concluded

       9
         These are well-known industry publications. Mr. Kern indicated that these
publications are “consulted” in developing the SCPPT average.
       10
         The testimony in this case occurred over the course of two hearings before the
Board. On February 18, 2016, two witnesses on behalf of petitioners testified at an
unnoticed hearing; no one testified on behalf of the Tax Department. Regardless, the Board
denied the protest. On March 17, 2016, petitioners appealed that decision to the circuit
court and the circuit court remanded the matter back to the Board to take the above
testimony from the Tax Department’s expert, which again resulted in the Board’s denial of
the protest.
                                              8
that petitioners failed to prove that the methodology was misapplied or that they were being

treated differently than other taxpayers. This appeal followed.

                             II. STANDARD OF REVIEW

              Generally, “there is a presumption that valuations for taxation purposes fixed

by an assessor are correct. . . . The burden is on the taxpayer challenging the assessment to

demonstrate by clear and convincing evidence that the tax assessment is erroneous.” Syl.

Pt. 2, in part, Western Pocahontas Props., Ltd. v. County Comm’n of Wetzel Cty, 189 W.

Va. 322, 431 S.E.2d 661 (1993). However,

              [i]n a case involving the assessment of property for taxation
              purposes, which does not involve the violation of a statute
              governing the assessment of property, or a violation of a
              constitutional provision, or in which a question of the
              constitutionality of a statute is not involved, this Court will not
              set aside or disturb an assessment made by an assessor or the
              county court, acting as a board of equalization and review,
              where the assessment is supported by substantial evidence.

Syl. Pt. 2, In re Tax Assessments Against the South Land Co., 143 W. Va. 152, 100 S.E.2d
555 (1957), overruled on other grounds by In re Kanawha Val. Bank, 144 W. Va. 346, 109
S.E.2d 649 (1959) (emphasis added). As statutory and constitutional issues are squarely

implicated in the instant case, any suggested deference or other reduced level of scrutiny

is inapplicable.

              Rather, “[i]nterpreting a statute or an administrative rule or regulation

presents a purely legal question subject to de novo review.” Syl. Pt. 1, Appalachian Power

                                              9
Co. v. State Tax Dep’t, 195 W. Va. 573, 466 S.E.2d 424 (1995). Further, “[c]onstitutional

challenges . . . are reviewed pursuant to a de novo standard of review.” Morris v. Crown

Equip. Corp., 219 W. Va. 347, 352, 633 S.E.2d 292, 297 (2006). However, we are mindful

that “[a]n inquiring court—even a court empowered to conduct de novo review—must

examine a regulatory interpretation of a statute by standards that include appropriate

deference to agency expertise and discretion.” Id. at 582, 466 S.E.2d at 433.

                                      III. DISCUSSION

              Petitioners make three arguments in support of their position that the Tax

Department’s valuation must be set aside: 1) that the mass appraisal methodology utilized

by the Tax Department as prescribed by regulation violates statutory authority requiring

tax assessments to be based on “true and actual” value; 2) that the methodology violates

the West Virginia Constitution’s “equal and uniform” taxation requirement; and 3) that the

methodology is similarly violative of the Equal Protection provisions of the United States

and West Virginia Constitutions. Petitioners emphasize that the monetary significance of

the purported over-valuation rendered by use of the methodology is substantial. Petitioners

assert that as a result of the “rounded up” 1,800 seam thickness average, they are taxed on

approximately 1.1 million tons of coal they do not actually own. Combined with the

allegedly inflated figure of $60.35/ton, petitioners assert this results in a $65 million over-

valuation of their coal properties.

                                              10
              The Tax Department responds primarily that the Constitution expressly

delegates development of the valuation methodology to the Legislature and that it has no

authority to deviate from the methodology delineated in the legislatively-approved

regulations. The Tax Department stresses that petitioners do not suggest that it failed to

properly apply the regulations; rather, they take issue with the legislatively-developed

methodology mandated therein. In that regard, the Tax Department does little to argue in

support of the validity of the regulations; rather, it largely defaults to its obligation to

faithfully apply the regulations as written. Insofar as the alleged constitutional violations,

the Tax Department argues that the regulations are applied uniformly for all similarly-

situated taxpayers and therefore no equality violation is present. We will examine each of

these arguments in greater detail.11

A.     STATUTORY VIOLATION AND VALIDITY OF THE REGULATIONS

              We begin with petitioners’ assertion that the regulations setting forth the

mass appraisal methodology for valuation of their coal properties is in violation of West

Virginia’s statutory taxation mandates. Petitioners argue that by taxing its coal reserves at

average seam thickness amounts12 and using historically-averaged prices that do not reflect

       11
          Because the Constitution’s “equal and uniform” taxation provision invokes
equality, it is similar in complexion to the petitioners’ equal protection argument and is
therefore collectively discussed more fully infra.
       12
         While petitioners challenged the use of the coal seam thickness average below
and before this Court, the bulk of their legal analysis is dedicated to the SCPPT average.
                                              11
the market value as captured on the assessment date of July 1, they are being taxed in

violation of the requirement contained in West Virginia Code § 11-6K-1(a) (2010) that

properties be assessed at their “true and actual value”: “All industrial property and natural

resources property shall be assessed annually as of the assessment date at sixty percent of

its true and actual value.” In support, they draw particular focus to the language of the

legislative intent expressed in the statutory taxation scheme:

              The Legislature hereby finds and declares that all property in
              this state should be fairly and equitably valued wherever it is
              situated so that all citizens will be treated fairly and no
              individual species or class of property will be overvalued or
              undervalued in relation to all other similar property within each
              county and throughout the state.

W. Va. Code § 11-1C-1(a) (1990).

              The Tax Department counters that per the language of the Constitution itself,

value is to be ascertained “as directed by law”: “[T]axation shall be equal and uniform

throughout the state, and all property, both real and personal, shall be taxed in proportion

to its value to be ascertained as directed by law.” W. Va. Const., art. X, § 1. As previously

indicated, the Tax Department underscores that petitioners do not accuse them of

misapplying the methodology, not evenly applying the methodology to all coal property

taxpayers, or violating the regulations in any way. Therefore, they argue, by correctly

applying this methodology to all coal properties, both observance of the statutory

requirements and equal and uniform taxation “as directed by law” are effectuated.

                                             12
              Petitioners are quick to reply that the Tax Department’s blind adherence to

proper application of the regulation fails to squarely address whether the Constitution’s “as

directed by law” language enables the Tax Department to devise, by legislative rule, a

methodology that admittedly fails to provide a value that is reflective of coal prices as of

the assessment date. We agree that the Tax Department’s position herein is relatively

unedifying as to the propriety of the regulations as pertains to West Virginia Code § 11-

6K-1(a)’s “true and actual” requirement. Instead, the Tax Department focuses on its strict

compliance with the regulations.13

              The West Virginia Constitution article ten, section one provides that

“taxation shall be equal and uniform throughout the state” and that all property is to be

taxed “in proportion to its value to be ascertained as directed by law.” (emphasis added).

To that end, West Virginia Code § 11-6K-1 provides that natural resources property shall

be assessed “at sixty percent of its true and actual value.”14 (emphasis added).

       13
          “Of course, an agency must follow and apply its rules and regulations in existence
at the time of agency action.” Appalachian Power Co., 195 W. Va. at 583 n.8, 466 S.E.2d
434 n.8. That the Tax Department was constrained to follow the regulations appears never
to have been in dispute; rather, petitioners assert that the regulations violate the statute’s
“true and actual” language and the equality provisions of the Constitution.
       14
         In their briefs, the parties engage in an initial debate about which taxation statute
applies here: the “general” taxation statute contained in West Virginia Code § 11-3-1
(2014) or the more specific “natural resources” taxation statute located at West Virginia
Code § 11-6K-1. West Virginia Code § 11-3-1(a) states:

                                             13
              Critically, West Virginia Code § 11-1C-10(e) directs that “[t]he Tax

Commissioner shall develop a plan for the . . . valuation of natural resources property.”

The statute further requires the Tax Department to “maintain accurate values for all such

property.” W. Va. Code § 11-1C-10(d). The regulations for valuation of active and reserve

coal properties for ad valorem purposes are contained in West Virginia Code of State Rules

§ 110-1I-1 et seq. These legislative rules were approved by the Legislature on March 11,

2006, becoming effective on May 1, 2006.15 W. Va. C.S.R. § 110-1I-1.4. As is well-

established, legislative rules have the force and effect of law. See Syl. Pt. 5, Smith v. W.

              All property, except public service businesses assessed
              pursuant to article six [§§ 11-6-1 et seq.] of this chapter, shall
              be assessed annually as of July 1 at sixty percent of its true and
              actual value, that is to say, at the price for which the property
              would sell if voluntarily offered for sale by the owner thereof .
              ...

(emphasis added). Petitioners argue that this general taxation statute is applicable and is
significant because it “defines” true and actual value as the “market value,” which must
necessarily be the market value as of the assessment date of July 1. The Tax Department
counters that the more specific natural resources taxation statute contained in West Virginia
Code § 11-6K-1—which provides no definition for “true and actual value”—is applicable.

        Where two statutes “govern a particular scenario, one being specific and one being
general, the specific provision prevails.” Bowers v. Wurzburg, 205 W. Va. 450, 462, 519
S.E.2d 148, 160 (1999). Therefore, while we agree that the more specific natural resources
statute is applicable, this conclusion does little to advance our analysis. All parties appear
to agree that “market value” is utilized to determine true and actual value; the disagreement
presented herein is how that value is determined.
       15
         See 2006 W. Va. Reg. Text 16090 (“Valuation of Active and Reserve Coal
Property for Ad Valorem Property Tax Purposes[.] The above rule has been authorized by
the West Virginia Legislature.”)

                                             14
Va. Human Rights Comm’n, 216 W. Va. 2, 602 S.E.2d 445 (2004) (“A regulation that is

proposed by an agency and approved by the Legislature is a “legislative rule” as defined

by the State Administrative Procedures Act, W. Va. Code, 29A–1–2(d) [1982], and such a

legislative rule has the force and effect of law.”). West Virginia Code of State Rules §

110-1I-1.1 expressly states that “[t]his rule clarifies and implements State law as it relates

to the appraisal at market value of active and reserve coal properties.” (emphasis added).

              While “[i]t is fundamental law that the Legislature may delegate to an

administrative agency the power to make rules and regulations to implement the statute

under which the agency functions,” it is equally well-established that “[i]n exercising that

power [] an administrative agency may not issue a regulation which is inconsistent with,

or which alters or limits its statutory authority.” Syl. Pt. 3, Rowe v. W. Va. Dep’t of Corr.

170 W.Va. 230, 292 S.E.2d 650 (1982). Accordingly, the initial question raised by

petitioners’ challenge is whether the regulations conflict with the language of the statute

requiring assessment at “true and actual value” 16 or, rather, properly inform that

requirement in a manner deemed appropriate by the agency charged with its

       16
         The Tax Department correctly notes that the present iteration of West Virginia
Code § 11-6K-1 was passed in 2010 and that the regulations were adopted in 2006. It
therefore argues that had the Legislature intended to displace this methodology, it could
have done so in the statute and that the statute is a de facto “reaffirmance” of the
methodology. However, the Legislature’s imprimatur, without placing it into the proper
legal context, adds little to the analysis.

                                             15
implementation. As such, we find that this presents a quintessential issue of agency

deference, necessitating the well-recognized Chevron17 analysis.

              This Court has held that “[i]n deciding whether an administrative agency’s

position should be sustained, a reviewing court applies the standards set out by the United

States Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).” Syl. Pt. 3, in part, Appalachian

Power Co., 195 W. Va. 573, 466 S.E.2d 424. In that regard,

              [t]he court first18 must ask whether the Legislature has directly
              spoken to the precise question at issue. If the intention of the
              Legislature is clear, that is the end of the matter, and the
              agency’s position only can be upheld if it conforms to the
              Legislature’s intent. No deference is due the agency’s
              interpretation at this stage.

       17
         Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). As
explained by Justice Cleckley, “Chevron . . . was a watershed decision in the area of judicial
deference to regulatory agencies.” Appalachian Power, 195 W. Va. at 582 n.6, 466 S.E.2d
at 433 n.6.
       18
          Chevron requires, as a threshold inquiry, a determination as to whether the
legislative rule is valid:

              A legislative rule is valid if (1) it is submitted to the legislative
              rule-making review committee for approval, as required by W.
              Va. Code § 29A-3-9, et seq., or (2) the Legislature expressly
              exempts it from such legislative rule-making review and
              approval pursuant to W. Va. Code § 29A-1-3(d) (1990) (Repl.
              Vol. 2002).

Syl. Pt. 13, Simpson v. W. Va. Office of Ins. Comm’r, 223 W. Va. 495, 678 S.E.2d 1 (2009).
In this instance, West Virginia Code of State Rules § 110-1I-1 et seq. is unquestionably a
valid legislative rule. See n.15 supra.
                                              16
Id. (footnote added). However,

                [i]f legislative intent is not clear, a reviewing court may not
                simply impose its own construction of the statute in reviewing
                a legislative rule. Rather, if the statute is silent or ambiguous
                with respect to the specific issue, the question for the court is
                whether the agency’s answer is based on a permissible
                construction of the statute. A valid legislative rule is entitled to
                substantial deference by the reviewing court.

Syl. Pt. 4, in part, id.

                A nearly identical challenge to a tax regulation was launched in 1995, the

Court’s examination of which demonstrates the proper application of the Chevron analysis.

In Appalachian Power, appellant challenged a regulation that dealt with a tax imposed on

the “net generation of electricity available for sale.” Id. at 579-80, 466 S.E.2d at 430-31.

The regulation prescribing the “net” taxable amount prohibited deduction of line loss or

company use to determine the amount “for sale.” Id. at 580, 466 S.E.2d at 431. During

the regulation’s development and approval by the legislature, a legislative attorney opined

that the regulation conflicted with the statute, but it was approved regardless by the

Legislative Rulemaking Committee. Id. at 580-81, 466 S.E.2d at 431-32. Petitioner

challenged the regulation arguing, among other things, that the enabling statute was at odds

with the prohibited deduction contained in the regulation and “impermissibly

differentiate[d]” between taxpayers, in violation of the equality provisions of the

Constitution. Id. at 581, 466 S.E.2d 432.

                                                17
              The Appalachian Power Court noted generally that “a legislative rule should

be ignored only if the agency has exceeded its constitutional or statutory authority or it is

arbitrary or capricious.” Id. at 585, 466 S.E.2d at 436. Accordingly, “the appropriate level

of consideration due [a legislative rule] depends on its clarity[.]” Id. at 586, 466 S.E.2d at

437. The Court explained that the first step of Chevron required it to review the legislative

rule to determine if it was “clear as to its intent and not contrary to the legislative enactment

that triggered its promulgation[.]” Id. at 586, 466 S.E.2d 437. If so, the rule must simply

be applied. Id. To perform this analysis, “a court must look primarily to the plain meaning

of the statute, drawing its essence from the ‘particular statutory language at issue, as well

as the language and design of the statute as a whole.’” Id. (quoting Kmart Corp. v. Cartier,

Inc., 486 U.S. 281, 291 (1988)).

              However, to whatever extent a statute does not reveal “an unmistakably clear

expression of legislative intent,” the Court must “examine the agency’s interpretation to

see how it relates to the statute.” Id. at 587-88, 466 S.E.2d at 438-39. The Court warned

that at this reconciliation stage, “deference looms large . . . . [and the analysis] involves a

high degree of respect for the agency’s role.” Id. The Court warned that only “some []

startling revelation of fact” would overcome a legislative rule that is not otherwise at odds

with a conflicting statute nor presents a “defect in the rulemaking process, [or] evidence of

bias or abuse of power[.]” Id. at 589, 466 S.E.2d at 440.

                                               18
              The Appalachian Power Court provided numerous instructive statements

relative to examining tax regulations, all of which unmistakably signal that the agency has

significant leeway in crafting taxation methodologies: “[T]he Tax Commissioner need not

write a rule that serves the statute in the best or most logical manner; he need only write a

rule that flows rationally from the statute.” Id. at 588, 466 S.E.2d at 439. The Court

reminded that it had previously “stressed the importance of liberally permitting

administrative agencies to carry out legislative dictates . . . [and that] aggressive judicial

intervention would disrupt agency processes and negate the legislative body’s legitimate

delegation of authority.” Id.

              Significantly, the Court stated that

              “[i]n the absence of . . . [legislative] direction as to what
              elements are to be considered in promulgating . . . [a] rule, the
              presumption is that . . . [the Legislature] is entrusting the
              decision as to what to consider in the hands of the agency in
              deference to agency expertise.”

Id. at 589, 466 S.E.2d at 440 (quoting Kennedy v. Block, 606 F. Supp. 1397, 1403 (W.D.

Va. 1985)) (emphasis added). The Court found that deference was particularly necessary

where “a technically complex statutory scheme is backed by an even more complex and

comprehensive set of regulations. Under such circumstances, the argument for deference

is at its strongest.” Id. at 589-90, 466 S.E.2d at 440-41. As a result, the Court upheld the

regulation, finding that “[w]ithout question, the Legislature intended the defendants, the

Tax Department and the Tax Commissioner, to have the authority to interpret [the taxation

statute].” Id. at 590, 466 S.E.2d at 441.
                                             19
              Under this analysis, it is clear that the “true and actual” language of West

Virginia Code § 11-6K-1(a) is fairly broad and non-specific as to its implementation

inasmuch as it does not prescribe a methodology for determining “true and actual” value.

More pointedly, West Virginia Code § 11-1C-10(e) expressly directs the Tax Department

to “develop a plan for the . . . valuation of natural resources property.” Accordingly, our

taxation scheme for natural resources property does not contain merely an implicit “gap”

in its directives, but an express gap, which it directs the Tax Department to close by

developing valuation methodologies:

              If Congress has explicitly left a gap for the agency to fill, there
              is an express delegation of authority to the agency to elucidate
              a specific provision of the statute by regulation. Such
              legislative regulations are given controlling weight unless they
              are arbitrary, capricious, or manifestly contrary to the statute.

Chevron, 467 U.S. at 843-44.

              This brings our analysis to the second stage of Chevron, which is whether

the agency’s interpretation rationally flows from the enabling statute. As previously

indicated, the agency need not employ the “best” or “most logical” methodology, but rather

one which is rationally based on the enabling statute. We find that there is little question

that the regulations here are a rational and necessary means to establish true and actual

value.

              The methodology for valuing coal properties contained in the extensively

detailed and thoroughly described regulations bears all of the hallmarks of those
                                              20
regulations found by the Supreme Court to be rationally conceived, i.e. “the regulatory

scheme is technical and complex, the agency considered the matter in a detailed and

reasoned fashion, and the decision involves reconciling conflicting policies.” Chevron,
467 U.S. at 865. As Mr. Kern testified, the methodology utilizing the historical rolling

three-year average was formulated after extensive debate and collaboration via the

legislative rule-making process. 19 The methodology seeks to create an equilibrium

between fluctuating coal pricing and taxation. While petitioners lament the use of the

trailing average in the current market “valley,” without question, this methodology

conceptually provides an equal benefit in the event of a pricing peak.20 The stabilizing

effect of the rolling historical average brings predictability to both the taxpayer and the

State.

              In fact, it is the “trailing” or “rolling” aspect of the methodology which

distinguishes it from the “frozen” years-old values struck down in Arkansas Public Service

Commission v. Pulaski County Board of Equalization, 582 S.W.2d 942 (Ark. 1979) upon

which petitioners heavily rely. In Arkansas Public Service Commission, residential values

         19
         Cf. Syl. Pt. 5, in part, In re Tax Assessment Against Am. Bituminous Power
Partners, L.P., 208 W. Va. 250, 539 S.E.2d 757 (2000) (“Title 110, Series 1P of the West
Virginia Code of State Rules confers upon the State Tax Commissioner discretion in
choosing and applying the most accurate method of appraising commercial and industrial
properties.”).

          In fact, Mr. Kern testified that “up until 2012, the statewide average was actually
         20

less than the PSC. So that, in essence, it’s been argued in various places that the State was
giving all the taxpayers a discount because we were using trailing averages, and trailing
averages were below the rise in price over time.”
                                               21
were “frozen” as of 1956, and timber and farm land values were “frozen” as of 1961 by

operation of statute which required use of a 1972 manual. Id. at 944. In contrast, the

methodology here annually revitalizes itself with use of the most recent three years’ coal

prices. As Mr. Kern explained, the process of assessment by its very nature always uses

trailing information: “[N]o matter what you do in the tax assessment basis, you are always

going to be at least a year behind, if not two years behind in your data, just by the nature

of what we do.” Therefore, it is clear that the methodology is both rationally based and

reasonably flows from the statutory language.

              We are particularly given to this conclusion by virtue of the unrebutted

evidence presented below indicating that petitioner Consolidation Coal Company

(predecessor-in-interest to petitioner Murray Energy) was extensively involved in the rule-

making process that it now challenges. Furthermore, petitioners’ failure to provide public

comment to the 2016 tax year variables or provide “Table F” information regarding their

actual sales is problematic. As the Appalachian Power Court observed, “[d]eference to the

[agency’s] interpretation ‘is especially appropriate where the rule was adopted only after

all interest [sic] persons were given notice and opportunity to comment[.]’” Id. at 592, 466

S.E.2d at 443 (quoting Va. Agr. Growers Ass’n, Inc. v. Donovan, 579 F. Supp. 768, 773

(W.D. Va. 1984)). Stakeholder involvement in development of the methodology casts a

pronounced pall over a subsequent legal challenge, absent some misapplication or

misinterpretation of the regulation.

                                            22
                As Justice Cleckley emphatically observed, “[a]s a matter of law and policy,

this is a paradigm example of a complex economic and taxation inquiry that our Legislature

has wisely left to resolution by the State’s taxing authority pursuant to its statutory

mandate.” Id. at 592, 466 S.E.2d at 443. The instant case presents a virtually identical

scenario. We are likewise reminded of the Supreme Court’s commentary in Chevron that

               [t]he arguments over policy that are advanced in the parties’
               briefs create the impression that respondents are now waging
               in a judicial forum a specific policy battle which they
               ultimately lost in the agency . . . but one which was never
               waged in the Congress. Such policy arguments are more
               properly addressed to legislators or administrators, not to
               judges.

Chevron, 467 U.S. at 864.

               Like the agency action in Chevron, we find that the methodology set forth in

West Virginia Code of State Rules § 110-1I-1 et seq. insofar as the calculation of the

SCPPT and seam thickness average reflects “a reasonable accommodation of manifestly

competing interests.” Chevron, 467 U.S. at 865.21 Moreover, as cautioned in Appalachian

Power, “[w]e will not set aside a formally adopted legislative rule without clearcut

evidence of an inconsistency between the rule and the authorizing statute.” 195 W. Va. at

       21
          To that end, while the Court recognizes that other methods of calculating the
taxable interest in coal resources exist, it is not the role of the Court to substitute its method
of determining such methodology for that promulgated by the Tax Department and
approved by the Legislature. Nonetheless, the Court encourages ongoing evaluation of
these methodologies by the Tax Department, Legislature, and stakeholders in a manner
sufficiently collaborative to ensure lawful processes which are consistent with the precepts
outlined herein.
                                                 23
588, 466 S.E.2d at 439. There is no such evidence here. We therefore hold that the

methodology of calculating and use of the annual average Steam Coal Price Per Ton and

coal seam thickness averages for ad valorem tax valuation purposes, as set forth in West

Virginia Code of State Rules § 110-1I-1 et seq., does not violate the requirement contained

in West Virginia Code § 11-6K-1(a) that natural resources property be assessed based upon

its “true and actual value.”

B.     CONSTITUTIONAL CHALLENGES: “EQUAL AND UNIFORM” AND EQUAL
       PROTECTION

              Notwithstanding the foregoing conclusion that the methodology prescribed

by regulation does not violate the statutory mandate of “true and actual” valuation, we must

determine if the methodology nonetheless creates an unconstitutional inequality.

Petitioners argue that by taxing its coal properties in tonnage amounts and at prices that do

not reflect their actual natural resources property or the actual market value as of the

assessment date and year, they are being taxed in violation of both the “equal and uniform”

and equal protection provisions of the West Virginia and United States Constitutions.

Petitioners argue that by over-taxing coal properties, even the uniform application of the

mass appraisal methodology creates inequality. Petitioners rely on this language from the

United States Supreme Court to explain the conceptual disparity: “Applying the same ratio

to the same assigned values, when the actual values differ, creates the same disparity in

effect as applying a different ratio to actual values when the latter are the same.”

Cumberland Coal Co. v. Bd. of Rev. of Tax Assessments, 284 U.S. 23, 29 (1931).
                                             24
              The Tax Department’s counter-argument is simply that its methodology is

equally applied to all coal properties and therefore does not treat petitioners differently or

unequally as compared to other coal property taxpayers. As for the conceptual inequality

described in Cumberland Coal, the Tax Department argues merely that the case has been

called into question because it pre-dates the “rational basis” equal protection analysis that

has developed in modern jurisprudence.22 See Nordlinger v. Hahn, 505 U.S. 1, 25 (1992)

(Thomas, J., concurring in part) (“Cumberland Coal, which fails even to mention rational-

basis review, conflicts with our current case law.”)

              “The right to equal protection of the laws is, of course, found in the

Fourteenth Amendment to the Constitution of the United States.” Payne v. Gundy, 196 W.

Va. 82, 87, 468 S.E.2d 335, 340 (1996). Commensurately, “West Virginia’s constitutional

equal protection principle is a part of the Due Process Clause found in Article III, Section

10 of the West Virginia Constitution.” Syl. Pt. 4, Israel by Israel v. W. Va. Secondary Sch.

Activities Comm’n, 182 W. Va. 454, 388 S.E.2d 480 (1989). When an equal protection

challenge is made involving economic rights, the rational relationship test is utilized:

              “‘Where economic rights are concerned, we look to see
              whether the classification is a rational one based on social,
              economic, historic or geographic factors, whether it bears a
              reasonable relationship to a proper governmental purpose, and
              whether all persons within the class are treated equally. Where

       22
          While this is true, this omission affects only the potential resolution of a similar
challenge, i.e. if the Cumberland Court had applied a rational relationship test, would the
classification have passed constitutional muster? Regardless, however, the inequality
described in Cumberland Coal is still a well-articulated description of how even a
uniformly-applied system can potentially create an equality problem.
                                              25
              such classification is rational and bears the requisite reasonable
              relationship, the statute does not violate Section 10 of Article
              III of the West Virginia Constitution, which is our equal
              protection clause.’ Syllabus Point 7, [as modified,] Atchinson
              v. Erwin, [172] W.Va. [8], 302 S.E.2d 78 (1983).” Syllabus
              Point 4, as modified, Hartsock-Flesher Candy Co. v. Wheeling
              Wholesale Grocery Co., 174 W.Va. 538, 328 S.E.2d 144
              (1984).

Syl. Pt. 4, Gibson v. W. Va. Dep’t of Highways, 185 W. Va. 214, 406 S.E.2d 440 (1991),

holding modified by Neal v. Marion, 222 W. Va. 380, 664 S.E.2d 721 (2008).

              Insofar as the “Equal and Uniform” Clause is concerned, this Court has

treated such a challenge collectively with equal protection challenges, warning that

              [w]e must exercise considerable caution in using our equality
              provisions to scrutinize underinclusive challenges to tax
              legislation—those cases in which the taxpayer objects to his
              tax because some other group, even if similar, has escaped the
              levy. . . . Courts should venture into that thicket only with
              utmost trepidation and only for a very good reason.

Appalachian Power Co., 195 W. Va. at 596, 466 S.E.2d at 447. The Appalachian Power

Court found that, with respect to tax legislation, our equality provisions require only

geographic and class equality and dispensed with the challenge therein by stating that “all

businesses within each class [were treated] the same.” Id.

              In support of this argument, petitioners rely heavily on Killen v. Logan

County Commission, 170 W. Va. 602, 295 S.E.2d 689 (1982), overruled on other grounds

by In re Tax Assessment of Foster Foundation’s Woodlands Retirement Community, 223
W. Va. 14, 672 S.E.2d 150 (2008). In Killen, the Court addressed what it termed a
                                             26
“fractional assessment”—an assessment method that resulted in like properties being

assessed at differing percentages of their market value. Id. at 606, 295 S.E.2d at 693.

Killen (the local school board president) alleged that Logan County property values were

under-valued because they were not consistently assessed at full value, but rather

somewhere within a “range” of 50 to 100 percent of value, as permitted by statute. Id. at

610, 295 S.E.2d at 698.

              The Killen Court broadly enunciated the position asserted by petitioners

herein—that by rendering an inaccurate base valuation, taxpayer properties are not treated

equally and therefore constitutionally required “equal and uniform” taxation cannot be

obtained: “Valuation, the determination of value, constitutes realization of the tax base.

Without an accurate determination of the tax base, equal and uniform taxation cannot be

achieved.” Id. at 613, 295 S.E.2d at 700. Moreover, the Killen Court posited that the

uniform application of an inherently flawed methodology will not necessarily “cure” an

inequality:

              [Appellants] interpret [“equal and uniform”] to require only
              uniformity of methodology in determining value within a
              county. As already demonstrated, the existing ‘uniformity’ of
              methodology has not, and cannot result in uniform taxation,
              either within a county or within this state. Since article 10,
              section 1 of the West Virginia Constitution requires equal and
              uniform taxation in all areas of the state, both the method and
              the result of taxation are essential to compliance with the
              constitution.

Killen, 170 W. Va. at 619, 295 S.E.2d at 707 (emphasis added). See also Allegheny

Pittsburgh Coal Co. v. Cty. Comm’n of Webster, 488 U.S. 336, 346 (1989) (“Viewed in
                                        27
isolation, the assessments for petitioners’ property may fully comply with West Virginia

law. But the fairness of one’s allocable share of the total property tax burden can only be

meaningfully evaluated by comparison with the share of others similarly situated relative

to their property holdings.”).

              We agree conceptually with Killen’s observations regarding the importance

of reaching accurate base valuations and that even the uniform use of a formula against

indiscriminately valued properties may create equality issues. However, we believe that

Killen requires a more nuanced reading against the backdrop of alleged valuation

inequalities which necessarily result from carefully crafted, stakeholder-involved, and

legislatively-approved systems which make no facially arbitrary classifications nor allow

for use of indiscriminate applications. We observe, importantly, that Killen makes no

mention or use of the rational relationship test. Like the United States Supreme Court’s

reluctance to vouch for Cumberland Coal’s current vitality for the same reason, the absence

of a rational relationship analysis alone makes Killen’s rigid application untenable.

              More importantly, Killen involved a variable fractional assessment, which

created wildly fluctuating assessments of like properties, due to the fact that the statute at

issue permitted each individual county’s assessor to “vary assessments up to 50 percent of

the appraised value both within and among classes of property.” Id. at 618, 295 S.E.2d at

705. It is upon that premise that the Killen Court found an equality violation: “Assessment

at a percentage of appraisal value, with the percentage varying from county-to-county
                                             28
within and among the various classes of property, cannot achieve equal and uniform

taxation.” Id. at 613–14, 295 S.E.2d at 701. No such arbitrary variations are present here.

              In the instant case, petitioners do not allege that the Tax Department is

utilizing a methodology to determine their coal property’s value that differs from that being

used for other taxpayers or applying it in an inconsistent manner property to property.

Rather, petitioners bemoan the use of seam thickness and SCPPT averages due to the

purported disparity those averages reflect with their individual coal properties and market

prices as of a date certain. However, to whatever extent petitioners perceive their property

is being over-valued by purportedly “inflated” prices per ton and/or the seam thickness

average, all other taxpayers are equally subjected to the same price per ton and seam

thickness average. Compare Matter of U. S. Steel Corp., 165 W. Va. 373, 379, 268 S.E.2d
128, 132 (1980) (finding unconstitutional assessor’s use of “two systems of assessment,

one for favored taxpayers and one for others”). As the Supreme Court stated in Allegheny

Pittsburgh Coal, “the constitutional requirement is the seasonable attainment of a rough

equality in tax treatment of similarly situated property owners.” 488 U.S. at 343 (citing

Allied Stores of Ohio v. Bowers, 358 U.S. 522, 526-27 (1959)).

              Petitioners hinge their argument precariously on the isolated statement of Mr.

Kern, who, in explaining the use of averages in the mass appraisal system, conceded that,

as a result, “[s]ome places are getting less tax than they could, and some places are getting

a little more tax than they could.” However, Mr. Kern’s testimony was hardly the
                                             29
bombshell petitioners would suggest. Mr. Kern’s testimony, in context, was not an

admission to an arbitrary, discriminatory, or ad hoc taxation scheme. Rather, he was

explaining the obvious: averages—by definition—both under- and over-represent certain

of those numbers which they reflect. Accordingly, the use of a mass appraisal system that

applies these averages across the board mathematically under- and over-represents certain

of the values which comprise the average. This alone does not create a taxation equality

problem for which the Constitution demands a remedy.

               Instead, we reiterate the United States Supreme Court’s observation that the

equal protection clause “imposes no iron rule of equality, prohibiting the flexibility and

variety that are appropriate to reasonable schemes of state taxation.” Allied Stores, 358
U.S. at 526. In short, “precise, scientific uniformity with reference to composition, use or

value” is neither required nor practically achievable. Id. at 527. Rather, “the Equal

Protection Clause is satisfied so long as there is a plausible policy reason for the

classification”; this rule is “especially deferential in the context of classifications made by

complex tax laws.” Nordlinger, 505 U.S. at 11; see also Revenue Cabinet, Com. of Ky., v.

Gillig, 957 S.W.2d 206, 209 (Ky. 1997) (“[S]ome amount of inequality in property taxation

is inevitable.”).

               In the instant case, it is clear that to whatever extent inequalities are created

by the mass appraisal methodology, any such inequality passes rational relationship muster.

The classifications result from a well-recognized mass appraisal methodology that is
                                              30
employed to ensure tax payment and revenue predictability for both the State and taxpayer

and alleviate the unattainable administrative burden of annual reappraisal.              See

Appalachian Power Co., 195 W. Va. at 596, 466 S.E.2d at 447 (approving classifications

which advance “ancillary interests” such as “administrative efficiencies”); Calhoun Cty.

Assessor v. Consol. Gas Supply Corp., 178 W. Va. 230, 232, 358 S.E.2d 791, 793 (1987)

(“‘[A]s a general rule, courts have been tolerant in construing statutes prescribing the

procedure for assessments . . . [and] [t]he factor of administrative convenience in the

enforcement and collection of taxes is taken into consideration by the courts.’” (quoting N.

Singer, 3A Sutherland Statutory Construction § 66.06 (4th ed. 1986))).

                Moreover, the methodology’s design seeks to even out the extreme ends of

the coal pricing curve and functions to provide commensurate benefit to the taxpayer

insofar as peak market pricing occurs. 23 Finally, the methodology is unquestionably

applied uniformly across the coal property tax base. “‘If the selection or classification is

neither capricious nor arbitrary, and rests upon some reasonable consideration of difference

or policy, there is no denial of the equal protection of the law.’” Allegheny Pittsburgh, 488
U.S. at 344 (quoting Brown-Forman Co. v. Kentucky, 217 U.S. 563, 573 (1910).

                This Court has approved of the principle articulated by the Supreme Court of

Ohio that

       23
            See n.20 supra.
                                             31
              “[t]he system of taxation unfortunately will always have some
              inequality and nonuniformity attendant with such
              governmental function. It seems that perfect equality in
              taxation would be utopian, but yet, as a practicality,
              unattainable. We must satisfy ourselves with a principle of
              reason that practical equality is the standard to be applied in
              these matters, and this standard is satisfied when the tax system
              is free of systematic and intentional departures from this
              principle.”

Kline v. McCloud, 174 W. Va. 369, 374, 326 S.E.2d 715, 720 (1984) (quoting Meyer v.

Cuyahoga Cty. Bd. of Revision, 390 N.E.2d 796, 800 (Ohio 1979)). We therefore conclude

that the valuation methodology contained in West Virginia Code of State Rules § 110-1I-

1 et seq. for the calculation and use of an average Steam Coal Price Per Ton and average

coal seam thickness does not violate the equality provision of West Virginia Constitution

Article X, Section 1 or the equal protection provisions of the West Virginia and United

States Constitutions.

                                   IV. CONCLUSION

              For the foregoing reasons, we affirm the December 7, 2017, order of the

Circuit Court of Marshall County, West Virginia.

                                                                                  Affirmed.

                                             32