Solvay Chems., Inc. v. Wyo. Dep't of Revenue

517 P.3d 1146

SOLVAY CHEMICALS, INC., Appellant (Petitioner),

v.WYOMING DEPARTMENT OF REVENUE, Appellee (Respondent).

S-22-0018

Supreme Court of Wyoming.

September 30, 2022

Representing Appellant: Walter F. Eggers, III and Kasey J. Schlueter, Holland & Hart LLP, Cheyenne, Wyoming. Argument by Ms. Schlueter.

Representing Appellee: Bridget Hill, Wyoming Attorney General; Brandi Monger, Deputy Attorney General; Karl D. Anderson, Supervising Attorney General; Patrick Miller, Assistant Attorney General. Argument by Mr. Anderson.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.

GRAY, Justice.

[¶1] Solvay Chemicals, Inc. (Solvay) appeals the Wyoming Department of Revenue's (Department) decision disallowing a deduction of bagging costs from the taxable value of its bagged soda ash. The State Board of Equalization (Board) and the district court affirmed the Department's decision, holding that the statute limited Solvay's processing deductions to the industry factor, a formulaic deduction, set out in Wyo. Stat. Ann. § 39-14-303(b)(ii). Solvay contends the Department's interpretation of the statute is erroneous and contrary to the plain language of Wyo. Stat. Ann. § 39-14-303(b)(iv). We affirm the Board's decision.

ISSUE

[¶2] Did the State Board of Equalization misinterpret and misapply Wyo. Stat. Ann. § 39-14-303(b) when it determined the cost of bagging soda ash is not a separately deductible expense?

FACTS

[¶3] The parties have stipulated to the relevant facts. Solvay mines trona from an underground mine in Sweetwater County. Much of the trona ore is processed into soda ash at a plant adjacent to the mine. Solvay sells soda ash in two forms. The majority is sold in bulk while a minor portion is bagged and sold in smaller quantities. Solvay sells bagged soda ash for a higher price than the bulk product due to the costs of bagging.

[¶4] Wyoming's trona tax statute provides an industry-wide standard deduction when calculating the taxable value of trona processed into soda ash. Wyo. Stat. Ann. § 39-14-303(b). This deduction or "industry factor" test was adopted in 1989 "to standardize the deductions for all trona companies and simplify what had been complicated calculations [of processing costs associated with converting trona to soda ash] by the producers, the [Department of Audit], and the [Department of Revenue]." Solvay Chemicals, Inc. v. Dep't of Revenue , 2018 WY 124, ¶ 7, 430 P.3d 295, 298 (Wyo. 2018) ( Solvay I ); 1989 Wyo. Sess. Laws 284–85. Prior to 2003, the statute required the industry factor to be calculated every two years. 1998 Wyo. Sess. Laws 128–29. In 2003, the legislature adopted a permanent industry factor of 32.5%. 2003 Wyo. Sess. Laws 42.

[¶5] In 2013–2015, Solvay applied the industry factor to its soda ash production and in addition deducted its soda ash bagging costs. The Department determined Wyo. Stat. Ann. § 39-14-303(b) did not entitle Solvay to a separate deduction for bagging costs because these costs were included in the "industry factor." Solvay appealed the decision to the Board.¹

[¶6] The Board concluded § 39-14-303(b) was ambiguous. After reviewing the history of the statute and the adoption of a standardized deduction for processing trona into soda ash, it issued its order affirming the Department's decision. The Board determined that the industry factor was intended to include all costs related to the sale of soda ash prior to shipment and no additional deduction could be taken for those costs, including the expense of bagging the product. Solvay appealed to the district court. The district court determined the statute was unambiguous but affirmed the Board's decision.

STANDARD OF REVIEW

[¶7] Judicial review of administrative decisions is governed by Wyo. Stat. Ann. § 16-3-114(c). We will uphold the Board's findings of fact if they are supported by substantial evidence in the record. Chevron U.S.A., Inc. v. Dep't of Revenue , 2007 WY 79, ¶ 9, 158 P.3d 131, 134 (Wyo. 2007). Statutory interpretation is a question of law subject to de novo review. Camacho v. State ex rel. Dep't of Workforce Servs., Workers’ Comp. Div. , 2019 WY 92, ¶ 17, 448 P.3d 834, 840–41 (Wyo. 2019) (quoting State, ex. rel., Wyoming Workers’ Safety & Comp. Div. v. Smith , 2013 WY 26, ¶ 9, 296 P.3d 939, 941–42 (Wyo. 2013) ). "We review an agency's conclusions of law de novo and affirm when they are in accordance with the law." Delcon Partners LLC v. Wyoming Dep't of Revenue , 2019 WY 106, ¶ 7, 450 P.3d 682, 684 (Wyo. 2019) (quoting Wyodak Res. Dev. Corp. v. Wyoming Dep't of Revenue , 2017 WY 6, ¶ 15, 387 P.3d 725, 730 (Wyo. 2017) ). "We do not afford any deference to an agency's determination on a question of law and will correct any errors made in interpreting or applying the law." Id. (citing Camacho , ¶ 17, 448 P.3d at 840–41 ).

[¶8] Our goal in interpreting statutes "is to give effect to the intent of the legislature, and we ‘attempt to determine the legislature's intent based primarily on the plain and ordinary meaning of the words used in the statute.’ " Fugle v. Sublette Cnty. Sch. Dist. No. 9 , 2015 WY 98, ¶ 8, 353 P.3d 732, 734 (Wyo. 2015) (quoting Stroth v. N. Lincoln Cnty. Hosp. Dist. , 2014 WY 81, ¶ 7, 327 P.3d 121, 125 (Wyo. 2014) ). "The paramount consideration is to determine the legislature's intent, which must be ascertained initially and primarily from the words used in the statute." RME Petroleum Co. v. Wyoming Dep't of Revenue , 2007 WY 16, ¶ 25, 150 P.3d 673, 683 (Wyo. 2007) (citing State ex. rel. Wyoming Dep't of Revenue v. Union Pac. R. Co. , 2003 WY 54, ¶ 12, 67 P.3d 1176, 1182 (Wyo. 2003) ). "Where legislative intent is discernible a court should give effect to the ‘most likely, most reasonable, interpretation of the statute, given its design and purpose.’ " Adekale v. State , 2015 WY 30, ¶ 12, 344 P.3d 761, 765 (Wyo. 2015) (quoting Rodriguez v. Casey , 2002 WY 111, ¶ 20, 50 P.3d 323, 329 (Wyo. 2002) ). "We therefore construe each statutory provision in pari materia , giving effect to every word, clause, and sentence according to their arrangement and connection." PacifiCorp, Inc. v. Dep't of Revenue, State , 2017 WY 106, ¶ 10, 401 P.3d 905, 908 (Wyo. 2017) (quoting Nicodemus v. Lampert , 2014 WY 135, ¶ 13, 336 P.3d 671, 674 (Wyo. 2014) ("To ascertain the meaning of a given law, we also consider all statutes relating to the same subject or having the same general purpose and strive to interpret them harmoniously.").

DISCUSSION

[¶9] Whether Solvay is entitled to deduct bagging costs from the taxable value of soda ash turns on the construction of Wyo. Stat. Ann. § 39-14-303, which controls the taxation of trona production. While the Board found Wyo. Stat. Ann. § 39-14-303(b) ambiguous, on appeal both Solvay and the Department assert the statute is unambiguous but reach different conclusions as to its plain meaning.

[¶10] We begin, as we must, with the language of the statute. Wyo. Stat. Ann. § 39-14-303 provides:

(a) Taxable event. The following shall apply:

(i) There is levied a severance tax on the value of the gross product for the privilege of severing or extracting trona, in the state. The severance tax imposed by this article may be in addition to other taxes, including but not limited to the ad valorem taxes imposed by W.S. 39-13-104.

(b) Basis of tax (valuation). The following shall apply:

(i) Trona shall be valued for taxation as provided in this section;

(ii) The department shall calculate the value of trona ore for severance and ad valorem tax purposes by using the individual producer's fair market value of soda ash f.o.b. plant multiplied by the industry factor divided by the individual producer's trona to soda ash ratio less exempt royalties. The industry factor shall be thirty-two and five-tenths percent (32.5%);

(iii) The value of the gross product shall be the fair market value of the product at the mouth of the mine where produced, after the mining or production process is completed;

(iv) Except as otherwise provided , the mining or production process is deemed completed when the mineral product reaches the mouth of the mine. In no event shall the value of the mineral product include any processing functions or operations regardless of where the processing is performed;

(v) Except as otherwise provided , if the product as defined in paragraph (iv) of this subsection is sold at the mouth of the mine, the fair market value shall be deemed to be the price established by bona fide arms-length sale;

(vi) When the taxpayer and department jointly agree that the application of the methods listed in paragraphs (i) through (v) of this subsection does not produce a representative fair market value for the product, a mutually acceptable alternative method may be applied. Not later than October 1 of each year, the department shall report to the joint minerals, business and economic development interim committee and the joint revenue interim committee on any action taken under this paragraph.

Wyo. Stat. Ann. § 39-14-303(a) – (b) (LexisNexis 2021) (emphasis added). The parties do not dispute that subsection (b)(ii) provides the methodology to value soda ash. They disagree on whether the calculation in subsection (b)(ii) produces a final taxable value or a pre-deduction value.

[¶11] Solvay argues (b)(ii), the first step, produces a pre-deduction value for producing soda ash in bulk. Because bagging occurs after the ore is processed into soda ash, subsections (b)(iii) and (iv) must then be applied to the pre-deduction value to arrive at a final taxable value. According to Solvay, subsection (iii) is intended to confirm that the value derived in subsection (ii) matches the value of the product at the mouth of the mine, and subsection (iv) requires that all processing costs, including bagging costs, be removed from the taxable value of soda ash. It claims the Department failed to apply this step when it rejected Solvay's bagging deduction.²

[¶12] The Department contends the statute does not establish a...