Archer Daniels Midland Co. v. State ( 2015 )

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CONCLUSION
We conclude that Melanie is entitled to a face-to-face hear-
ing at the Department’s local office under 475 Neb. Admin.
Code, ch. 1, § 007, but not under the Due Process Clause. She
is not a prevailing party for purposes of attorney fees under
42 U.S.C. § 1988, because she lost on the merits of her claim
under federal law. We reverse, and remand for further pro-
ceedings on Melanie’s request for a declaration of rights under
475 Neb. Admin. Code, ch. 1, § 007, and injunctive relief
within the scope of such declaration.
Affirmed in part, and in part reversed and
remanded for further proceedings.
Archer Daniels Midland Company, appellant, v.
State of Nebraska et al., appellees.
___ N.W.2d ___
Filed April 23, 2015. No. S-14-724.
1. Taxation: Judgments: Appeal and Error. An appellate court reviews decisions
rendered by the Tax Equalization and Review Commission for errors appearing
on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appear-
ing on the record, an appellate court’s inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is not arbitrary, capricious,
or unreasonable.
3. Taxation: Appeal and Error. An appellate court reviews questions of law aris-
ing during appellate review of decisions by the Tax Equalization and Review
Commission de novo on the record.
4. Statutes: Appeal and Error. Statutory interpretation is a question of law, which
an appellate court resolves independently of the lower tribunal.
5. ____: ____. Statutory language is to be given its plain and ordinary meaning,
and an appellate court will not resort to interpretation to ascertain the meaning of
statutory words which are plain, direct, and unambiguous.
6. Statutes: Legislature: Intent: Appeal and Error. In discerning the meaning of
a statute, an appellate court must determine and give effect to the purpose and
intent of the Legislature as ascertained from the entire language of the statute
considered in its plain, ordinary, and popular sense.
7. Statutes. If the language of a statute is clear, the words of such statute are the
end of any judicial inquiry regarding its meaning.
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8. ____. A court will construe statutes relating to the same subject matter together
so as to maintain a consistent and sensible scheme, giving effect to every
provision.
9. Statutes: Taxation. Tax exemption provisions are to be strictly construed, and
their operation will not be extended by construction.
10. Property: Taxation. Property which is claimed to be exempt must clearly come
within the provision granting exemption from taxation.
11. Property: Taxation: Time. The exemption provisions in Neb. Rev. Stat.
§ 77-5725(8)(c) (Reissue 2009) impose a mandatory statutory deadline for the
filing of the prescribed form.
12. Administrative Law: Taxation: Equity: Legislature. The Tax Equalization and
Review Commission is an agency whose only equitable powers are those con-
ferred upon it by the Legislature.
13. Stipulations. In Nebraska, parties are free to make stipulations that govern their
rights, and such stipulations will be respected and enforced by courts so long as
the agreement is not contrary to public policy or good morals.
Appeal from the Tax Equalization and Review Commission.
Affirmed.
James G. Powers, Patrick D. Pepper, and Nicholas K.
Niemann, of McGrath, North, Mullin & Kratz, P.C., L.L.O.,
for appellant.
Jon Bruning, Attorney General, and L. Jay Bartel for
appellees.
Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
Miller-Lerman, J.
NATURE OF CASE
After the Department of Revenue (the Department)
rejected the claim of Archer Daniels Midland (ADM), the
Nebraska Tax Commissioner denied ADM’s protest seek-
ing a personal property tax exemption under the Nebraska
Advantage Act, Neb. Rev. Stat. § 77-5701 et seq. (Reissue
2009) (the Act) for the year 2010 because the claim was not
timely filed. ADM appealed to the Tax Equalization Review
Commission (TERC). TERC affirmed. ADM now appeals to
this court, assigning that TERC erred when it concluded that
it did not have authority to apply the doctrine of “substantial
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compliance” to ADM’s untimely filings and when it con-
cluded that it did not have equitable authority to enter orders
of remand or mandamus to the Tax Commissioner for further
consideration of issues relating to the hearing officer. We
agree with TERC that there is no basis or authority to apply
the doctrine of substantial compliance to vary the terms of the
mandatory statutory deadlines and that ADM’s untimely claim
was properly denied. We further determine that by stipulation,
ADM waived the issue relating to the hearing officer, and that
TERC did not err when it afforded no relief. Accordingly,
we affirm.
STATEMENT OF FACTS
The parties stipulated to the controlling facts in this case.
ADM is a corporation that at all times relevant to these
proceedings has been engaged in business in the State of
Nebraska and is a taxpayer under Neb. Rev. Stat. § 77-2753
(Reissue 2009). Pursuant to the Act, ADM applied for and
entered into an agreement (the Agreement) with the Tax
Commissioner with the aim of using incentives set forth in
the Act for a project in Platte County, Nebraska. The personal
property for which ADM seeks exemption from ad valorem
taxes is generally described as involving agricultural process-
ing equipment.
The Agreement provided, inter alia, that ADM would be eli-
gible for exemption from personal property tax if it met “mini-
mum levels of employment and investment” before December
31, 2009. The Agreement further provided:
(c) To receive the property tax exemptions, the tax-
payer shall annually file a claim for exemption with the
. . . Tax [Commissioner] and with the county assessor in
each county in which the taxpayer is requesting exemp-
tion on or before May 1.
....
(ii) The form and supporting schedules [to claim
the exemption] shall be prescribed by the . . . Tax
[Commissioner] and shall list all property for which
exemption is being sought.
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The Tax Commissioner prescribed “Form 5725X” as the form
for claiming exemption from personal property taxes. See,
§ 77-5725(8)(c); 350 Neb. Admin. Code, ch. 43, § 003.01A
(2009). Because May 1, 2010, fell on a Saturday, the dead-
line for ADM to file Form 5725X was May 3. See 350 Neb.
Admin. Code, ch. 43, § 003.01C (2009).
ADM accomplished the necessary hiring and investing prior
to December 31, 2009. ADM built three facilities in Platte
County: a dry-mill ethanol plant, a wet-mill ethanol plant, and
a cogeneration electrical production plant. The taxable values
of these properties totaled $431,236,152.
ADM reported its compliance with the Agreement to the
offices of the Tax Commissioner and the Platte County asses-
sor (the Assessor), and those agencies took measures to review
ADM’s compliance. The Department conducted an audit of
ADM, and the Assessor’s office had multiple conversations
with ADM’s property tax manager concerning the poten-
tial exemptions.
Prior to May 3, 2010, ADM filed a series of Nebraska per-
sonal property tax returns with the Assessor and notified the
Assessor that the filings related to ADM’s property exemption
under the Act.
On May 7, 2010, ADM filed three Forms 5725X with
both the Department’s property assessment division and the
Assessor. They were dated May 1, 2010.
On May 20, 2010, the Department issued a “Notice of
Late Filing of Claim for Exemption of Personal Property” to
ADM. The notice cited Neb. Rev. Stat. § 77-1229(2) (Reissue
2009) and stated, “Failure to timely file the required forms
shall cause the forfeiture of the exemption for the tax year.”
The notice continued, “Your late filing acts as a waiver of
the exemption for tax year 2010” with respect to the sub-
ject property.
On May 27, 2010, ADM filed three amended Forms 5725X
with the Department’s property assessment division and the
Assessor.
ADM filed a protest and requested a hearing. It specifically
petitioned for redetermination of the Department’s conclusion
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that ADM’s personal property tax exemption claim for the
2010 tax year had not been timely filed.
On June 23, 2010, prior to the hearing, ADM filed a motion
to recuse the hearing officer, for the reason that the hearing
officer was engaged as a volunteer attorney and member of
the advisory board of a public interest organization which had
expressed dissatisfaction with the Act.
After ADM filed the motion for recusal, the hearing officer
sent an e-mail message to counsel for the Department stating
in part: “I am sorry to bother you but is there any precedent for
the substance of [ADM’s recusal] motion? . . . Is the problem
because of any association, past or present? Or continuing?
Thanks so much.”
Counsel for the Department disclosed the e-mail message
to ADM’s counsel. On June 30, 2010, ADM filed a second
motion to recuse the hearing officer, based on the e-mail
message, contending that the e-mail was an impermissible
ex parte communication requiring recusal. The hearing offi-
cer heard argument on the two recusal motions and denied
both motions.
After the rulings on the recusal motions, the parties filed
with the Department an “Amended and Restated Stipulation of
Facts and Issue,” dated July 27, 2010. With respect to the issue,
the parties stipulated and agreed as follows:
IT IS FURTHER STIUPLATED AND AGREED by
and between all parties to this stipulation that the only
question at issue in this matter (and any appeal thereof) is
whether ADM is eligible for a 2010 personal property tax
exemption under the . . . Act based on those documents
and records filed by ADM with the State of Nebraska
and/or Platte County, Nebraska and ADM’s correspond­
ence with the State of Nebraska and/or Platte County,
Nebraska, and the other communications between ADM,
the State of Nebraska, and/or Platte County, Nebraska,
based on testimony at the hearing.
Following the hearing, the Tax Commissioner denied the
petition for redetermination. The Tax Commissioner agreed
with the Department’s conclusion that because ADM’s per-
sonal property tax exemption claim for the 2010 tax year was
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not timely filed, denial of the exemption as to the subject prop-
erty was required.
ADM appealed to TERC. Prior to the hearing on the mer-
its, ADM raised the recusal issue in the form of a motion for
remand and writ of mandamus seeking an appointment of an
unbiased hearing officer. TERC denied the motion.
Following the hearing on the merits of the appeal, in its
order dated July 18, 2014, TERC discussed the recusal issue,
explaining its understanding that it had no express authority
to order a remand. As to the merits of ADM’s appeal, TERC
affirmed the Tax Commissioner’s determination that the sub-
ject property was not exempt from taxation for the year 2010.
TERC reviewed the relevant filing provisions of the Act,
noted that the filings were not timely, and cited case law stat-
ing, inter alia, that statutes relating to exemptions ought to
be strictly construed. TERC observed that it does not gener-
ally have equitable powers and, therefore, does not have the
authority to render equitable decisions without express con-
stitutional or statutory authority. In this regard, it noted that
its power to hear appeals “‘as in equity’” had been repealed
by 2007 Neb. Laws, L.B. 167, § 6. TERC, therefore, rejected
ADM’s suggestion to the effect that ADM had substantially
complied with filing requirements and that its claim should be
deemed timely. TERC stated it “found no authority to conclude
that ADM substantially complied with the filing requirements
of the Act” when ADM undisputedly filed the required forms
after the mandatory statutory deadline.
ADM appeals.
ASSIGNMENTS OF ERROR
ADM generally claims, restated, that TERC erred when it
affirmed the Tax Commissioner’s determination that the sub-
ject property was not exempt from taxation for the year 2010.
It specifically claims that TERC erred when it concluded (1)
it did not have authority to apply the doctrine of substantial
compliance to ADM’s untimely filing and (2) it did not have
authority to enter orders of remand or mandamus to the Tax
Commissioner for further consideration of issues relating to
the hearing officer.
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STANDARDS OF REVIEW
[1-3] An appellate court reviews decisions rendered by
TERC for errors appearing on the record. Lozier Corp. v.
Douglas Cty. Bd. of Equal., 285 Neb. 705, 829 N.W.2d 652
(2013). When reviewing a judgment for errors appearing on
the record, an appellate court’s inquiry is whether the decision
conforms to the law, is supported by competent evidence, and
is not arbitrary, capricious, or unreasonable. Id. An appellate
court reviews questions of law arising during appellate review
of decisions by TERC de novo on the record. Id.
[4] Statutory interpretation is a question of law, which an
appellate court resolves independently of the lower tribunal.
See Republic Bank v. Lincoln Cty. Bd. of Equal., 283 Neb. 721,
811 N.W.2d 682 (2012).
ANALYSIS
TERC Correctly Concluded That the Late Filing
of the Forms Required by the Act Resulted
in Forfeiture of the Tax Exemption.
The statutory framework under the Act controls the outcome
in this case. Timely filing of the right form in the right place is
required to properly claim a property tax exemption.
There seems to be no dispute that ADM satisfied the
investment and hiring requirements of the Act, and the Tax
Commissioner and the Assessor reviewed ADM’s compliance.
In order to obtain the exemption under the Act, ADM was
required to file Form 5725X with the Tax Commissioner and
the Assessor on or before May 3, 2010, and the terms of the
Agreement are to the same effect. See, § 003.01A (prescribing
Form 5725X); § 77-5725(8)(c) (setting May 1 as annual dead-
line); 350 Neb. Admin. Code, ch. 43, § 003.01B (2009) (copies
to be filed with Tax Commissioner and Assessor); § 003.01C
(providing for filing on next business day). However, ADM
did not file the Forms 5725X with the Tax Commissioner and
Assessor until May 7.
ADM claims that TERC erred when it concluded that TERC
did not have authority to apply the doctrine of substantial
compliance to ADM’s untimely filing for the exemption. Upon
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our de novo review, we find no error. Thus, we conclude that
TERC did not err when it affirmed the Tax Commissioner’s
order which determined that the subject property was not
exempt from taxation for the year 2010.
Under the statutory scheme, the Tax Commissioner has been
authorized to “adopt and promulgate all rules and regulations
necessary to carry out the purposes of the . . . Act.” § 77-5733.
With respect to the proper form, the Tax Commissioner pre-
scribed the “Claim for Nebraska Personal Property Exemption,”
Form 5725X as the required form for claiming the exemption.
§ 003.01A.
Having identified the proper form, we next consider the Act
to determine the filing deadline for Form 5725X. At the time of
ADM’s claim, § 77-5725(8)(c) (now recodified and amended
as § 77-5725(8)(d) (Cum. Supp. 2014)) provided, in part:
In order to receive the property tax exemptions allowed
by . . . this section, the taxpayer shall annually file a
claim for exemption with the Tax Commissioner on or
before May 1. The form and supporting schedules shall
be prescribed by the Tax Commissioner and shall list all
property for which exemption is being sought under this
section. A separate claim for exemption must be filed
for each project and each county in which property is
claimed to be exempt. A copy of this form must also be
filed with the county assessor in each county in which the
applicant is requesting exemption. The Tax Commissioner
shall determine the eligibility of each item listed for
exemption . . . .
Reference to the May 1 deadline appears elsewhere in the Act
and regulations. See, e.g., § 77-1229(2).
Consequences of a failure to timely file are found in the
language of § 77-1229(2), which addresses the procedure for
filing with the Assessor to obtain the personal property exemp-
tion at issue. Section 77-1229(2) provides:
Any person seeking a personal property exemption pursu-
ant to . . . the . . . Act shall annually file a copy of the
forms required pursuant to . . . the [A]ct with the county
assessor in each county in which the person is requesting
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exemption. The copy shall be filed on or before May 1.
Failure to timely file the required forms shall cause the
forfeiture of the exemption for the tax year.
(Emphasis supplied.)
The consequences of an untimely filing are also addressed
in agency regulations which, having been adopted by the
Department and filed with the Secretary of State, have the effect
of statutory law. See Middle Niobrara NRD v. Department of
Nat. Resources, 281 Neb. 634, 799 N.W.2d 305 (2011). Those
regulations provide that failure to timely file Form 5727X with
the Tax Commissioner “shall constitute a waiver of the exemp-
tion.” § 003.01B. Those regulations further provide that no
extension of time shall be granted for filing Form 5727X and
supporting schedules. § 003.01C.
[5-8] Statutory language is to be given its plain and ordi-
nary meaning, and an appellate court will not resort to inter-
pretation to ascertain the meaning of statutory words which
are plain, direct, and unambiguous. Bridgeport Ethanol v.
Nebraska Dept. of Rev., 284 Neb. 291, 818 N.W.2d 600
(2012). In discerning the meaning of a statute, we must
determine and give effect to the purpose and intent of the
Legislature as ascertained from the entire language of the stat-
ute considered in its plain, ordinary, and popular sense. Id. If
the language of a statute is clear, the words of such statute are
the end of any judicial inquiry regarding its meaning. Id. A
court will construe statutes relating to the same subject matter
together so as to maintain a consistent and sensible scheme,
giving effect to every provision. See State v. Piper, 289 Neb.
364, 855 N.W.2d 1 (2014).
[9,10] This court has previously considered tax exemption
provisions and stated that they are to be strictly construed
and that their operation will not be extended by construction.
See Bridgeport Ethanol v. Nebraska Dept. of Rev., supra.
Property which is claimed to be exempt must clearly come
within the provision granting exemption from taxation. Id.
Significantly, in TERC cases, we have required strict compli-
ance with statutory time requirements. See, e.g., Republic Bank
v. Lincoln Cty. Bd. of Equal., 283 Neb. 721, 811 N.W.2d 682
(2012) (determining that despite unclear deadline language in
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taxpayer form, TERC did not obtain subject matter jurisdiction
because deadline for filing appeal was controlled exclusively
by statute, and that appeal was not timely filed).
[11] We review the exemption provisions in § 77-5725 as
well as the remainder of the Act and the implementing regula-
tions in light of the foregoing principles of statutory construc-
tion. In so doing, it is clear that the provisions impose a man-
datory statutory deadline for the filing of Form 5725X which
we are not free to ignore.
In its order, TERC correctly noted that the required fil-
ing deadline was May 1, 2010, which, because it fell on a
Saturday, was extended to Monday, May 3. See § 003.01C.
TERC stated that the “evidence in this appeal is undisputed
that ADM did not file the required Form 5725X with both the
. . . Assessor and the . . . Department . . . until May 7, 2010,
four days after the statutorily required filing deadline of May
3, 2010.” The evidence included the Agreement, which is con-
sistent with the Act and in which ADM agreed to file its claim
with the Tax Commissioner and Assessor on or before May 1.
TERC concluded that “the required filings were not made until
after the statutorily required filing deadlines [and] that the Tax
Commissioner’s decision” was not arbitrary or unreasonable.
TERC’s decision affirming the ruling of the Tax Commissioner
was supported by the applicable law and evidence.
Notwithstanding the acknowledged lateness of its filings,
ADM urged TERC to apply the equitable doctrine of substan-
tial compliance to effectively extend the statutory deadline.
ADM claims TERC erred when it rejected this suggestion. We
conclude TERC did not err.
[12] TERC is an agency whose only equitable powers are
those conferred upon it by the Legislature. See Creighton St.
Joseph Hosp. v. Tax Eq. & Rev. Comm., 260 Neb. 905, 620
N.W.2d 90 (2000). We find no statutory language that would
have allowed TERC to deviate from the mandatory deadline
clearly set forth in the Act. To the contrary, as noted by TERC,
L.B. 167, § 6, repealed the statutory provision which had
authorized TERC to hear appeals “‘as in equity.’”
Our conclusion that TERC did not have authority to apply
the doctrine of substantial compliance to the untimely filing
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is reinforced by the language of the statutes and regulations
pertaining to late filings. As noted in our recitation above, the
relevant provisions regarding the consequences of untimely
filings provide variously that a “[f]ailure to timely file the
required forms shall cause the forfeiture of the exemption for
the tax year,” § 77-1229(2); no extensions of time to file Form
5725X shall be granted, § 003.01C; and failure to timely file
Form 5725X “shall constitute a waiver of the exemption,”
§ 003.01B. Construing the deadline and forfeiture provisions
together, there is no basis to ignore the filing schedule set by
the Legislature in order to grant relief to ADM. We conclude
that TERC did not err when it declined to apply the doc-
trine of substantial compliance to ADM’s untimely filings and
when it affirmed the order of the Tax Commissioner denying
ADM’s protest.
The Parties’ Amended Stipulation
Waived the Recusal Issue.
ADM asks this court to address its recusal claim and con-
sider whether TERC erred when it determined it did not have
authority to enter orders of remand or mandamus to the Tax
Commissioner for further consideration of the issue relating
to the hearing officer. Because we conclude that ADM waived
this issue, we do not reach this claim of error.
As stated above, ADM filed two motions for recusal which
were denied. After those rulings, ADM stipulated and agreed
that “the only question at issue in this matter (and any appeal
thereof) is whether ADM is eligible for a 2010 personal prop-
erty tax exemption” under the Act.
[13] In Nebraska, parties are free to make stipulations that
govern their rights, and such stipulations will be respected
and enforced by courts so long as the agreement is not con-
trary to public policy or good morals. Lincoln Lumber Co. v.
Lancaster, 260 Neb. 585, 618 N.W.2d 676 (2000). See, also,
Shearer v. Shearer, 270 Neb. 178, 700 N.W.2d 580 (2005)
(stating that parties are bound by stipulations voluntarily
made and that relief from such stipulations is warranted
only under exceptional circumstances); Malerbi v. Central
Reserve Life, 225 Neb. 543, 407 N.W.2d 157 (1987) (stating
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that stipulation was equivalent of pretrial order and that party
which stipulated to issues to be tried could not complain on
appeal that other issues should have been included).
We conclude that ADM is bound by its stipulation to limit
the issues in this matter—including on appeal—to its entitle-
ment to the claimed 2010 personal property tax exemption,
thereby excluding consideration of the issue regarding the
hearing officer on appeal. In any event, given the clear pro-
visions of the Act and implementing regulations requiring
rejection of ADM’s untimely claimed exemption, there is no
basis to expect a different outcome at the Department or at
TERC; nor is it reasonable to expect that a ruling contrary to
our decision discussed above would be upheld on appeal to
this court.
CONCLUSION
Because ADM did not timely file its claim for a personal
property tax exemption for the subject property for the year
2010, ADM is not entitled to the exemption, and TERC did not
err when it affirmed the order of the Tax Commissioner which
denied ADM’s protest. Accordingly, we affirm.
Affirmed.