Colorado Interstate Gas Co. v. Wyoming Department of Revenue ( 2001 )

LEHMAN, Chief Justice,

dissenting.

[¶ 16] I respectfully dissent. The majority opinion holds that the Department of Revenue's (DOR) inclusion of 1998 income in the three-year weighted average to calculate Colorado Interstate Gas's (CIG) tax valuation was a proper and accurate method of determining CIG's tax liability. I disagree. As a general rule, the Board of Equalization (the Board) is required to take into account legally enforceable restrictions when it determines value. Basin Electric Power Coop. v. Dep't of Rev., 970 P.2d 841, 856 (Wyo.1998). In my opinion, the Board failed to properly consider the fact that CIG's 1998 income level was not indicative of what its income levels would be post-FERC Order 686.

[¶ 17] Although FERC announced its intention to adopt FERC Order 686 in April of 1991 and issued FERC Order 636 in April of ©1992, the provisions of the order did not apply to CIG until CIG completed compliance with the rule by filing and getting FERC's approval of CIG's new tariff setting forth CIG's plan to restructure the business to meet the demands of FERC Order 686. This occurred when FERC approved CI@'s settlement tariff proposal on September 8, 1993, making FERC Order 636 applicable to CIG on October 1, 1998. The legally enforceable restriction created by FERC Order 636, therefore, did not exist until October 1, 1993, and the 1998 income level did not aceu-rately reflect the consequences of FERC Order 636. The dramatic decrease in income in 1994 of over $13.25 million is undeniable evidence that CIG's post-FERC Order 686 income will be significantly lower than its 1998 level.

[¶ 18] Although the Board recognized that CIG did not begin operating fully under FERC Order 686 until October of 1998, it concluded that DOR's use of 1998 income was appropriate, reasoning that it was a year that a reasonable business investor could have concluded the effects of FERC Order 636 would be evident. This logic is incompatible and improperly allows the use of an income level that did not fully reflect the effects of FERC Order 686.

[¶ 19] For these reasons, I would reverse and remand the appraisal to the DOR for recalculation. ~