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Penn Virginia Operating Co., LLC v. Yokum

Supreme Court of West Virginia

March 19, 2019

PENN VIRGINIA OPERATING CO., LLC, Petitioner Below, Petitioner
v.
PHYLLIS K. YOKUM, ASSESSOR OF RANDOLPH COUNTY; DALE W. STEAGER, STATE TAX COMMISSIONER OF WEST VIRGINIA; BARRY L. COOK, DIRECTOR, STATE FORESTRY, DIVISION OF FORESTRY; JOHN M. CUTRIGHT, ASSESSOR OF BARBOUR COUNTY; and DUSTIN ZICKEFOOSE, ASSESSOR OF UPSHUR COUNTY, Respondents Below, Respondents

          Submitted: February 12, 2019

          Consolidated Appeal from the Circuit Court of Randolph County The Honorable David H. Wilmoth, Judge Civil Action Nos. 16-C-33 - Randolph County, 16-AA-2 - Barbour County, 16-C-15 - Upshur County

          Don C. A. Parker, Esq. Alexander Macia, Esq. James C. Walls, III, Esq. Spilman Thomas & Battle, PLLC Charleston, West Virginia Counsel for Penn Virginia Operating Co., LLC

          Patrick Morrisey, Esq. Attorney General Charleston, West Virginia Jane Charnock, Esq. Assistant Attorney General South Charleston, West Virginia Counsel for the Division of Forestry

          Patrick Morrisey, Esq. Attorney General Charleston, West Virginia L. Wayne Williams, Esq. Assistant Attorney General Charleston, West Virginia Counsel for the State Tax Commissioner and Assessors of Barbour and Upshur Counties

          Webster J. Arceneaux, III, Esq. Lori D. Counts-Smith, Esq. A. Garner Marks, Esq. Lewis Glasser PLLC Charleston, West Virginia Counsel for the Assessor of Randolph County

         SYLLABUS BY THE COURT

         1. The West Virginia Division of Forestry has the exclusive authority to classify forest lands as managed timberland under this State's Managed Timberland Program.

         2. "Procedures and rules properly promulgated by an administrative agency with authority to enforce a law will be upheld as long as they are reasonable and do not enlarge, amend or repeal substantive rights created by statute." Syl. pt. 4, State ex rel. Callaghan v. West Virginia Civil Service Commission, 166 W.Va. 117, 273 S.E.2d 72 (1980).

         3. Pursuant to W.Va. C.S.R. § 110-1H-13.3, a property owner whose managed timberland application has been denied may, on or before November 1 of the assessment year, file an appeal of the denial with the Director of the West Virginia Division of Forestry.

          OPINION

          ARMSTEAD JUSTICE.

         This appeal concerns the distinction between the ordinary taxation of timberland by the State of West Virginia and the taxation at a lower appraised value of timberland subject to a cooperative contract with the State Division of Forestry pursuant to the Division's Managed Timberland Program.

         The petitioner, Penn Virginia Operating Co., LLC ("Penn"), appeals from the December 6, 2017, consolidated order of the Circuit Courts of Randolph, Barbour and Upshur Counties. Pursuant to the order, the Tax Commissioner's determination was upheld that Penn's forest properties were not eligible for lower valuation for Tax Year 2016. The basis of the order was that Penn filed its application with the Division of Forestry for certification of its properties as managed timberland sixteen days after the September 1, 2015, deadline. Consequently, Penn's tax liability for Tax Year 2016 substantially increased.

         This Court concludes that Penn was deprived of its right to an administrative appeal of the denial of its application due to incorrect information Penn received from the Division of Forestry ("Forestry"). Pursuant to W.Va. C.S.R. § 110-1H-13.3 [1999], Penn could have appealed the denial to Forestry's Director but was advised otherwise.

         Consequently, the December 6, 2017, consolidated order is reversed, and this case is remanded with directions allowing Penn to appeal the denial of its application to the Director of the Division of Forestry. Penn's assertions, that the September 1 deadline is not to be strictly enforced and that Penn's forest properties were entitled to certification as managed timberland for Tax Year 2016, are more appropriately to be made before the Director of the Division of Forestry ("Director").

         I. Factual and Procedural Background

         A. The Managed Timberland Program

         The Managed Timberland Program finds its source in Article VI § 53 of the Constitution of West Virginia. That section authorizes the Legislature to classify forest lands and provide for cooperation, by contract, between the State and property owners for the "planting, cultivation, protection and harvesting" of forest lands in West Virginia. Section 53 further states that forest lands embraced by the contract may be exempted from taxation or taxed in a manner as the Legislature may from time to time provide.

         Derivative of Article VI § 53 is W.Va. Code, 11-1C-11(a) [1998], which sets forth the legislative declaration regarding managed timberland:

The Legislature finds and declares that the public welfare is enhanced by encouraging and sustaining the abundance of high quality forest land within the State; that economic pressures may force industrial, residential or other land development inconsistent with sustaining the forests; and that tax policy should provide an incentive for private owners of forest land to preserve the character and use of land as forest land and to make management decisions which enhance the quality of the future forest.

Section (b)(1) of W.Va. Code, 11-1C-11 [1998], states that forest land certified and managed under a cooperative contract with Forestry shall be valued as managed timberland for State tax purposes. Thus, pursuant to W.Va. Code, 11-1C-11b(b) and(d) [1998], timberland that is not certified as managed timberland shall be valued at its market value, whereas the value of an acre of managed timberland "shall always be less than the value of an acre of timberland of comparable soil quality in the county that is not certified as managed timberland." Subsection (e) of W.Va. Code, 11-1C-11b [1998], provides that any person aggrieved by any valuation of timberland may file a written objection to the valuation with the county assessor.

         Especially relevant to the current matter is W.Va. Code, 11-1C-10(d)(1) [1994], which states in part:

In order to qualify for identification as managed timberland for property tax purposes the owner must annually certify, in writing to the Division of Forestry, that the property meets the definition of managed timberland as set forth in this article and contracts to manage property according to a plan that will maintain the property as managed timberland.

(emphasis added) Although W.Va. Code, 11-1C-10(d)(1) [1994], does not provide an annual date by which an owner must apply for certification, the statute requires the Tax Commissioner to promulgate rules for certification as managed timberland. Nevertheless, only Forestry can actually certify forest lands as managed timberland, and the Director of Forestry may ...


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