No. 18-0018 –        Murray Energy Corporation and Consolidation Coal Company v.
                     Dale W. Steager, State Tax Commissioner of West Virginia; The
                     County Commission of Marshall County; and Christopher J. Kessler,
                     Assessor of Marshall County
                                                                                  FILED
                                                                               April 29, 2019
                                                                                 released at 3:00 p.m.
                                                                             EDYTHE NASH GAISER, CLERK
                                                                             SUPREME COURT OF APPEALS
                                                                                  OF WEST VIRGINIA



Jenkins, Justice, dissenting:

              Pursuant to the Constitution of this State, all property is to be taxed in

accordance with its value: “taxation 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 (emphasis added). The

Legislature has further interpreted this command as requiring property to be assessed at its

“true and actual value,” both with respect to real property, generally, W. Va. Code § 11-3-

1(a) (LexisNexis 2013 & Supp. 2018), and with regard to the specific type of real property

at issue herein: natural resources. See W. Va. Code § 11-6K-1(a) (LexisNexis 2013). To

this end, W. Va. Code § 11-6K-1(a) directs that “[a]ll industrial property and natural

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

its true and actual value.” (Emphasis added). Moreover, for ad valorem property tax

purposes, this Court previously has recognized that “true and actual value” means “[t]he

price paid for property in an arm’s length transaction[.]” Syl. pt. 2, in part, Kline v.

McCloud, 174 W. Va. 369, 326 S.E.2d 715 (1984). Accord W. Va. Code § 11-3-1(a)

(defining “true and actual value” as “the price for which the property would sell if


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voluntarily offered for sale by the owner thereof, upon the terms as the property, the value

of which is sought to be ascertained, is usually sold, and not the price which might be

realized if the property were sold at a forced sale”).



              It is within this precise context that the challenged taxing methodology of a

“three-year rolling average” must be considered and its accuracy in taxing the subject

property at its “true and actual” value must be measured. While an efficient and expedient

valuation method with statewide application is not inherently problematic, when the

methodology selected and employed assigns valuations to property that do not reflect the

property’s “true and actual” value, the methodology is untenably invalid and financially

detrimental to the taxpayer whose property is valued in accordance therewith. Because the

Tax Commissioner’s use of a “three-year rolling average” to value coal interests for ad

valorem property tax purposes does not accurately value the subject property at its “true

and actual” value, the majority should have invalidated the legislative rule authorizing the

application of this methodology and required the implementation of a more accurate

valuation method. Instead, however, the majority has condoned the adoption and use of

this methodology, essentially ignoring the erroneous property valuations that have resulted

from its application. Because I disagree with the majority’s resolution of this matter, I

respectfully must dissent.



              Neither the parties nor the majority dispute that the Taxpayer’s coal interests

herein are statutorily required to be taxed at their “true and actual value” in accordance

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with W. Va. Code § 11-6K-1(a). Though not expressly defined in the specific statute

pertaining to the taxation of natural resources property, i.e., W. Va. Code § 11-6K-1(a), the

corollary, general real property taxation statute, W. Va. Code § 11-3-1(a), defines “true and

actual value” as

              the price for which the property would sell if voluntarily
              offered for sale by the owner thereof, upon the terms as the
              property, the value of which is sought to be ascertained, is
              usually sold, and not the price which might be realized if the
              property were sold at a forced sale.



              Pursuant to the rules of statutory construction, because both W. Va. Code

§ 11-6K-1(a) and W. Va. Code § 11-3-1(a) are part of the same overall taxation scheme

adopted by the Legislature, the two statutes should be read and considered in conjunction

with one another. See Syl. pt. 2, Tug Valley Recovery Ctr., Inc. v. Mingo Cty. Comm’n,

164 W. Va. 94, 261 S.E.2d 165 (1979) (“When two statutes relate to the same general

subject, and the two statutes are not in conflict, they are to be read in pari materia.”); Syl.

pt. 5, Fruehauf Corp. v. Huntington Moving & Storage Co., 159 W. Va. 14, 217 S.E.2d

907 (1975) (“Statutes which relate to the same persons or things, or to the same class of

persons or things, or statutes which have a common purpose will be regarded in pari

materia to assure recognition and implementation of the legislative intent. Accordingly, a

court should not limit its consideration to any single part, provision, section, sentence,

phrase or word, but rather review the act or statute in its entirety to ascertain legislative

intent properly.”). As such, it is apparent that the term “true and actual value” referenced

in W. Va. Code § 11-6K-1(a) also refers to the price a willing buyer would pay a willing

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seller for the subject property. See W. Va. Code § 11-3-1(a). Accord Syl. pt. 2, in part,

Kline, 174 W. Va. 369, 326 S.E.2d 715 (construing “true and actual value” to mean “[t]he

price paid for property in an arm’s length transaction”); Syl. pt. 3, in part, Killen v. Logan

Cty. Comm’n, 170 W. Va. 602, 295 S.E.2d 689 (1982) (interpreting “value” in tax

assessment context as “‘worth in money’ of a piece of property–its market value”),

overruled on other grounds by In re Tax Assessment of Foster Found.’s Woodlands Ret.

Cmty., 223 W. Va. 14, 672 S.E.2d 150 (2008).



              In recognition of this correlation between a property’s sales price and its “true

and actual value,” the Tax Commissioner has promulgated a legislative rule, which the

Legislature has approved, by which to calculate such price. The resulting methodology,

also known as the “three-year rolling average,” provides as follows:

                      “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), divided
              by annual production, expressed in dollars/ton. Average coal
              price can also be expressed in dollars per million BTU and is
              determined by dividing the arithmetic mean of the sum of coal
              sales, by the sum of all steam coal BTU mined in West Virginia
              and sold on the “spot” market as reported on FERC Form 423
              to the United States Department Of Energy and to the West
              Virginia Public Service Commission for the three most recent
              calendar years preceding the July 1st assessment date,
              calculated for the entire state as well as by coal bed and by
              location.



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W. Va. C.S.R. § 110-1I-3.12 (2006) (emphasis in original). In adopting this methodology,

the Tax Commissioner argues that application of this “three-year rolling average” more

accurately values coal interests because it accounts for market fluctuations in the sales price

of coal.



              However, the record evidence in this case tells a different story. According

to the evidence presented below, application of the Tax Commissioner’s “three-year rolling

average” to determine the sales price of the subject coal interests, as required by the West

Virginia Code of State Rules, does not accurately value the Taxpayer’s coal-based natural

resources interests at either their “true” or their “actual” value as required by both the

Constitution and statutory law of this State. See W. Va. Const. art. X, § 1; W. Va. Code §

11-6K-1(a). For the 2016 tax year, i.e., 2015 assessment year, at issue in this case, the Tax

Commissioner’s use of the “three-year rolling average” to determine a sales price for coal

interests in this State yields a figure of $60.35 per ton. But, as noted in the majority’s

opinion, the evidence presented by the Taxpayer calculates the average sales price for coal

during this time period to be $41.08 per ton, based upon industry publications. Moreover,

applying the “three-year rolling average” methodology to publicly-available data, and

excluding the additional, confidential information that the Tax Commissioner includes

when calculating this price, yields a coal sales price of $51.50 per ton, according to the

Taxpayer’s expert. Finally, even the Tax Commissioner’s own expert recognized that data

provided by the West Virginia Public Service Commission, the United States Energy

Regulatory Commission, and other industry analysts values the sales price of coal for this

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period “substantially lower” than that reflected by the Tax Commissioner’s adopted price

of $60.35 per ton, which testimony also is included in the majority’s opinion. Yet, despite

this overwhelming evidence demonstrating the inaccuracy of the “three-year rolling

average” to value coal interests for ad valorem tax purposes, which sustains the Taxpayer’s

burden of proof in such matters,1 the majority refrains from invalidating this flawed

methodology deferring, instead, to the Tax Commissioner’s legislatively-granted

authorization to adopt and implement the same. The majority further compounds this error

by adopting a new Syllabus point condoning the continuation of this factually unsupported

practice. See Maj. op. at Syl. pt. 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.’”).




              1
                See Maj. op. at Syl. pt. 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).” (emphasis added)).
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              I simply cannot agree to such a blatant departure from the constitutional and

statutory commands that property be taxed at its “true and actual” value. Accordingly, I

respectfully dissent.




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