Missouri Gas Energy v. Grant County Assessor
376 P.3d 923
| Okla. Civ. App. | 2016Background
- Missouri Gas Energy (MGE), a Missouri utility, purchased gas and stored volumes in Southern Star’s Webb underground storage facility in Grant County, Oklahoma; title remained with MGE while Southern Star possessed the gas.
- Southern Star allocates on Jan 1 each year storage volumes to customers (including MGE); Grant County assessed ad valorem tax on MGE’s allocated volume for tax year 2011.
- MGE filed a Freeport Exemption declaration for the portion of allocated gas it asserted originated outside Oklahoma; county assessor and board denied the exemption and assessed tax.
- MGE sought summary judgment that (1) natural gas in storage qualifies as “goods, wares and merchandise” under the Freeport Exemption (Okla. Const. art. X, § 6A) or (2) the allocated gas lacked taxable situs in Oklahoma; the trial court rejected the first and found taxable situs, prompting appeal.
- During the case the Legislature enacted HB 1962 (effective May 6, 2015) amending 68 O.S. § 2807 to explicitly include oil, gas, and petroleum products as goods for ad valorem purposes; the Court treated the amendment as clarifying prior law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether natural gas in storage is "goods, wares and merchandise" under the Freeport Exemption | MGE: plain meaning, UCC definitions, ballot title, OTC forms, and longstanding agency practice include severed natural gas as goods | Appellees: statutory scheme separately classifies "oil, gas, and petroleum products in storage," so stored gas is not within "goods, wares and merchandise" | Court: Natural gas severed from realty qualifies as "goods, wares and merchandise"; trial court reversed and remanded to quantify exempt volumes |
| Whether HB 1962 may be applied to clarify inclusion of stored oil/gas as goods | MGE: HB 1962 clarifies ambiguous prior law and may be applied retroactively to confirm inclusion | Appellees: expanded statutory language cannot be applied retroactively to broaden exemption | Court: HB 1962 clarified existing law; its effect supports treating severed natural gas as goods for Freeport purposes |
| Whether allocated gas that originated outside Oklahoma nevertheless has taxable situs in Oklahoma | MGE: gas that originated outside the state and was in interstate transit should not acquire situs if documentary proof supports in-transit status | Appellees: storage sojourn in Oklahoma creates sufficient nexus for ad valorem situs | Court: Under precedent, stored gas present in Oklahoma for a substantial part of the year acquires taxable situs; affirmed trial court on situs issue |
| Remedy on remand | MGE: trial court should exempt the portion showing out-of-state origin, stored ≤9 months, and shipped/sold out-of-state | Appellees: disputed | Court: Remanded for trial court to determine the quantity of gas qualifying for the Freeport Exemption for tax year 2011 |
Key Cases Cited
- In the Matter of the Assessment of Personal Property Taxes Against Missouri Gas Energy, a Division of Southern Union Co. for Tax Years 1998, 1999, and 2000, 234 P.3d 938 (Okla. 2008) (addressed situs and origination for stored gas; did not decide whether stored gas is "goods, wares and merchandise")
- Golsen v. ONG Western, Inc., 756 P.2d 1209 (Okla. 1988) (contracts for delivery of natural gas recognized as sale of goods under UCC)
- Barker v. State Ins. Fund, 40 P.3d 463 (Okla. 2001) (standard of review for summary judgment is de novo)
- Fanning v. Brown, 85 P.3d 841 (Okla. 2004) (questions of law reviewed de novo)
- Austin, Nichols & Co. v. Oklahoma County Bd. of Tax-Roll Corrections, 578 P.2d 1200 (Okla. 1978) (Freeport Exemption requires ultimate sale/destination outside the state)
- Oklahoma Indus. Auth. v. Barnes, 769 P.2d 115 (Okla. 1988) (agency long-continued construction of statute entitled to great weight)
- Texas County Irr. & Water Resources Ass'n v. Oklahoma Water Resources Bd., 808 P.2d 1119 (Okla. 1990) (legislative amendments construing ambiguous statutes may be regarded as clarifying prior law)