DO NOT REMOVE FROM F!LE filE COpy

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

No. 18-0018 Marshall County Case No. 16-P-16

MURRAY ENERGY CORPORATION and CONSOLIDATION COAL COMPANY,

Petitioners below, Petitioners,

v.

Ire 0 f1 ~ J/ll lUI JUL I 201~ l~ Ii &YT ___ t f: '_ ED HE NASH GAISER, CCER~ ~ SUPREr~E COURT OF APPEALS . OFWFSTVIRG!NIA

DALE \V. STEAGER, WEST VIRGINIA STATE TAX COMMISSIONER; THE COUNTY COMMISSION OF MARSHALL COUNTY, and

CHRISTOPHER J. KESSLER, ASSESSOR OF MARSHALL COUNTY,

Respondents below, Respondents.

APPEAL FROM THE FINAL ORDER OF THE CIRCUIT COURT OF MARSHALL COUNTY

PETITIONERS' REPLY BRIEF

Mark Gaydos, Esq. W. Va. State Bar # 4252 Buddy Turner, Esq. (Coullsel of Record) W. Va. State Bar No. 9725 McNeer, Highland, McMunn, and Varner, L.c. 107 W. Court Street P.O. Box 585 Kingwood, WV 26537 Phone: (304) 329-0773 Fax: (304) 329-0595

TABLE OF CONTENTS

ARGUMENT .................................................................................................................................. 1

A. Compliance with a Legislative Rule does not guarantee government action is constitutional. ....................................................................................................... 1

B. The values placed on Petitioner's coal properties are clearly \\;rong ....................... 5

C. The Assessments do not comply with the Equal and Uniform Clause contained in Article X, Section 1 of the West Virginia Constitution by the WVSTD's o\vn admission ..................................................................................... 10

D. The Assessments violate the Equal Protection clauses of both the Federal Constitution and the West Virginia Constitution ................................................... 11

CONCLUSION .............................................................................................................................. 14

11

TABLE OF AUTHORITIES

CASES

Appalachian Electric Power Company v. Koontz, 138 W.Va. 84, 76 S.E.2d 863 (1953) ........................................................................... 10-11

Arslain v. Alderson, 126 W.Va. 880,30 S.E.2d 533 (1944) ......................................................................... 10, 12

Atchinson v. Envin, [172] W. Va. [8], 302 S.E.2d 78 (1983) ............................................................................ 12

Cumberland Coal Co. v. Board of Revision of Tax Assessments in Greene County, Pa., 284 U.S. 23 (1931) ..................................................................................................... 4-5,13

Harbert v. Harrison Cty. Court 129 W. Va. 54, 39 S.E.2d 177 (1946) ............................................................................. 1-2

Hartsock-Flesher Candy Co. v. VVheeling Wholesale Grocery Co., 174 W. Va. 538,328 S.E.2d 144 (1984) ............................................................................ 12

In re 1975 Tax Assessments Against Oneida Coal Co., 178 W. Va. 485, 360 S.E.2d 560 (1987), rev'd sub nom. Allegheny Pittsburgh Coal Co. v. Cty. Comm'n of Webster Cty., W Va., 488 U.S. 336, 109 S. Ct. 633, 102 L. Ed. 2d 688 (1989) ................................................... 1 0

In re Assessment of KanQ1vha Valley Bank, 144 W. Va. 346,109 S.E.2d 649 (1959) .................................................................. 2,10-11

In re Tax Assessments Against Pocahontas Land Co., 172 W. Va. 53,303 S.E.2d 691 (1983) ................................................................................ 7

In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, 223 W.Va. 14,672 S.E.2d 150 (2008) ........................................................................... .4, 7

Israel v. West Virginia Secondary Schools Activities Committee, 182 W. Va. 454, 388 S.E.2d 480 (1989) ...................................................................... 12-13

Killen v. Logan Cty. Comm '11., 170 W. Va. 602, 295 S.E.2d 689 (1982), overruled on other grounds by In re Tax Assessment of Foster Found. 's Woodlands Ret. Only., 223 W. Va. 14, 672 S.E.2d 150 (2008) ................................................................... 2, 10-11

Mountain Am., LLC v. Hujfinan, 224 W. Va. 669, 687 S.E.2d 785 (2009) .......................................................................... 7-8

III

Robertson v. Goldman, 179 W. Va. 453, 369 S.E.2d 888 (1988) ...................................................................... 12-13

Sierra Club v. California Coastal Comm'n, 12 Cal.AppAth 602 (1993) ................................................................................................. 9

State v. Haskins, 92 W. Va. 632, 115 S.E. 720 (1923) .................................................................................... 2

Sunday Lake Iron Co. v. Wakefield Twp., 247 U.S. 350 (1918) ........................................................................................................... 12

STATUTES

W. Va. Code § 11-lC-1 ................................................................................................................... 3

W. Va. Code § 11-3-1 ................................................................................................................ 3, 13

W. Va. Code § 11-3-1(a) .................................................................................................................. 3

W. Va. Code § 11-3-1(£)(1) ............................................................................................................. 3

w. Va. Const., art. III, § 10 ...................................................................................................... 12-13

W. Va. Const., art. X, § 1 ....................................................................................................... passim

W. Va. Const., art. X, § lb ............................................................................................................. 13

OTHER AUTHORITIES

BLACK'S LAW DICTIONARY 10 (6th ed. 1990) ............................................................................. 8

IV

ARGUMENT

A. Compliance with a Legislative Rule does not guarantee government action is constitutional.

The central premise of Respondent's argument, and in fact their sole argument, is that

because the valuation of Petitioner's property is prescribed by law and the Imv was follow·ed, it is

constitutional. Despite the Legislative Rule prescribing the valuation methodology for taxing coal

interests, despite the Tax Commissioner's authority to appraise certain classes of property, and

despite the Legislature's po\ver to prescribe the Rules on taxation, all taxation must comply with

the West Virginia Constitution and United States Constitution. In fact, all legislative action must

comply with the Constitution. Actions of the Legislature are not per se constitutional as the

jurisprudence of both the West Virginia and United States Supreme Courts is replete \vith

examples of legislative action that was found to exceed the authority of the state or federal

constitutions. If every law passed by the legislature was per se constitutional, the necessity of

superior courts would be greatly diminished.

In analyzing the tension between these two concepts, the West Virginia Supreme Court of

Appeals wrote,

when in conflict with a restriction of the State Constitution, legislative authority reaches an impasse-a wall of adamant. When thus confronted, legislative action is fruitless. The representatives of the people may not do through legislation that which the people themselves have said in their Constitution may not be done. If there be conflict between constitutional inhibition and legislature enactment, the courts must adhere to the former and disregard the latter. Both cmIDot be law. The Constitution must stand; such enactment cannot.

Harbert v. Harrison Cty. Court, 129 W. Va. 54, 67, 39 S.E.2d 177, 187 (1946). The "Court must

preserve unimpaired the organic law in all its parts and it can not [ sic] disregard a plain mandate

of the Constitution directed against that type of legislation. Its solemn duty is to support the

Constitution." Harbert, 129 W. Va. at 68,39 S.E.2d at 187; State v. Haskins, 92 W. Va. 632, 115

S.E. 720, 723 (1923).

As such, this Court is at an impasse, whether to uphold valuation methodology which

results in the appraisal of Petitioner's coal property grossly over its' true and actual value simply

because the Legislature and Tax Commissioner have the authority to prescribe a methodology

which alloV>ls such a result, or, alternatively, find the legislation unconstitutional because it is not

equal, not uniform, and shifts a disproportionate percentage of the tax burden to the Petitioner.

Respondent relies upon a small phrase \vithin Article X, Section 1, that states " ... shall be

taxed in proportion to its value to be ascertained as directed by law," and seems to imply that the

valuation method is constitutional because it was set forth by the Legislature. W. Va. Const.

Art. X, S. 1. However, as stated supra, a grant of legislative authority must still comply with the

mandates of the Constitution and in this case, establish equal and uniform taxation. Id. This

requirement of equal and uniform taxation applies to both the method and the result of taxation;

both are essential to compliance with the constitution. Killen v. Logan Cty. C017lm'n, 170 W. Va.

602,619,295 S.E.2d 689,707 (1982), overruled on other grounds by In re Tax Assessment of

Foster Found.'s Woodlands Ret. Onty., 223 W. Va. 14,672 S.E.2d 150 (2008) (emphasis added).

Furthern10re,

this rule of uniformity requires that one person shall not be compelled to pay a greater proportion of the taxes, according to the value of his property, than another. Uniformity in taxing implies equality in the burden of taxation; and this equality cannot exist without uniformity in the basis of assessment, as \vell as in the rate of taxation.

In re Kanmvha Val. Bank, 144 W. Va. 346, 361, 109 S.E.2d 649,658 (1959) (internal citations

omitted).

2

Respondent further contends that Petitioner ignores the mandate contained in Article X,

Section I of the West Virginia Constitution that property be taxed in proportion to their value "to

be ascertained as directed by 1m!!." Resp. Br. at 11. Petitioner does not request this Court ignore

the law, rather Petitioner asks this Court to value property under West Virginia law that is

constitutional and a law that does not prescribe an unconstitutionally high "value" that results in

intentional and systematic over taxation.

West Virginia Code sets forth that property is to be valued at "sixty percent of its true and

actual value; that is to say, at the price for which the property \vould sell if voluntarily offered for

sale by the owner thereof' and not the discretionary contrived SCPPT imposed by the WVSTD.

W. Va. Code 11-3-1(a). Petitioner's proposed methodology requests application of this statute,

with a valuation date as set forth in West Virginia Code section 11-3-1 (f)(1) \vhich sets the

assessment date of July 1 of the year preceding the tax year. W. Va. Code § 11-3-1 (f)(1). This

proposed methodology can hardly be said to have no basis in law as argued by Respondents.

Furthermore, Petitioner requests that the Court apply the general Legislative finding that

all property in this state "should be fairly and equitably valued wherever it is situated so that all

citizens will be treated fairly and no individual species or class of property will be overvalued or

undervalued .... " W. Va. Code §11-IC-l (2018). As admitted by the Respondent, the valuation

methodology adopted and applied by the WVSTD grossly overvalues the actual \vorth of

Petitioner's coal. AR 5021 lines 1-21. By adopting this methodology, the WVSTD had

inappropriately overvalued one species of property in West Virginia - coal. Moreover, the

WVSTD had done this intentionally to "level" out the peaks and valleys. AR 5001 lines 17-24.

The undeniable truth in this case is that the Petitioner's coal is being grossly overvalued

and is being assessed at a greater percent of its' true and actual value in contravention of the West

3

Virginia Constitution, United States Constitution, and West Virginia statutory law. Consequently,

while a disproportionate share of the tax burden is being shifted to them, others are not charged

with their fair share of the tax burden. Respondent's Response in the proceedings belO\-\'

acknowledged that "all coal properties in West Virginia are being assessed using the identical

Legislative Rule and variables," AR 714, regardless of the true and actual value of the coal.! Quite

frankly, this is the point of Petitioner's appeal. All coal properties are not the same and the true

and actual value of the coal varies depending on a number of factors including but not limited to

location, quality of the coal, contract price, sales price, and market value. The methodology

utilized by the WVSTD assigns one value per ton of coal and treats and taxes all coal properties

as the same using an outdated non-responsive three-year average of coal prices despite great

variation in the price of coal and coal quality throughout the state? Consequently, some coal is

taxed at a higher rate than the true and actual value, and other coal is taxed at a lovver rate than its

true and actual value. See Cumberland Coal Co. v. Board o/Revision o/Tax Assessments in Greene

County, Pa., 284 U.S. 23, 29-30 (1931).3 This result is not equal and uniform taxation as required

Assessments of property for taxation purposes are based on the property's "true and actual value," which has been defined as its market value. In re TeLl Assessment of Foster Foundation's Woodlands Retirement Community, 672 S.E.2d 150,223 W. Va. 14 (2008).

The \VVSTD acknowledges the disparity between coal sales and prices. See AR 708 (stating "[ c ]oal prices vary significantly from day to day and from location to location based upon coal quality, market competition, and other factors.".

In this case, the United States Supreme COUli wrote,

[T]he fact that a unifonn percentage of assigned values is used, cannot be regarded as important, if, in assigning the values to which the percentage is applied, a system is deliberately adopted which ignores differences in actual values so that property in the same class as that of the complaining taxpayer is valued at the same figure (according to the unit of valuation, as, for example, an acre) as the property of other owners which has an actual value admittedly higher. Applying the same ratio to the same assigned values, when the actual values differ, creates the same disparity in effect as applying a different ratio to actual values when the latter are the same ... in such case, if the petitioners' property had been valued at 100 per

4

by the West Virginia Constitution despite being authorized by the Legislature. In adopting our

Constitution, our founders could not have meant to give such pow'er to the Legislature so as to

allow them to assess such unreasonable and disproportionate tax burdens on a few' without the

oversight of our judicial system. Such unchecked power under the guise of as directed by law as

Respondents suggest seems to run counter to an additional mandate of the West Virginia

Constitution: "No one species of property from which a tax may be collected shall be taxed higher

than any other species of property of equal value .... " W. Va. Const. Art. X, S. 1. This is precisely

what the Tax Commissioner has done and is not disputed. As stated by the Respondents' expert

Jeffrey Kern, "We're doing a mass appraisal system. Some places are getting less tax than they

could, and some places are getting a little more tax than they could." AR 470/ 4-6. Such a system

cannot be upheld as constitutional.

B. The values placed on Petitioner's coal properties are clearly wrong.

In this case, the Petitioner met its burden of show'ing that the coal assessments \vere clearly

wrong. One need look no further than the testimony of the WVSTD's only \vitness, Jeffrey Kern,

to show that the $60.35 price per ton utilized by the WVSTD is clearly wrong.

The Mass Appraisal System utilized by the WVSTD is designed to take out peaks and valleys. AR 500/ lines 22-24

cent. of its actual value, the like property of the other owners, having a higher actual value, would in effect have been valued at less than 100 per cent. The discrimination is essentially the same, and is equally repugnant to constitutional right, when both assessments are made on the basis of 50 per cent. of assigned values and differences in actual values are deliberately and systematically disregarded. The undervalued property is in effect valued at less than 50 per cent. of its actual value,., ,

Cumberland Coal Co. v. Board of Revision of Tax Assessments in Greene COUlltY, Pa., 284 U.S. 23, 29-30

(1931).

5

Coal industry is in huge depression right now. See id. at 501 llines 1-4;

The price of coal is in a valley right now. See id. at 50l/lines 5-6;

The system Mr. Kern helped design is trying to average out the valley we are in right now. See id. at 5011lines 19-21;

When you average out valley the price of coal utilized by the WVSTD is higher than what it actually is. See id. at p. 5011 lines 22-24;

That data used to calculate the SCPPT of $60.35 is artificially higher than what the market was in 2015 by design. See id. at p. 502/lines 11-15;

The SCPPT of$60.35 is artificially higher than what the actual value of the coal was for 2015 by design. See id. at p. 5021 lines 18-21.

As a result of this testimony, it is undisputed that the State of West Virginia is intentionally

overvaluing the value of the coal owned by the Petitioner.4

Moreover, the Petitioner presented evidence in the forn1 of expert testimony that the

WVSTD arbitrarily and capriciously assigns a clearly wrong dollar per ton of coal value for West

Virginia coal properties for tax year 2016. Mr. Weiss opined, relying upon publicly available data

and publications, that the average value per ton of coal for Petitioner's West Virginia coal

properties as of July 1,2015 was $41.08 per ton. AR 121/lines 5-8.5 Respondents' expert also

confirmed the price of coal in 2015 to be below $60.35. AR 506, lines 15-17. As a result of the

The Annual Appraisal Reports for Production of Coal provided by the Petitioner to the WVSTD disclosed that the price per ton of coal received for tax year 2015 was $53.01 for the Shoemaker mine and $5l.35 for the McElroy mine. See AR 201,280. The data contained in the Anllual Appraisal Reports for Production of Coal is utilized for other portions of the calculation utilized to determine the Petitioner's tax burden. That the price received is ignored for purposes of the calculation is yet another indication that the methodology adopted by the WVSTD is an intentional effort to artificially control the price of coal and thus the tax coffers of the State and counties.

Mr. Weiss also opined that utilizing the publicly available data for Pittsburgh Seam Coal and the State Tax Department's three-year average methodology, the Petitioner's West Virginia Coal properties have an average value of$5l.50 per ton utilizing data from 2012,2013, and 2014. AR 116/1ines 6-10.

6

testimony of these two gentlemen, the only evidence presented indicates that the $60.35 per ton

figure is "clearly wrong." In addition, despite Respondents' claim that Petitioner's data is

unverifiable, Mr. Kerns indicated that the WVSTD review's the same information published in the

journals relied upon by Mr. Weiss (Platts, Coal Week, S&L). AR 503/lines 11-166. The WVSTD

uses the PSC and FERC data rather because it is the source of the data provided to the journals.

AR 506/lines 20-23. Therefore, the same date is relied upon in deriving the value of Petitioner's

coal properties but Petitioner's method more accurately reflect the actual value of the coal

properties in accordance with the West Virginia Constitution.

As stated in Petitioner's initial brief, the taxpayer's burden before the Board of Review is

to present "clear and convincing evidence" that the Tax Department's valuation was wrong. Syl.

Pt. 5, in part, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community,

223 W. Va. 14,672 S.E.2d 150 (2008). Once a taxpayer has shown this, it becomes "incumbent

upon the [Tax Department] to place some evidence in the record to show vvhy its assessment is

correct." In re Tax Assessments Against Pocahontas Land Co., 172 W. Va. 53, 61, 303 S.E.2d

691, 699 (1983) (emphasis added); j\10untain Am., LLC v. Huffman, 224 W. Va. 669, 786 n. 23,

6 Q. But, now, Platts. Coal Week taken into account?

A. We look at them.

S&L.

Q. Okay. All of those are - for the year 2015, are below 60.35?

A. Yes. So is PSC. So is FERC.

Q. Okay. Substantially lower.

A. Yeah.

Q. All right. You look at those, but they are not specifically taken into -

A. I don't need to. PSC and FERC are the same sources that they use.

7

687 S.E.2d 785 n. 23 (2009) ("Once a taxpayer makes a show-ing that tax appraisals are erroneous,

the Assessor is then bound by law to rebut the taxpayer's evidence.").

The WVSTD did not present any data or evidence that the $60.35 per ton market value

assigned by the Tax Commissioner was the true and accurate value of coal. This lack of data or

evidence is in juxtaposition to the evidence presented by the Petitioner through direct testimony

and cross examination. Instead, the WVSTD argues the Tax Commissioner used his discretion

and confidential data, Response Brief at p. 24, and conducted "detailed surveys and analysis", id.

at p. 23, to arrive at the price per ton of $60.35. Under West Virginia law, once the Petitioner

presented clear and convincing evidence that the State-Wide Steam Coal Price of $60.35 per ton

\vas erroneous, it became the V,TVSTD's burden to rebut the taxpayer's evidence. 1\1ountain Am.,

LLC, 224 W. Va. at 786, n. 23, 687 S.E.2d at 785 n. 23 ("Once a taxpayer makes a showing that

tax appraisals are erroneous, the Assessor is then bound by lmv to rebut the taxpayer's evidence.").

Instead of submitting data and evidence that $60.35 is the true and accurate value of coal, the

WVSTD alternatively argues that Petitioner failed to comment on the factors, Response Brief at

p. 20, that Petitioner's predecessor took an active role in drafting the legislative rule, id. at p. 20,

and various information was not provided by Petitioner's predecessors. !d. at p. 23. Finally, the

Respondent glosses over the incredible discretion the Tax Commissioner has in selecting which

confidential data is utilized and in setting the dollar per ton rate by stating the Commissioner can

"select specific selling price rates best typifying activity in each appraisal year." Response Brief

at p. 22. The rate per ton of $60.35 is an abuse of discretion and plainly wrong given the evidence

presented and as testified to by Mr. Kerns. See BLACK'S LAW DICTIONARY 10 (6th ed. 1990)

(defining abuse of discretion as the failure to exercise a sound, reasonable, and legal discretion and

indicates that the appellate comi's opinion that the lower court, without intentional wrong or bad

8

faith, committed an error of law),' Sierra Club v. California Coastal Comm'n, 12 Cal. App. 4th

602, 609-10 (1993 ) (applying the definition of abuse of discretion as being when an agency's

decision is unsupported by its findings or if the findings are unsupported by the evidence).

Of important note is Respondent's reference to the value of steam coal for the 2017 tax

year. Response Briefat 25. The SCPPT utilized by the WVSTD for 2016 was $60.35 per ton. AR

574. The SCPPT utilized by the WVSTD for 2017 was $58.15. AR 574. Despite the coal industry

being in a "huge depression" the SCPPT price utilized to determine the tax on coal is relatively

unchanged and much higher than the market price of coal, AR 501 Ilines 1-4, and runs counter to

Mr. Kerns' prediction the price would plummet. AR 504/lines 6-14. This clearly does not promote

equity as proffered by Respondents and only serves to benefit those who are not paying their share

of the tax burden and the State and County tax coffers. Response Brief at 21. What the Tax

Commissioner's discretion and the contrived SCPPT price does do is to perpetuate over taxation

purportedly necessary for state coffers. See generally Amicus Curiae Brief of Steven L. Paine,

West Virginia Superintendent of Schools.

Taken together, the "discretion" utilized by the Tax Commissioner after his review of

confidential data is unsupported by the evidence and led to the establishment of a State-Wide

SCPPT of$60.35 per ton that is clearly wrong. Use of this clearly wrong SCPPT in the calculations

performed by the Tax Department results in over assessment and over taxation of the Petitioner's

coal properties in Marshall County. Accordingly, the Court should find that the methodology

employed and value assigned per ton of coal by the West Virginia State Tax Department was

clearly wrong and direct that the West Virginia State Tax Department and Marshall County

Commission, sitting as the Board of Equalization and Review, reassess Petitioner's coal properties

in Marshall County based upon the true and actual value of Petitioner's property.

9

C. The Assessments do not comply with the Equal and Uniform Clause contained in Article X, Section 1 of the West Virginia Constitution by the WVSTD's own admission.

The Equal and Uniform Clause from Section 1 of Article X of the West Virginia

Constitution provides that "taxation shall be equal and unifOllli throughout the State, and all

property both real and personal, shall be taxed in proportion to its value to be ascertained as

directed by la\\!. No one species of property from which a tax may be collected shall be taxed

higher than any other species of property of equal value .... " W. Va. Const. art. X, § 1. This article

therefore requires that taxes not discriminate along geographical lines, that taxes be equal within

each class of person or businesses taxed, and that there be some reasonable basis for the

Legislature'S classification scheme. See In re Assessment of Kanmvha Valley Bank, 144 W.Va.

346,109 S.E.2d 649 (1959); Appalachian Electric Power Company v. Koontz, 138 W.Va. 84, 76

S.E.2d 863 (1953); Arslain v. Alderson, 126 W.Va. 880,30 S.E.2d 533 (1944). Importantly, "[t]he

term 'value,' as used in article 10, section 1 of the West Virginia Constitution, means the 'worth

of money' of a piece of property - its market value." In re 1975 Tax Assessments Against Oneida

Coal Co., 178 W. Va. 485, 487-88, 360 S.E.2d 560, 562-63 (1987), rev'd sub n0171. Allegheny

Pittsburgh Coal Co. v. Cty. Comm'n of Webster Cty., W. Va., 488 U.S. 336,109 S. Ct. 633,102

L. Ed. 2d 688 (1989); see also Syl. pt. 3, in part, Killen v. Logan County Comm'l1, 170 W. Va.

602,295 S.E.2d 689 (1982), overruled on other grounds by In re Tax Assessment of Foster Found's

Woodlands Ret. Onty., 223 W. Va. 14, 672 S.E.2d 150 (2008). The Respondents have failed to

adhere to the guidelines of this constitutional provision and instead claim hide behind the authority

they claim is superior because it was provided by the Legislature.

Furthermore, the prohibition of one species of property being taxed higher than another

other species of property of equal value has been violated in this case. As stated by Mr. Kern,

10

"[w]e're doillg a mass appraisal system. Some places are gettillg less tax thall they could, alld

some places are gettillg a little more tax thall they could." ARilines 4-6. Despite being as directed

by law, this does not comply with the Article X, Section 1 of the West Virginia Constitution and

clearly indicates that this system of taxation is not equal and treats coal properties differently by

the WVSTD's O\vn admission. See id. Moreover, the end result is that one species of property

(coal) is bearing an increased tax burden as compared to other species of property such as personal

property or homes. Both the method and the result of taxation are essential to comply with the

constitution and the WVSTD's own expert admitted that result is not equal and uniform. See Killen

v Logan Cty. Comm'n, 170 W. Va. 602, 619, 295 S.E.2d 689,707 (1982) ("Since article 10,

section 1 of the West Virginia Constitution requires equal and uniform taxation in all areas of the

state, both the method and the result of taxation are essential to compliance w·ith the constitution.").

Consequently, this Court should find the State has violated the Uniform and Equal Clause and

order the Petitioner's coal properties be reassessed.

D. The Assessments violate the Equal Protection clauses of both the Federal Constitution and the West Virginia Constitution.

As stated supra, the Equal and Unifom1 Clause from Section 1 of Article X of the West

Virginia Constitution provides that "taxation shall be equal and unifom1 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. No one species of property from which a tax may be collected shall be taxed

higher than any other species of property of equal value .... " W. Va. Const. art. X, § l. This article

therefore requires that taxes not discriminate along geographical lines, that taxes be equal within

each class of person or businesses taxed, and that there be some reasonable basis for the

Legislature's classification scheme. See In re Assessment of KanGlvha Valley Bank, 144 W.Va.

346,109 S.E.2d 649 (1959); Appalachian Electric Power Company v. Koontz, 138 W.Va. 84, 76

11

S.E.2d 863 (1953); Arslain v. Alderson, 126 W.Va. 880, 30 S.E.2d 533 (1944). As previously set

forth by this Court,

Where economic rights are concerned, we look to see whether the classification is a rational one based on social, economic, historic or geographic factors, whether it bears a reasonable relationship to a proper governmental purpose, and whether all persons within the class are treated equally. Where such classification is rational and bears the requisite reasonable relationship, the statute does not violate Section 10 of Article III of the West Virginia Constitution, which is our equal protection clause.

Syl. pt. 7, [as modified,] Atchinson v. Envin, [172] W. Va. [8],302 S.E.2d 78 (1983)7; syl. pt. 4,

as modified, Hartsock-Flesher Candy Co. v. FVheeling Wholesale Grocery Co., 174 W. Va. 538,

328 S.E.2d 144 (1984). "Equal protection of the law is implicated \V"hen a classification treats

similarly situated persons in a disadvantageous manner." Syl. pt. 2, in pati, Israel by Israel v. West

Virginia Secondary Schools Activities Comm 'n, 182 W. Va. 454, 288 S.E.2d 480 (1989).

Furthermore, "it must be regarded as settled that the intentional systematic undervaluation by state

officials of other taxable property in the same class contravenes the constitutional right of one

taxed upon the full value of his property." SUllday Lake Irol1 Co. v. Wakefield Twp., 247 U.S. 350,

352-353 (1918). Taxing some less than they should be and some more than they should is not equal

treatment and not constitutional. See AR 470/lines 4-6. The WVSTD cannot refute nor deny this

is the result here as their own expeli admitted to the inequity of the taxing system. AR 4701 lines

4-6 ("We're doing a mass appraisal system. Some places are getting less tax than they could, and

some places are getting a little more tax than they could."). Consequently, both equal protection

clauses of the West Virginia and United States constitutions have been violated. See Robertson v.

Goldman, 179 W. Va. 453, 369 S.E.2d 888 (1988) (stating West Virginia's Constitution's equal

protection clause is coextensive or broader than its federal counterpart).

West Virginia Constitution article III, § 10 provides: "No person shall be deprived of life, liberty, or property, without due process of law, and the judgment of his peers."

12

In addition, the erroneous assessments in this case resulted from the insertion ofkno\vingly

erroneous values into the mass appraisal system by the West Virginia State Tax Department. As

stated by Jeffrey Kern, testifying on behalf of the West Virginia State Tax Department, the present

West Virginia tax system was not designed to tax the "true and actual value" of property. See AR

5111 lines 17-20; W. Va. Const. art. X, § 1 b, W. Va. Code § 11-3-l. Instead, it was the intent to

devise and create a mass appraisal system to take out peaks and valleys. See id. at SOO/lines 22-24.

As a result, the methodology and resulting assessments violate the Equal Protection Clauses of the

United States and West Virginia Constitutions. By creating a mass appraisal system to level out

the peaks and valleys, see id. at SOO/lines 22-24, the West Virginia State Tax Department, by

design, uses a price per ton for coal that is artificially higher than what the actual value ofthe steam

coal per ton was for 2015. See id. at p. S02/lines 18-2l. The application of uniform rates across

property ofthe same class of differing values violates the equal protection provisions of the United

States Constitution and West Virginia Constitution. See Cumberland Coal Co. v. Board of

Revision, 284 U.S. 23, 25 (1931).8

Accordingly, the Court should find that the methodology employed and value assigned per

ton of coal by the West Virginia State Tax Department violates the Equal Protection Clause of the

Fourteenth Amendment to the United States Constitution and Aliicle III, Section 10 of the West

Virginia Constitution and direct that the West Virginia State Tax Depmiment and Marshall County

Commission, sitting as the Board of Equalization and Review, reassess Petitioner's coal properties

in Marshall County based upon the true and actual value of Petitioner's property.

8 West Virginia's equal protection clause is found in Article Ill, Section 10 of the West Virginia Constitution. See Israel v. West Virginia Secondary Schools Activities Committee, 182 \\T. Va. 454, 388 S.E.2d 480 (1989). Moreover, the West Virginia Constitution's equal protection clause "is coextensive or broader" than its federal counterpart. See Robertson v. Goldman, 179 W. Va. 453, 369 S.E.2d 888(1988).

13

CONCLUSION

WHEREFORE, Petitioners, Consolidation Coal Company and Murray Energy

Corporation, respectfully request that this Court find that the SCPPT value proscribed by the West

Virginia State Tax Department is enoneous, overvalues the coal owned by Petitioners and violates

the West Virginia and United States Constitutions. Petitioner further asks that this Court reverse

the Circuit Court of Marshall County's December 7, 2017 "Final Order Dismissing Petition/or

Appeal and Affzrming the Board 0/ Equalization and Review," find that the methodology utilized

by the West Virginia State Tax Department is unconstitutional and remand this case to the Circuit

Court of Marshall County for further proceedings directing the Marshall County Board of

Equalization and Review' and the Assessor to compute Petitioner's taxes based upon the true and

accurate value of coal as of July 1,2015.

. 11 Respectfully submitted this ~ day of July, 2018.

CONSOLIDATION COAL COMPANY and MURRAY ENERGY CORPORATION,

Mark Qay os, Esq. W. Va. St e Bar No. 4252 Buddy Turner, Esq. W. Va. State Bar No. 9725 McNeer, Highland, McMunn and Varner, L.c. 107 W. Court Street P. O. Box 585 Kingwood, WV 26537 Phone: (304) 329-0773 Fax: (304) 329-0595

14

CERTIFICATE OF SERVICE

I hereby certify that I, Woodrow E. "Buddy" Turner, caused to be served a true and correct

copy of the foregoing "Reply Brief via United States Mail on the follow'ing counsel of record:

Via United States Mail Cassandra L. Means Katherine A. Shulz

State Capitol, Building 1, Room W-435 1900 Kanm:vha Boulevard East

Charleston, WV 25305 Counsel for Respondent

Joseph R. Canestraro Rhonda L. Wade

Office of the Marshall County Prosecuting Attorney 600 Seventh Street

Moundsville, WV 26041 Counsel for Respondent

Kelli D. Talbott Senior Deputy Attorney General

812 Quarrier Street, Second Floor Charleston, WV 25301

Counsel for Amicus Curiae

t '11 on thi~, the ~ day of July, 2018.

Mark E. G dos, Esq. W. Va. State Bar # 4252 Woodrow Turner, Esq. W. Va. State Bar # 9725 McNeer, Highland, McMunn and Varner, L.C. 107 West Court Street P.O. Box 585 Kingwood, WV 26537 Phone: (304) 329-0773 Fax: (304) 329-0595