Opinion
No. 2021-C-01559
01-19-2022
REGENCY INTRASTATE GAS, LLC v. LOUISIANA TAX COMMISSION and Scott Meredith, Assessor for Caldwell Parish Regency Intrastate Gas, LLC v. Louisiana Tax Commission and Roy Elrod, Assessor for Franklin Parish Regency Intrastate Gas, LLC v. Louisiana Tax Commission and Glen Kirkland, Assessor for Jackson Parish
Writ application denied.
Weimer, C.J., would grant and docket.
Crichton, J., would grant and docket and assigns reasons.
Crichton, J., would grant and docket and assigns reasons:
I would grant and docket this matter to examine whether the Louisiana Tax Commission (the "LTC") acted arbitrarily and capriciously in rejecting taxpayers’ requested reduction in the fair market value assessment of taxpayers’ pipeline property. D90 Energy, LLC v. Jefferson Davis Par. Bd. of Rev. , 2020-00200 (La. 10/1/20), reh'g denied sub nom. D90 Energy, LLC v. Par., 2020-00200 (La. 12/9/20), ––– So.3d ––––, 2020 WL 7234460 ("A reviewing court should afford considerable weight to an administrative agency's construction and interpretation of its rules and regulations adopted under a statutory scheme the agency is entrusted to administer, and its construction and interpretation should control unless found to be arbitrary, capricious, or manifestly contrary to its rules and regulations."). A determination of whether taxpayers submitted sufficient proof of economic obsolescence remains would require review of the record. See LAC 61:V.1301(A) ("Functional and/or economic obsolescence shall be considered in the analysis of fair market value [of pipeline property] as substantiated by the taxpayer in writing."). The reasoning of the LTC and court of appeal, however, calls for this examination.
Specifically, the LTC and court of appeal both found that the sale of interests in a partnership that owned the pipeline system was not a valid arms’ length transaction supporting the valuation proposed by taxpayer. Beyond the implication that a partner-to-partner sale of partnership interests is not "arms’ length," the court of appeal appears to have reasoned that because the sale was of the entity that owned the pipeline and not a sale of the pipeline itself that the sale could not be considered. Regency Intrastate Gas, LLC v. Louisiana Tax Commission , 2021-CA-0271 c/w 2021-CA-0272 and 0273 (La. App. 1 Cir. 9/27/21), 329 So.3d 838. I would grant and docket this matter to examine the correctness of this legal analysis particular where, as here, the partnership was ostensibly a single-asset business. In such situations, as persuasively argued by amicus Louisiana Association of Business and Industry, the value of the business may be compelling evidence of the value of the asset.
In my view, this matter presents an opportunity for this Court not only to review the correctness of the LTC's implementation of its own guidelines but, more importantly, to clarify the law of this state with respect to the validity and legal implications of a sale of partnership interests. The authority of this Court on the nature of business entities is wanting, and more guidance is needed in this area of the law. St. Romain v. Cherokee Ins. Co. , 2021-01412 (La. 11/23/21), 328 So. 3d 72, 73 (Crichton, J., would grant and docket).