APPEAL FROM: District Court of the First Judicial District, In and For the County of Lewis and Clark, Cause No. BDV-2010-836 Honorable Jeffrey M. Sherlock, Presiding Judge
The opinion of the court was delivered by: Chief Justice Mike McGrath
Submitted on Briefs: November 14, 2012
Decided: December 18, 2012
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Musselshell County appeals from the District Court's order entered February 3, 2012, affirming the Montana Department of Revenue's apportionment of the coal gross proceeds tax from the Bull Mountains Mine. We affirm.
¶2 Musselshell County presents the following issues for review:
¶3 Issue One: Whether the District Court erred in affirming the Montana Department of Revenue's apportionment of the coal gross proceeds tax from the Bull Mountains Mine between Musselshell County and Yellowstone County.
¶4 Issue Two: Whether the District Court erred in determining that the Montana Department of Revenue was not required to adopt rules under the Administrative Procedure Act prior to apportioning the coal gross proceeds tax from the Bull Mountains Mine between Musselshell County and Yellowstone County.
PROCEDURAL AND FACTUAL BACKGROUND
¶5 The Bull Mountains Mine is an underground coal mine operated by Signal Peak Energy, with its surface facilities located in Musselshell County. It is the only underground coal mine in Montana. At the Bull Mountains Mine, the coal is severed from the underground coal vein, crushed and then brought to the surface. There it is crushed again, stockpiled, and ultimately loaded onto rail cars for transportation to market. In 2009 the mine extended underground into Yellowstone County, and produced coal mined from both Musselshell County and Yellowstone County. As required by law (§ 15-23-701, MCA) the mine operator reported to the Department of Revenue the number of tons and the value of coal mined in each county for the 2009 tax year.
¶6 The coal gross proceeds tax is one of several Montana taxes associated with coal mining, and the revenues benefit counties. It is administered by the Department of Revenue and is levied pursuant to §§ 15-23-701, -702, and -703, MCA, at a rate of five percent of the contract sales price of the coal.*fn1 "Contract sales price" is the "price of coal extracted and prepared for shipment f.o.b. mine. . . ." Section 15-35-102(5), MCA. "Prepared for shipment" includes "in-mine movement, crushing, sizing, screening, storing, mixing, loading, treatment with substances including chemicals or oils, and other preparation of the coal for disposition." Section 15-35-102(7), MCA. The acronym "f.o.b." is not defined in the statute but is understood in the industry to mean "freight on board" a coal train at the mine.
¶7 Based upon quarterly reports of mine operators, the Department notifies the appropriate county or counties of the value of the coal gross proceeds and the amount of the tax that may be collected by each county. The county then collects the gross proceeds tax from the mine operator. For the 2009 tax year, the Bull Mountains Mine taxable coal gross proceeds were $9,110,535. Based upon the operator's report of the counties from which the coal was mined, the Department allocated ...