RICHLAND AVIATION, INC., Plaintiff, Appellee and Cross-Appellant,
STATE OF MONTANA, DEPARTMENT OF REVENUE, Defendant, Appellee and Cross-Appellee.
Submitted on Briefs: April 12, 2017
Court of the Seventh Judicial District, In and For the County
of Richland, Cause No. DV 14-40 Honorable Katherine M.
Bidegaray, Presiding Judge
Appellant: David R. Stewart, Courtney Mathieson, Elizabeth M.
Roberts, Special Assistant Attorneys General, Department of
Revenue, Helena, Montana.
Appellee: Jared M. Le Fevre, David C. Clukey, Crowley Fleck
PLLP, Billings, Montana.
The Montana Department of Revenue (DOR) appeals the judgment
of the Seventh Judicial District Court, which granted summary
judgment in favor of Richland Aviation, Inc. (Richland
Aviation), by holding that Richland Aviation is not a
"scheduled airline" subject to central assessment
by DOR. We affirm and state the issue as follows:
the District Court err by concluding Richland Aviation was
not a "scheduled airline" and therefore not subject
to central assessment?
AND PROCEDURAL BACKGROUND
Since 1971, Richland Aviation, a company based in Sidney,
Richland County, Montana, has provided on-demand flight
services, operating from the Sidney-Richland Airport.
Richland Aviation owns six light, twin piston engine
aircraft, the largest of which is a Cessna 404 with a maximum
capacity of 2, 684 pounds. Richland Aviation hires out its
aircraft and related services for the transport of people and
goods on a contract basis. Richland Aviation does not provide
scheduled or pre-set flights beyond the individual
arrangements it enters with those hiring its services. As
Richland Aviation explains, "[o]ne cannot walk up to the
gate, view a list of set and published dates and times for
flight, and purchase a ticket. Rather, use of the airplane is
negotiated on a case-by-case basis and via a negotiated
Richland Aviation has entered an agreement with the United
Parcel Service (UPS) to pick up and deliver freight at
certain locations on a routine basis. Under the negotiated
agreement, the date, time, and pickup locations are
determined exclusively by UPS, and all flights provided by
Richland Aviation pursuant to the agreement are reserved
exclusively for the transport of UPS freight.
Since its inception, Richland Aviation has registered its
aircraft with the Department of Transportation pursuant to
the aeronautical regulation and licensing provisions in
§ 67-3-201, et seq., MCA. As DOR explains, these
provisions impose an aircraft registration fee in lieu of
property taxes which is mutually exclusive to the system of
central assessment of scheduled airlines, and which is a
prerequisite to operation of the aircraft.See
§ 67-3-201(1), MCA ("[A] person may not operate or
cause or authorize to be operated a civil aircraft within
this state unless the aircraft has an appropriate effective
registration, license, certificate, or permit issued or
approved by the United States government that has been
registered with the department and the registration with the
department is in force."). Richland Aviation's
aircraft have never been centrally assessed for taxation by
In 2013, DOR sent a questionnaire to Richland Aviation and
other air carriers to determine if these companies "were
operating in a manner that would subject them to central
assessment." Richland Aviation returned the
questionnaire, indicating that it provided air transport
services under a contract with UPS. DOR ultimately determined
that Richland Aviation "performs regularly scheduled
flights for UPS" and was therefore subject to centrally
assessed taxes. Richland Aviation objected and filed the
instant proceeding to determine whether it was subject to the
aircraft registration statutes, rather than central tax
Because there was no statutory definition for the statutory
term, "regularly scheduled flight, " the District
Court reasoned that the term "scheduled airline"
had been rendered "statutorily undefined and ambiguous,
" and looked to authority from federal and sister
jurisdictions to define these terms. It concluded that
Richland Aviation was not a scheduled airline because it
"does not hold out to the public that it operates
between certain places at certain times, " and granted
summary judgment to Richland Aviation. DOR appeals.