Solvay Chemicals, Inc. v. Wyoming Dep't of Revenue

From 2012 to 2015, Solvay Chemicals, Inc. (Solvay) fueled its soda ash processing plant in part with waste mine gas (WMG) released from its trona mining operations. The Wyoming Department of Revenue (DOR) and the Wyoming Department of Audit (DOA) audited Solvay’s WMG production. They found the fair market value of the WMG used by Solvay during this time was $4,780,375. The DOR then imposed severance taxes amounting to $286,822.50 in addition to ad valorem (property) taxes on the WMG.

Solvay contested the taxation, asserting that the WMG was not taxable under the severance or ad valorem tax statutes. Alternatively, Solvay claimed that even if the WMG was taxable, the DOR and DOA improperly valued it. The Wyoming State Board of Equalization (Board) affirmed the tax assessment, and the district court affirmed the Board’s decision upon Solvay’s petition for review. Upon appeal, the Wyoming Supreme Court affirmed the district court’s decision.

In analyzing Wyoming’s tax statutes, the court determined the legislature intended to tax natural gas “produced from an oil or gas well.” Despite Solvay’s claim that the WMG was merely an unintended biproduct of the trona mining operations, the court found that the WMG was “produced” by Solvays’ capture and use process. Furthermore, the court found the boreholes designed to extract WMG from the mine fell within the statutory definition of a “well.” The Court also found the DOR’s application of the “comparable value” method in valuing the WMG to be proper. Because the Court found no error in the tax assessment, Solvay was required to pay the applicable severance and ad valorem taxes on the WMG.