Blue Cube Operations LLC v. Assumption Parish Board of Review; Wayne P. Blanchard, in his capacity as Assessor for Assumption Parish; and the Louisiana Tax Commission

STATE OF LOUISIANA

COURT OF APPEAL

b FIRST CIRCUIT

NO. 2020 CA 0157

BLUEBLUE CUBECUBE OPERATIONS,OPERATIONS, LLCLLC

VERSUSVERSUS

ASSUMPTIONASSUMPTION PARISHPARISH BOARDBOARD OFOF REVIEW;REVIEW;
WAYNEWAYNE P.P. BLANCHARD,BLANCHARD, ININ HISHIS CAPACITYCAPACITY ASAS
ASSESSORASSESSOR FORFOR ASSUMPTIONASSUMPTION PARISH;PARISH;
ANDAND THETHE LOUISIANALOUISIANA TAXTAX COMMISSIONCOMMISSION

JudgmentJudgment Rendered:Rendered:
NOVNOV 00 66 20202020

AppealedAppealed fromfrom thethe 19th19th JudicialJudicial DistrictDistrict CourtCourt
InIn andand forfor thethe ParishParish ofof EastEast BatonBaton RougeRouge
StateState ofof Louisiana Louisiana
SuitSuit No.No. C677797C677797

TheThe Honorable Honorable WilsonWilson E.E. Fields,Fields, JudgeJudge PresidingPresiding

PhyllisPhyllis D.D. SimsSims CounselCounsel forfor Plaintiff/Plaintiff/ AppellantAppellant

ErichErich P.P. RappRapp BlueBlue CubeCube Operations,Operations, LLCLLC
BatonBaton Rouge,Rouge, LouisianaLouisiana

BrianBrian A.A. EddingtonEddington CounselCounsel forfor Defendant/Defendant/ Appellee Appellee
BatonBaton Rouge,Rouge, LouisianaLouisiana WayneWayne P.P. Blanchard,Blanchard, AssessorAssessor forfor
Assumption Assumption ParishParish

BEFORE:BEFORE: GUIDRY,GUIDRY, McCLENDON,McCLENDON, ANDAND LANIER,LANIER, JJ.JJ.

LANIER, J.

Blue Cube Operations LLC (" Blue Cube") appeals the October 17, 2019

judgment of the district court judgment affirming the decision of the Louisiana Tax

Commission (" the Commission"). In a decision rendered in December 2018, the

Commission affirmed the ruling of the Assumption Parish Board of Review (" the

Board"), which had upheld the correctness of an ad valorem tax assessment by

Assumption Parish Assessor, Wayne P. Blanchard (" the Assessor"). For the

reasons that follow, we reverse and remand.

FACTS AND PROCEDURAL HISTORY

Blue Cube is engaged in brine mining operations in Assumption Parish. The

instant dispute concerns the 2017 ad valorem tax valuation and assessment of three

of Blue Cube' s active brine wells and related salt caverns located in Assumption

Parish. Blue Cube' s three wells are located over a salt deposit. As water is

injected into the ground, brine is extracted, and a void is created as the salt is

dissolved. The brine produced from the wells is pumped by pipelines to Blue

Cube' s chlorine plant in Plaquemine, Louisiana, where the " brine is electrolyzed

and converted to chlorine, caustic, and hydrogen. And then, those are used as raw

materials in other products." The salt caverns are produced as a result of the brine

mining operation. Blue Cube does not store, nor does it intend to store or have the

legal right to store, any hydrocarbons or any other products in the salt caverns.

The benefit to Blue Cube is the salt that is extracted, not the cavern that results

from the extraction of the salt.

For the 2017 tax year, the values in dispute, as assigned by the Assessor to

Blue Cube' s brine wells and caverns, reflect an assessed value of $1, 355, 590. 00

and a fair market value of $9, 037, 267. 00. Based on these values, Assumption

Parish Sheriff Leland Falcon, in his capacity as Ex -Officio Tax Collector, sent a

2017 Tax Statement to Blue Cube reflecting total taxes due in the amount of

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131, 790. 45. Thereafter, Blue Cube made two payments to Sheriff Falcon in

December 2017 totaling $ 131, 790. 45. Blue Cube paid $ 2, 870. 33 for the

undisputed portion of the taxes, while $ 128, 920. 12 was paid under protest, to be

held in escrow,
pending the correctness challenge it had filed with the

Commission.

Pursuant to the procedures established by the Louisiana Administrative

Procedure Act, La. R.S. 49: 950, et seq., Blue Cube first petitioned the Board for

correction of the Assessor's valuation of the three brine wells and caverns at issue.

Blue Cube challenged the assessment, requesting a fair market value of

196, 827. 00 for the brine wells based on Chapter 9 of the Commission' s Rules and

Regulations, rather than on Chapter 25 as was utilized by the Assessor. Blue Cube

further argued that the associated caverns were not used for, nor intended to be

used for, commercial storage and, therefore, do not have any value.

The Board upheld the Assessor's valuation, after which Blue Cube appealed

to the Commission. Blue Cube maintained throughout its challenge before the

Board and the Commission that the brine wells should be valued and assessed in

accordance with Chapter 9 of the Commission's Rules and Regulations, that the

caverns were not taxable property separate from the land, and that the salt caverns

were merely holes in the land that had no value and were not subject to taxation.

The Commission heard the appeal on August 22, 2018, and, after taking the

matter under advisement, affirmed the ruling of the Board in December 2018,

bearing Docket Number 17- 22007- 001 (" 2017 Tax Appeal"). Thereafter, Blue

Cube sought judicial review of the Commission' s decision in the 19th Judicial

District, and a hearing was held on September 23, 2019. The matter was argued by

counsel and submitted to the district court, whereupon the district court upheld the

decision of the Commission. A judgment in accordance with the district court's

ruling was signed on October 17, 2019.

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This appeal by Blue Cube followed, wherein Blue Cube assigned the

following specifications of error:

1. The Commission erred in affirming the Assessor' s value and
assessment of the [ brine wells] under Chapter 25 of the Commission' s
Rules and Regulations.

2. The Commission erred in affirming the Assessor' s
determination that the [ salt caverns] have some commercial use and/ or
contain personal property subject to assessment separate and apart
from the land.

3. The Commission erred in failing to find that the fair market
value of the disputed property was [$ 196, 827. 00], as requested and
reported by Blue Cube, similar to the Commission' s decision for the
prior year (2016 Tax Decision).

STANDARD OF REVIEW

As stated in La. Const. Art. VII, § 18( A), "[ p] roperty subject to ad valorem

taxation shall be listed on the assessment rolls at its assessed valuation, which ...

shall be a percentage of its fair market value. The percentage of fair market value

shall be uniform throughout the state upon the same class of property." Each

assessor is authorized by La. Const. Art. VII, § 18( D), to " determine the fair

market value of all property subject to taxation within his respective parish or

district except public service properties, which shall be valued at fair market value

by the Louisiana Tax Commission or its successor." The fair market value shall be

determined in accordance with criteria established by law, which must be

uniformly applied throughout the state. La. Const. Art. VII, § 18( D); La. R. S.

47: 2323( A).

Louisiana Constitution Article VII, § 18( E) provides that "[ t] he correctness

of assessments by the assessor shall be subject to review first by the parish

governing authority, then by the Louisiana Tax Commission or its successor, and

finally by the courts, all in accordance with procedures established by law." See

also La. R. S. 47: 1992, 47: 1989, and 47: 1998. Judicial review of the correctness of

the assessment is authorized by La. R.S. 47: 1998( A). The extent of that review is

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governed by the Administrative Procedure Act, La. R. S. 49: 964( F) and ( G).

Axiall, LLC v. Assumption Parish Board of Review, 2018- 0542 ( La. App. 1 Cir.

12/ 30/ 19), So. 3d , 2019 WL 7343414, * 3. Review is confined to the

administrative record established before the Commission. La. R. S. 49: 964( F);

Williams v. Opportunity Homes Limited Partnership, 2017- 0955 ( La. 3/ 13/ 18),

240 So. 3d 161, 166.

Pursuant to La. R. S. 49: 964( G), the district court may affirm or remand the

decision of an agency, while the reversal or modification of that decision requires

that additional conditions be met. Axiall, LLC, So. 3d at , 2019 WL

7343414 at * 3. As set forth in La. R. S. 49: 964( G), we may reverse or modify the

decision of the agency only if substantial rights of the party seeking review have

been prejudiced because the administrative findings, inferences, or decisions are:

1) in violation of constitutional or statutory provisions; ( 2) in excess of the

statutory authority of the agency; ( 3) made upon unlawful procedure; ( 4) affected

by other error of law; ( 5) arbitrary or capricious or characterized by abuse of

discretion or clearly unwarranted exercise of discretion; or ( 6) not supported and

sustainable by a preponderance of evidence as determined by the reviewing court.

The reviewing court shall make its own determination and conclusions of fact by a

preponderance of evidence, based upon its own evaluation of the record reviewed

in its entirety upon judicial review. La. R.S. 49: 964( G); Williams, 240 So. 3d at

166.

When reviewing a final decision of an agency, the district court functions as

an appellate court. EOP New Orleans, L.L.C. v. Louisiana Tax Com' n, 2001-

2966 ( La. App. 1 Cir. 8/ 14/ 02), 831 So. 2d 1005, 1008, writ denied, 2002- 2395 ( La.

11/ 27/ 02), 831 So. 2d 286. An aggrieved party may obtain review of any final

judgment of the district court by appeal to the appropriate court of appeal. See La.

R. S. 49: 965. On review of the district court's judgment, no deference is owed by

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the court of appeal to factual findings or legal conclusions of the district court, just

as no deference is owed by the Louisiana Supreme Court to factual findings or

legal conclusions of a court of appeal. Comm -Care Corp. v. Louisiana Tax

Com' n, 99- 0709 ( La. App. 1 Cir. 6/ 23/ 00), 762 So. 2d 770, 773, writ denied, 2000-

2271 ( La. 10/ 27/ 00), 772 So. 2d 656. Thus, an appellate court sitting in review of

an administrative agency reviews the findings and decision of the administrative

agency and not the decision of the district court. EXCELth, Inc. v. State through

Department of Health and Hospitals, 2017- 0363 ( La. App. 1 Cir. 12/ 19/ 17), 234

So. 3d 160, 165- 166, writ denied, 2018- 0113 ( La. 3/ 9/ 18), 238 So. 3d 453.

Accordingly, this court will conduct its own independent review of the

administrative record in accordance with the standards provided in La. R. S.

49: 964( G).

DISCUSSION

At the beginning of the August 22, 2018 hearing before the Commission in

the 2017 Tax Appeal, the parties stipulated that in lieu of live testimony, Blue

Cube' s exhibits 1 through 29 would be admitted into evidence without objection.

Counsel for Blue Cube stated:

That book of exhibits includes the transcript from a previous
hearing that Blue Cube had against the same opposing parry on
December 13, 2017 [ Docket Number 16- 22007- 001 (" 2016 Tax
Appeal")] in which witnesses were asked about matters including
2017, even though the hearing was about 2016. ...

And we would propose and stipulate that that testimony applies
to and would be considered by the Commission, along with all the
other exhibits as our evidence in lieu of live testimony at this hearing
with one minor addition; and that is that we would stipulate that our
tax consultant, Charles Zatarain would testify for 2017 that the fair
market value [ of the brine wells] calculated under Chapter 9 is
196, 827. 00] and that the assessed value would be [$ 29, 525. 00].
And we would ask that that be part of our stipulation because that
differs from the prior year' s testimony as to [ the] amount.

Counsel for the Assessor agreed with Blue Cube' s stipulation, noting that the

Assessor's numbers also differed for the 2017 tax year and that the 2017 fair

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market value was $ 9, 037, 267. 00. The parties also agreed to include a transcript

and testimony from Rodney Kret from a prior Commission hearing.' Finally, the

parties agreed that the issues before the Commission were the same as in the prior

hearing, i.e., simply whether the brine wells should be taxed under Chapter 25, as

argued by the Assessor, or Chapter 9, as argued by Blue Cube, and whether the

value of the caverns should be zero, as the Commission ruled following the 2016

Tax Appeal.

After taking the matter under advisement, the Commission rendered its

decision, affirming the ruling of the Board as follows: " Based on the foregoing,

and applying its expertise, technical competence, specialized knowledge, and

based upon the entirety of the record, the Commission does hereby affirm the

decision of the [ Board], which upheld the Assessor's fair market value of the

subject cavern and wells ... which was ... [$ 9, 037, 267. 00]." Following review in

the 19th Judicial District Court, the Commission' s decision was upheld in an

October 17, 2019 judgment, which is now before us on review.

As previously indicated, the crux of this case is whether the brine wells

should be taxed under Chapter 25, as argued by the Assessor, or Chapter 9, as

argued by Blue Cube, and whether the caverns are subject to taxation. This court

was faced with a similar legal and factual scenario in Axiall, LLC, supra, which

involved the assessment of six brine wells and caverns in Assumption Parish.

Therein, the Assessor based its valuation of the six brine wells on Chapter 25 of

the Commission's Rules and Regulations instead of Chapter 9, as requested by

Axiall, LLC. The Assessor also taxed the caverns separately from the wells as

commercial improvements. On review, the Commission ruled that all six brine

wells should be valued in accordance with the provisions set forth in Chapter 9, not

Rodney Kret's testimony before the Commission related to the taxation of six brine wells and
caverns owned by Axiall, LLC in Assumption Parish. This hearing precipitated the appeal in
Axiall, LLC, supra.

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Chapter 25 as advanced by the Assessor, and that the caverns at issue had no value

because they either could not be used for any commercial purpose or were legally

unusable. The district court reversed and vacated the Commission, thereby

reinstating the Board' s ruling and affirming the Assessor's valuations. Axiall,

LLC, So. 3d at , 2019 WL 7343414 at * 3.

In reversing the district court and reinstating the Commission' s decision that

the brine wells should be valued under Chapter 9 rather than Chapter 25 and that

the caverns had no value, this court noted as follows:

The text of Chapter 9 of the Commission' s Rules and Regulations
provides the guidelines for determining the fair market value of
various types of wells. The wells identified in Chapter 9 include
injection wells, which are described as " wells completed as single or

wells reclassified by the Louisiana Department of Conservation after a
conversion of another well. Wells are used for gas and water injection
for production purposes, also used for disposal wells." LAC
61: V.901. As explained by the facts herein, water is injected into the
brine wells for the purpose of producing brine. This clearly fits within
the description of injection wells included in Chapter 9.

In addition to the fact that Chapter 9 specifically includes
service wells, including injection wells, the Commission's Property

Classification Standards Regulations define types of property,
including oil and gas wells, under the broader classification of
personal property. The standards include a broad class description
that is broken down further into a " Sub -Class Description," and
finally, a definition of the class is provided. LAC 61: V.304B. The
relevant class description here is " Oil and Gas Wells." One sub -class
description for oil and gas wells includes injection wells and service
wells. Injection wells and service wells are defined as "[ i] njection
wells, service wells, saltwater disposal, brine wells, water wells." Id.
emphasis added). Of note,
brine wells are included without any
limitation that would limit the brine wells to only those used in
connection with oil and gas production.

Moreover, throughout the Commission's Rules and Regulations,
the term " injection well" does not appear anywhere other than in
Chapter 9 and in the Commission' s Property Classification Standards.
Similarly, " water well" and " disposal well" only appear in these
sections. Since injection wells are specifically included for valuation
under Chapter 9, do not appear anywhere else in the Commission's
Rules and Regulations, and are defined to include brine wells, we find
that the Commission's construction and interpretation valuing the

brine wells under Chapter 9 was not arbitrary, capricious, or contrary
to its rules and regulations. hl ...

Our second inquiry is to determine whether the evidence
supported the Commission' s determination that the caverns have no
commercial purpose and have a zero -dollar ($ 0) value. Simply put,
the Assessor argues that the void created in the ground as a byproduct
of the brine mining constitutes a commercial improvement and thus,
has a commercial purpose.

No party has pointed to a Chapter of the Commission' s Rules
and Regulations that provides for taxation of this type of property. In
fact, the Commission' s regulations only have one provision that

specifically addresses property of this type. Chapter 25 provides a
procedure for valuation of " Salt Dome Storage Wells and Caverns
permitted as Class II Type 10, 11- L or 11- N." LAC 61: V.2501( H);
LAC 61: V.2503. This refers to a specific class designation of the
Department of Natural Resources, which requires special permitting,
and no evidence adduced indicates that the caverns at issue were
permitted as any of these three specific classifications of wells.
Contrarily, the undisputed evidence indicates the wells and caverns at
issue have only ever been permitted by the Department of Natural
Resources for the mining of brine, which does not fall into any of the
specific class designations above. Further, a review of the

Department of Natural Resources regulations indicates that these
types of wells only consist of storage wells. The only commercial use
recognized for these caverns in the pertinent regulations is for storage
and/ or commercial disposal purposes.

A commercial use is one that is connected with or furthers an
ongoing profit-making activity; a noncommercial use is one that does
not involve the generation of income. See Black's Law Dictionary
11th ed. 2019). ... Further, uncontroverted testimony indicates that
a cavern that's being used for brining is not generating income" based
on the existence of the cavern. ...

C] avern 3 is not permitted and cannot be used for storage. It is,

however, being used to return minerals Axiall has extracted from the
ground back to the ground. Though it is possible to say that the
disposal use of the cavern is connected with Axiall's profit making

2 We note here, as we did in Axiall, LLC, So. 3d at , 2019 WL 7343414 at * 2, that
Pritchard & Abbott, the consulting firm used by the Assessor in this case, has in the past made
recommendations to the Commission regarding changes to its rules and regulations regarding the
valuation of brine wells and caverns. According to Pritchard & Abbott' s corporate representative
Rodney Kret, Pritchard & Abbott suggested that the language in Chapter 9 be clarified such that
brine wells and caverns used in brine production should be valued under Chapter 25, rather than
Chapter 9. Pritchard &
Abbott recommended clarifying that the only injection wells to which
Chapter 9 should apply were those applicable to oil and gas production or those oil and gas wells
that have been converted from production wells to injector wells for salt water disposal purposes.
The recommended changes, which would have made Chapter 25 the Chapter under which brine
wells would be assessed, were rejected by the Commission in 2014, and there is no evidence in
the record that any changes have since been adopted by the Commission concerning said
clarification to Chapter 9.

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activity, it may also be easily said that the disposal of minerals back
into the ground does not generate income. [ Footnotes omitted.]

Axiall, LLC, So. 3d at 12019 WL 7343414 at * 6- 7.

In the instant appeal, Blue Cube focuses largely on the Commission' s

February 21, 2018 decision in the 2016 Tax Appeal, wherein the Commission

ruled in favor of Blue Cube as follows:

A. Brine Wells

At the outset, the Commission notes that it has consistently
valued brine wells under Chapter 9 of the Commission' s Rules and
Regulations. The Commission hereby reaffirms its previous holdings
that brine wells should be valued and assessed pursuant to Chapter 9
of the Commission's Rules and Regulations, which are under the
Commission' s statutory and constitutional authority to ensure that
property is uniformly assessed throughout the State. Importantly, the
Commission notes that its interpretation of its own regulations,
promulgated pursuant to statutory grants of authority and the
procedures of the Louisiana Administrative Procedure Act, should be
given deference as a result of the Commission' s unique statutory
charge to promulgate, interpret, and apply those specific regulations.
See, e. g., Bowers v. Firefighters' Retirement System, 08- 1268, p. 4
La. 3/ 17/ 09), 6 So. 3d 173, 176. Further, "[ a] reviewing court should
afford considerable weight to the Commission' s construction and
interpretation of its rules and regulations adopted under a statutory
scheme that it is entrusted to administer ...." Forbes v. Cockerham,
2008- 0762, P. 33 ( La. 1/ 21/ 09), 5 So. 3d 839, 859. Moreover, no

evidence or testimony was presented to suggest that the cost to build
brine wells is any different than oil/gas wells or why brine wells
should be valued differently than other wells.

The evidence presented clearly established that the Assessor
valued and assessed the subject wells under Chapter 25 of the
Commission's Rules and Regulations. This assessment is invalid,
incorrect, and an abuse of the Assessor' s discretion. Assessors do not
have the authority to ignore the Rules and Regulations promulgated
by the Commission. Assessor Blanchard' s decision to ignore the
Commission's Rules and Regulations and its interpretation thereof is a
clear abuse of the Assessor' s discretion and requires the Commission
to examine and correct the assessment. Because the Assessor valued
the subject wells under Chapter 25, his valuations are clearly
erroneous and must be corrected. Moreover, and remarkably, the
Assessor failed to explain or justify why the subject brine wells should
be valued under Chapter 25 of the Commission' s Rules and

Regulations. Neither the Assessor himself or any witnesses testified
as to the Assessor's valuation and assessment of the subject property.
Remarkably, the Assessor appears to rely on the " appraisal" by the
consulting/ engineering firm of Pritchard & Abbott, but no

documentation or testimony was offered to support this " appraisal".

10

The Taxpayer submitted competent and sufficient evidence to
establish the correct value of the subject wells under Chapter 9 of the
Commission' s Rules and Regulations. Specifically, the subject brine
wells should be valued at [$ 139, 618. 00]. The evidence presented by
the Taxpayer regarding the valuation of the wells under Chapter 9 was
uncontradicted by the Assessor. Accordingly, the Commission
determines that the fair market value of the subject brine wells is
139, 618. 00].

B. Salt Caverns

In the past, the Commission has evaluated the correctness of the
valuation and assessment of salt caverns by their actual and potential
commercial use. No testimony or evidence was submitted by the
Assessor explaining or justifying his valuation and assessment of the
salt caverns. The Commission is therefore left to speculate why and
on what basis the Assessor valued and assessed the salt caverns. The

Assessor presumably determined that the salt caverns have some
commercial use and contain personal property subject to assessment
separate and apart from the land. However, no evidence or testimony
was presented to support such a proposition. In fact, the Taxpayer
presented specific and compelling testimony and evidence clearly
establishing that the salt caverns have no separate commercial value
separate from the land and are not ( and cannot presently be) used to
store hydrocarbons. Presently, the caverns have no distinct
commercial value apart from the brining operations, nor do they have
any value distinct from the land. Moreover, until the process to
convert the caverns for the storage of hydrocarbons, etc. is done, they
are simply holes in the ground without any inherent additional
commercial value. Accordingly, the Commission determines that the
caverns have no value separate from the land. Furthermore, the

Taxpayer presented testimony and evidence that established that it
does not own land at issue, and thus does not own the caverns. The

Taxpayer only owns the brine wells and related equipment ( i.e.
personal property) and has the right to conduct brine mining
operations, which naturally causes the formation of the caverns. As
such, assuming there were some inherent commercial value to these
caverns, which in this matter there is no value, that value would be
assessed with the assessment of the land, not personal property.
Footnotes omitted.]

Blue Cube notes that based on the exact same evidence, the Commission " reversed

course" in the 2017 Tax Appeal, finding in favor of the Assessor and upholding the

Assessor's $ 9, 037, 267. 00 fair market value of Blue Cube' s brine wells and caverns

in a decision that was clearly not supported by the testimony or the preponderance

of the evidence. We agree.

11

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 that the agency is entrusted to administer, and its construction and

interpretation should control unless the court finds it to be arbitrary, capricious, or

manifestly contrary to its rules and regulations. Rachal, ex rel. Regan v. State, ex

rel. Dept. of Health and Hospitals, 2009- 0786 ( La. App. 1 Cir. 10/ 27/ 09), 29

So. 3d 595, 603, writ denied, 2009- 2588 ( La. 3/ 5/ 10), 28 So. 3d 1013. An

interpretation used by the state administrative agency may be persuasive, but

inconsistent interpretation of the overall scheme or use of the wrong rule cannot

stand. Women' s and Children' s Hosp. v. State, Dept. of Health and Hospitals,

2007- 1157 ( La. App. 1 Cir. 2/ 8/ 08), 984 So. 2d 760, 766, writ granted, 2008- 0946

La. 6/ 27/ 08), 983 So. 2d 1287, and affd, 2008- 946 ( La. 1/ 21/ 09), 2 So. 3d 397. If

the evidence, as reasonably interpreted, supports the determination of an

administrative agency, its orders are accorded great weight and will not be reversed

or modified in the absence of a clear showing that the administrative action is

arbitrary and capricious. Id. Hence, the test for determining whether the action is

arbitrary and capricious is whether the action taken is reasonable under the

circumstances. Stated differently, the question is whether the action taken was

without reason. Id.

In the instant case, we have before us only the record evidence stipulated to

by the parties at the beginning of the district court's hearing on September 23,

2019. This evidence consisted of the testimony and exhibits previously entered

into evidence in the 2016 Tax Appeal, as well as the testimony of Pritchard &

Abbott's corporate representative Rodney Kret.

As noted by the Commission in the 2016 Tax Appeal, neither the Assessor

himself nor any other witness presented any documentation or testimony as to the

Assessor's valuation and assessment of the subject property. Rather, the Assessor

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simply relied on the unsupported appraisal from Pritchard & Abbott. With regard

to the caverns, the Commission found no evidence to support the Assessor' s

position that the caverns had some commercial use and contained separate personal

property subject to assessment separate and apart from the land. In contrast, the

Commission found that Blue Cube presented " competent and sufficient evidence to

establish the correct value of the subject wells under Chapter 9 of the

Commission's Rules and Regulations." Moreover, the Commission found there

was " specific and compelling" testimony presented by Blue Cube that the caverns

had no commercial value separate from the land and are not and cannot be used to

store hydrocarbons. Thus, the Commission determined the caverns had no value.

The fair market value assigned to the brine wells and the caverns by the

Assessor and upheld by the Commission, i.e., $ 9, 037, 267. 00, is contrary to the

valuation methodology established by the Commission' s Rules and Regulations

that provide for valuation and assessment of brine wells under Chapter 9. As

previously noted, the parties stipulated that if he had been called to testify in the

2017 Tax Appeal before the Commission, Blue Cube' s tax consultant, Charles

Zatarain, would have testified that the 2017 fair market value of the brine wells as

calculated under Chapter 9 was $ 196, 827. 00 and the assessed value was

29, 525. 00. Moreover, based on the same evidence that was before the

Commission in the 2016 Tax Appeal, we agree that the caverns have no distinct

commercial value apart from the brining operations, nor do they have any value

distinct from the land.

Based on our thorough review of this evidence and our holding in Axiall,

LLC, we find that the Commission' s decision in the 2017 Tax Appeal is arbitrary

and capricious and cannot reasonably be supported by the record or sustainable by

a preponderance of the evidence. The Commission failed to articulate any basis

for its reversal in interpretation of the rules and regulations with regard to valuing

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the brine wells. In 2016, the brine wells were valued using Chapter 9, but in 2017,

Chapter 25 was utilized, resulting in a 4, 491 percent increase in the assessed value

of Blue Cube' s property for the 2017 tax year. As this court held in Axiall, LLC,

the Commission' s construction and interpretation valuing the brine wells under

Chapter 9 was not arbitrary, capricious, or contrary to its rules and regulations."

Axiall, LLC, So. 3d at , 2019 WL 7343414 at * 6. Thus it follows that

based on these facts and circumstances, and given the Commission' s unwarranted

change in course, the Commission' s construction and interpretation valuing the

brine wells under Chapter 25 cannot stand.

DECREE

For the above and foregoing reasons, we reverse the district court's October

17, 2019 judgment affirming the Commission's decision in the 2017 Tax Appeal,

and we reverse the assessment as found by the Commission in the 2017 Tax

Appeal. We remand the matter to the Commission with instructions that it modify

its decision in the 2017 Tax Appeal to adopt the stipulated fair market value of

Blue Cube' s property as calculated under Chapter 9, i.e., $ 196, 827. 00.

Further upon modification of its decision, the Commission shall direct

Wayne P. Blanchard, in his official capacity as Assumption Parish Assessor, to

prepare a corrected 2017 assessment of Blue Cube's property based on the values

as stipulated to by the parties below, i.e., fair market value of $196, 827. 00 and

assessed value of $29, 525. 00. Thereafter, once an amended 2017 Tax Statement is

issued to Blue Cube by Sheriff Falcon, " the appropriate amount of taxes shall be

refunded to the taxpayer together with interest [ at the actual rate earned on the

money paid under protest in the escrow account] during the period from the date of

payment until the date of such refund." La. R.S. 47: 1998( F)

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Appeal costs in the amount of $13, 032. 00 are assessed against Assumption

Parish Assessor Wayne P. Blanchard and the Louisiana Tax Commission, as

provided by La. R.S. 13: 5112.

REVERSED AND REMANDED WITH INSTRUCTIONS.

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