THE CIRCUIT COURT OF THE CITY OF RICHMOND Margaret P.
PRESENT: Lemons, C.J., Mims, McClanahan, Powell, and Kelsey,
JJ., and Lacy and Millette, S.JJ.
WILLIAM C. MIMS JUSTICE
appeal, we consider whether Code § 58.1-3814(H) permits
a locality to impose a tax on natural gas consumed for the
sole purpose of generating electricity.
BACKGROUND AND MATERIAL PROCEEDINGS BELOW
Electric and Power Company ("VEPCO") operates a
gas-fired electric generation station located in the City of
Richmond. The City sent VEPCO a tax assessment for natural
gas consumed at the station between 2001 and 2004, ostensibly
under Code § 58.1-3814(H).[*] The City later sent a second
assessment for gas consumed between the years 2005 and 2008.
VEPCO filed timely applications for correction for each
assessment, which the City denied in final local
determination letters. VEPCO thereafter appealed the denials
to the Virginia Department of Taxation, asserting among other
things that it was not subject to the tax under the terms of
Code §§ 58.1-2600(A) and 58.1-3814(H). In a final
state determination letter, the Tax Commissioner affirmed the
City's ruling that VEPCO was subject to the tax. VEPCO
filed a motion to reconsider, which the Tax Commissioner
denied. The City thereafter sent a new assessment of $7, 292,
957.26, which included the earlier assessments, late fees,
and VEPCO's consumption through the year 2013.
thereafter filed a timely appeal from the Tax Commissioner to
the circuit court, again asserting, among other things, that
it was not subject to the tax. As relevant to this appeal, it
argued that it consumes natural gas at the station to
generate electricity, not to furnish heat or light.
Accordingly, it contended, its consumption was outside the
scope of Code § 58.1-3814(H).
hearing, the circuit court entered a consolidated letter
opinion and order ruling that "[t]o meet the definition
of a pipeline distribution company, a company must transmit
gas through a pipeline 'for purposes of furnishing heat
or light.'" The General Assembly's use of the
phrase "for purposes of furnishing heat or light"
makes clear that the purpose for consuming the gas is the
focus of the statute. VEPCO could not be liable for the tax,
the court continued, because it consumed gas for the purpose
of generating electricity. Any heat or light created when
VEPCO consumed gas at the station was merely incidental.
court found further support for its ruling from the use of
the phrase "heat, light and power" in the provision
of Code § 58.1-2600(A) that defines the term
"[c]ommission." The court reasoned that the use of
the word "power" alongside the words
"heat" and "light" in one provision of
Code § 58.1-2600(A), juxtaposed with the omission of the
word "power" from the phrase "furnishing heat
or light" in the same section, reflected legislative
intent that the term "pipeline distribution
companies" exclude companies transmitting gas consumed
solely to produce electricity. Accordingly, the court
concluded that VEPCO was not subject to the tax under Code
awarded the City this appeal.
sole assignment of error, the City asserts that the circuit
court erred in its interpretation of Code §
58.1-3814(H). The City argues that the term "heat or
light" is not ambiguous, so it must be given its plain
meaning. VEPCO's use falls within the plain meaning of
Code § 58.1-3814(H) because the evidence established
that VEPCO combusts natural gas, thereby creating heat, to
power electricity-generating turbines. Thus, the City
continues, the circuit court should not have construed the
term "heat or light" by referring to other parts of
Code § 58.1-2600(A) not expressly incorporated into Code
§ 58.1-3814. This is especially true, the City
concludes, because Code § 58.1-2600 is in a chapter of
Title 58.1 pertaining to state taxation of public utilities,
but Code § 58.1-3814 is in a chapter pertaining to local
taxation of utility consumption. We disagree.
§ 58.1-3983.1(G) provides that when a court is reviewing
a determination of the Tax Commissioner, the party
challenging the determination shall have the burden of proof
to show that the determination was erroneous. The State Tax
Commissioner's determination is presumed valid."
Palace Laundry, Inc. v. Chesterfield County, 276 Va.
494, 497, 666 S.E.2d 371, 373 (2008). However, "[t]axing
statutes must be construed strongly in the taxpayer's
favor, and will not be extended by implication beyond the
clear import of the statutory language." City of
Lynchburg v. English Constr. Co., 277 Va. 574, 583, 675
S.E.2d 197, 201 (2009) (internal quotation marks omitted).
Further, "[a] court never defers to the Tax
Commissioner's interpretation of a statute."
Nielsen Co. (US), LLC v. County Bd. of Arlington
County, 289 Va. 79, 89, 767 S.E.2d 1, 5 (2015). Rather,
this Court reviews questions of statutory interpretation de
novo. Eberhardt v. Fairfax County Emples. Ret. Sys. Bd.
of Trs., 283 Va. 190, 194, 721 S.E.2d 524, 526 (2014).
agree with the City that "[w]hen a statute is clear and
unambiguous, a court may look only to the words of the
statute to determine its meaning. It may not consider rules
of statutory construction, legislative history, or extrinsic
evidence." Id. (internal citations and
quotation marks omitted). However, courts have a "duty
to interpret the several parts of a statute as a consistent
and harmonious whole so as to effectuate the legislative
goal. A statute is not to be construed by singling out a
particular phrase." Id. at 194-95, 721 S.E.2d
at 526 (internal quotation marks omitted). Such consideration
does not violate the rule against considering statutory
construction, legislative history, or extrinsic evidence.
Id. The circuit court thus was not only empowered
but obligated to consider the words used in the definition of
"pipeline distribution companies" in context with
the words used in other provisions of Code §
58.1-2600(A) to ensure that its interpretation of that
definition was consistent with the other provisions. In
discharging this ...