DECISION AND ORDER

APPEARANCES

Tory and Meredith Taylor (Taxpayers) appeared pro se.

Jodi A. Darrough, Deputy Fremont County and Prosecuting Attorney, appeared on behalf of Eileen Oakley, Fremont County Assessor (Assessor).

DIGEST

This is an appeal by Taxpayers from a decision of the Fremont County Board of Equalization (County Board) upholding the Assessor’s decision denying agricultural classification for 44.47 acres of Taxpayers’ land in Fremont County, Wyoming.

Taxpayers filed a Notice of Appeal with the State Board of Equalization (State Board) on August 17, 2007. The parties filed briefs as allowed by the State Board’s Briefing Order. Neither party requested oral argument.

The State Board, comprised of Alan B. Minier, Chairman, Thomas R. Satterfield, Vice-Chairman, and Thomas D. Roberts, Board Member, considered the hearing record, the decision of the County Board and the parties’ briefs. We evaluate the Taxpayers’ claims against our standard of review which is whether the decision of the County Board was arbitrary, capricious, unsupported by substantial evidence, and/or contrary to law. Rules, Wyoming State Board of Equalization, Chapter 3 § 9.

PROCEEDINGS BEFORE THE COUNTY BOARD

The County Board conducted a hearing on Taxpayers’ appeal on July 3, 2007, and issued its decision upholding the Assessor’s denial of agricultural classification for Taxpayers’ land on August 2, 2007.

In affirming the Assessor’s denial of agricultural classification, the County Board considered the four statutory requirements for agricultural classification set out in Wyo. Stat. Ann. § 39-13-103(x). The County Board found Taxpayers did not meet two of the four statutory requirements. The County Board found: 1) Taxpayers failed to establish their land was being employed for an agricultural purpose and not a commercial purpose; and 2) Taxpayers failed to establish the income from the use of their land was consistent with the land’s capability to produce in an agricultural operation. [County Board Record, Decision of the Fremont County Board of Equalization, p. 88]. An adverse decision by the County Board on either requirement would be sufficient to deny Taxpayers’ request for agricultural classification.

JURISDICTION

The State Board is required to “hear appeals from county boards of equalization.” Wyo. Stat. Ann. § 39-11-102.1(c). Taxpayers filed a timely appeal of the County Board decision with the State Board. Rules, Wyoming State Board of Equalization, Chapter 3 § 2. The State Board has jurisdiction to decide this matter.

STANDARD OF REVIEW

When the State Board hears appeals from decisions of a County Board, it acts as an intermediate level of appellate review. Laramie County Board of Equalization v. Wyoming State Board of Equalization, 915 P.2d 1184, 1188 (Wyo. 1996); Union Pacific Railroad Company v. Wyoming State Board of Equalization, 802 P.2d 856, 859 (Wyo. 1990). In its appellate capacity, the State Board treats the County Board as the finder of fact. Id. In contrast, the State Board acts as the finder of fact when it hears contested cases on appeal from final decisions of the Wyoming Department of Revenue (Department). Wyo. Stat. Ann. § 39-11-102.1(c). This sharp distinction in roles is reflected in the State Board Rules governing the two different types of proceedings. Compare Rules, Wyoming State Board of Equalization, Chapter 2 and Rules, Wyoming State Board of Equalization, Chapter 3. Statutory language first adopted in 1995, when the State Board and the Department were reorganized into separate entities, does not express the distinction between the State Board’s appellate and de novo capacities with the same clarity as our long-standing Rules. 1995 Wyo. Sess. Laws, Chapter 209, § 1; § 39-1-304(a) (currently Wyo. Stat. Ann. § 39-11-102.1(c)).

By Rule, the State Board’s standards for review of a County Board’s decision are nearly identical to the Wyoming Administrative Procedure Act standards which a district court must apply to hold unlawful and set aside agency action, findings of fact, and conclusions of law. Rules, Wyoming State Board of Equalization, Chapter 3 § 9; Wyo. Stat. Ann. § 16-3-114(c)(ii). However, unlike a district court, the State Board will not rule on claims that a County Board has acted “[c]ontrary to constitutional right, power, privilege or immunity.” Wyo. Stat. Ann. § 16-1-114(c)(ii)(B). The State Board’s review is limited to a determination of whether the County Board action is:

(a) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(b) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(d) Unsupported by substantial evidence.

Rules, Wyoming State Board of Equalization, Chapter 3 § 9.

Since the State Board Rules are patterned on the judicial review provision of the Wyoming Administrative Procedure Act, we look to precedent under Wyo. Stat. Ann. § 16-3-114(c) for guidance. For example, we must apply this standard:

When an appellant challenges an agency's findings of fact and both parties submitted evidence at the contested case hearing, we examine the entire record to determine if the agency's findings are supported by substantial evidence. Colorado Interstate Gas Co. v. Wyoming Department of Revenue, 2001 WY 34, ¶ 8, 20 P.3d 528, 530 (Wyo.2001); RT Commc'ns, Inc. v. State Bd. of Equalization, 11 P.3d 915, 920 (Wyo.2000). If the agency's findings of fact are supported by substantial evidence, we will not substitute our judgment for that of the agency and will uphold the factual findings on appeal. “Substantial evidence is more than a scintilla of evidence; it is evidence that a reasonable mind might accept in support of the conclusions of the agency.” Id.

Chevron U.S.A., Inc. v. Department of Revenue, 2007 WY 79, ¶ 9, 158 P.3d 131, 134 (Wyo. 2007).

ISSUES

On appeal to the State Board, Taxpayers contend the County Board erred in affirming the Assessor’s decision denying agricultural classification for their land. Taxpayers argue they established their use of the land was agricultural and was consistent with the land’s capability to produce. [Notice of Appeal]. Under our standards of review, the Taxpayers must establish the decision of the County Board was not supported by substantial evidence and/or the County Board acted arbitrarily and capriciously.

The County Board affirmed the Assessor’s denial of agricultural classification for Taxpayers’ land. We affirm the Decision of the County Board.

FACTS PRESENTED TO THE COUNTY BOARD

1. Tory and Meredith Taylor own two parcels of land, totaling 46.47 acres, located at 6360 Highway 26 approximately 8 miles east of Dubois in Fremont County, Wyoming. One parcel, where the Taxpayers’ house and out buildings are located, is north of Highway 26 and consists of 19.05 acres. [County Board Record, Exhibits D2, E, pp. 39-46; Hearing Recording]. The other parcel is south of Highway 26 and consists of 27.42 acres. [County Board Record, Exhibit D1, p. 38; Hearing Recording].

2. Taxpayers appealed the Assessor's denial of agricultural classification for 44.47 acres of their land to the County Board. Taxpayers did not contest the Assessor's valuation of their house, outbuildings, or 2 acres of land on which their house is located. [County Board Record, Hearing Recording].

3. During February of 2007 the Assessor mailed small landowners in Fremont County, including Taxpayers, an Affidavit for Agricultural Classification. [County Board Record, Hearing Recording].

4. Taxpayers completed their Affidavit for Agricultural Classification and returned it to the Assessor on February 20, 2007. Taxpayers stated: 1) the land was used for cultivation of soil for production of crops, production of grasses for forage and rearing, feeding, grazing or management of livestock, 2) the land is not part of a platted subdivision, 3) the land is not leased and the owner has derived annual gross revenues of not less than $500, and 4) the land has been used consistent with its size, location and capability to produce as an agricultural operation. Taxpayers did not claim any intervening cause which would have prevented them from using the land consistent with its capability to produce. Taxpayers did not attach any documentation regarding their agricultural income. [County Board Record, Exhibit F, pp. 56-57; Exhibit C, p. 34; Hearing Recording].

5. On March 27, 2007, the Assessor sent Taxpayers a letter requesting “supporting documentation verifying the type and amount of agricultural product you raised and sold in 2006 on the land being considered.” [County Board Record, Exhibit C, p. 34; Exhibit G, p. 58; Hearing Recording].

6. On April 3, 2007, Taxpayers submitted a written statement claiming agricultural income in 2006 of $550 from the sale of 5 tons of baled hay, and $120 from the sale of 8 gallons of honey at $15 per gallon. The Taxpayers attached no documents to support the amounts claimed. [County Board Record, Exhibit C, p. 34; Exhibit H, p. 59; Hearing Recording].

7. After reviewing the information sent by Taxpayers, the Assessor sent a letter to the Taxpayers dated April 15, 2007, denying Taxpayers’ request for agricultural classification. The Assessor told the Taxpayers the information furnished did not meet the definition for agricultural land as set forth in Wyoming statutes and rules. [County Board Record, Exhibit I, p. 60; Hearing Recording].

8. After receiving the Assessor’s denial letter, Taxpayers requested a list of all taxpayers in the Dubois area who had been denied agricultural classification. On April 27, 2007 the Assessor sent the Taxpayers a three page list of properties (over ten acres in size) in the Dubois area not receiving agricultural classification. The list did not include property owner names. [County Board Record, Exhibit J, pp. 61-65; Hearing Recording].

9. On May 7, 2007, the Taxpayers sent the Assessor an e-mail addendum to the 2006 tax assessment information previously provided. Taxpayers stated they produced about 12 tons of hay and sold 5 tons for $550 and sold honey for $45. Taxpayers also stated for the first time that they leased pasture on the 27.42 acre parcel for $540. The income claimed as agricultural income had been accounted for previously for federal income tax purposes by Taxpayers “as outfitting income in the past….We can amend our taxes for 2006 to reflect this as agricultural income.” [County Board Record, Exhibit K, pp. 66-67; Hearing Recording].

10. In support of their claim Taxpayers provided a Lease Agreement for the pasture of 1 horse at $45 per AUM or $540 per year with a date of 12/2005 on it. The lease, part of an e-mail, was signed May 9, 2007, by Sharon Kahin and included a note from Mr. Taylor stating “[d]ue to changes in tax assessment, we need a signed lease agreement from you now. Can you sign this and return it to us ASAP? Thanks, Tory.” [County Board Record, Exhibit L, p. 68].

11. Taxpayers subsequently provided the Assessor with a Bill of Sale for the sale one bay gelding for $800 dated November 11, 2006. [County Board Record, Exhibit M, p. 69]. The Assessor noted the sale of a horse had not been mentioned by the Taxpayers in any previous discussions. [County Board Record, Exhibit C, p. 34; Hearing Recording].

12. The Assessor valued Taxpayers’ land at its fair market value and notified Taxpayers of the assessed value. [County Board Record, Exhibits D1, D2, pp. 38-39].

13. Taxpayers filed a Statement To Contest 2007 Property Tax Assessment with the County Board on May 22, 2007. [County Board Record, Exhibit N, pp. 70-79]. Taxpayers’ Statement included a two page letter dated May 13, 2007; the pasture lease for $45 per AUM, $540 per year, supra ¶ 10; a receipt for the sale of 5 tons of hay to Outland Ranch in the amount of $550 listing Tory Taylor, Taylor Outfitters as seller; a receipt for the sale of 4 gallons of honey for $45; the bill of sale for a gelding for $800; and six photos of their property. [County Board Record, Exhibit M, pp. 70-79; Hearing Recording].

14. The letter attached to Taxpayers’ Statement to Contest included two statements related to Taxpayers’ outfitting business:

We sell hay and lease pasture for horses owned by others that we use in our outfitting business. With this arrangement we are able to make $45 per AUM for a total of $1080 annually. This was accounted for as outfitting income in the past. We discussed this with our tax accountant this year and he said we could declare this as agricultural income in the future for tax purposes.

* * *

12. Our land is essential for the maintenance and use of our horse herd, from which we derive our outfitting income.

[County Board Record, Exhibit M, p. 73].

15. At the July 3, 2007, County Board hearing, Tory Taylor testified he had “…submitted every document and every piece of evidence and any information we can.” He argued the land is presently being used and employed for agricultural purpose as defined by law and regulations. The land is not platted as a subdivision. The land has been used consistent with the land size, location and capability to produce agricultural products at a reasonable profit. [County Board Record, Hearing Recording].

16. Mr. Taylor asserted that Taxpayers had never reported their income from outfitting or other business operations as agricultural income to qualify for an agricultural classification. “We have only reported agricultural income.… [W]e understand that [outfitting income] would be separate under commercial operation and we recognize that.” [County Board Record, Hearing Recording].

17. Meredith Taylor urged the County Board to reevaluate the Assessor’s figures for range land and irrigated land based on ongoing drought conditions. She told the County Board: “We enjoy training the horses, we think it is a major part of an operation that is agricultural. It is what people do in the upper country. Horses just seem to blend with the land a lot better. So we do what we can to make that part of the business agricultural and make it work…this year we are leasing more horses or leasing more land to horses. All of that fluctuates as the drought allows the production of the forage. It is all contingent on the weather.” [County Board Record, Hearing Recording]. Taxpayers did not provide testimony or other evidence indicating what adjustment needed to be made to account for the drought conditions. Mr. Taylor testified they received the Assessor’s figures on their land’s capability to produce agricultural products on June 19, 2007, and thought they were high in a couple of places or a little bit high but he did not quantify the difference. [County Board Record, Hearing Recording].

18. In response to a question from the Assessor, Taxpayers corrected the information previously provided regarding the sale of honey. Taxpayers told the County Board only 3 gallons of honey were produced and sold for $45, rather than eight gallons sold for $120 as reported to the Assessor in April. Supra ¶ 6. Taxpayers also confirmed they had not previously told the Assessor that they were claiming the sale of a horse as agricultural income. [County Board Record, Exhibit M, p. 79; Hearing Recording]

19. Taxpayers’ claimed income from agricultural operations in 2006 was $1,935 which included $540 from the lease of horse pasture, $550 from the sale of five tons of hay; $800 from the sale of a horse; and $45 from the sale of 3 gallons of honey. [County Board Record, Exhibit M, p. 79; Hearing Recording].

20. Eileen Oakley testified she was the Fremont County Assessor and was certified as a property tax appraiser by the State of Wyoming. [County Board Record, Hearing Recording].

21. The Assessor presented a complete description of the Taxpayers’ property. The market value of the property was determined by the Assessor using the CAMA (Computer Assisted Mass Appraisal) system mandated by the Department. [County Board Record, Exhibit C, p. 33; Hearing Recording].

22. The Assessor told the County Board to qualify for agricultural classification a property must meet the requirements of the Wyoming statutes and the guidelines of Chapter 10 of the Department Rules which govern agricultural classification. [County Board Record, Exhibit A, pp. 15-19; Hearing Recording].

23. The Assessor told the County Board she received an e-mail from the Taxpayers on May 7, 2007, informing her of additional income to be added to the list they had sent on April 3, 2007. The e-mail explained they had produced about 12 tons of hay and sold 5 tons for $110 per ton for $550, and had leased pasture for grazing for $540. The e-mail also stated “we had to purchase 11 tons of hay and contract winter horse pasture, we sell hay and lease pasture for horses owned by others we use in our outfitting business. With this arrangement, we are able to make $45 per AUM for a total of $1,080.” [County Board Record, Exhibit K, pp. 66-67; Hearing Recording].

24. The Assessor discussed Exhibit M, a receipt for the sale of one bay gelding by the Taxpayer for $800 with the County Board. She stated the receipt was received late and had not previously been furnished by Taxpayers. She argued that selling a horse is not necessarily agricultural income. To qualify as agricultural, it needs to be a product which has been raised from the land. [County Board Record, Exhibit M, p.69; Hearing Recording].

25. The Assessor argued that Taxpayers’ renting or leasing pasture for horses and other animals used to derive a commercial income did not qualify as agricultural income. She relied on the State Board decision in James Hulsey, State Board Docket No. 2001-163 (April 26, 2002), [County Board Record, Exhibit O, pp. 80-83], and quoted the following language in support of her position: “It is logical to consider dude ranches and the renting of horses as a commercial venture rather than an agricultural venture. The horses on a dude ranch serve as entertainment and a tourist attraction rather than a venture to raise food or fiber from the land.” [County Board Record, Exhibit C, p. 36; Exhibit O, p. 82; Hearing Recording]. It was the Assessor’s opinion that Taxpayers’ outfitting income was from a commercial operation. [County Board Record, Exhibit C, pp.35-36; Hearing Recording].

26. The Assessor prepared a quantitative analysis to determine whether the Taxpayers had used their land consistent with the land’s capability to produce under normal conditions using elements of the methods prescribed by the Department for valuation of all agricultural lands. [County Board Record, Exhibit C, p. 36; Hearing Recording].

27. After subtracting two acres from Taxpayers’ total acreage to account for a residential farmstead, she determined a productive value for the remaining 44.47 acres of Taxpayers’ land.

28. The Assessor used the Lander Area Soil Survey to determine the land soil types for Taxpayers’ property. The Assessor determined the pertinent Land Resource Area (LRA) and the productive class for soil type. The Assessor then determined the productive value for each of Taxpayers’ soil types using the 2007 Agricultural Land Valuation Study prepared by the Department. [County Board Record, Exhibit C, p. 36; Hearing Recording].

29. The Assessor classified 8.5 acres of Taxpayers’ land as irrigated crop land and determined its productive value in terms of tons of hay per acre. [County Board Record, Exhibit C, p. 36]. The Assessor classified Taxpayers’ irrigated crop land as LRA 4, Class V with production capacity determined by the Assessor of 1.4 tons per acre. [County Board Record, Exhibit C, p. 36; Hearing Recording]. The Assessor’s selected production capacity was within the range set by the Department’s 2007 Agricultural Land Valuation Study. [County Board Record, Exhibit B, p. 25].

30. The Assessor multiplied Taxpayers’ irrigated crop land acres by production per acre of 1.4 tons to reach an expected total production of 11.9 tons. She then multiplied this expected total tonnage by a average revenue estimate of $80 per ton of hay and rounded down to reach an expected total of $952 revenue for hay production. [County Board Record, Exhibit C, p. 36; Hearing Recording].

31. The assessor classified 8.56 acres of Taxpayers’ land as range land, LRA 5, Class I, with a production value of 1.5 AUM’s per acre for a total of 12.84 AUM’s. [County Board Record, Exhibit B, p. 29; Exhibit C, p. 36; Hearing Recording].

32. The Assessor classified 15 acres of Taxpayers’ land as Range-Irrigated, LRA 5, Class I, with a production value of l.5 AUM’s per acre for a total of 22.5 AUM’s. [County Board Record, Exhibit B, p. 29; Exhibit C, p. 36; Hearing Recording].

33. The Assessor classified 12.42 acres of Taxpayers’ land as Range, LRA 5, Class III, with a production value of 0.2 AUM’s per acre for a total of 2.48 AUM’s. [County Board Record, Exhibit B, p. 29; Exhibit C, p. 36; Hearing Recording].

34. The total AUM’s for Taxpayers’ range land of 37.82 AUM’s was taken times the Taxpayers’ reported value of $45 per AUM to establish a production value of $1,701.90 for the range land. [County Board Record, Exhibit C, p. 36; Hearing Recording].

35. Finally, the Assessor added the calculated values for the irrigated crop land ($952) and for the range land ($1,701.90) to determine a total productive value for Taxpayers’ land of $2,653.90, [County Board Record, Exhibit C, p. 36; Hearing Recording], and concluded Taxpayers’ claimed income was less than their land’s capacity to produce. [County Board Record, Hearing Recording].

DISCUSSION OF ISSUES AND APPLICABLE LAW

36. Taxpayers challenge the the County Board decision affirming the Assessor’s denial of agricultural classification for their land in Fremont County.

37. Article 15, § 11(b) of the Wyoming Constitution provides in pertinent part that: “[a]ll taxable property shall be valued at its full value as defined by the legislature except agricultural and grazing lands which shall be valued according to the capability of the land to produce agricultural products under normal conditions.”

38. The classification of land as agricultural requires fulfilment of four statutory requirements:

(x) The following shall apply to agricultural land:

(A) The department shall determine the taxable value of agricultural land and prescribe the form of the sworn statement to be used by the property owner to declare that the property meets the requirements of subparagraph (B) of this paragraph. In determining the taxable value for assessment purposes under this paragraph, the value of agricultural land shall be based on the current use of the land, and the capability of the land to produce agricultural products, including grazing and forage, based on average yields of lands of the same classification under normal conditions;

(B) Contiguous or noncontiguous parcels of land under one (1) operation owned or leased shall qualify for classification as agricultural land if the land meets each of the following qualifications:

(I) The land is presently being used and employed for an agricultural purpose;

(II) The land is not part of a platted subdivision;

(III) If the land is not leased land, the owner of the land has derived annual gross revenues of not less than five hundred dollars ($500.00) from the marketing of agricultural products, or if the land is leased land the lessee has derived annual gross revenues of not less than one thousand dollars ($1,000.00) from the marketing of agricultural products; and

(IV) The land has been used or employed, consistent with the land's size, location and capability to produce as defined by department rules and the mapping and agricultural manual published by the department, primarily in an agricultural operation, or the land does not meet this requirement and the requirement of subdivision (III) of this subparagraph because the producer:

(1) Experiences an intervening cause of production failure beyond its control;

(2) Causes a marketing delay for economic advantage;

(3) Participates in a bona fide conservation program, in which case proof by an affidavit showing qualification in a previous year shall suffice; or

(4) Has planted a crop that will not yield an income in the tax year.

Wyo. Stat. Ann. § 39-13-103(x).

39. The Department is required to confer with, advise and give necessary instructions and directions to the county assessors as to their duties, and to promulgate rules and regulations necessary for the enforcement of all tax measures. Wyo. Stat. Ann. § 39-11-102(c)(xvi) and (xix). In particular, except as provided by law for specific property, the Department “shall prescribe by rule and regulation the appraisal methods and systems for determining fair market value using generally accepted appraisal standards.” Wyo. Stat. Ann. § 39-13-103(b)(ii).

40. A county assessor has a corresponding duty to annually value property within the assessor’s county and in doing so to “[f]aithfully and diligently follow and apply the orders, procedures and formulae of the department of revenue or orders of the State Board of Equalization for the appraisal and assessment of all taxable property.” Wyo. Stat. Ann. §18-3-204(a)(ix).

41. The Department of Revenue Rules contain this definition of “agricultural land”:

(a) "Agricultural land" means contiguous or noncontiguous parcels of land

presently being used and employed for the primary purpose of providing gross revenue from agricultural or horticultural use or any combination thereof unless part of a platted subdivision. Agricultural land shall generally include land that is actively farmed, ranched or is used to raise timber for timber products to obtain a fair rate of return.

Rules, Wyoming Department of Revenue, Chapter 10 § 3(a).

42. The Department of Revenue Rules also contain a definition of “non-agricultural lands.”

(c) "Non-agricultural lands" shall include but not be limited to lands as described in the State of Wyoming market valuation of Residential, Commercial and Industrial Lands as published by the Department of Revenue, Ad Valorem Tax Division:

(i) Lands classified within neighborhood boundaries as residential, commercial, industrial or rural, whether vacant or improved;

(ii) Lands in active transition from agricultural use to residential, commercial or industrial use, which includes creation or division of a tract, parcel or other unit of land for the purpose of sale or development for such use.

(iii) Residential subdivision lands developed with either predetermined floor plans and elevations or custom buildings;

(iv) Farmsteads with lands occupied by buildings which constitute the homesite including one or more acres of land used in direct connection with the homesite;

(v) Condominium complexes with proportionate interests in ownership of the land;

(vi) Commercial land used for retail stores and shops, commercial parking, high-rise structures, shopping centers, offices, apartment houses, warehouses, commercial feed lots, dude ranch facilities, and other commercial or income purposes;

(vii) Land or land and improvements altered to accommodate industrial uses for assembling, processing or manufacturing a product or in providing a service;

(viii) Topsoil is removed or topography is disturbed to the extent that the property cannot be used to raise crops, timber or to graze livestock.

(ix) Resort or recreational lands, including dude ranch facilities, summer homes or mountain cabins; and

(x) Parcels of land forty (40) acres or less unless the landowner provides proof that such land should otherwise be classified as agricultural land.

(xi) Land zoned for purposes, which exclude agricultural uses.

Rules, Wyoming Department of Revenue, Chapter 10 § 3(c).

43. Administrative rules have the force and effect of law, Wyo. Dep’t of Revenue v Union Pacific Railroad Co., 2003 WY 54,¶ 18, 67 P.3d 1176, 1184 (Wyo. 2003); Painter v. Abels, 998 P.2d 931, 939 (Wyo. 2000), and are binding on an assessor.

44. With regard to appeals of property tax matters, the Wyoming Supreme Court has stated:

The Department’s valuations for state-assessed property are presumed valid, accurate, and correct. This presumption can only be overcome by credible evidence to the contrary. In the absence of evidence to the contrary, we presume that the officials charged with establishing value exercised honest judgement in accordance with the applicable rules, regulation, and other directives that have passed public scrutiny, either through legislative enactment or agency rule-making, or both. The petitioner has the initial burden to present sufficient credible evidence to overcome the presumption, and a mere difference of opinion as to value is not sufficient. If the petitioner successfully overcomes the presumption, then the Board is required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof. Once the presumption is successfully overcome, the burden of going forward shifts to the DOR to defend its valuation. The petitioner, however, by challenging the valuation bears the ultimate burden of persuasion to prove by a preponderance of the evidence that the valuation was not derived in accordance with the required constitutional and statutory requirements for valuing state-assessed property...

****

Colorado Interstate Gas Company v. Wyoming Department of

Revenue, 2001 WY 34,¶¶ 9-11, 20 P.3d 528, ¶¶ 9-11 (Wyo.

2001) (citations omitted).

Airtouch Communications, Inc. v. Dep’t of Revenue, 2003 WY 144, ¶ 12, 76

P.3d 342, 348 (Wyo. 2003).

Thunder Basin Coal Co. v. Campbell County, Wyoming Assessor, 2006 WY 44 ¶ 13, 132 P.3d 801, 806 (Wyo. 2006). This presumption applies equally to an assessor’s valuation of locally assessed property. Id. at fn. 1.

45. Of the four statutory requirements to qualify for agricultural classification, the County Board found the Taxpayers failed to prove two separate requirements: 1) that the land was being employed for an agricultural purpose and 2) that the land was employed primarily as an agricultural property based on the capability of the land to produce agricultural products under normal conditions based on a comparison of their income to the Assessor’s productive capacity calculations. Wyo. Stat. Ann. § 39-13-103(x)(B)(I) & (IV). [County Board Record, Decision of the Fremont County Board of Equalization, pp. 86-90].

46. There are no issues in this case concerning whether the land is in a platted subdivision or whether the Taxpayers derived annual gross revenues of not less than five hundred dollars ($500.00) from the marketing of agricultural products. The County Board found the Taxpayers met these other two statutory requirements. Wyo. Stat. Ann. § 39-13-103(x)(B)(II) & (III). [County Board Record, Decision of the Fremont County Board of Equalization, pp. 86-90].

A. Present Use for Agricultural Purpose

47. The first statutory requirement for the land to qualify for agricultural valuation is the present use and employment of the land for an agricultural purpose. Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(I).

48. “Agricultural purpose” is defined by statute as follows:

"Agricultural purpose," as used in W.S. 39-13-103(b)(x), means the following land uses when conducted consistent with the land's capability to produce:

(A) Cultivation of the soil for production of crops; or

(B) Production of timber products or grasses for forage; or

Wyo. Stat. Ann. § 39-14-101(a)(viii).

49. This statutory requirement of an agricultural purpose is reflected in the Department’s definition of “Agricultural land” which states in part: “Agricultural land shall generally include land that is actively farmed, ranched or is used to raise timber for timber products to obtain a fair rate of return.” Rules, Wyoming Department of Revenue, Chapter 10 § 3(a).

50. It is also reflected in the Department’s definition of land used for “…other commercial or income purposes” as non-agricultural lands. Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(vi).

51. The classification and valuation of land as agricultural contemplates the sale of agricultural products. Wyo. Stat. Ann. §§ 39-13-103(a)(x)(A), supra ¶ 38 (capability of the land to produce agricultural products); 39-13-103(a)(x)(B)(III), supra ¶ 38 (derived annual gross revenues…from the marketing of agricultural products); 39-13-103(a)(x)(B)(IV), supra ¶ 38 (production failure…marketing delay…will not yield income in the tax year…).

52. The Department’s Rules recognize this necessary agricultural income component. The Rules provide the following example of commercial operations which do not qualify as agricultural:

Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(vi).

53. While a commercial operation may use the same types of resources as an agricultural operation, there is a discernable difference. Income from commercial operations is not derived from the sale of agricultural products produced on agricultural land.

54. Taxpayers complain the Assessor incorrectly characterized their operations as a dude ranch. [Taxpayer’s Brief, p. 2]. We view the Assessor’s comments as drawing attention to the distinction between agricultural and non-agricultural use.

55. The use of real property as a “dude ranch” in the Department’s Rules provides a clear example of this distinction. Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(vi), supra ¶ 42. The use of land, livestock, forage, feed and other resources in a dude ranch operation resembles an agricultural operation. It is, however, significantly different in one respect. The income from the dude ranch is derived from the services provided to those who visit the ranch, not the sale of agricultural products made available for the visitors to enjoy as part of their ranch experience. The same is true for the operations of an outfitter.

56. The outfitting business is regulated in Wyoming through a board of outfitters and guides. Wyo. Stat. Ann. §§ 23-2-408, 23-2-410. Persons licensed as outfitters in Wyoming are considered professionals. Prokop v. Hockhalter, 2006 WY 75, ¶ 11, 137 P.3d 131, 134-135 (Wyo. 2006). To obtain an outfitter’s license, a person must meet specific qualifications including age, experience, and ownership or control of necessary equipment and facilities and must pass an examination. Wyo. Stat. Ann. §§ 23-2-407, 23-2-411, 23-2-413. Outfitters are subject to sanctions, including license suspension, and criminal penalties are imposed for specified violations. Wyo. Stat. Ann. §§ 23-2-416, 23-2-417.

57. A licensed professional outfitter is authorized to provide services to hunters and derives income for providing the necessary equipment, vehicles, tack and livestock to hunters. An outfitter’s income is not derived from the sale of agricultural products. It is a commercial operation, much like a dude ranch operation, and the use of land to support the provision of outfitting services is not agricultural. Wyo. Stat. Ann. § 39-13-103(x)(B)(I), supra ¶ 38; Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(vi), supra ¶ 42.

58. The Board concludes lands principally employed in commercial operations such as Taxpayers’ outfitting business are not entitled to agricultural classification.

59. Taxpayers’ admission that they use their land to support their outfitting business is substantial evidence of the Taxpayers’ non-agricultural use of their land and supports the County Board Decision. Supra ¶ 14. Taxpayers’ characterization of income for federal income tax purposes as outfitting income also underscores the primary role their land plays in their outfitting business and adds support to the County Board decision. Supra ¶ 14. Taxpayers’ offer to submit an amended federal income tax return does not change this fact. Together these facts are evidence that a reasonable mind might accept in support of the conclusion of the County Board that Taxpayers’ use of their land was not agricultural.

60. We find the County Board conclusion that Taxpayers were using their land as part of a commercial operation, i.e. their professional outfitting business, was supported by substantial evidence in the record and was neither arbitrary nor capricious.

B. Use Consistent With Size, Location and Capability to Produce Primarily in an Agricultural Operation.

61. The Wyoming Constitution grants favorable treatment to agricultural and grazing lands by providing that they “shall be valued according to the capability of the land to produce agricultural products under normal conditions.” Supra ¶ 37. The statutory definition of agricultural purposes echoes this language, limiting those purposes to being consistent with the land’s “capability to produce.” Supra ¶ 38. Land can only qualify for agricultural classification if it meets a fourth and related statutory test of being “used or employed, consistent with the land’s size, location and capability to produce as defined by department rules and the mapping and agricultural manual published by the department, primarily in an agricultural operation. . .” Supra ¶ 38. The qualifying phrase, “consistent with the land’s capability to produce,” appears repeatedly in the Department’s Rules. E.g., Rules, Wyoming Department of Revenue, Chapter 10 §§ 3(a)(i), 3(a)(ii), 3(a)(ii)(B), 3(a)(ii)(B)(II), 3(a)(ii)(B)(III), 3(a)(ii)(B)(IV).

62. The pertinent definition of “consistent” is “in agreement or harmony; in accord; compatible.” Webster’s New World College Dictionary, 4th Edition (2001), p. 311. The fourth statutory test for agricultural classification requires use of the land in an actual agricultural operation, measured generally by the same constitutional standard providing favorable property tax treatment – the land’s capability to produce.

63. The Assessor prepared a calculation to quantify her view that Taxpayers did not meet this requirement. She first excluded two acres from Taxpayers’ parcels to account for their residence, as required by the Department’s Rules and consistent with her practice for other agricultural land in Fremont County. Rules, Wyoming Department of Revenue, Chapter 10 § 3(c)(iv). Taxpayers did not dispute this exclusion. The Assessor then calculated a production value for the remaining acres at $2,654. Supra ¶¶ 27-35. This calculation is consistent with statutory requirements of the Department’s mapping and agricultural manual, which we have described in detail in other cases arising from Fremont County. E.g., Appeal of Fremont County Assessor (Dechert Property), Docket No. 2004-05, February 14, 2005, 2005 WL 301141(Wyo. St. Bd. of Eq.). The Assessor’s method employed a quantitative analysis which relied on elements of the method prescribed by the Department Rules for valuation of agricultural lands. Rules, Wyoming Department of Revenue, Chapters 10 and 11.

64. The Assessor questioned Taxpayers’ calculation of their agricultural income. The Assessor argued that the $540 lease agreement could not be used because the lessee did not furnish information to the Assessor showing lessee had income over $1000.00 from marketing agricultural products as required by the statute. Wyo. Stat. Ann. § 39-13-103(x)(B)(III), supra ¶ 38. The Assessor also argued the $800 from the sale of a horse was commercial and should not be used to determine whether Taxpayers were using their land consistent with its capability to produce under normal conditions. Rules, Wyoming Department of Revenue Chapter 10 § 3(c)(vi), supra ¶ 42. The Assessor also questioned the $550 receipt from the sale of 5 tons of hay when the Taxpayer had raised 12 tons of hay but then later bought 11 tons of hay to feed his horses. Supra ¶ 23. Based on this comparison, she concluded Taxpayers had not employed their land consistent with its capability to produce. Supra ¶ 35. We would have concluded that all of these arguments had merit.

65. The County Board nonetheless rejected the Assessor’s arguments concerning the inclusion of the income from the lease and the sale of a horse. This made no difference for the outcome because the County Board found Taxpayers’ claimed income of $1935 did not meet the statutory requirement of land use consistent with its capability to produce under normal conditions for agricultural classification based on the Assessor’s calculated income of $2653. This finding is supported by substantial evidence in the record.

66. Taxpayers complain they were not made aware of the requirement of land use consistent with its capability to produce or the method and amounts used by the Assessor to quantify that capability. [Taxpayers’ Brief, p. 1]. Taxpayers’ awareness has nothing to do with enforcement of the law, but even so, their claim is not credible. The record reflects that Taxpayers were aware from the outset of the requirement of use of their land consistent with the land’s capability to produce and the applicable definitions. Taxpayers checked the statement on their Affidavit for Agricultural Classification claiming “[t]he land has been used consistent with the land’s size location and capability to produce as an agricultural operation as defined by Department of Revenue Rules and the Mapping & Agricultural Manual that is published by the Department of Revenue.” [County Board Record, Exhibit F, pp 56-57]. Taxpayers acknowledged they were aware of the Assessor’s application of the methodology to their property by the time of the hearing and did not object to the introduction at the hearing of Exhibit C which contained the Assessor’s calculations. Exhibit C was provided to the Taxpayers on June 19, 2007. Supra ¶ 17. [County Board Record, Exhibit C, pp. 33-37]. In addition, the Department’s Rules and Mapping & Agricultural Manual were also exhibits at the County Board hearing. [County Board Record, Exhibits A, B, pp. 1-32]. We find Taxpayers’ complaint without merit.

67. Taxpayers also claim the production of their land was affected by drought. Supra ¶ 17. [Taxpayers’ Brief, p. 1]. The statute expressly addresses the problem that “normal conditions,” Wyo. Const. art. 15, § 11(b), may not prevail in any given assessment year. Unusual conditions may interfere with an assessor’s ability to determine whether the land is being used consistent with its capability to produce. An agricultural producer may accordingly be excused from compliance with the fourth requirement for agricultural classification, and the minimum gross revenue requirement of Wyo. Stat. Ann. § 39-13-103(x)(B)(III), if it:

(1) Experiences an intervening cause of production failure beyond its control;

(2) Causes a marketing delay for economic advantage;

(3) Participates in a bona fide conservation program, in which case proof by affidavit showing qualification in a previous year shall suffice; or

(4) Has planted a crop that will not yield an income in the tax year.

Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV); see Rules, Wyoming Department of Revenue, Chapter 10 § 3(a)(ii)(A). The Taxpayers did not initially claim any excuse from compliance with Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV), supra ¶ 4, and subsequently offered no evidence other than their personal opinions to support any such excuse from compliance with Wyo. Stat. Ann. § 39-13-103(b)(x)(B)(IV), supra ¶ 38.

68. The Wyoming Supreme Court has noted that “a strong presumption favors the Assessor’s valuation,” and the ultimate burden of persuasion to prove the valuation determined by the Assessor was not derived pursuant to constitutional and statutory requirements must be shouldered by the taxpayer challenging the value. Britt v. Fremont County Assessor, 2006 WY 10, ¶ 23, 126 P.3d 117, 125 (Wyo. 2006). Taxpayers did not fulfill their ultimate burden in this case. Taxpayers presented no evidence challenging the Assessor’s overall methodology used to determine whether the production capability requirement of agricultural land classification had been met.

69. We find ample evidence in the record to support the County Board’s finding that the Taxpayers did not meet their burden of persuasion to establish that their property qualified for agricultural classification. The County Board decision is supported by substantial evidence and is not arbitrary or capricious.

C. Miscellaneous Matters.

70. Taxpayers attempted to bolster their position by incorporating information related to 2007 in their brief to this Board, information which was not presented to the County Board. The submission of this information was not proper and cannot be considered in this appeal. The County Board is required to base its decision on only the evidence before it. Information not available to the County Board may not be considered by the State Board on appeal. Chicago Burlington & Quincy Railroad Co. v. Bruch, 400 P.2d 494, 497-498 (Wyo. 1965). As we recently noted:

The ultimate burden or persuasion rested with the Taxpayer and had to be met at the County Board hearing. It was incumbent on the Taxpayer to present all relevant evidence available at the County Board hearing. A Taxpayer may not supplement the record at a later time, and deprive the County Board of the opportunity of considering the evidence in the first instance without specific application to the State Board according to its rules. See Rules Wyoming State Board of Equalization, Chapter 3 § 8.

Chuck Hoelzen, Docket No. 2006-103, ¶ 76, March 9, 2007, 2007 WL 778605 (Wyo. St. Bd. Eq.).

71. Taxpayers complain “[t]here is a double standard being applied in Fremont County regarding agricultural income derived from horses, since some horse operations are considered agricultural and others are not.” [Taxpayers’ Brief, p. 2]. Taxpayers presented no evidence establishing that there were other taxpayers similarly situated to Taxpayers who were receiving agricultural classification.

72. While the inclusion of the income from the sale of one horse may not be sufficient to establish an agricultural use under all circumstances, compare Lane R. and Dianna K. Ross, Docket No. 2000-157, March 14, 2001, 2001 WL 314339 (Wyo. St. Bd. Eq.) with Appeal of Brenda L. Arnold, Laramie County Assessor from a Decision of the Laramie County Board of Equalization (Paul J. Steele) Docket No. 96-109, June 13, 1997, 1997 WL 345863 (Wyo. St. Bd. Eq.), the County Board accepted Taxpayers’ income from the sale of one horse in evaluating whether Taxpayers used their land consistent with its capability to produce in an agricultural operation. Taxpayers accordingly have no basis to complain on this point.

73. We conclude there was substantial evidence to support the determination of the County Board affirming the Assessor’s decision to deny agricultural classification for Taxpayers’ land, and the County Board decision was not otherwise arbitrary, capricious, or contrary to law.

ORDER

IT IS THEREFORE HEREBY ORDERED the decision of the Fremont County Board of Equalization affirming the Fremont County Assessor’s denial of Taxpayers’ request for agricultural classification for their property is affirmed.

Pursuant to Wyo. Stat. Ann. §16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in the appropriate district court by filing a petition for review within 30 days of the date of this decision.

DATED this day of March, 2008.

STATE BOARD OF EQUALIZATION

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Alan B. Minier, Chairman

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Thomas R. Satterfield, Vice-Chairman

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Thomas D. Roberts, Board Member

ATTEST:

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Wendy J. Soto, Executive Secretary