Elk Hills Power v. Board of Equalization

This case presents questions regarding how the Board of Equalization (Board) may assess the value of an electric powerplant for purposes of property taxation. The issue is complicated by the circumstance that, with exceptions not relevant here, assessors may not include the value of intangible assets and rights in the value of taxable property. (Cal. Const., art. XIII, § 2; Rev. & Tax. Code, §§ 110, 212; Roehm v. County of Orange (1948) 32 Cal.2d 280 [ 196 P.2d 550 ] (Roehm).) In this case, the power company purchased “emission reduction credits” (ERCs)—credits the company had to purchase to obtain authorization to construct the plant and to operate it at certain air-pollutant emission levels. All parties agree these ERCs constitute intangible rights for property taxation purposes. However, they dispute whether the Board improperly taxed the ERCs when it assessed the powerplant. This dispute turns on our construction of Revenue and Taxation Code section 110, subdivisions (d) and (e), and section 212, subdivision (c) (hereinafter sometimes sections 110(d), 110(e), and 212(c)).

Sections 212(c) and 110(d) prohibit the direct taxation of certain intangible assets and rights,…