Evans & Sutherland Computer Corp., v. Utah State Tax Comm.

State Tax Commission ("the Commission") concerning a real property tax dispute with the Salt Lake

County Board of Equalization ("the Board"). The district court ruled that the statute granting that court

jurisdiction to review the Commission's decision, section 59-1-601 of the Utah Code, did not apply

retroactively and, as a consequence, the court did not have jurisdiction to hear Evans & Sutherland's

case. We have jurisdiction over this matter under section 78-2-2(3)(j) of the Utah Code. We reverse the

district court's ruling that section 59-1-601 does not apply retroactively to this dispute, but we affirm the

dismissal of the action because we find that section 59-1-601 violates article XIII, section 11 and article

the Board on six of its buildings for property tax purposes and on the parcels of land on which the

buildings are located for privilege tax purposes. On June 3, 1993, the Commission initiated a formal

hearing on the valuation issues. The Commission issued its "Findings of Fact, Conclusions of Law, and

Final Decision" on February 2, 1994. Evans & Sutherland timely filed a request for reconsideration of

the Commission's decision concerning the valuation of the six buildings for property tax purposes.⁽²⁾ See

Utah Code Ann. § 63-46b-13(1)(a) (providing twenty days within which to file written request for

reconsideration of agency orders). Because the Commission did not act on the request within twenty days

after it was filed, the request for reconsideration was deemed denied on March 15, 1994, pursuant to

section 63-46b-13(3)(b) of the Utah Code. Instead of acting on the request for reconsideration within the

twenty-day period, the Commission sought to extend indefinitely its period of time for considering and

acting on the request in order to give the parties time to brief the issues raised in the request and to give

the Commission sufficient time to consider the request. Evans & Sutherland filed a protective petition for

review with this court on April 12, 1994.⁽³⁾ See Utah Code Ann. § 63-46b-14(3)(a) (directing parties to

file "petition for judicial review of final agency action within 30 days after the date that the order

constituting the final agency action is issued or is considered to have been issued under Subsection 63-46b-13(3)(b)"). We stayed the petition for review until after the issuance of the Commission's order on

the request for reconsideration and the expiration of time for filing any appeals pursuant thereto. The

Commission did not issue an order on Evans & Sutherland's request until January 27, 1995, when the

the Code to permit district court review by trial de novo of Commission decisions resulting from formal

hearings. Taxpayers Appeal from Administrative Rulings Act, ch. 248, sec. 2, § 59-1-601, 1993 Utah

Laws 1255, 1255. Prior to the passage of that statute, review was in this court only and the standard of

review, governed by section 59-1-610, was more restrictive. See Utah Code Ann. § 63-46b-16(1); id.

§ 78-2-2(3)(e)(ii); see also id. § 59-1-610. As amended, section 59-1-601 provides that "beginning

July 1, 1994, the district court shall have jurisdiction to review by trial de novo all decisions by the [tax]

commission resulting from formal adjudicative proceedings." Id. § 59-1-601(1) (1996). The Board

moved to dismiss Evans & Sutherland's petition on the grounds that section 59-1-601 does not apply

retroactively and is unconstitutional. The district court granted the Board's motion to dismiss, concluding

that the amended section 59-1-601 effected a substantive change in the law, making retroactive

application impermissible. The district court did not address the constitutional question. Evans &

question of law, which we review for correctness without deference to the district court. See Madsen v.

Borthick, 769 P.2d 245, 252-53 (Utah 1988). Two rules of statutory construction are relevant to our

assessment. One is the "long-standing rule of statutory construction that a legislative enactment which

alters the substantive law . . . will not be read to operate retrospectively unless the legislature has clearly

expressed that intention." Id. at 253 (citations omitted); see also Utah Code Ann. § 68-3-3. The intent to

have a statute operate retroactively may be indicated by explicit statements that the statute should be

applied retroactively, see, e.g., Utah Code Ann. § 19-6-302.5(3); id. § 19-6-402.5(3); id. § 77-18-17;

see also id. § 57-15-2, or by clear and unavoidable implication that the statute operates on events already

past. See 82 C.J.S. Statutes § 414 (1953). The second relevant rule of statutory construction, which is

often referred to as an exception to the first, permits retroactive application "'where a statute changes

only procedural law by providing a different mode or form of procedure for enforcing substantive

rights'" without enlarging or eliminating vested rights. Roark v. Crabtree, 893 P.2d 1058, 1062 (Utah

second rule of construction permits retroactive operation. See, e.g., id. at 1061-62. However, the terms

of the first rule of statutory construction indicate that it applies only when a statute alters the substantive

law. Consequently, where, as here, a statute does not contain an express retroactivity provision, the

better approach is to first determine whether a statute is substantive or procedural and then apply the

in relevant part, "In addition to the jurisdiction granted in Section 63-46b-15, beginning July 1, 1994, the

district court shall have jurisdiction to review by trial de novo all decisions by the commission resulting

from formal adjudicative proceedings." Utah Code Ann. § 59-1-601(1) (1996).⁽⁵⁾ Before the enactment

of this section, the district court did not have jurisdiction to review Commission decisions resulting from

formal adjudicative proceedings. The only avenue for challenging such decisions was to file a petition

for review with this court. See id. § 63-46b-16(1); id. § 78-2-2(3)(e)(ii). Section 59-1-601 grants parties

the choice of seeking review in the district court by trial de novo or in this court by the standard of

and Evans & Sutherland. The substantive law pertinent to this dispute has not been changed; instead,

section 59-1-601 merely affects the judicial machinery available for determining the substantive rights.

See Salt Lake Child & Family Therapy Clinic v. Frederick, 890 P.2d 1017, 1020 n.3 (Utah 1995); see

also National Parks & Conservation Ass'n v. Board of State Lands, 869 P.2d 909, 912 (Utah 1993)

(permitting retroactive application of amendments to procedural statutes "if the amendments merely

regulate the procedures for presenting and resolving a case and do not adversely affect vested rights"

(emphasis added)); State v. Burgess, 870 P.2d 276, 280 n.6 (Utah Ct. App. 1994). It is true that a

different standard of review applies in cases before the district court, and we assume this was done with a

purpose, but that fact does not make section 59-1-601 substantive. See Board of Equalization v. State

Tax Comm'n ex rel. Benchmark, Inc., 864 P.2d 882, 884 (Utah 1993) (ruling that section 59-1-610,

retroactively for two reasons. First, such an application will deprive the Board of a final decision

rendered in its favor; second, permitting de novo review in the district court will expose the Board to

substantial additional costs of litigation because a de novo proceeding means starting over. The latter

argument is easily dismissed: parties do not possess a vested right to avoid additional costs of litigation

on review of an agency decision. However, the first of the Board's arguments requires greater

consideration to determine whether retroactive application does deprive the Board of a final decision

rendered in its favor. The Board bases its contention that it will lose a final judgment rendered in its

favor on the following: (1) The Commission issued its "Findings of Fact, Conclusion of Law, and Final

Decision" on February 2, 1994; (2) Evans & Sutherland timely filed a request for reconsideration, but the

Commission did not act on the request within the twenty-day "considered denied" period established by

section 63-46b-13(3)(b); and (3) the request for reconsideration was deemed denied by operation of

section 63-46b-13(3)(b) in March of 1994. Therefore, the Board argues, the Commission's February 2nd

conclude that the Board did not have a vested right in the February 2nd decision, because the

January 27th decision supplanted that decision. Though the February 2nd decision became an appealable

final order on March 15th by virtue of section 63-46b-13(3)(b), which deems denied any request for

reconsideration not acted upon within twenty days of its filing date and thereby satisfies the requirements

of section 63-46b-14 for appealing an agency action, the Commission exercised its continuing jurisdiction

even after the request has been deemed denied under section 63-46b-13(3)(b). There, we interpreted

section 63-46b-14(3)(a)'s direction to parties to file their petition for review of an agency decision "within

30 days after the date that the order constituting the final agency action is issued or is considered to have

been issued under Subsection 63-46b-13(3)(b)." Id. at 815-16. We agreed with an earlier court of

appeals decision that "found that if an agency chooses to issue an order denying a petition for

reconsideration after the twenty-day presumptive denial period, the actual date of issuance would mark

the beginning of the thirty-day time period." Id. at 816 (citing 49th Street Galleria v. Tax Comm'n, 860

P.2d 996, 999 (Utah Ct. App. 1993)). In the instant case, the Commission issued an order denying

Evans & Sutherland's request for reconsideration after the "considered denied" period of section 63-46b-13(3)(b) had expired. Under Harper Investments, the order issued on January 27, 1995, not the order of

February 2, 1994, is the final decision of the Commission, and Evans & Sutherland properly sought

review of that final decision.⁽⁸⁾ Therefore, the Board does not lose a vested right in a final decision of the

resulting from formal adjudicative proceedings." Utah Code Ann. § 59-1-601(1) (1996). This language

does not address whether the legislature intended the statute to apply to all Commission decisions,

regardless of whether the facts constituting the claim arose prior to the effective date of the statute,

whether the claim was pending before the Commission prior to the effective date, or whether the

Commission issued its decision before either the effective date or July 1, 1994. The legislature

eliminated this ambiguity with the 1997 amendment to section 59-1-601. That section now provides in

relevant part that "beginning July 1, 1994, the district court shall have jurisdiction to review by trial de

novo all decisions issued by the commission after that date resulting from formal adjudicative

proceedings." Centrally Assessed Taxpayers Amendments, ch. 309, sec. 2, § 59-1-601(1), 1997 Utah

Legislative Report 212, 213. This amendment clearly delineates the district court's jurisdiction,

permitting review of all Commission decisions resulting from formal adjudicative proceedings and issued

after July 1, 1994, irrespective of whether the facts constituting the claim arose prior to the effective date

Okland Constr. Co. v. Industrial Comm'n, 520 P.2d 208, 210-11 (Utah 1974); cf. Visitor Info. Ctr.

Auth. v. Customer Serv. Div., State Tax Comm'n, 930 P.2d 1196, 1198 (Utah 1997) (noting that

amendment will be presumed to change rather than to clarify existing rights where language of original

statute is plain). This exception applies with particular force when, as here, the clarifying amendment is

to a procedural statute. Foil v. Ballinger, 601 P.2d 144, 151 (Utah 1979). In Foil, we observed that

such amendments apply to accrued, pending, and future actions. We further noted that "an action is

pending 'from the time of its commencement until its final determination upon appeal.'" Id. (quoting

Boucofski v. Jacobsen, 104 P. 117, 120 (Utah 1909)). Consistent with our reasoning in Foil, we hold

district court review of the Commission's decision issued on January 27, 1995, not the February 2, 1994,

decision. Consequently, the district court has jurisdiction under the 1997 amended version of section

adjust and equalize the valuation and assessment of property and vests that power with the district courts.

conduct a trial de novo on matters decided by the Commission resulting from formal adjudicative

proceedings. Although denominated "review by trial de novo," this statute does not actually provide for

review of the Commission decision. Rather, it directs the district court to decide the matter afresh.

Indeed, the 1997 version of section 59-1-601 eliminated the only limitations on the district court in the

1993 version: the witnesses it may hear and the direction to review and consider the Commission's

record.⁽¹⁰⁾ The Board contends that this section's operation violates article XIII, section 11 of the Utah

Constitution, which establishes the Commission and gives it its power. Article XIII, section 11 states in

by and with the consent of the Senate, for such terms of office as may be provided by law. The State

Tax Commission shall administer and supervise the tax laws of the State. It shall assess mines and public

utilities and adjust and equalize the valuation and assessment of property among the several counties. It

shall have such other powers of original assessment as the Legislature may provide. Under such

regulations in such cases and within such limitations as the Legislature may prescribe, it shall review

proposed bond issues, revise the tax levies of local governmental units, and equalize the assessment and

valuation of property within the counties. The duties imposed upon the State Board of Equalization by

previously decided by the Commission in formal hearings. First, it argues that article XIII, section 11

provides that "under such regulations in such cases and within such limitations as the Legislature may

prescribe . . . [the Commission] shall . . . equalize the assessment and valuation of property within the

counties" (emphasis added). Section 59-1-601 contains only legislative "regulations" and "limitations."

Second, Evans & Sutherland argues that article XIII, section 3(1), which provides that "[t]he Legislature

shall prescribe by law such provisions as shall secure a just valuation for taxation of . . . property," also

gives the legislature authority to establish the review procedures it deems necessary to secure "just"

valuations. In substance, Evans & Sutherland asserts that these two provisions grant the legislature the

authority to give the district courts the power to perform the duties imposed upon the Commission by

confer the Commission's powers on other governmental entities. See Kennecott Corp. v. Salt Lake

County, 702 P.2d 451, 457 (Utah 1985); State ex rel. Pub. Serv. Comm'n v. Southern Pac. Co., 79 P.2d

25, 38 (Utah 1938); cf. State ex rel. Salt Lake City v. Eldredge, 76 P. 337, 341 (Utah 1904)

(invalidating legislation conferring power on state board of equalization to assess property situated wholly

within single county because such legislation infringed on article XIII, section 11 authority of county

boards of equalization to "adjust and equalize the valuation of the real and personal property within their

assessing utilities in the State Tax Commission. Therefore, that specific provision must be considered as

a limitation on the power of the legislature to place the assessing power in any other officer or

situation analogous to the current one. The reviewed legislation conferred jurisdiction on the district

court to "'affirm, reverse, modify or remand any order of the state tax commission, and shall grant other

relief, invoke such other remedies, and issue such orders . . . as shall be appropriate.'" Id. (quoting

Utah Code Ann. § 59-24-4 (Supp. 1983)). At issue was whether section 59-24-4 permitted the district

court to adjust mining assessments. Relying on our interpretation of article XIII, section 11 in Southern

Pacific, we stated that the legislature may not "confer the power of assessing mines, which includes

fixing valuation of mining property, on the . . . district courts." Id. We concluded that if a district court

finds that the Commission erred in making a mining assessment, section 59-24-4 permits the district court

only to "reverse and remand the matter to the Commission for a proper determination pursuant to correct

11 duty of the Commission to "adjust and equalize the valuation and assessment of property" by vesting

the district courts with jurisdiction to review by trial de novo Commission decisions on such matters. As

noted above, section 59-1-601 defines "trial de novo" as "an original, independent proceeding"; as a

result, the district court is empowered to fix valuation of property rather than merely reviewing,

reversing, and remanding to the Commission for a proper determination. This empowerment of the

district court flies in the face of our decision in Kennecott. Section 59-1-601's grant of jurisdiction to the

district court goes well beyond the legislature's power to prescribe limitations on the Commission's

ability to "adjust and equalize the valuation and assessment of property among the several counties."

Utah Const. art. XIII, § 11. Section 59-1-601 does not operate only to limit the Commission's discretion

in conducting its article XIII, section 11 duties, it effectively eliminates the Commission's role whenever

one of the parties chooses to seek review under that section. The Commission's prior decision becomes a

section 3 nor article XIII, section 11 permits the legislature to remove the Commission's power to "adjust

and equalize the valuation and assessment of property among the several counties" and to place that

amendment was that "[c]entralized administration should be provided, with adequate authority to

supervise the entire tax system." Report of Tax Revision Commission of the State of Utah at 7 (1929).

Section 59-1-601 destroys this uniformity by vesting the administration of the taxation system in the eight

separate judicial districts and in the various individual judges of those districts. See Utah Code Ann.

§ 59-1-602(1)(b). Accordingly, we hold that both the 1993 and 1997 versions of section 59-1-601 violate

functions reserved to another branch of government. The power given the Commission, part of the

courts. Whatever the merits of substituting generalist judges for the expertise of the Commission, if any

such wholesale change in the allocation of responsibility for administering this state's tax system is to be

made, it must be made by a constitutional amendment passed by the people, not by an act of the

legislature. The people established the present regime in 1930 when article XIII, section 11 was passed.

Sutherland's petition for review to this court, No. 940185, from the Commission's February 2, 1994,

order as moot because the January 27, 1995, order is the final action of the Commission. Evans &

Sutherland did timely seek review of the January 27th order but sought review under section 59-1-601,

which today we strike down as unconstitutional, instead of section 63-46b-16. To avoid the inequitable

situation of leaving Evans & Sutherland without an avenue for obtaining review of the January 27, 1995,

order, we grant Evans & Sutherland thirty days from the issuance of this opinion in which to petition for

review from that order under the statutory procedures now in place for seeking review of a final agency

action resulting from formal adjudicative proceedings. See id. § 78-2-2(2) (granting this court "authority

because section 59-1-601 is unconstitutional under article XIII, section 11 and article V, section 1. Evans

& Sutherland's prior petition for review to this court is dismissed as moot, but we grant Evans &

Sutherland thirty days from the issuance of this opinion to seek review of the Commission's January 27,

The majority states: "That provision bars the judicial branch from exercising any of the functions

reserved to another branch of government. The power given the Commission, part of the executive

statute at issue before the appellate court.

February 2, 1994, decision, "clarif[ying] that its determination of value was the full fair

market value of the property prior to the intangible value adjustments as provided for by

§ 59-2-304."

Commission to enter an order on a request for reconsideration even after the request has

been deemed denied pursuant to section 63-46b-13(3)(b) and the agency action is

appealable under section 63-46b-14. As Justice Howe noted in his dissent in Harper

Investments, where a "party has requested reconsideration by the administrative agency

but no action has been taken on the request by the end of twenty days, an appeal must

then be filed." If an appeal is not filed, a party is exposed to the risk that the agency will

never act on the request and the time for filing an appeal will expire. 868 P.2d at 817

(Howe, J., dissenting). As Justice Howe further observed, however, "If . . . the agency

later . . . acts on the request and denies it, the appeal which has been taken turns out to be

premature and must be dismissed. The party must then file a second appeal, supposedly

pay another filing fee, and continue pursuit of the appeal." Id. (Howe, J., dissenting).

Permitting the Commission sufficient time to reconsider its decisions makes sense in

terms of judicial economy: the Commission can apply its expertise and correct its errors,

avoiding the need for an appeal to the courts where generalist judges would review the

controversy. Unfortunately, the current statutory scheme does not limit the

Commission's ability to enter orders on requests for reconsideration, yet deems such

requests denied after only twenty days. This creates uncertainty as to when a

Commission decision is truly final.

district court which record shall be reviewed and considered by the district court. A

district court may not, unless the parties otherwise agree in writing, hear witnesses that

were not called to testify or consider exhibits that were not presented to the commission

at the formal hearing. If the parties do not agree, and a district court determines that

additional witnesses should be heard or additional exhibits considered in the interest of

justice, the district court shall remand the case to the commission for that purpose. This

subsection supercedes [sic] Section 63-46b-16 pertaining to judicial review of formal

id. § 63-46b-15 (Supp. 1996).

more apparent than real. The district court could avoid the witness limitation by remand

with discretion to hear the new witnesses, and the direction to review and consider the

Commission's record was inconsequential because the district court did not have to give

any deference to the findings and conclusions in the record.