Challenge to Electrical Generation Property Valuation Must Be Filed Timely

State agencies are often given broad powers to adjudicate disputes, with the courts having the responsibility to review agency decisions. The timeline to review agency decisions may seem obvious, but the facts sometimes may create confusion, and in turn thwart the timely initiation of the action, which is essential for judicial review to be sought.

An electrical power cooperative (the “Co-Op”) sought judicial review of the valuation of its electrical generation property established by the State Board of Equalization (the “Board”).  By statute, the legislature allows valuation decisions to be adjudicated before the Board, and for judicial review of those determinations to be sought within 60 days of the Board’s issuance of its final decision.

The Court of Appeals addressed whether the Co-Op timely sought judicial review in Arizona Electric Power Cooperative, Inc. v. Department of Revenue, ___ P.3d ___ (App. 1CA-TX 16-0013).  On October 31, 2017, the Court ruled that the Co-Op filed its appeal after the 60 day period for an appeal provided by law had passed, although within 60 days of the correction of “inconsequential” errors in the final decision.  The Board issued the challenged valuation decision following a hearing conducted on November 13, 2015.  The Board issued its written decision and mailed the decision on November 13, 2015, the same date as the hearing.  The facts that created the backdrop for the Co-Op’s appeal began with an error in the November 13 decision.  The original decision incorrectly listed the value of the Co-Op’s property, overstating the valuation amount announced by the Board in the November 13 proceeding by $40 million.  Accordingly, the Board issued an amended notice on November 16.  The November 16 notice corrected the $40 million error, but identified the incorrect county that had valued the property.  Because of this error, and a separate typographical error in the November 16 notice, the Board issued a second amended notice on December 8, 2015.

The Co-Op filed its appeal on February 3, 2016, within 60 days of the December 8 notice but more than 60 days from the November 13 and November 16 notices.  In response to the appeal, the state filed a motion to dismiss, arguing that the Co-Op had failed to timely appeal the decision within 60 days of the November 16 notice.  The Tax Court granted the motion, and the Court of Appeals affirmed.  The Court of Appeals ruled that the Tax Court had jurisdiction to consider the appeal only if it had been timely filed.  The decision issued by the Board that was subject to appeal had been issued on November 13 when the Board announced its decision, which it confirmed in its corrected decision dated November 16.

On appeal, the Co-Op argued that the December 8 notice constituted the final decision subject to appeal, not the amended notices issued previously by the Board. The Court of Appeals rejected this argument, concluding that the corrections issued subsequent to November 13 were not actions of the Board, but rather clerical actions. The Court stated that the time for an appeal began to run when the Board issued its decision on November 13, and time did not start over when the staff or a single member of the Board issues new, corrected, or amended decisions, regardless of the significance of the correction or amendment.  The Court considered and rejected arguments that the Rules of Civil Procedure permitted the December 8 notice to be conserved as the final decision.  The Court noted that  while the Rules of Civil Procedure do govern judicial proceedings, those Rules had no applicability to Board decisions, which were governed by the statutory timeframe for valuation determinations. Further, the Court noted that the changes made in the November 16 and December 8 notices were not decisions of the Board, and were not actions that could be unilaterally transformed into Board actions by the Board’s Chairman.

The Court ultimately concluded that the substantive change (the correction of the $40 million error) in the November 16 notice made the November 16 notice the final decision that was appealable.  Using this date as the benchmark, the Court concluded that the Co-Op had failed to timely commence the action within 60 days of the November 16 notice.

Those subject to valuation determinations through the Board of Equalization (and other state agencies) should carefully evaluate decisions entered by the Board to determine when they become appealable, even if those decisions are subsequently modified.  Those aggrieved by decisions by the Board should thoughtfully consider the significance of any “amended” decision issued by the Board.  Unless later amendments to earlier decisions are made by the full Board and expressly address the question of whether the amended decision should be treated as the final decision, the “amendments” may have no impact on the passage of time to mark the beginning of the period within which judicial review may be sought.

A copy of the Opinion issued by the Court of Appeals may be found by clicking on