Can a Virginia county's Coal and Gas Road Improvement Advisory Committee dedicate fund money to pay the salary of a Commissioner of Revenue employee who audits coal and gas producers' tax records?

Plain-English summary

Buchanan County, in Virginia's coalfield region, collects a severance tax on coal and gas extracted within the county under § 58.1-3713. Three-quarters of that revenue goes into a Coal and Gas Road Improvement Fund, which the statute directs "shall be spent for … improvements to public roads." The remaining quarter is sent to the Virginia Coalfield Economic Development Authority. A four-member advisory committee in each producing county helps plan road improvements paid out of the local share.

The Buchanan County Commissioner of Revenue, in 2008, asked the advisory committee to fund a position in his office to audit the records of coal and gas companies and ensure that the severance tax was being paid correctly. Senator Puckett asked the Attorney General whether the advisory committee could use Fund money for that purpose.

Attorney General Bob McDonnell said no. Section 58.1-3713(A) is unambiguous: Fund money "shall be spent for improvements to public roads." That word "shall" is mandatory. The General Assembly did not authorize the Fund to pay for tax-collection or administrative expenses, however worthwhile they might be in supporting the underlying tax base. The Dillon Rule shapes the analysis: local governmental bodies like the advisory committee have only the powers expressly granted or necessarily implied. Where the express grant is "spend on roads," there is no implied power to "spend on someone whose work indirectly increases the tax base that funds the roads."

The opinion is short on flexibility and clear on the policy: the Fund is for road improvements. If Buchanan County wants to fund a severance-tax auditor, it has to use other county money (the general fund or other sources), not the dedicated Road Improvement Fund.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Section 58.1-3713 authorizes coal- and gas-producing counties and cities to impose a license tax on every person engaging in the business of severing coal or gases from the earth. The tax is calculated on the producer's gross receipts using § 58.1-3712's gross-receipts methodology. The revenue stream splits: three-fourths goes into the Coal and Gas Road Improvement Fund, dedicated to road improvements in the Southwest Virginia coalfield region (with a one-fourth carve-out within that share for water and sewer in certain circumstances), and one-fourth goes to the Virginia Coalfield Economic Development Fund under § 15.2-6009, administered by the Virginia Coalfield Economic Development Authority created by § 15.2-6001.

Section 58.1-3713(B) establishes the Coal and Gas Road Improvement Advisory Committee in each producing locality, with four members: one supervisor (or council member) appointed by the governing body, a VDOT representative, and two citizens connected with the coal and gas industry appointed by the chief judge of the circuit court. The committee's job is to develop "a plan for improvement of roads" funded from the local share of the Fund.

The Dillon Rule frames the analysis. Powers of localities and statutorily created committees "are limited to those conferred expressly or by necessary implication." Implied powers are construed narrowly. Doubt is resolved against the locality. Arlington County v. White articulates the implied-powers test: implied powers must be necessary to give effect to the legislature's expressed intent, must be consistent with the means and ends contemplated by the grant, and must not be applied to create a new power or expand an existing one beyond rational limits.

What the AG concluded

Section 58.1-3713(A) is plain and mandatory. The Fund's money "shall be spent for improvements to public roads." That language is unambiguous and directs the use of the money to a single statutory purpose.

The implied-powers doctrine does not stretch to tax-collection expenses. The advisory committee's express authority is to plan road improvements, not to oversee tax compliance. Funding a Commissioner of Revenue employee, even one auditing the very tax that funds the Road Improvement Fund, is not "necessary" to the road-improvement function.

Doubt under the Dillon Rule resolves against the locality. Even if the AG had been uncertain whether the implied-powers doctrine reached the auditor position, the rule of strict construction would have tipped the answer toward "no."

There is no Title 58.1 carve-out for collection expenses. The Tax Code generally permits localities to use general-fund money to pay for tax administration. The dedicated-fund structure of § 58.1-3713 specifically excludes such uses.

Common questions

Why did the Buchanan County Commissioner of Revenue want to use the Fund?
Because the Fund had healthier balances than the general fund, and the auditor's work would, in theory, increase severance-tax collections, which would in turn fill the Fund. From the Commissioner's perspective, this was a virtuous cycle. From the AG's perspective, it was outside the statutory channel.

Can the county still pay for the auditor some other way?
Yes. The county can use its general fund, special appropriations, or other lawful sources to pay for a Commissioner of Revenue audit employee. The opinion does not say the position is impermissible; it just says the Coal and Gas Road Improvement Fund cannot be the funding source.

What about administrative costs of running the advisory committee itself?
The opinion treats the advisory committee's planning function as part of the road-improvement purpose, so committee-specific administrative costs may be more easily defensible than payment to an outside employee. But the AG's reasoning is strict, and counties should be cautious about any expenditure that is not directly tied to road work.

Does this apply to the Coalfield Economic Development Authority's portion?
The opinion addresses the local Fund, not the Authority's portion. The Authority operates under §§ 15.2-6001 et seq. and has its own statutory mission, which is broader than road improvements. So the analysis for the Authority side is different.

What recourse does the Commissioner of Revenue have?
The Commissioner can ask the Board of Supervisors to fund the position from other sources, or work with the General Assembly to amend § 58.1-3713 to expand permissible uses of the Fund. The AG flagged that the General Assembly is presumed to be aware of AG opinions and can amend the statute to override them.

Citations

• Va. Code Ann. § 58.1-3713 (coal and gas road improvement tax)
• Va. Code Ann. § 15.2-6001 et seq. (Virginia Coalfield Economic Development Authority)
• Nat'l Realty Corp. v. Va. Beach, 209 Va. 172 (1968)
• Bd. of Supvrs. v. Horne, 216 Va. 113 (1975)
• Arlington County v. White, 259 Va. 708 (2000)
• Bd. of Supvrs. v. Countryside Invest. Co., 258 Va. 497 (1999)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/08-113-Puckett.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Robert F. McDonnell

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

Attorney General

February 2, 2009

The Honorable Phillip P. Puckett
Member, Senate of Virginia
P.O. Box 2440
Lebanon, Virginia 24266

Dear Senator Puckett:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether § 58.1-3713 permits the Buchanan County Coal and Gas Road Improvement Advisory Committee to include in its budget the payment of salary and benefits for an employee of the Commissioner of the Revenue whose primary responsibility will be to audit the records of coal and gas companies to ensure that the proper license tax for severance of coal and gas from Buchanan County is being paid.

Response

It is my opinion that § 58.1-3713 does not permit the Buchanan County Coal and Gas Road Improvement Advisory Committee to include in its budget the payment of salary and benefits for an employee of the Commissioner of the Revenue regardless of his primary responsibility.

Background

You observe that § 58.1-3713 establishes Coal and Gas Road Improvement Advisory Committees in localities in which coal and gas are severed from the earth. The section also provides for the creation of a Coal and Gas Road Improvement Fund (the "Fund") in each such locality and specifies how the Fund may be distributed. It is your view that the Fund generally may be used to improve public roads in such localities, to provide funding for water and sewer system lines, and to provide funding to the Virginia Coalfield Economic Development Authority. Although there is no specific provision for the payment of administrative costs of the Advisory Committee, you state that Buchanan County's Advisory Committee construes the statute to permit a budget providing for administrative expenses, including paying salary and benefits of the Committee's employees.

You further advise that the Buchanan County Commissioner of the Revenue recently approached the Advisory Committee with a request that the Committee fund a full- or part-time position in the Commissioner's office to assist in auditing the records of coal and gas companies.

Applicable Law and Discussion

The General Assembly enacted the Virginia Coalfield Economic Development Authority in 1988 "to enhance the economic base for the seven county and one city coalfield region of Virginia."[1] Section 15.2-6009 provides that

[o]n September 1, 1988, and on the first day of each month thereafter, each county and city shall remit to the Virginia Coalfield Economic Development Fund twenty-five percent of the revenues collected during the next to last calendar month from the coal and gas road improvement tax pursuant to § 58.1-3713.

Section 58.1-3713(A) provides, in part, that:

The moneys collected for each county or city from the tax imposed under authority of this section shall be paid into a special fund of such county or city to be called the Coal and Gas Road Improvement Fund of such county or city, and shall be spent for such improvements to public roads as the coal and gas road improvement advisory committee and the governing body of such county or city may determine as provided in subsection B of this section.

Additionally, § 58.1-3713(A) permits any county or city to impose a "license tax on every person engaging in the business of severing coal or gases from the earth." The tax is based on the producers' gross receipts from the sale of the coal and gas.[2] The monies collected from this tax are paid into a special county fund, the Fund.[3] Three-fourths of the revenue from such license tax must be paid to the Fund and spent only for improvements to public roads in the Southwest Virginia coalfield region,[4] and the remaining one-fourth of the revenue must be paid to the Virginia Coalfield Economic Development Fund,[5] which is administered by the Authority.[6]

Section 58.1-3713(B) provides, in part, that:

Any county or city imposing the tax authorized in this section shall establish a Coal and Gas Road Improvement Advisory Committee, to be composed of four members: (i) a member of the governing body of such county or city, appointed by the governing body, (ii) a representative of the Department of Transportation, and (iii) two citizens of such county or city connected with the coal and gas industry, appointed for a term of four years, initially commencing July 1, 1989, by the chief judge of the circuit court.

The power of a local governing body, and thus of a committee created by statute, unlike that of the General Assembly, "must be exercised pursuant to an express grant"[7] because the powers of a locality and a committee created by statute "are limited to those conferred expressly or by necessary implication."[8] "If the power cannot be found, the inquiry is at an end."[9] The Dillon Rule requires a narrow interpretation of all powers conferred on local governments, and in this case on the Coal and Gas Road Improvement Advisory Committee, since they are delegated powers.[10] Therefore, any doubt regarding the existence of power must be resolved against the locality.[11] In this case, such doubt must be resolved against the Coal and Gas Road Improvement Advisory Committee.

In ascertaining whether a power may be implied from a statutory grant of authority, the Supreme Court of Virginia has provided the following guidance:

"In questions of implied power, the answer is to be found in legislative intent. To imply a particular power from a power expressly granted, it must be found that the legislature intended that the grant of the express also would confer the implied.

"In determining legislative intent, the rule is clear that where a power is conferred and the mode of its execution is specified, no other method may be selected; any other means would be contrary to legislative intent and, therefore, unreasonable. A necessary corollary is that where a grant of power is silent upon its mode of execution, a method of exercise clearly contrary to legislative intent, or inappropriate to the ends sought to be accomplished by the grant, also would be unreasonable.

"Consistent with the necessity to uphold legislative intent, the doctrine of implied powers should never be applied to create a power that does not exist or to expand an existing power beyond rational limits. Always, the test in application of the doctrine is reasonableness, in which concern for what is necessary to promote the public interest is a key element."[12]

Statutory language is ambiguous when it may be understood in more than one way.[13] An ambiguity also exists when statutory language lacks clarity and precision, or is difficult to comprehend.[14] "The province of [statutory] construction lies wholly within the domain of ambiguity, and that which is plain needs no interpretation."[15] But when statutory language is clear and unambiguous, the plain meaning and intent of the enactment will be given to it.[16] The language used in § 58.1-3713(A) is clear and unambiguous as the General Assembly directs that the moneys collected from this tax "shall be spent for … improvements to public roads." (Emphasis added.) The General Assembly clearly does not authorize the expenditure of such funds for any purpose other than for improvements to public roads. Thus, I cannot reasonably conclude that an implied authority exists to expend such funds to pay the salary and benefits of an employee, including one whose primary duty is to audit the records of coal and gas companies, based on the express grant of authority to establish a Coal and Gas Road Improvement Advisory Committee. This particularly is so because the Advisory Committee is tasked with developing "a plan for improvement of roads."[17]

Conclusion

Accordingly, it is my opinion that § 58.1-3713 does not permit the Buchanan County Coal and Gas Road Improvement Advisory Committee to include in its budget the payment of salary and benefits for an employee of the Commissioner of the Revenue regardless of his primary responsibility.

Thank you for letting me be of service to you.

Sincerely,

Robert F. McDonnell
1:213; 1:941/08-113

1. VA. CODE ANN. § 15.2-6002 (2008); see also § 15.2-6001 (2008) (mandating that Authority is to assist the coal producing areas "to achieve some degree of economic stability").
2. See VA. CODE ANN. § 58.1-3713(A) (Supp. 2008) (providing that methodology of measuring gross receipts in § 58.1-3712 applies to tax).
3. Id. (designating that fund "be called the Coal and Gas Road Improvement Fund of such county").
4. Id. "[H]owever, one-fourth of such revenue may be used to fund construction of new water and/or sewer systems and lines" in certain circumstances. Id.
5. See id.; § 15.2-6009 (2008).
6. Section 15.2-6010 (2008).
7. Nat'l Realty Corp. v. Va. Beach, 209 Va. 172, 175, 163 S.E.2d 154, 156 (1968).
8. Bd. of Supvrs. v. Horne, 216 Va. 113, 117, 215 S.E.2d 453, 455 (1975).
9. Commonwealth v. County Bd., 217 Va. 558, 575, 232 S.E.2d 30, 41 (1977).
10. See Bd. of Supvrs. v. Countryside Invest. Co., 258 Va. 497, 504, 522 S.E.2d 610, 613 (1999) (holding that county board of supervisors does not have unfettered authority to decide what matters to include in subdivision ordinance; must include requirements mandated by Land Subdivision and Development Act, and may include optional provisions contained in Act); Op. Va. Att'y Gen: 2002 at 77, 78; 1974-1975 at 403, 405.
11. 2A EUGENE MCQUILLEN, THE LAW OF MUNICIPAL CORPORATIONS § 10.19, at 369 (3d ed. rev. 1996); see also Op. Va. Att'y Gen.: 2002 at 83, 84; 2000 at 75, 76.
12. Arlington County v. White, 259 Va. 708, 720, 528 S.E.2d 706, 712-13 (2000) (citation omitted).
13. Supinger v. Stakes, 255 Va. 198, 205, 495 S.E.2d 813, 817 (1998); Va.-Am. Water Co. v. Prince William County Serv. Auth., 246 Va. 509, 514, 436 S.E.2d 618, 621 (1993); Va. Dep't of Labor & Indus. v. Westmoreland Coal Co., 233 Va. 97, 101, 353 S.E.2d 758, 762 (1987).
14. Supinger, 255 Va. at 205, 495 S.E.2d at 817; Lee-Warren v. Sch. Bd., 241 Va. 442, 445, 403 S.E.2d 691, 692 (1991).
15. Winston v. City of Richmond, 196 Va. 403, 408, 83 S.E.2d 728, 731 (1954).
16. Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87 (1985).
17. Section 58.1-3713(B) (Supp. 2008).