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Vol. 15, No. 25 Week of June 20, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Pipeline owners may seek new tax ruling after costly defeat

The owners of the trans-Alaska oil pipeline have signaled they’ll likely ask a state judge to reconsider a ruling that more than doubled the line’s value for property tax purposes for the disputed 2006 tax year.

Superior Court Judge Sharon Gleason of Anchorage on May 24 issued a 170-page decision pegging the pipeline system’s worth at $9.98 billion.

A Department of Revenue official has said the ruling could allow the state to collect an estimated $113 million in extra taxes for 2006. The state and several municipal governments would split the revenue.

The pipeline owners including BP, ConocoPhillips, ExxonMobil, Chevron and Koch Industries have long battled state officials, arguing their assessment method overvalues the pipeline and thus results in excessive tax bills.

An engineering icon in operation since 1977, the pipeline carries crude 800 miles from Prudhoe Bay to the Valdez tanker port.

On May 28, lawyers for the owners asked the judge for “clarification” on certain points concerning how and when to file a motion for reconsideration.

Lawyers for the Department of Revenue resisted some of what the owners sought, urging the judge not to allow the owners to use reconsideration as “an avenue for presenting new arguments” they could have raised in the nearly six-week nonjury trial that preceded Gleason’s ruling.

In a June 7 order, the judge said parties to the case had until the close of business June 23 to file motions to reconsider. She further ordered that no party was allowed to file any new evidence such as affidavits or exhibits.

Regardless of what Gleason does on reconsideration, the case is expected to go on appeal to the Alaska Supreme Court.

The owners are contesting more than just their 2006 tax bills. They’ve also filed legal challenges to the state’s pipeline assessments for each year since.

—Wesley Loy



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