NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.
HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

SEARCH our ARCHIVE of over 14,000 articles
Vol. 15, No. 15 Week of April 11, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

In dispute over pipeline’s value, judge deals the owners a setback

Does federal tariff regulation somehow “preempt” the state’s ability to appraise the trans-Alaska oil pipeline for property tax purposes?

No, an Alaska Superior Court judge ruled recently.

The decision from Judge Sharon Gleason of Anchorage knocks down an attempt by the pipeline owners — BP, ExxonMobil, ConocoPhillips, Chevron and Koch Industries — to invalidate the state’s method of valuing the pipeline.

The owners feel overtaxed on an asset that carries crude oil 800 miles from the North Slope of Alaska to the tanker port at Valdez.

They are fighting their property tax bills for a number of years beginning with 2006.

At stake is potentially tens of millions of dollars in property taxes — the difference between what the pipeline owners believe they owe and what the state as well as local governments believe is due.

Gleason’s 10-page ruling, entered March 30, pertains only to 2006. The pipeline valuation for that year was $4.3 billion.

The ruling is the upshot from oral arguments held in Gleason’s courtroom months ago, on Sept. 30, 2009.

The arguments centered on a motion for summary judgment the pipeline owners filed seeking to nullify the 2006 appraisal.

Lawyers for the owners argued federal law preempted the new method the state Department of Revenue adopted beginning in 2005 to value the pipeline.

Specifically, the owners said state officials violated the “filed rate doctrine” by failing to recognize income from tariffs filed with the Federal Energy Regulatory Commission as the basis for determining pipeline value. Instead, the state used an appraisal approach that resulted in a higher value and thus bigger property tax bills.

Gleason, however, ruled against the owners.

She noted that the state Assessment Review Board in 2006 determined that an appraisal based on declining tariff revenue “fails to capture the full and true economic value” of the pipeline system — an asset the energy companies would replace if necessary to continue producing their North Slope oil.

Because the Department of Revenue and the review board did not employ a tariff different from what the FERC set, their 2006 pipeline valuations for property tax purposes “are not preempted by the filed rate doctrine,” Gleason held.

So, what’s next in the already protracted fight over pipeline property taxes?

A big item to look for is another ruling from Gleason on whether the $4.3 billion assessment for 2006 was correct.

—Wesley Loy



Did you find this article interesting?
Tweet it
TwitThis
Digg it
Digg
Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $69 per year.


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
circulation@PetroleumNews.com --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.