Court invalidates pipeline valuation rule

A rule that allowed governments and trans-Alaska Pipeline System owners to appeal taxes and avoid a public process has been invalidated by the Supreme Court.

The Jan. 29 ruling says the volunteer State Assessment Review Board is the sole entity with authority to decide taxable parts of the oil and gas infrastructure, the Fairbanks Daily News-Miner reported (http://bit.ly/1PHCzC7).

Attorney Robin Brena argued on behalf of the city of Valdez, which has not signed onto an $8 billion valuation for the system that the Fairbanks North Star Borough and North Slope Borough agreed to.

Major pieces of the pipeline are located in the three boroughs.

“It’s a jurisdictional issue for the Legislature and the Legislature said who had jurisdiction and the agency can’t reverse it,” he said. “I don’t think there’s any reasonable reading of something saying ‘The board shall hear appeals’ to mean ‘The board shall not hear appeals on taxability.’”

Brena said appeals on taxability could take years to decide, creating uncertainty for municipalities. He said Valdez gets about 90 percent of its revenue from trans-Alaska Pipeline System property taxes.

The ruling won’t directly impact ongoing valuation lawsuits.

The boroughs have argued that the pipeline is being undervalued, starting a legal dispute in 2006.

Municipalities valued the pipeline well above $10 billion at the time. Owners initially placed the value below $1 billion.

- Associated Press