Valdez can levy property tax on oil tankers

The city of Valdez can impose a property tax on tankers entering its port to pick up crude oil, according to a recent ruling in Alaska state Superior Court.

But Judge Peter Michalski of Anchorage also said the city has likely overtaxed the vessels, and could owe refunds to oil companies ConocoPhillips and Irving, Texas-based ExxonMobil.

Michalski explained his ruling on July 28 by saying a vessel should pay taxes in the place it does business at rates similar to those paid by locals for as long as the vessel is in the area.

About one tanker a day comes to Valdez to pick up North Slope crude oil headed to West Coast refineries. Valdez in 2000 imposed the tax on large vessels, particularly tankers, to make up for falling property tax collections on the Alyeska Pipeline Service Co. tanker port and to recoup the cost of providing services such as fire protection.

The shipping subsidiaries for the oil companies sued the city, saying a property tax on tankers merely visiting the Port of Valdez was unlawful.

Bill Walker, Valdez city attorney, said Aug. 23 the tanker tax may need some reworking, but said the port city does not owe the oil companies large refunds. The decision to uphold the tax was most important, Walker said.

The city and the companies each have their own formulas for calculating the tax and the rate must be resolved, Walker said. Lawyers for both sides also said they may appeal the case to the state Supreme Court.

Since 2000, Conoco’s subsidiary, Polar Tankers Inc., has been levied at least $5 million while Exxon’s SeaRiver Maritime Inc. has been charged more than $3.7 million.

A third major tanker operator, BP, in 2003 struck a 10-year deal with Valdez officials to pay a reduced levy on its ships.

—The Associated Press