Supreme Court affirms pipeline value decision

Published on NewsOK Modified: February 19, 2014 at 8:46 pm •  Published: February 19, 2014
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ANCHORAGE, Alaska (AP) — The Alaska Supreme Court on Wednesday handed Alaska municipalities a victory in a dispute over the value of the trans-Alaska pipeline, affirming that the structure for 2006 should have been valued at nearly $10 billion, not the $850 million claimed by pipeline owners.

The justices backed a Superior Court ruling that based the value of the pipeline on replacement costs, not fees paid to the owners for use of the pipeline.

The higher value means more tax revenue for municipalities through which the pipeline runs, especially the North Slope Borough, the Fairbanks North Star Borough and the city of Valdez, the parties in the lawsuit. The municipalities have long argued that pipeline owners have undervalued the 800-mile pipeline and tanker-loading facilities in Valdez.

"I've got a smile on my face today," Fairbanks North Star Borough Mayor Luke Hopkins said. "The Supreme Court validated what our position has been all along."

State Rep. Dave Guttenberg, D-Fairbanks, in a prepared statement praised the municipalities for seeking additional revenue and faulted the state for not intervening.

"The court has made it clear: It's about time the state starts living up to its Constitutional obligation to maximize the benefit to Alaskans from their natural resources," he said. "The governor needs to reverse course and stand up for Alaskans instead of giving their resource wealth away at every opportunity."

Sharon Leighow, a spokeswoman for Gov. Sean Parnell, said the court affirmed the state's method for assessment based on replacement value.

"Although we are still reviewing the decision, the State's methodology, upheld by the court, leaves more money in the people's treasury," she said by email.

BP PLC spokeswoman Dawn Patience said the company was disappointed with the court decision and will evaluate its legal options.

"Higher taxes like the excessive property taxes upheld by the Court harm the long term economic sustainability of the oil and gas industry in Alaska," she said by email.

The case focused on how the state would calculate the value of the pipeline in 2006. A Department of Revenue assessor, basing the value on replacement costs, set the value at $3.6 billion. That figure was appealed by both the owners and the municipalities.



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