TAPS value settled at $8B for 5 years
The next court battle over the value of the Trans-Alaska Pipeline System won’t be for at least another five years.
Two settlements over the taxable value of TAPS between the State of Alaska, its owners, and municipalities along the pipeline corridor were announced March 1. The agreements fix the value of the 800-mile pipeline, for property tax purposes, at $8 billion through 2020, according to a release from the North Slope Borough.
All pending litigation in Alaska courts regarding TAPS value will be dismissed as part of the deals as well.
North Slope Mayor Charlotte Brower thanked the Walker administration for the state’s help in reaching the linked deals.
“By fixing the value of the Trans-Alaska Pipeline System for the next five years, this agreement will provide a more stable and predictable budget environment and help ensure the financial security of the borough moving forward,” Brower said in a statement. “It also brings an end to the need for continuous litigation in which the borough and other municipalities have spent a decade and millions of dollars to obtain a fair valuation of TAPS.”
Under the deals for property tax years 2007 through 2015, the North Slope Borough will repay the state nearly $7.6 million and the City of Valdez will pay $7.3 million back to the State of Alaska for prior tax payments the state believes were in excess of the statutory cap on property tax revenues, according to a statement from the Department of Law.
The pipeline is primarily owned by subsidiaries of BP, ConocoPhillips and ExxonMobil. Unocal Pipeline Co. owns a 1.3 percent share of TAPS, according to Alyeska Pipeline Service Co., the pipeline operator.
In May 2014, the State Assessment Review Board valued TAPS at $10.2 billion. At the time, the owners estimated its value at $2.7 billion; the municipalities pegged the value at $13.7 billion; and the Department of Revenue suggested $5.7 billion as the taxable value for the year.
The proper value of the pipeline and subsequent property tax rates has been a source of legal contention for the Valdez and the North Slope and Fairbanks North Star boroughs for many years.
Coincidentally, the pipeline cost $8 billion to build in 1977 and was the world’s largest privately funded construction project at that time.
Elwood Brehmer can be reached at email@example.com.