The state's highest court on Friday upheld a value for the trans-Alaska pipeline that is billions of dollars more than the oil company owners wanted.
The state Supreme Court's decision, issued Friday, fully affirmed a lower court's decision supporting a Trans-Alaska Pipeline System value that averages out to $9.3 billion per year for 2007, 2008 and 2009.
The decision builds on an earlier ruling by the state Supreme Court issued last year affirming the pipeline's value at $9.98 billion for 2006.
Friday's ruling is part of a long-running legal tangle involving the state, municipalities and the owners of the 800-mile conduit – primarily BP, ExxonMobil and ConocoPhillips.
The North Slope Borough, the Fairbanks North Star Borough and the city of Valdez had argued for a valuation that averaged out to about $13.5 billion a year, said Robin Brena, a lawyer in the case representing the Fairbanks borough who served as coordinating counsel for the municipal governments.
The oil companies argued for a valuation that averaged out to a little more than $1 billion a year, the decision said. The State Assessment Review Board argued for a valuation that averaged out to about $6.6 billion and the state Department of Revenue estimate was lower than that, Brena said.
"This is a good outcome and we're getting closer to the true value of TAPS," he said. The final outcome was 9 times more than the TAPS owners sought.
"It was 40 percent higher than what the state of Alaska assessed it at," he said.
Spokespeople for the oil companies and Alyeska Pipeline Service Co., the pipeline operator owned by the companies, could not immediately comment late Friday.
Gov. Bill Walker and Attorney General Craig Richards also argued the case before they became state officials. Walker and Richards' law firm had represented the city of Valdez. They sold the law firm to Brena shortly after Walker was elected last fall.
Walker said on Friday afternoon he had seen the decision but did not have a chance to review it and had no comment.
Brena said the higher assessment, based largely on estimated costs to replace the pipeline, will lead to higher property tax income that's split about 50-50 between the state and the municipalities. Oil companies can deduct the expense from state taxes, but the additional property taxes are a "net positive" for the state, he said.
Litigation is underway that will determine the pipeline's value between 2010 and 2015.