The Wyoming Supreme Court has sided with Exxon Mobil Corp. in a long-running tax dispute with the state.
In a 4-1 decision issued Thursday, the court ruled in Exxon Mobil's favor over the valuation of natural gas production from the company's operations in southwestern Wyoming in 2005. The ruling reversed a decision by the Wyoming Department of Revenue and the State Board of Equalization.
The ruling means the state and local governments will lose millions of dollars in tax revenue.
The Supreme Court said a 1990 state law that attempted to clarify the point of valuation for natural gas production is ambiguous. The court agreed with Exxon Mobil that its Black Canyon facility is a processing facility under the law.
The state Department of Revenue set the point of valuation at the Black Canyon facility as the "initial dehydration" plant under the law. Exxon placed the point of valuation farther upstream at another facility where the gas is turned into marketable products and said Black Canyon was a legally a processing facility.
Because companies cannot deduct expenses upstream from the point of valuation to the wellhead, the change will allow more deductions of Exxon Mobil's expenses in calculating mineral severance taxes.
Since the dispute arose, Exxon Mobil has been paying its property taxes in Sublette County but not the taxes on natural gas production that are under appeal, said Sublette County Treasurer Roxanna Jensen. She estimated the unpaid production taxes totaled about $14 million.
Department of Revenue Director Edmund Schmidt said his agency does not yet have an estimate of the state mineral severance taxes involved.
"It's going to be a lot of money," he said.
The ruling, he said, is "very discouraging to people who have been working with this type of issue or issues."
Sarah Gorin, chairwoman of the Equality State Policy Center, said the decision demonstrates that the state needs to hire more assistant attorneys general, budget more for litigation costs and perhaps hire an expert to give the state more equal footing when facing a big corporation like Exxon Mobil.
"It's not like Exxon is a little old lady trying to figure out her tax bill," Gorin said.
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Information from: Casper Star-Tribune - Casper, http://www.trib.com
