Apr 13, 2014 19:42 Court ruling may lead to higher taxes for salt caverns Court ruling may lead to higher taxes for salt caverns Advocate photo by Anna Ivantsova -- Absorbant and retardant boom line the outside of a levee surrounding the Bayou Corne sinkhole (not pictured) in Assumption Parish on Nov. 11. The Louisiana Office of Conservation has required Texas Brine Co. to build the earthen levee around the watery, 26-acre sinkhole to contain oil, salt water and other contaminants from entering surrounding swamp. The waterway known as Bayou Corne is not far from the sinkhole's southern levee and is just through the pipeline corner cut through the swamp (center). The southern levee has developed cracks -- a few hairline and one sizeable -- due to subsidence from the sinkhole. Court ruling pleases parish assessors seeking more from salt dome operators by David J. Mitchell| firstname.lastname@example.org April 13, 2014 Comments The Louisiana Supreme Court has upheld an appeals court ruling on the taxation of underground salt dome caverns that could mean some cavern owners will pay hundreds of thousands to millions of dollars more in property taxes annually to local government coffers. The ruling in the Spectra Energy Corp. lawsuit out of St. Landry Parish also could lend a boost to assessors in other parishes trying to bring unreported and untaxed salt caverns onto the tax rolls for the first time. “I’m very happy,” said Ascension Parish Assessor M.J. “Mert” Smiley Jr., who recently hired a special auditor to value unreported caverns in the parish. “It should make our case a whole lot easier.” The ruling centers on how salt dome caverns should be classified for taxation purposes: as land or a commercial improvement. In mid-December, the state’s 3rd Circuit Court of Appeal upheld a lower court ruling that two Spectra-leased salt dome caverns in St. Landry, which each cost tens of millions to create, should be assessed as commercial improvements. On Friday, the state Supreme Court declined to review an appeal from Spectra and PBGS LLC, the owner of the caverns. St. Landry Parish Assessor Rhyn Duplechain said Spectra paid under protest about $1.34 million for three years of back taxes and sued him over the 2011 assessment that treated the caverns as commercial improvement. Duplechain said the ruling is a win for his parish and others. “I think from now on that these companies will be paying more because now assessors will be assessing them the way they should be assessing them and putting them on the rolls,” Duplechain said. He told The Associated Press last year that the ruling means Spectra, which pays the tax bill, will pay an additional $500,000 per year. A spokesman for Spectra Energy, Phil West, declined to comment. “It’s our policy not to comment on litigation,” he said Monday. The caverns, which can have volumes approaching the size of the Mercedes-Benz Superdome, are carved from underground salt deposits known as salt domes with fresh water injected into the ground. The process of carving and finishing the caverns’ infrastructure can take a few years. The brine byproduct is used as a source of salt for the petrochemical industry. Cavities left over from mining can be used to store natural gas and other hydrocarbons. But Spectra and salt dome operators in Assumption Parish and elsewhere have argued that the caverns should be treated as land for tax purposes. While this may seem like a technical difference, the terminology has significance. Caverns classified as a commercial improvement have a 33 percent larger annual property tax bill than those classified as land. The classification also determines whose responsibility it is to report the value of salt dome caverns. Under state law, it is the assessor’s job to find and assess land, but the owners of commercial improvements must report it to the assessors. Assessors also can pursue back taxes if commercial improvements go unreported, an attorney for the assessors said. As in St. Landry Parish, the land versus commercial property dispute is a key argument in several pending legal challenges in Assumption Parish. Assumption Assessor Wayne “Cat” Blanchard is pursuing $15.5 million in taxes on what he believes are 53 unreported caverns and other infrastructure in the Napoleonville Dome. The caverns were brought to light after an audit that was prompted by media coverage of the Bayou Corne-area sinkhole, Blanchard has said. Blanchard said he believes the caverns were omitted when owners reported the values of their operations. Some cavern owners like Dow, however, have claimed they followed the law, arguing the caverns are land, which means it’s not their job to report. Brian Eddington, attorney for Assessors Duplechain and Blanchard, said the Supreme Court ruling “puts to bed” these land versus commercial property arguments. “It seems like to me it’s almost closing the door on them,” Blanchard said Monday of the salt dome owners challenging assessments in Assumption. Attorneys for the cavern owners in Assumption either declined comment or did not return messages for comment on Friday and Monday.