Assumption Parish makes bid to add salt caverns to tax rolls

Sinkhole scrutiny unveiled assets

Salt dome operators in Assumption Parish are fighting against Assessor Wayne “Cat” Blanchard’s push to add dozens of underground salt caverns mined from the Napoleonville Dome to the parish property tax rolls, new lawsuits show.

Assumption Parish taxing jurisdictions could see $14.4 million in additional revenue for unpaid property taxes on the omitted caverns and equipment for 2013 tax year and the three prior years if the parish prevails in the dispute, parish officials and their attorney said.

Blanchard said news accounts related to the Bayou Corne sinkhole revealed unknown details about some of the caverns in the dome and led to a special audit that revealed the assessed values.

“This is a real significant case and a real turning point for Assumption Parish if we determine these are omitted assets and this could be part of the tax base going forward,” Sheriff Mike Waguespack, the parish tax collector, said.

But Dow Hydrocarbons and five other salt dome operators in Assumption filed suit in the 23rd Judicial District in early December, formally appealing Blanchard’s assessments of the facilities.

Dow, which operates the largest facility on the dome covering more than 880 acres, faces the largest added tax liability. Other operators facing new taxes include Crosstex Energy, two subsidiaries of Enterprise Products Partners and Occidental Chemical Corp., a listing of Blanchard’s proposed values for 2013 shows.

Crosstex Energy had not filed suit as of Monday.

All but one of the six companies’ suits name Blanchard, Waguespack and Pete Peters, chairman of the Louisiana Tax Commission, as defendants. The last suit, filed by Occidental, only names Blanchard.

With the suits still in the early stages, the state Tax Commission will be asked at 10 a.m. Tuesday at 5420 Corporate Blvd., Baton Rouge, to certify tax bills based on Blanchard’s assessments between 2010 to 2013 through what is known as a supplemental tax roll.

Blanchard’s attorney, Brian Eddington, said that if the five-member Tax Commission certifies them, the decision allows the tax bills to go out.

Eddington contends the commission hearing is designed to ensure formal procedures are met and not determine a tax bills’ validity, which is left to the courts.

But, he said attorneys for the companies informed him they plan to oppose certification Tuesday. He claimed the companies are doing whatever they can not to have defend their reporting of assets to the assessor’s office.

“It is all smokescreens that they’re doing,” Blanchard added.

“They’re going to say they reported everything when we know they didn’t.”

Blanchard said when questions first arose about what was in the salt dome, he sent a letter asking operators to report omitted property, which resulted in assessed values generating an additional $3 million in tax for 2013.

But a subsequent special audit found even more assessed values were omitted from the rolls, or about $3.7 million annually between 2010 and 2013. Those values are the subject of the Tax Commission hearing Tuesday.

These types of business assets are generally self-reported by industry through what are known as renditions. Waguespack claimed Dow officials acknowledged to him and Blanchard before the tax adjustments went out that its 31 caverns were never reported.

But, in the pending lawsuits, the companies allege the caverns are created from “a naturally-occurring geologic feature of the land” and are therefore inseparable under the state constitution from the land for the purposes of property tax assessment.

Eddington said the companies are claiming that “the caverns, to use their words, ‘are not a thing, but the absence of a thing and, therefore, have no value.’”

The massive underground cavities are carved with fresh water from salt domes, large, solid deposits of salt that can reach 40,000 feet deep to a mother bed of salt that has origins in an ancient inland sea.

Blanchard and Waguespack said they believe the caverns have value because they cost millions to build and some are then leased for millions more.

“It’s not just something that happened,” Blanchard said.

Dow separately claimed in 2008 that six of its Napoleonville Dome caverns would cost between $25 million and $45 million each to replace, depending on the type of cavern, court papers say.

Dow made the claims during a tangled legal dispute arising from a December 2003 gas leak from a storage cavern that Dow had leased to Gulf South Pipeline Co. Dow contended that storage cavern and five nearby caverns were damaged by the gas leak that Dow blamed on Gulf South. In addition to replacement costs, Dow also cited tens of millions more in lost profits and added costs. That dispute was settled out of court in March 2010.

James Exnicios, attorney for Dow and three other cavern owners, declined comment Monday, saying doing so would be inappropriate before the hearing.

Attorneys for Axiall and Occidental Chemical corporations did not return messages for comment Monday.

Gareth Johnstone, spokesman for Chevron Pipe Line Co., which has a gas storage cavern in the salt dome, said the company “complies with all tax laws and regulations related to its storage operations at the Napoleonville Salt Dome.”