From the pages of
The Sublette County Journal
Volume 4, Number 45 - 7/6/00
brought to you online by Pinedale Online

Commissioners Lose Exxon Appeal
Cramer alleges Governor Stacked BOE against county
by Rob Shaul

In a June 29 "Examination Report," the State Board of Equalization (BOE) dismissed allegations by the Sublette County Commissioners of illegal, improper and unequal assessment of natural gas extracted by Exxon from its LaBarge Operations wells between Big Piney and LaBarge.

The commissioners have challenged the 1989 agreement between Exxon, Sublette County, and the State of Wyoming which established the methodology used to assess the value of the natural gas Exxon produces from its LaBarge Operations.

The gas Exxon produces from these wells is "sour gas" which must be processed to separate the methane, helium, carbon dioxide and other gasses which flow from the wells. The debate centers around the amount of tax Exxon deducts to account for its gas processing cost, or cost of production. The methodology used to determine this deduction is called the "Howell-Yates" agreement.

In 1997, led by then-chairman Buzz Wassenberg, the Sublette County Commissioners filed a petition with the Board of Equalization for the LaBarge Wellfield production years 1991-1995. Exxon and the State Department of Revenue took the County to court over the petition. Exxon and the State essentially argued that the County had not exercised its right to appeal for these years in the time period required, and that the 1989 agreement was binding.

The case went all the way to the Wyoming Supreme Court, where, in a unamimous decision, the justices ruled against Exxon and the State and for Sublette County. The court ruled that there were no time limits which precluded the Board of Equalization from conducting an examination into the allegations made by Sublette County and ordered the BOE to review the issue.

In the Examination Report, the BOE writes that the Howell-Yates valuation methodology agreed to in 1989 "did not result in improper, illegal, or unequal assessments for production years 1991 through 1995."

The BOE writes that the Departments of Revenue and Audit presented it with four different valuation options for the years in question and except for one valuation method, "all other valuation methodology options produced lower values than those issued by the DOR using the methodology set forth by the 1989 settlement agreement." It continues that the methodology used which produced a higher valuation was "speculative," and "not materially higher" than the Howell-Yates methodology agreed to in 1989. "We cannot find that the settlement agreement in any way is improper in arriving at a fair cash market value, nor can we find that use of the agreement results in unequal assessment," writes the BOE.

Commissioners' Response

"We disagree with the [BOE's] conclusions and are considering legal options," said Sublette County Commission Chairman Bill Cramer on Monday. Commissioner Betty Fear added that the hearing method used by the BOE did not allow the County's lawyers, nor those of Exxon, to present their cases.

In its report, the BOE notes that the Sublette County Commissioners argued that it must hold a "contested case proceeding" but that both Exxon and the Department of Revenue argued for a "regulatory-type proceeding." The BOE chose the regulatory proeeding.

The BOE consists of three governor-appointed members, one of which had to dismiss himself from this case because he had worked on Exxon's valuation during a career in the Department of Revenue. In recent months, Governor Geringer dismissed one member of the BOE and decided not to re-appoint another. Mr. Cramer said Monday that he believed the Governor intimidated the two BOE members who did hear the case, Roberta Coates and Ron Arnold, into ruling against Sublette County.

However, Mr. Cramer went on to again criticize BOE's decision not to hold a contested proceeding. "The outcome might have been the same," if the two dismissed members were still on the BOE, "but the process would have been different."

The Commissioners cannot appeal the BOE decision, and on Monday they met in executive session with the attorney representing them in this case, John McKinley of the Davis & Cannon law firm in Cheyenne. No action was taken following the executive session , and Mr. Cramer says the county is still considering its legal options in wake of the BOE ruling.

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