State, Department of Revenue v. BP Pipelines (Alaska) Inc.
354 P.3d 1053
Alaska2015Background
- TAPS valuation in 2007–2009 at issue; previous 2006 decision affirmed de novo valuation and use of replacement-cost-new-less-depreciation (RCN) method.
- Parties: State Dept. of Revenue (appellant) and Owners including BP Pipelines, ConocoPhillips, ExxonMobil, Koch, Unocal, Alyeska (various cross-appellants/cross-appellees).
- Proceedings: trial de novo over nine weeks; evidence expanded from 2006 but core facts similar; superior court largely upheld earlier methodology and added deductions for obsolescence.
- Key issues concerned use-value vs market-value and whether tariff regulation caused economic obsolescence; court addressed whether to scale all assets and how to treat excess capacity.
- Court previously held in BP Pipelines I that use-value could apply; decision in 2014 affirmed the superior court’s valuation for 2007–2009; court allowed disclosure of redacted confidential exhibits.
- Conclusion: Supreme Court affirmed the superior court in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Use-value standard applicability | Owners argued use-value invalid due to regulatory restrictions | State maintained use-value is permissible for TAPS | Use-value upheld; not error to value TAPS by use value. |
| Economic obsolescence from regulation | Owners claimed tariffs/regulation cause external obsolescence | Record does not show regulatory effects reduce value | No economic obsolescence deduction based on regulation; rejected as clearly erroneous. |
| Minimum throughput and life of reserves | Municipalities argued for lower throughput; contest on end-of-life forecasts | State/Owners offered alternative forecasts and throughputs | Court correctly relied on Platt forecasts; minimum throughput of 100,000 bbl/d supported; end-of-life reasonable. |
| Economic obsolescence deduction for excess capacity | Municipalities argued for broader scaling; excess capacity has utility | Excess capacity primarily external obsolescence; not full reduction | Court did not err in deducting economic obsolescence; scaled all TAPS property; acknowledged capacity issues. |
| Collateral estoppel | Preclusion from relitigating 2006 issues | Discretion to apply collateral estoppel; not mandatory | Court did not abuse discretion; permissible to vacate prior order. |
Key Cases Cited
- BP Pipelines (Alaska) Inc. v. State, Dep’t of Revenue, 325 P.3d 478 (Alaska 2014) (affirms use-value framework for TAPS in 2006 decision and related issues)
- Misyura v. Misyura, 242 P.3d 1037 (Alaska 2010) (collateral estoppel and appellate standards guidance)
- Barrett v. Alguire, 35 P.3d 1 (Alaska 2001) (relevance of statutory cues in appraisal/valuations)
- Guin v. Ha, 591 P.2d 1281 (Alaska 1979) (confidential information and public records exemptions)
- Smith v. Weekley, 73 P.3d 1219 (Alaska 2003) (public records and trade secret considerations in evidentiary matters)
- City of Nome v. Catholic Bishop of Northern Alaska, 707 P.2d 870 (Alaska 1985) (deference and standard-of-review considerations for appellate review)