Louisiana High Court Ruling Could Mean Higher Taxes for Salt Domes

April 9, 2014

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. 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 tells The Advocate 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.

A spokesman for Spectra Energy, Phil West, declined to comment.

“It’s our policy not to comment on litigation,” he said.

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