LOGA Industry Report - Fall 2008 - (Page 22)

LOGA Challenges Commission’s Ad Valorem Tax Rules by Jim Exnicios, Liskow and Lewis LOGA has filed two separate lawsuits in the 19th Judicial District Court for the Parish of East Baton Rouge challenging recent actions by the Louisiana Tax Commission. The underlying tax issue in each case is whether assessors must consider evidence of obsolescence when valuing oil and gas properties and locally assessed pipelines during the upcoming tax assessment period. Both lawsuits seek the court to declare illegal the actions taken by the newly appointed Louisiana Tax Commission at its initial meeting in March concerning the promulgation of retroactive rules regarding the 2008 ad valorem tax year. The Louisiana Tax Commission conducted formal hearings regarding the 2008 ad valorem tax rules for oil and gas properties during the summer of 2007. As a result of those hearings, the Louisiana Tax Commission adopted an emergency rule, published in the December 20, 2007, Louisiana Register, that, among other things, amended Title 61, Part V, Section 907 and Section 1305 of the Louisiana Administrative code to provide that assessors “shall” consider obsolescence when valuing oil and gas properties and locally assessed pipelines. Prior to that action, the rules used the term “may” with regard to an assessor’s consideration of obsolescence, which gave assessors total discretion in making such valuations. The emergency rule was necessary to make the “may” to “shall” amendment effective as of January 1, 2008, the date provided by law for establishing valuations for the upcoming tax year’s assessments of ad valorem taxes. Also published in the December 20, 2007, Louisiana Register was a companion Notice of Intent to promulgate a Final Rule which included the same “may” to “shall” amendment language, necessary to extend the change beyond the statutory sunset period of 30 days for the emergency rule. The Louisiana Assessors Association ﬁled a Request for Rehearing with the Louisiana Tax Commission to reconsider the Notice of Intent to issue the Final Rule in early January 2008. The hearing was conducted on January 29, 2008, and the issues presented taken under advisement for an ultimate decision to be rendered by the newly appointed Louisiana Tax Commission under the Governor Jindal administration. On March 18, 2008, the recently appointed tax commissioners were sworn in and the newly constituted Louisiana Tax Commission, in its ﬁrst formal action, took up the Request for Rehearing and unanimously voted to retroactively revert back to the more permissive “may” rather than “shall” standard for consideration of obsolescence for oil and gas properties as of January 1, 2008. In addition, it also attempted to adopt a Final Rule via publication in the April 20, 2008 Louisiana Register changing the “shall” language to “may” without issuing a new Notice of Intent announcing the substantive departure from the language contained in the previously published Notice of Intent. 22 | LOGA INDUSTRY REPORT | FALL 2008

Table of Contents Feed for the Digital Edition of LOGA Industry Report - Fall 2008

LOGA Industry Report - Fall 2008 Contents Chairman's Corner President's Perspective Commissioner's Comments From the Pipeline... Supreme Court Upholds Act 312 LOGA Challenges Commission's Ad Valorem Tax Rules The Haynesville Shale - Waiting for the Gas to Come In 2008 Legislative Recap Gulf Coast Prospect Expo 2008 2nd Annual LAGCOE Open Golf Tournament Conservationist by Trade Katrina Relief Fund Update DNR Intent Natural Gas Production Surges: A Free Market At Work IPAA Washington Report Legal Updates New Members Index to Advertisers

LOGA Industry Report - Fall 2008

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