Payne County District Judge Phillip Corley is being asked to decide how much property tax seven different energy companies owe the county for 2019.
The companies and Payne County Assessor James Cowan disagree on the value of their taxable property to the tune of $273 million.
All seven companies applied for Freeport exemption on at least a portion of the oil they have stored at tank farms the Cushing area. That exemption prevents goods and materials that are just passing through Oklahoma as interstate commerce from being taxed, as long as they meet certain conditions.
The property must come from outside the state and have an eventual destination outside the state. It also can’t be held in Oklahoma for more than nine months, among other conditions.
The taxpayers requesting the exemption are obligated to apply each year and submit supporting documents. The burden of proof is on the taxpayer, according to instructions from the Oklahoma Tax Commission.
The companies appealed Cowan’s denial of Freeport exemption on their inventory to the Payne County Board of Equalization, the government body that hears appeals from taxpayers concerning their property taxes. They also asked to have the fair cash value of their property reduced.
Cowan in now appealing with the district court to overturn the Board of Equalization’s decisions. He says he believes the members of the Board of Equalization made the wrong decision because the oil was both bought and sold in Oklahoma.
“The Interstate Commerce section of the Commerce Clause is not being met due to the transactions and the storage contracts,” he wrote. “Some entities are also under-reporting and other entities have not rendered at all.”
Suncor energy USA Marketing Inc. got its fair cash value reduced from $11.1 million to $2.9 million.
Tidal Energy Marketing US LLC got its fair cash value reduced from $141 million to just under $2 million.
Mercuria Energy Trading Inc. got a fair cash value of $69 million reduced to $2.5 million.
Citigroup Energy Inc. got the fair cash values of two separate accounts reduced from $5.4 million and $12.9 million to $0 for both.
MV Purchasing LLC got its fair cash value reduced from $24.7 million to $7.7 million.
Plains Marketing LP got its fair cash value reduced from $14.6 million to $4.7 million.
Marathon Petroleum Company LP got its fair cash value reduced from $15.3 million to $921,091.
The Board of Equalization agreed with the taxpayers and made the adjustments based on the information they presented and the methodology they used, Chairman Randy Wedel said.
"I think James believes they are not accurately reporting," Wedel wrote. "Figuring out what qualifies for Freeport exemption on stored oil is like 'untangling a tangled slinky.'"
Cowan has aggressively reviewed the taxable property held by businesses, especially in the oil and gas industry since 2015 when he began contracting with Total Assessment Solutions Corporation, a company that locates and assigns value to oil and gas property.
Payne County officials have been preparing since June for the matter to end in court. The Board of County Commissioners approved a legal services contract in case it did.