The Board of Campbell County Commissioners agreed Monday to approve a property tax settlement agreement between Campbell County, the Campbell County Assessor, Carbon Creek Energy, LLC (CCE) and Powder River Midstream, LLC (PRM).
The two energy companies owed approximately $8.5 million in unpaid property taxes dating back to 2016. The dispute has drug on for the past four years with the approved settlement agreement finally bringing the matter to the close with the commissioners agreeing to accept only $1.8 million of the total due.
A similar situation occurred in February, when Johnson County settled with the same energy companies over unpaid taxes.
The proposed settlement does not apply to any unpaid production taxes. It solely pertains to the real and personal property taxes that the entities owe Campbell County, which in this case were assessed on CCE and PRM land and equipment, including compressor stations, pipelines, and other infrastructure related to methane gas production and transportation.
Though the commissioners approved the settlement agreement, none were seemingly happy with the outcome.
“It is quite disturbing to me that we’ve got a company that is out there making $138 million in Campbell County that paid one year’s worth of taxes, then come back and appeal and owe twice as many taxes, but yet, we don’t have a mechanism to recover those taxes when they’re making a lot of money off of Campbell County,” Chairman DG Reardon said.
Several other commissioners voiced their disdain.
“I would say in my opinion that this was intentional, but that’s the system they play. Unfortunately, this is a statute change that has to happen at some point,” Rusty Bell said.
Both CCE and PRM are presently under new ownership, after US Realm Powder River, LLC bought out Moriah Powder River, LLC.
When a tax payer believes that the county assessor has erred in determining a property’s valuation, the individual or company can appeal the decision to the County Board of Equalization, which is made up of the Board of County Commissioners, per state statute.
The County Board of Equalization, after holding a hearing, then issues a decision as to whether or not the assessor correctly applied state statutes to arrive at a valuation for the property (either real or personal). If either the tax payer or county assessor is unhappy with the decision of the County Board of Equalization, they can then appeal the decision to the Wyoming State Board of Equalization, who then hears the matter. The tax payer can appeal a decision of the Wyoming State Board of Equalization to the local district court.
Both CCE and PRM appealed their property taxes for multiple years and continued appealing later tax years after having received decisions from both boards.
CCE and PRM’s arguments over their real and personal property tax assessments were based upon a difference in perspective between the companies and the county assessor. The county assessor valued the compressor stations, pipelines, and other equipment at their value, including both depreciation, cost, and other factors, including the fact that some of the assets could be transported to another location. The counsel for the companies contended that the property had a nominal value for tax purposes, because they had paid hardly anything for the assets as larger companies shed their methane assets and liabilities as natural gas prices declined and the market for coal bed methane became unprofitable.
Both the Board of Equalization and Wyoming State Board of Equalization had found almost entirely for the assessor in that the property had value. However, the findings of both boards did not incentivize CCE or PRM to pay their back taxes. As the local Board of County Commissioners cannot pursue legal remedies while the taxes are being appealed, CCE and PRM continued appealing the taxes for later years.
Though the commissioners could have legally taken over the property through a foreclosure process, they have traditionally avoided that option because many legacy oil and gas assets have substantial liabilities and the county does not employ the expertise to operate producing oil and gas assets.
Campbell County Assessor Troy Clements and legal counsel for the companies, Walter Eggers, III, were both positive that there would not be any issues with tax payments in future years.
“This company has continued and is continuing to produce those wells currently,” Clements said Monday. “There is money being made. I’ve got a number from year 2016 to 2020 with $138 million dollars worth of product sold. There should be all sorts of incentive to pay the taxes moving forward.”