The U.S. Supreme Court struck down the city of Valdez tax on crude oil tankers June 15, but attorneys for the city say they are studying other options on the tax that might pass legal muster.
Valdez city attorney William Walker said city officials are studying the Supreme Court's decision and may consider ways the city tax can be modified to meet objections cited in the court's decision.
The justices objected mainly to a differential in the way the ships were taxed compared with other personal property taxed by the city, Walker said, and this problem might be corrected in a way that the tax could be upheld.
The Alaska Supreme Court had upheld the tax in a unanimous decision, he said.
If the tax is ultimately voided, however, Polar Tankers, the shipping company that brought the lawsuit, will be entitled to a refund of taxes paid since 2000, the year the law went into effect. Polar Tankers is the oil shipping subsidiary of ConocoPhillips.
BP and ExxonMobil, which also operate tankers serving Valdez, will not be entitled to a refund because they had negotiated settlements with the city over the tax, Walker said.
Polar Tankers, meanwhile, said it was pleased with the victory at the high court.
"Our company has consistently argued that the Valdez tanker tax targets vessels for discriminatory tax treatment and is thus unconstitutional, and that is why Polar Tankers filed suit against the tax in Alaska several years ago," company spokesman Bill Stephens said in a statement.
"We were unsuccessful in the Alaska courts, but we are pleased we had the opportunity for a fair and impartial review of our arguments before the United States Supreme Court, wherein seven justices agreed that the Valdez tanker tax is unconstitutional," he said.
Valdez city officials said they would not comment on how much they may have to pay in refunds to Polar Tankers and other shipping companies affected by the tax, but said the money has been put in escrow so it would not have any immediate effect on city finances. The city estimated that it would collect about $8 million in revenues from the tax in its current fiscal year, City Manager John Hozey said.
Valdez imposed the tax in 2000 to make up for revenues lost due to depreciation of the Trans-Alaska Pipeline System property, which is the city's main tax base.
