Municipality of Anchorage v. State, Department of Revenue, 050914 AKTAX, 3AN-02-5667 CI

Docket Nº:3AN-02-5667 CI
Opinion Judge:SEN K. TAN Superior Court Judge
Party Name:MUNICIPALITY OF ANCHORAGE " D/B/A/ MUNICIPAL LIGHT & POWER DEPARTMENT, Appellant, v. STATE OF ALASKA, DEPARTMENT OF REVENUE Appellee.
Case Date:May 09, 2014
Court:Superior Court of Alaska
 
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MUNICIPALITY OF ANCHORAGE " D/B/A/ MUNICIPAL LIGHT & POWER DEPARTMENT, Appellant,

v.

STATE OF ALASKA, DEPARTMENT OF REVENUE Appellee.

No. 3AN-02-5667 CI

Superior Court of Alaska, Third Judicial District

May 9, 2014

DECISION ON APPEAL

SEN K. TAN Superior Court Judge

The State of Alaska Department of Revenue levied a tax against the Municipality of Anchorage d/b/a Municipal Light & Power. The Municipality of Anchorage (MOA) had to pay taxes in 1997 to the State of Alaska on the gas produced by Municipal Light & Power (ML&P). The MOA now seeks a refund. This court rules that the MOA and its department./ ML&P, may not be taxed.

Facts

The: Municipality of Anchorage is a municipal corporation and unified home rule municipality organized under the laws of the state of Alaska. Anchorage Municipal Light and Power is a department of the Municipality of Anchorage.

In December 1996, the Municipality of Anchorage, d/b/a Municipal Light & Power (ML&P), purchased a one third interest in the Beluga Gas Field leases from Shell Oil Company. ML&P acquired Shell's one-third interest in eleven State of Alaska oil and gas leases' and two federal leases. The Anchorage Assembly granted final approval to close the purchase of Shell's interest in the Beluga oil and gas leases in November 1996.

As a regulated public utility, ML&P also had to get approval from the Regulatory Commission of. Alaska (RCA) to purchase Shell's interest in the Beluga leases. The. RCA approved ML&P's purchase of 'Shell's Beluga field interest by orders issued in October and November 1996.

Because the Shell/ML&P transaction involved state leases, it required approval by the Department of Natural Resources (DNR) . Oh May 8, 1997 DNR approved the transfer of the leases to ML&P, effective January 2, 1997.

DNR's approval purported to Included certain conditions. DNR required, as a condition of approval, that ML&P pay AS 43.56 oil and gas property taxes and that ML&P pay AS' 43. 55 production taxes and AS 43. 57 conservation taxes on the portion of its Beluga production that ML&P sold to third parties.

DNR's decision approving the transfer of oil and gas interest to ML&P left for future consideration the issue of whether ML&P would pay AS 43.55 production taxes and AS 43.57 conservation taxes on the gas ML&P used internally.

ML&P sold some of the gas to third parties and...

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