Enbridge Energy, Limited Partnership v. Commissioner of Revenue, 8858-R

CourtTax Court of Minnesota
Writing for the CourtJANE N. BOWMAN, JUDGE MINNESOTA TAX COURT.
PartiesEnbridge Energy, Limited Partnership, Appellant-Petitioner, v. Commissioner of Revenue, Appellee-Respondent.
Decision Date06 May 2021
Docket Number8858-R,8984-R

Enbridge Energy, Limited Partnership, Appellant-Petitioner,
v.

Commissioner of Revenue, Appellee-Respondent.

Nos. 8858-R, 8984-R

Tax Court of Minnesota, Regular Division, Ramsey County

May 6, 2021


These consolidated matters came before The Honorable Jane N. Bowman, Judge of the Minnesota Tax Court, to determine the final apportionable market value of EELP's pipeline.

Paul B. Kilgore and Eric S. Johnson, Fryberger, Buchanan, Smith & Frederick, P.A., represent appellant-petitioner Enbridge Energy, Limited Partnership.

Jennifer A. Kitchak and Kristine K. Nogosek, Assistant Minnesota Attorneys General, represent appellee-respondent Commissioner of Revenue.

FINAL APPORTIONABLE MARKET VALUE AND ORDER FOR JUDGMENT

EELP owns and operates an interstate petroleum pipeline system, known as the Lakehead system, in Minnesota and throughout the upper Midwest and elsewhere. On remand, the court determined the pipeline's unit value and the amount of that value attributable to Minnesota as of January 2, 2015, and January 2, 2016. Enbridge Energy, Ltd. P'ship v. Comm'r of Revenue, Nos. 8858-R & 8984-R, 2021 WL 1034185, at *1 (Minn. T.C. Mar. 15, 2021).

Minnesota Rule 8100, which governs the valuation of formula-assessed pipeline property, provides in relevant part: "After the Minnesota portion of the unit value … is determined, any property which is non-formula-assessed or which is exempt from ad valorem tax, is deducted from the Minnesota portion of the unit value." Minn. R. 8100.0500, subp. 1. This deduction produces apportionable market value, the value to be distributed among the various Minnesota taxing districts in which pipeline property is located. Minn. R. 8100.0600, subp. 1. Having determined only the Minnesota portion of unit value-rather than apportionable market value-as of each assessment date, the court instructed the Commissioner to calculate the value of EELP's property "which is non-formula-assessed or which is exempt from ad valorem tax [and] is deducted" under Minn. R. 8100.0500. Enbridge Energy, 2021 WL 1034185, at *1.

On April 16, 2021, the Commissioner submitted calculations, found at Exhibit A.[1] On April 20, 2021, EELP responded that it "has no objection to the Commissioner's calculations." [2]The court agrees with the parties, adopts the calculations submitted by the Commissioner, and determines final apportionable market value.

Based upon all the files, records, and proceedings herein, the court now makes the following:

FINDINGS OF FACT ON REMAND[3]

5. The court adopts the Commissioner's calculations of the value of EELP's non-formula-assessed and exempt property, found in Exhibit A, as reproduced below:

Plant Depreciation Percentage, 8100.500, subp. 3

2015

2016

Total System Plant

$10, 895, 757, 835

$12, 552, 117, 396

Non-Depreciable Plant (CWIP + Land)

$1, 134, 178, 874

$1, 154, 050, 198

Depreciable Plant

$9, 761, 578, 961

$11, 398, 067, 198

Accumulated Depreciation

$1, 522, 946, 212

$1, 788, 257, 414

Plant Depreciation Percentage

15.6014%

15.6891%

Ratio of System Unit Value and Cost Less Depreciation, 8100.0500, subp. 3

System Unit Value

$6, 537, 881, 887

$7, 096, 296, 095

Net Book Value of Plant

$9, 372, 811, 623

$10, 763, 859, 982

Ratio of System Unit Value to Net Plant

69.7537%

65.9271%

Minnesota Excludable Property, 8100.0500, subp. 1

Cost of Non-Depreciable Excludable Property

$43, 171, 230

$183, 766, 385

Cost of Depreciable Excludable Property

$87, 600, 479

$112, 271, 814

Depreciation on Depreciable Excludable Property

$13, 666, 901

$17, 614, 437

Cost Less Depreciation of Excludable Property

$73, 933, 578

$94, 657, 377

Total Excludable Property (Cost Less Depreciation)

$117, 104, 808

$278, 423, 762

Value of Excludable Property to be Deducted from Minnesota Allocable Value

$81, 684, 936

$183, 556, 712

6. EELP's apportionable market value as of January 2, 2015, was $1, 448, 833, 214 ($1, 530, 518, 150 - $81, 684, 936).

7. EELP's apportionable market value as of January 2, 2016, was $1, 511, 748, 425 ($1, 695, 305, 137 - $183, 556, 712).

ORDER ON REMAND

7. The court having reduced the system unit-value of EELP's pipeline operating system as of January 2, 2015, to $6, 537, 881, 887, and having adjusted the value attributable to Minnesota to $1, 530, 518, 150, the Commissioner shall adjust the Minnesota apportionable value to $1, 448, 833, 214, and shall reapportion the value accordingly among the affected counties.

8. The court having reduced the system unit-value of EELP's pipeline operating system as of January 2, 2016, to $7, 096, 296, 095, and having adjusted the value attributable to Minnesota to $1, 695, 305, 137, the Commissioner shall adjust the Minnesota apportionable value to $1, 511, 748, 425, and shall reapportion the value accordingly among the affected counties.

9. The Commissioner shall equalize the reapportioned values as required by law.

10. Taxes due and payable in 2016 and 2017 shall be recomputed accordingly and refunds, if any, paid to EELP as required by such computations, together with interest from the original date of payment.

IT IS SO ORDERED. THIS IS A FINAL ORDER. LET JUDGMENT BE ENTERED ACCORDINGLY.

JANE N. BOWMAN, JUDGE MINNESOTA TAX COURT.

Exhibit A - Calculation of Excludable Property Value

2015

2016

Plant...

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