Patrick Crow
OGJ Online
Washington, DC�Kansas natural gas producers will have to refund an estimated $750 million to consumers after the US Supreme Court declined Monday to hear an appeal of a tax refund case.
BP Amoco Plc, Exxon Mobil Corp., Occidental Petroleum Corp., and Union Pacific Resources Group Inc. asked the high court to consider the case. They and other Kansas producers owe the refunds stemming from a Federal Energy Regulatory Commission decision. It was the second time the Supreme Court declined to hear the an appeal of the case.
FERC had determined that Kansas�s ad valorem tax was a severance tax on gas production and allowed it to be added to the price of gas between October 1983 to June 1988.
A lawsuit was filed challenging the decision, and a federal appeals court remanded the issue to FERC for clarification. FERC then reversed itself and said producers must refund to consumers the Kansas ad valorem taxes plus interest.
Producers then sued to overturn FERC�s decision, and appealed the case when they lost (OGJ, Sept. 27, 1999, p. 38).
The state of Kansas supported producers in the suit, and the US Justice Department opposed them. In 1997, producers asked the Supreme Court to review the District of Columbia US appeals court�s decision that refunds were owed.
Producers also asked FERC to waive the accrued interest plus a portion of the tax that Kansas had added on, expecting they would recover the taxes from consumers. FERC denied that request, and last fall the circuit court upheld its action. Producers then appealed again to the high court.