Anchorage Daily News

The Alaska Supreme Court has overturned a lower court's decision and found the City of Valdez's tanker tax constitutional.

The court said that it disagreed with the Superior Court's finding that the way the tax is calculated, the apportionment formula, violates the due process and commerce clauses of the federal Constitution because it creates a risk of "duplicative taxation."

"We hold that the apportionment formula does not create a risk of duplicative taxation; it was therefore error to declare the ordinance unconstitutional as applied," the Supreme Court said recently.

Several shippers, including Polar Tankers, a Conoco Phillips subsidiary, challenged the Valdez tax, an ad valorem property tax on large boats and vessels not used for commercial fishing and not docking at city-owned docks, that the city adopted in 1999.

The tanker port across Valdez Arm from the city is owned by the owners of the trans-Alaska oil pipeline.

The City Council adopted an apportionment formula in 2000 and several tanker owners joined Polar in a suit, filed in 2000. The city settled with all except two over the next three years. The Superior Court issued its final judgment in early 2006 and three parties, including Valdez, appealed. SeaRiver, the Exxon Mobil tanker company, dropped its appeal and appeals by Valdez and Polar were consolidated.

Valdez levied the tanker tax to offset declining tax revenue from the huge tanker port. The value of the port has dropped by more than half since it was built more than 30 years ago, crimping the city budget, Valdez officials have said.

About one tanker a day docks in Valdez to pick up North Slope crude oil bound for West Coast refineries. City officials argue they provide services to the shippers, including fire protection, a hospital and an airport.

The Anchorage Daily News contributed to this story.

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