Legal briefs from both sides were filed last year. After hearing oral arguments on March 7, the court will deliberate and rule on the case, said Jon Sarche, public information officer for the Colorado Supreme Court. Its decision is final and exhausts all appeals.
“Oral argument allows the judges to ask questions and gives both attorneys a half-hour each to present their sides,” Sarche said. “It is not a trial. The good ones turn into a discussion where the judges try to tease out issues that have not been settled.”
Millions of dollars of dispersed tax revenue is at stake, county officials said, including $942,000 that was distributed to the Montezuma-Cortez School District, and $513,000 that went to Montezuma County’s general fund.
The complex case began in 2008 when then-Montezuma County Assessor Mark Vanderpool concluded that Kinder Morgan had underpaid its county property taxes by about $2 million.
The company’s taxable value increased by $56.7 million after Vanderpool rejected a Kinder Morgan request for tariff deduction for transporting its CO2 gas, saying that Kinder Morgan didn’t qualify because it owned more than a 50 percent owner of the Cortez Pipeline. The pipeline carries CO2 about 500 miles from the McElmo Dome and Doe Canyon to Denver City, Texas.
Kinder Morgan paid the higher tax bill for 2008, but petitioned for a tax-bill adjustment, claiming that it did qualify for the tariff deduction, and that the county’s retroactive valuation on its CO2 production was not authorized by state statute.
The higher valuation was upheld in 2008 by the Montezuma County Board of Assessment Appeals, composed of the county’s three commissioners, who at that time were Gerald Koppenhafer, Larrie Rule and Steve Chappell.
Kinder Morgan took the case to the Colorado District Court of Appeals in Denver, which eventually ruled in favor of the county.
Kinder Morgan then appealed the decision to the Colorado Supreme Court, which agreed last spring to make the final decision.
Current Montezuma County Assessor Scott Davis said that if the Colorado Supreme Court rules in favor of the county, Kinder Morgan could be liable for millions of dollars in back taxes. Since the legal challenge, Kinder Morgan has continued to claim the disputed transportation tariff deduction.
“If it goes the other way, county special districts would owe (Kinder Morgan) the $2 million from 2008,” Davis said.
A strange twist in the case occurred in January 2015 when the Colorado Appeals Court ruled in Kinder Morgan’s favor, then months later agreed to rehear the case, reversing its own decision in favor of Montezuma County.
“It’s been a lot of up and down,” Davis said. “After this, there will be no more appeals.”
The county has spent $138,000 in legal costs on the case, he said. Audits of Kinder Morgan taxes filed since 2008 are ongoing. Montezuma County is represented by the firm Dufford, Waldeck, Milburn & Krohn, LLP. Kinder Morgan is represented by lawyer Alan Poe, of Denver.
The $2 million tax windfall was distributed to special districts in the Kinder Morgan production area in 2008. Those districts were instructed by the Montezuma County Assessor’s Office to not spend the money pending the outcome of the case because they may have to pay it back.
The largest beneficiary of the increased tax collection was the Montezuma-Cortez Re-1 School District, which reaped $942,000 in 2008.
Other significant amounts went to the county’s general fund ($513,000), the road and bridge fund ($129,000), the Montezuma County Sheriff’s Office ($71,000), social services ($64,000), and Southwest Memorial Hospital ($50,000). The rest was spread out among smaller special districts including local fire departments and cemetery districts.
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