Volume 3, Number 27 - October 2, 2003
brought to you online by Pinedale Online
Collusion no surprise
Former Sublette County Commissioner Buzz Wassenberg said in an interview this week that the revelation that state officials in the Geringer administration had entered into a secret joint defense agreement with Exxon really wasn't a surprise.
"We knew they were awfully close down there ... and we knew they were assisting each other," Wassenberg said, but the extent of the collusion wasn't known. What is surprising is that the partners in the agreement didn't take action to make sure the agreement wouldn't surface, he said.
"It's interesting that they didn't do something to make sure the agreement never came to light," he said.
Wassenberg served as a county commissioner when the county first sought state Board of Equalization review of the valuation method used for Exxon's LaBarge field production.
Wassenberg said when the LaBarge operation first went on line in the early 1980s, Exxon was allowed to use the netback valuation method and the company reported that the cost of operations was equal to the income, so no tax was due. When state officials and the county took the issue to court, the resulting lawsuit settlement agreement allowed the company to use this valuation method until 1991, meaning it could deduct 65 percent of the company's income from the production, only paying taxes on the remaining 35 percent. But beginning in 1991, the agreement also allowed the State of Wyoming to select another valuation method. Should it fail to do so, the settlement agreement terms would continue, with the exception that Exxon's tax exemption would increase another 10 percent, to 75 percent.
Wassenberg said he was serving on the commission when it became evident the state wasn't going to take action. He said the county commission wrote a letter to then Governor Jim Geringer, asking for either the state "help us or get out of the way." With no help forthcoming, the county took the issue to the State Board of Equalization, he said.
"Our fight wasn't so much with Exxon, it was mainly with the state," Wassenberg said, adding that in failing to enact another valuation method, the state was losing the taxes on the extra 10 percent as well.
"As quick as we made an application, the state and Exxon sued," Wassenberg said. The issue has been tied up in the courts ever since, with the State Board of Equalization finally scheduling a hearing for next January.
Here is Wassenberg's letter to the editor of the Pinedle Roundup, Rob Shaul regarding this issue
The rest of the story
(The Examiner received a copy of this letter addressed to Pinedale Roundup editor Rob Shaul).
I read with much interest your coverage of the recent revelation in the (Exxon & State of Wyoming v. Sublette County) case, both on the front page and in the editorial. I commend you for leaving no doubt in the reader's mind where you stand on this issue. However, I found your coverage was a mixture of truth, half-truths and untruths, laced with prejudice.
While I was disturbed by some of what you said, I was more perturbed by what you didn't say. Either by design, or ignorance of the facts, you left out the whole basis of Sublette County's protest. Please allow me to tell your readers "the rest of the story."
It all began in the early 1980s when the Exxon LaBarge Operation first went online. The reports from Exxon for valuation purposes used the "net back" method of valuation and reported that the cost of operations was equal to the income and no tax was due. The Wyoming Department of Revenue took exception to this and refused to certify the valuation. The State of Wyoming and Sublette County went to court over the evaluation. In 1986 all parties on the case reached a complicated settlement agreement known as the "Howell Yates Agreement."
Among other things, this agreement set forth the valuation method to be used for the years from 1981 to 1991.
During this time Exxon would be allowed to deduct 65 percent of its income for processing costs and pay taxes on 35 percent of its income. In 1991, the State of Wyoming would be allowed to select another method of evaluation. If it failed to do so, the settlement agreement would continue. However, Exxon's exempted income would be increased to 75 percent.
In 1992, when Sublette County realized the state had failed to act, and we were losing the tax revenue on another 10 percent of the income, we asked the State Board of Equalization to see if the new evaluation was proper and in the best interest of the county. This prompted both Exxon and the State of Wyoming to sue the county in district court, claiming our protest was both untimely and illegal.
With the matter in court, the State Board of Equalization stayed any decision on our protests. The matter has been drug through the courts by appeals from both sides ever since.
If there is any doubt in your mind as to the effect of the state's decision on the county revenue, I am enclosing a chart the county assessor prepared for me while I was on the commission. In my opinion the nearly half-a-million dollars already spent and the money to be spent on legal fees would be offset many times with any favorable decision from the State Board of Equalization.
Last but not least, I feel your vicious attack on Mrs. Nancy Freudenthal was uncalled for and an abuse of your power of the press. I know her to be a lady of great character and moral standards. She did an excellent job in assisting our efforts over these many years, and took recluse from our case when it appeared there might conflict with her duties as First Lady for the state. I think you owe her a public apology.
Buzz Wassenberg - Big Piney
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