1998 ANNUAL REPORT
Tax & Legal

Tax Committees Score a Series of Advances: Discussions with LA Assessor Continue

Advances were made on several important taxation fronts in 1998, while discussions continue with the Los Angeles County Assessor’s Office on appraisal practices that directly impact Los Angeles basin refineries.

Using the expertise of a retained industrial appraiser, WSPA members met with the Assessor’s staff to argue that the oil industry was not receiving appropriate consideration on critical issues. Outstanding concerns include the practice of adding to the assessed value of a facility the costs incurred in complying with regulatory mandates, the handling of excess costs and functional and economic obsolescence.

On other fronts, WSPA’s Tax Committee succeeded in working with the California Board of Equalization’s Fuel Tax Division in addressing important issues. They included a change in fuel license tax provisions to allow non-refiners to be classified as qualified distributors providing they meet certain requirements, and favorable changes in the Board’s policy on underground storage tank fees, among other things.

1998 saw passage of state legislation exempting water-based hydrocarbons from taxation for two years after which a tax rate of six cents-per-gallon takes effect. But efforts to resolve issues of double taxation and redistribution of motor fuel taxes among qualified distributors were unsuccessful. Legislation is expected to be introduced next year to address these problems.

WSPA’s Tax Committee also was active in providing important input into adoption of the California Assessor’s Handbooks on such subjects as Appraisal, Advanced Appraisal, Personal Property and Fixtures and the Assessment Appeals Manual. And WSPA’s cooperative work with assessors statewide reached a milestone in September when the Property Tax Educational Form attracted record attendance, including five state lawmakers. WSPA provides continuing education credit for tax professionals who participate in this annual program.

Legal activities covered a variety of industry issues in 1998.
Here are some of the highlights:

• WSPA challenged the San Diego County marketing divorcement ordinance on a number of legal grounds. The ordinance was later rescinded (See Page 3 for details).
• The Bay Area Air Quality Management District’s proposed NOx rule was challenged in court. The judge ruled against the challenge on narrow grounds (See Page 6 for details).
• After years of inactivity, a settlement was reached by all parties with the California Attorney General regarding the discharge levels of a number of metals as enumerated in the Bay Area Water Quality Control Plan.
• WSPA is challenging a defacto ethanol mandate in Clark County, Nevada.
• WSPA joined other associations, industries and coalitions in forcefully responding to the U.S. EPA’s rulemaking on "environmental justice." At the request of the U.S. Justice Department, EPA is not taking action to enforce this policy which would hinder permitting processes at manufacturing facilities.

WSPA Adopts Policy on "Environmental Justice"
As the U.S. Environmental Protection Agency reconsiders its implementation policies on "environmental justice," WSPA’s RM&T Committee has adopted an Environmental Justice Policy Paper of its own. The paper endorses the goals of equal protection for all citizens; outreach and education of communities near industrial facilities; quantitative measurement of the current environment; implementation of appropriate mitigation measures and compliance with all applicable regulations.

The committee’s action came as the EPA received strong adverse reaction to its proposed Environmental Justice Implementation Plans and paused to review its approach. The so-called environmental justice movement has pressed for additional federal regulation based on it’s assertion that minority populations face disproportionate exposure to health and safety hazards from industrial facilities in their communities.