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Alaska Supreme Court rejects Alyeska's claim that state erred in land appraisal

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Posted: Sunday, November 25, 2012 12:27 am | Updated: 12:06 pm, Mon Jan 21, 2013.

FAIRBANKS — The Alaska Supreme Court on Friday rejected claims that the state erred in its appraisal of land leased to Alyeska Pipeline Service Co. for the right-of-way of the trans-Alaska oil pipeline.

Alyeska argued that the Department of Natural Resources misinterpreted the statute governing the calculation of the lease price, that the state should have adopted its interpretation of that statute as a regulation under the Administrative Procedure Act and therefore should have provided public notice and allowed public comment, and that the appraisal improperly included submerged lands that the state had failed to establish that it owned.

State law requires that the Department of Natural Resources adjust the right-of-way lease price every five years. The department hired an appraiser and in December 2002 informed Alyeska that the annual rent for state lands in the right-of-way would be $236,000.

Alyeska then hired an appraiser to review the state’s appraisal.

The Alyeska appraiser pointed out that the state lease to Alyeska did not grant Alyeska exclusive use of the land and that the state’s appraiser might have, had he been allowed to, value the land at 75 percent of fair market value rather than at 100 percent.

The Alyeska appraiser also noted that the state’s appraisal included 205.78 acres of submerged lands that were reported “as disputed acreage in navigable waterways” but that the state appraisal did not value those lands with that consideration.

Alyeska appealed the appraisal to then-Natural Resources Commissioner Mike Menge in January 2003. The appeal was rejected in September 2006. Alyeska appealed to Superior Court, which in August 2010 upheld the commissioner’s final ruling. Alyeska appealed to the Supreme Court, which rejected Alyeska’s arguments.

Contact the newsroom at 459-7572.

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