September 11, 2019
This week, Cheniere Energy is approaching the Supreme Court of Texas to step in and solve what they believe is a “double taxation issue” between Nueces County and San Patricio County.
Cheniere has been in the process of building a large Liquefaction facility in San Patricio County in 2014, and both counties deemed the land to be taxable in each jurisdiction so they both sent a “notice of value” to the company. Because this project has large incentives and abatements in place, it’s oftentimes difficult for a company to agree to the incentives and then pursue a lower value as they want to be seen as fairly paying their share of taxes. In this case, however, both counties were taxing land that was mostly submerged at the time. In Texas, the full value of a facility is not realized until completion, so during the early development years, the property tax burden was low. As Cheniere states in its August 5th filing “Although the double taxation was improper, the values were, at the time, not material, so CCL remitted payment to both counties without protest.”
Cheniere saw a property tax bill of over $100,000 in 2017 from each county and then a total taxable value notice in 2018 of more than $3,000,000.
There is a precedent for what Cheniere is asking for as the Texas Supreme Court ruled in favor of Occidental Chemical Corp. or “Oxy” who claimed double taxation for a pair of commercial piers in Corpus Christi’s Bay.
Cheniere argues in its filing that, “Because the Court held that ‘docks, piers, and similar permanent facilities that are connected to the mainland of San Patricio County’ are to be treated ‘as a part of that county,’ its directive to Nueces County Appraisal District necessarily covered CCL’s facility as well, (…) Nowhere in the opinion did the Court give the slightest hint that Oxy’s piers and related facilities were distinguishable from those of the ‘other taxpayers’ with property ‘along the Nueces County-San Patricio County border.’ “
The Nueces Central Appraisal District in an August 19 response stated that they have collected $0 in ad valorem taxes since the Oxy case last year. However, Nueces feels that this case differs from Oxy in that “Cheniere is not constructing mere piers jutting into Nueces County. It is constructing a large structure that will occupy a significant portion of Nueces County’s submerged land,” highlighting the differences between the lawsuits. They go on to argue that. “When an entity affirmatively constructs a large structure on Nueces County submerged land — even if it is connected to San Patricio County’s land — the construction cannot change county boundaries and Nueces County should have the ability to tax the portion of the facility that is on its submerged land.”
The case is currently pending in the Texas Supreme Court and will either solidify the precedent set in the Oxy Case or will be overturned.