Subcommittee Meeting Information

April 16, 2007

State Capitol Room 302

Cheyenne, Wyoming

 

Committee Members Present

Senator Jim Anderson, Co-Chairman

Representative Rodney "Pete" Anderson, Co-Chairman

Senator Jayne Mockler

Senator Tony Ross

Representative Steve Harshman

 

Committee Members Absent

Representative Mark Semlek

 

Legislative Service Office Staff

Mark Quiner, Assistant Director

Josh Anderson, Research Associate

Dean Temte, Legislative Analyst

 

Others Present at Meeting

Representative Roy Cohee.  Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

Call To Order

Co-Chairman Representative Anderson called the meeting to order at 9:00 am.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee Meeting Agenda.

 

Election of Chairman

Senator Ross moved for the election of Representative Anderson and Senator Anderson as cochairmen of the subcommittee, the motion passed unanimously.

 

Preliminary Comments

Senator Mockler had a concern that the membership of the subcommittee was different from the membership of the Revenue Committee.  Representative Cohee said that he decided to appoint a member with more knowledge of the complex issue of valuation of producer-processed natural gas.  Representative Cohee requested that Senator Mockler raise this concern at the next management council meeting in order to clarify whether it was appropriate to appoint different members to a subcommittee.

 

Producer Processed Natural Gas Valuation Presentation

Ed Schmidt, Director of the Department of Revenue, made a presentation concerning the issue of valuation of producer-processed natural gas.  The presentation gave a description of the different valuation methodologies for producer processed natural gas.  The presentation explained that although there are five different methodologies described in statute, only three types can be used in practice.  The first type is comparable value which is the arms-length sales price less processing and transportation fees charged to other parties for minerals of like quantity and quality.  The second methodology is proportionate profits which calculates taxable value by multiplying the sales revenue less royalties and production taxes by the direct cost ratio.  The third methodology is the jointly agreed upon method where no other method provides for a fair market value.  The Department of Revenue uses comparable value when they have evidence of fees charged to other parties, otherwise they are forced to use proportionate profits or they try to reach a jointly agreed upon method with the taxpayer.  The slides from the presentation are set out in Appendix 3.

 

Martin Hardsocg, Senior Assistant Attorney General, continued the presentation of issues concerning the valuation of producer-processed natural gas.  The slides from his presentation are set out in Appendix 4.

 

Paul Syring of BP clarified that BP is not using comparable value as suggested in the presentation, but rather uses the jointly agreed upon method.

 

Cochairman Representative Anderson stated that the intention was to have another meeting similar to this meeting where industry representatives would have a chance to present their views.

 

Craig Grenvik, Department of Revenue Mineral Tax Administrator, also presented slides concerning the valuation of producer-processed natural gas.  The slides he presented which do not include confidential information are set out in Appendix 5.

 

Brent Kunz on behalf of Exxon Mobile was concerned that Exxon Mobile had not yet received notice from the department of revenue that confidential information would be shared.

 

Bill Thompson on behalf of Chevron also expressed concern that Chevron had not received notice from the department relating to the disclosure of confidential information.

 

The Department of Revenue explained that notice had been sent by mail on Thursday April 12, 2007.

 

Mark Quiner, LSO, stated that the subcommittee had the right to view the confidential information so long as the information remained confidential and that it was not within the purview of the committee to determine if any applicable notice requirements had been complied with by the  Department of Revenue.

 

Paul Syring of BP also expressed concern that BP had not to his knowledge received notice of the presentation of confidential information.

 

Cochairman Senator Anderson made a motion that the subcommittee resolve itself into executive session and that any information provided related to any company be shared with the company and that any representative of the company who was present may attend that portion of the executive session. The motion passed unanimously.

 

The Subcommittee resolved into executive session to discuss confidential taxpayer information at 11:45 am.

 

The Subcommittee reconvened in general session at 2:00 pm.

 

Meeting Recess

The Subcommittee recessed at 2:15 for lunch.

 

Next Meeting

The Subcommittee reconvened in general session at 3:00 pm.  The next meeting was tentatively set for May 15, 2007.  After additional discussion and public comment the tentative agenda will consist of industry members presenting information with a goal of coming up with a way to determine fair market value.  The Subcommittee will also receive information on any possible unintended or collateral effects of any possible changes to the valuation of producer-processed natural gas.

 

Meeting Adjournment

There being no further business, Co-Chairman Representative Anderson adjourned the meeting at 4:00 pm.

 

Respectfully submitted,

 

 

 

Representative Rodney "Pete" Anderson, Co-Chairman

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Committee Sign-In Sheet		Lists meeting attendees		Legislative Service Office
2		Committee Meeting Agenda		Provides an outline of the topics the Committee planned to address at meeting		Legislative Service Office
3		Slides from presentation		Power point slides from presentation by Ed Schmidt, Director of the Department of Revenue		Department of Revenue
4		Slides from presentation		Power point slides from presentation by Martin Hardsocg, Senior Assistant Attorney General		Department of Revenue
5		Slides from presentation		Power point slides from presentation by Craig Grenvik, Department of Revenue Mineral Tax Administrator		Department of Revenue