District Judge Ernie B. Armstrong will rule by the end of the week if Kinder Morgan’s motion to dismiss a case by four Scurry County taxing entities was filed in a timely manner.
During a hearing in 132nd District Court this morning, Armstrong heard from Brent Lemon, who is representing Scurry County, Snyder ISD, Western Texas College and the Scurry County Hospital District, and Kinder Morgan’s attorney, Jack Shepherd.
The four entities filed a lawsuit in district court challenging a June Appraisal Review Board (ARB) decision not to reappraise Kinder Morgan mineral values from 2012-18.
Lemon said Armstrong, when considering his motion, should “consider what Kinder Morgan was thinking when the original petition was filed” on Aug. 23.
During ARB hearings in Scurry County on June 21 and Pecos County, on July 18, Lemon said the word “fraud” was used 73 different times.
Lemon said Kinder Morgan’s claim that fraud was a new claim did not hold merit and Armstrong, in a written ruling last month, agreed when determining the court had jurisdiction to hear the case when the ARB denied the entities’ request to reappraise mineral values. Lemon said today, Kinder Morgan’s filings have led to numerous delays.
Lemon also said that Kinder Morgan officials have called the entities’ members in both Scurry and Pecos counties asking them “to drop this lawsuit.”
“I think they have run out of time and you shouldn’t give them a second chance,” he said of the motion to dismiss.
Shepherd said the entities sought relief through the ARB hearing, but the Tax Code stated that entities must question the values of all companies, not a single taxpayer.
“There are some 11,000 mineral interests in Scurry County. That is a lot of defendants,” he said, adding the amended motion by Lemon focused on only Kinder Morgan. “The second petition should be considered a new legal action.”
Armstrong also said that after his written ruling is filed, a 9 a.m. hearing on March 13 may be held to discuss discovery issues. In August, Lemon’s original discovery petition requested all data used to set the values for the years in question.
Those figures include gross oil production, net revenue interest, net oil production, starting gross oil price, escalation rate, oil price, gross income, operating expense details, severance taxes, net income, discount factor and discounted cash flow.
The updated petition requested the same information.
Lemon’s services will be at no cost to the entities unless future settlements are reached in the matter. If that occurs, Lemon will receive 20 percent of any settlement. U.S. Consults, LLC, would also receive 20 percent of any settlements reached in the lawsuits.
The SCAD board of directors in February decided to table a settlement offer until after Armstrong issued his ruling on jurisdiction. The board has not scheduled a meeting to revisit the settlement offer.
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