Kilkenny, Halpern and Lane. The opinion of the court was delivered by Kilkenny, P.J.A.D.
[116 NJSuper Page 11] Petitioner appeals from final judgments of the State Division of Tax Appeals, affirming determinations
of the Middlesex County Board of Taxation, upholding the 1967 assessed valuations fixed for local taxation by the municipal authorities of the Townships of Edison, Piscataway, Woodbridge and Borough of Carteret.
The property consists of pipelines of varying dimensions owned by Texas Eastern, to the extent of their footage in the respective municipalities. Some of these were used in combination with continuances thereof for the transmission of natural gas from Texas to the New York metropolitan area. Other pipelines of Texas Eastern in these New Jersey municipalities were "idle," not being in active use.
No useful purpose would be served by a recital of the footage and dimensions of each particular kind of pipeline in each municipality; or when the pipelines were built; or the respective municipal assessed valuations. A common formula, known as the "Middlesex County Formula," because it had been approved and recommended for common use by the Middlesex County Assessors Association, had been employed by the respective local assessors in calculating values. The propriety and the correctness in the application of that formula are the main issues on this appeal.
Two local assessors, one from South Plainfield and the other from South Brunswick, testified as to the "Middlesex County Formula." All the lines were appraised at their "historical cost," meaning the cost when the lines were built. The "per foot cost" was determined by dividing the cost of the "spread" of the pipeline in New Jersey by the footage in the particular spread. There was deducted from cost 15% as a single, non-recurring depreciation factor. This was done to stabilize the annual valuations and thus avoid the need to recalculate true value from year to year. By way of exception, a 20% deduction in the historical cost was made in the case of the 20-inch pipeline.
Applying this formula to the various lines, the 36-inch line's cost was fixed by the local assessors at $46 a foot and, with a 15% depreciation, true value per foot was determined to be $39.10. The 24-inch pipeline's cost was set at
$27 a foot and depreciated 15% to make it $22.95. The 20-inch line was valued at $16 a foot and applying the 20% depreciation factor was reduced to $12.80. The 12-inch line was valued at $10 a foot and then reduced 15% to $8.50. The 10-inch line, valued at $8 a foot, by similar deduction of 15%, became $6.80. The 8-inch line, valued at $6 a foot, was reduced by 15% to $5.10.
The idle 12-inch line was valued at $4.20 a foot since it was idle. The idle 10-inch line was valued at $3.40 a foot and the idle 8-inch line at $2.55. This represented 50% of the value of the active lines. The reason why these idle lines have not been in service is that the so-called "Big and Little Inch" pipelines were built for the transmission of oil from the Texas fields to New Jersey refineries during World War II, but thereafter they ceased to be useful for the transmission of oil to customers, because Texas Eastern does not have customers for oil. The company uses its pipelines for the transmission of natural gas to different customers. It admittedly owns the "idle" lines.
By multiplying the per foot valuation of each kind of pipeline, determined as above, by the footage of each kind of pipeline in a particular municipality, the respective local assessors calculated the "true value" of the pipelines for local tax purposes.
All municipalities in Middlesex County are supposed to assess at a ratio of 50% of true value, according to a County Board directive. Relying upon that directive, each of the respondent municipalities fixed the "assessed value" of Texas Eastern's pipelines at 50% of "true value," as calculated above. Texas Eastern had been so billed and had paid the taxes so determined.
Following a hearing before Judge Gotshalk in the State Division on June 2, 1969, the judge determined:
There was not before me evidence of the cost of these lines from which I could make a positive finding of value * * *. (Emphasis added).
By reason thereof, the judge felt "compelled to affirm the finding of the County Board as to true value * * *." Accordingly, Texas Eastern's appeals were dismissed and the County Board's valuations were affirmed by ...