The 3rd Circuit Court of Appeal has upheld a district court ruling out of Opelousas that could have wide-ranging effects on the tax burden of the Louisiana oil and gas industry.

The appeals court upheld a ruling from the 27th Judicial District that backed St. Landry Parish Assessor Rhyn Duplechin’s classification of salt caverns as “other property” taxable at 15 percent of fair market value. In this case, the caverns are owned by PBGS, formerly Port Barre Gas Storage, LLC, and leased to Spectra Energy. Jointly, PBGS and Spectra contested Duplechin’s classification, arguing that salt caverns — used in this case to store natural gas — should be classified as “land,” which is taxed at 10 percent of fair market value.

The five-judge 3rd Circuit panel was split in rendering the ruling, with two judges dissenting. Judge Phyllis Keaty writes in her dissenting opinion that the appeals court lacked jurisdiction and the appeal properly belonged in the hands of the Louisiana Tax Commission. Judge Sylvia Cooks agreed, going further in her disdain for the ruling in writing that “the majority position is not only out the box, it is legally defective.”

Read the full ruling here.

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