§ 594 — Assessment of oil and gas economic units

§ 594. Assessment of oil and gas economic units. 1. Oil and gas\neconomic units shall be assessed only in the manner provided in this\ntitle. Notwithstanding the provisions of subdivision two of section\nfive hundred two of this article, oil and gas economic units shall be\nassessed in the name of the producer and shall be described on a\nseparate subsection of the taxable section of the assessment roll by\nsuch identifying characters as the commissioner may prescribe by rule.\nFor purposes of assessments under this title a producer may certify to\neach assessor the address to which the assessment for an economic unit\nand the notice pursuant to subdivision one of section five hundred\nninety-five of this title shall be sent.\n 2. Upon receipt of the appropriate unit of production values certified\nby the commissioner, each assessor shall compute and determine, in\naccordance with rules promulgated by the commissioner, the assessed\nvalue of oil and gas economic units located in that assessing unit. Any\nlocal officers, including school authorities, having custody and control\nof the assessment roll when final unit of production values are\ncertified by the commissioner, shall make the changes, if any, occurring\nas a result of such certification. Except as otherwise provided for in\nthis subdivision and subdivision three of this section, oil and gas\neconomic units shall be assessed as follows: multiply (1) the\nappropriate unit of production value; times (2) the amount of production\nfrom that economic unit in the production year; times (3) the latest\nstate equalization rate or special equalization rate, except that where\nsuch rate exceeds or would exceed one hundred, a special equalization\nrate of one hundred percent shall be established by the commissioner for\npurposes of this section. The value of all elements in an oil and gas\neconomic unit shall be deemed to be included in the value of such\neconomic unit and shall not be separately assessed. Assessment of gas\neconomic units shall be based on actual measured annual production\nduring the life of the well or wells in that unit even though such\nannual production may be non-existent due to non-connection,\nnon-completion, shut-in or other circumstances which prevent production\nof oil and/or gas. Annual production of the economic unit shall be based\non the production year. The foregoing notwithstanding, upon the\nexercise of gas rights, each gas economic unit shall be subject to a\nminimum assessment for two one year periods based on a minimum annual\nproduction equivalent of two million four hundred thousand cubic feet.\nSuch minimums shall be applied during the life of the well in\nconsecutive or nonconsecutive years, whenever such well has an annual\nproduction of less than two million four hundred thousand cubic feet.\nUpon completion of the second year minimum tax assessment, a gas\neconomic unit shall be assessed on actual measured annual production of\ngas. For purposes of assessing gas economic units, no minimum assessment\nshall be applied to any gas economic unit existing on or before January\nfirst, nineteen hundred eighty-six and such economic units shall be\nassessed only on actual measured annual production. Oil economic units\nshall be assessed on the basis of actual measured annual production.\n 3. Economic units including oil and gas rights contained therein shall\nnot be eligible for any exemption from taxation except as provided in\nthe following circumstances:\n (a) Oil and gas rights and other elements of economic units shall be\nexempt from taxation if owned by a school district or board of\ncooperative educational services;\n (b) Oil and gas rights and other elements of economic units shall be\nexempt from taxation if owned by an organization whose property is\nexempt from taxation pursuant to section four hundred twenty-a of this\nchapter, except that such property shall be taxable to the extent that\nthe oil and gas produced is sold rather than used by the owner,\nregardless of the use to which the revenues are devoted;\n (c) Unless a local law, ordinance or resolution has been adopted\npursuant to paragraph (a) of subdivision one of section four hundred\ntwenty-b of this chapter, oil and gas rights and other elements of\neconomic units shall be exempt from taxation if owned by an organization\nwhose property is exempt pursuant to such section four hundred twenty-b,\nexcept that such property shall be taxable to the extent that the oil\nand gas produced is sold rather than used by the owner, regardless of\nthe use to which the revenues are devoted; and\n (d) Oil and gas rights and other elements of economic units shall be\nexempt from taxation if the gas produced in the economic unit is\ncollected from a landfill or used to power farm waste energy systems or\nfarm waste electric generating equipment, as such term is defined in\nsection sixty-six-j of the public service law. Such exemption shall\napply to property on assessment rolls based on taxable status dates\noccurring on or before December thirty-first, two thousand seventeen.\n 4. Where an oil or gas economic unit is located within more than one\nassessing unit, the appropriate county director or county directors\nshall certify to the assessors the percentage of capital investment in\nproperty located within each such assessing unit. The assessor shall\napportion the assessment of economic units among school districts and\nspecial districts based upon the percentage of capital investment\nlocated within each such district.\n