N.Y. Real Property Tax Law § 594: Assessment of oil and gas economic units

§ 594. Assessment of oil and gas economic units. 1. Oil and gas

economic units shall be assessed only in the manner provided in this

title. Notwithstanding the provisions of subdivision two of section

five hundred two of this article, oil and gas economic units shall be

assessed in the name of the producer and shall be described on a

separate subsection of the taxable section of the assessment roll by

such identifying characters as the commissioner may prescribe by rule.

For purposes of assessments under this title a producer may certify to

each assessor the address to which the assessment for an economic unit

and the notice pursuant to subdivision one of section five hundred

ninety-five of this title shall be sent.

2. Upon receipt of the appropriate unit of production values certified

by the commissioner, each assessor shall compute and determine, in

accordance with rules promulgated by the commissioner, the assessed

value of oil and gas economic units located in that assessing unit. Any

local officers, including school authorities, having custody and control

of the assessment roll when final unit of production values are

certified by the commissioner, shall make the changes, if any, occurring

as a result of such certification. Except as otherwise provided for in

this subdivision and subdivision three of this section, oil and gas

economic units shall be assessed as follows: multiply (1) the

appropriate unit of production value; times (2) the amount of production

from that economic unit in the production year; times (3) the latest

state equalization rate or special equalization rate, except that where

such rate exceeds or would exceed one hundred, a special equalization

rate of one hundred percent shall be established by the commissioner for

purposes of this section. The value of all elements in an oil and gas

economic unit shall be deemed to be included in the value of such

economic unit and shall not be separately assessed. Assessment of gas

economic units shall be based on actual measured annual production

during the life of the well or wells in that unit even though such

annual production may be non-existent due to non-connection,

non-completion, shut-in or other circumstances which prevent production

of oil and/or gas. Annual production of the economic unit shall be based

on the production year. The foregoing notwithstanding, upon the

exercise of gas rights, each gas economic unit shall be subject to a

minimum assessment for two one year periods based on a minimum annual

production equivalent of two million four hundred thousand cubic feet.

Such minimums shall be applied during the life of the well in

consecutive or nonconsecutive years, whenever such well has an annual

production of less than two million four hundred thousand cubic feet.

Upon completion of the second year minimum tax assessment, a gas

economic unit shall be assessed on actual measured annual production of

gas. For purposes of assessing gas economic units, no minimum assessment

shall be applied to any gas economic unit existing on or before January

first, nineteen hundred eighty-six and such economic units shall be

assessed only on actual measured annual production. Oil economic units

shall be assessed on the basis of actual measured annual production.

3. Economic units including oil and gas rights contained therein shall

not be eligible for any exemption from taxation except as provided in

the following circumstances:

(a) Oil and gas rights and other elements of economic units shall be

exempt from taxation if owned by a school district or board of

cooperative educational services;

(b) Oil and gas rights and other elements of economic units shall be

exempt from taxation if owned by an organization whose property is

exempt from taxation pursuant to section four hundred twenty-a of this

chapter, except that such property shall be taxable to the extent that

the oil and gas produced is sold rather than used by the owner,

regardless of the use to which the revenues are devoted;

(c) Unless a local law, ordinance or resolution has been adopted

pursuant to paragraph (a) of subdivision one of section four hundred

twenty-b of this chapter, oil and gas rights and other elements of

economic units shall be exempt from taxation if owned by an organization

whose property is exempt pursuant to such section four hundred twenty-b,

except that such property shall be taxable to the extent that the oil

and gas produced is sold rather than used by the owner, regardless of

the use to which the revenues are devoted; and

(d) Oil and gas rights and other elements of economic units shall be

exempt from taxation if the gas produced in the economic unit is

collected from a landfill or used to power farm waste energy systems or

farm waste electric generating equipment, as such term is defined in

section sixty-six-j of the public service law. Such exemption shall

apply to property on assessment rolls based on taxable status dates

occurring on or before December thirty-first, two thousand seventeen.

4. Where an oil or gas economic unit is located within more than one

assessing unit, the appropriate county director or county directors

shall certify to the assessors the percentage of capital investment in

property located within each such assessing unit. The assessor shall

apportion the assessment of economic units among school districts and

special districts based upon the percentage of capital investment

located within each such district.