§ 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.