[45 Pa.B. 3311]
[Saturday, June 27, 2015]

[Continued from previous Web Page]

 Comment 44: The PFB recommended that § 137b.73a(a) and (b) be revised to make clear that the mere execution of a lease authorizing the mineral exploration or development described in this section does not trigger liability for roll-back taxes, and that it is the actual exploration or development authorized by that lease that triggers this roll-back tax liability.

 Response: The Department believes that § 137b.73a(b)(1) makes clear that roll-back tax liability is only imposed on those portions of a tract of enrolled land that are actually devoted to gas/oil exploration and removal or the development of appurtenant facilities related to these activities. For this reason, the Department declines to implement the commentator's suggestion.

 The Department will consider revisiting this provision if experience subsequently shows that county assessors seek to impose roll-back tax liability on the basis of a signed leased document rather than the actual activity taking place on the leased land.

 Comment 45: The PFB reviewed the four examples in proposed § 137b.73a(b)(1) and offered that the use of ''third party'' in those comments was confusing since only two persons—the surface owner and the person that acquires subsurface mineral extraction rights—are involved in the situations presented in these examples. The commentator suggested this term be replaced in these examples with simpler, clearer designations.

 Response: Although the Department believes the regulated community has an understanding of what a ''third person'' is, it has implemented the commentator's suggestion in the final-form rulemaking by replacing that term with a generic reference.

 Comment 46: The TCAO noted that searching deeds of enrolled land to determine when and if mineral rights were severed is time consuming. This comment apparently relates to proposed § 137b.73a(b)(1)(ii), which hinges roll-back tax liability on a determination as to whether a conveyance of oil, gas or coal bed methane rights to a third party occurred before enrollment and before December 26, 2010.

 Response: The Department appreciates that this requirement imposes some burdens on county assessors, but emphasizes that these requirements are imposed by section 6(c.1)(4) of the act and that the final-form rulemaking simply restates them. The Department cannot make an amendment to the final-form rulemaking to relieve a county assessor from having to verify the date of transfer of the stated mineral rights as a prudent initial step in determining the extent of roll-back tax liability regarding oil and gas exploration/extraction activities on enrolled land.

 Comment 47: Proposed § 137b.73a(b)(1)(ii) essentially restates section 6(c.1)(4) of the act providing that roll-back taxes are not due with respect to surface activities regarding the exploration for or removal of oil or gas, including coal bed methane, where the referenced exploration/extraction rights were transferred to a third party before December 26, 2010. The CCAP requested that the final-form rulemaking be amended to make clear that the transfer of these exploration/extraction rights must include the right to engage in these surface activities. The commentator offered that:

There may be situations wherein a property owner has severed the oil and gas rights from the surface property prior to the December 26, 2010, cutoff date, but did not also authorize exploration or drilling on their surface property prior to that date. In that case, the construction of an appurtenant facility on that landowner's property after December 26, 2010, would be outside the rights that were granted for exploration and other activity, and should therefore be subject to roll-back taxes.

 Response: The Department believes it is the transfer of the referenced exploration/extraction rights that must have occurred before December 26, 2010, for the roll-back tax exemption to apply. It is not essential for that transfer to have addressed or granted permission for a particular method of extraction before that date for the roll-back tax exemption to apply. For this reason, the Department declines to amend the final-form rulemaking to address the situation presented by the commentator.

 Comment 48: The CCAP and the TCAO reviewed Examples 3 and 4 in proposed § 137b.73a(b)(1) and asked whether the 50% interest language in those two examples is meant to establish a line that creates different roll-back tax consequences for a landowner who sells more than a 50% interest in coal bed methane exploration and extraction rights to a third party than it does for a landowner who sells less than a 50% interest in those same rights.

 The CCAP also offered the alternative thought that the examples might be read as saying that roll-back taxes would not be imposed in a situation wherein a proportion of exploration and extraction rights were sold. The commentator recommended that this be clarified in the final-form rulemaking.

 IRRC joined the commentators in asking for clarification in the final-form rulemaking.

 Response: The referenced examples use a 50% interest as an example and are not intended to suggest that there are different roll-back tax consequences for a landowner who sells more than a 50% interest in coal bed methane exploration and extraction rights to a third party than there are for a landowner who sells less than a 50% interest in those same rights.

 The Department understands the commentators' point and has changed the references to a ''50% (as opposed to 100%)'' interest in the referenced examples to ''something less than a 100%'' interest.

 Comment 49: The TCAO noted that measuring portions of the total acreage of a tract of enrolled land is difficult, and also opined that using a reclamation permit (presumably, rather than the well production report in proposed § 137b.73a(b)(2)) would have been ''more efficient.''

 Response: The Department appreciates the commentator's insight into the administrative responsibilities the act imposes on county assessors, and seeks to avoid adding to these responsibilities by regulation.

 As far as the commentator's suggestion that a reclamation permit would be preferable to requiring a well production report goes, the Department notes that the requirements regarding well production report are imposed by section 6(c.1)(3) of the act. The Department will remain mindful of the commentator's suggestion as it administers this provision and, if experience ultimately shows that the commentator is right and the act should be amended to implement the commentator's suggestion, will consider seeking a statutory amendment.

 Comment 50: Regarding proposed § 137b.73a(b)(2), the TCAO noted that it is not receiving the required well production reports from the Department of Environmental Protection (DEP) and that ''it is a time consuming task to access the reports online and determine which well sites are new.''

 The CCAP apparently agrees with the TCAO on this point, and extended an offer to ''. . . work with the Department and the DEP to streamline the process by which DEP provides a copy of the well production report to the county assessor to determine rollback taxes.'' The CCAP related that DEP has taken the position that it is meeting the statutory requirement in section 6(c.1)(3) of the act that it provide the county assessor a copy of the well production report when it makes these reports available on DEP's web site. The CCAP recommended that ''. . . there be some sort of notification to counties to alert them when the new reports are posted every six months and if possible to make it clear which wells in the reports are new wells that came online just within the previous six month reporting period.''

 Response: The Department believes this is a good idea, and can assist the commentator on this project outside of this final-form rulemaking.

 Section 6(c.1)(3) of the act requires that a copy of the well production report be ''. . . provided by the Department of Environmental Protection to the county assessor within ten days of its submission.''

 The Department agrees that the current process being employed by the DEP could be improved along the lines described in the comment, and is willing to engage with the DEP and the commentator to try to implement that change.

 Comment 51: The CCAP referenced three instances when new statutory or regulatory language requires an owner of enrolled land to report specific changes in the use of the enrolled land. Specifically, reference was made to the requirement that an owner of enrolled land report: (1) facilities that are appurtenant facilities with respect to the extraction of oil and gas, as required under proposed § 137b.73a(b)(2); (2) leases of enrolled land for pipe storage yards as required under section 6(c.3) of the act; and (3) the beginning of energy generation from a wind power generation system as required under section 6(c.5)(2) of the act. The CCAP offered the following general comment:

. . . a public education effort will be needed to better inform property owners of these changes (particularly insofar as the new statutory and regulatory changes apply to those enrolled in the program prior to the changes) and their obligations to report relevant changes in their use of their land to the county assessment office.

 Response: The Department agrees with the commentator on this point. The Department believes the typical owner of enrolled land does not stay abreast of amendments to the act and is not generally aware of new statutory requirements. The Department will attempt to do more direct outreach to the public, whether through the media or by attending local meetings.

 The Department notes that this response is similar to the response offered with respect to Comment 54.

 Comment 52: Regarding proposed § 137b.73a, the TCAO observed that it ''. . . took months to develop'' the retroactive tax bill referenced in proposed § 137b.73a(c) and ''the tax amount on many of them is minimal.''

 Response: Since the retroactive adjustment of fair market value described in § 137b.73a(c) is imposed by section 6(c.1)(3) of the act, the Department cannot alter this requirement by regulation.

 Comment 53: IRRC and the PFB offered comments with respect to proposed § 137b.73b, which allows the owner of enrolled land to temporarily lease a portion of that land for pipe storage.

 IRRC and the PFB asked for guidance on the treatment of the land after the lease expires and the land is returned to its original use. IRRC asked ''[w]ould the land that was leased continue to be assessed at fair market value after the expiration of the lease, or would it automatically revert to use value for taxing purposes?'' IRRC asked the Department to include language in the final-form rulemaking to address this situation. The PFB suggested that the landowner will typically need to do ''nothing or next-to-nothing'' to restore the land to its original use, and that return to preferential assessment should be automatic unless a county assessor visits the site and determines that the required restoration has not occurred.

 Response: The referenced regulation restates section 6(c.3) of the act. The Department revised the final-form rulemaking to clarify that following the expiration of a lease and the restoration of the land to its original eligible use, preferential assessment will resume unless the county assessor determines upon inspection that the land has not been restored to its original use.

 Comment 54: Regarding proposed § 137b.73b, the TCAO noted that owners of enrolled land do not typically notify that office when they lease a portion of the enrolled land for pipe storage yards.

 Response: Although the regulation restates section 6(c.3) of the act that an owner of enrolled land who leases a portion of that land for a pipe storage yard provide the county assessor a copy of that lease within 10 days after it is signed, the Department appreciates that there needs to be some effort to educate owners of enrolled land with respect to this requirement. The Department will attempt to do more direct outreach to the public, whether through the media or by attending local meetings.

 The Department notes that this response is similar to the response offered with respect to Comment 51.

 Comment 55: A commentator noted that proposed § 137b.77(c) and (d) would allow an owner of enrolled land to assess a fee or charge in connection with the recreational use of enrolled agricultural use or forest reserve land without adversely impacting the preferential assessment of that land. The commentator stated that these fees should not be allowed. The commentator presented the following:

Allowing fees for recreation? How is this different on Ag Use and Forest Reserve? The focus of ''use'' now could potentially change based upon market demand. A municipality or private enterprise could create ball fields and charge fees, etc. And building a ''permanent'' structure could be circumvented by mobile structures. IE an RV. Or a whole campground of them. (No taxes and lucrative income). Golf course example: Subdivide the structures off of the parcel and enroll the course. No fees should be permitted. What other unintended consequences might arise from the implementation of this item?

 In support of his position the commentator also referenced a comment and response in the final-form rulemaking published at 31 Pa.B. 1701, which adopted Chapter 137b.

 Response: A statutory amendment would be needed to implement the commentator's recommendations. Section 8(f) of the act allows a landowner to assess fees and charges with respect to agricultural use land and forest reserve land.

 Comment 56: IRRC and the PFB noted that proposed § 137b.81 would add a reference to ''applicable sections of the act,'' as follows: ''The owner of enrolled land will not be liable for any roll-back tax triggered as a result of a change to an ineligible use by the owner of the split-off tract in accordance with the applicable sections of the act.''

 Both commentators believe that ''in accordance with the applicable sections of the act'' is confusing. The PFB suggested the phrase be deleted from the final-form rulemaking.

 Response: The Department agrees with the commentators and deleted the phrase in the final-form rulemaking.

 Comment 57: The PFB reviewed proposed § 137b.81 and offered that the final sentence is inconsistent with section 6(a.3) of the act, which describes circumstances under which the transfer of ''land subject to a single application for preferential assessment'' does not trigger roll-back tax liability. The proposed rulemaking referenced a ''transfer of enrolled land under a single application.'' The commentator offered that section 6(a.3) of the act ''provides for a broader scope of conveyances to be deemed to be relieved of roll-back tax liability than what is suggested in the rulemaking's proposed language,'' and adds:

We believe that the Department's proposed provision, which fails to recognize the outright conveyance of contiguous area of a land unit that is part of a multi-unit application for clean and green, is unduly restrictive, and is inconsistent with the principles of logic and administration that are consistently established through numerous provisions of the Act.

Farm Bureau recommends further amendments to the sentence proposed in this Section to also recognize that ''units'' of contiguous area identified in a single application that are conveyed in entirely to another fall within the scope of ''transfers'' relieved of roll-back tax.

 IRRC noted the PFB's comment and asked the Department to provide an explanation of the reason for the proposed language and an explanation of how it is consistent with the intent of the General Assembly and in the public interest.

 IRRC also offered that the preamble to the proposed rulemaking did not explain why the Department is adding language to this section or the effect it will have on the regulated community, and asked the Department to provide a detailed explanation of why this language is being added and how it is consistent with the intent of the General Assembly and in the public interest.

 Response: Language being added to § 137b.81 is clearly consistent with the intention of the General Assembly. The language is from section 6(a.3) of the act and makes the regulation more consistent with the act. IRRC's concerns are also addressed in the Description of the Regulation portion of this preamble.

 In addition, the Department has encountered several instances when a tract of enrolled land was transferred to a person (such as a developer) whose long-term intention was to convert the land to some use other than agricultural use, agricultural reserve or forest reserve. The new language helps make clear that the transfer does not trigger roll-back tax liability or impact preferential assessment, or both, but that a subsequent change of use would.

 The Department declines to include the further amendments recommended by the PFB, and disagrees that the language that is being added to § 137b.81, which practically restates section 6(a.3) of the act, is somehow inconsistent with the act.

 Comment 58: The PFB offered several comments with respect to proposed § 137b.82. With respect to the first sentence of this section, the PFB suggested ''accurate'' be replaced by ''met.''

 Response: This comment suggests the commentator was reviewing the proposed rulemaking as submitted by the Department to the Pennsylvania Bulletin for publication, rather than the proposed rulemaking as published at 43 Pa.B. 4353. The Legislative Reference Bureau made format and style changes to the document that effectively address the commentator's concern.

 In addition, the Department deleted ''if all the following are true'' from the final-form rulemaking because the initial phrase of that sentence essentially says the same thing.

 Comment 59: The PFB expressed concern with respect to the language the Department proposed to add to § 137b.82(3), which reads: ''In calculating the total tract split-off, the total shall include the acreage of all tracts that have been split-off from the enrolled tract since enrollment.'' The PFB feels this language:

. . . provides no greater insight or resolution of the ambiguity, confusion and hardship that current landowners . . . can often face in in trying to determine whether a particular split-off would meet or violate the 10-acre/10-percent rule, especially in situations where the enrolled land has been enrolled in clean and green for decades, has had multiple owners during its enrollment, or has had additional separations within originally separated tracts. The proposed provision does nothing to simplify the real challenges that landowners of enrolled land can face in identifying split-offs on portions of enrolled land that the landowner does not own, nor does the proposed provision provide any insight or resolution for the host of unanswered legal questions that can arise from the timing and degree of split-offs on separated land. The legal and practical situations surrounding the 10-acre/10-percent rule become even more unwieldy in situations where separated land to originally enrolled land are subject to further separations.

Instead of the proposed provision, Farm Bureau believes the Department should consider development of regulations that establish safe-harbor principles that provide landowners of enrolled land with simpler and more straightforward means to identify whether a contemplated split-off of enrolled land will comply with or will violate the 10-acre/10-percent rule.

 Response: The Department believes the act establishes a bright-line standard as to the maximum amount of acreage that can be split-off without triggering roll-back tax liability with respect to the entire enrolled tract. That standard is in section 6(a.1)(1)(i) of the act, and is the lesser of: (1) 10% of the entire tract that is subject to preferential assessment; or (2) 10 acres. In other words, there can never be more than 10 acres split-off from an enrolled 100-acre tract without triggering roll-back tax liability on the entire 100-acre tract.

 The commentator's concern is understandable. In the 100-acre example, if 10 acres had already been split-off and the land was later separated into several tracts and conveyed to new owners, those owners might not be aware that no further split-offs could occur without triggering roll-back tax liability on the entire 100-acre tract.

 Owners of enrolled land are required under § 137b.63 to provide county assessors 30 days' advance written notice of a split-off. This presents an opportunity to avoid adverse roll-back tax consequences. The county assessor is the repository of records regarding split-offs, and can provide a landowner the split-off history with respect to the land enrolled under a single application for preferential assessment.

 Although this is not the extensive amendment requested by the commentator, in response to this comment the Department added § 137b.82(b) to advise landowners to confer with county assessors regarding planned split-offs.

 Comment 60: In the context of its review of proposed § 137b.82, the PFB offered that the 2010 amendments to the act regarding split-offs were largely prompted by the Commonwealth Court's opinion in Donnelly v. York County Board of Assessment (976 A.2d 1226, Pa. Commw. 2009). The PFB recommended that:

. . . the Department consider the inclusion of an illustrative example that includes the same set of facts as the actual facts in the Donnelly case and expressly states the correct conclusions that: (i) roll-back taxes for split-offs done in accordance with the Act's prescribed standards are limited to the area split-off; (ii) the landowner who originally conveys the split-off tract is solely responsible for payment of any roll-back tax due from the conveyance; and (iii) the owner of the split-off is solely responsible for payment of any roll-back tax triggered through use of his or her split-off tract.

 Senator Yaw offered a comment that confirmed some of the PFB's thinking on this subject. Senator Yaw was a prime sponsor of Act 88, and offered the following:

One of the objectives of Act 88 of 2010 was to clarify that if an owner of land that is enrolled and receiving preferential tax assessment splits-off a portion of that enrolled land, and that split-off complies with the requirements presented at 72 P. S. § 5490.6(a.1)(1)(i), then roll-back taxes are only due with respect to the split-off portion of the enrolled land—and not with respect to the entire tract of enrolled land. This clarification was, in part, in response to a 2009 Commonwealth Court case (Donnelly v. York County Board of Assessment (976 A.2d 1226)), which suggested there was ambiguity on this point.

Act 88 of 2010 made substantial revisions to the provision at 72 P. S. § 5490.6(a.1)(2), clarifying that under the circumstances presented in the preceding paragraph roll-back taxes are ''. . . only due with respect to the split-off portion of the land.'' I recommend Agriculture revise its final-form regulation to include one or more examples to underscore this clarification. . .

 Senator Yaw's comment included recommended language for an example and encouraged the Department to consider additional examples.

 Response: The Department implemented Senator Yaw's recommendation in the final-form rulemaking by adding the substance of his proposed example in § 137b.82(a), and believes this example will add clarity to the final-form rulemaking.

 This example also implements the PFB's request for an example that identifies the landowner who conducts the split-off as the person liable for payment of roll-back taxes under the facts presented in that example.

 The Department declines to add the PFB's third recommended example. While the Department agrees that it is true that if a tract of enrolled land is separated (rather than split-off) and the owner of a separated tract changes the use of the separated tract to an ineligible use, that landowner owes roll-back taxes in accordance with section 6(a.2) of the act, it does not believe this same roll-back tax liability would be triggered by a change-of-use to a tract that has been split-off.

 Comment 61: The PFB reviewed proposed § 137b.84 (relating to split-off that does not comply with section 6(a.1)(1)(i) of the act), offered that the proposed sentence at the end of the first paragraph was ''very vague and unclear'' and suggested the following:

. . . much more specific language or illustrative examples are needed to better identify what this language means and how it is to be applied in the context of split-offs that fail to meet the requirements of Section 6(9a.1)(1)(i) of the Act. In absence of more specific language or illustrative examples, Farm Bureau would recommend deletion of this sentence.

 Response: The Department deleted the referenced sentence from the final-form rulemaking.

 Comment 62: The Lancaster County Assessment Office reviewed proposed § 137b.84, requested an explanation of the reason for the proposed changes to this section and asked ''[i]s this so it is understood that a conveyance of any amount of land, be it .25 of an acre or 25 acres, is a violation and subject to total rollback?''

 The commentator also asked for ''. . . an expression of the State's position regarding lot add-ons.''

 Response: In response to Comment 61, the Department withdraws the proposed amendments to § 137b.84.

 With respect to the commentator's request for the Department's position on lot add-ons, if the term refers to routine property line adjustments that correct survey errors or that otherwise adjust property lines without the land that is being added or deleted having a separate legal existence, then the Department does not believe these add-ons have an adverse impact on preferential assessment under the act.

 Comment 63: The PFB reviewed proposed § 137b.87 and recommended the Department either not delete the sentence it proposed for deletion or replace it with a sentence such as the following:

Conversion in use of one of the tracts created through separation to a use that renders the tract ineligible for preferential assessment shall not terminate or otherwise affect preferential assessment of the other tracts created through the separation.

 Response: The Department accepts the commentator's recommendation that the referenced sentence not be deleted. The Department withdraws the proposed amendments to § 137b.87.

 Comment 64: In a comment that appears to relate to § 137b.131 (relating to civil penalties), a commentator offered that the $100 penalty amount is not a deterrent to violators and that counties are unwilling to pursue violations for low penalty amounts. The commentator recommended that ''meaningful penalties be established to gain compliance'' with the act.

 Response: The referenced civil penalties are established in section 5.2 of the act, and the Department does not have the discretion to change them by regulation.

Persons Likely to be Affected

 The final-form rulemaking promotes the efficient, uniform, Statewide administration of the act. It updates and supplants outdated and inadequate provisions. It also implements changes to the act accomplished by Act 235, Act 88, Act 109, Act 34, Act 35 and Act 190. Although a number of persons and entities are likely to be impacted by this final-form rulemaking, the act, rather than this final-form rulemaking, drives these impacts.

 The final-form rulemaking is not expected to have significant adverse impact on any group or entity.

 The final-form rulemaking will provide counties and county assessors a better understanding of the requirements of the act, and will help in implementing the statutory amendments. Owners of currently-enrolled land will benefit from more consistent and uniform interpretation and enforcement of the act.

 To the extent that the final-form rulemaking simply implements requirements of the act, adverse impact is attributable to the act and not the underlying regulations.

Fiscal Impact

Commonwealth

 The final-form rulemaking will not have appreciable fiscal impact upon the Commonwealth.

Political subdivisions

 The final-form rulemaking is not expected to impose costs on political subdivisions. To the extent a county incurs costs in recalculating preferential assessments, those costs would be driven by the act rather than by the regulations. These statutory costs cannot be readily estimated.

 To the extent the final-form rulemaking helps clarify how the act is to be administered by counties, it may result in some savings to counties by virtue of there being fewer appeals and legal challenges regarding preferential assessment. These savings cannot be readily estimated.

Private sector

 The final-form rulemaking will not have appreciable fiscal impact upon the private sector. The act affords the owners of agricultural use, agricultural reserve and forest reserve land the opportunity for tax savings through the use value (rather than market value) assessment of that land. These tax savings are attributable to the act rather than the regulations, and cannot be readily estimated.

 To the extent the final-form rulemaking helps clarify how the act is to be administered by counties, it may result in some savings to private sector entities that own enrolled land or that seek to enroll land for preferential assessment, by virtue of there being fewer appeals and legal challenges regarding preferential assessment. These savings cannot be readily estimated.

General public

 The act and the final-form rulemaking are expected to result in tax savings to owners of land enrolled for preferential assessment under the act. These savings cannot be readily estimated.

 To the extent the final-form rulemaking helps clarify how the act is to be administered by counties, it may result in some savings to members of the general public who own enrolled land or who seek to enroll land for preferential assessment, by virtue of there being fewer appeals and legal challenges regarding preferential assessment. These savings cannot be readily estimated.

Paperwork Requirements

 The final-form rulemaking will not result in an appreciable increase in the paperwork handled by the Department.

Effective Date

 The final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin.

Regulatory Review Act

 Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on July 19, 2013, the Department submitted a copy of the notice of proposed rulemaking, published at 43 Pa.B. 4344, to IRRC and the Chairpersons of the House and Senate Agriculture and Rural Affairs Committees for review and comment.

 Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

 Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on May 27, 2015, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on May 28, 2015, and approved the final-form rulemaking.

Findings

 The Department finds that:

 (a) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.

 (b) A public comment period was provided as required by law and the comments received were considered.

 (c) The amendments to this final-form rulemaking in response to comments do not enlarge the purpose of the proposed rulemaking published at 43 Pa.B. 4344.

 (d) The adoption of the final-form rulemaking in the manner provided in this order is necessary and appropriate for the administration of the act.

Order

 The Department, acting under authority of the act, orders the following:

 (a) The regulations of the Department, 7 Pa. Code Chapter 137b, are amended by adding §§ 137b.73a—137b.73d and 137b.77 and amending §§ 137b.2—137b.4, 137b.12—137b.15, 137b.42, 137b.51—137b.53, 137b.72, 137b.74, 137b.81, 137b.82, 137b.89, 137b.93 and 137b.112 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.

 (Editor's Note: The proposed amendments to §§ 137b.84 and 137b.87 have been withdrawn by the Department.)

 (Editor's Note: The Department included § 137b.64 in the final-form rulemaking submitted to IRRC and the House and Senate Committees. As there were not changes to this section, it is not included in Annex A.)

 (b) The Secretary of the Department shall submit this order and Annex A to the Office of General Counsel and to the Office of Attorney General for approval as required by law.

 (c) The Secretary of the Department shall certify and deposit this order and Annex A with the Legislative Reference Bureau as required by law.

 (d) This order shall take effect upon publication in the Pennsylvania Bulletin.

RUSSELL C. REDDING, 
Secretary

 (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 45 Pa.B. 2962 (June 13, 2015).)

 Fiscal Note: Fiscal Note 2-159 remains valid for the final adoption of the subject regulations.

Annex A

TITLE 7. AGRICULTURE

PART V-C. FARMLAND AND FOREST LAND

CHAPTER 137b. PREFERENTIAL ASSESSMENT OF FARMLAND AND FOREST LAND UNDER THE CLEAN AND GREEN ACT

GENERAL PROVISIONS

§ 137b.2. Definitions.

 The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

 Act—The Pennsylvania Farmland and Forest Land Assessment Act of 1974 (72 P. S. §§ 5490.1—5490.13), commonly referred to as the Clean and Green Act.

 Agricultural commodity—Any of the following:

 (i) Agricultural, apicultural, aquacultural, horticultural, floricultural, silvicultural, viticultural and dairy products.

 (ii) Pasture.

 (iii) Livestock and the products thereof.

 (iv) Ranch-raised furbearing animals and the products thereof.

 (v) Poultry and the products of poultry.

 (vi) Products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.

 (vii) Processed or manufactured products of products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.

 (viii) Compost.

 Agricultural reserve—Noncommercial open space lands used for outdoor recreation or the enjoyment of scenic or natural beauty and open to the public for that use, without charge or fee, on a nondiscriminatory basis. The term includes land devoted to the development and operation of an alternative energy system, if a majority of the energy annually generated is utilized on the tract.

 Agricultural use—Land which is used for the purpose of producing an agricultural commodity or is devoted to and meets the requirements and qualifications for payments or other compensation under a soil conservation program under an agreement with an agency of the Federal government.

 (i) The term includes any farmstead land on the tract.

 (ii) The term includes a woodlot.

 (iii) The term includes land which is rented to another person and used for the purpose of producing an agricultural commodity.

 (iv) The term includes land devoted to the development and operation of an alternative energy system, if a majority of the energy annually generated is utilized on the tract.

 Agritainment—

 (i) Farm-related tourism or farm-related entertainment activities which are permitted or authorized by a landowner in return for a fee on agricultural land for recreational or educational purposes.

 (ii) The term includes corn mazes, hay mazes, farm tours and hay rides.

 (iii) The term does not include activities authorized under section 8(d) of the act (72 P. S. § 5490.8(d)).

 Alternative energy system—A facility or energy system that utilizes a Tier I energy source to generate alternative energy. The term includes a facility or system that generates alternative energy for utilization onsite or for delivery of the energy generated to an energy distribution company or to an energy transmission system operated by a regional transmission organization.

 Assessment ratio or county's established predetermined ratio—The ratio established by a taxing body that determines on what portion of the assessed value the millage rate is to be levied, as prescribed by assessment law.

 Capitalization rate—The percentage rate used to convert income to value, as determined by the most recent 5-year rolling average of 15-year fixed loan interest rates offered to landowners by the Federal Agricultural Mortgage Corporation or other similar Federal agricultural lending institution, adjusted to include the landowner's risk of investment and the effective tax rate.

 Change of use—

 (i) The alteration of enrolled land so that it is no longer agricultural use, agricultural reserve or forest reserve land.

 (ii) The term does not include:

 (A) The act of subdividing enrolled land if the subdivided land is not conveyed.

 (B) The act of conveying subdivided enrolled land to the same landowner who owned it immediately prior to subdivision.

 Class A beneficiaries for inheritance tax purposes—The following relations to a decedent: grandfather, grandmother, father, mother, husband, wife, lineal descendants, wife, widow, husband or widower of a child. Lineal descendants include all children of the natural parents and their descendants, whether or not they have been adopted by others, adopted descendants and their descendants and step descendants.

 Compost—Material resulting from the biological digestion of dead animals, animal waste or other biodegradable materials, at least 50% by volume of which is comprised of products commonly produced on farms.

 Contiguous tract—

 (i) All portions of one operational unit as described in the deed or deeds, whether or not the portions are divided by streams, public roads or bridges and whether or not the portions are described as multiple tax parcels, tracts, purparts or other property identifiers.

 (ii) The term includes supportive lands, such as unpaved field access roads, drainage areas, border strips, hedgerows, submerged lands, marshes, ponds and streams.

 Contributory value of farm building—The value of the farm building as an allocated portion of the total fair market value assigned to the tract, irrespective of replacement cost of the building.

 County—The county assessor, the county board of assessment or other county entity responsible to perform or administer a specific function under the act.

 County commissioners—The board of county commissioners or other similar body in home rule charter counties.

 Curtilage—The land surrounding a residential structure and farm building used for a yard, driveway, onlot sewage system or access to any building on the tract.

 Department—The Department of Agriculture of the Commonwealth.

 Direct commercial sales—Retail or wholesale sales of agriculturally related commodities to customers who are physically present onsite to make purchases.

 Division by conveyance or other action of the owner—

 (i) When used in the context of a separation or a split-off, the term refers to either:

 (A) A conveyance, a subdivision, a land development plan or comparable plan required by a local government unit.

 (B) An owner-initiated process that produces a metes and bounds description of the separated or split-off land and a calculation of the acreage of that separated or split-off land.

 (ii) The term does not include:

 (A) The act of subdividing enrolled land if the subdivided land is not conveyed.

 (B) The act of conveying subdivided enrolled land to the same landowner who owned it immediately prior to subdivision.

 Enrolled land—Land eligible for preferential assessment under an approved application for preferential assessment filed in accordance with the act.

 Fair market value—The price as of the valuation date for the highest and best use of the property which a willing and informed seller who is not obligated to sell would accept for the property, and which a willing and informed buyer who is under no obligation to buy would pay for the property.

 Farm building—A structure utilized to store, maintain or house farm implements, agricultural commodities or crops, livestock and livestock products, as defined in the Agricultural Area Security Law (3 P. S. §§ 901—915).

 Farmstead land—Any curtilage and land situated under a residence, farm building or other building which supports a residence, including a residential garage or workshop.

 Forest reserve—Land, 10 acres or more, stocked by forest trees of any size and capable of producing timber or other wood products. The term includes land devoted to the development and operation of an alternative energy system if a majority of the energy annually generated is utilized on the tract.

 Income approach—The method of valuation which uses a capitalization rate to convert annual net income to an estimate of present value. Present value is equal to the net annual return to land divided by the capitalization rate.

 Ineligible land—Land which is not used for any of the three eligible uses (agricultural use, agricultural reserve or forest reserve) and therefore cannot receive use value assessment.

 Land use category—Agricultural use, agricultural reserve or forest reserve.

 Land use subcategory—A category of land in agricultural use, agricultural reserve or forest reserve established by the Department and assigned a particular use value in accordance with sections 3 and 4.1 of the act (72 P. S. §§ 5490.3 and 5490.4a). A land use subcategory of agricultural use or agricultural reserve land may be based upon soil type, soil group or any other recognized subcategorization of agricultural land. A land use subcategory of forest reserve land may be based upon forest type or other recognized subcategorization of forest land, and may be a county-specific average timber value.

 Net return to land—Annual net income per acre after operating expenses are subtracted from gross income. The calculation of operating expenses does not include interest or principal payments.

 Noncoal Surface Mining Conservation and Reclamation Act—52 P. S. §§ 3301—3326.

 Normal assessment—The total fair market value of buildings and ineligible land, as of the base year of assessment, on a tract multiplied by the assessment ratio.

 Oil and Gas Act—58 Pa.C.S. §§ 3201—3274 (relating to development).

 Outdoor recreation—

 (i) Passive recreational use of land that does not entail the erection of permanent structures or any change to the land which would render it incapable of being immediately converted to agricultural use. Examples include picnicking, hiking, wildlife watching and hunting, subject to the restrictions in § 137b.64 (relating to agricultural reserve land to be open to the public).

 (ii) The term does not include the operation of motor vehicles other than under either of the following circumstances:

 (A) When necessary to remove an animal which has been hunted.

 (B) When the motor vehicle is operated over an existing lane and is incidental to hunting, fishing, swimming, access for boating, animal riding, camping, picnicking, hiking, agritainment activities or the operation of nonmotorized vehicles.

 Pasture—Land, other than land enrolled in the USDA Conservation Reserve Program, used primarily for the growing of grasses and legumes for consumption by livestock.

 Person—A corporation, partnership, limited liability company, business trust, other association, government entity (other than the Commonwealth), estate, trust, foundation or natural person.

 Preferential assessment—The total use value of land qualifying for assessment under the act.

 Recreational activity—The term includes, but is not limited to:

 (i) Hunting.

 (ii) Fishing.

 (iii) Swimming.

 (iv) Access for boating.

 (v) Animal riding.

 (vi) Camping.

 (vii) Picnicking.

 (viii) Hiking.

 (ix) Agritainment activities.

 (x) Operation of nonmotorized vehicles.

 (xi) Viewing or exploring a site for aesthetic or historical benefit or for entertainment.

 (xii) Operation of motorized vehicles if the operation is either of the following:

 (A) Over an existing lane and incidental to an activity in subparagraphs (i)—(x).

 (B) Necessary to remove an animal which has been hunted under subparagraph (i).

 Roll-back tax—The amount equal to the difference between the taxes paid or payable on the basis of the valuation and the assessment authorized under the act and the taxes that would have been paid or payable had that land not been valued, assessed and taxed as other land in the taxing district in the current tax year, the year of change, and in 6 of the previous tax years or the number of years of preferential assessment up to 7.

 Rural enterprise incidental to the operational unit—A commercial enterprise or venture that is all of the following:

 (i) Owned and operated by the landowner or by the landowner's beneficiaries who are Class A beneficiaries for inheritance tax purposes.

 (ii) Conducted within 2 acres or less of enrolled land.

 (iii) When conducted, does not permanently impede or otherwise interfere with the production of an agricultural commodity on that portion of the enrolled land that is not subject to roll-back taxes under section 8(d) of the act as a result of that commercial enterprise or venture.

 Separation—A division, by conveyance or other action of the owner, of lands devoted to agricultural use, agricultural reserve or forest reserve and preferentially assessed under the act, into two or more tracts of land, the use of which continues to be agricultural use, agricultural reserve or forest reserve and all tracts so formed meet the requirements of section 3 of the act.

 Silvicultural products—

 (i) Trees and tree products produced from Christmas tree farms, tree nurseries, tree greenhouses, orchards and similar actively-cultivated tree or tree product production operations.

 (ii) The term does not include trees and tree-derived products produced from forest land regardless of whether the trees or tree-derived products are harvested from forest land in accordance with a timber management plan.

 Split-off—A division, by conveyance or other action of the owner, of lands devoted to agricultural use, agricultural reserve or forest reserve and preferentially assessed under the act, into two or more tracts of land, the use of which on one or more of the tracts does not meet the requirements of section 3 of the act.

 Tier I energy source—A Tier I alternative energy source as defined in section 2 of the Alternative Energy Portfolio Standards Act (73 P. S. § 1648.2).

 Tract—

 (i) A lot, piece or parcel of land.

 (ii) The term does not refer to any precise dimension of land.

 Transfer—A conveyance of all of the enrolled land described in a single application for preferential assessment under the act.

 USDA—The United States Department of Agriculture.

 USDA-ERS—The United States Department of Agri- culture—Economic Research Service.

 USDA-NRCS—The United States Department of Agri- culture—Natural Resources Conservation Service.

 Woodlot—An area of less than 10 acres, stocked by trees of any size and contiguous to or part of land in agricultural use or agricultural reserve.

§ 137b.3. Responsibilities of the Department.

 (a) General. The Department's responsibilities are to provide the use values described in section 4.1 of the act (72 P. S. § 5490.4a) by May 1 of each year and to provide the forms and regulations necessary to promote the efficient, uniform Statewide administration of the act.

 (b) Information gathering. The Department will collect information from county assessors for each calendar year to ensure that the act and this chapter are being implemented fairly and uniformly throughout this Commonwealth. This information will be collected through a survey form to be provided to county assessors by the Department no later than December 15 each year, and which county assessors shall complete and submit to the Department by January 31 of the following year.

 (c) Educational outreach. The Department will conduct an educational outreach effort on matters related to the administration and interpretation of the act and this chapter.

§ 137b.4. Contacting the Department.

 For purposes of this chapter, communications to the Department shall be directed to the following address:

Pennsylvania Department of Agriculture
Bureau of Farmland Preservation
2301 North Cameron Street
Harrisburg, PA 17110-9408
Telephone: (717) 783-3167
Facsimile: (717) 772-8798

ELIGIBLE LAND

§ 137b.12. Agricultural use.

 Land that is in agricultural use is eligible for preferential assessment under the act if it has been producing an agricultural commodity or has been devoted to a soil conservation program under an agreement with the Federal government for at least 3 years preceding the application for preferential assessment, and is one of the following:

 (1) Comprised of 10 or more contiguous acres (including any farmstead land and woodlot).

 (2) Has an anticipated yearly gross income of at least $2,000 from the production of an agricultural commodity.

 (3) Devoted to the development and operation of an alternative energy system, if a majority of the energy generated annually is utilized on the tract.

 Example 1: Landowner owns 50 acres of pasture upon which horses are kept. The horses are pastured, bred and sold. The land is in agricultural use.

 Example 2: Same facts as Example 1, except 20 acres are pasture land and 30 acres are wooded. Twenty acres of land are in agricultural use and 30 acres are in forest reserve.

 Example 3: Landowner owns 7 acres of pasture land upon which there is a small horse breeding operation from which there is at least $2,000 of anticipated yearly gross income. The land is in agricultural use.

 Example 4: Same facts as Example 3, except that horses are neither bred nor sold and there is at least $2,000 of anticipated yearly gross income from a horse boarding operation. The land is in agricultural use, since it is being used for the purpose of producing an agricultural commodity.

 Example 5: Landowner owns 10 acres of land that is a combination of wooded and open space land from which tomatoes and sweet corn are produced for sale. The land is in agricultural use.

 Example 6: Landowner owns 10 acres of land that is a combination of wooded and open space land from which beef cattle are produced and sold. The land is in agricultural use.

 Example 7: Landowner owns a parcel of land that is used for the production of agricultural commodities. Landowner erects solar panels (or some other alternative energy system) on the land and a majority of the electricity generated by the alternative energy system is used on the land. The land is in agricultural use.

 Example 8: Landowner owns two separate parcels of land, Parcel A and Parcel B. These parcels are used for the production of agricultural commodities. They are enrolled under a single application for preferential assessment. Landowner erects solar panels (or some other alternative energy system) on Parcel A. The majority of the electricity generated by the alternative energy system on Parcel A is used by a large dairy operation on Parcel B. Both Parcel A and Parcel B are in agricultural use.

§ 137b.13. Agricultural reserve.

 Land that is in agricultural reserve is eligible for preferential assessment under the act if the land is comprised of 10 or more contiguous acres (including any farmstead land and any woodlot). This includes land devoted to the development and operation of an alternative energy system if a majority of the energy annually generated is utilized on the tract.

 Example 1: Landowner owns 30 acres of land. The land is cleared land that was farmed at one time but that is no longer farmed. The land is open to the public for outdoor recreation or the enjoyment of scenic or natural beauty, without charge or fee, on a nondiscriminatory basis. The land qualifies to be enrolled as agricultural reserve land.

 Example 2: Same facts as Example 1, except the landowner charges a fee for allowing public access for hunting and recreation. This land is not eligible to be enrolled as agricultural reserve land.

 Example 3: Same facts as Example 1, except the landowner places reasonable restrictions on public access to the enrolled land that are acceptable to the county assessor in accordance with § 137b.64 (relating to agricultural reserve land to be open to the public). The land qualifies to be enrolled as agricultural reserve land.

 Example 4: Landowner owns 9 acres of land. The land is cleared land that was farmed at one time but that is no longer farmed. The land is not eligible to be enrolled as agricultural reserve land because it is less than 10 contiguous acres in area.

 Example 5: Landowner owns a parcel of enrolled agricultural reserve land. Landowner erects solar panels (or some other alternative energy system) on the land and a majority of the electricity generated by the alternative energy system is used on the land. The land remains in agricultural reserve.

 Example 6: Landowner owns two separate parcels of enrolled land, at least one of which is agricultural reserve land. The parcels are enrolled under a single application for preferential assessment. Landowner erects solar panels (or some other alternative energy system) on an agricultural reserve parcel. The majority of the electricity generated by the alternative energy system is used on the other enrolled parcel. The parcel upon which the alternative energy system is located remains agricultural reserve land.

§ 137b.14. Forest reserve.

 Land that is in forest reserve is eligible for preferential assessment under the act if presently stocked with trees and the land is comprised of 10 or more contiguous acres (including any farmstead land). Forest reserve land includes land that is rented to another person for the purpose of producing timber or other wood products. This includes land devoted to the development and operation of an alternative energy system if a majority of the energy annually generated is utilized on the tract.

 Example 1: Landowner owns 60 acres of forested land with trees of all sizes. The landowner intends to harvest timber periodically. The land qualifies to be enrolled as forest reserve land.

 Example 2: Landowner owns 100 acres of land that was recently cleared and replanted with seedlings. The land qualifies to be enrolled as forest reserve land.

 Example 3: Landowner owns 100 acres of land that was recently harvested for timber and seedlings remain. The land was not replanted. The land qualifies to be enrolled as forest reserve land.

 Example 4: Landowner owns 50 acres of land that was cleared and not replanted. There are no trees of any size remaining on this property and no intention of planting. The land does not qualify to be enrolled as forest reserve land.

 Example 5: Landowner owns an 8-acre woodlot and wants to enroll. The land is not eligible to be enrolled as forest reserve land because it is less than 10 contiguous acres in area.

 Example 6: Landowner owns a parcel of enrolled forest reserve land. Landowner erects solar panels (or some other alternative energy system) on the land and a majority of the electricity generated by the alternative energy system is used on the land. The land remains in forest reserve.

 Example 7: Landowner owns two separate parcels of enrolled land, at least one of which is forest reserve land. The parcels are enrolled under a single application for preferential assessment. Landowner erects solar panels (or some other alternative energy system) on a forest reserve parcel. The majority of the electricity generated by the alternative energy system is used on the other enrolled parcel. The parcel upon which the alternative energy system is located remains forest reserve land.

§ 137b.15. Inclusion of farmstead land.

 (a) Farmstead land is an integral part of land in agricultural use, agricultural reserve or forest reserve. In considering whether land is in agricultural use, agricultural reserve or forest reserve, a county shall include any portion of that land that is farmstead land regardless of whether the farmstead land is entitled to preferential assessment under the act or this chapter.

 Example 1: A landowner seeks to enroll a 10-acre tract of land as agricultural use land. One acre of the 10-acre tract is comprised of farmstead land. All 10 acres of land shall be considered in determining whether the tract meets the 10 contiguous acres minimum acreage requirement for agricultural use land established in section 3(a)(1) of the act (72 P. S. § 5490.3(a)(1)).

 Example 2: A landowner seeks to enroll a 10-acre tract of land as agricultural reserve land. One acre of the 10-acre tract is comprised of farmstead land. All 10 acres of land shall be considered in determining whether the tract meets the minimum acreage requirement for agricultural reserve land established in section 3(a)(2) of the act.

 Example 3: A landowner seeks to enroll a 10-acre tract of land as forest reserve land. One acre of the 10-acre tract is comprised of farmstead land. All 10 acres of land shall be considered in determining whether the tract meets the minimum acreage requirement for ''forest reserve'' land established in section 3(a)(3) of the act.

 (b) Farmstead land on agricultural use land shall be considered to be land that qualifies for preferential assessment under the act and this chapter.

 (c) Farmstead land on agricultural reserve land shall only be considered to be land that qualifies for preferential assessment under the act and this chapter if at least one of the qualifications for preferential assessment in § 137b.51(g)(2)(i)—(iii) (relating to assessment procedures) has been met.

 (d) Farmstead land on forest reserve land shall only be considered to be land that qualifies for preferential assessment under the act and this chapter if at least one of the qualifications for preferential assessment in § 137b.51(g)(3)(i)—(iii) has been met.

APPLICATION PROCESS

§ 137b.42. Deadline for submission of applications.

 (a) General. A landowner seeking preferential assessment under the act shall apply to the county by June 1. If the application is approved by the county assessor, preferential assessment shall be effective as of the commencement of the tax year of each taxing body commencing in the calendar year immediately following the application deadline.

 Example 1: A landowner applies for preferential assessment on or before June 1, 2001. The application is subsequently approved. Preferential assessment shall be effective as of the commencement of the tax year for each taxing body in calendar year 2002.

 Example 2: A landowner applies for preferential assessment on or after June 2, 2001, but not later than June 1, 2002. The application is subsequently approved. The application deadline is June 1, 2002. Preferential assessment shall be effective as of the commencement of the tax year for each taxing body in calendar year 2003.

 (b) Exception: years in which a county implements countywide reassessment. In those years when a county implements a countywide reassessment, or a countywide reassessment of enrolled land, the application deadline shall be extended to either a date 30 days after the final order of the county board for assessment appeals or by October 15 of the same year, whichever date is sooner. This deadline is applicable regardless of whether judicial review of the order is sought.

PREFERENTIAL ASSESSMENT

§ 137b.51. Assessment procedures.

 (a) Use values and land use subcategories to be provided by the Department. The Department will determine the land use subcategories and provide county assessors use values for each land use subcategory. The Department will provide these land use subcategories and use values to each county assessor by May 1 of each year.

 (b) Determining use values and land use subcategories.

 (1) Agricultural use and agricultural reserve. In calculating appropriate county-specific agricultural use values and agricultural reserve use values, and land use subcategories, the Department will consult with the Department of Agricultural Economics and Rural Sociology of the College of Agricultural Sciences at the Pennsylvania State University, the Pennsylvania Agricultural Statistics Service, USDA-ERS, USDA-NRCS and other sources the Department deems appropriate. In determining county-specific agricultural use and agricultural reserve use values, the Department will use the income approach for asset valuation.

 (2) Forest reserve. In calculating appropriate county-specific forest reserve use values and land use subcategories, the Department will consult with the Bureau of Forestry of the Department of Conservation and Natural Resources.

 (c) County assessor to determine total use value.

 (1) For each application for preferential assessment, the county assessor shall establish a total use value for land in agricultural use, including farmstead land, and for land in agricultural reserve, by considering available evidence of the capability of the land for its particular use utilizing the USDA-NRCS Agricultural Land Capability Classification system and other information available from USDA-ERS, the Pennsylvania State University and the Pennsylvania Agricultural Statistics Service. Contributory value of farm buildings, as calculated in accordance with § 137b.54 (relating to calculating the contributory value of farm buildings), shall be used. With respect to agricultural reserve land, the total use value includes farmstead land if at least one of the qualifications for preferential assessment in subsection (g)(2) has been met.

 (2) For each application for preferential assessment, the county assessor shall establish a total use value for land in forest reserve by considering available evidence of the capability of the land for its particular use. Contributory value of farm buildings, as calculated in accordance with § 137b.54 shall be used. The total use value includes farmstead land if at least one of the qualifications for preferential assessment in subsection (g)(3) has been met.

 (d) Determining preferential assessment. The preferential assessment of land is determined by multiplying the number of acres in each land use subcategory by the use value for that particular land use subcategory, adding these products and multiplying the total by the county's established predetermined ratio. The Department will establish land use subcategories as part of the procedure to establish use values.

 (e) Option of county assessors to establish and use lower use values. A county assessor may establish use values for land use subcategories that are less than the use values established by the Department for those same land use subcategories. A county assessor may use these lower use values in determining preferential assessments under the act. Regardless of whether the county assessor applies use values established by the Department or lower use values established by the county assessor, the county assessor shall apply the use values uniformly when calculating or recalculating preferential assessments, and shall apply these use values to the same land use subcategories as established by the Department. Calculation and recalculation of preferential assessments shall be made in accordance with § 137b.53 (relating to calculation and recalculation of preferential assessment). A county assessor may not, under any circumstances, establish or apply use values that are higher than those use values established by the Department.

 (f) Option of county assessors to select between county-established use values and use values provided by the Department. When a county assessor has established use values for land use subcategories, and the use values for some—but not all—of these land use subcategories are lower than those provided by the Department, the county assessor has the option to apply the lower use value with respect to each individual land use subcategory, without regard to whether it was provided by the Department or established by the county assessor.

 (g) Valuation of farmstead land.

 (1) Farmstead land on agricultural use land. Farmstead land that is located on land enrolled as agricultural use land shall be assessed at agricultural use value.

 Example: Landowner has a 100-acre contiguous property that is enrolled for preferential assessment. Some of this land is enrolled as agricultural use land and the remainder is enrolled as forest reserve land. The farmstead land is located on the agricultural use land. The farmstead land shall be assessed at agricultural use value.

 (2) Farmstead land on agricultural reserve land. Farmstead land that is located on land enrolled as agricultural reserve land shall receive normal (fair market value) assessment, rather than assessment at agricultural use value, unless one of the following is true:

 (i) The county commissioners have adopted an ordinance to include farmstead land in the total use value for land in agricultural reserve, as permitted in section 3(g)(1) of the act (72 P. S. § 5490.3).

 (ii) A majority of the land in the application for preferential assessment applicable to that farmstead land is agricultural use land.

 (iii) Noncontiguous tracts of land are included in the application for preferential assessment applicable to that farmstead land and a majority of the land on the contiguous tract where the farmstead land is located is enrolled as agricultural use land.

 (3) Farmstead land on forest reserve land. Farmstead land that is located on land enrolled as forest reserve land shall receive normal (fair market value) assessment, rather than assessment at forest reserve use value, unless one of the following is true:

 (i) The county commissioners have adopted an ordinance to include farmstead land in the total use value for land in forest reserve, as permitted in section 3(g)(2) of the act.

 (ii) A majority of the land in the application for preferential assessment applicable to that farmstead land is agricultural use land.

 (iii) Noncontiguous tracts of land are included in the application for preferential assessment applicable to that farmstead land and a majority of the land on the contiguous tract where the farmstead land is located is enrolled as agricultural use land.

 (4) Examples.

 Example 1: Landowner has a 100-acre contiguous property that is enrolled for preferential assessment. Fifty-one acres (a majority of the land in the application for preferential assessment) are enrolled as agricultural use land. Forty-nine acres are enrolled as agricultural reserve land or forest reserve land, or a combination of the two. The farmstead land is located on the agricultural use land. The farmstead shall be assessed at agricultural use value.

 Example 2: Same facts as Example 1, except that the farmstead land is located on agricultural reserve land or forest reserve land. The farmstead shall be assessed at agricultural use value.

 Example 3: Landowner has a 100-acre contiguous property that is enrolled for preferential assessment. Fifty-one acres (a majority of the land in the application for preferential assessment) are enrolled as agricultural reserve land or forest reserve land, or a combination of the two. Forty-nine acres are enrolled as agricultural use land. The farmstead land is located on the agricultural use land. The farmstead shall be assessed at agricultural use value.

 Example 4: Same facts as Example 3, except that the farmstead land is located on agricultural reserve land or forest reserve land. The farmstead land may not receive preferential (agricultural use value) assessment.

 Example 5: Landowner has 100 acres enrolled for preferential assessment. The acreage consists of two noncontiguous parcels of 50 acres each. One 50-acre tract is enrolled as forest reserve land, agricultural use land, agricultural reserve land or a combination of the three. The other 50-acre tract contains farmstead land and consists of 26 acres of enrolled agricultural use land and 24 acres of enrolled agricultural reserve land, forest reserve land or a combination of the two. Since the majority of the land on the tract where the farmstead tract is located is enrolled as agricultural use, the farmstead shall be assessed at agricultural use value, regardless of whether it is located on the agricultural use land, agricultural reserve land or forest reserve land.

 Example 6: Same facts as Example 5, except the 50-acre tract that contains the farmstead land consists of 24 acres of enrolled agricultural use land and 26 acres of agricultural reserve land, forest reserve land or a combination of the two. If the farmstead land is located on that portion of the 50-acre tract that is enrolled as agricultural use land, the farmstead shall be assessed at agricultural use value. If the farmstead land is located on that portion of the 50-acre tract that is enrolled as agricultural reserve land or forest reserve land, the farmstead may not receive preferential (agricultural use value) assessment.

 Example 7: One of the six fact situations described in Examples 1—6 except that the county commissioners have adopted an ordinance to include farmstead land in the total use value for land in agricultural reserve or forest reserve in accordance with section 3(g)(1) of the act. The farmstead shall be assessed at agricultural use value.

§ 137b.52. Duration of preferential assessment.

 (a) General. Enrolled land shall remain under preferential assessment for as long as it continues to meet the minimum qualifications for preferential assessment or until removed from preferential assessment in accordance with the procedure in subsection (b). Land that is in agricultural use, agricultural reserve or forest reserve shall remain under preferential assessment even if its use changes to either of the other two land use categories.

 Example: A landowner owns a 100-acre tract of enrolled land, consisting of 85 acres in agricultural use and 15 acres in forest reserve. If the landowner later amends his application to one in which 60 acres are in agricultural use, 30 acres are in agricultural reserve and 10 acres are in forest reserve, the entire 100-acre tract continues to receive preferential assessment (although different use values and land use subcategories may apply in recalculating the preferential assessment).

 (b) Removal of land from preferential assessment.

 (1) A landowner receiving preferential assessment under the act may remove land from preferential assessment if:

 (i) The landowner provides the county assessor written notice of this removal by June 1 of the year immediately preceding the tax year for which the removal is sought.

 (ii) The entire tract or tracts enrolled on a single application for preferential assessment is removed from preferential assessment.

 (iii) The landowner pays rollback taxes on the entire tract or tracts as provided for in section 5.1 of the act (72 P. S. § 5490.5a).

 (2) Land removed from preferential assessment under this subsection or under section 8.1 of the act (72 P. S. § 5490.8a) is not eligible to be subsequently re-enrolled in preferential assessment by the same landowner.

 (3) Nothing in this subsection or section 8.1 of the act prohibits a landowner whose land was terminated from preferential assessment under authority other than this subsection or section 8.1 of the act from re-enrolling the land in preferential assessment.

 (c) Split-offs, separations, transfers and other events. Split-offs that meet the size, use and aggregate acreage requirements in section 6(a.1)(1)(i) of the act (72 P. S. § 5490.6(a.1)(1)(i)), separations and transfers under the act or this chapter will not result in termination of preferential assessment on the land which is retained by the landowner and which continues to meet the requirements of section 3 of the act (72 P. S. § 5490.3). In addition, the following events will not result in termination of preferential assessment on that portion of enrolled land which continues to meet the requirements of section 3 of the act:

*  *  *  *  *

§ 137b.53. Calculation and recalculation of preferential assessment.

 (a) New values each year. As described in § 137b.51 (relating to assessment procedures), the Department will determine the land use subcategories and provide to a county use values for each land use subcategory. The Department will provide these land use subcategories and use values to each county assessor by May 1 of each year.

 (b) Option of county assessor in calculation of preferential assessment. A county assessor shall calculate the preferential assessment of enrolled land using one of the following methods:

 (1) Calculate the preferential assessment of all of the enrolled land in the county each year.

 (2) Establish a base year for preferential assessment of enrolled land in the county, and use this base year in calculating the preferential assessment of enrolled land in the county, unless recalculation is required under subsection (c), (d), (e) or (f).

 (c) Required recalculation of preferential assessment if current assessment is based upon use values higher than those provided by the Department. A county assessor shall calculate the preferential assessment of all enrolled land in the county using either the current use values and land use subcategories provided by the Department or lower use values established by the county assessor.

 Example 1: All of the enrolled land in a particular county receives a preferential assessment under the act that is calculated with use values that are lower than the use values provided by the Department. The county has the option of either continuing to assess all enrolled land using its lower use values or recalculating the preferential assessment of all enrolled land using the use values provided by the Department.

 Example 2: All of the enrolled land in a particular county receives a preferential assessment under the act that is calculated with use values that are higher than the use values provided by the Department. The county shall recalculate the preferential assessment of all enrolled land using either the use values provided by the Department or lower use values determined by the county assessor.

 (d) Required recalculation of preferential assessment if farmstead land has not been preferentially assessed as agricultural use, agricultural reserve or forest reserve. A county assessor shall recalculate the preferential assessment on any tract of enrolled land which contains farmstead land if the farmstead land has not been assessed as required under § 137b.51.

 (e) Required recalculation of preferential assessment if contributory value of farm buildings has not been used in determining preferential assessment of land in agricultural use, agricultural reserve or forest reserve. A county assessor shall recalculate the preferential assessment on any tract of enrolled land if the earlier calculation did not consider the contributory value of any farm buildings on that land. This recalculation shall be accomplished in accordance with § 137b.51.

 (f) Required recalculation of preferential assessment in countywide reassessment. If a county undertakes a countywide reassessment, or a countywide reassessment of enrolled land, the county assessor shall recalculate the preferential assessment of all of the enrolled land in the county, using either the current use values and land use subcategories provided by the Department, or lower use values established by the county assessor and land use subcategories provided by the Department.

 (g) Required recalculation of preferential assessment of forest reserve land when initial assessment was calculated using county-specific average timber value. A county assessor shall recalculate the preferential assessment of any tract of enrolled forest reserve land if the current assessment was calculated using a county-specific average timber value provided by the Department and the landowner provides documentation to the county assessor verifying that the value of the timber on the enrolled tract is lower than the timber value that was estimated using that county-specific average timber value.

IMPACT OF SPECIFIC EVENTS OR USES ON PREFERENTIAL ASSESSMENT

§ 137b.72. Direct commercial sales of agriculturally related products and activities; rural enterprises incidental to the operational unit.

 (a) General. An owner of enrolled land may apply up to 2 acres of enrolled land toward direct commercial sales of agriculturally related products and activities, or toward a rural enterprise incidental to the operational unit, without subjecting the entirety of the enrolled land to roll-back taxes and interest, if both of the following apply to the commercial activity or rural enterprise:

 (1) The commercial activity or rural enterprise does not permanently impede or otherwise interfere with the production of an agricultural commodity on the remainder of the enrolled land.

 (2) The commercial activity or rural enterprise is owned and operated by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes, or by a legal entity owned or controlled by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes.

 (b) Roll-back taxes and status of preferential assessment.

 (1) If a tract of 2 acres or less of enrolled land is used for direct commercial sales of agriculturally related products and activities, or toward a rural enterprise incidental to the operational unit, and paragraph (2) is not applicable, the 2 acre or less tract shall be subject to roll-back taxes and interest, and preferential assessment of that 2 acre or less tract shall end. The remainder of the enrolled land shall continue under preferential assessment as long as that remainder continues to meet the requirements for eligibility in section 3 of the act (72 P. S. § 5490.3).

 (2) If a tract of 1/2 acre or less of enrolled land is used for direct commercial sales of agriculturally related products, roll-back taxes or interest are not due and breach of preferential assessment will not be deemed to have occurred on that tract if:

 (i) At least 50% of the agriculturally related products are produced on the enrolled land.

 (ii) The direct commercial sales of agriculturally related products do not require new utilities or buildings.

 (3) Enrolled land that is used for ingress, egress and parking with respect to the direct commercial sales and agriculturally related activities described in paragraphs (1) and (2) shall be counted toward the acreage totals referenced in those paragraphs.

 (c) Inventory by county assessor to determine ownership of goods. A county assessor may inventory the goods sold at the business to ensure that they are owned by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes, or by a legal entity owned or controlled by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes, and that the goods meet the requirements of this section.

§ 137b.73a. Gas, oil and coal bed methane.

 (a) General.

 (1) Land subject to preferential assessment may be leased or otherwise devoted to both of the following:

 (i) The exploration for and removal of gas and oil, including the extraction of coal bed methane.

 (ii) The development of appurtenant facilities, including new roads and bridges, pipelines and other buildings or structures, related to exploration for and removal of gas and oil and the extraction of coal bed methane.

 (2) Portions of land subject to preferential assessment may be used for both of the following:

 (i) The exploration for and removal of gas and oil, including the extraction of coal bed methane.

 (ii) The development of appurtenant facilities, including new roads and bridges, pipelines and other buildings or structures, related to those activities.

 (b) Roll-back tax liability.

 (1) Roll-back taxes shall be imposed upon those portions of land actually devoted to activities in subsection (a)(2), except for the following:

 (i) Land devoted to subsurface transmission or gathering lines is not subject to roll-back tax.

 (ii) Notwithstanding any other provision in this section, a roll-back tax may not be imposed upon a landowner for activities related to the exploration for or removal of oil or gas, including the extraction of coal bed methane, conducted by parties other than the landowner that hold the rights to conduct these activities pursuant to an instrument, conveyance or other vesting of the rights if the transfer of the rights occurred before:

 (A) The land was enrolled for preferential assessment under this act.

 (B) December 26, 2010.

 Example 1: Landowner sold coal bed methane exploration and extraction rights with respect to a tract to another person in 2008 and enrolled that tract for preferential assessment under the act in 2009. The other person erects a well, a pond used to support hydrofracturing and other appurtenant facilities related to the removal of coal bed methane on the enrolled land. Roll-back taxes may not be imposed with respect to the enrolled land on which these appurtenant facilities are located.

 Example 2: Same facts as Example 1, except the landowner sold coal bed methane rights with respect to the tract to another person after the tract was enrolled for preferential assessment under the act. Roll-back taxes are due with respect to the enrolled land on which the appurtenant facilities are located.

 Example 3: Same facts as Example 1, except the landowner sold something less than a 100% interest in coal bed methane exploration and extraction rights to another person. Roll-back taxes may not be imposed with respect to the enrolled land on which these appurtenant facilities are located.

 Example 4: Same facts as Example 2, except the landowner sold something less than a 100% interest in coal bed methane exploration and extraction rights to another person. Roll-back taxes are due with respect to the enrolled land on which the appurtenant facilities are located.

 (2) The portion of land that is subject to roll-back tax is the well site and land which is incapable of being immediately used for the agricultural use, agricultural reserve or forest reserve activities required under section 3 of the act (72 P. S. § 5490.3). The portion of land that is subject to roll-back tax under this paragraph shall be determined as follows:

 (i) If a well production report is required to be submitted to the Department of Environmental Protection in accordance with section 3222 of the Oil and Gas Act (relating to well reporting requirements) and 25 Pa. Code § 78.121 (relating to production reporting), the determination shall be made when that well production report is first due to the Department of Environmental Protection. Section 6(c.1)(3) of the act (72 P. S. § 5490.6(c.1)(3)) requires the Department of Environmental Protection to provide the county assessor a copy of the well production report within 10 days of its submission by the well operator.

 (ii) If a well production report as described in subparagraph (i) is not required to be submitted to the Department of Environmental Protection, the landowner shall, in writing, report the circumstances (activities and structures) that render a portion of the land incapable of being immediately used for the agricultural use, agricultural reserve or forest reserve activities required under section 3 of the act, and the area of the affected land, to the county assessor within 10 days of the occurrence of those circumstances. The county assessor shall determine the portion of the land that is subject to roll-back taxes under this subsection.

 Example: A tract of enrolled land does not contain a well site and is not required to submit the well production report described in subparagraph (i) but contains one or more appurtenant facilities related to exploration for and removal of gas and oil (including the extraction of coal bed methane) on other land. These appurtenant facilities include a pond used to support hydrofracturing, a compressor station, aboveground pipeline facilities, or other structures or facilities. The landowner shall report these appurtenant facilities and the acreage to the county assessor who will determine the portion of the land that is subject to roll-back taxes.

 (c) Retroactive application. The fair market value of the well site and land which is incapable of being immediately used for the agricultural use, agricultural reserve or forest reserve activities required under section 3 of the act shall be adjusted retroactively to the date a permit was approved under section 3211 of the Oil and Gas Act (relating to well permits).

 (d) Due date. The tax calculated based on the adjusted fair market value shall be due and payable in the tax year immediately following the year in which a production report is provided to the county assessor. Roll-back taxes shall become due upon the receipt of a well production report by the county assessor.

 (e) Continued preferential assessment. The utilization of a portion of land for activities in subsection (a)(2) does not invalidate the preferential assessment of the land which is not so utilized and the land shall continue to receive preferential assessment if it continues to meet the requirements of section 3 of the act.

 (f) Land use category of land used for subsurface transmission or gathering lines. The land use category of a portion of enrolled land beneath which subsurface transmission or gathering lines as described in subsection (b)(1)(i) are installed does not have to change.

 Example: Subsurface transmission or gathering lines are installed beneath enrolled land that is enrolled as forest reserve land. Trees are cleared from the surface of the land along the route of the subsurface line. It is not necessary for that cleared portion of the land to be reclassified as agricultural reserve land rather than forest reserve land.

§ 137b.73b. Temporary leases for pipe storage yards.

 The owner of enrolled land may temporarily lease a portion of the land for pipe storage yards provided that roll-back taxes shall be imposed upon those portions of land subject to preferential assessment that are temporarily leased or otherwise devoted for pipe storage yards and the fair market value of those portions of land shall be adjusted accordingly. The imposition of roll-back taxes on portions of land temporarily leased or devoted for pipe storage yards does not invalidate the preferential assessment of land which is not so leased or devoted and that land shall continue to be eligible for preferential assessment if it continues to meet the requirements of section 3 of the act (72 P. S. § 5490.3). Only one lease under this section is permitted to a landowner and a copy of the lease shall be provided to the county assessor within 10 days of its signing by the landowner. The lease may not exceed 2 years and may not be extended or renewed. Following the expiration of the lease, the land shall be restored to the original use which qualified it for preferential assessment, and preferential assessment shall resume unless the county assessor determines upon inspection that this restoration requirement has not been met.

§ 137b.73c. Small noncoal surface mining.

 (a) The owner of property subject to preferential assessment may lease or otherwise devote land subject to preferential assessment to small noncoal surface mining as provided for under the Noncoal Surface Mining Conservation and Reclamation Act.

 (b) Roll-back taxes shall be imposed upon those portions of land leased or otherwise devoted to small noncoal surface mining and the fair market value of those portions of the land shall be adjusted accordingly. Roll-back taxes on those portions of the land do not invalidate the preferential assessment of the land which is not leased or devoted to small noncoal surface mining and the land shall continue to be eligible for preferential assessment if it continues to meet the requirements of section 3 of the act (72 P. S. § 5490.3).

 (c) Only one small noncoal surface mining permit may be active at any time on land subject to a single application for preferential assessment.

 (d) Land that is no longer actively mined may be re-enrolled if the land is reclaimed and it continues to meet the requirements of section 3 of the act.

§ 137b.73d. Wind power generation systems.

 (a) Portions of land subject to preferential assessment may be leased or otherwise devoted to a wind power generation system.

 (b) Roll-back taxes shall be imposed upon those portions of the land actually devoted by the landowner for wind power generation system purposes and the fair market value of those portions of the land shall be adjusted accordingly. The wind power generation system must include the foundation of the wind turbine and the area of the surface covered by the appurtenant structures including new roads and bridges, transmission lines, substations and other buildings or structures related to the wind power generation system. The utilization of a portion of the land for a wind power generation system does not invalidate the preferential assessment of land which is not utilized and the land shall continue to receive preferential assessment if it continues to meet the requirements of section 3 of the act (72 P. S. § 5490.3). An owner who is subject to roll-back taxes under this subsection shall submit a notice of installation of a wind power generation system to the county assessor within 30 days following the beginning of electricity generation at the wind power generation system. Roll-back taxes shall become due on the date the notice of installation of a wind power generation system is received by the county assessor.

 (c) This section does not apply to land devoted to the development and operation of an alternative energy system when a majority of the energy annually generated from that system is used on the tract. The impact of this type of alternative energy system is addressed in §§ 137b.12—137b.14 (relating to agricultural use; agricultural reserve; and forest reserve).

§ 137b.74. Option to accept or forgive roll-back taxes in certain instances.

 (a) Option to accept or forgive principal on roll-back taxes. The taxing body of the taxing district within which a tract of enrolled land is located may accept or forgive roll-back taxes that are otherwise due and payable if the use of some portion of the land is changed for the purpose of granting or donating some portion of the land to one of the following:

 (1) A school district.

 (2) A municipality.

 (3) A county.

 (4) A volunteer fire company.

 (5) A volunteer ambulance service.

 (6) A nonprofit corporation that qualifies as tax-exempt under section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C.A. § 501(c)(3)), if prior to accepting ownership of the land, the corporation enters into an agreement with the municipality wherein the subject land is located guaranteeing that the land will be used exclusively for recreational purposes, all of which shall be available to the general public free of charge. If the corporation changes the use of all or a portion of the land or charges admission or any other fee for the use or enjoyment of the facilities, the corporation shall immediately become liable for all roll-back taxes and accrued interest previously forgiven.

 (7) A religious organization, if the religious organization uses the land only for construction or regular use as a church, synagogue or other place of worship, including meeting facilities, parking facilities, housing facilities and other facilities which further the religious purposes of the organization.

 (b) No option to forgive interest on roll-back taxes. The taxing body of the taxing district within which a tract of enrolled land is located may not forgive interest due on roll-back taxes with respect to that portion of the enrolled land that is granted or donated to any one of the entities or for any of the uses described in subsection (a)(1)—(7). That interest shall be distributed in accordance with section 8(b.1) of the act (72 P. S. § 5490.8(b.1)).

§ 137b.77. Recreational activities on agricultural use or forest reserve land.

 (a) Agricultural use land. An owner of enrolled agricultural use land who performs recreational activities on that land, or who permits or authorizes others to perform these activities, does not violate the requirements for preferential assessment and is not responsible to pay roll-back taxes if the recreational activity does not render the land incapable of being immediately converted to agricultural use.

 (b) Forest reserve land. An owner of enrolled forest reserve land who performs recreational activities on that land, or who permits or authorizes others to perform these activities, does not violate the requirements for preferential assessment and is not responsible to pay roll-back taxes if the recreational activity does not render the land incapable of producing timber or other wood products.

 (c) Assessment of fees or charges by a landowner. Subsections (a) and (b) apply regardless of whether the landowner assesses fees or charges with respect to the recreational activity or allows another to assess these fees or charges.

 (d) Recreational leases. Subsections (a) and (b) apply regardless of whether the landowner leases enrolled land to another person for hunting or other recreational activities and receives fees or charges in return.

LIABILITY FOR ROLL-BACK TAXES

§ 137b.81. General.

 If an owner of enrolled land changes the use of the land to something other than agricultural use, agricultural reserve or forest reserve, or changes the use of the enrolled land so that it otherwise fails to meet the requirements of section 3 of the act (72 P. S. § 5490.3), that landowner shall be responsible for the payment of roll-back taxes and interest, and preferential assessment shall end on that portion of the enrolled land which fails to meet the requirements of section 3 of the act. The owner of enrolled land will not be liable for any roll-back tax triggered as a result of a change to an ineligible use by the owner of a split-off tract. A transfer of enrolled land under a single application will not trigger liability for roll-back taxes unless there is a subsequent change of use so that it fails to meet the requirements of section 3 of the act, in which case the landowner changing the use shall be liable for payment of roll-back taxes on the enrolled land under that single application.

§ 137b.82. Split-off tract.

 (a) Criteria. When a split-off tract meets the following criteria, which are set forth in section 6(a.1)(1) of the act (72 P. S. § 5490.6(a.1)(1)), roll-back taxes and interest are only due with respect to the split-off tract and are not due with respect to the remainder:

 (1) The tract split off does not exceed 2 acres annually, except that a maximum of the minimum residential lot size requirement annually may be split off if the property is situated in a local government unit which requires a minimum residential lot size of 2 acres to 3 acres.

 (2) The tract is used for agricultural use, agricultural reserve or forest reserve or for the construction of a residential dwelling to be occupied by the person to whom the land is conveyed.

 (3) The total tract split off does not exceed the lesser of 10 acres or 10% of the entire tract of enrolled land. In calculating the total tract split off, the total includes the acreage of the tract that was split-off from the enrolled tract since enrollment.

 Example: A landowner owns a 60-acre tract of land that is enrolled and receiving preferential assessment. The landowner splits-off 2 acres for one or more of the uses described in paragraph (2) and the split-off otherwise meets the requirements of this subsection. Roll-back taxes are due with respect to the 2-acre split-off tract, but not with respect to the remaining 58 acres. The owner of the 60-acre tract who split-off the 2-acre tract is responsible to pay these roll-back taxes.

 (b) Responsibility of landowner. The criteria in subsection (a) shall be applied to the entire tract that was the subject of the application for preferential assessment. For this reason, a landowner should engage with the county assessor in advance of a planned split-off to determine the extent to which the criteria in subsection (a) apply, or whether the planned split-off would trigger liability for payment of roll-back taxes and interest with respect to the entire enrolled tract. In addition, § 137b.63 (relating to notice of change of application) requires a landowner to provide the county assessor at least 30 days' advance written notice of a planned split-off.

§ 137b.89. Calculation of roll-back taxes.

 A county assessor shall calculate roll-back taxes using the following formula:

 (1) If preferential assessment has been in effect for 7 tax years or more, calculate the difference between preferential assessment and normal assessment in the current tax year, and in each of the 6 tax years immediately preceding the current tax year. If preferential assessment has been in effect for less than 7 tax years, calculate the difference between preferential assessment and normal assessment in the current tax year, and in each of the tax years in which the enrolled land was preferentially assessed.

 (2) With respect to each of these sums, multiply the tax difference determined under Step (1) by the corresponding factor, which reflects simple interest at the rate of 6% per annum from that particular tax year to the present:

Year	Factor
Current Tax Year	1.00
1 Tax Year Prior	1.06
2 Tax Years Prior	1.12
3 Tax Years Prior	1.18
4 Tax Years Prior	1.24
5 Tax Years Prior	1.30
6 Tax Years Prior	1.36

 (3) Add the individual products obtained under Step (2). The sum equals total roll-back taxes, including simple interest at 6% per annum on each year's roll-back taxes.

 Example 1: Landowner's liability for roll-back taxes is triggered on July 1, 7 or more tax years after preferential assessment began. The county assessor calculates the difference between the preferential assessment and normal assessment in the current tax year and in each of the 6 tax years preceding the current tax year, in accordance with this section. The county assessor determines the appropriate sum to be $2,000 in each full year.

Year	Amount Multiplied by Factor
Current Tax Year	$1,000 x 1.00 = $1,000
1 Tax Year Prior	$2,000 x 1.06 = $2,120
2 Tax Years Prior	$2,000 x 1.12 = $2,240
3 Tax Years Prior	$2,000 x 1.18 = $2,360
4 Tax Years Prior	$2,000 x 1.24 = $2,480
5 Tax Years Prior	$2,000 x 1.30 = $2,600
6 Tax Years Prior	$2,000 x 1.36 = $2,720
TOTAL ROLL-BACK	$15,520
TAXES, WITH INTEREST:

 Example 2: Landowner's liability for roll-back taxes is triggered on July 1, less than 7 tax years after preferential assessment began. The county assessor calculates the difference between the preferential assessment and normal assessment in the current tax year and each of the tax years since preferential assessment began, in accordance with this section. The county assessor determines the appropriate sum to be $2,000 in each of these years. The county assessor would calculate roll-back taxes and interest in accordance with the chart set forth in Example 1, calculating for only those tax years in which preferential assessment occurred.

§ 137b.93. Disposition of interest on roll-back taxes.

 (a) ''Eligible county'' explained. A county is an ''eligible county'' under the Agricultural Area Security Law (3 P. S. §§ 901—915), and for purposes of this chapter, if it has an agricultural conservation easement purchase program that has been approved by the State Agricultural Land Preservation Board in accordance with that statute.

 (b) Disposition in an eligible county.

 (1) County treasurer. If a county is an eligible county, the county treasurer shall make proper distribution of the interest portion of the roll-back taxes it collects to the county commissioners or the county comptroller, as the case may be. The county commissioners or comptroller shall designate all of this interest for use by the county agricultural land preservation board. This interest shall be in addition to other local money appropriated by the eligible county for the purchase of agricultural conservation easements under section 14.1(h) of the Agricultural Area Security Law (3 P. S. § 914.1(h)).

 (2) County agricultural land preservation board. A county agricultural land preservation board that receives interest on roll-back taxes in accordance with paragraph (1) shall segregate that money in a special roll-back account. Notwithstanding any other provisions of the Agricultural Area Security Law, the eligible county board under the Agricultural Area Security Law shall, at its discretion and in accordance with its approved county agricultural conservation easement purchase program, give priority to the purchase of agricultural conservation easements from agricultural security areas located within the municipality in which the land subject to the roll-back tax is located, when using the funding from the special roll-back account.

 (c) Disposition in a county that is not an eligible county. If a county is not an eligible county, the county treasurer shall forward the interest portion of the roll-back taxes it collects to the Agricultural Conservation Easement Purchase Fund. The county treasurer shall coordinate with the Department's Bureau of Farmland Preservation at the address in § 137b.4 (relating to contacting the Department) to accomplish this transfer.

DUTIES OF COUNTY ASSESSOR

§ 137b.112. Submission of information to the Department.

 A county assessor shall, by January 31 of each year, compile and submit the information required by the Department under § 137b.3(b) (relating to responsibilities of the Department). This includes the following information:

 (1) The cumulative number of acres of enrolled land in the county, by land use category, at the end of the previous year.

 (2) The number of acres enrolled in each land use category during the previous year.

 (3) The number of acres of land, by land use category, with respect to which preferential assessment was terminated within the previous year.

 (4) The dollar amount received as roll-back taxes within the previous year.

 (5) The dollar amount received as interest on roll-back taxes within the previous year.

[Pa.B. Doc. No. 15-1200. Filed for public inspection June 26, 2015, 9:00 a.m.]

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