§ 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.
Source The provisions of this § 137b.73a adopted June 26, 2015, effective June 27, 2015, 45 Pa.B. 3311.
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