May 15, 2007 By The 3 min read

House Majority Leader H. William DeWeese, D-Waynesburg, is seeking co-sponsors for legislation that would allow counties, municipalities and school districts to assess value to coal, minerals, natural gas, methane gas and oil. “Gas operators have been drilling natural gas and methane gas wells throughout the western part of the commonwealth with an unrestrained abandon and they do so virtually tax free. Meanwhile, they are damaging roads and property and local taxing entities have no recourse,” said DeWeese.

DeWeese said that before Dec. 19, 2002, these natural resources were being taxed at the local level. However, on that date, the Pennsylvania Supreme Court decided in “Independent Oil and Gas Association of Pennsylvania, et al v. Board of Assessment Appeals of Fayette County” that the General Assembly had not explicitly recognized gas and oil as a taxable interest.

Independent Oil brought the suit against the county and the tax assessment appeals board. The county started assessing the company’s oil and gas interests in 1998 for the purpose of taxation. The company appealed, claiming that imposing a tax on oil and natural gas was illegal and unconstitutional.

Both Common Pleas and Commonwealth Court judges ruled the tax could be imposed

The Supreme Court overruled the lower courts in its 2002 opinion.

The decision found that Fayette – and the other 66 counties in the state – could not tax oil and natural gas.

The Supreme Court held that oil and natural gas were not considered real estate or lands, and thus governing bodies could not impose real estate taxes on either. The justices also found that laws associated with such taxed items make no mention of oil and natural, and reasoned that if they weren’t specifically mentioned then they couldn’t be taxed.

“The legislation that I am proposing would correct that oversight to the benefit of counties, local municipalities and school districts. The additional revenue that they would receive from the drillers would be just one step in helping to prevent future local tax increases,” he said.

DeWeese said estimates place the assessed value of the gas and oil in Pennsylvania at between $10 billion and $20 billion.

DeWeese said he plans to introduce the legislation in the coming weeks.

“This issue is very important to the county commissioners, township supervisors and property owners throughout Greene, Fayette and Washington counties. I am proud to be able to respond to their concerns by introducing this bill and I look forward to having my colleagues hear their comments firsthand,” he said.

On a related note, DeWeese also is co-sponsoring House Bill 132, authored by Rep. Tom Yewcic, D-Cambria/Somerset, that helps to protect surface owners when wells are drilled on their property.