May 17, 2007 3 min read

More than four years after a state Supreme Court ruling stopped counties from taxing underground gas, exempting millions of dollars in assessed value in Fayette County alone, someone in the state legislature has finally stepped forward to close that loophole. And that someone is state Rep. H. William DeWeese (D-Waynesburg), who as House majority leader is seeking cosponsors for legislation that would let counties, school districts and municipalities collect taxes on natural gas, methane gas and oil.

This isn’t a small matter. Fayette County Chief Assessor James A. Hercik says there are currently 2,500 gas wells in Fayette, with one company alone continuing to sink 400 to 500 new wells per year. When the Supreme Court made its ruling in December 2002, Fayette County alone lost $90,000 in revenue. That number would be much higher now.

Although Hercik’s office stopped tracking the assessed value of natural gas after the Supreme Court made its ruling in December 2002, for the reassessment that went into effect in 2003, Fayette listed approximately $36.5 million in assessed value for underground resources such as coal, stone and natural gas.

“It’s definitely in the millions. It would be significant,” says Hercik of the potential addition to the county’s real estate tax base should DeWeese’s effort succeed.

Rectifying the matter shouldn’t have taken this long. It’s a simple matter of adding a few words to existing real estate tax law. The Supreme Court ruled that since oil and natural gas aren’t specifically mentioned in existing law, they couldn’t be taxed. But in matters like this, involving a powerful lobby like the Independent Oil and Gas Association of Pennsylvania (IOGA), finding a legislative sponsor isn’t an easy thing.

Back in early 2003, Hercik said that while the County Commissioners Association of Pennsylvania and the Assessor’s Association of Pennsylvania wanted to close the loophole upheld by the Supreme Court, in a case involving

Fayette County, the work would require some arm twisting.

“The hard part is going to be finding a sponsor (in the state House or Senate),” said Hercik back then.

Enter DeWeese, who correctly notes, “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.”

This isn’t about levying a new tax just for enhanced revenue; it’s about fairness. If the owners of surface property and underground minerals like coal are taxed on their real estate, why shouldn’t the owners of natural and methane gas be treated the same, especially when the sale of those resources is generating huge amounts of revenue?

DeWeese has stepped up to the plate on this one. And he deserves the support of all property owners in the effort.

Approaching 2,500 in Fayette County, Atlas sinking 400 to 500 per year.

“We’re tracking them. We’ve been trying to find a sponsor for a while now, through the AAP and CCAP.”

“It’s definitely in millions. It would be significant.”

“We’ve been trying to get somebody to do it since we lost that IOCA case.”