NY Real Prop Tax L § 592 (2021)
2021 New York Laws RPT - Real Property Tax Article 5 - Assessment Procedure Title 5 - Oil and Gas Economic Units 592 - Determination of Unit of Production Values.

§  592.  Determination  of  unit  of  production  values.  1.  (a) The commissioner shall annually develop one or more  economic  profiles  for gas  and  one  or  more  economic  profiles  for  oil  for  use  in  the determination of unit of production values. The  establishment  of  more than  one  economic  profile  for  either gas or oil shall be based upon common factors such as geologic formation, geographic  region,  economic and cost characteristics of such profiles and such other criteria as the commissioner may deem appropriate.  (b)  At  least  forty-five  days prior to the tentative roll date each year, the commissioner shall establish a tentative  unit  of  production value  for  each economic profile and shall provide to appropriate local officials and industry representatives notice of the tentative  unit  of production  values.  The  commissioner shall conduct at least one public hearing to receive comments on the tentative unit of production  values. At least fifteen days prior to the tentative roll date, the commissioner shall certify to each assessor appropriate unit of production values for use in the assessment of oil and gas economic units.  (c)  Unit  of  production  values  shall  be based upon the average of typical income, expense and operating data for five consecutive calendar years beginning with the sixth calendar year preceding the year in which the unit of production values are to be certified. In  determining  unit of  production  values, the commissioner shall use a discounted net cash flow approach in which gross income shall be reduced by  the  following: operating  expenses;  landowner royalty payments, which the commissioner shall deem to  be  the  value  of  one-eighth  of  the  economic  unit's production;  and  other  costs,  if  any,  such  as  overriding  royalty interests not retained by the owners of the working interest, additional capital investment required, depletion and depreciation. In  determining the  unit  of  production  values,  the  minimum  discount rate or rates applied by the commissioner shall be the sum of (1) the average  of  the discount rates established by the United States federal reserve board on the first business day of each month for each of the five calendar years upon  which the economic profiles are based and that precede the year in which the unit of production values are to  be  certified,  plus  (2)  a seventeen and one-half percent factor to account for risk, nonliquidity, management,  real  property  taxes, intangible drilling costs and income taxes.   2. For the purpose of developing  economic  profiles  and  determining discounted  net  cash  flow,  the  commissioner may require producers to submit statements of income and expenses related to the  economic  units for  five  consecutive  calendar years beginning with the sixth calendar year preceding the year in which the unit of production values are to be certified. Such statements of  income  and  expenses  shall  consist  of information  usually  kept  in  the  ordinary  course  of business. This subdivision is not applicable to producers of one  thousand  barrels  of oil or two hundred million cubic feet of gas per year or less.   3.   The   commissioner   shall   promulgate  rules  establishing  the methodology for  determining  unit  of  production  values  pursuant  to subdivision  one of this section. Such rules shall include a description of the economic data to be compiled, the method  for  their  compilation and  a  delineation  of  the  process  to  be  followed  in applying the discounted net cash flow methodology. Such  rules  shall  provide  that, subject to the availability of suitable economic data, the establishment of unit of production values shall take into account and reflect varying economic and operating conditions and characteristics.