NORWICH – No one will ever sell property in Chenango County again without keeping the mineral rights for themselves or being substantially compensated for them.
That was the message from members of a special natural gas committee who met Tuesday at the County Office Building in Norwich. Property previously purchased by Norse Energy for future natural gas drilling is currently on the market without mineral rights, they said, and more is to come from the company and private landowners.
Chenango County’s Office of Real Property Tax Services Director Steve Harris received an earful as an invited guest of the committee. Not only was he questioned about the methodology of assessing land and mineral rights for two classes of owners for the same parcel, but whether Norse’s currently producing wells were being taxed.
Harris is charged with creating the county’s new ORPTS department, streamlining communications between local assessors and possibly developing assessing districts. Members of the committee specifically asked him to zero in on taxing properties with and without mineral rights, taxing natural gas production itself, handing tax-free exchanges of land and swaps for right-of-ways, and how land sales will ultimately affect local equalization rates.
Committee Chairman Peter C. Flanagan, D-Preston, said Chenango County is “further down the trail” than most other counties in the state because drilling is already in full swing here. The New York State Department of Environmental Conservation’s scoping document that would mandate new regulations and perimeters for the industry “won’t even address the issues we already have,” he said.
The document, due in the spring, solely focuses on horizontal drilling into the Marcellus Shale formation. While Norway-based Norse Energy has acreage and plans for drilling into the Marcellus at a later date, drilling into the Herkimer and production through existing pipeline infrastructure is already occurring.
“Many of our state’s congressmen don’t even know we are drilling,” said Flanagan.
Members of the committee stressed that unequal sales tax distribution from production would benefit schools but impact highway budgets. Referring to roadway damage from heavy rig and water trucks, emergency management costs and the possibility of water and other environmental pollution, Flanagan said, “Towns will take a small portion of the revenues and a big portion of the impacts.”
Harris said he didn’t know whether Norse had been billed for the producing wells in Smyrna and Plymouth. He suggested that New York’s Office of Real Property Services could be notified every year on sales instead of waiting for a gas company to report, a process which traditionally takes up to two years. He also said he would encourage local assessors to read deeds and leases and monitor well meter reports on the DEC’s website.
Chenango County Planner Rena Doing suggested developing county policy that would authorize the Agriculture and Markets Department to read well meters for production rates.
Supervisor James B. Bays, D-Smyrna, whose town already has 15 wells and many in production, suggested that Harris draw on the expertise from Chemung and Tioga, counties that have already created policies on taxing issues related to the natural gas industry.
“We are going to need really good communication between the county and local assessors,” he said.
Town of New Berlin Supervisor Ross Iannello said the county’s tax committee “needs to be involved.”
“If there are enough sales on land based on mineral rights, then our equalization rates will go to zero,” he said.