AR
Arkansas House Bill HB1937

Arkansas 2025 Regular Session

Arkansas House Bill HB1937 Compare Versions

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11 Stricken language would be deleted from and underlined language would be added to present law.
2-Act 821 of the Regular Session
3-*JLL308* 04-03-2025 11:07:56 JLL308
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5-State of Arkansas As Engrossed: H4/3/25 1
2+*JLL308* 03/31/2025 4:21:47 PM JLL308
3+State of Arkansas 1
64 95th General Assembly A Bill 2
75 Regular Session, 2025 HOUSE BILL 1937 3
86 4
97 By: Representative Jean 5
108 By: Senators Stone, Caldwell 6
119 7
1210 For An Act To Be Entitled 8
1311 AN ACT TO AMEND THE METHOD OF VALUATION FOR MINERAL 9
1412 RIGHTS UNDER ARKANSAS CONSTITUTION, ARTICLE 16, § 5; 10
1513 TO CLARIFY THE METHOD OF VALUATION FOR OIL AND GAS 11
1614 WELL PRODUCTION EQUIPMENT; TO PROVIDE FOR CONSISTENCY 12
1715 AND UNIFORMITY IN VALUATION; AND FOR OTHER PURPOSES. 13
1816 14
1917 15
2018 Subtitle 16
2119 TO AMEND THE METHOD OF VALUATION FOR 17
2220 MINERAL RIGHTS UNDER ARKANSAS 18
2321 CONSTITUTION, ARTICLE 16, § 5; AND TO 19
2422 CLARIFY THE METHOD OF VALUATION FOR OIL 20
2523 AND GAS WELL PRODUCTION EQUIPMENT. 21
2624 22
2725 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 23
2826 24
2927 SECTION 1. DO NOT CODIFY. Legislative intent. 25
3028 The General Assembly intends for this act to: 26
31- (1) Be remedial; and 27
32- (2) Clarify the law. 28
33- 29
34- SECTION 2. Arkansas Code § 26 -26-1110(a), concerning the valuation of 30
35-mineral rights for purposes of property taxes, is amended to read as follows: 31
36- (a)(1) As used in this section: 32
37- (A) “Oil well Well” means a producing unit well or well 33
38-that produces: 34
39- (i) Only liquid hydrocarbons; 35
40- (ii) Liquid hydrocarbons associated with the 36 As Engrossed: H4/3/25 HB1937
29+ (1) Be remedial; 27
30+ (2) Clarify the law; and 28
31+ (3) Apply retroactively to the effective date of Acts 2021, No. 29
32+668. 30
33+ 31
34+ SECTION 2. Arkansas Code § 26-26-1110(a), concerning the valuation of 32
35+mineral rights for purposes of property taxes, is amended to read as follows: 33
36+ (a)(1) As used in this section: 34
37+ (A) “Oil well Well” means a producing unit well or well 35
38+that produces: 36 HB1937
4139
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41+ (i) Only liquid hydrocarbons; 1
42+ (ii) Liquid hydrocarbons associated with the 2
43+production of gas; or 3
44+ (iii) Gas associated with the production of liquid 4
45+hydrocarbons; 5
46+ (iv) Natural gas; or 6
47+ (v) Any combination of oil, gas, and other 7
48+hydrocarbons; and 8
49+ (B) “Production equipment” means all piping and other 9
50+equipment of an oil a well from the bottom of the casing to and including the 10
51+sales valve at the tank battery or sales meter. 11
52+ (2) The county assessor shall assess all producing mineral 12
53+interests in the county. 13
54+ (3)(A) The county assessor shall assess the mineral interests in 14
55+the land separate from the fee simple interest in the land when the: 15
56+ (i) Mineral interests in the land are held by one 16
57+(1) or more persons that are different from the person or persons holding the 17
58+fee simple interest; and 18
59+ (ii) County assessor is advised of the separate 19
60+holdings by the recording of a deed in the county recorder's office. 20
61+ (B) When subdivision (a)(3)(A) of this section applies, a 21
62+sale of the mineral interests for nonpayment of taxes shall not affect the 22
63+title to the land itself, nor shall a sale of the land for nonpayment of 23
64+taxes affect the title to the mineral interests. 24
65+ (4)(A) The county assessor shall assess all production equipment 25
66+as real property. 26
67+ (B)(i) Except as stated under subdivision (a)(4)(B)(ii) of 27
68+this section, when assessing the value of production equipment, the county 28
69+assessor shall assess the production equipment at a value of one dollar 29
70+($1.00) per foot. 30
71+ (ii) Any portion of the casing in a well that has 31
72+been rendered inoperable for producing oil or gas by a cement or mechanical 32
73+plug shall not be subject to taxation. 33
74+ (5) If an oil a well reported production in a prior year and 34
75+reports an annual increase in average daily production, the annual increase 35
76+in average daily production shall be assessed as newly discovered property 36 HB1937
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44-
45-production of gas; or 1
46- (iii) Gas associated with the production of liquid 2
47-hydrocarbons; 3
48- (iv) Natural gas; or 4
49- (v) Any combination of oil, gas, and other 5
50-hydrocarbons; and 6
51- (B) “Production equipment” means all piping and other 7
52-equipment of an oil a well from the bottom of the casing to and including the 8
53-sales valve at the tank battery or sales meter. 9
54- (2) The county assessor shall assess all producing mineral 10
55-interests in the county. 11
56- (3)(A) The county assessor shall assess the mineral interests in 12
57-the land separate from the fee simple interest in the land when the: 13
58- (i) Mineral interests in the land are held by one 14
59-(1) or more persons that are different from the person or persons holding the 15
60-fee simple interest; and 16
61- (ii) County assessor is advised of the separate 17
62-holdings by the recording of a deed in the county recorder's office. 18
63- (B) When subdivision (a)(3)(A) of this section applies, a 19
64-sale of the mineral interests for nonpayment of taxes shall not affect the 20
65-title to the land itself, nor shall a sale of the land for nonpayment of 21
66-taxes affect the title to the mineral interests. 22
67- (4)(A) The county assessor shall assess all production equipment 23
68-as real property. 24
69- (B)(i) Except as stated under subdivision (a)(4)(B)(ii) of 25
70-this section, when assessing the value of production equipment, the county 26
71-assessor shall assess the production equipment at a value of one dollar 27
72-($1.00) per foot. 28
73- (ii) Any portion of the casing in a well that has 29
74-been rendered inoperable for producing oil or gas by a cement or mechanical 30
75-plug shall not be subject to taxation. 31
76- (5) If an oil a well reported production in a prior year and 32
77-reports an annual increase in average daily production, the annual increase 33
78-in average daily production shall be assessed as newly discovered property 34
79-only if the annual increase in average daily production is solely 35
80-attributable to new production from a geologic zone or horizon that was not 36 As Engrossed: H4/3/25 HB1937
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83-
84-
85-produced in a prior year from the existing oil well. 1
86- (6)(A) In calculating the working interest -assessed value of an 2
87-oil a well, the county assessor shall apply a uniform expense allowance per 3
88-barrel of oil or one thousand (1,000) cubic feet of gas produced without 4
89-regard to the average daily production of the oil well. 5
90- (B) The expense allowance under subdivision (a)(6)(A) of 6
91-this section shall be based as nearly as practicable on actual expenses per 7
92-barrel of oil or one thousand (1,000) cubic feet of gas produced. 8
93- (7) In assessing the value of an oil a well based on an income 9
94-approach, the income shall be based on the actual average price per barrel of 10
95-oil or one thousand (1,000) cubic feet of gas in Arkansas during the 11
96-immediately preceding calendar year. 12
97- (8) All formulas, valuation tables, and guidance that are 13
98-published or provided to the county assessors by the Assessment Coordination 14
99-Division to be used in the valuation and appraisal of mineral rights for ad 15
100-valorem tax purposes shall comply with the requirements of this section. 16
101- 17
102- SECTION 3. EFFECTIVE DATE. Section 2 of this act is effective for 18
103-assessment years beginning on or after January 1, 2025. 19
104- 20
105-/s/Jean 21
106- 22
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79+only if the annual increase in average daily production is solely 1
80+attributable to new production from a geologic zone or horizon that was not 2
81+produced in a prior year from the existing oil well. 3
82+ (6)(A) In calculating the working interest -assessed value of an 4
83+oil a well, the county assessor shall apply a uniform expense allowance per 5
84+barrel of oil or one thousand (1,000) cubic feet of gas produced without 6
85+regard to the average daily production of the oil well. 7
86+ (B) The expense allowance under subdivision (a)(6)(A) of 8
87+this section shall be based as nearly as practicable on actual expenses per 9
88+barrel of oil or one thousand (1,000) cubic feet of gas produced. 10
89+ (7) In assessing the value of an oil a well based on an income 11
90+approach, the income shall be based on the actual average price per barrel of 12
91+oil or one thousand (1,000) cubic feet of gas in Arkansas during the 13
92+immediately preceding calendar year. 14
93+ (8) All formulas, valuation tables, and guidance that are 15
94+published or provided to the county assessors by the Assessment Coordination 16
95+Division to be used in the valuation and appraisal of mineral rights for ad 17
96+valorem tax purposes shall comply with the requirements of this section. 18
97+ 19
98+ SECTION 3. DO NOT CODIFY. Retroactivity. 20
99+ Section 2 of this act applies retroactively to assessment years 21
100+beginning on or after January 1, 2022. 22
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108-APPROVED: 4/17/25 24
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