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HB 1937

TO AMEND THE METHOD OF VALUATION FOR MINERAL RIGHTS UNDER ARKANSAS CONSTITUTION, ARTICLE 16, § 5; AND TO CLARIFY THE METHOD OF VALUATION FOR OIL AND GAS WELL PRODUCTION EQUIPMENT.

2025 Regular Session Introduced by Ron Caldwell and 2 co-sponsors

HB 1937 modernizes Arkansas mineral rights valuation, ensuring fair property tax assessments for oil and gas production, impacting owners and county assessors starting 2025.

Notification that HB1937 is now Act 821
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Bill Summary · HB 1937

Summary of House Bill 1937 (HB 1937)

Purpose and Intent

House Bill 1937 (HB 1937) aims to amend the method of valuation for mineral rights under the Arkansas Constitution, specifically Article 16, § 5. The bill seeks to clarify and modernize the assessment process for oil and gas well production equipment, ensuring consistency and uniformity in property tax valuations related to mineral rights.

Key Provisions

  • Definition Changes: The bill replaces the term "oil well" with the broader term "well," which includes:

    • Wells producing only liquid hydrocarbons
    • Wells producing liquid hydrocarbons associated with gas
    • Wells producing gas associated with liquid hydrocarbons
    • Wells producing natural gas or any combination of oil, gas, and other hydrocarbons

  • Valuation Method:

    • Current law values wells based on barrels of oil produced. HB 1937 allows for valuation based on the production of gas, specifically using a measure of 1,000 cubic feet of gas produced.

  • Assessment Guidelines:

    • County assessors are required to assess mineral interests separately from the fee simple interest in the land when different parties hold these interests.
    • Production equipment will be assessed at a value of $1.00 per foot, with exceptions for inoperable portions of casing.
    • Newly discovered property due to increased production must be assessed based on actual average prices from the previous year.

  • Implementation Timeline: The new valuation methods will be effective for assessment years beginning on or after January 1, 2025.

Impact

  • Affected Parties: The bill primarily impacts property owners with mineral rights, county assessors, and the oil and gas industry in Arkansas.
  • Fiscal Impact: The bill is expected to have no immediate impact on state revenues, but the effect on property tax collections is currently undetermined.
  • Resources Required: The Assessment Coordination Division will need to develop new formulas and guidelines for assessing mineral rights, which may take at least one year to implement.

Procedural Aspects

  • Legislative Process: HB 1937 was introduced on March 31, 2025, and underwent several readings and amendments before being passed. It was enrolled and transmitted to the Governor's Office on April 15, 2025, and subsequently became Act 821 on April 17, 2025.

Conclusion

HB 1937 represents a significant update to the valuation process for mineral rights and production equipment in Arkansas, aiming to provide clarity and consistency in property tax assessments. The changes are designed to reflect modern practices in the oil and gas industry while ensuring fair taxation for property owners.

Compiled from official sources — confirm details with the bill’s official record.

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