Property Tax Post: Property Tax Relief a Possible Solution for Human-Made Earthquakes

oil terminal

Last September, Oklahoma residents experienced a 5.8 magnitude earthquake that may have been linked to oil and gas companies’ injection of fracking wastewater into underground wells. Colorado, Arkansas, Kansas and Texas have also experienced fluid injection earthquakes with magnitudes up to 5.0 on the Richter scale. Certainly, with quakes of this magnitude, one could expect property damage to occur. And despite efforts to mitigate circumstances leading to human-induced quakes, these kinds of tremors appear to be on the rise.  In some states, there are provisions in place offering relief to taxpayers whose property has been damaged or destroyed by earthquakes, which may prove useful going forward.

In California, a state familiar with earthquakes, owners of property damaged by “a major calamity” including earthquakes, may qualify for property tax relief. Under these circumstances, the property is reassessed “to reflect its damaged condition” until it is restored to a similar condition, in which case the property’s new assessed value will be the same as it was before the damage occurred. To qualify, the property must be located in a county that has adopted an ordinance allowing for such relief, and the damage must meet or exceed a $10,000 loss threshold. Currently, Fresno is the only county that has not adopted such an ordinance. 

Oregon also provides similar property tax relief, but the nature of the relief is limited to “[f]ire or [acts] of God.”  Residents in states with statutes worded in this manner may find that they are disqualified from seeking property tax relief if the damage-causing event is a human-induced earthquake and not another type of natural disaster.  

Oklahoma’s legislature has yet to introduce a plan that addresses property tax relief for damage caused by human-induced earthquakes. The state does provide an income tax credit for owners of residential property whose primary residence was damaged or destroyed by a major natural disaster that occurred on or after Dec. 31, 2011, and also provides a homestead exemption for homeowners whose properties sustained damage due to tornados.

In the meantime, some Oklahoma residents are looking to the courts for recourse concerning damage to their property caused by the recent tremors. Specifically, a class action lawsuit has been filed in the District Court of Payne County, by residents of Cushing, Okla., seeking recovery for physical damage to real and personal property and loss of the property’s market value caused by man-made quakes.

The U.S. Geology Survey reported that Oklahoma’s Sept. 3, 2016, earthquake was comparable to “[t]he largest earthquake induced by fluid injection that has been documented in scientific literature,” which occurred on Nov. 6, 2011, with a 5.7 magnitude and also reported that it is not the first of its kind.

Considering that man-made quakes are expected to continue to occur, perhaps Oklahoma’s legislature will consider exploring property tax relief options that reduce assessed value, such as those in California.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do you think property tax relief is an adequate means to address damage caused by human-induced earthquakes?

Get a free trial to Premier State Tax Library , a comprehensive research service that delivers deep, unique analysis and time-saving practice tools to help practitioners make well-informed decisions.