It is critical that all landowners understand potential "Clean and Green" tax implications.

Attorney Douglas Clark understands the Clean and Green Statute and it's consequences. The Clark Law Frim fights to construct ALL agreements with gas and pipeline companies to protect themselves from potentially significant tax bills.

NOT ALL CLEAN AND GREEN PROVISIONS ARE CREATED EQUAL!!! Clean and Green language must be carefully crafted and negotiated to provide complete protection for the property owner.

Do not be fooled into believing you have complete Clean and Green protection simply because your oil and gas lease or pipeline right-of-way agreement contains an addendum entitled "Clean and Green." Many landowners are very disappointed and surprised to learn that the Clean and Green provision in their oil and gas lease or other agreement is insufficient and fails to insulate them from "any and all" taxes and penalties.

By way of explanation of the program, the Pennsylvania Farmland and Forest Land Assessment Act of 1974, more commonly known as “Clean and Green,” is a preferential tax assessment statute that affects the rights of some Pennsylvania landowners. Clean and Green applies to all counties in Pennsylvania. HOWEVER, each county assessment officer is responsible for administering the program within its jurisdiction. This has resulted in different interpretations and applications of the Clean and Green statute by counties across Pennsylvania.

It is important that landowners seek to determine how their County is interpreting and enforcing the Clean and Green statute relating to gas development activities. However, a county's current interpretation of the Clean and Green Statute may unexpectedly change in the future. These contingencies must be accounted for, whenever possible, when negotiating a contract with an energy company. The Clark Law Firm understands the techniques and "tricks" used in company favored provisions and will combat and counter unfriendly company proposed Clean and Green language.

Clean and Green is a Pennsylvania state law that allows qualifying land that is devoted to agricultural and forest land use to be assessed at a value for that use rather than the fair market value. In other words, Clean and Green is, in essence, a land conversation program that reduces the property tax rate for the landowners who enroll in the program. The intent of Clean and Green is to encourage property owners to retain their land in agricultural, open space, or forest land use, by providing real estate tax relief. Thus, if a landowner enrolls in the program, he/she is then obligated to devote their land to agricultural use, agricultural reserve use, of forest reserve use in order to qualify for reduced property taxes. Landowners who exit the program may be required to pay up to seven (7) years worth of “roll-back” taxes, plus interest.

Landowners who wish to enroll into the Clean and Green program must submit an application to their county assessment office. Once a landowner is enrolled, the general rule is that the landowner is obligated to continue using the land in a qualified use indefinitely or face roll-back taxes for the most recent seven (7) years, plus interest.

Once enrolled into the Clean and Green program, a landowner cannot voluntarily remove their land from Clean and Green without a land use change. When a land use change takes place, and rollback taxes have been paid, the landowner has the option of removing any portion of the land that remains eligible, or the land that remains eligible may be re-enrolled.

A landowner who breaches the Clean and Green covenant of land use is subject to a roll-back tax. A roll-back tax is imposed for changes in the use of Clean and Green property. The roll-back tax is the difference between the real estate taxes the owner would have paid if the property was assessed under the Fair Market Value valuation system and the reduced taxes the owner paid under the Clean and Green Use Value assessment.

As a general rule, the roll-back tax is imposed on the entire portion of the land enrolled under the application. However, county interpretations and enforcement of this general rule may very. To defend against a potentially heavy tax burden, ALL contracts should account for the possibility that all lands may be taxed in the future. Remember, a county who enforces the Clean and Green Statute one way today, may change it's interpretation of the Clean and Green statute in the future. It is imperative that the landowner's contract specifically addresses these issues in as much clarity and detail as possible.

Roll-back taxes are due for the year of the change in use and the six previous tax years for a total of seven (7) years. Land that has been enrolled in Clean and Green for more than seven (7) years is only subject to roll-back taxes for the seven (7) most recent tax years, and land that has been in Clean and Green for less than seven (7) years is subject to roll-back taxes only for the years it has been in the program. In addition to the tax, interest is imposed on each year’s roll-back tax at the rate of six percent (6%) per year.