A. The provisions of this section apply to the valuation of all mineral property and property used in connection with mineral property when the primary production from the mineral property is uranium.

B. The following kinds of property held or used in connection with uranium mineral property shall be valued under the methods of valuation required by the Property Tax Code:

(1) improvements, equipment, materials, supplies and other personal property held or used in connection with all classes of uranium mineral property; "improvements" as used in this section includes surface and subsurface structures, but does not include pits, shafts, drifts or other similar artificial changes in the physical condition of the surface or subsurface of the earth produced solely by the removal or rearrangement of earth or minerals for the purpose of exposing or removing ore from a mine; and

(2) the surface value for agricultural or other purposes of class one productive or nonproductive uranium mineral property when the surface interest is held in the same ownership as the mineral interests.

C. The value for property taxation purposes of class one productive, class two and class three uranium mineral property is the annual net production value of the uranium mineral property.

D. The value for property taxation purposes of class one nonproductive uranium mineral property shall be determined under Subsection E of Section 7-36-23 NMSA 1978.

E. For the purposes of this section, the "annual net production value" means:

(1) the sales price of uranium-bearing material disposed of as ore or solution, less fifty percent of that sales price as a deduction for the cost of producing and bringing the output to the surface and of transporting and selling it; or

(2) in the case of uranium-bearing material not disposed of as ore or solution but processed or beneficiated (other than by sizing and blending), regardless of the form in which the product is actually disposed of, the value of U3O8 contained in ore or solution determined on the basis of the U3O8 content of the ore or solution at fifty percent of the taxpayer's average unit sales price during the preceding calendar year of U3O8 contained in the concentrate form commonly known as "yellowcake" (or if the uranium concentrate has not been sold in the preceding calendar year, at fifty percent of the representative sales price for U3O8 contained in the concentrate form commonly known as "yellowcake" at the place and time of processing or beneficiation into that concentrate), plus fifty percent of the representative sales price of all other minerals produced and saved from such uranium-bearing material, less fifty percent of the value as a deduction for the cost of producing and bringing the output to the surface from an underground mine.

F. In determining annual net production value of class two and class three uranium mineral property, a deduction may be taken for royalties paid or due the United States, the state or any Indian tribe, Indian pueblo or Indian who is a ward of the United States, but the deduction allowed by this subsection must be subtracted from one hundred percent of the applicable sales price before applying any other reductions in or deductions from that sales price.

History: 1953 Comp., § 72-29-14, enacted by Laws 1973, ch. 258, § 26; 1975, ch. 165, § 6; 1982, ch. 29, § 1.

Cross references. — For severance tax on uranium, see 7-26-7 NMSA 1978.

For mines and mining, see Chapter 69 NMSA 1978.

Section deemed constitutional. — Since the classification, in Subsection E, distinguishing open-pit mines from underground mines is reasonable and the tax imposed by this section is uniform and equal on all subjects of a class, this section is constitutional. Anaconda Co. v. Property Tax Dep't, 1979-NMCA-158, 94 N.M. 202, 608 P.2d 514, cert. denied, 94 N.M. 628, 614 P.2d 545.

There is reasonable basis for division of mines for tax purposes into the classes of underground and open-pit mines: the basis for the classification is the difference between the cost of producing and bringing uranium ore to the surface in the two types of mines; since this cost is greater in underground than in open-pit mines, it was within the legislature's power to provide a tax deduction to underground mines that it did not grant to open-pit mines. Anaconda Co. v. Property Tax Dep't, 1979-NMCA-158, 94 N.M. 202, 608 P.2d 514, cert. denied, 94 N.M. 628, 614 P.2d 545.

Fair market value is theoretically what a willing seller would take and a willing buyer offer. Kaiser Steel Corp. v. Property Appraisal Dep't, 1971-NMCA-131, 83 N.M. 251, 490 P.2d 968, cert. denied, 83 N.M. 258, 490 P.2d 975.

Market price as exchange value. — As to the price between a fictional seller and buyer, the market price of a commodity is the exchange value and it is determined by the demand for it in relation to the supply and is proved, when possible, by actual sales. Kaiser Steel Corp. v. Property Appraisal Dep't, 1971-NMCA-131, 83 N.M. 251, 490 P.2d 968, cert. denied, 83 N.M. 258, 490 P.2d 975.

Essential factors in determining market value are the existence of a demand and the accessibility of a market. Kaiser Steel Corp. v. Property Appraisal Dep't, 1971-NMCA-131, 83 N.M. 251, 490 P.2d 968, cert. denied, 83 N.M. 258, 490 P.2d 975.

Materials incorporated into underground mining structures included in valuation base. — Tangible materials incorporated into underground mining structures, such as roof bolts, concrete, steel mesh, timbers and reinforcing rods, are materials included in the valuation base. Kerr-McGee Nuclear Corp. v. Property Tax Div., 1980-NMCA-063, 95 N.M. 685, 625 P.2d 1202.

Materials in shafts and drifts necessary to extraction of minerals not included in valuation. — The lining or bracing of shafts and drifts in a mine, as well as ventilation air shafts, leach holes and other shafts necessary to the extraction of minerals, are exempt from valuation under Subsection B(1). Kerr-McGee Nuclear Corp. v. Property Tax Div., 1980-NMCA-063, 95 N.M. 685, 625 P.2d 1202.

Burden of proof was on contestant and was both the burden of producing evidence and the burden of persuasion which was, in this case, where the validity of the state's valuation is in issue, not the burden of showing the correct valuation but to show that the state's valuation was erroneous. However, an asserted failure in contestant's burden of persuasion does not require that the court uphold the state's valuation when that valuation is not supported by substantial evidence. Kaiser Steel Corp. v. Property Appraisal Dep't, 1971-NMCA-131, 83 N.M. 251, 490 P.2d 968, cert. denied, 83 N.M. 258, 490 P.2d 975.

Finding not supported by evidence inference. — Since the market value of the mine run coal was based on evidence of sales of 4% and 9% of production at $8.50 per ton, this evidence did not support an inference that 96% and 91% of production had a market value of $8.50 per ton absent evidence of a market at that price and, therefore, the finding utilizing a market value of $8.50 per ton for all mine run coal was not supported by substantial evidence. Kaiser Steel Corp. v. Property Appraisal Dep't, 1971-NMCA-131, 83 N.M. 251, 490 P.2d 968, cert. denied, 83 N.M. 258, 490 P.2d 975.

Law reviews. — For comment, "Taxation of the Uranium Industry: An Economic Proposal," see 7 N.M.L. Rev. 69 (1976-77).

For article, "Nonneutral Features of Energy Taxation," see 20 Nat. Resources J. 853 (1980).

For article, "Evaluating Congressional Limits on a State's Severance Tax Equity Interest in Its Natural Resources: An Essential Responsibility for the Supreme Court," see 11 Nat. Resources J. 673 (1982).