NMSA 1978, § 7-36-27 — 7-36-27

Special method of valuation; pipelines, tanks, sales meters
and plants used in the processing, gathering, transmission,
storage, measurement or distribution of oil, natural gas, carbon
dioxide or liquid hydrocarbons.

# A.

All pipelines, tanks, sales meters and plants used in the processing, gathering,
transmission, storage, measurement or distribution of oil, natural gas, carbon dioxide or
liquid hydrocarbons subject to valuation for property taxation purposes shall be valued
in accordance with the provisions of this section.

# B.

As used in this section:
(1) "construction work in progress" means the total of the balances of work
orders for pipelines, plants, large industrial sales meters and tanks, in the process of
construction on the last day of the preceding calendar year, exclusive of land and land
rights and equipment, machinery or devices that are used or are available for use to
construct pipelines, plants, large industrial sales meters and tanks but that are not
incorporated into the pipelines, plants, large industrial sales meters or tanks;
(2) "depreciation" means straight line depreciation over the useful life of the
item of property;
(3) "direct customer distribution pipeline" means a low or intermediate
pressure distribution system pipeline of four inches or smaller diameter situated in urban
areas;
(4) "economic obsolescence" means, with respect to valuation for property
taxation purposes, loss in value of a property caused by unfavorable economic
influences or factors outside of the property; "economic obsolescence" is a loss in value
in addition to a loss in value attributable to physical depreciation;
(5) "functional obsolescence" means, with respect to valuation for property
taxation purposes, loss in value of a property caused by functional inadequacies or
deficiencies caused by factors within the property; "functional obsolescence" is a loss in
value in addition to a loss in value attributable to physical depreciation;
(6) "large industrial sales meter" means a sales meter having an installed
tangible property cost in excess of two thousand five hundred dollars ($2,500);
(7) "other justifiable factors" includes, but is not limited to, functional
obsolescence and economic obsolescence;
(8) "pipeline" means all pipe, appurtenances and devices used in systems for
gathering, transmission or distribution, but excludes sales meters, a pipeline operated
exclusively for and constituting a part of a plant and a direct customer distribution
pipeline;
(9) "plant" means any refinery, gasoline plant, extraction plant, purification
plant, compressor or pumping station or similar plant, including all structures,
equipment, pipes and other related facilities, excluding residential housing, office
buildings and warehouses;
(10) "sales meter" means the meter, regulator and all appurtenances and
devices used for measuring sales to customers and includes the service pipe to the
customer's property line from the point of connection with the pipeline;
(11) "schedule value" means a fixed value of an individual property unit within
a mass of similar or like units established by determining the total tangible property cost
of a substantial sample of such property and deducting therefrom an average related
accumulated provision for depreciation and allocating a proportionate part of the
remainder to individual taxable property units;
(12) "tangible property cost" means the actual cost of acquisition or
construction of property, excluding construction work in progress, including additions,
retirements, adjustments and transfers, but without deduction of related accumulated
provision for depreciation, amortization or other purposes and excluding any amount
attributable to oil or gas reserves dedicated to such item of property; and
(13) "tank" means any storage tank or container, other than a natural reservoir,
for storage that is not a component part of a plant.

# C.

Sales meters, other than large industrial sales meters, shall be valued as follows:
(1) the department may periodically determine the average tangible property
cost of a substantial sample of sales meters in general use in the state;
(2) such average tangible property cost shall then be reduced by the average
related accumulated provision for depreciation applicable to the sample of sales meters;
and
(3) from the determinations pursuant to Paragraphs (1) and (2) of this
subsection, a schedule of value for sales meters for property taxation purposes shall be
determined and set forth in a rule adopted by the department.

# D.

Pipelines, direct customer distribution pipelines, large industrial sales meters,
tanks and plants shall be valued as follows:
(1) the valuation authority shall first establish the tangible property cost of
each item of property;
(2) from such tangible property cost shall be deducted the related
accumulated provision for depreciation and any other justifiable factors that further
affect the tangible property value of each item of property; and
(3) notwithstanding the determination of value for property taxation purposes
in Paragraphs (1) and (2) of this subsection, the value for property taxation purposes of
each item of property valued under this subsection shall not be less than twenty percent
of the tangible property cost of such item of property.

# E.

Construction work in progress shall be valued at fifty percent of the amount
expended and entered upon the accounting records of the taxpayer as of December 31
of the preceding year as construction work in progress.

# F.

Each item of property having a taxable situs in the state and valued under this
section shall have its net taxable value allocated to the governmental units in which the
property is located.

# G.

A reduction in value asserted by a taxpayer as attributable to economic
obsolescence or functional obsolescence shall contain an obsolescence factor along
with a brief statement of the facts that support the reduction, together with supporting
documentation. The documentation may include items such as monthly throughput
volumes from the prior year; comparisons to a documented industry standard;
comparisons to a close competitor; and an engineer's or appraiser's valuation. The
department may adopt rules that include other types of objective evidence of functional
obsolescence or economic obsolescence.

# H.

If the department determines that a taxpayer has not established, based on the
brief statement of facts and the supporting documentation provided, that the reduction
for functional obsolescence or economic obsolescence is in accordance with the law or
rules adopted by the department, the department shall notify the taxpayer of the
department's determination in writing setting forth the reasons for its determination and
specifying the supporting information that the department requires. The department
shall provide the notice by April 1 or thirty days after the return is filed but no later than
April 15 of the tax year. If the taxpayer does not file the report by March 15 of the
property tax year, the department shall not be required to furnish a timely notice of
deficiency by April 15 of the property tax year. In the case of properties regulated by the
federal energy regulatory commission, the notice of deficiency shall be provided to the
taxpayer within fifteen days after the filing of the report and the taxpayer shall then have
ten days within which to correct the deficiency.

# I.

The department shall adopt rules to implement the provisions of this section.