Summary of a Recent
Judicial Development in
Estate Planning & Taxation

Property Denied Qualification as Agricultural
Land for Tax Purposes

Joshua T. Crain
National AgLaw Center Graduate Assistant

Summary of Decision

In Jicarilla Apache Nation v. Rodarte, 103 P.3d 554 (N.M. 2004) the New Mexico Supreme Court held that elk were not considered "livestock" under the state's property tax code for purposes of determining whether certain property qualified as agricultural land. It also held that a soil conservation agreement entered into between the taxpayer and the USDA was not sufficient to establish the primary use of the property as agricultural. See Jicarilla, 103 P.3d at 554.

Background

Petitioner Rio Arriba County Assessor appealed a decision of the New Mexico Court of Appeals that reversed the Rio Arriba County Valuation Protests Board (the Board). See id. The Board had upheld a reclassification of Jicarilla Apache Nation (taxpayer) land from agricultural to miscellaneous non-residential, which increased the value of the land from $2,199,378 to $21,301,191. See id. The issues presented were whether the taxpayer's elk herd were livestock under the New Mexico Property Tax Code and therefore "agricultural," and whether a conservation agreement entered into between the taxpayer and the USDA was sufficient to make the primary purpose of such land agricultural.

Analysis and Holdings

The court first considered whether elk were considered "livestock" under the New Mexico Property Tax Code. See id. It explained that elk were not listed in the definition of livestock in § 7-35-2(C), the section of the Property Tax Code enumerating the animals considered to be livestock. See id. The court explained that because elk were not specifically listed as livestock, it had to determine whether the elk fell into the category of "other domestic animals useful to man," an element to § 7-35-2(C). Id. at 560. Stating that the pivotal question was whether elk were "domestic," the court noted that the elk were contained within an eight-foot high fence surrounding two 3,200 acre tracts of land and that they were harvested through big game hunts. See id. The court determined that hunting the elk was contrary to the idea that they were domesticated and reversed the appeals court's holding that the elk were livestock under the state tax code. See id.

The court also considered whether the soil conservation program the taxpayer was enrolled in qualified the land as "agricultural." Id. The court explained that for the land to qualify as agricultural under the New Mexico Tax Code due to its enrollment in the conservation program, "the primary use of the land must be to meet the requirements for compensation pursuant to the soil conservation agreement in order to be entitled to the agricultural method of valuation. Conversely, property which is primarily used for non-agricultural purposes but which incidentally meets the requirements for compensation pursuant to a valid soil conservation agreement is not 'land used primarily for agricultural purposes'" under the tax code. See id. at 565.

The court concluded the following:

Consistent with the Court of Appeals, we hold that the . . . [taxpayer] entered into a valid soil conservation agreement with the USDA which governs in part the use of the . . . [the land]. Contrary to the Court of Appeals, however, we uphold the Board's determination that the agreement was insufficient to establish that the primary use of the . . . [land] was agricultural. The Board's conclusion that the primary use of the land was commercial hunting, not to meet the requirements of the agreement, is supported by substantial evidence and is not contrary to law. We therefore reverse the Court of Appeals on this point and affirm the order of the Board.

Id.

The case was decided on September 3, 2004; this summary was posted Mar. 24, 2005.