A. There is levied and shall be collected by the department a tax on all products that are severed and sold. The measure and rate of the tax shall be nineteen-hundredths percent of the taxable value of sold products. Every interest owner shall be liable for this tax to the extent of the owner's interest in the value of the products or to the extent of the owner's interest as may be measured by the value of the products. An Indian tribe, Indian pueblo or Indian shall be liable for this tax to the extent authorized or permitted by law.

B. When the average price of west Texas intermediate crude in the previous quarter exceeds seventy dollars ($70.00) per barrel, an additional tax to that provided pursuant to Subsection A of this section is levied and shall be collected by the department on oil that is severed and sold in the ensuing quarter. The measure and rate of the total tax on oil shall be twenty-four hundredths percent of the taxable value of the sold product. Every interest owner shall be liable for this tax to the extent of the owner's interest in the value of the products or to the extent of the owner's interest as may be measured by the value of the products. An Indian tribe, Indian pueblo or Indian shall be liable for this tax to the extent authorized or permitted by law.

History: 1953 Comp., § 72-20-4, enacted by Laws 1959, ch. 53, § 4; 1975, ch. 289, § 15; 1977, ch. 237, § 6; 1985, ch. 65, § 31; 1989, ch. 130, § 6; 1996, ch. 72, § 1; 2003, ch. 433, § 2; 2007, ch. 97, § 1; 2010, ch. 98, § 2.

Cross references. — For the oil and gas reclamation fund, see 70-2-37 NMSA 1978.

The 2010 amendment, effective May 19, 2010, in Subsection A, in the second sentence, deleted "Except as provided in Subsections B and C of this section"; deleted former Subsection B, which provided that if the unencumbered balance of the oil and gas reclamation fund equals or exceeds $2,500,000 the tax rate shall be eighteen-hundredths percent; deleted former Subsection C, which provided that if the unencumbered balance of the oil and gas reclamation fund is less than or equal to $500,000, the tax rate shall be nineteen-hundredths percent; deleted former Subsection D, which provided that the department shall notify taxpayers of changes in the tax rate; and added a new Subsection B.

The 2007 amendment, effective June 15, 2007, in Subsection B, increased the maximum amount to be held in the oil and gas reclamation fund from $1,150,000 to $2,500,000.

The 2003 amendment, effective July 1, 2003, inserted the exception near the beginning of Subsection A; rewrote Subsection B designating part of former Subsction B as present Subsection C and redesignating former Subsection C as Subsection D; and deleted the last phrase of Subsection C, concerning distribution to the oil and gas reclamation fund.

The 1996 amendment, effective May 15, 1996, made stylistic changes in Subsection A.

The 1989 amendment, effective June 16, 1989, substituted "department" for "division" in the catchline; in Subsection A substituted "department" for "division" in the first sentence, inserted "and rate" in the second sentence, and made minor stylistic changes in the third sentence; rewrote the first and second sentences of Subsection B; and designated the former third sentence of Subsection B as Subsection C.

Severance alone does not give rise to taxable event. Yankee Atomic Elec. Co. v. N.M. & Ariz. Land Co., 632 F.2d 855 (10th Cir. 1980).

Severance, coupled with sale, triggers imposition of tax. Yankee Atomic Elec. Co. v. N.M. & Ariz. Land Co., 632 F.2d 855 (10th Cir. 1980).

Indian right to tax oil production not preempted by congress. — Although it granted to the states the right to tax the production of oil and gas on Indian reservations, congress did not preempt similar tribal taxation. Merrion v. Jicarilla Apache Tribe, 617 F.2d 537 (10th Cir. 1980), aff'd, 455 U.S. 130, 102 S. Ct. 894, 71 L. Ed. 2d 21 (1982).

Law reviews. — For article, " 'New Mexican Nationalism' and the Evolution of Energy Policy in New Mexico," see 17 Nat. Resources J. 283 (1977).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 84 C.J.S. Taxation §§ 165 et seq.