Opinion ID: 2632648
Heading Depth: 3
Heading Rank: 4

Heading: Soil conservation program

Text: {34} Although Petitioner had conceded at the hearing that the Lodge's conservation agreement with the USDA was a bona fide agricultural use, the Board concluded that it was not. Specifically, the Board concluded that the agreement has, as its primary purpose, the development and maintenance of a habitat suitable for the maintenance of elk, not soil conservation. Any soil conservation effected by the plan is incidental and secondary to this primary purpose. As such, the plan does not qualify as a soil conservation program pursuant to [Section 7-36-20(B)]. The Court of Appeals reversed, concluding that: (1) the agreement was a soil conservation agreement under Section 7-36-20(B); and (2) under the Department of Taxation's regulations, a valid soil conservation agreement is by itself sufficient to show that the property is primarily used for agricultural purposes. Jicarilla Apache Nation, 2004-NMCA-055, ¶¶ 38, 40, 135 N.M. 630, 92 P.3d 642. {35} The Board's conclusion is ambiguous. On the one hand, language in the first part of the paragraph quoted above suggests that it rejected the Lodge's argument because it concluded that the conservation agreement was not the primary use of the land. On the other hand, the last sentence states that, because soil conservation was not the primary purpose of the agreement, it did not qualify as a soil conservation agreement under the statute. {36} To the extent that the Board concluded that the agreement was not a soil conservation agreement, we agree with the Court of Appeals that such a conclusion would be error. This agreement is with the USDA, an agency of the federal government under Section 7-36-20(B). It required the Lodge to irrigate for the purpose of ... minimiz[ing] soil erosion and nutrient losses; to manage grazing on a schedule that meets the needs of the soil, water, air, plant and animal resources; and to manage pasture and hayland to maintain enough cover to protect the soil. Although the agreement also had other intended effects, it is nonetheless a soil conservation agreement under the same provision. Finally, because the USDA shared the costs of these projects, the use of the land met the requirements for payment or other compensation. There is simply no grounds in Section 7-36-20(B) for concluding, as the Board might have, that an agreement is not a bona fide soil conservation agreement even if its primary purpose is something other than soil conservation. {37} Nonetheless, establishing that the Lodge entered into a valid soil conservation agreement only satisfies the agricultural use requirement of Section 7-36-20(B). Under Subsection A of that Section, this use must also be the primary use of the property. That is, under Sections 7-36-20(A) and (B), 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 Section 7-36-20(A). Considering that the agricultural method of valuation is meant to be a limited exception to the normal rule of property taxation, cf. Ambell, 94 N.M. at 397, 611 P.2d at 220 (noting that Section 7-36-20 establishes a special method of valuation), we doubt the Legislature intended a broad safe harbor for those whose primary use of the land is non-agricultural but who also enter into a soil conservation agreement. This may be what the Board was alluding to in its order when it concluded that the Lodge's soil conservation agreement did not satisfy Section 7-36-20 because the primary purpose of the uses described in the agreement was to provide suitable habitat for elk, not to conserve soil. Cf. Rio Grande Chapter of the Sierra Club, 2003-NMSC-005, ¶ 13, 133 N.M. 97, 61 P.3d 806 (noting that a court may uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned) (quotation marks and quoted authority omitted). {38} The Court of Appeals, interpreting 3.6.5.27(A)(1) NMAC, concluded that the Nation's qualification for compensation under this agreement constituted primary agricultural use of the upland portion of the property without a further showing that the compensation agreement was the primary use of the property. Jicarilla Apache Nation, 2004-NMCA-055, ¶ 41, 135 N.M. 630, 92 P.3d 642. We disagree. That regulation provides: (1) When applying for classification of land as land used primarily for agricultural purposes, the owner of the land bears the burden of demonstrating that the use of the land is primarily agricultural. This burden cannot be met without submitting objective evidence that: (a) the plants, crops, trees, forest products, orchard crops, livestock, poultry or fish which were produced or which were attempted to be produced through use of the land were: (i) produced for sale or home consumption in whole or in part; or (ii) used by others for sale or resale; or (iii) used, as feed, seed or breeding stock, to produce other such products which other products were to be held for sale or home consumption; or (b) the use of the land met the requirements for payment or other compensation pursuant to a soil conservation program under an agreement with an agency of the federal government; or (c) the owner of the land was resting the land to maintain its capacity to produce such products in subsequent years. 3.6.5.27(A) NMAC (emphasis added). {39} The regulation delineates several ways that a taxpayer can demonstrate that the land is used for agricultural purposes. The listed uses are alternative necessary conditions for establishing agricultural use, and the regulation requires the taxpayer to present objective evidence that the land is used in accordance with at least one of them. None, however, are sufficient conditions that by themselves definitively prove that the land meets all of the qualifications for the agricultural exemption. The taxpayer must still establish the other two requirements found in Section 7-36-20(A): that the agricultural use is bona fide and the primary use of the land. In this case, objective evidence that the land meets the requirements for payment or other compensation pursuant to a soil conservation program under an agreement with an agency of the federal government was a necessary element to prove agricultural use, but it was not sufficient by itself to establish the agricultural exemption. The Lodge also needed to prove that this use was the primary use of the land. The Court of Appeals seems to have read the minimum requirement of proving the existence of the soil conservation agreement as one sufficient to establish, by itself, that the use consistent with the agreement is a primary use. Jicarilla Apache Nation, 2004-NMCA-055, ¶¶ 39-40, 135 N.M. 630, 92 P.3d 642. {40} The regulation, however, does not read: This burden will be met by submitting objective evidence of use consistent with a valid soil conservation agreement. Instead, it reads: This burden cannot be met without submitting objective evidence of the proper use. In that sense, subsection (A)(1)(b), unlike subsection (A)(1)(a), adds very little to the requirements set forth in Section 7-36-20(A) and (B) that the property be primarily used to meet the requirements of a valid soil conservation agreement. Furthermore, a reading of 3.6.5.27(A)(1) NMAC that obviates the need to show that the property is primarily used to meet the requirements for compensation under a valid soil conservation agreement would conflict with Section 7-36-20(A), and would be ultra vires. See City of Albuquerque v. Pub. Regulatory Comm'n, 2003-NMSC-028, ¶ 22, 134 N.M. 472, 79 P.3d 297. {41} Consistent with the Court of Appeals, we hold that the Lodge entered into a valid soil conservation agreement with the USDA which governs in part the use of the uplands region. 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 uplands region 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.