No.

Mr. Ray Carper Property Tax Administrator 623 State Centennial Building 1313 Sherman Street Denver, Colorado 80203

Dear Mr. Carper:

QUESTIONS PRESENTED AND CONCLUSIONS

This is in reply to your inquiry of August 10, 1978 wherein you ask the following two questions:

1. Chapter 39-6-104 specifically excludes coal as a producing mine and states (39-6-111) that it is to be valued for assessment in the same manner as other real property. With this presumption does 39-6-107 (equipment within a mine) and 39-6-112 (valuation of tunnels) apply to coal mines or only to producing mines?

My conclusion is that C.R.S. 1973, 39-6-107 which, in part, excepts mining improvements does not apply to coal mines.

2. The encyclopedia of energy states that oil shale is classified as sedimentary rock. Since rock products are similarly excluded as a producing mine (39-6-104) would you agree that oil shale is not to be classified and valued as a producing mine? If you make that decision, would producing oil shale lands be then classified and valued as oil and gas leaseholds and lands (Article 7), or would it depend upon the type of process used (e.g., "in situ")?

My conclusion is that a producing oil shale mine is to be valued as a producing mine. Where the "in situ" process is used and oil is produced the oil should be valued pursuant to C.R.S. 1973, 39-7-102.

ANALYSIS

In answer to your first question the following statutes are pertinent:

C.R.S. 1973, 39-6-104 which reads as follows:

Classification of Mines. All mines, except mines worked or operated primarily for coal, asphaltum, rock, limestone, dolomite, or other stone products, sand, gravel, clay, or earths, shall, for the purpose of valuation for assessment, be divided into two classes: Producing and nonproducing.

(Emphasis added.)

C.R.S. 1973, 39-6-111 pertinently provides, in part, as follows:

Valuation of mines other than producing mines. (1) Mines excepted from the provisions of section 39-6-104 shall be valued for assessment in the same manner as other real property.

(2) All mines which are classified as nonproducing mines shall be valued for assessment in the same manner as other real property . . . .

The above statutes clearly reveal that mines are classified as producing or nonproducing with certain mines such as coal excepted from either classification. Considering this classification and exception you inquire whether C.R.S. 1973,39-6-107 is applicable to coal mines. This section reads as follows:

Valuation of improvements, machinery. All machinery and equipment, personal property, and improvements, except mining improvements within a mine excavation, shall be separately valued for assessment.

Briefly, you ask whether C.R.S. 1973, 39-6-107, which, in part, excepts mining improvements within a mine excavation, applies to coal mines. The answer is in the negative as C.R.S. 1973, 39-6-107 applies to the valuation of improvements in producing mines not to excepted mines such as coal mines (C.R.S. 1973, 39-6-104). Machinery and equipment of excepted mines and nonproducing mines should be valued for assessment as provided in C.R.S. 1973, 39-6-111.

You also ask whether C.R.S. 1973, 39-6-112 pertaining to the valuation of tunnels governs excepted mines such as coal or only producing mines. This section reads, in part, as follows:

Valuation of tunnels. (1) A tunnel excavated for the mere purpose of exploration and discovery of mines on the public domain shall be deemed to be real property and shall be listed and valued for assessment by the name thereof unless it becomes a part of a producing mine, in which case it shall be considered a parcel thereof . . . .

(Emphasis added.)

The above quoted section applies to producing mines, not excepted mines (C.R.S. 1973, 39-6-104). Therefore, coal mine tunnels should be valued pursuant to C.R.S. 1973, 39-6-111.

In response to question two set forth above, it is noted that the legislature has specifically enumerated, in C.R.S. 1973, 39-6-111, the method to be followed in the valuation of nonproducing oil shale mines. It follows that a producing oil shale mine should be valued for assessment as a producing mine pursuant to C.R.S. 1973, 39-6-106. You suggest that inasmuch as the encyclopedia of energy classifies oil shale as sedimentary rock that such a mine falls within the excepted classification set forth in C.R.S. 1973, 39-6-104. This contention is rejected for it is noted that 39-6-104 excepts "mines worked or operatedprimarily for . . . rock . . . or other stone products, sand, gravel, clay or earth . . . ." While in mining oil shale, the mineral is extracted from stone, it cannot reasonably be concluded that a producing oil shale mine is worked or operated primarily for stone or anything other than the mineral.

SUMMARY

Accordingly, a producing oil shale mine, conducting its mining operation by a conventional method of mining, should be valued pursuant to C.R.S. 1973, 39-6-106. However, in those operations where the "in situ" process is used and oil is produced, the assessor should value the oil pursuant to C.R.S. 1973, 39-7-102. In an "in situ" operation, the possibility exists that mining could be undertaken for the recovery of byproducts. If so, this mining operation should be valued as a producing mine pursuant to C.R.S. 1973, 39-6-106.

Very truly yours,

J.D. MacFARLANE Attorney General

OIL AND GAS MINES AND MINING TAXATION AND REVENUE

C.R.S. 1973, 39-6-104 C.R.S. 1973, 39-6-111 C.R.S. 1973, 39-6-107 C.R.S. 1973, 39-6-106 C.R.S. 1973, 39-7-102

LOCAL AFFAIRS, DEPT. OF Property Taxation, Div. of

A producing oil shale mine, conducting its mining operation by a conventional method of mining, should be valued pursuant to C.R.S. 1973, 39-6-106. However, in those operations where the "in situ" process is used and oil is produced, the assessor should value the oil pursuant to C.R.S. 1973, 39-7-102. In an "in situ" operation, the possibility exists that mining could be undertaken for the recovery of byproducts. If so, this mining operation should be valued as a producing mine pursuant to C.R.S. 1973, 39-6-106.