Nothing in this Article Three shall be construed as affecting in any manner the tax liability of any entity other than the Southern Ute Indian Tribe. Nothing in this Taxation Compact shall prevent the Oil and Gas Commission from charging its conservation levy and environmental response fee against any non-Indians operating within the exterior boundaries of the Southern Ute Indian Reservation.
Article Four
Real and Personal Property Interests
Subject to Taxation on the Reservation.
The parties acknowledge that certain non-Indian real and personal property interests within the exterior boundaries of the Southern Ute Indian Reservation, including the interests of non-Indian partners or venturers with the Tribe, are generally subject to State and local taxation; however, the Tribe maintains that those taxes may be legally objectionable in circumstances where Congress has expressly granted an exemption from such taxation or imposition of the tax poses a serious and demonstrable threat to the economic or political security of the Tribe. The Tribe agrees not to interpose any objection for the duration of this Taxation Compact to State and local taxation of non-Indian real and personal property interests located within the Reservation boundaries under current circumstances (i.e., so long as present levels of State and local taxation of such interests do not change significantly). Specifically, those non-Indian real and personal property interests for which the Tribe does not assert exemption from State and local taxation under this Taxation Compact include:
Real Property Surface Estates;
Real Property Subsurface Estates;
Mineral Lease Working Interests;
Mineral Lease Royalty Interests;
Mineral Lease Production Payments;
Vehicles and Mobile Homes;
Buildings or Improvements;
Equipment;
Security Interests;
Other Real or Personal Property;
Any Oil and Gas Production and Interest.
Article Five
Tribal Declaration of Real Property Acquisition.
Tribal Declaration.
Following acquisition by the Tribe of any interest in real property located within the boundaries of the Reservation, in order to be entitled to the benefits of this Taxation Compact relative to such interest, the Tribe shall file a declaration of such acquisition with the County Assessor, which declaration shall contain: A legal description of the real property interest acquired, including a geographical description and a statement of the interest acquired; identification of the grantor of such interest; the date of closing of the acquisition transaction; and, with respect to interests acquired by the Tribe in non-trust real property, a statement of tribal intent of whether or not application is to be made by the Tribe to the United States of America to place ownership of such acquired interest into trust status. If the Tribe subsequently applies to have such interest placed into federal trust status, the Tribe shall so notify the County Assessor in writing, and the Tribe shall further notify the County Assessor in writing if and when such trust status is conferred.
Assessor's Annual Compilation.
No later than the thirty-first day of January of each year during which the Taxation Compact is in force, the County Assessor shall prepare a compilation of all tribally declared real property interests within the Reservation acquired during the preceding calendar year by the Tribe, which interests have not been identified by the Tribe as having been taken into trust status by the United States of America. For each such parcel or interest listed on said compilation, the County Assessor shall prepare a schedule showing within which taxing districts such parcel or interest is located, together with a statement of the mill levy attributable to said interests by taxing district as reported on the last applicable tax or assessment notice, and a statement of the assessed or estimated assessed value of such parcel or interest based on the last applicable assessment notice. If tribally acquired interests have been shown on a previously issued annual compilation under this paragraph for the immediately preceding year, without subsequent notification by the Tribe of either a change in ownership or trust status of such interests, the County Assessor shall carry forward such interests on the then current annual compilation with such updated schedules of mill levy by taxing district for the particular carried-forward interest or parcel. For each such listed parcel or interest, the County Assessor shall also submit, with the assistance of the County Treasurer, a statement of the amount of ad valorem tax revenue that would have been collected during said applicable annual period, or part thereof during which the Tribe owned a listed interest, but for the Tribe's ownership. Upon completion of the annual compilation, the County Assessor shall promptly forward the same to the designated representative of the Tribe.
Tribal Valuation Protest.
No later than forty-five days following its receipt of the County Assessor's Annual Compilation of tribally acquired interests, valuation, and statement of tax revenue, the Tribe may submit to the County Assessor a protest of the valuation estimate or statement of tax revenue for any parcel or interest which the Tribe believes is overstated in the Annual Compilation. Said protest shall be accompanied by written justification setting forth the basis for the protest. Such justification may include, for example, records of actual production and sales value of oil and gas or coalbed methane using valuation criteria similar to that employed by the State in valuing non-Indian oil and gas properties. Should the County Assessor and the Tribe not be able to reach agreement as to the proper valuation or statement of tax revenue to be assigned to any such parcel or interest, then said dispute shall be submitted to the State Property Tax Administrator for resolution. The State Property Tax Administrator shall employ such procedures he or she deems fair and reasonable for hearing the dispute, provided that in any event, both the Assessor and the Tribe shall have an effective opportunity to state their respective positions. The State Property Tax Administrator shall issue a ruling resolving said dispute no later than the first day of June of any such year, which ruling shall be binding and final. In no event shall the State Property Tax Administrator be permitted to reach a finding of valuation or a statement of tax revenue greater than that originally estimated by the County Assessor as set forth in the Annual Compilation.
Article Six
Annual Tribal Payment in Lieu of Taxation.
Voluntary Payment.
In consideration for the covenants herein contained, the Tribe agrees during each year that this Taxation Compact is in full force and effect to make a voluntary payment to the County as more particularly described below.
Non-Public School Share and Bonded Indebtedness.
The Tribe hereby agrees to remit to the County no later than the fifteenth day of June of each year a voluntary payment in lieu of taxes which shall be equal to the non-public school share of annual real property ad valorem taxes, plus the portion of annual real property ad valorem taxes that are attributable to public school bonded indebtedness, for non-trust real property owned or acquired by the Tribe within the Reservation that otherwise would have been assessed and collected but for acquisition or ownership of such real property by the Tribe. The parties agree that the Colorado statutory definitions for the terms "real property" and "personal property" presently contained in article 1 of title 39, C.R.S., shall apply for purposes of this section of this Taxation Compact; provided however, the parties agree that regardless of how they are treated under Colorado law, mobile homes owned or acquired by the Tribe shall be considered personal property for purposes of this section of this Taxation Compact.
How Determined and Reported.
The amount of said voluntary payment will be computed based on the total sum of taxes that would have been collected for each parcel or interest listed on the County Assessor's Annual Compilation for all non-public school taxing districts. Together with the Tribe's voluntary payment, the Tribe shall submit a schedule setting forth the amount of voluntary payment being made for each parcel or interest contained on the County Assessor's Annual Compilation.
Previously Acquired Non-Trust Real Property.
The parties acknowledge that the County asserts a claim for seventy-seven thousand sixty-five dollars and eighty-four cents ($77,065.84) in taxes due on non-trust real property acquired by the Tribe from and previously taxable to non-Tribal parties for the period of time prior to the 1996 tax year (i.e., prior to and including December 31, 1995). The Tribe agrees to pay the County seventy-seven thousand sixty-five dollars and eighty-four cents ($77,065.84) in full satisfaction of any claims that the County may have against the Tribe relating to these claims. Additionally, prior to December 31, 1996, the Tribe agrees to provide to the County Assessor, in a format consistent with that described in Section 5.01, supra, a listing of real property interests owned by the Tribe, not held in trust, acquired by the Tribe prior to the effective date of this Taxation Compact for which the Tribe is entitled to exemption from taxation under the provisions of Section 3.03, supra.
Article Seven
Tribal Oil and Gas Operations; Reporting and Remittance for Non-Indian Parties.
Red Willow Production Company.
The parties acknowledge that the Tribe serves as the operator of oil, gas, and coalbed methane wells which produce minerals associated with both trust and non-trust mineral interests located within the Reservation. Such operations have been conducted by the Tribe under the name Red Willow Production Company, which is wholly owned by the Tribe. While in most instances such operations involve mineral leases issued by the Tribe pursuant to federal law, there are situations in which the underlying leases have been issued or could have been issued by non-Indian mineral interest holders. In either instance, however, non-operating interest holders typically include non-Indians who own working interests or overriding royalty interests in the applicable leases. The parties acknowledge that nothing in this Taxation Compact shall preclude the collection of lawful and applicable taxes and charges on property and interests owned by the Tribe and located outside the exterior boundaries of the Southern Ute Indian Reservation.
State and County Reporting Requirements.
Under existing State law, well operators are required to submit to State and County officials reports related to the conduct of well production activities and the disposition of produced substances. Such reports are utilized by the Colorado Oil and Gas Conservation Commission to monitor and regulate the development of oil, gas, and coalbed methane resources within the State. Additionally, such reports are available for use by the Colorado Department of Revenue and County officials to assess and collect taxes, including severance tax and ad valorem tax, from the actual holders of interests in minerals or from the beneficiaries of income derived from energy resource development. Based upon the reporting requirements imposed upon well operators, and based upon statutory provisions which require well operators to withhold and remit funds from production income to meet the tax liabilities of non-operating interest holders of such wells, compliance by well operators in submitting timely reports and remitting taxes withheld is integral to the effective operation of State tax laws with respect to non-operating interest holders.
Red Willow Reporting Responsibilities.
In order to assist the State and County in obtaining information needed for the effective monitoring and regulation of resource development, the accurate valuation of taxable interests of non-Indian interest holders on the Reservation, and the collection of taxes from parties lawfully subject to State and County taxes, the Tribe d/b/a Red Willow Production Company (or in whatever name the Tribe is doing business) agrees to remit reports and declarations involving energy production activities on the Reservation over which it serves as operator on the following basis:
Operational Reports. With respect to operational reports and filings, including, for example, applications for permits to drill and sundry notices, involving mineral operations conducted by Red Willow Production Company subject to federal supervision on lands within the Reservation, the Tribe hereby consents to provide or to cause the appropriate federal agencies to provide informational copies of documents filed by Red Willow with such federal agencies to the Colorado Oil and Gas Conservation Commission. This tribal consent is intended as a supplement to joint cooperative procedures already contained in the Memorandum of Understanding and Interagency Agreement between the Tribe and the Bureau of Land Management and the Bureau of Indian Affairs and the Bureau of Land Management, dated August 22, 1991, and in the Memorandum of Understanding between the Colorado Bureau of Land Management and the Colorado Oil and Gas Conservation Commission, dated August 22, 1991.
Severance Tax Reports and Withholding. The Tribe hereby agrees to submit to the executive director of the Colorado Department of Revenue an annual report related to energy impacts as otherwise required by section 39-29-110, C.R.S. With respect to wells operated by Red Willow located on the Reservation, the Tribe agrees to withhold from income it receives for the sale of production attributable to non-Indian interests such amounts otherwise required to be withheld on a quarterly basis pursuant to section 39-29-111, C.R.S., and to remit such withholding, together with forms for related reporting, to the Colorado Department of Revenue.
Ad Valorem Declarations. With respect to any leased lands that are producing or are capable of producing oil or gas on the assessment date of each year, which are operated by Red Willow on the Reservation, the Tribe shall file with the County Assessor in accordance with section 39-7-101, C.R.S., and section 39-5-107, C.R.S., a declaration of the oil, gas, or coalbed methane sold or transported from the premises, which declaration shall designate the Tribe's exempt share, if any, and such tax schedules normally filed by non-Indian operators designating such taxable personal property of non-operators or portions thereof over which Red Willow exercises control as operator. In preparing and filing any such declarations or schedules, the Tribe shall be entitled to list its own ownership share as exempt.