JIM MA.rroX November 13, 1989 

Honorable Bobby Joe Mann 

Palo Pinto County Attorney 

Courthouse 

Palo Pinto, Texas 76072 

Opinion No. JM-1115 

Re: Whether the Water Commission has the authority to 

create a district whose boundaries exclude mineral 

estates located more than 300 

feet below the surface of the 

land and whether such mineral 

estates must be taxed 

(RQ-1457) 

Dear Mr. Mann: 

You inform us that in . . _ 

1980 the Texas Water Commission 

by written order granreo a petition authorizing the creation 

of a municipal utility district within Palo Pinto County 

designated %portsman‘s World Municipal Utility District.” 

The petition approved by the commission set forth the 

boundaries of the district, specifically excluding from the 

boundary description the mineral estates located below a 

depth of 300 feet under the surface area of the land 

comprising the district. Consequently, as a practical 

matter, all mineral interests within the surface boundaries 

of the district below a depth of 300 feet from the surface 

have been exempted from ad valorem taxation imposed by the 

district since the district's creation. 

Because of the requirement of article VIII of the Texas 

Constitution that all property, except that specifically 

exempted by the constitution, be taxed in any equal and 

uniform manner, you ask the following question: 

[A]re the mineral interests located under the 

boundaries of the Sportsman's World Municipal 

Utility District taxable for ad valorem taxation purposes by the Sportsman's World Municipal Utility District? 

YOU also ask: 

P. 5847 
Honorable Bobby Joe Mann - Page 2 (JM-1115) 

Does the Water Commission have the authority 

to create a district whose boundaries exclude 

a category of taxable property? 

We will address initially your second question. We 

answer it in the negative: the Texas Water Commission is 

without authority to approve a petition authorizing the 

creation of a municipal utility district that excludes from 

its boundaries a particular class of taxable property, 

specifically the mineral estates located below a depth of 

300 feet from the surface area of the land comprising the 

district. 

There can be no question that, absent the Water 

Commission order purporting to exclude from the boundaries 

of the district the mineral estates below a depth of 300 

feet under the surface of the land comprising the district, 

such mineral estates would be taxable by the district. See. 

u, Note, Ad Valom Tax&ion of Mineral Prooerty 21 

Baylor L. Rev. 46 (1969). The issue then is whether' the 

Water Commission has the authority to approve the creation 

of a district that excludes such a category of taxable 

property from the boundaries of the district. 

The Sportsman's World Municipal Utility District was 

created pursuant to section 59 of article XVI of the Texas 

Constitution and chapter 54 of the Water Code. Section 

54.013 of the code governs the composition of the district 

and provides: 

(a) A district may include the m in 

all or part of any county or counties 

including all or part of any cities and other 

public agencies. 

(b) The m composing a district need 

not be in one body, but may consist of 

senarate bodie of land separated by land 

which is not' included in the district. 

(Emphasis added.) 

Section 54.014 of the code provides that, in order to 

create a chapter 54 municipal utility district, a petition 

requesting creation must be filed with the Texas Water 

Commission [hereinafter the commission]. Section 54.015 of 

the code sets forth the contents of the petition and 

provides in pertinent part: 

The petition shall: 

p. 5848 
Honorable Bobby Joe Mann - Page 3 (JM-1115) 

(1) describe the of the proposed district bv metes and bounQs or bv lot 

itiyefFt 

if there is a recorded map 

survey of the area . . . . 

(Emphasis added.) 

Section 54.020 of the code requires that, after proper 

notice, the commission shall hold a hearing and Qhall 

examine the petition to ascertain its sufficiency.18 

Subsection (b) of section 54.020 provides that "[t]he commission shall have jurisdiction to determine all issues on 

the sufficiency of the petition and creation of the 

district." 

Section 54.021 of the code governs the granting or 

denial of the petition and provides in relevant part: 

(a) After the hearing of the petition if 

it is found that the petition conforms to the 

requirements of Section 54.015 of this code 

and that the project is feasible and 

practicable and is necessary and would be a 

benefit to the m to be included in the 

district, the commission shall so find by its 

order and grant the petition. 

(b) In determining if the project is 

feasible and practicable and if it * 

necessary and would be a benefit to the G 

included in the district, the commission 

shall consider: 

. . . . 

(3) whether or not the district and 

its system and subsequent development 

within the district will have an 

unreasonable effect on the following: 

(A) land elevation: 

(W subsidence; 

(C) groundwater level within 

the region: 

(D) recharge capability of a 

groundwater source: 

P. 5849 
Honorable Bobby Joe Mann - Page 4 (JM-1115) 

(El natural run-off rates and 

drainage; 

(P) water quality: and 

((3 total tax assessments on 

all land located within the district. 

(c) If the commission finds that not all 

of the u proposed to be included in the 

district will be benefited by the creation of 

the district, the commission shall so find 

and exclude all m which is not benefited 

from the proposed district and 

She Drooosed district s bodies accord- 

-. (Emphasis adde:.) 

Neither section 54.013 nor any other section of the 

code expressly authorizes the commission to approve a 

petition authorizing the creation of a district that 

excludes from its boundaries the mineral estate located 

below the surface of the land comprising the district. 

However, a brief submitted to us in connection with this 

request concludes that the code impliedly authorizes the 

creation of such a district. We summarize the argument as 

follows: 

Minerals in place are realty and, as such, 

are subject to ownership, severance, and 

;;d;; maer v. Stakeg, 294 S.W. 835 (Tex. 

(Tex. ' 

Dx s Co. v. Daua&&y 176 S.W. 

191:). 

717 

A grant or keservation of 

mineral interests by the fee owner effects a 

horizontal severance and creation of two 

separate and distinct estates: an estate in 

surface and an estate in mineral. 

m, 464 S.W.Zd 348 (Tex. 1971); 

Ref. Co. v. Noa, 443 S.W.2d 35 (Tex. 1968). 

Real estate ordinarily is taxed as a unit; 

yet, where there has been a severance by 

conveyance, exception, or reservation, so 

that one portion of the realty belongs to one 

person and other portions to others, each 

owner should pay taxes under proper assessment against him of the portion owned by him. 

The fact that a portion may consist of 

minerals or of a fractional interest therein 

makes no difference. -v. NJxa: 

State v. Downmgn, 134 S.W. 707 (Tex. Civ. 

p. 5850 
Honorable Bobby Joe Mann - Page 5 (JM-1115) 

APP. 191>1) ,u, 231 U.S. 353 (19i3). 

Because a grant or reservation of mineral 

estates effects a horizontal severance and 

creation of two separate estates, each of 

which is taxable separately, the petition 

seeking the creation of a chapter 54 

municipal utility district may be drawn in 

such a way as to exclude the mineral estate 

and reflect that horizontal severance. 

We disagree with this construction of the Water Code for two 

reasons. 

First, the severance of mineral interests by the 'fee 

owner creates two separate mtateg in land. When the 

severance is accomplished, each gstatg, that in the minerals 

in place, and that in the remainder of the land, may be a 

freehold, or an estate in fee simp1e.w aevs - Mexia * co. 

v. Gammon, 254 S.W. 296, 299 (Tex. 1923) (emphasis added). 

The estate of a person is not the land itself, but the 

status or relation that the law permits that person to bear 

toward the land. &&&& v. Milti, 28 S.W. 940 (Tex. 

1894). The term "estate" in law means the degree, quantity, 

nature, and extent of one88 interest or ownership in land or 

other tenements. 

S.W.Zd 506 (Tex. 1962): E ' (T::: 

Comm'n App. 1931, judgm*t adopted). It may designate the 

quantum, extent, or duration of one's ownership of a 

particular item of property. Gibbs, i%zwr.a. 

Different persons may, at the same time, bear different 

relations, each constituting an estate in the land. Bouldin 

Y. Mi.ue?c I-. 

Sections 54.013 and 54.015 of the Water Code do not 

provide that a municipal utility district comprise westates" 

in land: rather they provide that a district comprise "area" 

or "land" whose nboundariesVO are described by "metes and 

bounds or by lot and block number." The word "land" 

ordinarily includes a mineral estate, even when the minerals 

are severed constructively from the surface. no110 v 

own Heirs v. What&y 

Tennantv. 

131 S.W.Zd 89 (Tex. 1::9;7 

110 S.W.Zd 53 (Tex. 1937); 

eld v. Hoaq, 77 S.W.Zd 1021 (Tex. 1934). 

Second, the petition to establish a district must 

describe the wboundariesw by "metes and bounds or by lot and 

block number." Water Code f 54.015. Boundaries mark out 

the limits of the territory over which the district has 

jurisdiction. m 2E. McQuillan, The Law of Municipal 

p. 5851 
Honorable Bobby Joe Mann - Page 6 (JM-1115) 

Corporations f 7.02, at 359 (3d ad. rev. 1988). Boundaries 

ordinarily are limits established laterally on the surface 

of the land, and do not extend vertically to mark a 

district's limits underground or in the airspace. $@= Doria 

y. Suchowolsu, 531 S.W.Zd 360 (Tex. Civ. App. - San Antonio 

1975, writ ref'd n.r.e.) ("boundary by aquiescence" is 

generally a line established by a fence): 11 C.J.S. 

Boundariee 9 1, at 538: & &I.G. Invesats v. E.P A, 

;;:,",,f:."d 1 (Ill. 1988) (boundaries generally involv; 

not vertical measurement, but exception is made for 

solid haste fill, which has boundaries expressed in 

altitude). 

%etes and bounds" refers to a method of measurement by 

distances and angles from designated landmarks in relation 

to adjoining properties. B. Garner, Dictionary of Modern 

Legal Usage 359 (1987); set 11 C.J.S. Boundaries 5 4, at 542 

(*metes" includes the exact quantity of land in square feet, 

rods, or acres). Metes and bounds provide a two dimensional 

measurement of land. A description of land by metes and 

bounds indicates that its boundaries are on the surface, and 

that the land is not limited by boundaries at a certain 

subsurface depth or distance above the ground. 

Thus, any district whose creation is approved by the 

Water Commission consists of land marked out by boundaries 

on the surface of the earth. The commission is not 

authorized by the code to approve boundaries that limit the 

district's jurisdiction vertically. Accordingly, we answer 

your second question in the negative: The Water Commission 

may not grant a petition seeking the creation of a chapter 

54 municipal utility district whoae boundaries exclude the 

mineral estate or a portion thereof below the surface of the 

land comprising the district. 

We note, however, that after the commission approves 

the petition seeking creation of the district, but before 

the district's governing board issues the district's first 

series of bonds, the code requires the governing body of the 

district to exclude "land or other property" from the 

boundaries of the district under certain circumstances. 

Section 54.701 provides in pertinent part: 

(a) Before the board issues the first 

series of district bonds payable in whole or 

in part from taxes, the board may on its own 

motion call a hearing on the question of the 

exclusion of J&3.@ from the district under the 

provisions of Sections 54.702-54.707 of this 

p. 5852 
Honorable Bobby Joe Mann - Page 7 (JM-1115) 

code, if the exclusions are practicable, 

just, or desirable. 

(b) The board must call a hearing on the 

exclusion of w or otue*v from thg 

er in the district 

filed with the secretary of the board before 

the district issues its first series of bonds 

payable in whole or in part from taxes. 

(Emphasis added.) 

Section 54.704 of the code governs the petition for 

exclusion from the district of "land or other property" and 

provides in relevant part: 

(a) A petition for exclusion of land must 

accurately describe by metes and bounds or 

lot and block number the land to be excluded. 

A petition for exclusion of other property 

must describe the property to be excluded. 

Thus, it appears that the class of property that may be 

excluded from the boundaries of the district by its 

governing body m the initial petition to create the 

district has been approved by the Water Commission is 

greater than that which the commission may consider when 

deciding whether to approve the initial petition. No case 

decided under chapter 54 of the Water Code, which governs 

municipal utility districts, has construed the phrase "land 

or other propertyH that is set forth in section 54.701. 

However, a case decided under chapter 51 of the code, which 

governs water control and improvement districts and contains 

a section virtually identical to section 

so.1 

54.701, has done 

1. The 1925 codification of what later would become 

chapter 51 of the Water Code provided that the district 

comprise "land' and provided that "land" may be excluded 

from the boundaries after its creation under certain 

circumstances. No mention was made of "other property" or 

"interests in land." Acts 1925, 39th Leg., ch. 25, 5 76, at 

106. Two years later, section 76 of chapter 25 was amended 

to provide that notice for exclusion of "land" from the 

district must be afforded "to the owner or owners of the 

(Footnote Continued) 

p. 5853 
Honorable Bobby Joe Mann - Page B (JM-1115) 

W-s Countv Water Control 6 UggrovemeUst. No 

, 304 S.W.Zd 281 (Tex. Civ. App - El Paso 1957,' 

writ ref'd n.r.e.), the court of appeals upheld a trial 

(Footnote Continued) 

land and all others in anywise interested." Acts 1927, 40th 

Leg., 1st C.S., ch. 107, 5 9, at 501. The "or other 

property" language was included for the first time in a 1929 

amendment to section 76: 

After a district has been organized, 

preliminary surveys have been completed, the 

district does adopt plans for the 

construction of a plant and improvements, and 

before the district calls an election for the 

authorization of construction bonds, there 

rt be any exc::e- ::c"""""t"""""i are 

practicable, just or desirable, from the 

district by means and upon conditions as 

follows . . . . 

Acts 1929, 41st Leg., ch. 280, 8 8, at 585. Such language 

was retained in the 1957 amendment to then article 7680-76, 

V.T.C.S. Acts 1957, 55th Leg., ch. 324, g 1, at 787. No 

legislative history exists indicating what the legislature 

meant by the phrase. 

The Water Code was enacted in 1971, codifying the 

general and permanent statutes relating to water rights, 

water development, water quality control, river compacts, 

and general law districts. Acts 1971, 62d Leg., ch. 58, at 

110. The code was extensively amended by other 1971 

amendments, including the addition of chapter 54, which 

authorizes the creation of municipal utility districts. Id. 

ch. 84, at 774. Title 4 of the code sets forth those code 

provisions governing the creation and operation of 14 

general law districts. Chapters 50 (containing provisions 

generally applicable to general law districts), .52 

(governing underground water conservation districts), 58 

(governing irrigation districts), and 65 (governing special 

utility districts), in addition to chapters 51 and 54, each 

contain sections regarding the exclusion of "land or other 

property" from the boundaries of the districts after the 

petition seeking the creation of the district has been 

granted. No case has construed the phrase under any of 

(Footnote Continued) 

p. 5854 
Honorable Bobby Joe Mann - Page 9 (JM-1115) 

court judgment excluding certain lands owned by one party 

(who presumably owned both the surface and the subsurface 

estates) and certain oil and gas leases owned by oil and gas 

companies from the boundaries of a water control and 

improvement district. The district comprised 140 square 

miles of territory, SO percent of which was submerged by the 

waters of two bays. The land that one party sought to be 

excluded comprised 8,400 acres of Uustang Island. The oil 

leases of the oil and gas companies were located under lands 

that were submerged by the bays. The plans of the proposed 

district did not call for, nor was any expenditure of 

district funds shown for, providing service to any other 

area other than the town of Port Aransas and the area 

immediately adjacent thereto. Specifically, the plans did 

not contain any provision for service either to the lands 

sought to be excluded or to the submerged oil and gas 

leases. 

In affirming the trial court judgment excluding both 

the land and the oil and gas leases, the court of appeals 

stated: 

The only two issues submitted to the jury 

by the court were whether. the lands of 

appellee Sam E. Wilson, Jr. would be 

benefited by .the proposed improvements, and 

as to whether the oil and gas leases of the 

appellee oil companies would be benefited by 

the proposed improvements. The jury answered 

both questions in the negative. Appellant 

objected to said issues because they were 

immaterial, and because there was 

evidence, and insufficient evidence, :: 

support the jury's findings to said issues. 

We overrule these points. There was ample 

evidence to support the findings of the jury. 

The question of benefit to the lands involved 

is material, as is provided in the above 

quoted statute. 

(Footnote Continued) 

these chapters, except for pueces County Water Control & 

ist. No. 4 v. Wilsqn, 304 S.W.Zd 281 (Tex. Civ. 

APP. - El Paso 1957, writ ref'd n.r.e.). 

p. 5855 
Honorable Bobby Joe Mann - Page 10 (JM-1115) 

Ig, at 287: ~98 Attorney General Opinion H-881 (1976) (sets 

forth background of law enacted by legislature granting 

Corpus Christi certain submerged lands in Corpus Christi Bay 

to use as public beach). 

Thus, under chapter 51 of the Water Code, mineral 

estates apparently can be excluded under subchapter 0 of 

chapter 51 of the code. There is no authority, however, for 

excluding such estates from the boundaries set forth in the 

initial petition seeking the creation of the district that 

must be passed on by the Water Commission. Analogously, we 

assume that a court, if presented with a question of 

exclusion of mineral estates under chapter 54 of the code, 

would conclude that section 54.701 likewise authorized such 

an exclusion under the phrase "land or other property." 

See. e.a,, 59 Tex. Jur. 3d m SS l-4 (V1prope*yt' is a 

broad term, referring not to a particular material object 

but to the right and interest or domination rightfully. 

obtained over such object, with the unrestricted right to 

its use, enjoyment, and disposition, and includes not only 

that which is perceptible to the senses but also that which 

is intangible). We turn now to your first question. 

You ask: 

Are the mineral estates located under the 

boundaries of the Sportsman's World Municipal 

Utility District taxable for ad valorem tax 

purposes by the Sportsman's World Municipal 

Utility District? 

Section 21.01 of the Tax Code provides that "[r]eal 

property is taxable by a taxing unit u located in the unit 

wJanuarv (emphasis added).2 Thus real property that is 

not located within a taxing unit is not taxable by that 

taxing unit. Mineral interests are interests in land and 

2. Section 11, article VIII, of the Texas 

Constitution sets forth the general rule governing situs of 

property for purposes of taxation and provides in relevant 

pa*: 

All property, whether owned by persons or 

corporations shall be assessed for taxation, 

and the taxes paid in the county where 

situated . . . . 

p. 5856 
Honorable Bobby Joe Mann - Page 11 (JM-1115) 

are taxable in the taxing unit where the land is located. 

, 165 

S.W.Zd 645 (Tex. 1943); m Countv v. Mid-w Oil & 

Gas Co<, 254 S.W. 290 (Tex. 1923). Real property that is 

omitted from the appraisal roll of a district is required to 

be added to the roll and back appraised pursuant to section 

25.21 of the Tax Code. In this instance, however, we are 

unable to answer whether such excluded mineral interests 

should be back appraised. 

We do not have sufficient facts before us to determine 

whether the initial petition proposing the creation of the 

district is fatally flawed because of the failure to include 

owners of the mineral estates. Section 54.014 of the Water 

Code sets forth the requirements for the petition and 

provides: 

When it is proposed to create a district, 

a petition requesting creation shall be filed 

with the commission. The petition shall be 

signed by a majority in value of the holders 

of title of the land within the proposed 

district, as indicated by the county tax 

rolls. If there are more than 50 persons 

holding title to the land in the proposed 

district, as indicated by the county tax 

rolls, the petition is sufficient if it is 

signed by 50 holders of title to the land. 

We do not have sufficient facts before us to determine 

either whether the petition was signed by a majority in 

value of the holders of title to the land when the value of 

the mineral estates is added to the value of the surface 

estates or whether there are more than 50 persons holding 

title to the land in the district when the owners of mineral 

estates are added. Nor are we empowered to make such 

findings of fact. 

In the matter of the creation and organization of 

public and quasi-public corporations, there must be 

substantial compliance with the conditions precedent 

required by statut;;xa~l;;gCrutc~, 578 S.W.Zd 438 

I writ ref‘d n.r.e.); State 

eside vim 329 

S.W.Zd 245 (Tex. Civ. App. - Fort Worth 1959, writ r;fld). 

An irregularity, if harmless, in the creation of a municipal 

corporation will not work an ouster under quo warranto. 

We-s Countv ater Control & Imvrovement Dist. No. 4 

270 S.W.Zd 672 (Tex. Civ. App. - Sk 

p. 5857 
Honorable Bobby Joe Mann - Page 12 (JM-1115) 

Antonio 1954, writ ref'd n.r.e.); State ex rel. Miller vr 

Troell, 207 S.W. 610 (Tex. Civ. App. - San Antonio 1918, 

writ ref'd). In an instance in which the irregularity is 

deemed sufficiently serious, a proposed district has been 

declared to be without legal existence. fitv of Cornu 

288 S.W.Zd 836 (Tex. Civ. App. - Sa: 

writ ref'd) 

district when' relevant 

(court invalidated proposed 

statute required petition to be 

signed by "majority in number of the holders of title to t& 

J&p& [within the proposed district] and the owners of a 

majority in value of the lands ther& II and the owners of 

the mineral estates were not considered in determining the 

sufficiency of the petition: under the facts presented, 

court found that less than a majority of landowners signed 

No. 3 v. State, 73 S.W.Zd 1101 (Tex. Civ. App. - Texarkana 

1934, writ dism'd) (irregularities in creation of levee 

district would make district bonds voidable, not void). 

Moreover, subsection (b) of section 54.701 of the code 

provides: 

The [governing] board [of the district] 

must call a hearing on the exclusion of land 

or other property from the district on the 

wrA::enirtition of any landowner or property 

the district filed with the 

secretary of the board before the time the 

first election on the question of the 

issuance of bonds payable in whole or in part 

from taxes is called. 

The failure to provide for such a hearing amounts to a 

denial of due process. 

(Tex. 1927); State ex rel. Ma v. BaU 

(Tex. 1927). We do not have sufficient facis before us to 

determine, nor are we empowered to so determine, whether 

such notice was, in fact, afforded. 

We cannot answer your first question or other questions 

about the possible consequences of our answer to your second 

question. The ultimate resolution of such questions would 

require us to make findings of fact, which we are not 

empowered to make, and to evaluate the interests of various 

parties who have relied on the boundaries of the district 

established by the commission. &= WallinTexas , 348 S.W.Zd 532 (Tex. 1961); b Sal18 

p. 5858 
Honorable Bobby Joe Mann - Page 13 (JM-1115) 

OVement Dist. NO. 1 v. Gw 40 s.w.zd 892 

(Tex. Civ. App. - San Antonio 1931, writ ref8& (when it is 

claimed that a statute was not followed in establishing the 

territorial limits of a special district as then 

constituted, matter can be raised only by the state in a guo 

warrant0 proceeding). 

SUMMARX 

Chapter 54 of the Water Code does not 

authorize the Texas Water Commission to 

permit the creation of a municipal utility 

district that exc,ludes from its boundaries 

the mineral estates located below a depth of 

300 feet under the surface of the land 

comprising the district. The code does 

authorize the board of the district to 

exclude such property after the Water 

Commission has approved the petition seeking 

the creation of the district. We are unable 

to answer whether such mineral interests, 

which were heretofore improperly excluded 

from the district, should be added to the 

district*s appraisal roll and back appraised 

pursuant to section 35.21 of the Tax Code, 

because we are given insufficient facts to 

determine the validity of the creation of the 

district, and we are not empowered to 

determine such facts. The filing of an 

information in the nature of guo warrant0 is 

the proper method for resolving such a 

matter, rather than the opinion process. 

JIM MATTOX 

Attorney General of Texas 

WARYKELLER 

First Assistant Attorney General 

LOUMCCREARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STBARIBY 

Special Assistant Attorney General 

p. 5859 
Honorable Bobby Joe Mann - Page 14 (JM-1115) 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Jim Moellinger 

Assistant Attorney General 

P. 5860