## IN THE SUPREME COURT OF TEXAS

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### No. 15-0969

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### R EEVES 

### C OUNTY 

### A PPRAISAL 

### D ISTRICT AND 

### L OVING 

### C OUNTY 

### A PPRAISAL 

### D ISTRICT 

### , P ETITIONERS

v. 

### M ID 

### C ON 

### C OMPRESSION 

### , L.L.C., R ESPONDENT

══════════════════════ ════════════════════ O N P ETITION FOR R EVIEW FROM THE C OURT OF A PPEALS FOR THE E IGHTH D ISTRICT OF T EXAS

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PER CURIAM MidCon Compression owns and leases out compre ssor stations used to deliver natural gas into pipelines. Some of these compressors are in use in Reeves and Lovi ng counties. In response to a 2012 amendment to the Tax Code that included leased heavy equipment in a statutory formula used to value heavy equipment held by dealer s for sale, MidCon bega n paying taxes on the compressors located in Reeves and Loving countie s to Ector and Gray counties, where MidCon contends it maintained yards from which the compressors in Reeves and Loving counties are leased. But Reeves and Loving coun ties continued to place the comp ressors on their appraisal rolls at full market value, arguing that their presence within the counties fixes taxable situs there. The respective appraisal-review boards sided with the countie s and MidCon sought judicial review. In the trial court, the countie s argued Tax Code sections 23.1241 and 23.1242—the provisions the legislature amended in 2012—are unconstitutional on their face and as applied2 because the statutory formula for valuing leased heavy equipment bears no relationship to any measure of market value as required by the Texa s Constitution. The counties al so argued that taxes on the compressors were due to Reeves and Loving counties, not Ector and Gray counties. Finally, they argued the compressors are not “heavy e quipment” under Tax Code section 23.1241(a)(6), and therefore do not fall under the challenged stat utory framework. The trial court sided with the counties on the first two issues but with MidCon on the third. Both parties appealed, but the counties dropped their argumen t that MidCon’s compressors are not “heavy equipment” under se ction 23.1242. The court of appeal s reversed the trial court’s determination that sections 23.1241 and 23.1242 are unconstitutional but affirmed its conclusion that the compressors’ taxable situses are Reeves and Loving counties rather than Ector and Gray counties. See 478 S.W.3d 804, 811–818 (Tex. App.—El Paso 2015). Both parties sought our review and this case was consolidated for brie fing with four other similar cases. On March 2, 2018, we issued an opinion in EXLP Leasing, LLC v. Galveston Central Appraisal District , 554 S.W.3d 572 (Tex. 2018). That opinion is largely dispositive of the issues presented in this petition for review.
In EXLP Leasing , we considered the same constitutional challenges considered by the court of appeals in this case and held that the Galves ton County appraisal district failed to rebut the presumed constitutionality of Tax Code sections 23.1241 and 23.1242. Specifically, we rejected the district’s argument that “for constitutional pu rposes, ‘value’ under article VIII, section 1(b) means the actual market value a willing buyer w ould pay a willing seller fo r the compressors at issue.” Id. at 576. Instead, we acknowledged th at it is the legislature’s province to set valuation for tax purposes so long as it does not act unreasonably, arbitrarily, or capriciously. Id. at 576–581.3 We also rejected the same argument made in this case that sections 23.1241 and 23.1242 violate the constitution’s equal-and-uniform provisi on found in article VIII, section 1(a). Id. at 580–81. The court of appeals in this case likewi se concluded that “the constitution does not prescribe a particular formula or standard for de termining the ‘market value’ of property.” 478 S.W.3d at 811. Noting that the method for valui ng leased heavy equipment in sections 23.1241 and 23.1242 is “neither novel nor unique,” the court of appeals considered it “eminently reasonable to require dealers of inventory held for lease or rent in the ordinary course of business to pay taxes only on inventory actually leased or rented.” Id. at 812–13. The court of appeals went further than we did by considering the reasonableness of the underlying statutory framework. Cf. EXLP Leasing , 554 S.W.3d at 580 (concluding we “need not consider” EXLP’s “vigorous defense of sections 23.1241 and 23.1242 as an e fficient and equitable statutory scheme” because “[t]he county made its stand on the idea that the constitution compels a market-value approach” and “offers no other reason why the statute is unconstitutional”). Nonetheless, the court of appeals’ holding that the appraisal districts failed to establis h sections 23.1241 and 23.1242 are unconstitutional on the basis that property must be taxed in proportion to its market value is consistent with our opinion
in EXLP Leasing . Similarly, its conclusion that the counties failed to esta blish that t hose provisions violate the constitution’s equal-and-uniform provis ion is consistent with our rejection of that argument in EXLP Leasing

. Id. at 580–81. On these issues, the c ourt of appeals’ judgment is affirmed. On the question of where the compressors at issue are properly taxe d, however, the court of appeals’ conclusion differs from ours in EXLP Leasing . We concluded that “sections 23.1241 and 23.1242, read together, reflect the legislature’s intent to fix the situs of dealer-held heavy4 equipment at the location where the dealer mainta ins its inventory rather than at the various locations where the equipment migh t otherwise by physically located.” Id. at 583. Accordingly, we held that Tax Code section 21.02, which cont ains default provisions for determining taxable situs, “does not control the taxable si tus of property cove red by section 23.1242.” Id. at 585. The court of appeals, however, concl uded that MidCon failed to rebut th e presumption that Reeves and Loving counties are the compressors’ taxabl e situses under secti on 21.02. 478 S.W.3d at 818. Because we held differently in EXLP Leasing , we reverse the court of appeals’ judgment on the issue and render judgment that th e taxable situs of MidCon’s comp ressors located in Reeves and Loving counties is controlled by Tax Code sections 23.1241 and 23.1242.
In EXLP Leasing , we further concluded that Washi ngton County was the correct taxable situs of the compressors at issue. We need not similarly decide, howev er, whether taxes were properly paid on the compressors at issue here in Ec tor and Gray countie s. Although MidCon argues it properly paid taxes on the compressors at issue in Ector and Gray counties, it only sought judgment from the trial court that its compressors are not taxable in Reev es and Loving counties. Because Midcon never affirmatively sought judgme nt on the question of where the compressors were properly taxable, whereas summary judgment was affirmativ ely sought on that question in EXLP Leasing , we need not and do not decide whet her MidCon properly paid taxes on the compressors at issue in Ector and Gray counties. For these reasons, and without hearing oral argument, see T EX

. R. A PP

. P. 59.1, we affirm the court of appeals’ judgment in part and reve rse in part, rendering judgment that sections 23.1241 and 23.1242 control the taxable situs of the compresso rs at issue in this ca se. Because Reeves and Loving counties raised no alternative argument in their second amended answers that situs was5 proper in their counties under those sections, inst ead urging the sole argument that sections 23.1241 and 23.1242 are unconstitutional, there is no basis to remand the case to determine whether taxable situs in Loving and Reeves counties is proper under the governing statutory provisions.

OPINION DELIVERED : November 16, 2018