I N T H E SUPR EM E C O UR T O F M I SS I SS I PPI NO. 2 0 1 1 - CA- 0 0 7 1 2 - S CT J ONESCO UNT Y S CHOOL DI S T RICT AN D J ONES C OUN TY S CHOO L BOAR D
v. M ISS ISS IP P I D EP A R T M EN T O F R E V EN U E f/k /a M I S S I S S I P P I S T AT E T AX COM M I S S ION; M I S S I S S I PP I S TAT E OI L & GASBOARD; BEAN RESO U RC ES, I N C. ; D EN

BU RY RESO U RC ES, I N C .; A N D V EN T U R E O I L & G A S , I N C . AN D M ISS ISS IP P I D EP A R T M EN T O F R E V EN U E f/k /a M I S S I S S I P P I S T AT E T AX COM M I S S ION
v. J ONES C OUN TY S CHOO L DI S TRICT; J

ONES CO U N TY SCH O O L B OAR D ; BE AN RESO U RC ES, I NC. ; DENBURY RES OURCES , I NC. ; VENTURE OI L & GAS

, I NC . ; AN D T HE S EC RE T AR Y OF S T A T E O F T H E S T A T E O F M ISS ISS IP P I AN D T HE S EC RE T AR Y OF S T AT E O F T HE S T AT E O F M ISS ISS IP P I
v. M ISS ISS IP P I D EP A R T M EN T O F R E V EN U E f/k /a M I S S I S S I P P I S T AT E T AX COM M I S S ION AN D

### 2

BEAN RES OURCES

, I NC. ; DENBURY RESO U RC ES, I N C. ; AN D VEN TU

RE O I L & G AS, I N C . v. M ISS ISS IP P I D EP A R T M EN T O F R E V EN U E f/k /a M I S S I S S I P P I S T AT E T AX COM M I S S ION A ND M I S S I S S I PP I S TAT E OI L & GASBOARD
D A T E O F JU D G M E N T : 05/ 02/ 2011 TRI AL J UDG E: HON
. F RANKLI N C. M CKENZI E, J R. COURT F ROM W HI CH APP EAL ED: J ONES COUNTY CHAN CER Y COURT A TTO RN EY S FO R A PPELL A N TS: TER RY L. CA V ES J ER RY D EA N SH A RP W I LL I AM GARNER CHENE Y, J R. OF F I CE OF T HE AT T OR NE Y GE NE RA L B Y : R O G E R G O O G E , J R . N A N CY M O RSE PA RK ES ATTO RN EYS FOR A PP ELLEES : J AM ES L. POW ELL BR I D G ETT E TR EN ETT E TH O M A S STEPH A N I E V . RO G ER S HOW ARD O. LE ACH J OHN J EF F REY T ROTT ER GLE NN G ATE S TAYLOR C. TE D SANDERS ON, J R. NA TUR E OF THE C ASE: CI VI L - STATE BO AR DS A ND AG ENC I ES DI S P OSI TI ON: AFF I RM ED I N PART ; REVE RS ED I N PART A N D R E M A N D E D - 03/ 07/ 2013 M OT I ON F OR RE HE AR I NG F I L E D: M ANDAT E I S S UE D: EN BA NC. PI ERCE, J UST I CE, FOR TH E COU RT: ¶ 1
. T h is c a se c o n c e rn s th re e m a in iss u e s. T h e fi rs t is s u e is w h e th e r a sc h o o l d istric t is l i abl e f oroi l a nd ga s s e ve r a nc e t a xe s on i t s r oy a l ty i nt e r e s t s de r i ve d f r om oi l a nd ga s pr oduct i on on s i xt eenth- s ect i on l and. T he cha ncel l orrul ed thati ti s not . H e f ound t hat

### 3

s i xt eenth- s ect i on l ands ar e h el d i n trus tf orthe bene f

i tof l ocal t ow ns hi p s chool s and that paymentof

s ever ance t axes di vert s m oney f r om the purpos es of

thattrus t . T he se cond i s s ue i s w hetherthe s t atut e of l i m i t at i on s res tr i ct s the t i m e per i od i n w hi ch a s chool di s tr i ctcan
se e k a re fu n d o f se v e ra n c e tax e s th a t ith a d p a id e rro n e o u sly . T h e c h a n c e llo r ru led th a t a three -ye ar statute o f l im it ati o n s ap p li ed to an y refu n d c laim s. T h e fina l i ssu e is w h ethe r a
s chool di s tr i cti s l i abl e f ora dm i ni s tr at i ve expens e t axes on i t s r oyal ty i nt er es t s der i ved f r om
o i l a n d g a s p r o d u c t i o n o n s i x t e e n th
- s e c t i o n l a n d
. Th e c h a n c e l l o rru l e d th a ti ti s . He
c h a ra c ter ize d th e se a ss e ss m e n ts a s fe e s, n o t ta x e s, a n d re a so n e d th a t tru ste e s a re a llo w e d to p a y re a s o n a b le e x p e n s e s a s s o c ia te d w ith a d m in is te ri n g tru s t p ro p e rt y . ¶ 2
. T h is C o u rt fin d s th a t th e ju d g m e n t sh o u ld b e a ffirm e d in p a rt a n d re v e rs e d in p a rt. Fi r s t , w e ac know l edge thats chool di s tr i ct s a r e notl i abl e f oroi l and gas s ever ance t axes on sixteen th-sec ti o n roy alty intere sts , b u t fo r d iffe re n t re a so n s th a n th o se c ited b y th e c h an ce ll o r. School di s tr i ct s , as pol i t i cal s ubdi vi s i ons of the s t at e, a r e noti ncl uded w i thi n the def i ni t i on of “per s ons ” made s ubj ectt o thes e t axes . Second, pur s uantt o A r t i cl e 4, Sect i on 104 of the M i s s i s s i ppi C ons t i tut i on, s t atut es of l i m i t at i on i n ci vi l caus es do notrun aga i ns tt he s t at e or i t s s ubdi vi s i ons . T he cha ncery court , how ever , s houl d make a de t erm i nat i on a s t o w hether th e d o c trin e s o f w a iv e r a n d /o r e sto p p e l ap p ly in th is c a se . F in a lly , sc h o o l d istric ts a re liab le fo r a d m in istra tiv e e x p e n se tax e s o n six tee n th -se c tio n ro y a lty in ter e sts . T h e se a ss e ss m e n ts
ar e “f ees , ” not“t axes ”; the L egis l at ure ha s expr es s l y m ade the s t at e and i t s s ubdi vi s i ons
s ubj ectt o the s e f

e e s ; a nd no c on s t i tut i on a l pr ov i s i on orothe rl a w i s vi ol a t e d b y r e qu i r i ng
s c h o o l d is tr ic ts to p a y th e m . FACTS

### In 2009, as thi s l itigati on was pending, the Leg is lature e liminat ed the Mi ss is sippi 1 

### StateTax Commi ss ion and cr eate d theMis si ss ippiDepartme nt of Reve nue and the Mississip pi B oardof T ax App eals in its stead . 20 09 Miss. L aws 1 22 8-1 37 9; se eMis s. Code Ann. § 27- 3-1 ( Rev. 2010). 4 ¶ 3
. T h e Jo n e s C o u n ty S c h o o l B o a rd , w h ic h g o v e rn s th e Jo n e s C o u n ty S c h o o l D istric t, l eas ed s i xt eenth- s ect i on pr operty t o V entur e O i l & G as , I nc. , foroi l , gas , and mi ner al expl or at i on. T he School D i s tr i ctr es erved a one- ei ghth r oyal ty i nt er es t . Fr om N ovember1, 1997, t o Sept ember30, 2006, V entur e w i thhel d the School D i s tr i ct ’ s pr opor t i onat e s har e of oil and gas severance tax es from the S cho ol D i stri ct ’s royal ty int eres tand rem i t t ed those tax e s o n b e h a lf o f th e S c h o o l D istric t. ¶4. I n 2006, V entur e and the School D i s tr i ct l earned of thr ee A t t orney G ener al opi ni ons t ha th a d c on c l ud e d tha ts c ho ol d i s tr i c t s ’ r oy a l ty i nt e r e s t s f r om oi l a nd g a s p r od uc t i on on
s i xt eenth- s ect i on l ands ar e nots ubj ectt o any s ever ance t ax. T hese opini on s ar e di s cus s ed i nfr a i n I s s ue I . B . 2. B as ed on thos e opi ni ons , V entur e and the School D i s tr i ctr eques t ed a ref un d o f $248 , 27 7 fr om the M i ssi ssi pp i D epart m ent of R even ue. M on ths l at er, they al so

1 request ed a r efund fr om the M i ssi ssi pp i St at e O i l and G as B oard of adm i nis trat i ve-exp ense taxe s tha t V en ture h ad p aid to the O il an d G as B o ard o n the S ch o o l D istri ct’s be h alf. ¶5. T he D epar t m ent o f R evenue deni ed V entur e’ s and t he S chool D i s tr i ct ’ s r eques tf or
a s ever ance - t ax r ef

und. I tfound thatV entur e w as “l i abl e f ort he f ul l am ountof the s ever ance t ax, ” and i tr ej ect ed the ar gum entt hatno s ever ance tax w as ow ed j us tbeca us e oi l and gas pr oduct i on had occ urr ed on s t at e- ow ned l and. T her eaf t er , V entur e cont i nued t o w i thhol d t he School D i s tri ct ’s p ort i on of the s ever ance t axes , buti tdi d notr emi tthos e t axes t o t he D e p a rt m e n t o f R e v e n u e .

### 5

¶6. T he O i l and G as B oard, in con t r as t , i ni t i al l y gr ant ed a mai nt enanc e- t ax r ef und of $8, 338. B ut , m or e than one yearl at er , the O i l and G as B oar d change d i t s s t ance . I tt ook t he p o sitio n th a t sc h o o l d istric ts a re re q u ire d to p a y a d m in istra tiv e -e x p e n se tax e s o n ro y a lty i nter est s deri ved fr om oil and gas prod ucti on on si xteenth-sect i on l and s. ¶7. A ggr i eved by the D epart m entof R evenue ’ s deci s i on, V entur e and the School D i s tr i ct f i l ed s ui ti n t he C hance r y C our tof the Second J udi ci al D i s tr i ctof J ones C ounty. V entur e and the School D i s tr i ctr eques t ed thatthe D epart m entof R evenue be or der ed t o r ef und s ever ance t axes pai d f

r om N ovember1, 1997, to Sept ember30, 2006, and s ought“t empora r y, pr el i m i nary, and perm anenti nj unct i ve and decl ar at ory re l i ef ” agai ns tfurtheri m pos i t i on of
a n y s e v e ra n c e ta x e s . ¶8. J us t bef

or e f i l i ng s ui t , the School D i s tr i ct had w r i t t en a l et t er t o the D epart m entof R evenue and t o the O i l and G as B oar d. I n i t s l ett ert o the D epart m entof R evenue , the S c h o o l D is tr ic t r e q u e s te d a d d itio n a l r e fu n d s fo r s e v e ra n c e ta x e s th a t E a g le O il a n d G a s C o .; D enbury E ner gy Ser vi ces , I nc. ; and B ean Resour ces , I nc. , had pai d on i t s be hal f
. T he t ot al
r ef und r eques texce eded $2 m i l l i on. T he D epart m entof R evenue r es ponded that , acc or di ng to it s r e c o rd s , th e S c h o o l D is tr ic t its e lf h a d n e v e r f

ile d a n “ O il a n d G a s S e v e ra n c e ta x re tu rn .” T hus , i tde ni ed the School D i s tr i ct ’ s r ef und r eques tbe caus e “onl y [ a] t axpayer can see k
r ef und of an overpaymentof

t axes . ” In i t s l ett ert o t he O i l and G as B oar d, the School D i s tr i ct li k ew ise sou g h t a refu n d for m ainten an ce t ax es tha t E ag le an d D en b u ry h ad pa id o n its b eh alf. ¶9
. M o re th an tw o m o n ths after it s init ial su it , the S ch o o l D istri ct fi led a se co n d su it
. It and the School Boar d f

i l ed s ui ta gai ns tV entur e, Eagl e, D enbury, and B ean ( col l ect i vel y “the

### The O rde r on Motion f or Inte rve nti on st at es theAtt orne y Gene ra l a uthoriz ed the 2 

### Secretaryof S tate to interven e in th is case. SeeMis s. Code Ann. § 7-5- 1 (Re v. 2002)
. 6 O i l C om pani es ”)
. T he D epart m entof R evenue and the O i l and G as B oar d l at erw er e adde d
as de f endant s , a nd the Secr et ary of St at e w as al l ow ed t o i nt ervene a s a party pl ai nt i f f
. T he 2 School D i s tr i ct , the School B oar d, and the Secr et ary of St at e ( col l ect i vel y “the Pl ai nt i f f s ”)
r eques t ed: ( 1) an acc ount i ng of a l l s ever ance and admi ni s tr at i ve- expens e t axes thathad bee n pai d t o the D epartm entof Revenue and t o the O i l and G as B oar d; ( 2) a dec l ar at ory j udgm ent thatthe School D i s tr i ctw as notobl i gat ed t o pa y s ever ance oradmi ni s tr at i ve- expens e t axes
o n ro y alt ies d erive d fro m o il a n d g as p rod u cti o n o n sixtee n th-sec ti o n lan d ; (3) a p reli m inary i nj unct i on t o pr ohi bi tthe O i l C om pan i es fr om r emi t t i ng any f utur e s ever ance or admi ni s tr a t i ve - e xp e ns e t a x pa ymen t s t o the Depa r t mento f Rev e nu e o rt o the Oi l a nd G as B oar d on the School D i s tr i ct ’ s behal f ; and (4) an or derdi r ect i ng the D epart m entof R evenue and the O i l a nd G as B oar d t o r ef und any s ever ance oradmi ni s tr at i ve expe ns e t axes thatthe O i l C om pani es had pai d on the School D i s tr i ct ’ s behal f
. T he Pl ai nt i f

f s f ur theras s ert ed that the O i l C om pani es had br eac hed a f i duci ary duty by w r ongf ul l y payi ng s ever ance and ad m inistrati v e-e x p en se tax es o n the S ch o o l D istri ct’s be h alf. ¶1 0. T he O i l C om pani es , i n r e s po ns e , a s s e r t e d c r os s - c l a i ms a ga i ns tthe D e pa r t m ent of R evenue and the O i l and G as B oar d t o r ecove rany s eve r a nc e oradmi ni s tr at i ve- expens e t axes th a t th e y h a d p a id e rr o n e o u s ly . B e a n a n d V e n tu re , fu rth e rm o re , as k e d th e c h a n c e llo r to enj oin t he D epart m entof R evenue and the O i l and G as B oar d f r om att empt i ng t o col l ect
severance an d ad m i nis trat i ve-exp ense t axes on the S cho ol D i stri ct ’s royal ty int eres t s. ¶ 1 1
. T h e tw o su its w e re c o n so lid a ted , an d a ll th e p a rties re q u e ste d su m m a ry ju d g m e n t.

### In i ts motion f or s umm ar

y judgm ent , Ea glein cluded an af fi davi t by i ts vic e 3 

### pre si dent , who repr es ent ed that Eagl e di d not hol d l ea se s on s ixt ee nth- se ction lands in Jone s County. None of thepartie s dispute d this ass erti on. Thus, the c hanc el lor grante d summary jud gment for E agle an d d ismissed all claims against it w ith p rejud ice. Eag le is no t a party to th is app eal. 7 ¶12. A f

t erconduct i ng a hea r i ng, the chanc el l ori s s ued hi s fi ndi ngs of f actand concl us i ons
o f la w . T h e c h a n c e llo r firs t fo u n d th a t th e S tate h o ld s title to six tee n th -se c tio n p ro p e rty in trus tf orthe bene f

i tof s chool s w i thi n the l ocal t ow ns hi p; thatal l r evenue der i ved f r om
s i xt eenth- s ect i on pr operty m us tbe us ed exc l us i vel y f orthe bene f

i tof thos e s chool s ; and that t he D epart m entof

R evenue had mi s appr opr i at ed trus tf unds by col l ect i ng s ever ance t axes on the School D i s tr i ct ’ s roya l ty i nt er es t s and di s tr i but i ng t hos e moneys t o gener al
- r evenue f unds and t o others chool di s tr i ct s . A ccor di ngl y, the cha ncel l or re ver s ed and r ender ed the D epart m entof

R evenue ’ s deni al of

V entur e’ s and t he School D i s tr i ct ’ s r eques tf ora r ef und. T he chanc el l orf

ur there nj oi ned the D epart m entof Revenue f

r om l evyi ng a nd col l ect i ng
s ever ance t axes f

r om the O i l C om pani es on the School D i s tr i ct ’ s r oyal ty i nt er es t s . Second, 3 the ch ancell or l abeled t he assessm ents l evied by the O i l and G as B o ard as f ees, no tt axes. T he cha ncel l ors t at ed thatthes e as s es s m ent s fund the r egul at ory and enf or cementf

unct i ons
o f th e O il an d G as B o ard an d that th e P lai n ti ffs ha d b en efitted fro m the O il an d G as B o ard ’s
se rv ice s. T h e c h a n c e llo r r e a so n e d th a t su c h fe e s w e re re a so n a b le e x p e n se s a ss o c iate d w ith the admi ni s tr at i on of

trus tpr operty, a nd ther ef or e, no f i duci ary dut i es ha d b een v i ol at ed. A c c o rd in g ly , th e c h an ce ll o r gra n ted th e O il an d G a s B o a rd ’s M o tio n fo r S u m m a ry Ju d g m e n t. ¶13. A f

t erthe chanc el l orha d i s s ued hi s f i ndi ngs of

f actand conc l us i ons of

l aw , the par t i es ent er ed an a gr eed or derf orthe cha ncel l ort o amend hi s f i ndi ngs of

f actand conc l us i ons of

### SeeMis s. R. Civ. P. 54(b)
. 4 

### 8 l aw t o addr es s w hetherany or al l of the School D i s tr i ct ’ s r ef und cl ai m s w er e barr ed by the statu te of li m it ati o n s o r th e d o ctri n es o f l ac h es, estop p el, o r w aive r. ¶14. Fol l ow i ng the part i es ’ agr eed or der , the chanc el l or ent er ed s uppl ement al f i ndi ngs of f actand conc l us i ons of

l aw . H e f

ound thatthe thr ee- years t atut e of l i m i t at i ons underSect i on 27- 73- 5 of

the M i s s i s s i ppi C ode al l ow ed the School D i s tr i ctt o s eek a r ef und onl y f

ort axes i thad pai d s i nce Jul y 2, 2005; thi s w as thr ee ye ar s pr i ort o the dat e thatV entur e and the School D i s tr i ctha d f

i l ed thei ri ni t i al s ui t . T he cha ncel l ordi s t i ngui s hed othercas es thathad held that s t atutes of l i m i t at i on do no trun agai nstthe st at e or i t s poli t i cal subd i vis i on s. T ho se
c a se s, h e sa id , h a d in v o lv e d lit ig a tio n b e tw e e n th e sta te a n d a p riv a te p a rty ; th is c a s e , in
con tras t , featured on e po l i t i cal subd i vis i on of the state s uing ano ther. T he ch ancell or al so
r eas oned that , s i nce the s t at e has the s over ei gn pow ert o cr eat e orabol i s h l ocal uni t s of go vernm ent, i thas t he p ow er t o est abli sh and i m po se s t atutes of l i m i t at i on upo n it s cr eat i on s. ¶15. T he chanc el l orent er ed a R ul e 54( b) Fi nal J udgm ent thati ncorpor at ed by r ef er ence 4 h is in itia l a n d s u p p le m e n ta l f in d in g s o f f

a c t a n d c o n c lu s io n s o f l a w . ¶ 1 6
. T h e M iss iss ip p i D e p a rtm e n t o f R e v e n u e n o w a p p e a ls a n d ra ise s o n e iss u e : W het her t he [ c] hancel l or er red i n f i ndi ng t ha t t he s ever ance t axes i m pose d by §§ 27-25- 501 et s eq. and 27-25- 701 et

s eq. , M is s . C o d e A n n ., a r e n o t o w e d o n p r o d u c tio n o f o il a n d g a s th a t is a llo c a b le t o a p u b lic sch o o l d ist rict’s ro y a lt y i n ter est th a t i s o w n ed b y a p u b li c sc h o o l district. ¶ 1 7 . T h e S c h o o l D istric t an d th e S c h o o l B o a rd a p p e a l an d ra ise th re e iss u e s: I . W het her t he [ c] hancel l or er red i n f i ndi ng t hat t he s t at ut e of l i m i t at i ons provi ded by M i s s . C ode A nn. § 27- 73- 5 l i m i t s t he Jones C o u n ty S c h o o l D is tr ic t’ s c la im fo r [a ] r e fu n d o f s e v e r a n c e ta x e s .

### 9

I I . W het her t he [ c] ha n cel l or err ed i n grant i ng t he O i l and G as Boar d’ s M ot i on f

or Sum m ar y J udgm e nt f i ndi ng t hat t he O i l and G as B oard i s aut hori z ed by l aw t o charge an adm i ni s t rat i ve ex p en se ta x a g a inst th e J o n es C o u n ty S ch o o l D ist rict’s ro y a lt y in te r e s t. I I I . W het her t he [ c] hancel l or err ed i n hi s f i ndi ng t hat t he t i m e peri od fo r r e q u e stin g a r e fu n d o r filin g a c o n te st o f th e se v e r a n c e ta x is th r e e y e a r s p r io r to th e d a te o f t h e fi lin g o f t h e [c ]o m p la in t. ¶ 1 8
. T h e S e c re tar y o f S tate a lso a p p e a ls a n d ra ise s th e fo llo w in g iss u e : W he t he r t he [ c ] hanc e l l or e r r e d i n f i ndi ng t hat t he s t at ut e of l i m i t at i ons p ro v ide d b y M iss. C o d e A n n . § 2 7 -73 -5 li m it s a p o litica l su b d ivisi o n ’s cl ai m f or [ a] ref

und of s ever ance t axes to t hree ye ars pri or t o t he dat e of fi lin g th e [c ]o m p la in t. B e a n , D e n b u ry , an d V e n tu re a p p e a l a s w e ll a n d jo in th e b rie fs f iled b y th e S c h o o l D istric t, the S cho ol B oard, an d the S ecret ary of St at e. T he S ecret ary of St at e, no t ably, did not opp ose the O il an d G as B o ard ’s M o ti o n for Su m m ary Jud g m en t an d d o es n o t app ea l th e c h an ce ll o r’s
rul i ng i n f

avorof the O i l and G as B oar d.

DI S CU S S I ON ¶ 1 9
. B e fo re a d d re ss in g th e iss u e s o n a p p e a l, an o v e rv iew o f b o th th e n a tu re a n d o w n e rsh ip of s i xt eenth- s ect i on l ands i s setoutbel ow . T he bas i c s tructur e of the oi l
- and- gas - s ever ance tax law s is p ro v id e d a s w e ll. T h e a d m in is tr a tiv e -e x p e n se tax sc h e m e is d isc u ss e d late r, in Is s u e II I. Si xt eenth- Sect i on Lands ¶ 2 0
. T h e o r ig in s o f

p u b li c - s c h o o l l a n d s p re d a te M is s is s ip p i’ s s ta te h o o d
. P apas an v. A lla in , 478 U
. S. 265, 27- 71, 106 S. C t . 2932, 2936- 37, 9 2 L . E d. 2d 209 ( 1986)
. I n 1803, the U ni t ed St at es C ongr es s setasi de “‘ the s ect i on num bers i xt een’ ” of every t ow ns hi p i n the

### Th e creationof six teenth -s ec ti o nland s and“lieu lan ds” is d iscussedin d etail in 5 

### Papasan , 47 8 U .S. at 2 68 -73
. 10 M i s s i s s i ppi Terr i t ory t o be r es erved “‘ f orthe s uppor tof

s chool s w i thi n the s ame. ’ ” P apas an , 478 U
. S. at271 ( quot i ng 2 St at . 233- 34)
. A nd i n 1815, C ongr es s author i zed the l eas i ng of
s ix te e n th -s e c tio n la n d s to ra is e fin a n c ia l su p p o rt fo r s c h o o ls w ith in th e T e rr ito ry . L i p s c o mb
v. Co lu m b u s Mu n . S e

p a ra te S c h . D ist. , 269 F. 3d 494, 498 ( 5th Ci r . 2001) ( ci t i ng A ctof J an. 9 , 1 8 1 5 , 3 S ta t. 1 6 3 ). ¶21. W hen M i s s i s s i ppi beca m e a s t at e i n 1817, C ongr es s di r ect ed that“‘ the s ect i on N o. 16 i n eac h t ow ns hi p . . . shal l be r es erved f orthe s uppor tof

s chool s ther ei n. ’ ” P apas an , 478 U . S. at271 (quot i ng 3 St at . 375 ( 1817) )
. A ccor di ngl y, A r t i cl e 6, Sect i on 20 of t he 5 M i s s i s s i ppi C ons t i tut i on of 1817 di r ect ed the Legi s l atur e t o “t ake m eas ur es t o pr es erve f r om unnecessary w ast e ordamage s uch l ands as ar e orm ay her eaf t erbe gr ant ed by the U ni t ed St at es f orthe us e of

s chool s , w i thi n e ach t ow ns hi p i n thi s St at e, and appl y the f unds w hi ch
m ay be r ai s ed f

r om s uch l ands , by r entorlea s e, i n s tr i ctconf or m i ty t o the obj ectof

s uch g ra n t . . . . ” M iss . C o n st. a rt 6 , § 2 0 (1 8 1 7 ). M iss iss ip p i’s c u rre n t C o n stitu tio n p ro v id e s th a t: “The L egi s l atur e s hal l enac ts uch l aw s as m ay be ne ces sar y t o asce r t ai n the true condi t i on
o f th e tit le to th e six tee n th se c tio n lan d s in th is s tate . . . a n d sh a ll p ro v id e th a t th e six tee n th
s ect i on l ands r es erved f

orthe s uppor tof

t ow ns hi p s chool s . . . s hal l notbe s ol d nors hal l t hey be l eas ed” e xceptas pr ovi ded underthe t erm s of A r t i cl e 8, Sect i on 211. M i s s . C ons t . art . 8, § 2 1 1 (1 8 9 0 ). ¶22. Fr om t hei rbegi nni ngs , si xt eenth- s ect i on l ands have been he l d t o be trus tl ands f or the b e n e fi t o f p u b lic s c h o o ls
. H il l v. T hom ps on , 564 So. 2d 1, 5- 6 ( M i ss. 19 89 ) ( ci t at i ons

### 11

o m itte d ). T h e s e la n d s a re h e ld in tw o tru s ts : o n e fe d e ra l a n d o n e s ta te . L i p s c o mb , 269 F. 3d at510. T he f

eder al trus ti s pur el y honor ary; M i s s i s s i ppi hol ds abs ol ut e t i t l e t o s i xt eenths e c tio n la n d s w ith o u t f

e d e ra l r e s tr ic tio n . I

d. at507 ( ci t i ng Madis on Count y B d. of E duc. v. I l linois Cent

. R . R . Co. , 9 3 9 F .2 d 2 9 2 , 3 0 5 ( 5 th C ir .1 9 9 1 ), abr ogat i on on othergr ounds
r ecogni z ed by L i p s c o mb , 269 F. 3d at508 n. 72)
. I n s om e ca s es , thi s C our thas s ugges t ed that th e tru s t is fe d e ra lly e n fo rc e a b le
. H ill , 56 4 S o. 2d at6 (st at i ng that “[ t ] he schoo l l and s trust
w a s f e de r a l l y c r e a t e d a nd i s f e de r a l l y e nf

or c e a bl e ” ) c i t i ng P apasan , 4 7 8 U . S
. at 26 8 -72 )); Turney v. Mar i on Count y B d. of E duc. , 481 So. 2d 770, 776 ( M i s s . 1985) ( s t at i ng thatthe A t t orney G ener al of

the U ni t ed St at es m ay enf or ce the trus t ) ( ci t i ng Las s e n v. Ari z ona , 385 U . S. 458, 460, 87 S. C t . 584, 585, 17 L . E d. 2d 515 ( 1967) )
. B utthe U ni t ed St at es C our tof A ppeal s f

or t he Fi f

th C i r cui thas expl ai ned thatear l y s i xt eenth- s ect i on l and gr ant s , w hi ch in c lu d e d M iss iss ip p i’s, c o n v e y e d tit le in fe e sim p le a n d th a t t h e fe d e ra l tru st is p u re ly h o n o ra ry as to th o s e g ra n ts . I d. at507 ( ci t i ng Co o

p e r v . R o b e rts , 59 U
. S. 173, 181- 82, 18 H o w . 1 7 3 , 1 5 L . E d . 3 3 8 (1 8 5 5 ); A labam a v. Schm idt , 232 U . S. 168, 173- 74, 34 S. C t . 301, 58 L
. E d. 55 5 ( 19 14 ) )
. Rega r dl e s s , i ti s c l e a rtha t , un de rM i s s i s s i pp i s t a t e l a w , s i xt e e nths e c tio n la n d s a re h e ld in a b in d in g tru s t. L i p s c o mb , 2 6 9 F .3 d a t 5 0 7 -0 8 (c itin g , e .g ., Mor r ow
v. V inson , 6 6 6 S o . 2 d 8 0 2 , 8 0 5 -0 6 (M is s . 1 9 9 5 ))
. ¶ 2 3
. T h e S tate is th e tit leh o ld e r o f six tee n th -se c tio n la n d s , Hill 5 64 S o. 2 d at6 ( ci t i ng Turney , 4 8 1 S o . 2 d a t 7 7 6 ), w h ic h it h o ld s “ in tru s t f o r t h e b e n e fi t o f t h e p u b lic s c h o o ls .” M i s s . C ode A nn. § 29- 3- 1( 1) ( R ev. 2010)
. T he bene f i ci ari es, m or e s peci f

i cal l y, ar e “the i nh a bi t a nt s of

the r e s pe c t i ve t owns hi ps . ” Tu rney , 481 So. 2d at777 ( ci t i ng Jones v. Ma diso n Co u n ty , 7 2 M is s. 7 7 7 , 1 8 S o . 8 7 (1 8 9 5 )); s ee al s o M i s s . C ons t . art . 8, § 211

### Sectio n 2 9-3 -1 g ives g eneral superv isoryauth orityto th e “state landcommis sioner.” 6 

### Mis s. Code Ann. § 29-3- 1(1) (Rev. 2010). The off ic e of st at e l and c omm is si oner , howe ver , was abol is hed in 1980 and al l of it s duti es and res ponsibil itie s wer e transf er re d to t he of fi ce of th e Secretaryof S tate. Turne y , 481 So. 2d at 776 (c iting Mi ss . CodeAnn. § 7- 11-2 ( Supp. 19 84 )). 12 (id e n tify in g six tee n th -s e c tio n lan d s a s h a v in g b e e n “ re se rv e d fo r th e su p p o rt o f to w n sh ip
s c h o o ls ” ). ¶24. T he St at e, as t i t l ehol der , has del egat ed gener al s upervi s ory author i ty overs i xt eenths e c tio n la n d s to th e S e c re ta ry o f S ta te . Turney , 481 So. 2d at777; M i s s . C ode A nn. § 29- 3- 1( 1) ( R ev. 2010). A s a m att erof pr act i cal neces s i ty, thes e l ands ar e managed thr ough l ocal 6
c o u n ty b o a rd s o f e d u c a tio n . Turney , 481 So. 2d at777. Sect i on 29-3- 1( 1) st at es that : “The boar d of educa t i on underthe gene r al s upervi s i on of the [ Secr et ary of

St at e] , shal l have contr ol and j ur i s di ct i on of [ s i xt eent h-s ect i on] l ands and of al l f unds ar i s i ng f

r om any d ispo sit ion the reo f h ere tofo re o r h ere after m ad e.” M iss. C o d e A n n . § 2 9 -3-1 (1) (R ev . 2 0 1 0 ). S cho ol boards ar e di rect ed t o m anag e these l and s, and al l f un ds deri ved theref

rom , as trust pr operty and t o ens ur e thatadequa t e compens at i on i s r ece i ved f or al l us age. M i s s . C ode A nn . § 29- 3- 1( 1) ( R ev. 2010)
. School boar ds thus s t and as “trus t ee[ s ] and as t rust
s u p e rv is o rs o r m a n a g e rs ” o f s ix te e n th -s e c tio n la n d s . H ill , 5 6 4 S o . 2 d a t 7 . ¶25
. In theirrol e as tru stees, sch o o l bo ard s a re a u tho ri ze d a n d e m p o w ered t o l ease
s i xt eenth- s ect i on lands f oroi l , gas , and mi ner al expl or at i on. M i s s . C ode A nn. § 37- 7- 305 (R e v . 2 0 0 7 ); see al

so M i s s . C ode A nn. § 29- 3- 99 ( R ev. 2010)
. R oyal t i es r ece i ved f r om the
s al e of oi l a nd ga s a r e depos i t ed i nt o the l ocal s chool boa r d’ s pr i nci pal f und, w hi ch Sect i on 29- 3- 113 s ays “s hal l be a pe r m anentt ow ns hi p f und. ” M i s s . C ode A nn. § 29- 3- 113 ( R ev.

### 13

2 0 1 0 ). F u rth e r, S e c tio n 2 9 -3 -1 0 9 d ire c ts th a t “ [a]ll e x p e n d a b le fu n d s d e riv e d fro m six tee n th
s ect i on orl i eu l ands s hal l be cr edi t ed t o the s chool di s tr i ct s of the t ow ns hi p i n w hi ch s uch
s i xt eenth s e c t i on l a nd s may b e l oc a t e d. ” M i s s . Code
. A nn . § 2 9- 3- 10 9 ( Rev. 20 10 )
. That
s t atut e al s o s t at es t hat“[ s ] uch f unds s hal l notbe expe nded exc eptfor t he purpos e of edu cat i on of the ed ucab l e chil dren of the schoo l di stri ctt o w hich they belong, oras ot herw i se
m a y b e p ro v id e d b y la w .” M is s . C o d e . A n n . § 2 9 -3 -1 0 9 (R e v . 2 0 1 0 ). O i land G as Seve r ance Taxe s ¶26. M i s s i s s i ppi i m pos es annual s ever ance t axes on oi l a nd ga s pr oduct i on w i thi n the s t at e. M i s s . C ode A nn. §§ 27- 25- 503( 1) , 27- 25- 703( 1) ( R ev. 2010)
. T he oi l s ever ance t ax s t atut es
ar e i n C hapt er25, A r t i cl e 5 of the M i s s i s s i ppi C ode, and the natur al -gas severa nce t ax
s t atut es ar e i n A r t i cl e 7 of thats ame chapt er . M i s s . C ode A nn. §§ 27- 25- 501 t o 27- 25- 525, 27 -25-701 t o 2 7-25-72 3 (M i ss. 2 01 0). A rt i cl e 5 an d A rt i cl e 7 are very si m i l ar and o ft en u se id e n tic a l la n g u a g e . ¶27. O i l a nd ga s s ever ance t axes a r e l evi ed “upon the ent i r e pr oduct i on i n thi s s t at e” a nd
acc rue atthe t i m e the oi l orga s i s s ever ed f r om the s oi l orw at er . M i s s . C ode A nn. §§ 27- 25- 503( 2) ; 27- 25- 703( 2) ( R ev. 2010)
. T hes e t axes ar e l evi ed “upon e very per s on engagi ng or cont i nui ng w i thi n thi s s t at e i n t he busi nes s of pr oduci ng, or s ever i ng [ oi l orgas ] , as def i ned herei n, fr om the soi l o r w at er f or sal e, tr anspo rt , st orage, p rof i to r f or com m erci al use. ” M i ss. C ode A nn . § § 27-25- 503( 1) , 27- 25- 703( 1) ( R ev. 2010)
. E xempt i ons and r educe d
as s es s m ent s ar e pr ovi ded i n cer t ai n i ns t ance s . M i s s . C ode A nn. §§ 27- 25- 503( 1)
- ( 5) , 27- 25- 7 0 3 (2 )- (7 ) ( R e v . 2 0 1 0 ).

### 14

¶28. O i l and gas s ever ance t axes , m or e s peci f i cal l y, ar e “l evi ed upon the pr oducer s of s uch [ oi l orgas ] i n t he pr opor t i on of thei row ner s hi p a tthe t i m e of s ever ance . . . . ” M i s s . C ode A n n . § § 2 7 -2 5 -5 0 9 (1 ), 2 7 -2 5 -7 0 7 (1 ) (R e v . 2 0 1 0 ). T h e ter m “ p ro d u c e r” is d e fin e d b ro a d ly
a s: [ A ] ny pers on ow ning, contr oll i ng , m anag i ng or l easi ng any [ oil o r gas] pr operty, or[ oi l orga s ] w el l , a nd a ny per s on w ho pr oduces i n any mannerany [ oi l orga s ] by t aki ng i tf r om the ea r th orw at eri n thi s s t at e, and s hal l i ncl ude any per s on ow ni ng any r oyal ty orotheri nt er es ti n a ny [ oi l orgas ] ori t s val ue, w hetherproduce d by hi m , orby s om e otherper s on on hi s behal f , ei therby l eas e contr actorot herw i s e. M i s s . C ode A nn. §§ 27- 25- 501( i ) , 27- 25- 701( j ) (Rev. 2010). A “per s on, ” i n turn, i s def i ned
as “any na tur al per s on, f i r m , copartner s hi p, j oi ntventur e, as s oci at i on, corpor at i on, es t at e, t rust [ , ] or a ny ot hergr oup, orcombi nat i on act i ng as a uni t , and the pl ur al as w el l as t he
s in g u la r n u m b e r.” M is s . C o d e A n n . § § 2 7 -2 5 -5 0 1 (h ), 2 7 -2 5 -7 0 1 (i ) ( R e v . 2 0 1 0 ). ¶ 2 9
. T h o u g h o il an d g a s se v e ra n c e tax e s a re lev ied u p o n “ p ro d u c e rs” in p ro p o rtio n to th e ir
ow ner s hi p i nt er es t , Sect i ons 27- 25- 509( 1) and 27- 25- 707( 1) di r ectthatthes e t axes “s hal l be pai d by the per s on i n char ge of the pr oduct i on oper at i ons, w ho i s her eby author i zed, empow er ed and r equi r ed t o deductf r om any amountdue t o pr oducer s of s uch pr oduct i on at the t i m e of

s everance t he pr opor t i onat e amountof the t ax her ei n l evi ed bef or e maki ng p ay m en ts t o suc h pro d u ce r. ” M iss. C o d e A n n . §§ 27 -25 -50 9 (1), 2 7 -25 -70 7 (1) (R ev . 2 0 1 0 ). A nd, i f “the per s on i n char ge of pr od ucti on o per at i ons f ai l s t o pay the t ax, then [ the D epart m entof

R evenue ] s hal l proc eed aga i ns tt he pr oducert o col l ectthe t ax i n acc or dance
w i th the pr ovi s i ons m ade f orthe col l ect i on of

del i nquentt axes . ” M i s s . C ode A nn. §§ 27- 25- 5 0 9 (1 ), 2 7 -2 5 -7 0 7 (1 ) ( R e v . 2 0 1 0 ).

### 15

¶30. A r t i cl e 8, Sect i on 206A of the M i s s i s s i ppi C ons t i tut i on and Sect i on 27- 25- 506 of t he M i s s i s s i ppi C ode pr ovi de that“[ t ] he s t at e’ s s har e of al l oi l and gas s ever ance t axes der i ved f r om oi l and gas r es our ces unders t at e- ow ned l and s” i s t o be depos i t ed i nt o an “e ducat i on i m pr ovementtrus tf

und” i n the St at e Tre as ury. M i s s . C ons t . art . 8, § 206A ; M i s s . C ode A nn. § 2 7 -2 5 -5 0 6 (R e v . 2 0 1 0 ). I . W het her t he School D i s t ri ct i s r eq u i red to pa y o i l an d gas s ever ance t axes on i t s royal t y i nt ere s t s deri ved f rom oi l and gas p r o d u c ti o n o n s ix te e n th -s e c ti o n la n d . ¶3 1. T he D epar t m entof R evenue ar gues tha tthe c ha nc e l l orer r ed i n r ever s i ng and
r ender i ng i t s deni al of

V entur e’ s a nd the School D i s tr i ct ’ s r eques tf ora r ef und of oi l and gas severance t axes. ¶32. Thi s Courtw i l l r ever s e the deci s i on of a n admi ni s tr at i ve age ncy “‘ onl y i f the deci s i on ( 1) w as uns uppor t ed by s ubs t ant i al evi dence; ( 2) w as arbi tr ary and capr i ci ous ; ( 3) w as beyond the pow erof

the admi ni s tr at i ve agen cy t o m ake; or( 4) vi ol at ed the compl ai ni ng party’ s s t atut ory orcons t i tut i onal r i ght
. ’ ” B u ffin g to n v . Miss. S tate T ax Co m m ’n , 43 So. 3d 450, 453- 54 ( M i s s . 2010) ( f ootnot e omi t t ed) ( quot i ng Mis s . Met hodis t Hos p. and R ehab. Ctr., In c . v. Miss . D iv. o f Me dica id , 2 1 S o . 3 d 6 0 0 , 6 0 6 -07 (M iss. 2 0 0 9 )). ¶ 3 3
. “ ‘A n a g e n c y ’s i n terp re tatio n o f a ru le or sta tu te go v e rn in g th e a g e n c y ’s op e ra tio n is
a m atte r o f l aw that is r ev iew ed d e n o v o , b u t w ith g rea t defe ren ce to the ag en cy ’s i nt erpr et at i on. ’ ” B uf

f ington , 43 So. 3d at454 ( quot i ng Mis s . Met hodis t Hos p. an d R ehab. Ctr. , I nc. , 2 1 S o . 3 d a t 6 0 6 -0 7 ). R e c e n tly , this C o u rt c lar ified w h a t “d e fe re n c e ” m e a n s in th is
c o n te x t. Q u e e n City Nu rs in gCtr., In c . v. Miss . S ta te D e p ’t o f He a lth , 80 So. 3d 73, 84 ( M i s s . 2011)
. The Courtemphasi zed thati thas the ul t i m at e author i ty and r es pons i bi l i ty f or

### 16

in te rp re tin g la w s . I

d. S o, even t hough an “agenc y’ s i nt erpr et at i on i s an i m por t antf act ort hat
u su all y w arran ts stron g co n sid e rati o n , ” the C o u rtd o es n o t defe r t o an ag en cy ’s in te re p re ta tio n in th e se n s e th a t it y ie ld s ju d g m e n t o r o p in io n . I d. F u rth e r, n o d e fe re n c e is due i f the “‘ agenc y’ s i nt erpr et at i on i s contr ary t o the unambi guous t erm s orbes tr eadi ng of
a s t atut e. ’ ” B uf

f ington , 43 So. 3d at454 ( quot i ng Mis s . Me th o dis t H o s p . a n d R e h a b . Ctr., I nc. , 2 1 S o . 3 d at 60 6 -07 ).

A . W h e th e r o il a n d g a s se v e r a n c e ta x e s a r e lev ied u p o n th e O il C o m p a n ie s o r th e S c h o o l D is tr ic t. ¶34. T he thr es hol d ques t i on that m us t be addr es s ed i s w ho i s r es pons i bl e f or the t ax. T he D epart m entof

R evenue as s ert s thatthe O i l C om pani es — notthe School D i s tr i ct— ar e the actual t axpaye r s . I tar gues thatthe O i l C om pani es ar e the part i es l i abl e f orthe s ever ance t axes . T he chanc el l orr ej ect ed thi s ar gum entbas ed on thi s C our t ’ s deci s i on i n Cali f or ni a Co.
v. State of

Mis s is s i ppi , 2 2 1 M is s . 7 6 6 , 7 4 S o . 2 d 8 5 6 (1 9 5 4 ). ¶35. A s di s cus s ed above , oi l and gas s ever ance t axes ar e “l evi ed upon the prod ucers o f .

. . [ oi l or gas ] i n t he pr opor t i on of thei row ner s hi p att he t i m e of s ever ance . . . . ” M i s s . C ode A nn . §§ 27 -25-509 (1) , 27 -25-707 (1) (R ev. 20 10 ) ( em ph asi s added ). A nd a “prod ucer” i s: [ A ] ny person o w ning, con trol l i ng , m anag i ng or l easi n g a n y [ oil or gas] pr operty, or[ oi l orgas ] w el l , and any per s on w ho pr oduces i n a ny mannerany [ oi l orgas ] by t aki ng i tf r om the ea r th orw at eri n thi s s t at e, a nd s hal l i ncl ude any per s on ow ni ng any r oyal ty orotheri nt er es ti n any [ oi l orgas ] ori t s val ue, w hetherpr oduced by hi m , orby s om e otherpers on o n his behal f , ei therby le a s e c o n tr a c t o r o th e rw is e . M iss. C o d e A n n . § § 2 7 -25 -50 1 (i ), 2 7 -25 -70 1 (j ) (R ev . 2 0 1 0 ). E v en tho u g h the tax es a re lev ied u p o n “ p ro d u c e rs,” th e “ p e rso n in c h a rg e o f th e p ro d u c tio n o p e ra tio n s” is re q u ire d to deductthe pr oducer ’ s s har e of the t axes f

r om the pr oducer ’ s i nt er es tand t o r emi tthe t axes

### 17

on the pr oducer ’ s behal f
. M i s s . C ode A nn. §§ 27- 25- 509( 1) , 27- 25- 707( 1) ( R ev. 2010)
. T he C our texpl ai ned thi s pr ocedur e i n Ca lif o r n ia Co . ¶36. I n Cali

f or ni a Co. , thi s C our tr ecogni zed thatM i s s i s s i ppi ’ s oi l s ever ance t ax i s l evi ed
u p o n ro y a lty in te re s t o w n e rs . Cali f or ni a Co. , 74 So. 2d at857. T here, the U ni t ed St at es g o v e rn m e n t, ac tin g th ro u g h th e B u re a u o f L a n d M a n a g e m e n t, ha d lea se d lan d s to a c e rta in i ndi vi dual ; in do i ng s o, i thad r es erved a one
- ei ghth r oyal ty i nt er es ti n al l oi l pr oduced on
s u c h la n d s . I

d. at856. T hati ndi vi dual , i n turn, cont r act ed w i th T he C al i f orni a C om pany f

or
o il ex p lo ra tio n . I

d. T he C al i f

orni a C om pany pai d the oi l s ever ance t ax on the t ot al p ro d u c tio n fo r a lm o s t th re e y e a rs . I d. D ur i ng thatt i m e, the U ni t ed St at es r ef us ed t o al l ow T h e C a lifo rn ia C o m p a n y to d e d u c t an y o il se v e ra n c e tax e s fro m th e U n ited S tate s’ r o y a lty in te re s t. I

d. T he C al i f

orni a C om pany pai d the t axes on the U ni t ed St at es ’ behal f anyw ay but
e v e n tu a ll y s o u g h t a re fu n d fr o m th e A u d ito r o f P u b lic A c c o u n ts . I d. T h e C a lifo rn ia C o m p a n y a rg u e d th a t sta tes c a n n o t tax the fed e ra l g o v e rn m e n t; th e re fo re , itw a s e n tit led to
a re fu n d fo r a n y o il s e v e ra n c e ta x e s th a t it h a d p a id o n th e U n ite d S ta te s ’s b e h a lf
. I d. at857. T he A udi t orr ef

us ed The C al i f

orni a C om pany’ s r eques t , a nd the cha ncery courtaf f i r m ed the A u d ito r’ s d e c is io n . I

d. a t856. Thi s C our thel d thatthe oi l s ever ance t ax w as l evi ed on the U n ite d S ta te s a s a ro y a lty in te re s t o w n e r. I d. a t 8 5 7 . T h e o il se v e ra n c e tax , ite x p lain e d , “‘is l evi ed upon the prod ucers of s uch oi l i n the pr opor t i on o f t hei row ner s hi p atthe t i m e of
s ever ance . . . , ’ ” I

d. at857 ( quot i ng 1944 M i s s . L aw s 148) ( emphasi s added) ; M i s s . C ode A nn. § 2 7-25-50 9(1) ( R ev. 20 10 ); and the term “produ cer” i ncludes “‘any p ers on ow ning any
r oyal ty orotheri nt er es ti n any oi l ori t s val ue. ’ ” Cali f or ni a Co. , 74 So. 2d at857 ( quot i ng 1944 M i s s . L aw s 146) ; M i ss. C ode A nn. § 27- 25- 501( i ) ( R ev. 2010) )
. T hus , even though

### 18

th e “ p e rso n in ch a rg e o f th e p ro d u c tio n o p e ra tio n s,” i.e., T h e C a lifo rn ia C o m p a n y , h a d p a id th e tax o n th e U n ited S tate s’ b e h a lf, th e tax w a s n o t lev ied d ire c tly u p o n T h e C a lifo rn ia C o m p a n y b u t w a s “ lev ied in th e first in sta n c e o n th e o w n e rs o f th e o il i n p ro p o rtio n to th e ir i nt er es t . ” Cali

f or ni a Co. , 74 So. 2d at858. T he C our tul t i m at el y hel d that , beca us e of t he
s upr emacy of

the f eder al governm ent , the oi l s ever ance t ax w as uncons t i tut i onal t o the ext ent th a t it a tte m p te d t o ta x th e U n ite d S ta te s . I d. T he C al i f

orni a C om pany, ther ef

or e, w as deemed t o be ent i t l ed t o a cr edi tf orthe port i on of

the t ax thatotherw i s e w oul d have be en
c h a rg e d to th e U n ite d S ta te s a s a ro y a lty o w n e r. I d. ¶37. T hough Ca lif

o r n ia Co . i nvol ved onl y oi l s ever ance t axes , the gas s ever ance s t atut es
a re id e n tica l o n th is p o in t. B o th ta x e s a re le v ied u p o n “ p ro d u c e rs,” w h ich in c lu d e s ro y a lty
o w n e rs a n d a c tu a l o p e ra to rs . M iss. C o d e A n n . § § 2 7 -25 -50 9 (1), 27 -25 -50 1 (i ), 2 7-25-7 0 7 (1), 27- 25- 701(

j ) ( R ev. 2010)
. T he O i l C om pani es , as the “pe r s on[ s ] i n char ge of the pr oduct i on operat i ons, ” deduc tthe School D i s tr i ct ’ s pr opor t i onat e s har e of the oi l and gas s ever ance t axes f r om any paymentow ed t o t he School D i s tr i ctand r emi tthos e t axes t o the D epart m ent
o f R e v e n u e o n th e S c h o o l D is tr ic t’ s b e h a lf
. See Cali

f or ni a Co. , 74 S o. 2d at85 7-58; M i ss. C o d e A n n . § § 2 7 -2 5 -5 0 9 (1 ), 2 7 -2 5 -7 0 7 (1 ) (R e v . 2 0 1 0 ). T h o u g h th e O il C o m p a n ie s re m it th e ta x e s , Ca lif

o r n ia Co . is cl ea r th at th e tax es a re “ levied in the fi rstinstan ce o n the o w n ers of the oi l i n pr opor t i on t o t hei ri nt er es t . ” Cali f or ni a Co. , 74 So. 2d at858. ¶3 8
. T h e last sen tenc es o f S ec ti o n 2 7 -25 -50 9 (1) a n d S ec ti o n 27 -25 -70 7 (1) fu rth er su p p o rt thatoi l and gas s ever ance t axes ar e l evi ed upon the School D i s tr i ct . M i s s . C ode A nn. §§ 27- 2 5 -5 0 9 (1 ), 2 7 -2 5 -7 0 7 (1 ) (R e v . 2 0 1 0 ). B o th sta tu tes sta te th a t: “In th e e v e n t th e p e rso n in char ge of

pr od uc t i on op e r a t i on s f a i l s t o p a y the [ oi l orga s s e ve r a nc e ] t a x, the n the

### 19

[ D epart m entof

R evenue ] s hal l pr ocee d agai ns tthe pr oducert o col l ectthe t ax i n acc or dance
w i th the pr ovi s i ons m ade f orthe col l ect i on of

del i nquentt axes . . . . ” M i s s . C ode A nn. §§ 2 7 -2 5 -5 0 9 (1 ), 2 7 -2 5 -7 0 7 (1 ) ( R e v . 2 0 1 0 ). I n o th e r w o rd s, if th e O il C o m p a n ies fa il t o re m it the t axes , the D epart m entof R evenue i s di r ect ed t o pr ocee d agains tthe pr oducer , i
. e. t he S c h o o l D is tr ic t — n o t th e O il C o m p a n ie s — to c o lle c t d e lin q u e n t ta x e s . ¶3 9. A ccor di ngl y, w e f i nd tha toi l a nd ga s s e ve r a nc e t a xe s a r e l e vi e d u po n the School D is tr ic t a s a ro y a lty o w n e r.

B. W he t he r t he Sc hoo l D i s t r i c t i s e xc e pt e d f r om pay i ng o i l and ga s severan ce taxes on i ts s i xteenth -s ecti on roy alt y interest s. ¶4 0. Fr om t he out s ether e, i ti s i mpor t a ntt o n ot e tha ts c ho ol di s tr i c t s a r e cons i der ed p o litic a l s u b d iv is io n s o f t h e s ta te . G re ss e tt B y & T h ro u g h G re ss e tt v. Ne w to n S e p a ra te Mu n . S c h . D ist. , 6 9 7 S o . 2 d 4 4 4 , 4 4 6 (M iss . 1 9 9 7 ) (c iti n g M is s . C o d e A n n . § 1 1 -4 6 -1 (i) (R e v . 2 0 0 4 ))
. ¶ 4 1
. T h e D e p a rtm e n t of R e v e n u e arg u e s th a t ne ith e r t h e o il s e v e ra n c e ta x s ta tu te s in Se c t i on s 27
- 25
- 50 1t o 27- 25- 525, northe natur al gas s ever ance t ax s t atut es i n Sect i ons 27- 25- 701 t o 27- 25- 723, expr es s l y exem ptschool di s tr i ct s ors i xt eenth- s ect i on l ands f r om t axat i on. I tar gues thatt axat i on i s the rul e unl es s an exe m pt i on i s s t at ed expr es s l y and t hatno t axpaye r has a ves t ed r i ghtt o an exe m pt i on. I tof f er s s ever al exampl es in w hi ch the s t at e has
e x p re s s ly e x e m p te d its e lf fr o m ta x a tio n . See M i s s. C od e A nn. § 27- 31- 1( b) ( R ev. 2010) (e x e m p tin g a ll rea l o r p e rso n a l p ro p e rty “ b e lo n g in g to th e S tate o f M iss iss ip p i o r a n y o f its pol i t i cal s ubdi vi s i ons” fr om ad val or em t axes ) ; M i s s . C ode A nn. § 27- 19- 27 ( R ev. 2010) (exem pti ng st at e and l ocal gov ernm ent veh i cl es f rom m otorvehicl e pri vil ege taxes) ; M i ss.

### 20

C o d e A n n . § 2 7 -65 -10 5 (R ev . 2 0 1 0 ) (pro v iding go v ern m en tal ex em p ti o n s fr o m sales tax es); M i ss. C od e A nn . § 2 7-55-12 (1) (R ev. 2 01 0) (exem pti ng “the Stat e of M i ssi ssi pp i , cou nti es,
m uni ci pal i t i es , s chool di s tr i ct s and al l ot herpol i t i cal s ubdi vi s i ons of the s t at e” f

r om gas ol i ne,
s peci al f uel , a nd c om pr es s ed gas e xci s e t axes ) ; M i s s . Code A nn. § 27- 15- 103( 1) ( R ev. 2010) (pro v iding tha t foreig n insu ran ce ca rri ers tha t f u rnish serv ice u n d er the S tat e E m p loy ee s L if e and H eal th I ns ur ance Pl an ar e notr equi r ed t o pay the annua l l i cens e orpr i vi l ege t ax on p re m iu m s c o lle c te d ))
. ¶4 2. T he Pl ai nt i f

f s , on t he o the rh a nd , a s s e r ttha tn ei t hert he s t at e nori t s pol i t i cal
s ubdi vi s i ons ar e s ubj ectt o a t ax unl es s the l aw cl ear l y s ays they ar e. ¶43. I n det erm i ni ng w hethera per s on orent i ty i s subj ectt o a t ax, di f f er ents t andar ds appl y, dependi ng upon w hetherthe obj ectof the t ax i s of

publ i c orpr i vat e natur e. G ener al l y, “he
w ho cl ai m s exempt i on m us ts how af f i r m at i vel y a n exempt i on expr es s l y decl ar ed, and that the cl ai m anti s cl ear l y embra ced w i thi n the t erm s of the exe m pt i on. ” Mor r is I ce Co. v. A da ms , 7 5 M iss . 4 1 0 , 2 2 S o . 9 4 4 , 9 4 5 (1 8 9 8 ); s ee al s o B ar nes v. Jones , 139 M i s s . 675, 103 So. 773, 776 ( 1925) (s t at i ng t hata t ax exe m pt i on i s neverpr es um ed and thata cl ai m anthas th e b u rd e n to e sta b lish cle a rly h is rig h t to a n e x e m p tio n ); B ridg es v. B arr , 245 M i s s . 137, 1 4 3 , 1 46 S o. 2d 54 4, 54 6 (196 2) ( st at i ng that t ax ex em pti on s ar e stri ct l y co nst rued ag ai nst th e e x e m p tio n ist a n d th a t o n e w h o a ss e rts th e e x e m p tio n m u st e sta b lish it cle a rly ). T h is is
c o n sis ten t w ith th e D e p a rtm e n t o f R e v e n u e ’s p o sitio n . B u t tax a tio n o f p u b lic p ro p e rt y is tr e a te d d if

fe re n tly . A s a g e n e ra l r u le , th e s ta te d o e s n o t t a x it s o w n p ro p e rt y . State v. B d. of Miss. L evee Com m ’rs , 75 M i s s . 132, 21 So. 661 ( 1897)
. Fur ther , thi s Courthas s ai d that
w her e a s t atut e att empt s t o i m pos e l i abi l i t i es upon the s t at e ori t s pol i t i cal s ubdi vi s i ons , the

### 21

statu te i s “i nap pli cable t o them , un l ess they are i ncluded exp res sl y o r by nec essary i m pl i cat i on. ” Co lem a n v. W h ip p le , 191 M i s s . 287, 2 So. 2d 566, 568 ( 1941) ( quot i ng City
o f J a c kso n v. S ta te , 1 5 6 M is s . 3 0 6 , 1 2 6 S o . 2 , 4 (1 9 3 0 ))
. ¶44
. H ere , the P lai n t i ff s ar e corr ect : N ei ther the st at e no r i t s poli t i cal subd ivisi o n s are
s ubj ectt o a t ax unl es s t he l aw i ncl udes them expr es s l y orby nece s s ary i m pl i cat i on. T rue, the Legi s l atur e has chos en i n seve r al i ns t ance s expr es s l y t o exem ptt he s t at e ori t s pol i t i cal
su b d iv isio n s fr o m c e rta in tax e s. B u t th a t d o e s n o t alte r th e g e n e ra l, co m m o n -la w ru le
c o n c e rn in g ta x a tio n o f p u b lic p ro p e rt y . ¶ 4 5 . T h e C o u rt, th e re fo re , m u st c o n sid e r w h e th e r th e S c h o o l D istric t is in c lu d e d e x p re ss ly
o r b y n e c e s s a ry im p lic a tio n w ith in th e o il- a n d -g a s -s e v e ra n c e -t a x la w s .

1. W het her t he School D i s t ri ct i s i ncl uded exp ress l y or b y n ecessary im p l i cati on w i thi n the oil -an d -gass e v e r a n c e -t a x la w s . ¶ 4 6
. T h e S c h o o l D istric t a n d th e S c h o o l B o a rd a rg u e th a t th e y a re n o t re q u ire d to p a y o il and gas s ever ance t axes be caus e they ar e nota “per s on, ” as def i ned i n Sect i ons 27- 25- 501( h) or 27-25 -701(i ), m ade subj ectt o such t axes. ¶47. A s di s cus s ed above, Sect i ons 27- 25- 503( 1) and 27- 25- 703( 1) l evy “annua l pr i vi l ege t axes upon every pers on eng agi ng orcont i nui ng w i thi n thi s s t at e i n the bus i nes s of pr oduci ng, ors ever i ng [ oi l and gas]
. . . . ” M i s s . C ode A nn. §§ 27-25- 503( 1) , 27- 25- 703( 1) ( R ev. 2010) ( emphasi s added)
. T hese t axes , m or e s peci f i cal l y, ar e “l evi ed upon the pr oducer s of

s uch [ oi l and gas ] i n the pr opor t i on of thei row ner s hi p a tthe t i m e of s ever ance

. . . . ” M i s s . Code A nn. §§ 27- 25- 509( 1) , 27- 25- 707( 1) ( R ev. 2010)
. A “ pr oducer , ” i n tur n, is:

### 22

[ A ] ny pers on o w n i ng , con trol l i ng , m anag i ng or l easi ng any [ oil or gas] pr operty, or[ oi l orgas ] w el l , and any pers on w ho pr oduces i n any mannerany [ oi l orgas ] by t aki ng i tf r om the ea r th orw at eri n thi s s t at e, and s hal l i ncl ude any pers on ow ni ng any r oyal ty orotheri nt er es ti n any [ oi l orgas ] ori t s val ue, w hetherpr oduced by hi m , orby s om e otherper son on h i s behal f , ei therby le a s e c o n tr a c t o r o th e rw is e . M i s s . C ode A nn. §§ 27- 25- 501( i ) , 27- 25- 701( j ) ( R ev. 2010) ( emphasi s added)
. T hus , oi l and g a s s e v e ra n c e ta x e s a re lev ied u p o n “ p ro d u c e rs” w h o , b a se d o n th e d e fin iti o n o f th a t sp e c ific t erm , m us tbe “pe r s ons . ” ¶48. Sect i ons 27- 25-501(h) and 2 7-25-70 1(i ) both def i ne a “ per s on” as “any natur al per s on, f i r m , copartner s hi p, j oi ntventur e, as s oci at i on, corpor at i on, est at e, t rus tor a ny ot her group , or com binat i on act i ng as a unit , and t he plur al as w el l as the si ng ularnu m ber. ” M i ss. C ode A nn. §§ 27- 25- 501( h) , 27- 25- 701( i ) ( R ev. 2010)
. N ei therthe s t at e nor i t s pol i t i cal
s u b d iv is io n s a re in c lu d e d w ith in th is d e fi n itio n . ¶49. T hi s C our thas s t at ed that , w her e “‘ a s t atut e enumer at es and s peci f i es the s ubj ector things upo n w hich i ti s t o op erat e, i ti s t o b e con strued as excludi ng fr om i t s ef fectal l t ho se notexpr es s l y m ent i oned orundera ge ner al c l aus e, thos e notof l i ke ki nd orc l as s i f

i cat i on as thos e enumer at ed .
. . . ’ ” L ee v. A lexander , 607 So. 2d 30, 36 ( M i s s . 1992) ( quot i ng Southw es t

D r ug Co. v. How ard B r os . P harm acy of Jacks on, I

nc. , 320 So. 2d 776, 779 (M is s . 1 9 7 5 ))
. ¶50. T i t l e 1, Chapt er3 of the M i s s i s s i ppi Code s et s f or th s om e gene r al rul es f or cons t rui ng sta tu tes . M iss . C o d e A n n . § § 1 -3 -1 (R e v . 2 0 0 5 ). N o tab ly , S e c tio n 1 -3 -3 9 sta tes th a t: T h e term “p erso n , ” w h en u sed in an y statu te, sh all ap p ly to a rt if ici al as w e ll as natur al per s ons ; and w hen us ed t o des i gnat e the party w hos e pr operty m ay be the subj ect of

of f ens e, s hal l i ncl ude the U ni t ed St at es , thi s s t at e, orany otherst at e, t err i t ory, orcountry, and any c ounty, ci ty, t ow n orvi l l age w hi ch

### 23

m a y law fu lly o w n p ro p e rty in th is s tate ; als o a ll p u b lic a n d p riv a te corporat i on s, as w el l as i nd i vidual s. M i s s . C ode. A nn. § 1- 3- 39 ( R ev. 2005)
. Sect i on 1-3- 1, how ever , s t at es that“[ t ] hi s chapt er i s appl i cabl e t o every s t atut e unl es s i t s gener al obj ect , orthe cont extof l anguage cons trued,
orotherpr ovi s i ons of

l aw i ndi cat e thata di f

f er entmeani ng orappl i cat i on w as i nt ended f r om thatr equi r ed by thi s chapt er . ” M i s s . C ode A nn. § 1- 3- 1 ( R ev. 2005)
. A ccor di ngl y, the def i ni t i ons and cons truct s w i thi n t hatchapt erdo notappl y i f anothe rpr ovi s i on of l aw i ndi cat es thata di f

f er entm eani ng i s i nt ended. ¶51. T hi s C our tcannotappl y t he gene r al s t atut ory def i ni t i on of “per s on” her e bec aus e the
o il- a n d -g a s -s e v e ra n c e -t a x s ta tu te s p ro v id e a s p e c if ic , d is tin c t d e fi n itio n o f “ p e rs o n .” Sect i ons 27- 25- 501( h) and 27-25- 701( i ) s how thata di f f er entm eani ng of

“per s on” than that cont ai ned i n Sect i on 1- 3- 39 w as i nt ended f orthe purpos es of

oi l a nd ga s s ever ance t axat i on. ¶52. T he oi l and gas s ever ance t axes l evi ed underSect i ons 27- 25- 501 t o 27- 25- 525 and 27- 25- 701 t o 27- 25- 723 ar e l evi ed upon “pe r s ons ” onl y. Such t axes do notappl y t o the School D i stri ctbecau se i tdo es no tm eetthe de fi nit i on o f “person” set f orth w i thin t ho se provi si on s. F u rth e r w e fin d n o th in g in th e se se c tio n s th a t in d ica tes th e S c h o o l D istric t is su b jec t to o il
a n d g a s s e v e ra n c e ta x e s b y n e c e s s a ry im p lic a tio n . ¶53. T hr ee A t t orney G ener al opi ni ons s uppor tourco nclusi on . In N ov ember1979, the A tto rn e y G en era l w as a sk ed to d eterm ine w h ethe r th e state, as a ro y alty o w n er, w as liab le fo r o il a n d g a s s e v e ra n c e ta x e s o n its ro y a lty
. H addock , O p. A t t ’ y G en. #80- 0552 ( M ar ch 21, 1980)
. T he A t t orney G ener al f ound thatthe s t at e w as c ons i der ed a “ pr oducer , ” butthat oil and gas s ever ance t axes coul d notbe l evi ed upon i tbeca us e ther e w as no “mani f est

### 24

decl ar at i on” i n Sect i ons 27- 25- 501 t o 27- 25- 525 or27- 25- 701 t o 27- 25- 723 t o i ndi cat e that it w a s s u b

je c t to s u c h ta x e s . I

d. ¶54. A n A t t orney G ener al opi ni on i s s ued i n D ece m ber 1995 addr es s es the “per s on” i s s ue
m o r e s p e c if

ic a lly
. Ku e h n le , O p. A t t ’ y Gen. #9 5- 07 72 ( D e c e mber6, 19 95 )
. The r e , the A t t orney G ener al had bee n a s ked t o de t erm i ne “w hethers chool di s tr i ct s a r e exemptf r om t he im p o sitio n o f a ta x o n ro y a lti e s th e y rec e iv e fro m the p ro d u c tio n o f o il o r g a s fr o m six tee n th
s ect i on l ands
. ” I

d. T h e A tto rn e y G e n e ra l fo u n d th a t s c h o o l d istric ts a re n o t su b jec t to o il and gas s ever ance t axes on s uch r oyal t i es beca us e “a ‘ governm ent al ent i ty’ s uch as a s chool di s tr i ctdoe s notf

al l w i thi n a ny of

the cat egor i es thatw oul d e xpr es s l y c l as s i f y the s chool as
a p e rs o n to s u b

je c t i t t o ” s u c h ta x e s . I

d. M onths l at er , the C hi ef A t t orney f

orthe M i s s i s s i ppi T ax C om m i s s i on r eques t ed thatthe A t t orney G eneral reconsi der the D ecem ber1995 opi ni on. Long , O p. A t t ’ y G en. #96-0258 ( M ay 10, 1996)
. T he A t t orney G ener al once a gai n af f i r m ed th e p o s itio n th a t sc h o o l d istric ts’ s ix tee n th -se c tio n ro y a lty in ter e sts a re n o t su b jec t to
s e v e ra n c e ta x e s . I

d. ¶5 5. A t t orne y G e ne r a l op i ni on s a r e no t bi nd i ng , bu t the y c e r t a i nl y a r e us e f ul i n o f f er i ng g u id a n c e to th e C o u rt . S h e lterMu t. In s. Co . v. D a le , 914 So. 2d 69 8, 7 03 (M i s s . 2005) ( quot i ng I

n r e A s s e s s m e n t o

f A d V a lo r e m T ax e s o n L e a s e h o ld

I n te r e s t He ld

b y R e e d M fg., Inc. ex rel

. Itaw am ba Cou n t

y B d. of Su

pervisors , 8 5 4 S o . 2 d 1 0 6 6 , 1 0 7 1 (M iss. 2 0 0 3 )). ¶56. T he D epart m entof R evenue , how ever , a r gues that , be caus e the def i ni t i on of “per s on”
u n d e r S e c tio n s 2 7 -2 5 -5 0 1 (h ) a n d 2 7 -2 5 -7 0 1 (i) in c lu d e s “ tru sts ,” th e se v e ra n c e tax sh o u ld
a p p ly , b e c a u se th e ro y a lty o w n e r h e re is th e six tee n th -se c tio n lan d tru st. T h is a rg u m e n t is
s tr a in e d . S ix te e n th -s e c tio n la n d s a re in d e e d p u b lic -t ru s t la n d s . E .g ., B ayview L and, L td. v.

### 25

S tate ex rel

. Clark , 950 So. 2d 966, 972 ( M i s s . 2006) ( ci t at i ons om i t t ed)
. Y et , the t axpaye r h e re is th e S c h o o l D istric t a n d n o t a “ tru st” p e r s e . A n d it i s d iffic u lt t o re a d “ p u b lic tru st” i nt o “trus t , ” gi ven thatnothi ng el s e i n the s t atut e i m pl i cat es any type of publ i c or g o v e rn m e n ta l e n tity
.

2. W he t he r t he s t at e or i t s pol i t i c als ubdi vi s i ons c an be re q u ired to p a y o ila n d g a s sev er a n ce tax es o n it s s i xt e e nt h- s e c t i on r oy al t y i nt e r e s t s u nd e r t he M is s is s ip p i C o n s ti tu ti o n . ¶57. T he D epart m ent of R evenue ar gues that A rt i cl e 8, Sect i on 206A of the M i s s i s s i ppi C ons t i tut i on sho w s t hatthe s t at e i s obl i gat ed t o pay oi l and gas s ever ance t axes on s t at eow ned l ands
. A nd the D epart m entof R evenue cont ends thatSect i on 27- 25- 506 of t he M issi ssipp i C o d e fu rth er rec o g n izes tha t th e state p ay s sev era n ce tax es. T h e S ch o o l B o ard
a n d th e S c h o o l D istric t d isa g re e . T h e y in sis t th a t S e c tio n 2 0 6 A re q u ire s th a t a llm oneys d e riv e d fro m o il a n d g a s p ro d u c tio n o n six tee n th -se c tio n lan d s b e u se d o n ly fo r th e b e n e fit of the s chool s w i thi n t he l ocal t ow ns hi p. ¶5 8. W e f

i nd, how ever , t hatS ect i on 206A do e s no tr e qu i r e the s t a t e ori t s pol i t i cal
s ubdi vi s i ons t o pay oi l and gas s ever ance t axes on i t s s i xt eenth- s ect i on r oyal ty i nt er es t s , nor d o e s it e x e m p t th e m fr o m s u c h ta x e s . ¶59. Sect i on 206A of

the M i s s i s s i ppi C ons t i tut i on est abl i s hed an “e ducat i on i m pr ovement tru s tf u n d ” t o b e u s e d f

o ri mp r o v i n g e d u c a t i o n i n Mi s s i s s i p p i
. M i s s . C o n s t . a r t . 8 , § 2 0 6 A. I ts t at es , i n pert i nentpart , that T her e i s her eby cr eat ed and e s t abl i s hed i n the St at e Tre as ury a trus tf und w hi ch may be used, as her ei naf t erprovi ded, fort he i m pr ovementof e ducat i on w i thi n t he St at e of

M i s s i s s i ppi
. T her e s hal l be depos i t ed i n s uch trus tf und:

### 26 ( a) T he st at e’ s shar e of

al l oi l s ever ance t axes and gas s ever ance t axes der i ved fr om oi l and gas r es our ces unders t at e- ow ned l and s or f

rom severed st at e-ow ned m i neral s; ( b) A ny and al l m oni es r ece i ved by the s t at e fr om the devel opm ent , produc t i on and ut i l i zat i on of oi l and gas r es our ces un der st at e-ow ned l and s or f rom s evered st at e-ow ned m i neral s, excep tforthe fol l ow i ng po rt i on s of s uch m on i es:

. . . ( i i ) M oni es der i ved f

r om s i xt eenth sect i on l ands a n d lan d s h e ld in lieu th e re o f o r fro m m in e ra ls s ever ed f

r om s i xt eenth s ect i on l ands and l ands hel d i n l i eu ther eof

; and

. . . ( c) A ny gi f

t , donat i on, bequ est , trus t , gr ant , endow m entor tr ansf erof m oney ors ecur i t i es des i gnat ed f ors ai d trus tf

und; and ( d) A l l s uch moni es f

r om any others our ce w hat s oeveras the L egi s l atur e s hal l , i n i t s di s cret i on, s o appr opr i at e ors hal l , by g e n e ra l law , so d ire c t. M i s s . C ons t . art . 8, § 206A
. C ons i s t entw i th thi s cons t i tut i onal pr ovi s i on, Sec t i on 27- 25- 506 pr ovi des that“[ t ] he s t at e’ s s har e of a l l oi l a nd ga s s ever ance t axes der i ved f r om oi l and gas
r es our ces underst at e- ow ned l ands orf r om s ever ed s t at e- ow ned mi ner al s s hal l be depos i t ed i nto the S t at e T reas ury t o the cre ditof the trustfund creat ed in Sec t i on 20 6A
. . . . ” M i ss. C o d e A n n . § 2 7 -2 5 -5 0 6 (R e v . 2 0 1 0 ). ¶ 6 0
. S e c tio n 2 0 6 A th u s d e lin e a tes fo u r c a teg o rie s o f m o n e y s th a t a re to b e d e p o site d in to th e e d u c a tio n im p ro v e m e n t tru st fu n d ; th is c a s e c o n c e rn s s u b se c tio n s (a ) a n d (b )(ii)
s p e c if ic a lly
.

### 27

¶61. Subse ct i on ( a) di r ect s that“[ t ] he st at e’s share o f al l o i l sever ance t axes and gas
s ever ance t axes der i ved f r om oi l and gas r es our ces unders t at e- ow ned l ands orf r om s ever ed sta te- o w n e d m in e ra ls” sh a ll b e d e p o site d in to th e S e c tio n 2 0 6 A tru st fu n d . M iss . C o n st. a rt. 8, § 2 06 A (a)
. T he D ep artm en t of R even ue argu es that this m eans t hat s t at e-ow ned l and s,
w hi ch i ncl udes s i xt eenth- s ect i on l ands , ar e t axabl e and thatthe s t at e i s requi red t o pay
s ever ance t axes on oi l and gas der i ved f r om thos e l ands
. T he School D i s tr i ctand School B o ard co n tend that su b sec ti o n (a) m u st be rea d tog ethe r w ith su b sec ti o n (b)(ii ). ¶6 2. Sub s e c t i on ( b) ( i i ) s t a t e s tha t“ [ a ] ny a nd a l l moni e s r e c e i ved by t he s t at e f r om t he devel opm ent , pr oduct i on and ut i l i zat i on of oi l and gas r es our ces unde rs t at e- ow ned l ands or f r om s ever ed s t at e- ow ned m i ner al s ” ar e t o be de pos i t ed i nt o the Sect i on 206A t rustf und
exc ept f or“[ m ] oni es der i ved f

r om s i xt eenth s ect i on l ands and l ands hel d i n l i eu ther eof or from m inera ls sev ere d from sixteen th se cti o n land s . . . . ” M iss. C o n st. a rt . 8 , § 2 0 6 A (b)(ii ). T h e S c h o o l D istric t an d th e S c h o o l B o a rd a rg u e th a t su b se c tio n (b )(ii) m e a n s th a t a llm oneys der i ved f r om s i xt eenth- s ect i on l ands ar e exc ept ed f r om bei ng depos i t ed i nt o the Secti on 206A trus tf

un d; the y i ns i s ttha ta l l s uc h mone ys mus tgo i nt o the l oc a l t owns hi p f und i ns t ead. T hey mai nt ai n thatthei ri nt erpr et at i on i s cons i s t entw i th Sect i on 29- 3- 113, w hi ch
s t at es that“[ a] l l expenda bl e f unds der i ved fr om si xt eenth s ect i on orl i eu l ands s hal l be
cr edi t ed t o the s chool di s tr i ct s of the t ow ns hi p i n w hi ch s uch s i xt eenth s ect i on l ands m ay be l ocat ed” a nd that“[ s ] uch f unds s hal l notbe expende d exceptfort he purpos e of educa t i on of the educ abl e chi l dr en of the s chool dis t ri ctt o w hi ch they bel ong, oras otherw i s e may be p ro v id e d b y la w .” (c itin g M is s . C o d e A n n . 2 9 -3 -1 0 9 (R e v . 2 0 1 0 ))
.

### 28

¶6 3. T he D epar t m ent of Reve nu e i nt e rpr e t s s ub s e c t i on ( b) ( i i ) di f f e r e nt l y. I t a r gu e s t ha t
s ubs ect i on ( b) ( i i ) exce pt s the i ncome orr evenue der i ved f r om o i l and gas pr oduct i on on
s i xt eenth- s ect i on l ands f r om bei ng depos i t ed i nt o Sect i on 206A trus tf und butdoes not exempts ever ance t axes f r om bei ng depos i t ed i nt o thatf und. ¶64. W e di s agr ee w i th the D epart m entof R evenue t o t he ext entthati ti nt erpr et s s ubs ect i on ( a) as pr ovi ng t hatt he st at e pays seve r ance t axes on s t at e- ow ned l ands
. S ubs ect i on ( a) s ays
on l y that al l s everance t axes r ecei ved f rom oil and gas res ou rces on st at e-ow ned l and s m ust go i nt o the Sect i on 206A trustfund. M i s s . C ons t . art . 8, § 206A ( b)
. I ts ays nothi ng, h o w ev er, ab o u t w h o is or is no t req u ir ed to p ay tho se tax es. S ec ti o n 2 0 6 A ’s on ly co n ce rn i s thatthe s t at e’ s s har e of the s ever ance t axes b e deposi t ed i nt o the trus tf und; i ti s not
conce rned w i th w ho the t axpaye rmi ghtbe
. A ccor di ngl y, s ubs ect i on ( a) nei thers ubj ect s t he
s t at e t o norexcl udes the s t at e f r om payi ng oi l and gas s ever ance - t axes : I ti s s i l enton t hat is s u e . ¶65. W e al s o di s agr ee w i th the School D i s tr i ct ’ s and School B oar d’ s pos i t i on that Sect i on 206A exce pt s al l m oneys deri ved f r om oi l and gas pr oduct i on on s t at e- ow ned l ands f r om bei ng depos i t ed i nt o the Sect i on 206A trustfund
. Subse ct i on ( a) addr es s es oi l and gas
s ever ance t axes , w hi l e Subse ct i on ( b) r ef er s s peci f

i cal l y t o “ [ a] ny a nd a l l mon i es r ecei ved b y t h e s ta te ” fr o m o il a n d g a s p ro d u c tio n o n s ta te -o w n e d la n d s . M is s . C o n s t. a rt . 8 , § 206A ( a) , ( b)
. T he f

actthatSect i on 206A tr eat s s ever ance t axes s epar at el y f r om “[ a] ny and al l m oni es r ece i ved” i ndi cat es thatthes e tw o cat egori es ar e di s t i nct . T hus , contr ary t o t he School D i s tr i ct ’ s and the School B oar d’ s as s ert i ons , “ [ a] ny and al l m oni es r ece i ved” c annot be i nt erpr et ed as encompas s i ng s evera nce- t ax moneys. I f “[ a] ny and al l m oni es r ece i ved”

### 29

unders ubs ect i on ( b) encompas s ed s ever ance t axes , then s ubs ect i on ( a) w oul d be r end er ed
m eani ngl es s . T he m os tre as onabl e i nt erpr et at i on t hen i s t hatsubs ect i on (b) r ef er s onl y t o net in c o m e , i.e ., “ m o n ie s re c e iv e d ,” a n d n o t s e v e ra n c e ta x e s . T h u s , u n d e r s u b s e c tio n (b )( ii) , o n ly th e n e t in c o m e d e ri v e d fro m six tee n th -se c tio n lan d s is e x c e p ted fro m b e in g d e p o site d in to th e S e c tio n 2 0 6 A tru s t f u n d
. ¶66. T he C our tf

i nds that , r ead t og et her, the m ostreasonab l e i nt erpr et at i on of Sect i on 206A ( a) and ( b) ( i i ) i s as f ol l ow s : T he s t at e’ s s har e of al l oi l and gas s ever ance t axes der i ved fro m sta te- o w n e d lan d s — re g a rd les s o f w h o the tax p a y e r m a y b e — is to b e d e p o site d in to the Sect i on 206A trus tf und; a ddi t i onal l y, any and a l l neti ncome r ece i ved by the s t at e f r om
o il an d g a s p ro d u c tio n o n sta te- o w n e d lan d s is to g o in to th e S e c tio n 2 0 6 A tru st fu n d as w e ll,
exc ept fo r a n y a n d a ll n e t in c o m e d e ri v e d fr o m s ix te e n th -s e c tio n la n d s . ¶6 7. T he above cons t ruct i on of Sect i on 206 A i s n otc on tr a ry t o Se c t i on 2 11 of t he M i s s i s s i ppi C ons t i tut i on ort o Sect i ons 29-3-109 o r29- 3- 113 of the M i s s i s s i ppi C ode. Sect i on 211 of the M i s s i s s i ppi C ons t i tut i on af f i r m s t hatsi xt eenth- s ect i on l ands ar e r es erved f orthe s uppor torbenef i tof t ow ns hi p s chool s . M i s s . C ons t . art . 8, § 211. T hats ect i on, ho w ever, do es not necessar i l y p rohi bitt axes or fees fr om being assess ed o n such l and s. Sect i on 29- 3- 109 s t at es t hat“[ a] l l expenda bl e f unds der i ved f

r om s i xt eenth s ect i on orl i eu l ands shal l be cr edi t ed t o t he sc hool di s tr i ct s of the t ow ns hi p i n w hi ch s uch s i xt eenth s ect i on l and s m ay be l ocated .
. . . [ and ] [ s] uch f un ds shal l no tbe ex pen ded excep tforthe p urpose of educa t i on o f

the e du c a bl e c hi l dr e n of the s c ho ol d i s tr i c tt o w hi c h the y be l on g, o ras otherw i s e may be pr ovi ded by l aw . ” M i s s . Code A nn. § 29- 3- 109 ( R ev. 2010)
. A nd Sect i on 29- 3-113(d) di r ect s that“r oyal t i es r ece i ved f r om the s al e of

. . . oi l and gas ” ar e t o be

### 30

depos i t ed i nt o t he s chool boa rd’ s pr i nci pal f und. M i s s . C ode A nn. § 29- 3- 113( d) ( R ev. 2010)
. T hes e tw o code s ect i ons , how ever , cannotm ean thatevery centderi ved f r om
s i xt ee nth- s e c t i on l a nd s mus tb e u s e d on l y f orthe e du c a t i on o f

the c hi l dr e n w i thi n t he t ow ns hi p. O therst atut es show t hatt hi s pos i t i on i s unt enabl e. Sect i on 29- 3- 73, f orexampl e, pr ovi des thats i xt eenth- s ect i on l ands thatl i e w i thi n, and ar e benef i t t ed by, a dr ai nage di s tr i ct
a re liab le f

o r th e ir “ p ro ra ta s h a re o f th e c o sts , e x p e n se s, ta x e s, a n d a ss e ss m e n ts re latin g to
s ai d di s tr i ct . ” M i s s . C ode A nn. § 2 9-3-73 (R ev. 2 010)
. I f the l and i s hel d by a l es s ee, t he l eas e contr acti s t o f

i x w hethert he l es s ee orthe s chool boar d i s l i abl e for t hese ta xes and
a s s e s s m e n ts . I

d. A n d if th e lan d is n o t lea se d , th e sc h o o l b o a rd is o b lig a ted to p a y a ll dr ai nage t axes and ass es s m ent s and can do so “outof any s i xt eenth s ect i on f

unds bel ongi ng t o the t ow ns hi p i n w hi ch s uch l ands ar e l ocat ed. ” I d. D raina g e ta x es a n d asse ssm en ts are thus payabl e outof f

unds t hatot herw i s e w oul d be used f orthe l ocal s chool s . A ddi t i onal l y, Sect i on 29- 3- 99 s t at es thats chool di s tr i ct s ’ roya l ty i nt er es t s f r om oi l and gas pr oduct i on on
s i xt eenth- s ect i on l ands a r e comput ed af t erde duct i ng a ny us e by the l es s ee. M i s s . C ode A nn. § 2 9 -3 -9 9 (R e v . 2 0 1 0 ). S u c h d e d u c tio n re d u c e s th e a m o u n t o f m o n e y th a t o th e rw ise w o u ld be pai d as partof

the s chool di s tr i ct ’ s r oyal ty i nt er es t . Sect i ons 29- 3- 73 and 29- 3- 99 t hus i ndi cat e thatl ocal s chool s ar e notal w ays ent i t l ed t o every centder i ved f r om s i xt e e nth- s e c t i on la n d s . ¶68. H er e, though, w e conc l ude thatSec t i on 206A ne i therr equi r es the s t at e ori t s pol i t i cal
s ubdi vi s i ons t o pay oi l and gas s ever ance t axes on i t s s i xt eenth- s ect i on roya l ty i nt er es t s nor
e x e m p ts th e m fr o m s u c h ta x e s .

### 31

II . W h e th e r th e sta tu te o f lim ita tio n s r e s tr ic ts t h e p e r io d o f tim e in w hi ch t he School D i s t ri ct can s eeka ref und of s ever ance t axes t hat i t has pai d erroneous l y. ¶69. A f

t erf i ndi ng t hatthe School D i s tr i ctw as notrequir ed t o pay s ever ance t axes , the chanc el l orf

ound thatt he t hr ee- years t atut e of l i m i t at i ons i n Sect i on 27- 73- 5 barr ed the S c h o o l D istric t an d th e O il C o m p a n ies fro m c laim in g a re fu n d fo r a n y ta x e s p a id b e fo re Ju ly 2 , 2 0 0 5 – th re e y e a rs p rio r to th e d a te th a t V e n tu re a n d th e S c h o o l D is tr ict h a d filed th e ir i ni t i al compl ai nt . T he cha ncel l orf ound thatthe cas es i n w hi ch thi s Courtha d he l d thatthe
s t atut e of l i m i t at i ons and l ache s do notrun a gai ns tthe s t at e ori t s s ubdi vi s i ons had i nvol ved l i t i gat i on betw een the s t at e, orone of i t s s ubdi vi s i ons , and a pr i vat e party. H e coul d notf i nd any ca s e thathad addr es s ed w hetherthe s t atut e of l i m i t at i ons appl i ed i n a di s put e betw een
a p o lit ica l su b d iv isio n o f th e sta te a n d a sta te a g e n c y . T h e ch a n c e llo r th u s re a so n e d th a t,
s i nce the s t at e had c r eat ed the School D i s tr i ct , i thad the pow ert o s ets t atut es of l i m i t at i ons f ora ny c l a i ms tha tthe Sc ho ol Di s tr i c tmad e a ga i ns ti t s c r e a t or . The s t a t e , h e s a i d, has

“‘ author i ty t o contr ol i t s pol i t i cal s ubdi vi s i ons. ’”( ci t i ng State v. H inds Cou nt

y B oar d of S u pervisors , 6 3 5 S o . 2 d 8 3 9 , 8 4 3 (M is s . 1 9 9 4 ))
.

A . W h e th e r th e s ta tu te o f l im it a ti o n s a p p lie s . ¶70. T he Pl ai nt i f

f s as s ert that A r t i cl e 4, S ect i on 104 of the M i s s i s s i ppi C ons t i tut i on and Sect i on 15- 1- 51 of

the M i ssi ssi pp i C ode ar e cl earthatthe s t atut es of l i m i t at i on do notrun
a g a in st th e sta te o r a n y o f its su b d iv isio n s. T h e y a rg u e th a t th e C o n s titu tio n g o v e rn s th is is s u e . N e w e ll v. S ta te , 3 0 8 S o . 2 d 7 1 , 7 7 (M iss . 1 9 7 5 ); Ch e v ro n U .S .A ., In c . v. S ta te , 578 S o . 2 d 6 4 4 , 6 4 8 (M iss . 1 9 9 1 ); T o w n o f Cre n sh a w v. P a n o la Co u n ty , 115 M i s s . 891, 76 So. 741 ( 1917)
. Fur ther , they cont end thatthe cha ncel l orerr ed i n r el yi ng upon H in d s C o u n ty

### 32

B oa rd of Su

pervisors i n re achi ng hi s deci s i on, as the st atut es of l i m i t at i ons w er e notati s s ue in th a t c a s e . ¶71. T he D epart m entof R evenue , on the ot herhand, ass ert s t hatt he O i l C om pani es — not the School D i s tr i ct— are t he t axpaye r s ; ther ef or e, the s t atut e of

l i m i t at i ons i s notbei ng app l i ed to the S t at e or i t s subdivi si on s. Itargues fur ther that the st at e and i t s subdivi si on s,
on occa s i on, h ave be en dee m ed s ubj ectt o s t atut es of l i m i t at i on. I tci t es thr ee c as es as
su p p o rt: T

ow n of Tutw ilerv. G ibs on , 1 1 7 M iss
. 8 7 9 , 7 8 S o . 9 2 6 (1 9 1 8 ); T a lla h a tch ie Co u n ty v . L itt

le , 93 M i s s . 88, 46 S o. 257 ( 1908) ; and G ull y v. B ew , 170 M i s s . 427, 154 So. 284 ( 193 4)
. The Depa r t mento f Rev e nu e a l s o w a rns tha tf a i l ur e t o a pp l y a s t a tut e of l i m i t at i ons coul d r es ul ti n “a s ever e bl ow t o the s t at e’ s cof f er s . ” A ddi t i onal l y, i tas s ert s t hat
r ecor ds da t i ng ba ck beyond thr ee year s ha ve been des tr oyed underthe “St at e D ocument R e te n tio n P o lic y .” ¶ 7 2
. W e a lre a d y h a v e a d d re s s e d th e D e p a rt m e n t o f R e v e n u e ’s c o n ten tio n th a t th e O il C om pani es — notthe School D i s tr i ct— ar e the t axp ayers and found thatar gum entt o be
w it h o u t m e ri t. See, s up ra Is s u e I.A
. Ca lif o r n ia Co . i s cl ear that the seve rance t axes are le v ie d u p o n th e S c h o o l D is tr ic t in th e fi rs t in s ta n c e . Cali f or ni a Co. , 74 So. 2d at858. E ven though the O i l Com pani es may r emi tthes e t axes , the t axes a r e deduct ed f r om the S cho ol D is tr ic t’ s o w n e rs h ip s h a re ; a n y re fu n d , th e re fo re , w o u ld b e lo n g to th e S c h o o l D is tr ic t. ¶73. A r t i cl e 4, Sect i on 1 04 o f t he M i ssi ssi pp i C on st i tuti on st at es that : “[ s ] t atut es of l i m i t at i on i n ci vi l caus es s hal l notrun agai ns tthe s t at e, o r any s ubdi vi s i on orm uni ci pal
c o rp o r a t i o n th e r e o f

. ” M i s s . Co n s t . a r t . I V, § 1 0 4
. S e c t i o n 1 5
- 1
- 5 1 r e p e a t s th i s s a me la n g u a g e . M is s . C o d e A n n . § 1 5 -1 -5 1 (R e v . 2 0 1 2 ).

### 33

¶74. T hi s C our t has s ai d that the purpos e of Sect i ons 104 and 15- 1-51 “i s t hat t he body p o lit ic s h o u ld n o t su ffe r b e c a u se o f th e n e g le c t o r p ro c ra stin a tio n o f its p u b lic s e rv a n ts in pr om pt l y as s ert i ng and pr ot ect i ng r i ght s of the gene r al publ i c i n ci vi l m att er s . ” Miss . S ta te H i gh w ay C o m m 'n v. N

ew A l ba ny G as S

ys. , 534 So. 2d 204, 207 ( M i s s . 1988)
. Si nce Sect i on 104 w as enac t ed, thi s C our tcons i s t ent l y has uphel d the “i m m uni ty” a gove rnm ent al
e n tity e n jo y s fr o m t h e s e p ro v is io n s . E n roth v. Mem ’l Hosp. at G u l

fport , 566 So. 2d 202, 2 0 6 (M iss . 1 9 9 0 ); s ee al s o Mu rph ree v. A berdee n -Mon roe Cou n t y Hosp . , 671 So. 2d 1300 (M iss . 1 9 9 6 ); State H

i ghw ay Com m '

n v. N ew Albany G as Sys
. , 5 34 S o. 2 d 20 4, 2 07 (M i ss. 1 9 8 8 ); B oar d o

f Educ. of

I tawam ba Count

y v. Loag ue , 405 So. 2d 122, 124- 25 ( M i s s. 1 9 8 1 ); Nugent

& P ullen v. R ober t

s on , 1 2 6 M iss
. 4 1 9 , 8 8 S o . 8 9 5 , 8 9 7 -9 8 (1 9 2 1 ); G r enada L u m b e rC o . v . S ta te , 9 8 M iss . 5 3 6 , 5 4 S o . 8 , 9 (1 9 1 1 ); A dam s v. I l linois Cent

. R . Co. , 71 M iss. 7 5 2 , 1 5 S o . 6 4 0 (18 9 4 ). ¶75. N one of the cas es ci t ed by the D epart m ent of R evenue i s per s uas i ve t o the contr ary. I n G ibs on , the C our thel d thata muni ci pal i ty w as s ubj ectt o the t i m e l i m i t at i ons f orf i l i ng an
a p p e a l. G ibs on , 78 So. a t926- 27. T he C our ts ai d that“the t i m e w i thi n w hi ch appe al s t o the Supr eme C our tm us tbe t aken i s nota s t atut e of l i m i t at i on i n the or di nary s ens e. ” I d. at926. T her ef or e, i tf ound thatA r t i cl e 4, Sect i on 104 of the C ons t i tut i on had no bear i ng upon t hat
c a s e . I d. I n L itt le , the C our thel d onl y t hatt he t w o- yearper i od al l ow ed f orr edempt i on f

r om
a ta x s a le d id n o t c o n s titu te a “ s ta tu te o f lim ita tio n s ” u n d e r A rt ic le 4 , S e c tio n 1 0 4
. L itt le , 46 So. at258. Fi nal l y, i n G u lly , the C our thel d thatt he st at e t ax col l ect orw as s ubj ectt o a s i xyears t atut ory l i m i t at i ons per i od f orf i l i ng s ui tt o for ecl os e tw o m or t gages s ecur i ng i l l egal lo a n s m a d e b y a c o u n ty . G u lly , 154 So. at288. T he C our ts ai d t hat the county’ s caus e of

### 34

act i on h a d a c c rue d a s s oo n a s the l oa ns h a d be e n made , a nd i tn ot e d tha t , u nd e rAr t i cl e 4, Sect i on 104 of

the M i s s i s s i ppi C ons t i tut i on, the s t atut e of l i m i t at i ons di d notrun agai ns tt he
c o u n ty . I

d. B ut, i tfound that the si x-year st atute of l i m i t at i on s appli ed in that cas e, becau se th a t p a rticu lar sta tu te o f lim itatio n s w a s “ n o t a lim itatio n o n th e c a u se o f a c tio n b u t a l i m i t at i on on the r i ghtof the [ s t at e t ax col l ect or ] t o s ue on an e xi s t i ng caus e of act i on i n f

avor of the county. ” I

d. ¶76. A l l of

the above
- m ent i oned ca s es , how ever , i nvol ve d s ui t s be tw e e n governm ent al and pr i vat e ent i t i es . H er e w e have a s ui tbe tw een governm ent al e nt i t i es . T he o nly case t hat app ears t o ad dress the q uest i on before us i s T o w n o f Cre n sh a w v. P a n o la Co u n ty , 11 5 M i ss. 8 9 1 , 7 6 S o . 7 4 1 (1 9 1 7 ). ¶77. T her e, the Tow n of C r ens haw ha d pr es ent ed a cl ai m t o the Panol a C ounty B oar d of Super vi s or s i n 1915 f

ori t s s har e of

the ad val or em t axes Panol a C ounty had col l ect ed f ort he y e a rs 1 9 0 7 a n d 1 9 0 8
. I d. A f t erthe boar d of

s upervi s or s r ej ect ed the cl ai m , the Tow n s ued in ju s tic e c o u rt , w h ic h re n d e re d ju d g m e n t in fa v o r o f t h e T o w n . I d. Panol a C ounty appea l ed t o the ci r cui tcourt , as s ert i ng t hatthe Tow n’ s s ui tw as barr ed by a s i x- years t atut e of lim ita tio n s . I

d. 7 4 1 -4 2
. T h e c ir c u it c o u rt a g re e d w ith P a n o la C o u n ty . I d. a t742. L i ke the ch an ce ry c o u rth ere , the c o u rttoo k the p o sit ion that S ec ti o n 1 0 4 p roh ibit ed the L eg isl ature onl y f r om author i zi ng a s t atut e of l i m i t at i ons agai ns tthe s t at e, i t s s ubdi vi s i ons , and muni ci pal
c o rp o ra tio n s w h e n p riv a te p a rties are in v o lv e d
. I d. T h is C o u rtrejected the c ir cu itco u rt ’s i nt erpr et at i on of

Sect i on 104 a nd he l d thatthe s t atut e of l i m i t at i ons di d notappl y agai ns tt he t ow n:W e ac know l edge thatthe doctr i ne of l ache s w as r ai s ed bel ow , butthe w el l
- s ett l ed 7 l aw i n M i s s i s s i ppi i s thatnei therthe s t at e nori t s ent i t i es i s s ubj ectt o t he st atut es of lim ita tio n s o r c h a rg e a b le w ith th e l a c h e s o f i ts o ff ic ia ls
. B oar d of

E ducati on of

L am ar Count y v. Hudson , 5 8 5 S o . 2 d 6 8 3 , 6 8 8 (M iss.1 9 9 1 ); Hil l v. T hom ps on , 564 So. 2d 1, 14 (M iss. 1 9 8 9 ). 

### 35 Sect i on 104 of

ourC ons t i tut i on expr es s l y pr ovi des tha tthe s t atut es of lim itatio n sh a ll n o t ru n a g a in st m u n icip a l co rp o ra tio n s. T h e p lain tiff in th is c a se is a m u n icip a l co rp o ra tio n , an d w e c a n fin d n o th in g in th e C o n stitu tio n to w arr antthe exc ept i on s oughtt o be m ade i n thi s cas e. T he county coul d, of cour s e, i nvoke t he st atut e agai ns ta natur al per s on orpr i vat e corpor at i on, but the C ons t i tut i on cl os es the doorw hen the pl ai nt i f f i s a muni ci pal corpor at i on. T ow n of Cr ens haw , 7 6 S o . a t 7 4 3
. T ow n of Cr ens haw thus s uppor t s thatS ect i on 104
a p p lie s e v e n w h e n th e s ta te , o r a n y o f i ts s u b d iv is io n s , is e ith e r p la in tif f o r d e fe n d a n t. ¶78. T hats ai d, beca us e the cha ncel l orbas ed hi s deci s i on on the s t atut e of l i m i t at i ons , he d id n o t re a c h th e q u e stio n o f w h e th e r th e d o c trin e s o f w a iv e r a n d /o r e sto p p e l sh o u ld a p p ly i n th i s c a s e . W e b e l i e v e th e y wa rr a n tc o n s i d e r a t i o n i n th i s i n s t a n c e . Ac c o r d i n g l y , we

7
re m a n d th is is s u e to th e c h a n c e ry c o u rt to a llo w th e s e d o c tr in e s to b e c o n s id e re d fu lly
. III . W h ether the S ch oo l D ist rict is li a b le fo r ad m i n i st rati ve exp en se t axes on i t s royal t y i nt ere s t s d eri ved fr om oi l an d gas p roduct i on on s i xt e e nt h- s e c t i on l and. ¶ 7 9
. A tr ia l c o u rt ’s g ra n t o f s u m m a ry ju d g m e n t is re v ie w e d d e n o v o . Hookerv. G r eer , 81 So. 3d 1103, 1108 ( M i s s . 2012) ( ci t i ng W aggonerv. W

il liam s on , 8 So
. 3d 1 47 , 15 2 (M i ss. 2 0 0 9 )). S u m m a ry ju d g m e n t is p ro p e r w h e n “ th e p lea d in g s, d e p o sitio n s, a n sw e rs to i nterrogat ori es and admi s s i ons on f i l e . . . s how thatther e i s no genui ne i s s ue as t o any
m at eri al factand that the m ov i ng party is enti t l ed to a j ud gm ent as a m at t er of law
. ” M i ss. R . C i v. P. 56( c)
. T he evidenc e i s cons i der ed i n the l i ghtm os tf avor abl e t o the nonmovi ng p a rt y . Hooker , So. 3d at 1108 (c i t i ng W aggoner , 8 So. 3d at152)
. T he movanthas t he

### 36

b u rd e n o f sh o w in g th a t n o g e n u in e iss u e o f m a ter ial fa c t ex ists, an d the n o n m o v in g p a rty is g iv e n th e b e n e fi t o f th e d o u b t a s to th e e x is te n c e o f a m a te ri a l fa c t. Hooker , 81 So. 3d at 1108 ( ci t i ng W

aggoner , 8 S o . 3 d a t 1 5 2 -5 3 ). ¶80. T he chanc el l orf ound thatthe School D i st ri ctw as r equ i red t o p ay admi ni s tr at i ve expens e t axes on i t s s i xt eenth-s ect i on r oyal ty i nt er es t s . T he cha ncel l orr el i ed on B ida rt B r others v. Cali

f or ni a A pple Com m is s i on , 73 F. 3d 925, 927 ( 9th C i r . 1996) , t o det erm i ne thatthes e as s es s m ent s are f ees , nott axes . T he cha ncel l ors ai d thatthes e f ees f und t he reg u lat o ry a n d e n fo rc e m e n t f u n cti o n s o f th e O il an d G as B o ard an d that the P lai n ti ffs benef i t t ed di r ect l y f

r om t he O i l and G as B oar d’ s s ervi ces . H e not ed thatthe O i l and G as B oar d ens ur es thatthe School D i s tr i cti s pai d i t s f ai rr oyal ty s har e. ¶81. O nce aga i n, w e not e t hatt he Secr et ary of St at e does notappea l the cha ncel l or ’ s gr ant of s um m ary j udgm entf

orthe O i l and G as B oar d. T he School D i s tr i ctan d S chool B oar d, ho w ever, assertthat the ch ancell or’ s t ax-f ee dis t i ncti on i s i nco nsequ enti al : A l l m on i es,
w hethert axes orf

ees , m us tgo t o the School D i s tr i ct . A l t ernat i vel y, the School D i s tr i ctand S cho ol B oard ch al l eng e t hat these fees are no treasonab l y rel at ed t o si xteenth-sect i on l and s. T he op er at i ons of

the O i l and G as B oar d, they ar gue, ar e expa ns i ve and s erve the br oad i nter est s of the p ub l i c, no tj ustsi xteenth-sect i on l and s. ¶82. Sect i on 53- 1- 73 of t he M i s s i s s i ppi C ode l evi es an admi ni s tr at i ve expe ns e t ax on eac h barr el of oi l pr oduced i n the s t at e. M i ss. C od e A nn. § 53- 1- 73 ( R ev. 2003)
. T he moneys
c o llec ted a re to b e “ u se d e x c lu siv e ly to p a y th e e x p e n se s a n d o th e r c o sts in c o n n e c tio n w ith t he f un c t i on i ng o f

the St a t e Oi l a nd Gas Boa r d a nd the a dmi ni s tr a t i on o f the oi l and gas
con servati on l aw s of the S t at e o f M i ssi ssi pp i no w i n force or her eaft er enact ed an d the rules ,

### 37

r egul at i ons and or der s of s ai d boar d. ” M i s s . C ode. A nn. § 53- 1- 73 ( R ev. 2003)
. T he O i l and G a s B o a rd h a s th e p o w e r to in c re a se o r re d u c e th e a m o u n t ch a rg e d w ith in th e lim its se t fo rth in S e c tio n 5 3 -1 -7 3
. Id
. ¶ 8 3
. A ll “ p e rso n s” o w n in g a ro y a lty in ter e st a re liab le fo r a d m in istra tiv e e x p e n se tax e s in pr opor t i on t o t hei row ner s hi p atthe t i m e of pr oduct i on. M i s s . C ode A nn. § 53-1- 75 ( R ev. 2003)
. U nl i ke the defi nit i on of “per s on” underthe oi l
- and- gas - s ever ance - t ax s t atut es , t he d e fin iti o n o f “ p e rso n ” fo r th e p u rp o se s o f a d m in istra tiv e e x p e n se tax e s d o e s in c lu d e th e sta te and i t s pol i t i cal s ubdi vi s i ons . M i s s . C ode A nn . § 53- 1- 71 ( R ev. 2003)
. Sect i on 53- 1- 71
s t at es , i n pert i nentpart , thatthe t erm “ per s on, ” as us ed i n Sec t i on 53- 1- 73, “ s hal l mean any i ndi vi dual , corpor at i on, partner s hi p, as s oci at i on, orany s t at e, m uni ci pal i ty, poli t i cal
su b d ivisi o n o f an y stat e . . . . ” M iss. C o d e. A n n . § 5 3 -1-7 1 (R ev . 2 0 0 3 ). T h e L eg isl ature f i r s ti ncl uded i ndi vi dual s, partner s hi ps , as s oci at i ons , s t at es , m uni ci pal i t i es , pol i t i cal
s u b d iv is io n s o f a s ta te , a n d a n y a g e n c y , in th e s ta tu te in 2 0 0 9 M is s . C o d e . ¶84. T he School D i s tr i cti s r equi r ed t o pay admi ni s tr at i ve expe ns e t axes t o the O i l and G as B oar d. T he as s es s m ent s l evi ed underS ect i on 53-1- 73 ar e l abel ed m or e appr opr i at el y as f ees
ra th e r t h a n ta x e s . ¶85. I n San Juan Cel lular T elephone Co. v. P ubli c Ser vice Com m is s i on of P uer to R i co , 967 F. 2d 683 ( 1s tC i r . 1992) , then- C hi ef J udge B r eyerdi s cus s ed the gene r al appr oach that
c o u rts h a v e u se d to d istin g u ish tax e s fr o m fe e s: C our t s have ha d t o di s t i ngui s h “t axes ” f rom r egul at ory “f

ees ” i n a var i ety of s ta tu to ry c o n tex ts. Y e t, i n d o in g so , the y h a v e a n a ly z e d th e leg a l issu e s in s i m i l arw ays . T hey have s ket ched a s pectrum w i th a par adi gm at i c t ax atone end and a par adi gm at i c f ee a tthe other. T he cl as s i c “t ax” i s i m pos ed by a l egi s l atur e upon many, oral l , ci t i zens . Itra i s es m oney, contr i but ed t o a gene r al

### 38

fun d , an d sp en t f

o r th e b en efito f the e n ti re c o m m u n ity . T h e c lassic “reg u lat o ry f ee” i s i m pos ed by an a gency upon thos e s ubj ectt o i t s r egul at i on. I tm ay s erve r egul at ory purpos es di r ect l y by, f orexampl e, del i ber at el y di s cour agi ng part i cul arconductby m aki ng i tm or e expe ns i ve. O r , i tm ay s erve s uch p u rp o se s in d ire c tly b y , fo r e x a m p le, r a isin g m o n e y p lac e d in a sp e c ial fu n d to help defr ay the agen cy’s r egu l at i on -r el at ed ex pen ses. Cour t s f a c i ng c a s e s tha tl i e ne a rthe mi dd l e of thi s s pe c trum ha ve t ended (so m e tim e s w ith m in o r d iffe re n c e s re fle c tin g th e d iffe re n t sta tu tes a t issu e ) to emphasi ze the r evenue ’ s ul t i m at e us e, as ki ng w hetheri tpr ovide s a gene r al b e n e fit to th e p u b lic, o f a s o rt o fte n fin a n c e d b y a g e n e ra l tax , o r w h e th e r it p rov ides m o re n arro w b en efit s t o regu lat ed co m p an ies or d efray s the ag en cy ’s c o s ts o f r e g u la tio n . San Ju an Cel

lularT el . Co. , 967 F. 2d a t685 ( 1s tCi r . 1992) ( ci t at i ons om i t t ed)
. T he U ni t ed S tate s C o u rt o f A p p e a ls fo r th e F irst C irc u it h e ld th a t th e “ p e rio d ra te” o r “ p e rio d ic f e e ” in thatpart i cul arcas e w as a f ee, and nota tax, b eca us e: ( 1) a r egul at ory agenc y as s es s ed the f ee; ( 2) the agenc y pl ace d t he m oney i n a spec i al fund; and (3) the money w as us ed t o def r ay th e e x p e n s e s o f a g e n c y ra th e r t h a n fo r a g e n e ra l p u rp o s e . I d. a t 6 8 6
. ¶86. T he admi ni s tr at i ve expe ns e t ax l evi ed underSect i on 53- 1- 73 i s m or e a f ee than a t ax. T he O i l an d G as B oar d f i xes the ac tual char ge and c ol l ect s the as s es s m ent s . M i s s . C ode A nn. § 53- 1- 73 ( R ev. 2003)
. T he money i s t hen depos i t ed i nt o a spec i al fund know n as the “O i l and G as C ons ervat i on F und. ” M i s s . C ode A nn. § 53- 1- 77( 1) ( R ev. 2003)
. T hatm oney i s “hel d i n trus tf

orthe us e of

the boar d t o pay the expe ns es and cos t s i ncurr ed i n connec t i on
w i th the adm i ni s tr at i on and enf or cementof the oi l and gas cons ervat i on l aw s of the St at e of M i s s i s s i ppi and the rul es , r egul at i ons and or der s ” of the O i l and G as B oar d. M i s s . C ode A nn. § 5 3-1-77(2) ( R ev. 20 03 ). T he O i l and G as B oard i s sel f- funded and rel i es heav i l y o n these
asse ssm en ts. T h ese asse ssm en ts acc o u n ted fo r $2
. 8 8 m il li o n o f th e O il an d G as B o ard ’s $3. 62 m i l l i on budgetf

orfi s cal year2009, and $1. 96 m i l l i on of i t s $2. 24 m i l l i on budgetf or

### 39

f i s cal year2010. E xces s m oney w i thi n the O i l and G as Conservat i on Fund i s us ed t o pl ug oi l orgas “orphan” w el l s thatpr es enti m m i nentthr eat s t o t he envi r onm ent . M i s s . C ode A nn. § 5 3 -1 -7 7 (4 )- (7 ) ( R e v . 2 0 0 3 ). ¶8 7. T he a s s e s s ment s un de r Se c t i on 53
- 1- 73 s a t i s f y a l l the c r i t e r i a of a f

e e : The O i l and G a s B o a rd a ss e ss e s th e fe e , the m o n e y g o e s in to a sp e c ial fu n d , an d th e m o n e y is u se d to def r ay the O i l and G as B oar d’ s cos t s of oper at i on. ¶88. I f the as s es s m ent s under Sect i on 53- 1- 73 ar e f ees , no cons t i tut i onal pr ovi s i on orl aw
w oul d pr ecl ud e t he School D i s tr i ctf r om havi ng t o pay thes e f ees . Sect i on 206A of

the M i s s i s s i pp i Cons t i tut i on , di s c us s ed s u p r a , I s s ue I . B . 1. , does notr equi r e thatevery cent d erive d from sixteen th-sec ti o n p rop erty b e u sed for th e loc al sch o o ls. O ther statutes su p p o rt th is a s w e ll. See s upr a, I s s ue I . B . 1. ¶89. I n the abs ence of any cons t i tut i onal orotherl aw f ul ba rr i er , the School D i s tr i ctcan be
r equi r ed t o pa y the admi ni s tr at i ve expens e t ax beca us e i ti s e xpr es s l y i ncl uded w i t hin t he
s t atut e. T he School D i s tr i ctf i t s w i thi n the def

i nit i on o f

“per s on” ow i ng admi ni s tr at i ve
e x p e n se tax e s. U n lik e the o il-an d -g a s-s e v e ra n c e -ta x sta tu tes , th e L e g isla tu re h a s e x p re ss ly
m a d e th e s ta te a n d its p o litic a l s u b d iv is io n s s u b je c t to th is a s s e s s m e n t. ¶ 9 0
. F o r th e se re a so n s, th e c h a n c e llo r d id n o t er r in g ra n tin g su m m a ry ju d g m e n t fo r th e O il
a n d G a s B o a rd
. CO NC L US I ON ¶91. W e f

i nd that the School D i s tr i ct i s not r equi r ed t o pay oi l and gas s ever ance t axes on i t s s i xt eenth- s ect i on r oyal ty i nt er es t s . B utthe Sch oo l D i s tr i cti s r equi r ed t o pay admi ni s tr at i ve expe ns e t axes on i t s s i xt eenth- s ect i on r oyal ty i nt er es t s . O n r emand, t he

### 40

c h a n c e ry c o u rt sh a ll d e ter m in e w h e th e r th e d o c trin e s o f w a iv e r a n d /o r e sto p p e l sh o u ld a p p ly to th e P lai n ti ffs’ refu n d clai m s. A cc o rdin g ly, the jud g m en t o f th e Jo n es C o u n ty C h a n c e ry C our ti s af

f i r m ed i n partand r ever s ed i n parta nd r emanded f orf ur therpr ocee di ngs cons i s t ent
w ith th is o p in io n . ¶ 9 2
. AF F I RM ED I N P ART ; RE VE RS ED I N P ART AND RE M ANDE D. DI CKI NS ON AND RA NDOL P H, P . J J . , LA M AR, KI TC HENS , CHANDL ER , KI NG AN D C OL E M AN , J J . , CO NC UR . W AL L E R, C. J . , NO T P AR T I CI P AT I NG .