### THE ~TORNEY GENERAL OF TEXAS

Honorable Rick Hamby District Attorney Howard County Courthouse Big Spring, Texas 79720

Honorable Mark Edwards Reagan County Attorney P.0. Box 924 Big Lake, Texas 76932 Opinion No.JR-1221

Re: Division of taxing authority over certain severed mineral interests between two contiguous underground water conservation districts (RQ-1927), (RQ-1983)

DearMr. Hamby andMr. Edwards:

This opinion responds to the issues you each raise under section 14of Senate the legislature in 1989. Bill 1634,which was enacted by Acts 1989, 71st Leg., ch. 653, at

- 2153-55. Senate Bill 1634 created the Santa Rita Underground Water Conservation District [hereinafter the Santa Rita district] inReagan County, Texas. Section 14of the bill excludes certain lands from the Santa Rita district. Your requests focus on the ad valorem taxation of the severed mineral interests inthe excluded lands that were annexed into the Glasscock County Underground Water Conservation district].1 District [hereinafter the Glasscock County

We understand that some of theReagan County landowners whose lands have been annexed into the Glasscock County district did not own all of themineral rights in the annexed lands. You each askwhether the Santa Rita district
or theGlasscock County district is authorized to tax the severed mineral interests since those interests were not

1. In 1981 the legislature created the Glasscock County district and provided that its boundaries were identical to those of Glasscock County. Acts 1981, 67th Leg., ch. 489, 55 l-2, at 2104. Glasscock County is located immediately north ofReagan County.Honorable Rick Hamby -Page 2 (JM-1221)

Honorable Mark Edwards

owned by the persons who tion.2 filed the petitions for annexaSection 14(a) exempts fromthe district "any lands

. . .annexed into" the Glasscock County district under section 51.714 of theWater Code prior toJune 14, 1989, the effective date of the act. Section 51.714 permits an "owner of land" to filewith the Glasscock County district 'Ia petition requesting that'the land described bymetes bounds inthepetition be included inthe district.1' and

Section 14(b),which establishes another means of eluding lands fromthe Santa Rita district, provides in that:

(1) Within one calendar year from the

effective date of thisAct, the owner of land who owns landwith[in] adelineated critical area3 pursuant to Section 52.053, Water Code, andwhose lands are within the district may filewith the board a netition recuestins that the owner's landbe- excluded from the district. The petition must describe the landby legal description orby metes and bounds orby lotandblock number ifthere is
a recorded plat of the area tobe excluded from the district. This petition must be signed and notarized by the owner of the land.

(2) The board shall accept the petition immediately and shallgrant exclusion of the land described in the petition, the only requirement for review by the board being that of conformity to Subdivision (1)of this subsection. (Emphasisadded.)

2. We have received correspondence indicating that the Santa Rita district asserts no right to tax mineral interests owned by the surface owners whose petitions for annexation were granted. expart

3. A lBcriticalarean isanarea designated and delineated by the TexasWater Commission asan area experiencing

or expected to experience critical groundwater problems. Water Code 552.001(14).

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Honorable Mark Edwards

Except for lands that have been excluded under either section 14(a) or (b),the Santa Rita district includes all territory located within Reagan County. Acts 1989, 71st Leg., ch. 653, 53,at 2153.

Wehave received correspondence indicating that some Reagan County landowners timely filedpetitions for annexation under section 51.714 of the Water Code with the Glasscock County district and that those petitions were granted prior to June 14, 1989. The sample petitions for annexation thatwehave received refer to section 51.714 and request the annexation of "the landdescribed bymetes and bounds" in the exhibits attached to the petitions. The metes andbounds descriptions neither expressly include nor exclude minerals in or under the described land. We understand that the sample petitions are typical of the petitions filedunder section 14(a).

,- We are also advised that some Reagan County landowners

timely filed petitions under section 14(b) to exclude their lands from the Santa Rita district. We understand that nearly all of the landowners who filed section 14(b) tions forexclusion with the Santa Rita district have petialso filed petitions with the Glasscock County district for annexation of the excluded lands.

The samples thatwe have received ofannexation petitions filedby landowners whose landswere excluded pursuant to section 14(b) refer to section 52.521 of theWater Code, which authorizes the owner of land contiguous to an underground water district to filea petition for annexation.4

4. Section 52.521, alongwith the rest of subchapter K ofchapter 52,was added to theWater Codeby Senate Bill 1212 and took effect September 1, 1989. Acts 1989, 71st Leg., ch. 936, 514 at 3998, §21, at 4001. Subchapter **K** provides forthe annexation of territory to and consolidation ofdistricts. u. 514,at 3998-4000. Subchapter K is applicable to underground water conservation districts created by special law. Water Code 5 52.005 (subchapters D, J, andK applicable to special lawdistricts). Prior to the passage of Senate Bill 1212, some underground water conservation districts relied on the annexation provisions of chapter 51of theWater Code,which covers water control and improvement districts. Section 51.714 isone of those (Footnote Continued)

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Honorable Mark Edwards

The sample petitions metes andbounds and describe the land tobe annexed by neither expressly include nor exclude minerals inorunder the described land. We understand that these samples are representative of the annexation petitions filedwith the Glasscock County district by owners of lands excluded fromthe 14(b).5 Santa Rita district pursuant to section

OnApril **26, 1989,**  the Senate Committee on Natural Resources conducted a public hearing during which it received testimony on Senate Bill 1634. briefly in favorof the Twowitnesses spoke committee substitute for the bill. Noone spoke against the bill. Senator Bill Sims, the bill's sponsor, spoke first onbehalf of the committee substitute. His speech focused on section 14,which first appeared inthe committee substitute adopted by the Natural Resources committee.6 He referred to section 14 as the agreement negotiated between the two districts that would allowmembers of the farming community to annex into the Glasscock County district. He stated that the arrangement in section 14hadbeen worked out since some of the farming community felt they could work better with the Glasscock County district and that theReagan County district thatwould work well for both sides. thought Senator Simsmade no reference to the owners of the severed mineral interests.

(Footnote Continued) provisions. See. e.a.,Acts 1981, 67th Leg., ch. 489, 54, at 2104 (Glasscock County district may exercise powers permitted by chapter 51).

**5.** We assume forpurposes of this opinion that before approval of any annexation petition all applicable requirements were satisfied. See. e.s.,Water Code 55 51.716, **52.523.**

**6.** Sections 14(a) and 14(b) Committee onNatural Resources asadded **by** the Senate

**are almost**  identical to the sections as enacted. OnMay 10, 1989, the House Committee
onNatural Resources reported asubstitute for Senate Bill 1634 thatmodified section 14(b) to permit only owners of landwithin delineated critical areas to filepetitions for exclusion. The Senate version of section 14(b)would have allowed any owner of landwithin the Santa Rita district to file apetition forexclusion.Honorable Rick Hamby -Page 5 (JM-1221)

Honorable Mark Edwards

The nextwitness at the Senate hearing also did not mention the owners of the severed mineral interests, and only stated that section 14 was a closely negotiated arrangement thatwas satisfactory to the representatives of both districts. Public Hearino on S.B. 1634 Before Senate Comm. onNatural Resources, (April26, 1989) (testimony of TomMassey). The focus in the House was also on the settlement reached between the districts. Representative Robert June11 referred to the division of the county between the northern farming and the southern ranching communities and stated that the controversy about the northern part of the county had been settled by theparties. Public Hearinq
on C.S.S.B. 1634 Before House Comm. onNatural Resources, WY 10, 1989)(testimony ofRep. Robert A. Junell).

We areunaware ofany constitutional provision restricting the legislature's choice ofboundaries for conservation districts orproperties to include within such districts. &q Harris Countv Drainase Dist. No. 12v. Houston, 35 S.W.Zd 118 (Tex. 1931); 36 D.Brooks, n Countv and Secial District Law §46.4, at 544-45: 546.6, at 548-49 (Texas Practice 1989) (districtboundaries may overlap or coincide with other governmental districts): Attorney General Opinion /h JM-827 (1987) (holding valid a water district created

primarily to encompass ahazardous waste facility).7 Nor has anybrief submitted inconjunction with your requests referred us to such aprohibition.

We note that section 14(a) references section 51.714 rather than section 51.718 of theWater Code. In contrast to section 51.714, which permits a single landowner to petition for annexation, section 51.718 authorizes two or more landowners of adefined area of territory to petition forannexation. A section 51.718 petition must be signed either by amajority of the landowners inthe territory or by 50 landowners if the territory contains more than 50

7. Although the legislature possesses broad authority to select the boundaries of and theproperties tobe included within water districts, the legislature has delegated to the Texas Water Commission only circumscribed powers over district creation. See Attorney General Opinion JM-1115 (1989) (whilecommission not authorized to create district excluding part of themineral interests, district board could grant petition excluding such interests after district creation).

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landowners. Annexation of property within the territory becomes final upon approval of amajority of thevoters in the territory tobe annexed aswell as in the annexing district. Given the liability fordistrict indebtedness and taxes imposed on annexed territory, webelieve that the legislature would have referenced section 51.718 in section 14(a) if ithad intended forproperty other than that of the petitioning landowner to be annexed into the Glasscock County district.8

We are unaware ofany case construing either section 51.714 or 51.718 or their predecessors, articles 7880-75 and 7880-75b, V.T.C.S. See Acts 1925, 39th Leg., ch. 25, §75, and 575b, as added byActs 1929, 41st Leg., 1st C.S., ch. 82, 52. We think, however, that the courts would hold that both the owners of the surface estates and the owners of the severed mineral estates are separate landowners forpurposes of section 51.714 and 51.718. See Citv of Cornus Christi v. Cartwrioht, 288 S.W.2d 836 (Tex. Civ.App. -San Antonio 1956,writ ref'd) (holdingowners of severed mineral estates and owners of surface estates were landowners for district creation purposes and had tobe considered in determining the sufficiency of apetition filed under article 7880-10 [nowsection 51.013 of theWater Code]): see also Nueces Countv Water Control & Imnrovement Dist. No. 4v. Wilson, 304 S.W.2d 281 (Tex. Civ.App. -El Paso 1957,writ ref'd n.r.e) (court has jurisdiction to review denial by water district board of separate petitions filed under article 7880-76 [nowsection 51.692 of theWater Code] by owners of surface estates andoil andgas leases to exclude their interests in lands fromthe district).

Thus, we think the courtswould construe section 51.714 topermit the annexation of lands only owned by the landowner filing the petition forannexation.9 To the extent

8. Sections 52.521 and 52.525 are analogous to sections 51.714 and 51.718. Section 52.521, as mentioned earlier in the text, authorizes a landowner to file a petition requesting that "the owner's land be included within" anunderground water district. Section 52.525, in contrast, permits two or more landowners to petition to include adefined area of territory.

9. Ifapetition is filedpursuant to section 51.714 (Footnote Continued)

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the Glasscock County district has annexed prior toJune 14, 1989, the lands owned **by a**  landowner who filed an annexation petition under section 51.714 inaccordance with section
**14 (a),**  those landswill be taxable by the Glasscock County district. The Santa Rita district and not the Glasscock County district may tax the severed mineral interests in those lands unless the owners of those severed interests have filed a section 51.714 petition thatwas approved in accordance with section 14(a).10

Section 14(b) reinforces our conclusion with regard to section 14(a) and its reference to section 51.714. Subdivision (1)of section 14(b)provides that "theowner of land"may file 'Iapetition requesting that the owner's land be excluded" and that thepetition "must be signed by and

(Footnote Continued) thedistrict is permitted but not obligated to add the petitioner's lands. Water Code 551.716. The district may

r therefore refuse toadd a severed mineral estate if the

owner of the estate files a petition forannexation under section 51.714. See alsoWater Code 5 52.523(a) (board has discretion togrant or deny section 52.521 petitions filed by single landowners). Since chapter 52, which governs underground water districts, does not apply tooil and gas wells permitted by the Texas Railroad Commission, some districts may choose todeny such apetition. Water Code 552.170(e) (nothing inchapter applies towells permitted by commission).

10. Article 8, section 11, of the Texas Constitution provides that allproperty shallbe taxed in the county where situated. Texas courtshave construed this in light of provision

the common law to mean that governmental entities may tax only property within their jurisdiction. See. e.c., Great Southern Life Ins.Co.v.Austin, 243 S.W. **778, 780**  (Tex.1922). Since we determine that the severed mineral interests in issuehave notbeen excluded from the Santa Rita district by the action of the surface owners, Santa Rita possesses the requisite jurisdiction to tax those severed interests. See also Tax Code 55 21.01, **25.04** (separate estates or interests in lands are listed separatelyby name of the owners and taxable if located in the district onJanuary 1of the taxyear).

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notarized by the owner of the land."11 Byusing language referring only to the owner of the land and the owner's land, the legislature has indicated its intent to authorize certain landowners topetition forexclusion ofonly '~their property from the Santa Rita district. If the legislature had intended the exclusion of allproperty rights in the excluded lands, including those notheld by the petitioning owners, such as the severed mineral interests, we believe the legislature would have so indicated by referring to landowners and their territory as in sections 51.718 and 52.523 of theWater Code.

In summary, the Santa Rita district andnot the Glasscock County district may tax the severed mineral interests inthe Reagan County lands that have been annexed into the Glasscock County district upon approval of the annexation petitions filed by the surface owners of those lands. Nevertheless, the Glasscock County district and not the Santa Rita district may tax a severed mineral interest if the owner of the severed interest has filed either a section 51.714 petition thatwas approved inaccordance with section 14(a) or an appropriate annexation petition that was approved subsequent to the grant of the owner's petition excluding the interest fromthe Santa Rita district pursuant to section 14(b).

11. Although the term l'land'V or "lands" asused by the Texas courts generally refers to all interests or estates in land including those held by the owners ofoil and gas leases and othermineral estates, the context inwhich the term isused may determine whether the term isused broadly to refer to all rights inthe land or narrowly to refer to only certain rights such as surface rights. See. e.q Avervt v.Grande. Inc., 717 S.W.2d 891, 893-4 (Tex. 1986;; Holloway's Unknown Heirs v. Whatlev, 131 S.W.2d 89, 91-2 (Tex.1939). Our review of the legislative history and language of section 14 shows that the legislature intended to accomodate the interests of the farming community in northern Reagan County and accomplished this by authorizing any landowner holding any estate or interest in lands to act
onhis own to have his lands annexed into the Glasscock County district.

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Honorable Mark Edwards

SUMMARY

The Santa RitaUnderground Water District and not the Glasscock County Underground Water District may tax the severed mineral interests in Reagan County lands that have been annexed into the Glasscock County district upon approval of annexation petitions filed by the owners of the surface estates inthose lands.

Very truly yo 

# J-k

.

-~ JIM MATTOX Attorney General ofTexas

MARY KELLER First Assistant Attorney General

LOU **MCCREARY** Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General

RENEA HICKS Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared by Celeste Baker Assistant Attorney General

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