Opinion ID: 2428184
Heading Depth: 1
Heading Rank: 3

Heading: taxing limestone as a mineral in place

Text: Section 1.04 of the Texas Tax Code states that real property subject to taxation includes a mine or quarry or a mineral in place. The Tax Code further provides that minerals not under production may be taxed. Tex.Tax Code § 23.17. [4] If the limestone underlying the Wise County property is a mineral in place that is not under production, then it must be appraised and taxed at a rate relative to its market value. See Tex.Tax Code § 1.04(7). The majority says that limestone is not a mineral in place subject to taxation. That holding turns on the court's conclusion that, as a matter of law, limestone is not a mineral within the ordinary and natural meaning of the word. This court previously has struggled with what the term mineral comprises. But this term's prior development was caused by circumstances peculiar to Texas' oil and gas law. The need to define the term arose from oil and gas conveyancing problems. See Moser v. U.S. Steel Corp., 676 S.W.2d 99, 101 (Tex. 1984) (conveyance of oil, gas, and other minerals conveys all minerals within ordinary and natural meaning of word, which includes uranium but not limestone); Reed v. Wylie, 597 S.W.2d 743, 748 (Tex. 1980) (conveyance of oil, gas, and other minerals did not convey lignite within 200 feet of the surface); Acker v. Guinn, 464 S.W.2d 348, 352-53 (Tex.1971) (conveyance of oil, gas, and other minerals did not convey nearsurface iron ore); Heinatz v. Allen, 147 Tex. 512, 217 S.W.2d 994, 995-96 (1949) (devise of mineral rights did not embrace limestone). The majority's opinion rightly recounts in footnote five, at 815, the policies that led the court to define this term, namely, the need for title certainty and the need to protect the interests of surfaceestate-owners subject to an oil and gas conveyance. However, the policies pressed upon us by the conveyancing problems and the title uncertainty discussed in Moser do not apply with equal effect in ad valorem tax situations. I agree with Moser's conclusion that the ordinary and natural meaning of the word mineral in an oil and gas context excludes limestone. But the particular context of that case compelled that conclusion. Applying Moser' s definition to a wholly separate area of law ignores the truism that legal definitions frequently achieve their meaning from the context in which they are applied rather than from generic understanding. A term's applicable definition for a particular area of the law should be shaped by the constitutional and statutory policies the state seeks to promote in that area. In Texas, our tax policy, as revealed by the Texas Constitution and the Texas Tax Code, seeks to ensure the taxation of real property at a rate reasonably related to its true value. This court could further the constitutional and legislative will in this regard by including limestone as within the word mineral's ordinary and natural meaning in the context of tax law. The oil and gas policies that buttressed this court's previous definition of the word mineral do not support grafting the same definition onto tax law. By importing an oil and gas definition into the realm of taxation, the court has not simply applied precedent regarding what a mineral is as a matter of law. Instead, the court has created a new rule in a new context that contravenes this state's accepted tax policies. The court's new rule has some serious ramifications. By using a definition from oil and gas to say that limestone is not taxable as a mineral in place as a matter of law, the court implicitly exempts from ad valorem taxation all other minerals exempted in oil and gas law, including the following: near-surface lignite, iron and coal, gravel, building stone, and surface shale. See, e.g., Reed, 597 S.W.2d at 747 (near surface lignite, iron and coal not minerals); Heinatz, 217 S.W.2d at 997 (building stone not a mineral); Atwood v. Rodman, 355 S.W.2d 206, 213 (Tex.Civ.App. El Paso 1962, writ refd n.r.e.) (surface shale not a mineral); Psencik v. Wessels, 205 S.W.2d 658, 661 (Tex.Civ.App.Austin 1947, writ refd) (sand and gravel not minerals). This result imposes a policy inconsistent with the Texas Constitution and the Texas Tax Code, for it may prevent a taxing authority from imposing an ad valorem tax genuinely derived from the real property's true value. Texas' tax policy requires that, unless the legislative intent is ambiguous, courts should resolve questions regarding tax exemptions in favor of the taxing authority. See Bullock v. National Bancshares Corp., 584 S.W.2d 268, 272 (Tex.1979), cert, denied, 444 U.S. 1016, 100 S.Ct. 667, 62 L.Ed.2d 645 (1980). Resolving ambiguities in favor of the state is not a concept unique to Texas tax law. In a dispute between the state and a private citizen over the ownership of coal and lignite, this court ruled that any ambiguities concerning what minerals the state conveyed to a private citizen should be resolved in favor of the state. See Schwarz v. State, 703 S.W.2d 187, 189 (Tex.1986). We concluded in that case that the state retained all of a tract's coal and lignite and not just that coal and lignite within 200 feet of the surface (as would have been the result had the state not been a party). Id. Thus, when applying the ordinary and natural meaning of the term mineral to decide whether a particular substance is a mineral in place, we should resolve any ambiguities that arise in favor of the state. In the instant case, there is at least a facial ambiguity as to whether limestone should be considered a mineral when appraising real property in Texas and the court should have resolved this ambiguity in favor of the taxing authority.