Court Opinion

ID: 9645295
Source: CourtListenerOpinion
Date Created: 2023-08-22 21:19:57.667407+00
Date Added: 2024-06-11T18:11:26.767980
License: Public Domain

Concurring opinion by GONZALEZ, J.
GONZALEZ, Justice,
concurring.
I agree with the Court that the conditioning of judicial review on prepayment of disputed additional royalties as provided by Tex.Nat.Res.Code Ann. § 52.137(a) violates the open courts provision of the Texas Constitution. However, I disagree with the remainder of the Court’s opinion.
The Court states that “the Texas Legislature, in enacting the relevant provisions of the Natural Resources Code, intended to authorize the General Land Office to interpret and apply contractual provisions in state mineral leases.” Majority Opinion at 481 (emphasis added). Nonetheless, the Court affirms the judgment of the court of appeals on the ground that the General Land Office (“GLO”) is not authorized to “adjudicate” controverted property rights. At 485. I agree instead with the reasoning of the court of appeals. The plain meaning of the term “audit” in Tex.Nat.Res.Code Ann. §§ 52.135 and 52.137 does not connote adjudication of controverted property rights. Even if it did, the statute would not pass constitutional muster because only courts are empowered to adjudicate controverted property rights. 802 S.W.2d at 68; see also Board of Water Engineers v. McKnight, 229 S.W. 301 (Tex.1921); Rutherford Oil Corp. v. General Land Office, 776 S.W.2d 232 (Tex.App.—Austin 1989, no writ).
Since 1919, the Natural Resources Code and its predecessors have authorized the “inspection and examination” by the GLO (and various other state officials) of the books, accounts, and records of oil and gas lessees on state lands. Before 1986, however, the GLO was not authorized by Chapter 52 to do anything beyond the inspection and examination of the records. If the GLO discovered an error in the lessee’s compliance with the lease, it was required to request the attorney general to file suit and obtain a judgment to correct the errors.
In 1986, the Texas Legislature amended the Natural Resources Code to expand the enforcement powers of the GLO. The GLO prior to 1986 had commenced a “systematic audit program” which issued deficiency assessments totalling more than $20 million. This program was challenged on the basis that the agency did not have the authority to conduct such audits. According to the bill analysis that accompanied the amendments in the Texas Senate, the purpose of the statutes was “to provide for an orderly resolution of the issues relating to these royalties and their payment to the state at the earliest possible date.” Senate Comm, on Finance, Bill Analysis, Tex.H.B. 32, 69th Leg., 3d C.S. (1986).
The revised statutes now provide that the GLO must send a lessee an “audit billing notice” when the GLO determines, after inspection and examination of the lessee’s records, that additional royalties are due. Tex.Nat.Res.Code Ann. § 52.135(b) (emphasis added). Upon receipt of this audit billing notice, the lessee has 30 days to pay the “audit deficiency assessment” or to request a hearing before the GLO for rede-termination of the assessment. Id. § 52.-135(c) (emphasis added). If a hearing is requested, the lessee must submit a statement of factual and legal grounds on which the lessee disputes the assessment. Id. If the lessee chooses to forego a hearing, or if the lessee is dissatisfied with the outcome of the hearing, then the lessee must pay the audit deficiency assessment under protest. Id. § 52.137(a). The lessee may then bring a suit to recover the payment, with trial on the disputed issues being de novo. Id. § 52.137(c), (e).
The court of appeals held that § 52.135 only contemplated “an examination for accounting-type errors resulting in royalty deficiencies.” 802 S.W.2d at 69. I agree. Section 52.135 uses the word “audit” four times, three times to modify “billing notice” and one time to modify “deficiency *487assessment.”1 The other amended statutes likewise continue to use the word “audit” to modify “billing notice” and “deficiency assessment.” See id. §§ 52.137, 52.-139, & 52.140 (emphasis added). When the legislature enacts a statute, a presumption exists that every word in the statute possesses a significant purpose and meaning. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.1981); Bomar v. Trinity Nat. Life & Accident Ins. Co., 579 S.W.2d 464, 465 (Tex.1979). In other words, the legislature presumptively included the word “audit” for a purpose in § 52.135; some meaning must have been intended by the use of the phrases “audit billing notice” and “audit deficiency assessment” which would not have been present by the use of just “billing notice” and “deficiency assessment.” In determining how the word “audit” limits the scope of § 52.135, we are to consider the plain and ordinary meaning of the word “audit” since the legislature did not specifically define the term. Hopkins v. Spring Ind. School Dist., 736 S.W.2d 617, 619 (Tex.1987); Big H Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756, 758 (Tex.1984).
The ordinary meaning of the term “audit” does not denote a legal inquiry or the construction of the terms of a document; rather, an audit is “a formal or official examination and verification of books of accounts.” Webster’s Third New Int. Dictionary 143 (19th ed. 1962). Another court decision of this state has similarly concluded that an audit is just an examination and verification of books and accounts. See May v. Wilcox Furniture Downtown, Inc., 450 S.W.2d 734, 739 (Tex.Civ.App.—Corpus Christi 1969, writ ref’d n.r.e.). The legislature itself recognized the limited meaning of “audit” since the other statutory amendments to Chapter 52 of the Texas Natural Resources Code use the terms “audit,” “examination,” and “inspection” virtually synonymously.2
Because the term “audit” has a specific meaning that the legislature recognized, we must presume the word was intended to limit the scope of the statute. Section 52.-135 thus must be interpreted, under its plain meaning, to apply only to accounting-type errors, not to legal determinations on the proper construction of an oil and gas lease. Therefore, any action by the GLO in *488adjudicating the rights of the parties to a mineral lease exceeds the statutory authority granted to the agency.
The Court fails to even address the plain meaning of the word “audit.” The Court supports its erroneous construction of the statute by examining the legislative history of the amendments. However, by doing this, the Court ignores the fundamental precept that the legislative history of a statute is to be examined only when the statute is ambiguous. Cail v. Service Motors, Inc., 660 S.W.2d 814, 815 (Tex.1983). This statute is not ambiguous, and therefore the legislative history of the enactment does not need to be examined. Nonetheless, an examination of the history of this statute actually supports my interpretation of its meaning rather than the majority’s interpretation.
As discussed previously, before 1986 the GLO had to request the attorney general to file suit to collect a deficiency. The GLO had initiated an audit deficiency assessment program to cut through the inefficiency of this system, and the legislature later provided statutory authority for the assessments. However, nothing in the amended statutes expands the examination powers of the GLO; the statutes only change the procedure used to collect deficiencies. This is clearly evidenced by the fact that the “inspection and examination” portion of § 52.135 was not amended at all — the statute just added collection mechanisms. Compare Act of June 19, 1975, 64th Leg., R.S., ch. 635, § 2, 1975 Tex.Gen. Laws 1939 with Act of Sept. 17, 1986, 69th Leg., 3d C.S., ch. 5, 1986 Tex.Gen.Laws 4. The Court asserts that this interpretation of the statute cannot be correct because the GLO has had the power to review for accounting-type errors since 1919, and my interpretation would thwart the legislative purpose behind the amendments. The Court ignores that the basic purpose behind the statutes was to aid in the efficiency of collection. If the legislature had intended to expand the scope of the permissible inspection and examination, it would have amended that portion of the statute. The legislature did not, and we should not be rewriting the statute.
The other arguments of the Court m support of its reading of the statute are likewise unpersuasive. The Court argues that § 52.135(c), which provides that a lessee requesting a hearing must set out factual and legal grounds for its disagreement with the assessment, somehow evidences a legislative intent to allow the GLO to make legal determinations in the examination and the hearing. This provision may allow the GLO to make some preliminary legal determinations at the hearing, but the statute does not say anything about allowing the GLO to make legal determinations at the examination stage. A proper reading of the statute in its entirety mandates the conclusion that the GLO’s examination is limited to accounting-type errors, but that the lessee’s response to the assessment issued based on the examination can include both legal and factual matters. It only makes sense that a lessee should bring all of its challenges to an assessment at the hearing in front of the GLO rather than waiting to bring up legal arguments in the trial de novo. However, it does not follow that the GLO is allowed to interpret contracts in new ways at an inspection and then is allowed to uphold its interpretation of the contract at a hearing. The statute gives the GLO the power to make certain legal contentions at the newly-created procedure for hearings; it does not change the GLO’s inspection and examination powers since this portion of the statute was not amended.
For all of the above reasons, I cannot join in the Court’s opinion but I do join in the judgment.

. Section 52.135 provides:
(a) The books and accounts, receipts, and discharges of all lines, tanks, pools, and meters and all contracts and other records relating to the production, transportation, sale, and marketing of the oil and gas are subject at any time to inspection and examination by the commissioner and the attorney general and governor or their representatives.
(b) If, after inspection and examination of books, accounts, reports, or other records, the commissioner or his representative determines that additional royalties are due under a lease of state land or minerals, the commissioner shall send to the lessee by certified mail, return receipt requested, an audit billing notice notifying the lessee of such additional royalties, and interest and penalty, due and of the reasons for such determination.
(c) The lessee shall have 30 days from the date of the receipt of such audit billing notice in which to pay such audit deficiency assessment or to request a hearing before the commissioner of his representative for redetermi-nation of such assessment. A statement of grounds setting out in detail the lessee’s reasons for disagreement with such assessment and the factual and legal grounds on which the claim is based must be submitted by a lessee with its request for a hearing. Such hearing shall be conducted in accordance with the rules and procedures established by the commissioner.
(d)In order to stop the further accrual of penalty or interest, the lessee may pay the additional royalties assessed at any time after receipt of an audit billing notice.
Tex.Nat.Res.Code Ann. § 52.135 (emphasis added).

. Section 52.139(c) provides:
This section shall not preclude the commissioner from conducting subsequent audits or examinations covering the same issues, time periods, and leases in cases where fraud exists or where the first audit deficiency assessment results only from an examination of documents, records, or reports submitted to the commissioner and not from a complete audit of the books, accounts, reports, or other records of a lessee.
Tex.Nat.Res.Code Ann. § 52.139(c) (emphasis added). Section 52.140(a), entitled “Audit Information Confidential," provides in pertinent part: "All information secured, derived, or obtained during the course of an inspection or examination of books, accounts, reports, or other records, as provided in Section 52.135 of this code, is confidential_” Id. § 52.140(a) (emphasis added).