Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and Wife, Brandi N. Chambers v. San Augustine County Appraisal District
12-15-00201-CV
| Tex. App. | Oct 15, 2015Background
- Appellants own surface estates entirely in Shelby County; their mineral interests were pooled/unitized into multi-tract gas units that cross into San Augustine County.
- The dispute arose from small ad valorem tax assessments by the San Augustine County Appraisal District on the pooled mineral interests.
- Appellants protested, arguing their mineral estate should be taxed only in Shelby County because the surface lies wholly in Shelby.
- Lessees exercised lease provisions allowing pooling/unitization and filed Railroad Commission unit designations (Tigers DU No. 1H and Wolfpack (SL) DU No. 1H).
- Unit designations allocate production (and related rights/payments) among tracts in proportion to each tract’s surface acres within the unit.
- The trial court granted summary judgment for the Appraisal District; appellee argues proportional taxation by county is appropriate where a unit spans counties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether minerals unitized into a multi-tract unit that crosses a county line may be taxed by the county containing part of the unit | Appellants: Minerals should be taxed only in Shelby because the surface estate is entirely in Shelby County | Appraisal Dist.: Unitization legally attributes production to each tract in proportion to surface acres in the unit, so each county may tax the portion of the unit within its borders | Court granted summary judgment for Appraisal District — proportional taxation of unitized minerals by county is proper |
| Whether lease language preventing "exchange or transfer of any interest" defeats cross-conveyance or attribution for taxation | Appellants: Anti–cross-conveyance clause prevents treating production as attributed to other tracts for tax purposes | Appraisal Dist.: Clause does not negate the practical effect of pooling/unitization for allocation; unit treatment (allocation by surface acres) governs taxation | Court treated unitization and allocation language as sufficient to permit proportional taxation despite anti-transfer phrasing |
| Whether method of taxation (pro rata allocation by surface acres within unit) is consistent with law and AG guidance | Appellants: Method is improper given surface boundaries | Appraisal Dist.: Method is consistent with common appraisal practice and Attorney General Opinion DM-490; pooling treats production as attributable across unit | Court relied on established authorities and practice to uphold the appraisal method |
| Whether any genuine fact issue exists to preclude summary judgment | Appellants: challenge to validity of taxing San Augustine on these interests | Appraisal Dist.: Unit designations and lease rights are undisputed; no contested appraisal issues | Court found no genuine issue of material fact and affirmed summary judgment for Appraisal District |
Key Cases Cited
- Key Operating & Equip., Inc. v. Hegar, 435 S.W.3d 794 (Tex. 2014) (discussing legal consequences of pooling and allocation of production among tracts in a unit)
- London v. Merriman, 756 S.W.2d 736 (Tex. 1988) (effect of unitization on rights and allocations)
- Montgomery v. Rittersbacher, 424 S.W.2d 210 (Tex. 1968) (pooling effects as a cross‑conveyance among mineral owners)
- Pipe Line Co. v. Tichacek, 997 S.W.2d 166 (Tex. 1999) (pooling consequences and treatment of production)
- Veal v. Thomason, 159 S.W.2d 472 (Tex. 1942) (historical recognition that pooling can effect cross‑conveyance)
- Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008) (issues arising when unit termination or lease expiration intersect with pooling language)