Valero Refining-Texas, L.P. v. Galveston Central Appraisal District
519 S.W.3d 66
| Tex. | 2017Background
- Valero, BP, and Marathon operate large refineries in Galveston County; the county appraisal district appraised complex refineries using multiple separate tax accounts for components (processing units, PCE, tanks, personal property).
- Valero protested several—but not all—of its account appraisals to the appraisal review board, which reduced some values but rejected Valero’s unequal-appraisal claims for the protested accounts; Valero appealed only five account orders to district court and later narrowed its claim to three processing-unit accounts.
- Valero alleged unequal appraisal under Tex. Tax Code § 42.26(a)(3), comparing its appraised values (adjusted by Equivalent Distillation Capacity, EDC) to BP’s and Marathon’s to show its accounts exceeded the median of comparable properties.
- Valero’s experts computed adjusted values both including and excluding Pollution Control Equipment (PCE); excluding PCE produced a much larger over-appraisal percentage and the jury found unequal appraisal based on the exclusion.
- The District appealed, arguing the trial court lacked jurisdiction to review only some tax accounts (rather than the entire tract), that Marathon was not a comparable property, and that excluding PCE was improper; the court of appeals affirmed jurisdiction and comparability but found Valero’s expert exclusion of PCE legally insufficient and remanded for new trial on the verdict.
Issues
| Issue | Plaintiff's Argument (Valero) | Defendant's Argument (District) | Held |
|---|---|---|---|
| Jurisdiction: May an owner appeal unequal appraisal of only some tax accounts? | Tax Code treats each tax account as property; Valero complied with protest and appeal rules and may challenge accounts individually. | An appeal must challenge the entire improved tract; owner cannot attack component accounts separately. | Held: taxpayer may challenge individual tax-account appraisals; district court had jurisdiction. |
| Comparability: Are BP and Marathon reasonable comparables to Valero for §42.26? | The three refineries share core functions and can be adjusted (by EDC) for capacity/complexity; evidence supports comparability. | Marathon is materially different (size/complexity) and not comparable; three properties insufficient. | Held: sufficient evidence for jury to find Marathon comparable for unequal-appraisal claim. |
| PCE Inclusion: May Valero exclude PCE accounts from the comparison? | Yes; when accounts are separate, values may be compared in isolation; exclusion is a permissible method of comparison. | PCE is integral to refinery operations and must be included; excluding it improperly skews comparisons. | Held: Valero could lawfully exclude PCE from its unequal-appraisal comparison; inclusion is not required as a matter of law. |
| Evidentiary sufficiency: Was expert testimony (EDC adjustments / median calculation) legally sufficient? | Experts used EDC adjustments and median between comparables to compute unequal appraisal; jury accepted their methodology. | Valero’s experts failed to justify excluding PCE and did not apply the statutory median test properly; opinions were conclusory. | Held: Court reversed appellate judgment and remanded factual sufficiency issues to court of appeals for further proceedings; trial evidence adequacy left to that court. |
Key Cases Cited
- Matagorda Cty. Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 S.W.3d 329 (Tex. 2005) (appraisal districts may organize land and improvements into separate tax accounts and must notify owners what each account includes)
- Covert v. Williamson Central Appraisal District, 241 S.W.3d 655 (Tex. App.—Austin 2007) (pet. denied) (discusses limits on challenging component valuations when property is appraised as a single account)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (statutory interpretation principles on construction of rights and remedies)