                 THE    ~TORNEY     GENERAL
                           OF TEXAS




    Honorable Rick Hamby              Opinion No. JR-1221
    District Attorney
    Howard County Courthouse          Re:    Division of taxing au-
    Big Spring, Texas    79720        thority over certain severed
                                      mineral interests between two
    Honorable Mark Edwards            contiguous underground  water
    Reagan County Attorney            conservation districts
    P. 0. Box 924                     (RQ-1927), (RQ-1983)
    Big Lake, Texas   76932

    Dear Mr. Hamby and Mr. Edwards:

         This opinion responds to the issues you each raise
    under section 14 of Senate Bill 1634, which was enacted by
    the legislature in 1989. Acts 1989, 71st Leg., ch. 653, at
-   2153-55. Senate Bill 1634 created the Santa Rita Under-
    ground Water Conservation District     [hereinafter the Santa
    Rita district] in Reagan County, Texas. Section 14 of the
    bill excludes certain   lands from the Santa Rita district.
    Your requests   focus on the ad valorem taxation       of the
    severed mineral interests   in the excluded   lands that were
    annexed   into   the Glasscock    County Underground     Water
    Conservation   District  [hereinafter the Glasscock     County
    district].1

         We understand that some of the Reagan County landowners
    whose lands have been annexed into the Glasscock      County
    district did not own all of the mineral      rights  in the
    annexed lands. You each ask whether the Santa Rita district
    or the Glasscock   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 of Reagan County.
Honorable Rick Hamby - Page 2    (JM-1221)
Honorable Mark Edwards




owned by the   persons who   filed the    petitions for   annexa-
tion.2

     Section 14(a) exempts   from the district   "any lands
. . . annexed  into" the Glasscock   County district under
section 51.714 of the Water Code prior to June 14, 1989, the
effective date of the act. Section 51.714 permits an "owner
of land" to file with the Glasscock County district       'Ia
petition requesting  that'the land described   by metes and
bounds in the petition be included in the district.1'

      Section 14(b), which establishes another means of ex-
eluding lands from the Santa Rita district, provides in part
that:

           (1) Within one calendar year from the
        effective date of this Act, the owner of land
        who owns land with[in] a delineated   critical
        area3 pursuant to Section 52.053, Water Code,
        and whose lands are within the district may
        file with the board a netition      recuestins
        that the owner's land be- excluded from the
        district.  The petition must describe      the
        land by legal description   or by metes and
        bounds or by lot and block number if there is
        a recorded plat of the area to be 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 shall grant 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.   (Emphasis added.)



     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.

     3. A lBcritical arean is an area designated and delin-
eated by the Texas Water Commission as an area experiencing
or expected to experience critical groundwater     problems.
Water Code 5 52.001(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, 5 3, at 2153.

          We have received correspondence    indicating that some
     Reagan County landowners timely filed petitions for annexa-
     tion 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 that we have received refer to section 51.714 and
     request the annexation of "the land described by metes and
     bounds" in the exhibits attached to the petitions.        The
     metes and bounds descriptions neither expressly include nor
     exclude minerals   in or under the described       land.   We
     understand that the sample petitions     are typical  of the
     petitions filed under 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) peti-
     tions for exclusion with the Santa Rita district have also
,-   filed petitions  with the Glasscock    County district  for
     annexation of the excluded lands.

          The samples that we have received of annexation   peti-
     tions filed by landowners whose lands were excluded pursuant
     to section 14(b) refer to section 52.521 of the Water Code,
     which authorizes the owner of land contiguous to an under-
     ground water district to file a petition for annexation.4



          4. Section 52.521, along with the rest of subchapter K
     of chapter 52, was added to the Water Code by Senate Bill
     1212 and took effect September   1, 1989.    Acts 1989, 71st
     Leg., ch. 936, 5 14 at 3998, § 21, at 4001. Subchapter       K
     provides for the annexation  of territory to and consolida-
     tion of districts.  u. 5 14, at 3998-4000. Subchapter K is
     applicable  to underground   water conservation     districts
     created by special law. Water Code 5 52.005 (subchapters D,
     J, and K applicable to special law districts).   Prior to the
     passage of Senate Bill 1212, some underground water con-
     servation districts relied on the annexation provisions    of
     chapter 51 of the Water Code, which covers water control
     and improvement districts.  Section 51.714 is one of those
                                              (Footnote Continued)




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Honorable Mark Edwards




The sample petitions describe the land to be annexed by
metes and bounds and neither expressly include nor exclude
minerals in or under the described land. We understand that
these samples are representative of the annexation petitions
filed with the Glasscock County district by owners of lands
excluded from the Santa Rita district pursuant to section
14(b).5

     On April 26, 1989,    the Senate Committee   on Natural
Resources   conducted  a public hearing during which       it
received testimony on Senate Bill 1634. Two witnesses spoke
briefly in favor of the committee substitute for the bill.
No one spoke against the bill.       Senator Bill Sims, the
bill's sponsor,   spoke first on behalf of the committee
substitute.   His speech focused on section 14, which   first
appeared in the committee substitute adopted by the Natural
Resources committee.6    He referred to section 14 as the
agreement negotiated between the two districts that would
allow members of the farming community to annex into the
Glasscock County district.   He stated that the arrangement
in section 14 had been worked out since some of the farming
community felt they could work better with the Glasscock
County district and that the Reagan County district   thought
that would work well for both sides. Senator Sims made no
reference to the owners of the severed mineral interests.




(Footnote Continued)
provisions.   See. e.a., Acts 1981, 67th Leg., ch. 489, 5 4,
at 2104   (Glasscock County district may exercise      powers
permitted by chapter 51).

     5.  We assume for purposes of this opinion that before
approval of any annexation petition all applicable      re-
quirements were satisfied. See. e.s., Water Code 55 51.716,
52.523.

     6.   Sections 14(a) and 14(b) as added by the Senate
Committee on Natural Resources   are almost identical to the
sections as enacted. On May 10, 1989, the House Committee
on Natural Resources reported a substitute for Senate    Bill
1634 that modified   section 14(b) to permit only owners of
land within delineated critical areas to file petitions   for
exclusion.   The Senate version  of section 14(b) would have
allowed any owner of land within the Santa Rita district   to
file a petition for exclusion.
     Honorable Rick Hamby - Page 5   (JM-1221)
     Honorable Mark Edwards




          The next witness   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 that was satisfactory to the representatives    of
     both districts. Public Hearino on S.B. 1634 Before Senate
     Comm. on Natural Resources,   (April 26, 1989) (testimony of
     Tom Massey).   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 the parties.   Public Hearinq
     on C.S.S.B. 1634 Before House Comm. on Natural Resources,
     WY   10, 1989)(testimony of Rep. Robert A. Junell).
          We are unaware of any constitutional provision restric-
     ting the legislature's choice of boundaries for conservation
     districts or properties  to include within such districts.
     &q Harris Count v Drainase Dist. No. 12 v. Houston,        35
     S.W.Zd 118 (Tex. 1931); 36 D. Brooks, Countv and Sn ecial
     District Law § 46.4, at 544-45: 5 46.6, at 548-49      (Texas
     Practice 1989) (district boundaries may overlap or coincide
     with other governmental districts): Attorney General Opinion
/h   JM-827   (1987) (holding valid a water district      created
     primarily to encompass  a hazardous waste facility).7     Nor
     has any brief submitted in conjunction   with your requests
     referred us to such a prohibition.

          We note that section 14(a) references section 51.714
     rather than section 51.718 of the Water 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 a defined area of territory to petition
     for annexation.  A section 51.718 petition must be signed
     either by a majority of the landowners in the 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 the properties    to be in-
     cluded 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) (while commission not authorized to create district
     excluding part of the mineral    interests, district board
     could grant petition excluding such interests after district
     creation).




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Honorable Mark Edwards




landowners. Annexation   of property within the territory
becomes final upon approval of a majority of the voters   in
the territory  to be annexed as well as in the annexing
district. Given the liability for district indebtedness  and
taxes imposed on annexed territory,    we believe  that the
legislature would have referenced section 51.718 in section
14(a) if it had intended for property other than that of the
petitioning landowner to be annexed into the Glasscock
County district.8

     We are unaware  of any 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 5 75b, as added by Acts 1929, 41st Leg., 1st C.S., ch.
82, 5 2. 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 for purposes
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) (holding owners of severed mineral estates
and owners of surface estates were landowners for district
creation purposes and had to be considered in determining
the sufficiency of a petition filed under article    7880-10
[now section 51.013 of the Water Code]): see also Nueces
Countv Water Control & Imnrovement Dist. No. 4 v. 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 [now section 51.692 of the Water Code] by owners of
surface estates and oil and gas leases to exclude their
interests in lands from the district).

     Thus, we think the courts would construe section 51.714
to permit the annexation  of lands only owned by the land-
owner filing the petition for annexation.9    To the extent



     8. Sections 52.521 and 52.525 are analogous to sec-
tions 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" an underground water district.  Section 52.525, in
contrast, permits two or more landowners to petition    to
include a defined area of territory.

    9.   If a petition is   filed pursuant to section   51.714
                                          (Footnote Continued)




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    Honorable Mark Edwards




    the Glasscock County district has annexed prior to June 14,
    1989, the lands owned by a landowner who filed an annexation
    petition under section 51.714 in accordance with section
    14 (a), those lands will 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 that was 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.      Sub-
    division (1) of section 14(b) provides that "the owner of
    land" may file 'Iapetition requesting that the owner's  land
    be excluded" and that the petition "must be signed by and




    (Footnote Continued)
    the district   is permitted but not obligated to add the
    petitioner's lands. Water Code 5 51.716. The district may
r   therefore refuse to add a severed mineral estate     if the
    owner of the estate files a petition for annexation    under
    section 51.714. See also Water Code 5 52.523(a) (board has
    discretion to grant or deny section 52.521 petitions   filed
    by single landowners).    Since chapter 52, which governs
    underground water districts, does not apply to oil and gas
    wells permitted  by the Texas Railroad Commission,      some
    districts may choose to deny such a petition.   Water Code
    5 52.170(e) (nothing in chapter applies to wells permitted
    by commission).

         10. Article 8, section 11, of the Texas Constitution
    provides that all property   shall be taxed in the county
    where situated. Texas courts have construed this provision
    in light of 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 issue have not been 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 separa-
    tely by name of the owners and taxable if located in the
    district on January 1 of the tax year).




                                    p. 6469
Honorable Rick Hamby - Page 8   (JM-1221)
Honorable Mark Edwards




notarized by the owner of the land."11 By using language
referring only to the owner of the land and the owner's
land, the legislature has indicated its intent to authorize
certain landowners to petition  for exclusion of only '~their
property from the Santa Rita district.   If the legislature
had intended the exclusion of all property    rights in the
excluded lands, including those not held 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 the Water Code.

     In summary, the Santa Rita district and not the Glass-
cock County district may tax the severed mineral   interests
in the 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 that was approved in accordance with section
14(a) or an appropriate     annexation petition   that   was
approved subsequent  to the grant of the owner's petition
excluding the interest from the Santa Rita district pursuant
to section 14(b).




     11. Although the term l'land'Vor "lands" as used by the
Texas courts generally refers to all interests or estates in
land including those held by the owners of oil and gas
leases and other mineral estates, the context in which the
term is used may determine whether the term is used broadly
to refer to all rights in the 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
on his own to have his lands annexed into the Glasscock
County district.




                             p. 6470
Honorable Rick Hamby - Page 9     (JM-1221)
Honorable Mark Edwards




                       SUMMARY

           The Santa Rita Underground 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   peti-
        tions filed by the owners of the surface
        estates in those lands.




                                 J-k
                                 -~
                                      Very truly yo



                                      JIM
                                             .

                                              MATTOX
                                      Attorney General of Texas

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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