Texas Judiciary Online - HTML Opinion

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Opinion issued=20 January 26, 2006

In=20 The

Court of Appeals

For The

First District of = Texas

NO.=20 01=E2=80=9304=E2=80=9301277=E2=80=93CV

____________

Jim = Wells County=20 and Premont Independent School District, = Appellants

El = Paso Production=20 Oil and Gas Company; El Paso Production Oil and Gas USA, L.P.; El = Paso CGP=20 Company; Coastal Oil and Gas Corporation; The Coastal Corporation; = Coastal=20 States Trading, Inc.; Coastal States Crude Gathering Company; = Coastal Gas=20 Marketing Company; Coastal Limited Ventures, Inc.; and El Paso = Merchant=20 Energy Company, Appellees

On = Appeal from the=20 79th District Court

Jim = Wells County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=9308=E2=80=9341749

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300725=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301278=E2=80=93CV

____________

Brooks = County and=20 Brooks County ISD, Appellants

On = Appeal from the=20 79th District Court

Brooks = County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=9308=E2=80=9311950CV

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300726=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301279=E2=80=93CV

____________

Brooks = County and=20 Brooks Independent School District, Appellants

Texaco = E&P,=20 Inc. and Shell Western E&P, Inc., Appellees

On = Appeal from the=20 79th District Court

Brooks = County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=9308=E2=80=9311943

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300727=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301280=E2=80=93CV

____________

Duval = County; San=20 Diego Independent School District; and Freer Independent School = District,=20 Appellants

Shell = Western=20 E&P, Inc., Appellee

On = Appeal from the=20 229th District Court

Duval = County,=20 Texas

Trial = Court Cause=20 No. DC=E2=80=9303=E2=80=93313

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300728=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301281=E2=80=93CV

____________

Duval = County; San=20 Diego Independent School District; and

Freer = Independent=20 School District, Appellants

Conoco, Inc.;=20 Continental Oil Company; Brandywine Industrial Gas; ConocoPhillips = Company; Phillips Petroleum Company; El Paso Production Oil and = Gas=20 Company; El Paso Production Oil and Gas USA, L.P.; El Paso CGP = Company;=20 Coastal Oil and Gas Corporation; The Coastal Corporation; Coastal = States=20 Trading, Inc.; Coastal States Crude Gathering Company; Coastal Gas = Marketing Company; Coastal Limited Ventures, Inc.; and El Paso = Merchant=20 Energy Company, Appellees

On = Appeal from the=20 229th District Court

Duval = County,=20 Texas

Trial = Court Cause=20 No. DC=E2=80=9303=E2=80=93320

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300729=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301282=E2=80=93CV

____________

Jim = Hogg County=20 and Jim Hogg Independent School District, = Appellants

Chevron U.S.A.,=20 Inc. a/k/a Chevron Products Company, Appellee

On = Appeal from the=20 229th District Court

Jim = Hogg County,=20 Texas

Trial = Court Cause=20 No. CC=E2=80=9303=E2=80=93115

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300730=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301283=E2=80=93CV

____________

Jim = Wells County=20 and Premont Independent School District, = Appellants

Anadarko Petroleum=20 Corporation and Anadarko Holding Company f/k/a Union Pacific = Minerals,=20 Inc. and f/k/a Union Pacific Resources Group, Inc.,=20 Appellees

On = Appeal from the=20 79th District Court

Jim = Wells County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=9308=E2=80=9341740

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300731=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301284=E2=80=93CV

____________

Webb = County,=20 Appellant

Chevron U.S.A.,=20 Inc. a/k/a Chevron Products Company; Texaco E&P, Inc.; and = Four Star=20 Oil & Gas Company, Appellees

On = Appeal from the=20 49th District Court

Webb = County,=20 Texas

Trial = Court Cause=20 No. 2003-CVQ-1374-D1

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300732=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301285=E2=80=93CV

____________

Webb = County,=20 Appellant

Conoco = Inc.;=20 Continental Oil Company; Brandywine Industrial Gas; ConocoPhillips = Company; Phillips Petroleum Company; El Paso Production Oil and = Gas=20 Company; El Paso Production Oil and Gas USA, L.P.; El Paso CGP = Company;=20 Coastal Oil and Gas Corporation; The Coastal Corporation; Coastal = States=20 Trading, Inc.; Coastal States Crude Gathering Company; Coastal Gas = Marketing Company; Coastal Limited Ventures, Inc.; and El Paso = Merchant=20 Energy Company, Appellees

On = Appeal from the=20 111th District Court

Webb = County,=20 Texas

Trial = Court Cause=20 No. 2003CVQ001368-D2

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300733=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301286=E2=80=93CV

____________

Zapata = County and=20 Zapata Independent School District, Appellants

On = Appeal from the=20 49th District Court

Zapata = County,=20 Texas

Trial = Court Cause=20 No. 5,519

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300734=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301287=E2=80=93CV

____________

Zapata = County and=20 Zapata Independent School District, Appellants

Chevron U.S.A.,=20 Inc. a/k/a Chevron Products Company; Shell Western E&P, Inc.; = Anadarko=20 Petroleum Corporation; and Anadarko Holding Company f/k/a Union = Pacific=20 Minerals, Inc. and f/k/a Union Pacific Resources Group, Inc.,=20 Appellees

On = Appeal from the=20 49th District Court

Zapata = County,=20 Texas

Trial = Court Cause=20 No. 5,520

Appealed to the=20 Court of Appeals for the Fourth District of = Texas

Appellate Cause=20 No. 04=E2=80=9304=E2=80=9300735=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301326=E2=80=93CV

____________

Hidalgo County,=20 Texas, Appellant

Texaco, Inc., a=20 surviving subsidiary of merger between Texaco, Inc. and Chevron = Inc.;=20 TotalFinaElf E&P USA Inc.; Kerr=E2=80=93McGee Oil & Gas = Onshore, L.L.C.;=20 Shell Western E&P, Inc.; and El Paso Production Oil & Gas = Company,=20 Appellees

On = Appeal from the=20 92nd District Court

Hidalgo County,=20 Texas

Trial = Court Cause=20 No. C=E2=80=93640=E2=80=9303=E2=80=93A

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300542=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301327=E2=80=93CV

____________

Edinburg=20 Consolidated Independent School District, = Appellant

Fina = Oil and=20 Chemical Company; Atofina Petrochemicals, Inc.; Fina, Inc.; = TotalFinaElf=20 Gas & Power North America, Inc.; Fina Natural Gas Company; = Mokeen Oil=20 Company; Conoco, Inc.; Continental Oil Company; Brandywine = Industrial Gas,=20 Inc.; Shell Oil Company; Shell Western E&P, Inc.; Shell Gas = Trading=20 Company; El Paso Production Oil and Gas Company; El Paso = Production Oil=20 and Gas USA, L.P.; El Paso CGP Company; IBC Petroleum, Inc.; Texas = Independent Exploration, Inc.; Sun Operating Limited Partnership; = Oryx=20 Energy Company; ANR Production Company; Coastal Oil and Gas = Corporation;=20 The Coastal Corporation; Coastal States Trading, Inc.; Coastal = States=20 Crude Gathering Company; Coastal Gas Marketing Company; Coastal = Limited=20 Ventures, Inc.; El Paso Merchant Energy Company; American = Exploration=20 Company; Contract Energy, L.L.C.; EOG Resources, Inc.; Arco Oil = & Gas=20 Co.; Cody Energy LLC; Samedan Oil Corporation; Cabot Oil & Gas = Corporation; Vastar Resources, Inc.; BP America Production = Company;=20 Kerr=E2=80=93McGee Oil & Gas Onshore LLC; Mobil Producing TX. = & N. M.=20 Inc.; Chevron U.S.A. Inc.; Texaco, Inc.; and Socony Mobil Company, = Inc.,=20 Appellees

On = Appeal from the=20 275th District Court

Hidalgo County,=20 Texas

Trial = Court Cause=20 No. C=E2=80=93401=E2=80=9303=E2=80=93E

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300543=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301328=E2=80=93CV

____________

McAllen=20 Independent School District, Appellant

Fina = Oil and=20 Chemical Company; Altofina Petrochemicals, Inc.; Fina, Inc.; = TotalFinaElf=20 Gas & Power North America, Inc.; Fina Natural Gas Company;=20 TotalFinaElf E&P USA, Inc.; Total E&P USA, Inc.; Denovo = Oil &=20 Gas, Inc.; and Virtex Petroleum Company, Inc., = Appellees

On = Appeal from the=20 389th District Court

Hidalgo County,=20 Texas

Trial = Court Cause=20 No. C=E2=80=932195=E2=80=9303=E2=80=93H

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300544=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301329=E2=80=93CV

____________

Kleberg County and=20 Kingsville Independent School District, = Appellants

Atofina=20 Petrochemicals, Inc. f/k/a Fina Oil & Chemical Co.; Total Fina = Elf=20 Holdings USA, Inc.; Anadarko Petroleum Corporation; and Anadarko = Holding=20 Company f/k/a Union Pacific Minerals, Inc. and f/k/a Union Pacific = Resources Group, Inc., Appellees

On = Appeal from the=20 105th District Court

Kleberg County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=93441=E2=80=93D

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300553=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301330=E2=80=93CV

____________

Kleberg County and=20 Kingsville Independent School District, = Appellants

On = Appeal from the=20 105th District Court

Kleberg County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=93446=E2=80=93D

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300554=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301331=E2=80=93CV

____________

Willacy County,=20 Appellant

On = Appeal from the=20 357th District Court

Willacy County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=93264

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300555=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301332=E2=80=93CV

____________

Edcouch=E2=80=93Elsa=20 Independent School District; La Villa Independent School District; = Progresso Independent School District; Weslaco Independent School=20 District; City of La Joya; City of Edinburg; City of Mercedes; and = City of=20 Penitas, Appellants

Chevron U.S.A.,=20 Inc. a/k/a Chevron Products Company; Texaco E&P, Inc.; Shell = Western=20 E&P, Inc.; Atofina Petrochemicals, Inc. f/k/a Fina Oil & = Chemical=20 Co.; and Total Fina Elf Holdings USA, Inc., = Appellees

On = Appeal from the=20 332nd District Court

Hidalgo County,=20 Texas

Trial = Court Cause=20 No. C=E2=80=932166=E2=80=9303=E2=80=93F

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300556=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

and

____________

NO.=20 01=E2=80=9304=E2=80=9301333=E2=80=93CV

____________

Kenedy = County,=20 Appellant

On = Appeal from the=20 105th District Court

Kenedy = County,=20 Texas

Trial = Court Cause=20 No. 03=E2=80=93CV=E2=80=93103

Appealed to the=20 Court of Appeals for the Thirteenth District of = Texas

Appellate Cause=20 No. 13=E2=80=9304=E2=80=9300557=E2=80=93CV

and = Transferred to=20 the Court of Appeals for the First District of = Texas

by the = Supreme=20 Court of Texas

Misc. = Docket No.=20 04=E2=80=939270

O P I = N I O=20 N

<= /SPAN>The=20 appellant counties and school districts (collectively referred to = as =E2=80=9Cthe=20 Taxing Units=E2=80=9D) filed claims in the trial courts for fraud = and related=20 causes of action against the appellees (collectively referred to = as =E2=80=9Cthe=20 Oil Companies=E2=80=9D) arising out of an alleged scheme to = undervalue oil and gas=20 reserves for ad valorem tax purposes. 3DFootnote The trial court granted the Oil = Companies=E2=80=99 plea to=20 the jurisdiction and dismissed the Taxing Units=E2=80=99 cases for = want of=20 jurisdiction because they did not exhaust an administrative remedy = before=20 filing suit.

<= /SPAN>In=20 four points of error, the Taxing Units contend that (1) the = district=20 courts have jurisdiction over their common-law remedy for fraud, = (2) the=20 district courts are not divested of jurisdiction by the alleged = existence=20 of a Tax Code remedy for fraud for which the Appraisal Review = Board has=20 jurisdiction, (3) the Oil Companies seek to have this Court expand = the Tax=20 Code by creating a remedy before the Appraisal Review Board, and = (4) the=20 Tax Code provides no pervasive regulatory scheme encompassing the = Taxing=20 Units=E2=80=99 causes of action. We affirm the trial = court=E2=80=99s order dismissing the=20 causes of action.

Background 3DFootnote

= In=20 19 separate suits, the Taxing Units sued the Oil Companies = alleging =E2=80=9Cfraud=20 and conspiracy to defraud [the Taxing Units] through a series of = schemes=20 to manipulate the gas and oil markets in order to underpay Ad = Valorem=20 taxes to the taxing authorities. . . .=E2=80=9D The Taxing Units = alleged that the=20 Oil Companies were conducting =E2=80=9Csham sales of gas=E2=80=9D = amongst each other as=20 well as reselling the gas all in an attempt to devalue their = property for=20 ad valorem tax purposes. Specifically, the Taxing Units alleged = that=20

By selling gas to = marketing=20 affiliates, reselling the gas for higher prices through the = affiliates and=20 basing appraisals and ad valorem taxes on the lower prices paid = and=20 received in the affiliated transaction, or on fictional price = calculations=20 which did not equate to fair market value as required by the = Leases, [the=20 Oil Companies] knowingly and intentionally defrauded [the Taxing=20 Units].

The Taxing Units = asserted=20 that, =E2=80=9Cthrough these fraudulent sales and the manipulation = of royalties on=20 said sales and re-sales of gas from the Leases, [the Oil = Companies] made=20 false, deceptive and misleading representations to [the Taxing = Units]=20 regarding sales of gas covered by the [Leases] and the pricing = used to=20 properly appraise the mineral estates.=E2=80=9D The Taxing Units = further alleged=20 that the Oil Companies =E2=80=9Cfailed to disclose that prices = were based on sales=20 to affiliates who were in turn reselling the gas for higher prices = without=20 adding value to the gas and that [the Oil Companies] devised a = formula by=20 which to calculate royalties which did not relate to the economic = reality=20 of the sale of gas from the field where the Leases were = located.=E2=80=9D The Oil=20 Companies allegedly =E2=80=9Cmisrepresented prices and costs, thus = causing the=20 fictionally low appraisal and thus incorrect ad valorem taxes to = be=20 calculated.=E2=80=9D The Taxing Units sued for fraud, negligent = misrepresentation,=20 and civil conspiracy to commit fraud. The suit is not = one to=20 collect delinquent taxes. There is no allegation that the Oil=20 Companies failed to pay the taxes assessed them with respect to = the oil=20 interests.

= When=20 they filed their answers, the Oil Companies also filed pleas to = the=20 jurisdiction. The pleas argued that the trial court lacked = jurisdiction=20 over the Taxing Units=E2=80=99 suits because (1) the Tax Code = provides that an=20 Appraisal Review Board has exclusive jurisdiction over challenges = to the=20 value of the Oil Companies=E2=80=99 property, (2) the remedies for = the Taxing=20 Units=E2=80=99 claims are exclusive and are contained in the Tax = Code, (3) the=20 Taxing Units have not exhausted their administrative remedies = under the=20 Tax Code, and (4) the counties lack standing to bring this = lawsuit. The=20 trial court granted the pleas to the = jurisdiction.

In re ExxonMobil=20 Corporation

= In=20 a case with almost identical facts, the Amarillo Court of Appeals = recently=20 conditionally granted a petition for writ of mandamus directing = the trial=20 court to dismiss the underlying suit. See In re ExxonMobil = Corp.,=20 153 S.W.3d 605, 619 (Tex. App.=E2=80=94Amarillo 2004, orig. = proceeding). In=20 ExxonMobil Corp., the relators, which consisted of more = than 20=20 owners and operators of oil properties, filed a petition for writ = of=20 mandamus after the trial court denied their pleas to the = jurisdiction.=20 Id. at 607=E2=80=9308. In the underlying suit, Yoakum = County and the Denver=20 City and Plains Independent School Districts sued 28 owners and = operators=20 of oil companies in Yoakum County, asserting causes of action for = fraud=20 and conspiracy with respect to the valuation of the properties for = ad=20 valorem tax purposes. Id. at 608.

= In=20 ExxonMobil, the taxing units alleged that =

the defendant = companies,=20 knowing and intending that appraisers rely on [historical sales = prices],=20 engaged in a conspiracy and fraud carried out by = misrepresentations of the=20 market price for oil through various transactions, including = posted price=20 sales; sales of oil to subsidiary or affiliated companies at = below-market=20 prices; and =E2=80=9Cbuy/sell=E2=80=9D or =E2=80=9Cswap = sales.=E2=80=9D

Id. at = 608-09. This=20 conduct allegedly =E2=80=9Cconstituted a =E2=80=98systematic price = undervaluation=E2=80=99 that=20 reduced the taxable value of their mineral interests and caused = the taxing=20 units to lose tax revenue.=E2=80=9D Id. at 609. The = Amarillo Court=20 identified =E2=80=9Ctwo threshold conclusions=E2=80=9D that guided = their disposition of=20 the proceedings.

Nature of Underlying=20 Suit

= The=20 first threshold conclusion concerned the nature of the underlying = suit.=20 Id. at 612. The defendant companies classified the taxing = units=E2=80=99=20 suit as an ad valorem tax case, and the taxing units called it a = fraud and=20 conspiracy case. Id. The court noted that the district = court would=20 be unable to =E2=80=9Cadjudicate the claims asserted in the taxing = units=E2=80=99 pleading=20 and award the relief they seek without determining the market = value, for=20 ad valorem tax purposes, of the mineral interests in question. = Id.=20 (citing Tex. Tax Code = Ann. =C2=A7=20 26.09 (Vernon 2001) (entitled =E2=80=9CCalculation of = Tax=E2=80=9D)). Relying on Ector=20 County v. Stringer, 843 S.W.2d 477 (Tex. 1992), the Amarillo = Court of=20 Appeals concluded that

a suit to recover = damages=20 measured by the ad valorem taxes not received by a taxing unit = because of=20 undervaluation of property necessarily involves substituting the = district=20 court=E2=80=99s determination of the proper value of the property = for that=20 determined by the appraisal district and approved by the appraisal = review=20 board. And . . . we cannot consider the trial court=E2=80=99s = jurisdiction over=20 the taxing units=E2=80=99 claims here outside the constitutional = and statutory=20 provisions governing the appraisal of property for ad valorem=20 purposes.

Id. at=20 613.

Tax Code = Remedy

= The=20 second threshold conclusion reached by the ExxonMobil court = was=20 that the Tax Code = provided a=20 remedy for the taxing units. Id. The court recognized that = the=20 chief appraiser had a nondiscretionary duty under section 25.21 to = add to=20 the appraisal roll real property omitted in any one of the five = proceeding=20 years. Id. (citing Atascosa County v. Atascosa County = Appraisal=20 Dist., 990 S.W.2d 255, 257 (Tex. 1999)). The court concluded = that,=20 =E2=80=9Cfor purposes of section 25.21, property = =E2=80=98omitted=E2=80=99 from the appraisal roll=20 includes that undervalued by virtue of taxpayer fraud.=E2=80=9D = Id. (citing=20 Beck & Masten Pontiac-GMC, Inc. v. Harris County Appraisal=20 Dist., 830 S.W.2d 291, 294=E2=80=9395 (Tex. = App.=E2=80=94Houston [14th Dist.] 1992,=20 writ denied) (holding that, when the property assessments were = void ab=20 initio, the property =E2=80=9Cescaped taxation.=E2=80=9D)). = The court also noted that=20 section 41.03 provides for a remedy in the event that the chief = appraiser=20 fails to address the allegedly fraudulent activity. Id. at = 614.=20 Section 41.03 provides that =E2=80=9Ca taxing unit is entitled to = challenge before=20 the appraisal review board. . . .=E2=80=9D Tex. Tax Code Ann. = =C2=A7 41.03 (Vernon=20 2001). Failing to receive a satisfactory result at the Appraisal = Review=20 Board, de novo judicial review of its decision was available. = See=20 id. =C2=A7=C2=A7 42.031, 42.21, 42.23; Atascosa County, = 990 S.W.2d at=20 259.

= Once=20 it made these two =E2=80=9Cthreshold conclusions,=E2=80=9D the = Amarillo Court was led to=20 the question of whether the Tax Code=E2=80=99s remedies were = =E2=80=9Cthe exclusive means=20 by which a taxing unit must address claims of fraud and conspiracy = occurring in the appraisal process.=E2=80=9D In re = ExxonMobil, 153 S.W.3d=20 at 614.

Exclusive = Remedy

= ExxonMobil=20 recognized that, =E2=80=9Cwhether an administrative body has = been given the=20 sole authority, or exclusive jurisdiction, to make an initial=20 determination in a dispute depends on statutory = interpretation.=E2=80=9D=20 Id. at 615 (citing Subaru of America, Inc. v. David = McDavid=20 Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002)). The court found = that=20 =E2=80=9Cthe provisions of the Tax Code expressly provide the = necessary=20 authority.=E2=80=9D Id. (citing Tex.=20 Tax Code Ann.=C2=A7=C2=A7 6.01, 6.03, 23.01, 25.21 and = Atascosa=20 County, 990 S.W.2d at 257 (Appraisal Review Board is = =E2=80=9Ccharged with=20 ensuring that property is properly appraised=E2=80=9D)). The court = stated that it=20 would =E2=80=9Cdefeat the Tax Code=E2=80=99s purpose=E2=80=9D to = deny the appraisal review board=20 and taxing units the power to address and remedy, through Code = procedures,=20 fraudulent conduct that reduces the appraised value of the mineral = interests below the statutorily-required market price. Id. = at=20 615=E2=80=9316. After an examination of the Tax Code and, after = noting the absence=20 of any specific legislative expressions of intent regarding = exclusive=20 jurisdiction, the court commented that

Despite the = absence from the=20 Tax Code of specific language so providing, the nature of the = governmental=20 function exercised through the Tax Code, the constitutional = mandates it=20 implements, its comprehensive and detailed provisions concerning = appraisal=20 of property, and its provision of remedies combine to require the=20 conclusion that the Legislature intended the Code procedures to be = the=20 exclusive means through which the taxing units may seek a remedy = for the=20 injuries caused them by the tortious conduct alleged here.=20

Id. at 618. = The=20 Amarillo court concluded that the taxing units had failed to = exhaust=20 =E2=80=9Cremedies the Legislature has made exclusive under the Tax = Code, depriving=20 the trial court of jurisdiction.=E2=80=9D = Id.

= Here,=20 with essentially the same set of facts, we are asked to determine = whether=20 the trial court erred when it granted the Oil Companies=E2=80=99 = pleas to the=20 jurisdiction and dismissed the Taxing Units=E2=80=99 cases for = want of=20 jurisdiction because they did not exhaust an administrative remedy = before=20 filing suit.

Standard of Review=20 for Plea to the Jurisdiction

<= /SPAN>The=20 existence of subject-matter jurisdiction is a question of law. = State ex=20 rel. State Dep=E2=80=99t of Highways & Pub. Transp. v. = Gonzalez, 82 S.W.3d=20 322, 327 (Tex. 2002). Therefore, we review de novo the trial = court=E2=80=99s=20 ruling on a plea to the jurisdiction. Id. In deciding a = plea to the=20 jurisdiction, a court may not consider the merits of the case, but = only=20 the plaintiff=E2=80=99s pleadings and the evidence pertinent to = the jurisdictional=20 inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 = (Tex.=20 2002).

Ad Valorem = Taxes

= The=20 Texas Constitution generally authorizes taxes on property in = proportion to=20 the property=E2=80=99s value. Tex.=20 Const. art. VIII, =C2=A7 1(b); Tex. Mun. League = Intergovernmental=20 Risk Pool v. Tex. Workers=E2=80=99 Comp. = Com=E2=80=99n, 74 S.W.3d 377, = 387 (Tex.=20 2002). An =E2=80=9Cad valorem=E2=80=9D tax is a tax on property at = a certain rate based on=20 the property=E2=80=99s value. See generally 71 Am. Jur. 2D State = & Local=20 Taxation =C2=A7 20 (1973); Tex. Mun. League = Intergovernmental Risk=20 Pool, 74 S.W.3d at 387. Obligations to pay, = as well as=20 exemptions from, ad valorem taxes are derived entirely from = constitutional=20 and statutory provisions. City of Houston v. Northwood Mun. = Util. Dist.=20 No. 1, 73 S.W.3d 304, 311 = (Tex.=20 App.=E2=80=94Houston [1st Dist.] 2001, pet. denied). The amount of = ad valorem=20 taxes owed is based on the appraised value of the property.=20 = = Section=20 23.175 of the Texas Tax Code sets forth the method by which the = mineral=20 properties must be appraised. Section 23.175(a) provides in part = that,=20

if a real property = interest=20 in oil or gas in place is appraised by a method that takes into = account=20 the future income from the sale of oil or gas to be produced from = the=20 interest, the method must use the average price of the oil or gas = from the=20 interest for the preceding year as the price at which the oil or = gas=20 produced from the interest is projected to be sold in the current = year of=20 the appraisal.

Tex. Tax Code Ann. = =C2=A7 23.175=20 (Vernon 2001).

Common = Law=20 Remedy

<= /SPAN>In=20 point of error one, the Taxing Units argue that they have a common = law=20 remedy for fraud and the district courts have jurisdiction of = these=20 claims. The Taxing Units reference a 19th century United States = Supreme=20 Court case for the =E2=80=9Cunquestioned principal of law=E2=80=9D = that a sovereign has=20 the right to pursue common law remedies against tortfeasors in its = own=20 courts. See Cotton v. United States, 52 U.S. 229, 230 = (1850).=20

<= /SPAN>A=20 municipal corporation=E2=80=99s power to tax property is derived = solely =E2=80=9Cby virtue=20 of authority delegated to them by the state.=E2=80=9D Texas = & Pac. Ry. Co.=20 v. City of El Paso, 85 S.W.2d 245, 247 (Tex. 1935). Without a = common=20 law right to tax, the Taxing Units have no common law right to sue = for=20 damages for an alleged loss in tax revenues. See Bullock v. = Amoco Prod.=20 Co., 608 S.W.2d 899, 901 (Tex. 1980) (with statutory right and = remedy=20 not existing at common law, courts act in manner provided by = statute).=20 When considering a claim premised on a right created entirely by = statute,=20 =E2=80=9Ccourts may act only in the manner provided by the statute = which created=20 the right.=E2=80=9D Id.

<= /SPAN>Market=20 value for ad valorem tax purposes is determined by appraisal = districts and=20 Appraisal Review Boards. Tex. Tax=20 Code Ann. =C2=A7=C2=A7 6.01(b); 41.01(a) (Vernon 2001). The = Taxing Units=E2=80=99=20 claim would require the trial court to substitute its = determination of the=20 market value of the Oil Companies=E2=80=99 property for the = determination of the=20 appraisal districts and Appraisal Review Boards. See In re=20 ExxonMobil, 153 S.W.3d at 613. As the ExxonMobil court = stated,=20 =E2=80=9Cwe cannot consider the trial court=E2=80=99s jurisdiction = over the taxing units=E2=80=99=20 claims here outside the constitutional and statutory provisions = governing=20 appraisal of property for ad volorem tax purposes.=E2=80=9D = Id. at 613. The=20 Taxing Units cannot avoid the procedures and remedies in the Tax = Code by=20 characterizing a statutory tax case as a common law fraud case. = See=20 id. Accordingly, we overrule point of error = one.

Tax = Code=20 Remedy

<= /SPAN>In=20 point of error two, the Taxing Units contend that the district = courts are=20 not divested of jurisdiction by the alleged existence of a Tax = Code remedy=20 for fraud for which the Appraisal Review Board of each county has=20 jurisdiction, and which remedy the Taxing Units have failed to = exhaust=20 prior to filing suit. And, in point of error three, the Taxing = Units argue=20 that the Oil Companies =E2=80=9Cseek to have the court expand the = Tax Code,=20 creating a remedy before the Appraisal Review Board, by implying = into Tax=20 Code section 25.21 a private cause of action that is not found in = the=20 statute=E2=80=99s wording or sanctioned by the statute itself in = order to defeat=20 the jurisdiction of the district court.=E2=80=9D

<= /SPAN>The=20 Texas Constitution provides that the trial courts have = jurisdiction=20 =E2=80=9Cexcept in cases where exclusive, appellate, or original = jurisdiction may=20 be conferred by this Constitution or other law on some other = court,=20 tribunal, or administrative body.=E2=80=9D Tex. Const. art. V, = =C2=A7 8. An agency=20 has exclusive jurisdiction when =E2=80=9Ca pervasive regulatory = scheme indicates=20 that [the Legislature] intended for the regulatory process to be = the=20 exclusive means of remedying the problem to which the regulation = is=20 addressed.=E2=80=9D In re Entergy Corp., 142 S.W.3d 316, = 322 (Tex. 2004).=20

<= /SPAN>The=20 Tax Code is a classic example of a =E2=80=9Cpervasive regulatory = scheme=E2=80=9D=20 evidencing a legislative intent to vest the responsible agency = with=20 exclusive jurisdiction, in this case the Appraisal Review Board. = One of=20 the Legislature=E2=80=99s primary purposes in enacting the Tax = Code was to=20 establish a system that yields fair and uniform valuations across = taxing=20 units. Watson v. Robertson County Appraisal Review Bd., 795 = S.W.2d=20 307, 310 (Tex. App.=E2=80=94Waco 1990, no writ). To accomplish = this purpose, the=20 Legislature abolished the appraisal authority of the taxing units, = established a centralized appraisal district for every county, and = charged=20 the appraisal districts with the exclusive responsibility = =E2=80=9Cfor appraising=20 property in the district for ad valorem tax purposes of each = taxing unit=20 that imposes ad valorem taxes on property in the = district.=E2=80=9D Tex. Tax Code Ann. = =C2=A7 6.01. With=20 this shift of power, the taxing units were sidelined in the = appraisal=20 process, except for certain specifically circumscribed rights with = respect=20 to contested appraisals before the Appraisal Review Board and = rights of=20 appeal from decisions of that tribunal.

<= /SPAN>Accordingly,=20 because the Tax Code comprises precisely the type of = =E2=80=9Ccomprehensive=20 legislative scheme=E2=80=9D that courts, including the = ExxonMobil court=20 routinely hold to be exclusive and, because the Supreme Court of = Texas has=20 already concluded that the Tax Code=E2=80=99s detailed provisions = for adjudicating=20 tax disputes represent a =E2=80=9Ccomprehensive tax = scheme,=E2=80=9D we overrule point of=20 error two. See ExxonMobil, 153 S.W.3d at 618; see also = Atascosa=20 County, 990 S.W.2d at 259.

<= /SPAN>Alternatively,=20 the Taxing Units argue that the Legislature has not given them a = remedy.=20 We disagree.

<= /SPAN>In=20 fact, the Tax Code provides at least two remedies for any alleged = fraud by=20 taxpayers which results in undervaluation of property. First, the = Taxing=20 Units may file a challenge to the Appraisal Review Board=E2=80=99s = valuation of a=20 category of properties, which here would be oil and gas = properties. Tex. Tax Code Ann. = =C2=A7 41.03(a)(1)=20 (Vernon 2001). Alternatively, the Taxing Units could have = petitioned the=20 chief appraiser to void the original appraisal and then = back-appraise the=20 properties in accordance with section 25.21 of the Tax Code. Tex. Tax Code Ann. = =C2=A7 25.21 (Vernon=20 2001); In re ExxonMobil, 153 S.W.3d at 613=E2=80=9314; = Beck &=20 Masten, 830 S.W.2d at 294=E2=80=9395. 3DFootnote

= The=20 Taxing Units argue that the amendment to section 25.21 that = changed the=20 wording =E2=80=9Cescaped taxation=E2=80=9D to = =E2=80=9Comitted=E2=80=9D property, renders 25.21=20 inapplicable to the facts before us. We disagree. Both In re=20 ExxonMobil and Beck & Masten considered the very = argument=20 presented by the Taxing Units, and both courts concluded that = section=20 25.21=E2=80=99s application is determined by the = allegation of=20 fraud, not the characterization of the result. See In re=20 ExxonMobil, 153 S.W.3d at 613 (=E2=80=9CFor purposes of 25.21, = property=20 =E2=80=98omitted=E2=80=99 from the appraisal roll includes that = undervalued by virtue of=20 taxpayer fraud.=E2=80=9D); see also Beck & = Masten, 830 S.W.2d at=20 295 (fraud caused the initial assessment to be void ab = initio, and=20 the property escaped taxation for purposes of section=20 25.21).

<= /SPAN>Accordingly,=20 we overrule points of error two and three.

Pervasive=20 Regulatory Scheme

<= /SPAN>In=20 point of error four, the Taxing Units contend that =E2=80=9Cthe = Tax Code provides=20 no pervasive regulatory scheme encompassing their causes of = action, the=20 purpose and effectiveness of which statutory scheme would be = defeated by=20 allowing the trial courts to try these cases as common law fraud=20 actions.=E2=80=9D

<= /SPAN>The=20 ExxonMobil court held that three factors =E2=80=9Ccombine = to require the=20 conclusion that the Legislature intended the Code procedures to be = the=20 exclusive means through which the taxing units may seek a remedy = for the=20 injuries caused them by the tortious conduct alleged = here.=E2=80=9D In re=20 ExxonMobil, 153 S.W.3d at 618. These factors are: (1) the=20 constitution=E2=80=99s mandate for a single appraisal of property, = (2) the Tax=20 Code provisions relating to the [Appraisal Review Board=E2=80=99s] = jurisdiction,=20 and (3) the Tax Code=E2=80=99s overall, comprehensive and detailed = scheme=20 regarding appraisal and remedies. Id.

<= /SPAN>For=20 the reasons previously discussed herein, the Taxing Units have not = persuaded us that we should reach a different conclusion than that = of the=20 ExxonMobil court. Accordingly, we overrule point of error=20 four.

Conclusion

<= /SPAN>We=20 agree with the summation found in one of the briefs filed by the = Oil=20 Companies. It stated that,

accepting [the Taxing Units=E2=80=99] = novel theory would=20 undermine the Tax Code=E2=80=99s processes, strip the Appraisal = Review Boards of=20 their sovereignty over property tax appraisals and their role in = valuation=20 disputes, disrupt a well-thought-out administrative system that = has=20 successfully recovered over $5 billion in fraudulent underpayments = in=20 Harris County alone, and open the floodgates to a new era of=20 judicially-created ad valorem tax suits, in direct contravention = of the=20 Legislature=E2=80=99s intent.

We decline to do so. Accordingly, we = affirm the=20 trial court=E2=80=99s order dismissing the causes of = action.

&= nbsp; &n= bsp; &nb= sp; &nbs= p; = ; = George=20 C. Hanks, Jr.

&= nbsp; &n= bsp; &nb= sp; &nbs= p; = ; = Justice