Zapata County and Zapata Independent School District v. Conocophillips Company on Its Own Behalf and as Successor–by–merger to Conoco Inc. (f/K/A Continental Oil Company, Inc.) Brandywine Industrial Gas, Inc. Phillips Petroleum Company El Paso Production Oil and Gas Company
This opinion consolidates 19 separate suits filed by various Texas counties and school districts (Taxing Units) against numerous oil and gas companies (Oil Companies). The Taxing Units alleged fraud and conspiracy to defraud through schemes to undervalue oil and gas reserves for ad valorem tax purposes, leading to underpayment of taxes. The trial courts granted the Oil Companies' pleas to the jurisdiction, dismissing the cases because the Taxing Units failed to exhaust administrative remedies under the Texas Tax Code. The Court of Appeals affirmed the trial court's decision, concluding that the Tax Code provides the exclusive means for addressing such claims, establishing a pervasive regulatory scheme through the Appraisal Review Board, and offering remedies like challenging valuations or back-appraising omitted property. The court held that the Taxing Units cannot bypass the comprehensive statutory scheme by recharacterizing tax disputes as common-law fraud cases.