State v. State
Headline: Court denies Texas’s bid to change a prior order on the pipeline tax and modifies receiver’s duties for the gross-production tax, defining payment calculations and assigning the burden to lessees.
Holding: The Court denies Texas’s request regarding the §11 pipeline tax and modifies paragraph 4 to limit and define the receiver’s payments for the gross-production tax.
- Limits receiver’s tax payments to net proceeds and unpaid portions.
- Requires payments calculated on each well’s full production.
- Leaves Texas able to collect pipeline tax from others outside receivership.
Summary
Background
The State of Texas asked the Court to change paragraph 4 of a June 9 order about taxes tied to production and pipeline operations. The State sought to alter how a court-appointed receiver would handle a pipeline tax in §11 of a 1917 Texas statute and a gross-production tax under Article 7383 as amended in 1923. The supplemental petition asked the Court to make the receiver responsible in a broader way for those taxes.
Reasoning
The Court denied the State’s request as it related to the §11 pipeline tax, but without prejudice to Texas’s right to collect that tax from people other than the receiver. At the same time, the Court modified paragraph 4 of the prior order about the gross-production tax. The modification requires that the receiver compute amounts on full production of each well, never pay more than the net proceeds from a given well held by the receiver, only pay portions of the tax not already paid by interested parties, and treat payments by the receiver as charged against lessees rather than owners when the tax falls on lessees.
Real world impact
The ruling limits the receiver’s exposure to pipeline tax claims while clarifying how the gross-production tax must be handled in receivership. It narrows what the receiver must pay, protects owners from being charged when lessees are responsible, and leaves the State free to collect the pipeline tax from others outside the receivership. The denial leaves open Texas’s ability to pursue other parties for the §11 pipeline tax.
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