Opinion
22-0620
06-21-2024
Texas Disposal Systems Landfill, Inc., Petitioner, v. Travis Central Appraisal District, by and through Marya Crigler, acting in her official capacity as Chief Appraiser of Travis Central Appraisal District, Respondent
Argued February 22, 2024
On Petition for Review from the Court of Appeals for the Third District of Texas
Justice Bland delivered the opinion of the Court, in which Chief Justice Hecht, Justice Lehrmann, Justice Blacklock, Justice Busby, Justice Huddle, and Justice Young joined.
Justice Boyd filed an opinion dissenting in part, in which Justice Devine joined.
OPINION
Jane N. Bland, Justice.
In this tax appraisal dispute, we decide whether limits placed on a taxing authority's claim in an appeal from an appraisal review board decision also confine the trial court's subject matter jurisdiction. We conclude that the limits the Tax Code imposes on bringing such an appeal are not jurisdictional. A trial court must nonetheless evaluate compliance with Tax Code mandates in deciding the subject property's appraised value. The court of appeals concluded that the trial court had jurisdiction over the taxing authority's challenge, albeit for a different reason. We therefore affirm its judgment.
I
A
The Texas Constitution provides that "[a]ll real property and tangible personal property in this State . . . shall be taxed in proportion to its value, which shall be ascertained as may be provided by law." Any calculation of property tax in Texas thus begins with an assessment of the property's value. Under laws implementing this constitutional provision, a subject property is appraised at its "market value."
Tex. Const. art. VIII, § 1(b).
Tex. Tax Code § 23.01(a). The Legislature is free to adopt other modes of valuation, provided that those modes do not exceed market value. EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572, 576 (Tex. 2018).
The Tax Code provides guidance for conducting this appraisal. Appraisers must use "generally accepted appraisal methods," and the Code endorses specific kinds of appraisal methods for determining market value. Regardless of the method, the overarching goal is to fix a market value for the subject property. Market value is "the price at which a property would transfer for cash or its equivalent under prevailing market conditions" in an informed, arms-length transaction. From there, one calculates the property tax owed by applying exemptions and multiplying the appraised value by the applicable tax rate.
Tex. Tax Code § 23.01(b). The Tax Code provides:
Id.The market value of property shall be determined by the application of generally accepted appraisal methods and techniques. If the appraisal district determines the appraised value of a property using mass appraisal standards, the mass appraisal standards must comply with the Uniform Standards of Professional Appraisal Practice. The same or similar appraisal methods and techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property's market value, and all available evidence that is specific to the value of the property shall be taken into account in determining the property's market value.
Id. § 1.04(7). The Tax Code defines "market value" as:
[T]he price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
(A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
(B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
(C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.Id.
The Constitution enshrines two limits on property taxes. First, "Taxation shall be equal and uniform." An appraiser must use similar appraisal methods and techniques for similar properties and must arrive at a value proportionate to the appraisals of similar properties.A taxpayer may challenge a taxing authority's appraised value on the ground that the value is not equal and uniform when compared with similarly situated properties.
Tex. Const. art. VIII, § 1(a).
Tex. Tax Code §§ 23.01(b), 41.43, 42.26. The requirement that taxation be equal and uniform applies within classes of property, not between classes of property. Hegar v. Tex. Small Tobacco Coal., 496 S.W.3d 778, 785 (Tex. 2016). The Legislature has latitude to construct tax classifications. Id.
Second, a property appraisal must not be set at "a greater value than [the property's] fair cash market value." A market value determination is a constitutional ceiling: under the Constitution, property is to be appraised in proportion to its value, but it must never be appraised at more than market value.
Tex. Const. art. VIII, § 20.
The Tax Code secures these constitutional rights to fair taxation through a robust protest procedure. A taxpayer may challenge a taxing district's proposed appraised value on grounds that the appraised value is greater than the property's market value. The taxpayer may also claim that the appraised value results in taxation that is not equal and uniform. Such challenges are first brought before a local appraisal review board. If a taxpayer is dissatisfied with the board's determination, then the taxpayer may seek judicial review. Once in court, the parties start from scratch, without any deference to the board's decision. The trial court conducts a trial de novo of the protest, setting an appraised value for the subject property based on the evidence it hears.
Id. § 42.01.
Id. §§ 42.23, 42.24. The Tax Code grants the trial court determining the appeal the authority to:
(1) fix the appraised value of property in accordance with the requirements of law if the appraised value is at issue;
(2) enter the orders necessary to ensure equal treatment under the law for the appealing property owner if inequality in the appraisal of his property is at issue; or
(3) enter other orders necessary to preserve rights protected by and impose duties required by the law.Id. § 42.24.
Rarely, the appraisal district is the party dissatisfied with the board's decision. In such a case, the Tax Code gives appraisal districts the right to seek judicial review. But the Tax Code places different limits on the district's claim for relief than it does the taxpayer's. Before an appraisal district may appeal, the chief appraiser must obtain permission to appeal from the board of directors of the appraisal district. And a district cannot challenge an appraised value under $1 million unless the district first establishes fraud. Finally, pertinent here, a district's appeal is confined to an appeal from "an order of the appraisal review board determining . . . a taxpayer protest."
Id. § 42.02.
Id. § 42.02(a).
Id. § 42.02(b), (c).
Id. § 42.02(a).
B
Petitioner Texas Disposal Systems Landfill, Inc. owns 344 acres of land in Travis County, which it operates as a landfill. In 2019, Respondent Travis County Central Appraisal District appraised the market value of the landfill at $21,714,939. The Landfill protested this amount under the Tax Code provision requiring equal and uniform taxation. The Landfill did not, however, claim that the District's appraised value was higher than the market value of the property.
See id. § 41.41(a)(2).
The Landfill won its challenge. The appraisal review board reduced the appraised value of the subject property by nearly ninety percent. The board concluded: "The subject property was unequally appraised, and the appraisal records should be adjusted to reflect a value of $2,800,000."
The District appealed to the trial court, claiming that the board erred in concluding that the District's appraised value was not equal and uniform when compared with similarly situated properties. The District also claimed that the board's appraised value was lower than the subject property's true market value:
The market value of [the landfill] is greater than the determination of the [Appraisal Review Board] and the value set by the ARB results in unequal appraisal of the subject property. The ARB's value determination was arbitrary, erroneous, unjust, and unlawful and violated the requirements of Tex. Tax Code §§ 1.04(7) and 23.01. The result of the ARB's determination is an appraisal of the subject property below market value and unequal appraised value.
The Landfill answered and filed a plea to the jurisdiction. In its jurisdictional plea, the Landfill argued that the challenge it made before the appraisal review board was an equal-and-uniform challenge, not one based on market value. Thus, the trial court lacked jurisdiction to consider market value. The trial court granted the Landfill's plea.
The court of appeals reversed. The court held that a trial court's review of an appraisal review board's decision is not confined to the grounds the taxpayer asserted before the board. The court of appeals further concluded that an appraisal district has no obligation to raise reasons justifying its appraised value in response to a taxpayer protest; therefore, the statute permits appraisal districts to support their claimed appraised value for reasons the appraisal review board did not consider. We granted the Landfill's petition for review.
684 S.W.3d 470, 480 (Tex. App.-Austin 2022).
Id. at 477-78.
Id.
II
A
Whether a court has subject matter jurisdiction is a question of law we review de novo. If the Legislature assigns exclusive or original jurisdiction to an administrative body, then no right to judicial review exists "unless a statute provides a right or unless the order adversely affects a vested property right or otherwise violates a constitutional right." Even when such a statute provides judicial review, ordinarily the trial court does not acquire jurisdiction until the party exhausts its administrative remedies.
Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). "[W]e have an obligation to examine our jurisdiction any time it is in doubt . . . ." Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 774 (Tex. 2020).
Cont'l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 397 (Tex. 2000).
Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002).
The Tax Code grants appraisal districts the right to judicial review of an appraisal review board's orders. "On written approval of the board of directors of the appraisal district, the chief appraiser is entitled to appeal an order of the appraisal review board determining . . . a taxpayer protest as provided by" certain tax code provisions permitting a protest. The parties dispute whether the appeal, granted from "an order of the appraisal review board determining . . . a taxpayer protest," restricts judicial review to the protest grounds the property owner presented before the appraisal review board.
The Landfill argues that the trial court decides only the taxpayer's protest. To open the door to matters the taxpayer did not raise in protest would thwart the Legislature's goal of an expedient, taxpayer-driven protest system. The District responds that its appeal is from the board's "order" and thus the statute does not confine the District's appeal to the taxpayer's protest. The District notes that the Tax Code requires a trial de novo, in which "a court may consider arguments and evidence that are introduced afresh." The District also notes that the statute vests the trial court with the authority to "fix the appraised value of property in accordance with the requirements of law if the appraised value is at issue."
Willacy Cnty. Appraisal Dist. v. Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 50 (Tex. 2018).
Tex. Tax Code § 42.24(1); see also Cherokee Water Co. v. Gregg Cnty. Appraisal Dist., 801 S.W.2d 872, 877 (Tex. 1990) (holding that a trial court has the authority to increase or decrease the appraised value).
B
Considering the context of the Tax Code and its provisions granting an appeal, the language authorizing the District to appeal from the order determining the taxpayer's protest does not limit the trial court's jurisdiction. By authorizing the chief appraiser to appeal "an order of the appraisal review board determining . . . a taxpayer protest," the Tax Code imposes limits on the District's claim, but like many of the Code's procedural limits, the one presented in this case does not carry jurisdictional implications. Rather, it governs proceedings before the trial court and the availability of relief to an appraisal district.
In this case, we examine the distinction between a market-value protest and an equal-and-uniform protest; we do not foreclose the possibility that an appeal of another type of determination may have a jurisdictional limit.
San Jacinto River Auth. v. City of Conroe, 688 S.W.3d 124, 132 (Tex. 2024) (concluding that compliance with adjudication procedures is mandatory but not jurisdictional); Hubenak v. San Jacinto Gas Transmission Co., 141 S.W.3d 172, 183 (Tex. 2004) (construing an "unable to agree" requirement as mandatory but not jurisdictional).
We agree with the Landfill that the statutory language limiting an appeal to "an order of the appraisal review board determining . . . a taxpayer protest" narrows the trial court's de novo trial to the protest the appraisal review board heard. This limitation, however, is not jurisdictional. The taxpayer fixes the grounds for protest. The statute authorizes the trial court to hear an appeal of the protest. Under the statute, however, the District cannot prevail in a new trial of that protest by importing claims the appraisal review board did not hear.
Since Dubai Petroleum Co. v. Kazi, our Court has embraced the modern trend of declining to read statutory mandates to be jurisdictional prohibitions absent clear indication that failure to comply with the mandate also deprives a court of the power to decide the claim. Dubai Petroleum was a wrongful death suit in which the defendant disputed the trial court's jurisdiction on the basis that a foreign country lacked "equal treaty rights" with the United States, a statutory requirement. We held that any failure to comply with the "equal treaty rights" statutory mandate did not deprive the trial court of subject matter jurisdiction over the claim. The Court announced its movement away from the traditional rule that a claim must satisfy given statutory requisites to vest the trial court with jurisdiction to decide the claim's merit.
12 S.W.3d 71, 76-77 (Tex. 2000).
Id. at 74.
Id. at 76-77.
Id.
In doing so, we emphasized that "the modern direction of policy is to reduce the vulnerability of final judgments to attack on the ground that the tribunal lacked subject matter jurisdiction." Denominating statutory requirements as "jurisdictional" has the unfortunate effect of casting doubt on otherwise final judgments. In general, whether a plaintiff has complied with statutory prerequisites implicates the right to relief, not the jurisdiction of the court.
Id. at 76 (quoting Restatement (Second) of Judgments § 11 cmt. e (Am. L. Inst. 1982)).
Id. at 76-77. In suits against the government, however, all statutory prerequisites to suit are jurisdictional requirements. Tex. Gov't Code § 311.034 (abrogating Univ. of Tex. Sw. Med. Ctr. at Dall. v. Loutzenhiser, 140 S.W.3d 351 (Tex. 2004)).
Following Dubai Petroleum, we later held that no jurisdictional bar stemmed from a failure to comply with a statute permitting a condemnation action when "the entity and the property owner are unable to agree on the damages." Because a party opposing condemnation could waive the right to complain of the lack of effort to agree, the statutory context revealed that requirement was not a jurisdictional one. And in another condemnation case, we held that (1) the trial court's statutory authority to try appeals "in the same manner as other civil causes"; (2) the lack of an option for the trial court to simply affirm the award; and (3) the fact that the commissioners' award was not admissible, taken together, meant that the trial court was not jurisdictionally confined to evidence presented during the administrative phase.
Hubenak, 141 S.W.3d at 180-83 (quoting and analyzing Tex. Prop. Code § 21.012(b)).
Id. at 181-82.
PR Invs. & Specialty Retailers, Inc. v. State, 251 S.W.3d 472, 476 (Tex. 2008) (quoting Tex. Prop. Code § 21.018(b)).
The statutory framework in this case similarly employs procedural limits on the trial de novo of a tax protest that are not jurisdictional. A taxpayer and the appraisal district each may appeal to the trial court an order determining a protest. When a taxpayer raises a new basis to protest for the first time in the trial court, the court may "remand the action to the appraisal review board with instructions to allow the property owner an opportunity to cure the property owner's failure to exhaust administrative remedies." While the statute contemplates jurisdictional challenges arising from the failure to exhaust, it eliminates mandatory dismissal for lack of jurisdiction. The parties may forgo remand entirely and "elect that the court determine the appeal on the merits," including the taxpayer's newly presented protest. We have long held that parties cannot confer jurisdiction by agreement. The parties' ability to proceed by agreement on a taxpayer's newly identified ground for protest signals that the parameters of an appeal, though mandatory, are not jurisdictional.
Id. § 42.231(b). Section 42.231 applies to all appeals filed on or after September 1, 2019. Act of May 9, 2019, 86th Leg., R.S., ch. 157 §§ 3-4, 2019 Tex. Gen. Laws 286, 287.
PR Invs., 251 S.W.3d at 476-77 & n.17 (observing that jurisdiction cannot be manufactured by consent or waiver).
The statute provides no mirror-image avenue of review to appraisal districts because an appraisal district is in the position of defending its appraised value before the review board. But no matter which party appeals, the trial court hears the protest anew, including new evidence and argument. The trial court does not defer to the appraisal review board's determination. This de novo review is further indication that the limit on the appraisal district's claim is not tantamount to a jurisdictional prohibition.
The trial court's de novo review does not, standing alone, confer subject matter jurisdiction. See Cont'l Cas., 19 S.W.3d at 398-99 (holding that statutory provisions that prescribe the manner of judicial review do not independently create jurisdiction). The Legislature's grant of an appeal is the basis for the trial court's subject matter jurisdiction.
In this way, the Tax Code provision permitting the appraisal district's appeal shares characteristics with provisions in the condemnation review statute our Court concluded are not jurisdictional. Like the condemnation statute, the Tax Code directs the trial court to conduct a trial de novo. The court may not simply affirm the appraisal review board's order, and it "may not admit in evidence the fact of prior action by the appraisal review board . . . except to the extent necessary to establish its jurisdiction." The Tax Code also provides that the trial court is not confined to the evidence presented to the appraisal review board, similar to condemnation procedures that we held lacked jurisdictional implications. The trial court "is 'appellate' only as distinguished from 'original' or 'concurrent,' but not in the sense that the evidence is fixed or that court is confined to that paper record."
PR Invs., 251 S.W.3d at 475-79.
Compare id. § 42.23(b), (h), with PR Invs., 251 S.W.3d at 475-79.
Willacy Cnty. Appraisal Dist., 555 S.W.3d at 50 (holding that an appraisal district may raise a new argument during the taxpayer's appeal to the trial court because review is de novo). The Court in Willacy additionally supported its holding by explaining that an affirmative defense cannot be waived by failing to raise it in the administrative phase, but the first reason- that the trial is de novo-is sufficient on its own. Id.
The Tax Code's grant of trial de novo is unlike the statute authorizing permissive interlocutory appeals. The latter is a general statute permitting an appeal for "an order that is not otherwise appealable" if the order "involves a controlling question of law" and the appeal will materially advance the litigation toward resolution. As we said in Elephant Insurance Co. v. Kenyon, these two conditions are necessary for permission to appeal, but the court of appeals' jurisdiction extends to the entire order, without a limit on any examination of subsidiary issues.
644 S.W.3d 137, 147 (Tex. 2022).
Tax Code Section 42.02, in contrast, grants a right to appeal "an order of the appraisal review board determining . . . a taxpayer protest." The condition is not merely requisite but exclusionary.
This interpretation is consistent with our treatment of other provisions of the Tax Code in Oncor Electric Delivery Co. v. Wilbarger County Appraisal District. The taxpayer in that case brought appeals after appraisal districts declined to correct alleged errors in the tax rolls stemming from tax protest settlement agreements. The question in those cases was whether provisions barring appraisal review boards from rejecting settlement agreements jurisdictionally barred the trial court from hearing the taxpayer's challenge that those agreements were void due to a mutual mistake. In that case, as in this one, we concluded that a trial court has jurisdiction to consider the claim.
__ S.W.3d __ (Tex. June 21, 2024) (No. 23-0138).
Id., slip op. at 18.
The Landfill argues that statutory limits must be jurisdictional to secure the goal of an expedient, affordable protest system. We agree that the purpose of administrative proceedings is to streamline dispute resolution. A statutory mandate, however, is no less a limit on the prosecution of a claim for relief in court than one that implicates the trial court's power to decide that claim. A court cannot ignore a statutory mandate simply because the mandate lacks jurisdictional consequences. Under the statute in this case, the trial court's consideration of the appraisal district's claim is confined to a de novo determination of the taxpayer's protest. The District has no mandate to expand trial court review of an appraisal beyond the taxpayer's protest.
Image API v. Young, S.W.3d, slip op. at 16 (Tex. June 21, 2024) (No. 22-0308).
C
In this case, confining the claim before the trial court to the taxpayer's protest is of limited consequence.
First, to the extent that the fair market value of the subject property deviates from its equal and uniform appraised value, the Landfill is entitled to the lower of the two amounts for calculating the property tax it owes. In a perfect world, market value and uniform value are the same number, as all properties must be appraised based on market value, adjusted for each property's unique characteristics. Giving the property owner the benefit of the lower of the two valuations harmonizes the cumulative constitutional mandates that property cannot be assessed "at a greater value than its fair cash market value" and that taxation must be "equal and uniform." The Landfill's vigorous rejection of judicial inquiry into fair market value might deprive the trial court of the ability to appraise the property at a value that is lower than the equal and uniform amount. But if the fair market value of the property is higher-as both parties seem to presume-that value must yield to the lower equal and uniform value as assessed on comparable properties.
Tex. Const. art. VIII, §§ 1(a), 20.
Second, even though the Tax Code limits the trial court's determination in this case to an appraisal amount that is equal and uniform, evidence of a subject property's fair market value is relevant to both the taxpayer's challenge and the trial court's duty to set the subject property's appraised value at an equal and uniform amount, which as we have said, should approach the property's market value. The Tax Code provides three formulas for use in determining whether an appraisal is equal and uniform. Two compare the "appraisal ratio" of the subject property to comparable properties. The "appraisal ratio" is "the ratio of a property's appraised value as determined by the appraisal office or appraisal review board, as applicable, to . . . the market value of the property." The third formula compares "the appraised value of the property" and "the median appraised value of a reasonable number of comparable properties appropriately adjusted." Implicit in this third formula are appropriate adjustments to the market value of comparable properties, in a manner similar to appropriate adjustments to the market value of the subject property, making their respective appraised values "comparable properties appropriately adjusted." Thus, evidence of the subject property's fair market value is admissible in either kind of taxpayer protest to support or challenge the appropriateness of comparable properties and the adjustments made in determining whether the appraised value is equal and uniform. Using evidence of appropriately adjusted fair market values, the District is free to counter the taxpayer's suggested equal and uniform value of comparable properties-with the caveat that, under the statute, the Landfill gets the benefit of the calculation that results in the lowest appraisal value.
See Harris Cnty. Appraisal Dist. v. Hous. 8th Wonder Prop., L.P., 395 S.W.3d 245, 251-52 (Tex. App.-Houston [1st Dist.] 2012, pet. denied).
Id. § 42.26(a)(1), (2).
Id. § 1.12(b).
Id. § 42.26(a)(3).
Id. § 42.26(b) ("If a property owner is entitled to relief under more than one subdivision of Subsection (a), the court shall order the property's appraised value changed to the value that results in the lowest appraised value."). We disapprove of courts of appeals cases to the extent they suggest that market value of the subject property is per se irrelevant in unequal-appraisal litigation. See In re Catherine Tower, 553 S.W.3d 679, 685-87 (Tex. App.-Austin 2018, orig. proceeding [mand. denied]); In re APTWT, LLC, 612 S.W.3d 85, 90-93 (Tex. App.-Houston [14th Dist.] 2020, orig. proceeding). For this reason, the differences between the Court and the dissent on this point have little practical effect. Evidence of fair market value is admissible in determining both kinds of taxpayer protests. And we agree that the trial court must address all issues of fact and consider new arguments and evidence in arriving at an appraised value without deference to the review board's determination.
Finally, the potential relevance of a subject property's fair market value does not permit sweeping discovery into every aspect of a property owner's business. Discovery is limited to that information relevant to a de novo resolution of the taxpayer's protest, and the burden of answering such discovery must be proportionate to its importance in arriving at an equal and uniform appraised value. Trial courts must limit discovery and protect confidential information when taxing authorities fail to narrowly tailor their discovery requests in a taxpayer protest appeal.
See Tex. R. Civ. P. 192.4(b).
The Tax Code limits judicial review to conducting a de novo trial of the taxpayer's protest. In deciding the taxpayer's protest in this case, the trial court is to determine the equal and uniform appraised value for the property subject to taxation. This limit, though mandatory, is not jurisdictional. We affirm the court of appeals' judgment for the reasons stated in this opinion. We remand the case to the trial court for further proceedings.
Justice Boyd, joined by Justice Devine, dissenting in part.
Section 42.02(a)(1) of the Texas Tax Code authorizes an appraisal district's chief appraiser to appeal an appraisal review board's order determining a property owner's protest by filing suit against the property owner in district court. The parties here dispute the scope of the district court's authority over that appeal. Agreeing with the property owner, the Court concludes the statute "narrows" the trial court's review "to the protest the appraisal review board heard." Ante at 10. Because the property owner protested and prevailed only on the ground that the appraisal was not equal and uniform, the Court concludes the chief appraiser cannot appeal the appraisal review board's new appraisal on the ground that it fails to reflect the property's market value. Id. The Court also holds, however, that this limitation is not jurisdictional. Id. at 12. Because the chief appraiser appealed and asserted a ground the property owner did not raise in the protest, the district court must dismiss that claim, but not because it lacks jurisdiction. Id. at 15.
I disagree with the Court on both points. Section 42.02(a)(1) delineates a district court's jurisdiction because it establishes and defines a chief appraiser's right to seek judicial review of an administrative agency's order. It does not merely constitute or impose a "procedural" prerequisite or requirement for pursuing the appeal. But it does not restrict the district court's jurisdiction to grounds the property owner raised in the protest. It authorizes an appeal from the appraisal review board's order, not from the property owner's protest. And other provisions-of both the Tax Code and the Texas Constitution-require the district court to resolve all issues raised in the pleadings and ensure that the appraised value is both equal and uniform and based on the property's market value.
I thus join the Court's judgment to the extent it affirms the court of appeals' judgment. But to the extent the Court's judgment prohibits the district court from addressing the chief appraiser's claim that the appraisal review board's appraisal fails to reflect the property's market value, I respectfully dissent.
The trial court granted the property owner's plea to the jurisdiction in this case because the court concluded that (1) any limit the Tax Code places on a trial court's authority over an appeal from an appraisal review board's order is jurisdictional, and (2) the Tax Code limits a trial court's authority over such an appeal to the ground the property owner raised in the protest. The court of appeals reversed and remanded the case to the trial court, agreeing that (1) any limit the Tax Code places on the trial court's authority is jurisdictional, but concluding that (2) the Tax Code does not limit judicial review to the ground the property owner asserted in the protest. See 684 S.W.3d 470, 477- 78 (Tex. App.-Austin 2022). The Court today affirms the court of appeal's judgment but disagrees with its reasoning. It disagrees with both lower courts' conclusion that the Code's limit is jurisdictional, but it agrees with the trial court that the Code limits review to the ground asserted in the protest. Ante at 19. I agree with the court of appeals on both points. Importantly, however, the Court ultimately concedes that, although the Code limits the trial court's authority to a review of the ground asserted in the protest, it must nevertheless accept evidence of fair market value and consider and address "all issues of fact" and all "new arguments and evidence" to arrive at a de novo determination of the proper appraised value. Id. at 17 n.58. And the Court further acknowledges that the property's equal and uniform value must "approach the property's market value," id. at 16, so a constitutionally permissible de novo valuation necessarily must consider both. The parties and lower courts should be careful not to miss this point on remand and in future cases.
I. Jurisdictional Limitation
The chief appraiser of each Texas appraisal district is responsible for appraising all taxable property within the district for ad valorem tax purposes. TEX. TAX. CODE §§ 6.01, 25.01(a). A property owner who disagrees with the chief appraiser's appraisal may file a protest before the local appraisal review board (ARB). Id. § 41.41(a). A protest may challenge the "appraised or market value," an "unequal appraisal," or several other specified errors. Id. § 41.41(a). When an owner protests an appraisal, the ARB must conduct an evidentiary hearing and then announce its determination through a written order. Id. §§ 41.45, .47(a). If the ARB "finds that the appraisal records are incorrect in some respect raised by the protest," it must "correct the appraisal records by changing the appraised value" or by making "other changes in the appraisal records that are necessary to conform the records to the requirements of law." Id. § 41.47(b).
A protest may also challenge the property's inclusion on the appraisal records, the denial of a partial exemption, a determination that the property does not qualify for certain appraisal limitations, a determination that the property does not qualify for appraisal, the identification of the taxing units in which the property is taxable, a determination of who owns the property, a determination that the use of land has changed, a failure to give the property owner a notice the owner is entitled to receive, or "any other action of the chief appraiser, appraisal district, or appraisal review board that applies to and adversely affects the property owner." Tex. Tax Code §§ 41.41(a), .411.
Both the property owner and the chief appraiser are "entitled to appeal . . . an order of the [ARB] determining" a property owner's "protest." Id. §§ 42.01(a)(1)(A), .02(a)(1). To appeal, the party must file a petition for review in a local district court. Id. §§ 42.21, .22. The district court must review the ARB order "by trial de novo," resolving "all issues of fact and law raised by the pleadings in the manner applicable to civil suits generally." Id. § 42.23(a).
Texas Disposal Systems Landfill (TDS Landfill) and Travis Central Appraisal District (Travis CAD) dispute the extent to which Section 42.02(a)(1)-which, to repeat, entitles a chief appraiser "to appeal an order of the [ARB] determining" a property owner's "protest"-limits the scope of the appeal it permits. But they agree that the limits-whatever they are-are jurisdictional. So did the trial court and the court of appeals in this case, and so do the twenty-four interested parties who submitted amicus curiae briefs, including eleven other appraisal districts, eight property owners or entities representing property owners, three tax-policy research organizations, and two Texas legislators. Despite the fact that no one in this case has raised the issue, the Court holds sua sponte that "the limits the Tax Code imposes" on an appeal from an ARB's order determining a protest "are not jurisdictional." Ante at 1-2. I agree with the parties, lower courts, and amici.
Because this case involves a chief appraiser's (as opposed to a property owner's) appeal from an ARB order, the parties here disagree about the extent to which Section 42.02 limits the scope of the appeal. But Sections 42.01 (which grants a property owner a right to appeal) and 42.02 (which grants a chief appraiser a right to appeal) use identical language to describe the scope of the authorized appeal: an "appeal" from "an order of the [ARB] determining a [property owner's] protest." Id. §§ 42.01(a)(1)(A), .02(a)(1). So whatever limit this language imposes would apply to an appeal by a property owner as well as an appeal by a chief appraiser.
Both parties agree that Section 42.02(a) establishes and defines the scope of the district court's jurisdiction.
Bexar Appraisal District, Denton Central Appraisal District, El Paso Central Appraisal District, Gillespie County Central Appraisal District, Gonzalez County Appraisal District, Harris Central Appraisal District, Henderson County Appraisal District, Matagorda County Appraisal District, Montgomery Central Appraisal District (through its Chief Appraiser, Janet Jennings-Doyle), San Patricio County Appraisal District, and Williamson Central Appraisal District.
Christopher Investment Company, Omni Hotels & Resorts, Texas Apartment Association, Texas Association of Manufacturers, Texas Building Owners and Managers Association, Texas Realtors, Valero Refining-Texas, LP, and Walgreen Co.
Texas Taxpayers and Research Association, Texas Public Policy Foundation, and Texas Association of Property Tax Professionals.
Texas Senator Paul Bettencourt and Texas Representative Hugh D. Shine.
The Texas Constitution broadly grants district courts jurisdiction over all "actions, proceedings, and remedies" unless the Constitution or "other law" confers jurisdiction on "some other court, tribunal, or administrative body." Tex. Const. art. V, § 8. The Texas Tax Code is an "other law" that authorizes actions to challenge a chief appraiser's tax appraisal, and it grants ARBs exclusive, original jurisdiction over such actions. Cameron Appraisal Dist. v. Rourk, 194 S.W.3d 501, 502 (Tex. 2006) (per curiam).
When a statute grants exclusive, original jurisdiction over an action to an administrative agency, district courts lack jurisdiction to address the claims unless, and only to the extent that, a statute grants them such jurisdiction. See City of Amarillo v. Hancock, 239 S.W.2d 788, 791 (Tex. 1951). Parties have "no right to judicial review of an administrative order unless a statute explicitly provides that right or the order violates a constitutional right." Hous. Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151, 158 (Tex. 2007). A statute that provides a right to judicial review of an administrative order governs the scope of that right and of the court's jurisdiction to decide the dispute. See id. at 159.
As the Court explains today, we have increasingly "embraced the modern trend of declining to read statutory mandates to be jurisdictional prohibitions, absent clear indication that failure to comply with the mandate also deprives a court of the power to decide the claim." Ante at 10 (emphasis added) (citing Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000)). Construing particular statutes, for example, we have held that some procedural prerequisites and requirements- like notice requirements, filing deadlines, venue requirements, and dismissal deadlines-although mandatory, are not jurisdictional. See, e.g., Tex. Mut. Ins. Co. v. Chicas, 593 S.W.3d 284, 289 (Tex. 2019); In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 306-07 (Tex. 2010); City of DeSoto v. White, 288 S.W.3d 389, 398 (Tex. 2009).
In addressing these types of procedural prerequisites, requirements, and mandates, we have preferred to hold that they are not jurisdictional because that holding "strengthen[s] finality and reduce[s] the possibility of delayed attacks on judgments." City of DeSoto, 288 S.W.3d at 394. But in each case, we have acknowledged that we must construe a statutory provision to be jurisdictional when the statute demonstrates "that was the Legislature's clear intent." Id.; see In re United Servs. Auto Ass'n, 307 S.W.3d at 304 ("[W]e have been 'reluctant to conclude that a provision is jurisdictional, absent clear legislative intent to that effect.'" (emphasis added) (quoting DeSoto, 288 S.W.3d at 393)).
Chapter 42 of the Texas Tax Code imposes numerous procedural prerequisites, requirements, and mandates on parties who desire to appeal an ARB order. The chapter also explicitly addresses whether some (but not all) of these requirements are jurisdictional. As one example, a property owner who appeals an ARB order must nevertheless pay the taxes due before the delinquency deadline, in an amount that is the lesser of (1) the amount the owner does not dispute is due, (2) the amount due under the ARB order being appealed, or (3) the amount that was due for the preceding tax year. TEX. TAX. CODE § 42.08(b). And an owner who pays under the first option (the amount the owner does not dispute is due) must file with the appeal a written statement "of the amount of taxes the property owner proposes to pay." Id. § 42.08(b-1). An owner who fails to timely pay the required amount "forfeits the right to proceed to a final determination of the appeal." Id. § 42.08(b). But the statute expressly provides that "[t]he failure to provide" the written statement of the amount the owner proposes to pay "is not a jurisdictional error." Id. § 42.08(b-1) (emphasis added).
A property owner may be excused from this payment obligation if he adequately demonstrates that he is financially unable to pay. TEX. TAX. CODE § 42.08(b), (d).
As a second example, a party who wishes to appeal an ARB order must file a petition for review in the district court no later than sixty days after the party received notice of the ARB's order. Id. § 42.21(a). An appeal filed by a chief appraiser must be brought against the property owner, and an appeal filed by the property owner must be brought against the appraisal district. Id. § 42.21(b). A party's failure "to timely file a petition bars any appeal" under Chapter 42. Id. § 42.21(a) (emphasis added). More specifically, the statute expressly provides that the district court lacks "jurisdiction" over an appeal if (1) the property was not "the subject of an [ARB] order," (2) the party failed to timely file the petition for review, or (3) the petition fails to provide "sufficient information to identify the property that is the subject of the petition." Id. § 42.21(h). But "so long as" these requirements are satisfied, the property owner's failure to correctly identify the plaintiff or describe the property in the petition does not deprive the court of "jurisdiction" and "may not be the subject of a plea to the jurisdiction." Id.
As a third example, the Tax Code expressly recognizes that the district court lacks "jurisdiction" if the property owner "failed to exhaust" its administrative remedies before the ARB. Id. § 42.231(b).But it expressly permits (though it does not require) the district court to remand the action to the ARB so that the owner can cure the failure, "in lieu of dismissing the appeal for lack of jurisdiction." Id. And if the court decides to permit a remand to the ARB, the statute allows the parties to agree to waive the need for remand, subject to the court's approval, and elect to allow the court to resolve the appeal on the merits despite the owner's failure to exhaust its administrative remedies. Id. § 42.231(e). As a final example, Chapter 42 also provides that (1) a chief appraiser may only appeal "[o]n written approval of the board of directors of the appraisal district," and (2) if "the protest involved a determination of the [property's] appraised or market value," and the ARB determined that the property's value is less than $1 million, the chief appraiser cannot appeal unless she alleges that the owner or his representative "committed fraud, made a material misrepresentation, or presented fraudulent evidence in the [ARB] hearing." Id. § 42.02(a)(1), (b), (c). The statute does not explicitly address whether a chief appraiser's failure to satisfy these procedural prerequisites deprives the district court of jurisdiction.
This is true for any statutorily authorized appeal to the courts from an administrative agency's order, absent some statutory provision to the contrary. See, e.g., CPS Energy v. Elec. Reliability Council of Tex., 671 S.W.3d 605, 617-18 (Tex. 2023) ("If the agency's exclusive jurisdiction is established, the claimant must pursue and exhaust all available administrative remedies before turning to the courts. 'Until then, the trial court lacks subject-matter jurisdiction' and must dismiss the claims with issues that come within the agency's exclusive jurisdiction.") (quoting Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d 422, 428 (Tex. 2017) ("As a rule, when an agency has exclusive jurisdiction, a party must exhaust all administrative remedies before seeking judicial review of the agency's action. . . . Until then, the trial court lacks subject-matter jurisdiction and must dismiss the claims within the agency's exclusive jurisdiction.")); Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002) ("Typically, if an agency has exclusive jurisdiction, a party must exhaust all administrative remedies before seeking judicial review of the agency's action. Until then, the trial court lacks subject matter jurisdiction and must dismiss the claims within the agency's exclusive jurisdiction." (citing Cash Am. Int'l Inc. v. Bennett, 35 S.W.3d 12, 15 (Tex. 2000))).
The Court suggests that this statutory grant of a right to waive the exhaustion requirement "signals" that the exhaustion requirement is not jurisdictional. Ante at 12. This suggestion misreads the statute. The statute permits the district court to remand the action to the ARB, but if the court chooses not to remand, it must "dismiss[] the appeal for lack of jurisdiction." TEX. TAX. CODE § 42.231(b) (emphasis added). If the court chooses instead to permit the remand and the parties agree to waive the remand, the waiver is effective only if the court approves it. Id. § 42.231(e). As the Court notes, "parties cannot confer jurisdiction by agreement." Ante at 12 (citing PR Invs. & Specialty Retailers, Inc. v. State, 251 S.W.3d 472, 476 & n.17 (Tex. 2008)). True enough, but the Legislature can confer it by statute, Fed. Underwriters Exch. v. Pugh, 174 S.W.2d 598, 600 (Tex. 1943) ("Jurisdiction of the subject matter exists by operation of law only. . . ."), and nothing prohibits the Legislature from permitting parties to waive a prerequisite that would otherwise constitute a jurisdictional hurdle. In other words, the Legislature- exercising its constitutional authority to define the courts' jurisdiction-has granted jurisdiction to the district court only if (1) the appealing party exhausted its administrative remedies before the ARB, (2) the district court remands to allow a party to cure its failure to exhaust, or (3) the district court approves the parties' agreement to waive the necessity of a remand. If none of these requirements is satisfied, the district court lacks jurisdiction.
The parties agree that these requirements are not at issue here as TDS Landfill has abandoned any argument that the chief appraiser failed to obtain written approval from the appraisal district's board of directors and the parties agree that the property at issue was appraised at an amount greater than $1 million.
As these examples illustrate, Chapter 42 imposes numerous procedural prerequisites, requirements, and mandates on a party who desires to appeal an ARB order. But none of these procedural prerequisites are at issue in this case. In fact, no procedural prerequisites, requirements, or mandates are at issue in this case. What is at issue is the meaning of Section 42.02(a)(1): A chief appraiser is "entitled to appeal an order of the [ARB] determining" a property owner's "protest." Id. § 42.02(a)(1). This provision does not impose procedural requirements. It describes the "appeal" a chief appraiser is "entitled" to take.
Chapter 42 indisputably defines and limits the scope of an appeal the parties are entitled to take from an ARB order. Property owners, for example, are "entitled to appeal" an "order of the [ARB] determining":
(A) a protest by the property owner . . .;
(B) a motion [to correct or change the appraisal roll] filed under Section 25.25;
(C) that the property owner has forfeited the right to a final determination [by] failing to comply with the prepayment requirements . . .;
(D) eligibility for a refund requested under Section 23.1243; or
(E) that the [ARB] lacks jurisdiction . . . because the property owner failed to comply with a requirement of . . . Chapter 41, or Section 25.25 . . . .Id. § 42.01(a)(1). Chief appraisers, by contrast, are only "entitled to appeal an order of the [ARB] determining: (1) a taxpayer protest . . .; or (2) a taxpayer's motion to change the appraisal roll filed under Section 25.25." Id. § 42.02(a).
The statute limits the parties' right to appeal to ARB orders that determine these specific matters. But these limits are nothing like the statute's procedural prerequisites, requirements, and mandates. Sections 42.01(a)(1)(A) and 42.02(a)(1) define a district court's jurisdiction over an appeal from an ARB order because they do not merely govern "the manner of judicial review;" they "grant a right of judicial review." Cont'l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 400 (Tex. 2000). Or as the United States Supreme Court recently described the distinction, they do not merely seek "to promote the orderly progress of litigation;" they "demarcate a court's power." Harrow v. Dept. of Def., 144 S.Ct. 1178, 1183 (2024) (quoting Henderson v. Shinseki, 562 U.S. 428, 435 (2011)).
Because Sections 42.01(a)(1)(A) and 42.02(a)(1) grant a right of judicial review of an ARB order, define the types of appeals the parties are permitted to take, and "demarcate a court's power" over those appeals, any limitation they place on the scope of a party's right to appeal an ARB order is a legislative limitation on the district court's jurisdiction over that appeal. Id.; see Cont'l Cas. Ins., 19 S.W.3d at 405 ("[B]ecause the Workers' Compensation Act does not provide a right of judicial review, the district court properly dismissed the suit for lack of jurisdiction."); Ferrell, 248 S.W.3d at 159 ("Because the Legislature has not authorized the trial court to grant the relief sought, the trial court lacks jurisdiction over the case."). I thus agree with the parties, lower courts, and amici that Section 42.02(a)(1)'s limitations are jurisdictional.
II. Grounds for Appeal
The issue the parties raise in this Court is not whether Section 42.02(a)(1)'s limitations are jurisdictional, but what those limitations are. Specifically, TDS Landfill contends that, because the only ground it advanced in its protest to the ARB was that the chief appraiser's appraisal was not "equal and uniform," the chief appraiser cannot appeal the ARB's order resolving that protest on the ground that the ARB's appraisal does not reflect the property's "market value." The Court agrees, ante at 15, but I do not.
In support of their position, the Court and TDS Landfill rely primarily on Section 42.02(a)(1)'s reference to the taxpayer's "protest." The Court, for example, states that "[t]he statute authorizes the trial court to hear an appeal of the protest," and grants "a de novo determination of the taxpayer's protest." Id. at 10, 15. But that's simply not what the statute says. The statute says that a chief appraiser is "entitled to appeal an order of the [ARB] determining . . . a taxpayer protest." Tex. Tax Code § 42.02(a) (emphasis added). Section 42.02(a)'s reference in subsection (1) to an ARB order "determining . . . a taxpayer protest"-like its reference in subsection (2) to an ARB order "determining . . . a taxpayer's motion to change the appraisal roll"- describes the types of ARB orders the chief appraiser is entitled to appeal. It does not restrict the scope of the court's power to review the orders it describes.
We recently rejected a very similar contention involving the permissive-interlocutory-appeal statute in Elephant Insurance Co. v. Kenyon, 644 S.W.3d 137, 147 (Tex. 2022). That statute authorizes an interlocutory appeal "from an order that is otherwise unappealable if 'the order to be appealed involves a controlling question of law' and if 'an immediate appeal from the order may materially advance the ultimate termination of the litigation.'" Id. (quoting Tex. Civ. Prac. & Rem. Code § 51.014(d)) (emphases added by the Court in Kenyon). Applying that statute in Kenyon, the court of appeals concluded "that its only obligation in the permissive appeal was to" decide the "controlling question of law" by "ascertain[ing] whether" the defendant owed a legal duty "in the abstract," and it refused to consider "whether the duty is applicable to or fairly implicated by the facts and circumstances presented." Id. at 143, 147.
We rejected the court's "disconcertingly cramped view of its jurisdiction over the appeal" and held that courts must decide permissive appeals, like "any other appeal," by "addressing all fairly included subsidiary issues and ancillary issues pertinent to resolving the controlling legal issue." Id. at 147. We explained that, although "'involve[ment]' of a controlling legal issue is essential to securing a permissive appeal, the statute plainly provides that it is the order (or, as the case may be, the relevant portion of the order) that is on appeal." Id. Like the permissive-appeal statute, Section 42.02(a)(1) permits an appeal from an ARB order, not from a taxpayer's protest. That the ARB order "determin[es] . . . a taxpayer protest" is "essential to securing" an appeal under Sections 42.01(a)(1)(a) and 42.02(a)(1) because that is one of the types of ARB orders the statute entitles a party to appeal. But "the statute plainly provides that it is the order," and not the protest, "that is on appeal." Id.
If Section 42.02(a)(1)'s authorization of an "appeal from an [ARB] order" were not clear enough, numerous other statutory and constitutional provisions confirm that a district court's authority to decide an ARB appeal is not limited to the grounds asserted in the taxpayer's protest.
First, several provisions of the Tax Code confirm that the "subject" of an appeal under Section 42.02(a)(1) is the "appraised value" of the property at issue, not the grounds on which the property owner may have protested the valuation. When a property owner protests "the appraised value of the owner's property," and the ARB "finds that the appraisal records are incorrect in some respect raised by the protest," the ARB's order resolving that protest "must state in the order the appraised value . . . as finally determined by the [ARB]" and must "correct the appraisal records by changing the appraised value [as] necessary to conform the records to the requirements of law." TEX. TAX. CODE § 41.47(b), (c). If a chief appraiser elects to appeal the ARB's order stating "the appraised value . . . as finally determined by the [ARB]," the chief appraiser must "indicate where appropriate those entries on the appraisal records that are subject to the appeal." Id. § 42.06(d). The "entries" that are "subject to the appeal" in such a case are the entries that state the "appraised value" of the property at issue. Id. § 25.02 (describing entries included in appraisal records). The subject of the chief appraiser's appeal, in other words, is the appraised value as stated in the ARB's order, not the grounds on which the property owner protested the chief appraiser's appraised value.
Second, several provisions confirm that a district court that decides a chief appraiser's appeal must decide all issues raised in the pleadings in order to determine the appraised value that Texas law requires. The district court must review the ARB order "by trial de novo," resolving "all issues of fact and law raised by the pleadings in the manner applicable to civil suits generally." Id. § 42.23 (emphasis added). As we recently explained, a "trial de novo is '[a] new trial on the entire case-that is, on both questions of fact and issues of law-conducted as if there had been no trial in the first instance.'" Willacy Cnty. Appraisal Dist. v. Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 50 (Tex. 2018) (quoting Trial de novo, Black's Law Dictionary (10th ed. 2014)). "A trial de novo is not confined to the same evidence that was presented during the administrative phase," and "in a trial de novo, a court may consider arguments and evidence that are introduced afresh." Id. (emphasis added).
The nature of the relief the district court grants after conducting a de novo trial will vary depending on the issues the pleadings raise, but in all cases the relief must comply with all requirements of Texas law. See TEX. TAX. CODE § 42.24. If "the appraised value is at issue," the judgment may "fix the appraised value . . . in accordance with the requirements of law." Id. § 42.24(1). If "inequality in the appraisal . . . is at issue," the judgment may "enter the orders necessary to ensure equal treatment under the law." Id. § 42.24(2). And in any case, the court may "enter other orders necessary to preserve rights protected by and impose duties required by the law." Id. § 42.24(3).
And third, the Texas Constitution and the Tax Code confirm that Texas law requires that an appraised value must be both (1) "equal and uniform," and (2) based on the property's "value." As the Court notes, ante at 3-4, the Constitution requires that all "[t]axation shall be equal and uniform," Tex. Const. art. VIII, § 1(a), and further provides that "[n]o property of any kind in this State shall ever be assessed for ad valorem taxes at a greater value than its fair cash market value," id. § 20. The Court believes that, to "harmonize[] the[se] cumulative constitutional mandates," we must conclude that if "the fair market value of the subject property deviates from its equal and uniform appraised value," the property owner is entitled to the benefit of being taxed at the "lower of the two amounts." Ante at 16.
But as the Court also acknowledges (although as if only in passing), see id. at 2, the Constitution does more than merely prohibit taxation based on an appraisal that exceeds the property's fair market value. In addition to that protection, the Constitution affirmatively requires that all property, "unless exempt as required or permitted by this Constitution, . . . shall be taxed in proportion to its value, which shall be ascertained as may be provided by law." TEX. CONST. art. VIII, § 1(b) (emphasis added).
Section 1 of Article 8 thus requires that property must be taxed based on appraisals that are both (1) "equal and uniform" and (2) based on the property's "value," which must be ascertained as provided by law. EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572, 574 (Tex. 2018) ("The Texas Constitution requires that taxation 'shall be equal and uniform' and that property 'shall be taxed in proportion to its value.'"). We have already rejected the Court's suggestion that the Constitution allows an appraisal that is less than the property's value so long as the appraisal is equal and uniform: "A property tax is equal and uniform only if it is in proportion to property value." In re Nestle USA, Inc., 387 S.W.3d 610, 620 (Tex. 2012) (emphasis added). The Constitution requires that TDS Landfill's property be taxed based on an appraisal that is both equal and uniform and reflects the property's market value. Bosque Disposal Sys., LLC v. Parker Cnty. Appraisal Dist., 555 S.W.3d 92, 98 (Tex. 2018) (holding that Article 8 Section 1(b) "obligated" appraisal district to account for "market value added to the taxpayers' real property").
Section 20 of Article 8, which prohibits taxation based on appraisals that exceed the property's fair cash market value, confirms that Section 1(b) generally prohibits the taxation of property based on a value less than the market value by expressly granting the Legislature the power to "pass necessary laws" to authorize a "discount" on taxes owed if the owner pays the taxes early. Tex. Const. art VIII, § 1(b). This constitutional authorization of a discount would not be necessary if the Constitution otherwise permitted the Legislature to provide for taxation based on appraisals that are less than the property's value.
Although Section 1(b) does not necessarily require the Legislature to equate "value" with "market value" for all purposes, see EXLP Leasing, 554 S.W.3d at 576, the Legislature has nevertheless declared that, with limited exceptions not applicable here, "all taxable property" must be "appraised at its market value." TEX. TAX. CODE § 23.01(a). "The market value of property shall be determined by the application of generally accepted appraisal methods and techniques," considering "the individual characteristics that affect the property's market value," id. § 23.01(b), and using either the "cost," "income," or "market data comparison" appraisal method, whichever is "most appropriate." Id. § 23.0101. Although the Constitution permits some "discrepancy between the actual value of the property and the value at which it is assessed for taxes," any discrepancy must be "reasonable," and any "distinctions in the manner in which market value of property is determined" must not be "unreasonable, arbitrary, or capricious." Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 935-36 (Tex. 1996).
In light of Section 1(b) of Article 8, Section 42.02(a)(1) would be unconstitutional if it permitted a district court to fix an appraised value that is equal and uniform but not based on the property's market value. To the extent Section 42.02(a)(1) is ambiguous as to whether it grants such permission, the canon of constitutional avoidance requires us to interpret the statute to avoid that constitutional infirmity. See Paxton v. Longoria, 646 S.W.3d 532, 539 (Tex. 2022).
Fortunately, however, we need not rely on that canon here. By authorizing an appeal from an ARB's "order," TEX. TAX. CODE § 42.02(a), confirming that the "subject" of the appeal is the "appraised value" of the property at issue, id. §§ 41.47(b), (c), 42.06(d), requiring the district court to review the ARB order "by trial de novo," id. § 42.23(a), and requiring the district court to grant relief that complies with all requirements of Texas law, id. § 42.24, the Tax Code can only be reasonably construed to require the district court to do what the Code expressly requires the court to do: "try all issues of fact and law raised by the pleadings" and "fix the appraised value . . . in accordance with the requirements of law." Id. §§ 42.23(a), .24(1). Because the chief appraiser's pleadings challenged the ARB's appraisal on the ground that it fails to reflect the property's market value, I conclude that the district court must resolve that claim regardless of whether TDS Landfill protested the chief appraiser's appraisal on that ground.
It seems worth noting that the chief appraiser's pleadings in its appeal to the district court provide the first and only opportunity for the chief appraiser to raise the market-value issue. The chief appraiser initially appraises the property at a value that-at least presumably-the chief appraiser believes is both equal and uniform and based on the property's market value. If a property owner protests the appraisal only on the ground that it is unequal, and the ARB agrees and fixes a value that is equal but without regard to whether it is based on the property's market value, the chief appraiser has no reason or opportunity to complain about that appraisal until it appeals the ARB's order to the district court.
III. Conclusion
For the reasons explained, I conclude that (1) any limitation that Section 42.02(a)(1) imposes on the scope of a chief appraiser's appeal from an ARB order determining a property owner's protest of an ad valorem tax appraisal is jurisdictional, and (2) Section 42.02(a)(1) does not limit the scope of a chief appraiser's appeal to the grounds the property owner asserted in its protest to the ARB. I thus concur in the Court's judgment affirming the court of appeals' judgment remanding the case to the district court, but I respectfully dissent to the extent the Court's judgment prohibits the district court from addressing and resolving the market-value issue on remand.