In a case of first impression, the Eastland Court of Appeals has ruled that a fleet of mobile sand silo systems qualify for appraisal as dealer’s heavy equipment inventory under §§ 23.1241-1242, Tax Code.

Solaris Oilfield Site Services Oper LLC v. Brown County Appraisal District (No. 11-22-00206-CV; April 18, 2024) arose from the denial of Solaris’s protest of the CAD’s treatment of its mobile sand silo systems as ordinary personal property for tax years 2020 and 2021. Solaris asserted that the systems met the definition of “heavy equipment” for purposes of special appraisal under §§ 23.1241-42. Silo systems are used to deliver sand at hydraulic fracturing sites. Each silo system includes six sand silos, underneath which sand is released onto conveyor belts that deliver the sand to the customer’s sand hopper for mixing. Solaris owns the systems and leases them to operators. The company uses specially designed trailers to move the silos to the site, as well as base trailers for transporting the air compressors and generators necessary to run the system. The appraisal appraisal review board denied Solaris’s protest. Solaris sought judicial review. The parties filed cross motions for summary judgment on whether the silo systems constitute “heavy equipment” as a matter of law. The trial court sided with the CAD. Solaris appealed.

In an opinion by Justice Williams, the court of appeals reversed and rendered in favor of Solaris. Solaris argued that the systems met the statutory definition of “heavy equipment” because they weigh at least 1,500 pounds, is self-powered, and is intended to be used in a mining process. § 23.1241(a)(6). The CAD countered that, “when viewed at an integrated unit, the silo systems meet the definition of ‘motor vehicle’ [which is excluded from the definition of heavy equipment] under the Transportation Code because they must be transported by a specialized trailer titled or registered as motor vehicles.  Further, the CAD argued, when transporting the systems, Solaris must comply with regulatory weight and width requirements for highway travel. The court rejected the CAD’s “integrated unit” argument on the basis that although the trailers may be specially designed to carry the silos, they are otherwise interchangeable, i.e. “at any given time, a transport trailer might be hauling any one of the multitude of silos that are part of Solaris’s fleet.”

The court then turned to whether the silo systems met the definition of “motor vehicle” under §§ 501.002 and 502.001, Transportation Code, specifically whether they constitute a “semitrailer” or “trailer.” These definitions require the trailer to be designed to carry a load wholly on its own structure and be drawn or designed to be drawn by a motor vehicle. They do not, however, refer to the load carried. The court thus concluded that while Solaris’s trailers might be motor vehicles that have to be registered or titled, the silo systems themselves—the load carried—are not. Additionally, the court did not buy the CAD’s argument that the silo systems could not be classified as “motor vehicles” for transportation purposes but as heavy equipment when they are “integrated and fully deployed.” Solaris simply contended that the trailers and the systems be separated into two accounts and appraised accordingly. In response to the CAD’s objection that without the trailers the systems would not be “self-powered” and, consequently, not “heavy equipment,” the court pointed out that SCOTX had already rejected that argument in the case of gas compressors, even though they lacked an internal fuel source. As SCOTX saw it, “self-powered” means “any piece of heavy equipment that relies on an integrated combusion engine” (citation omitted).

The court concluded that the “tax provision language as applied to the facts of this case yields only ‘one reasonable interpretation’ . . . The statutory taxation scheme before us does not forbid the trailers that are used to haul and support the silo system equipment from being taxed as motor vehicles and the remaining silo system equipment from qualifying as heavy equipment under Section 23.1241.” The trial court thus erred in granting summary judgment for the CAD and denying Solaris’s cross motion. The court rendered judgment for Solaris.

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