February 20, 1950
Hon. Jimmy P. Horany, Chairman
Subcommittee on Revenue and Taxation
Revenue and Taxation Committee
House of Representatives
51st Legislature
Austin, Texas Opinion No. V-1909;
..!
Re: The adequacy of designated.
provisions in House Bill No.
Dear Sir: 7. 51st Leg., 1st~C.S.. 1950.
Your request for an, opinion reads as follows:
“The Committee desires a general ruling from
your Department as to the. sufficiency and general ad-
equacy of the term ‘gathering’ as defined in Subdivi-
sion 2 of Section 1. page 2 of this bill, and also.as to
the adequacy of Section 2. page 4 in preventing the tax
imposed by this bill from being passed on to the pro-
ducer.”
,Subdivision 2 of Section 1 of House Bill No. 7 reads as
follows:
“(2) ‘Gathering’ gas shall mean the first, taking
or acquiring of custody, possession, title or control.
in Texas, from the producer of gas produced in this
State. after the severance of such gas from the earth,
and after the passage of such gas through any separa-
tor, drip, trap or meter that may be located at or near
the well, and prior to its admission into any transmis-
sion line for any purposes whatsoever .except those here-
in provided. Provided that in the case of gas containing
gasoline or liquid hydrocarbons that are removed or ex-
tracted in commercial quantities at a plant by scrubbing,
absorption, compression, or any, similar process, the
term ‘gathering gas’ shall mean the first taking or the
first retaining of possession of such gas for transmis-
sion through a pipe line after such gas has .passed through
the outlet of such plant.”
Section 2 of the Bili reads, in part: .’
Hon. Jimmy P. Horany, Page 2 (V-10’09)
“Provided that the, tax herein levied being strict-
ly a privilege tax for the privilege of engaging in such
business of gathering gas produced in this State shall
in no case be deducted from any payments due by gath-
erers to producers of gas.”
It is fundamental that laws must be certain and defi-
nite in order to be valid. 3
In State v. International and G. N. Ry. Co., 107 Tex. 349,
179 S.W. 867 (1915), the Supreme Court said (at page 868):
“The provisions of the acti in order for it to be
enforceable, should be plain enough in meaning for
those operating the industry affected by it to know and
realize whether by engaging in an act of repair they
would breach its terms. If the act meets and fulfills
the requirements of this rule, it would be sufficiently
definite in meaning to be operative. If it is not suffi-
ciently plain in meaning for those engaged in the line
of industry affected to so understand its terms and pro-
visions, then the act would and should be held void for
uncertainty, as it would be inexcusable for a govern-
ment to fine or punish its citizens for an infraction of
a law which in its terms could not be understood by
them. But it is equally true that, if the act of the Leg-
islature is as definite in meaning as the nature of the
subject would allow, no more than this should be expect-
ed to meet the rule of certainty required; to hold other-
wise would be to nullify the power of the .Legislature to
legislate at all on a proper subject for its consideration.”
The word “gathering” as used in House Bill No. 7 is de-
fined in language that is specific and definite and its meaning can be
clearly understood.
Subject to constitutional restrictions the Legislature has
the inherent power to determine the persons, property, and privileg-
es to be taxed, the mode, form and extent of the tax, and the manner
and means of enforcing the tax. 51 Am. Jur. 73, 85. 432, Taxation,
Sets. 43, 55, 409.
The Supreme Court of Alabama is upholding a provision
in a sales tax statute requiring the retailer to add or “pass on” the
amount of the tax to the sales price said:
“The taxpayer, the seller, is charged with the
mandatory duty to’ add the amount of the tax to his
sales price, and to collect it from the purchaser along
Hon. Jimmy P. Horany, Page 3,(V.-10.09) ,:. .~
with the sales +Pice. .‘Hi?has’,all thena&hority:to coi- so
lect this added sum whiclrhe has to c.ollect,.his. sales
price. The flaw intervenes”and adds the amount of’the
sales. tax which th’s seller must pay to the state to the .’
price he niust collect from the purchaser.” Doby v.
State Tax Commission, 234 Ala. 150. 174 So. L33. 237
* (Emphasis adaed throughout.)
‘.
The Supreme Court of Illinois has upheld a statute pro-
vidinn~that the’ retailer could not collect the retailer’s occunation
tax from the purchaser. Thatxurt in People’s Drug Shop v;,tioy-
-sey, 384 111. 283, ~51 N.E.2d 144, 146 (1943) , said:
that the tax imposed is upon retailers an& .i ~.
*
. a .
not upon consumers, and that the sole duty of paymg
the tax,rests upon the former. It follows necesSarily .‘.
that plaintiff was without legal authority to collect fro&~
its customers: the defendant. -thenchallenged item& in’&
invoices representing additional charges ftii retail&s
occupation taX;”
-.
Section 2 of the Bill piovides that the gathering tax can-
not be ‘passe8 on” to the producer. The implication is that the “gath-
erer ” must either absorb the tax or “pass it on” to the transmission
pipe line operator to be ultimately’assumed by thenconsumer:
.It is our contilu&on that the terniinology of Subdivision 2
of Sectioti~ l~and’~of Section 2 of the Bill is Sufficient to d&&mine the
legislative intent and i$ adequate to accomplish the purl&e’s for which
they were‘ included in the 5ill. The 1egislatiLe inter+, when ascertain-
ed, is the law. City of Wacb v. McGraw. 127 Tex. 268. 93 S.w.2d 717
(1936); Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941;
leave to file petition for mandamus denied 315 U.S. .8, 1.9’42); Thompson
v. United Gas Corp.. 190 S.W.2d~504 (Tex. Civ. App. 1945. eirw
39 Tex. Jur. 166. Statu.tes. Sec. 90.
This opinion IS limit&d to the specific ~question asked and
is ziiot a Pulitig on the effecfiv~~&ss Or validrty of the Bill as’! who!&.
~.:. ::.
: t
* SUMMARY
I
Subdivision 2 of Section 1 and Section 2 of H.B.
No. 7, Acts’ 51gt Legislature, 1st C;S.,- 1950;relative~
to a’gas gathering tax, are sufficiently definite to a&er-
. .,
(.
Hon. Jimmy P. Hprany, Page 4 (V-1009)
tain the legislative intent and are adequate to accom-
.plish the purposes for which they were inserted in the
Bali
Yours very truly,
PRIG E DANIEL
Attorney General
APPROVED:
W. V. Geppert Assistant
Taxation Division
Charles D. Mathews
Executive Assistant
FL/mwb