575
OFFICE OFTHEATTORNEY GENERALOFTEXAS
AUSTIN
lioaolrblo aem. 8. 3hep&mrU
Oomptrollerof PublIe Aeoouate
Auatb, !hxas
war “ll-t
a8ve nattu be8
U&b rroa your
request a8 fullouDt
*They hare filed a sepwt uadrr probeet,
sad atata that tbsy are not ani have not at any
t&5$ imgagso in the tralwpor0ation of oil. Thay
tmamport the motor fuel mad kwmaaao di*tiLlate
I
576
Mo. H. Sheppard,
Bonarfiblo Page 2
eon tour natural gar rooyoling pluats. The j?ro-
duoen of theere produote pay the tax aa provldod
-r0r in Artiols 7Ob7 R and the residue X.Sr*tumed
bp the rsoyollng mttwd to the ame, gee produolng
tommtton underlg~ng the lend frim wbleh the gas
la produeeii.hurtng the year 1942, they tran*
ported 2 255,986 barrels on wblah they ohare&
tariiie lo. t&8 MwVnt of $211.65 l36r ‘Phi8pi&N--
line baa til the eqmeta od:an 0L pipeline in
es mueh atiit ie separately inoorpomted. ft haa'
l euperinkadent, and paf8 fedoral trmrportotlon
snd iJM0~ tax46 OQ It8 net i;iOOEie,
Yi’he’main problem here, Is rhethnr or not the
tracmportatioa Bf kero&one, di8tillate and mote0
fuel omstitutee the olaoe oi oil plpellne tea-
panlea,as defined in Chapter L, Title 122, rItb
Amsndercrata,‘Fax on Zn(;Mgible Amete. . . ."
Io addition to the faotr stated by port, we hare
ohooked *he ebuter bi this oorporcrtioo la bt!e ortioo of
the Seeratary ef Stat6 and fine tha parpoau the*eaf, arr
stated in said ahartu, to be a& follcws~
"2. The purpose ioruhloh it ie SonuQ is
to atom tramport, buy awl eel1 oil, &as, salt,
brine d ether mlnorsl solution, im@ludlog t&o
prlvllegae ena pow+8 granted bl and eutherired
in Chapter lst Title 32 Reviae4 UirU 3totute8
of Texts, whieb ie bere'66y adopted*
You 8tate
tkmt the produeorr aS t&o pau0ta tmm-
ported by utS.8 ao8qmy hate pita the taxer prwliloa rbr In
Artlole 7047b. Thie artiele provldee for an oao&mtioa tax
an produoarr of natural gas and, 88 aaondm% by the Aotb ot
the 47th Legislature In 19&X, pa e 269, Chapter 184, Artiale
II, seotlon 1, Isaida&tale par f dm tbett
V&em4 gas is prooeos& for it0 1iQUid hydra-
c+arbon oontent .md reeldue gas ia returned by re-
oyoling method8 to the mne $ahpreduoiog,fornretion
uderlylag the 1-a fro& rhi6h the gas is prodweb,
the tazable value of saab Rae e&all he tlwee4fZthe
(3/5) of the fpm.6 value of all p.roduWia ertraioted,
seperatod and esved 'from two& &LUr”
I
tie aWo undomtand tht t&e produootr of Nm po-
duote tranrgorted bl thin oompaay bm not paid t&o taua
proridmd for la hrtlole 7057a, mhloh levie8 au ooaupatbn
ter on oil produced within this st'&e, Smtion 2 of whiah
we5 antad& by the Aota of the 47th Legialatura in 19&l,
ptqp 269, Chapter 16J+, Article 1, Seation 1.
It is the
OS ttriu depart&ml
opinbm that aaid
ompmy is not subjeot to
the provialoas of Chapter 4
Title 122, QC the Rerisud
Girl Statuten of Tswis, an: in
eupport oi this aonahnion we dirbot JIOUEattention to the
mlloldn@ I
The statutea under mhloh thin etxcpaay was lnror-
porsted oontaln the f'ollowtn~ prwl&mot Artiola l495 lr
in part &alfallout:
Yhia Chapter wabraoes oorporattoa5 oroated
ror the purpaeo OS coring, tmrlsport~, byror
eind sellbg all gao salt ba-lne and othw *imrrnl
6~utm~ m riqd0d dn~rdl~~ . ..ead tbo
LIP? of o%l and $a& (As amendedAota 1935,
+, pw 296, oh. l&G, @ 2.1"
Arti a.496 la in ~4x3 ee rd.bfm
"Suah oorporetionr &al& hnve pcwerr
*1. To &ore an3 tlrruport oil* (lam,bYin,
cad other &noml uelutio~ and liquiffod nin.mU,
. . . . and b us&e mawxtabl, ohar&ps lhorafor.
As ammdad kote %935, bt&h Lo&,, p, 296, ah. X1.6,
A 3.1"
brtial; nbs
OS said Chapter 4 Title 122, cvdt~mimnd-
ed by tbo 47th I.e&Lature, 1941, e&e 2&P, Cheytar l&4, ;d-
iclo XIII, Ssotlon 1, in whigh armeadmeat 110 ahang* ~66 lade
effw~~; the mattm? hsma under ooaaldoratien, is in pert a*
*Weoh inoorporatod . . . o%l pip0 lfcr abJc
pang, and all oe~moa wirrier pipe line ooammies
of every oharaoter whatmaver, engaged i+ the tram-
portatiotr uf oil, . . w doing budnese whally or
578
in art within th3.aState . . . and every otbmr
Ind s vldual, oompary, corporation, or amQoIation
aQ* buntwIn8m of the mm0 oharaoter In t&la State,
irk additiorr to the ad ~aloF8m tarsa a11 ta.agIble
propert1er . . . shall pa,s an annual tax to the
state, ba&mlnp, with the Sis~~t day ot Ja~uaw
uf moh year, cm th@Zr fnter@bls asacte F&C?pro-
pepty, and looul Iu@x~&I thereon tQ the eOWtIm8 ia
whloh its kil!JImss Is omlae ark*
ArtIaie 70578, Notion i(5), o.f the Herlaud Ciiil
statutes, dimfinsce oil 60 fol&~~s:
“(5). *oil1 shall mfm orude oFI, 6r other
8s iax aa w. haw hem nbU to aoaertain cl], Is
otx&d.~ &a be a dlffueti mIm.x~l prcduut fmm @ata,cn!
ttm liquid byibwaxboaa prodwed from &as iu fuot Artialo
m7ba ef @he Herimd GLril l?~batutes, hor&msbaoo nfermd
to,a0ntaIne ap~wIaIon that %.ll liquid hydro-oarhna that
ape mewadfmmgao bpmbam of a separatc~rorb~~thw
nomaoomntatrl* &alla&hods be.tasod at the ERIMrate ao
oil as levied by Art&lo
I of this BOt* therbby alearly
shark t4at pFaduot8 ti gas an not oii, at least they am
no M oonddu#A for tax purpas~e.
In az’der t;o brIw tbie oaqmny within ths tomu of
Chapter i+ Title 122, be bald chat. it; is an Wmur-
It must
-ted ail plpslinu ocmpany- oaaaged in ttha tranaporb*tion
of oil, 0~ that It 58 a *oammn earrlu gipslina eoqaufl OS
8om* eharmotsr 8np+paA fa the tlVUmpsrfdt0a sf Ofi, or that
it la *Q@%q btmineaa” In this state OS the “mm eharaatu-
aa aae,cn tl4sother of said nonasrtm
The InW6ible gaaecld in
tax Ia’R 1788 orI6Inally
1005. Et was amended in I.907and #i&ah in 1933, Tho k933
amerubmnt imesrted for tha Tirltt tl3 the wordar *oil pipe-
lixm fsfaspgaap ma all emson oarrier pipeline aompaai~a of
STew ahrmoter whatsoever, engaged In the *ransp0rtati0nof
Oil’. This a.wndmnt of 1933 eaprrsatsdlIts Lqialatire tn-
tent and purpose in the SollowIng pro+I6Ionl
“The purposs harooS Is to ~1Res dIl1 Qot%wodl
aatrler 011 pipe lias 06mpa5ies mdsr ail of the
Fonorable Coo. R..Shippard, Isage 5
pr~+i~i~t~ oi t&s Intaaglbti Asset Tar L6~8 Of
this State and, for the purpoee of plaol~~ uadsr
raid nat a 1 1 taxpayers eImIlarly aitueted, aa
to bring about P better olasaIfIastIon end a wider
dlrtributioc of the burdone ot taxatlor,, a8 far
88 thin olaoa of tc\rpyars in c~ncaruad.~'
In dealing with this etatute in a oaso wherein it
wa8 nooeasarp to oocstrue ita meaning, the Zastland Court of
Civil Appeals nrado thr ibllowin~ hold- ir the case of Col-
Tax Refining Coqmny 1. Hart at al.j 144 2. 1:. (2) 909, writ
XMUlWl:
-*Inthis l~uae~ tbs mpese OS the that I6
olaarlf It '(WEdoawed
tipr4b6e6a. to extend the
term o? tbs Intwiblo tar ~~baauxbto a strq
anU @-ci+iae; alaas oi clrrpafma who badtJiW'.to-
fore esaaped tbla pnrtloular type o? tax. This
6otman oarriar oil pip8 lina ooqmniea
of evtry okari%oter whatWWW' and kll taxpa;rmra
aimilarlp situetod* mnd ln u cdendiog 10 it
was deslgded to *br& about a brttor ~laacfiiaa-
tlon ana a wfdor dfstributlon 0r ths burdens of
taxation, ae far ad th&a olans of taxpayer8 fo
ronoemrd’.
"iWurally a 00-n 4arrI.r oil pipb line
ooapmy roulU oarry en the budn6u af trstnrport-
Ing oil by pipe linen a8 Its busiaeaw durQprecar;Pp-
tive1p ior tar.. It would ba a towma pcoduaimg
oonoern within itaelt, and as 6uoh would telailp
fall wIthIn the elnso of' taxpayers greeumably club-
Jsat to the intaaglble tas ox mu&t Co bs rrub$eot-
ed to thmt tax.
“Upon the 8ma prIncIpl* 8~16ior the muse ma-
sons, an inoorpomtsd o&l pbps line acxtpan~~would
The businers rou3.d have a8 Its objsot
a profit & Inaoas Sor the a*ncrr, and that would
be true whether it ~88 a pr&Wts or pub110 aaSX'f%r.
The very purposcrat Its exlsten6e and hmGure Of
lta buainsaar at woe inuggast it wa6 cskmilar &Y4
eltwtfon (as d subjeot rbr trxation) to tllot 09
the OOEIBLM oarrfu pfpe lina osqmuy, and, there-
fcre, a propar aubjeot for the applioatlon or the
l#gzkngible tax meanuru whloh the Lq$&ature wee
oeekiafi to ax&ma to tazmyers l~linllarly sItuatedt.
It wotild, therefore, aem logical not only to
bring auoh onnpenieo within the epread of this
tax meearure,but alao to extelld the same and die-
ttibute its burden to **, * * crsrg other Icdiri-
dwl, ooa~, oorportitiou or smooIntIon doing
buadne6m or the Muno ebarnoccrr in this :itato'.
Mt. 7105.
"The motion or tha statute just quoted de-
r&Dates a ohsa of pereons whIoh would loe,Ioelly
fall ppithin the term of the Intan$Ibl.e Cax mee-
8~ (IS dofInItely ale the tirrt two alasaee dia..
Ot$SU4. The provlaicn leeveo no both% es to who
:i would be eabraoed in its tuxus. Xt speaiff 0aH.y
ocxupany,warpor-
te be 0r the mw otraraetu a* wmt bohg doam ay
the Ineorporafeapfpe llna ooIqwiy* aal-rler,eta.,
that Is, e%I@wQd in the tmmaportation 0 oil a8
a busluw%1),and prerum!$ital~ for b&e. . . .*
In bOld1~ th8tl the Col4en RsftnIng coelJp!&nywae
oo?i an "oil pipeline oompaay", or a oorpcratiosr doing buei-
nt)mn I& the *saw3 ohraoter*, ~ith.h the mnina 0r btkkifj
?lo5, and, tlmr~foma, oot aubjeat 00 t&m tax provided for
ttmre&m, mid ?astlend Sourt of SItI Ap? ala oallad attan-
tien to the Zaot that "at the tins (1933 7 the wordr *mob
" * * oil pipe line oornpaay * * ' of every oharao'dar what-
aoever, eagsged In the transportation 0r oil* ytem laoerted
Iu the Intangible tnx law, nad Art. 7105 took %bmprosent
form, AZ% 6016, iii c. 3. 1925, aaa than a pa%% of our gan-
es&, ste~tutetaad had &on elne 1017." A ritfomnoe to sala
Article 60119 showa thmt pipeline oarriere whloh are therein
daolered to be oi?~on oerti~srs are 8UQb f&o transport qomade
petroleum* My, therefere, the oompany bare uder ooneidere-
tlon mild mt pmsibly OQ;DI) uader the, term "mm&a eaPrler
We alee direat ye&w attention to the tact 6hmt the
&A&M ia the ewe et Col4rx Refining Conpsay v. Ilart et
al., wpra, wee handed dorm oa ootober 11, 19&C, md reheer-
iap deelod on kieveraber 8, 1940 and ttat tberufter the 47th
l,&rl~tur81 amwdotl Artiole 7d5 in 194 but that lt baado
w oI&angeln uldnrticle ineef'ar aa Chematter here mdex
oonoiduatkao lo oonoonted. By tihbt sleondarsttt sala Intw-
ble TRX Lawme ma80 tc apply to eaoh %wter bun ao~~p(uv*,
AS dofin. in the A&s of~tho Legislntumttherein re;termd te,
a na l8oh wocumcm oarrier 0Mor wirzlof* op~ra~~g uadu au-
thority ot the Rellroed Comlstalon, but imld larr was not amoM-
od w a0 to inelude,th* ts8a8pertatlon ot proiluots of natural
gas au& ae are’ hsn brln@, ~wmld~8rad. Thfs evlaentiy war an
appro+al of) 6r UD aoquieooonoe in, br the Le&elatum of the
haldiM it3 arid o~inirua, AA well SA tbA OfXL5tl’UOthA -Oed
itpofi oaid law by your ilapiXrtaPant in sAa8eptiAg PywA% Of kma
UAdrr ArOl01e 7047e, ratltu tkaJ3 aadu nrklole 70578, t&m R.&t-
rril ml. &OVA¶%~SMJ AAAb BitAAtiOA baa set out in 39 TM.
hr., 000~ 132, pg. 2&8-2%. in the ?ellwiaig l~~et
Weubtlaao qho tegleleture, in eaaotlng,
AmoAdiagOf repo8llqg a mtatuts, &u&y b8 prAAUaad
to hare knwn faota of OOUOA notori*tgin elm
Stats, de ~11 148 eny oirowuetenoee ox aondlUose
afSsotlag OY relating to tinapartloular ataat5wtr
And It avy be praolslrsd Wit tka LeglAlAtbim %AAu*,
‘hAd &A IdAa’, or hae familiar with' the 'law of
trio 1aAd that in, t&O t%RUtitUtiOA #he OoyPg
law, *x&d% statutes Qltd the iSho& thateot~ ala0
prlox dsoidona ef the eour%*,-aC Lea& those of
lest XWQ3%,--~XttiA~ to the aub~wbmatter,
The I~e&elatuxv IIB prs5ktd to hare wlabcr
stood the mem& of' lnncg~~&e WeiD it eraployed,
atid to bAOCrkA0WAthe WcUUtXUOtiOA SACSOd UJWAb&A
5ame OX B siolilar abatube by the agpellats oourQ8
an8 by ereoutiva or adndnbatrstiv~ officsera. aad
it rap ?a pxotiwiad ln a roper wee thst the 5b-
~ielature has aoq&Boed L-4 Ike OOAll aXuOEfQzlof a
prtioular aot, or that if it hed not bew eat&-
sic4 titer; ouoh %onsltruotlon it wourd h%+e %tuln#ni
the ~6rbia(gs OS the 3.8~ so as to AIAow a Contras
iateotiixl.
”
” l . .*
..
582
Efonorabls a#. ff. Shop-d, Pscro 8
This oonpany not bsiag pri oil ~Ipelltw oompany, or
a 00~0~ oar&em pipeline Oo~pnny, atqgnged in ths traarjuwta-
tiOA of oil, end not bei% a ociqmny ongegsd in doI@ buai-
nosi of the sam oharsoter, 8s est forth and deaorIb+d in
nala iirtiol4 7105, w think It IP alsax that it doe8 not ocma
within tha 41~3s of 011 pI.pelin* o4mpanlee a% d&i-d In
ChapOer 4, Tit14 122, and amendmutto.
Tkw3tIng that thIe Mtilritkotorlly enavmra your in-
quiry, we rrslaln
Vary truly yours
AT'l'OMrfP CBlWRhL 0% Ff2XU&
Jw
hm. @. Bt458ott
A~salatant