OFFICE OF THE ATTORNEY GENERAL OF TEXAS
Eoaomblo Ooorgo Ii.Zhoppard
Cc4mptroll~r or Publlr AoroIlntr
Auatlti, mur
nt end hereby
thantor the
MO he ha6 km
a oarboa ccmpany r0r 30$ of the sarbon xzodr
~0iiio the 781~0 or urid 30$ k taxer at 1004
or money ta1u*9-
onormblo Oeorp II. 'hopBird, l'8go 2
In the altuatlon pre8ettt.d la thin quutlott the
t-0d~03 p08bu0~ hi8 O*D gu, uheerarr thbn IS 80
f the gU 88 upon tiOh th0 ~81118 th8nOr
I880 It * 8M Ot8 O8OOOO8rl t0lOOrt8itl tb0 VOlU Ot
lB produae6, MO b8for8 it im pro8uaeo la tk* g8a- ,
b l8 & ..
IiD8 Qhtttt, U&Or th. to-8 Of H. a. MO. 6 0881mkO4
s fhb ‘O8OOll0 MOSUJI” Of RtdO 1 bt OtU Opl&t ii0. o-3516,
hiOh -8&t
I
=. . .ltty 8ua of monby t&t su8h gu la1
H@sombl;l bTh# ii pPOdttO& a 8OMI 118 8000&d- s ;’
en&e dtb th8 ?u18B 8ad ~tUl8t~OM Of thb
%8tO.*
h rtrtoa in raid opinion RO. 0.3516,
%t 8ppliO4tlOht O? 6db rU& 1 (ChDOtd hri-
nltlon or tIarkrt Vslu8) l811r for 8 dotorminatlon
by tho CmDtron8r Or Pnbllo Aaootmt8 Or ‘IrI’kOt
V8lU8', thst 18, the aorrgtrollor or Publlo Aooounte .,:
c tta l t~~lnb 811 evmilrblo OTidOMO, inobtding
881.0 ot OtbSr 08O b thb W8R8 688 r&Old, that
chow or tend to ahow *market V8hO’ 8Pd rPar, that
lTid8nOO n8k O l riadiAg Or r8Ot U t0 Uhtth8r O?
not thr g88 bM b68n 8014 for itG 'v&he Or Ub8t
the g8O WOUid POMOM~ b?bg if it hsd kOtt
produU6 end 801d i& ltOOal’08llOO With the 18W0,
rti8o 8ld r8gUl8tioM 0f thi8 %8tO.*
YOU 8t8tO that .th8 protailiag pri80 iCU tho 8-8
ADO Or 880 itt thtI O-8 ii016 i@ 20$ O? th8 C880mO 8OatOat
per oherooel te8t et thb pria qtrotod In l tr84o pabli~tloa
pi~8 504 or thb TURBO 8810e. I? yw hrto icod that thla
LB th8 #&8eOt VIM Or th0 go 10 th&8 fiOld, th0 %8X #had
b6 b88Od Ott rueh t8lP8, 8tWl thOU@l it b0 bS8d Upoll &pglll'Wit-
Ly arbitrary ~mBum(l rueh 8B %ho guolltn owknt par ohm-
~orl k8t* u16 tho prloo oi 88rollao nbloh 18 Wtotod Sa l
tr 800p r b liUtiOII,” ir TUp b OtiV8 Or th 0 8OtM i 8B OUd O? ICU-
allno ortraoted, or tho pfloo et rkloh tk ~rollae lm lO= I
truny rold. no ri8h to point out, hmnv8r. t hat th8 r00t \
tk u t l mjorlty of tha grs in mob flol4 18 balag so14 W8r
long ten3 ooatr116ta whenun~or the proboor roooiv88 2ti of
th8 gaBOlin by obroO81
8ttd s* O? th8 rO8idm
tort &8a
B81O0 r&d iS ~810 rOr hlr 8hUt'8 Or tho gUOlitt0 8t th6 9riOO
CuoteC in 8 tr8do prrblio8tlon. i8 I%Ot ll8OOlJO8rily dOtOMh8-
tire of th6 present wsrk8t reluo 0t tkm cp8. The rrket volu
Or tb ~88 dght OOfiO8iv8Uy
mOhUt8, UlLhOU(& rO8T. Of
tl:O gFi8 Ol?UthiU8d t0 be! SOid
8t ihOd priOSQ Wie8r 1~
ten1 0ontrsotS. A rSW TMMt
OOIItr8Ot8 rOr th0 Ml0 Or
llmllr eer
r ln the rlolnity would b@ l yore loourate lndl-
08tiOtt Or &WOMttt r!8ri:8t T81UO thsn WUld th8 t8l’RS pro-
dded la ooatrroto m8ar 88vu81 years 860 under rhloh roe
or th8 ~88 in tb rl8id i. Still b8ing sold. r.'hara&a8 ir
sol0 by the produou, h?r tox Ir baa04 upon his groor ra-
oolptr therMor (88 prmi400 lo Ruls 3 or 4 or Oplnloa NO.
0.3516) mgrrci88s 0r *OR h0 t34y h&r8 tmd ittt0 m0h
COntnOt O? S818. Ir him ger 18 801a uno8r 8 low tom oon-
traot hi8 t82 till Oolitillltb t0 be band UpOn th8 t8h;B Of
hi8 oontract, lrn89aotlto or fluotuotlonr ia th8 mrkot
~011~0 Of tb8 g88 in #C riS& 3ut whom, u la the sltw-
tlon u&or oonalder8tiOn, th8 pxotluoor prooraaee hla om
gcla, his t6r is to bQ owputed upoa the market rrlue of
th8 Un9rO88SScO 588 On YOU FL8y filtd thu r&me to b @urine
the eonth ior uhioh the tu 18 pOy8bh. Ir VU rhtc 8UCh
market v8lU8 to
bo a oompon8nt 0r Vo$ 0r the ~sollns con-
tent Fer OharC t@St 8t t)?@ p?iOO quOtd :II 8 tr8d8 publl-
08tiOCI 9lU8 so"5 Or the r88ioUO 80108". thMI YOU 8hOtm US0
suoh r8OtOra in OUUpUtt8& mrkOt VtiU8. lf on the othu
h8R6, you find the pm8OtLt RSrket Value Or tho UUpWO88Std
,ras to b6 bared upon tho aotusl noorarg or grr8OllJi88t tho
prloe ror wbloh it lo eotu8lly fold, then these 8r8 tlm pro-
par ractoro for you to osnnl4or ln detcrv.lnin;; the mtrrret
relum or the c88 8a produood.
OOntrQOt8
fh8 pHBVi8lOll8 Or th8 ?Oydty 8rO Con-
tWJlllUg 88 t0
t&O Teh~ Or t)\8 l&h royelty int8mUt, bUt
‘%a prlae rtodln4 by th* royalty ownus would not naoesmr-
ilf detomitie th0 38rk8t.V8lU8 Or the 108JSM'S 7/11th8Of
?OO 8IWWW8 t0 tir8t aOOond, thm doff rO%Wth
~*~ozl in Opinion Ho. o-351&
Tour problor h&a ln to G8tolmiw
tho fiOrhbt t8luo
Or tha 6US 8t the llrOUth
Of th0 b8ll. tOU nf&ht fm tt8t
them 18 8 ptw6ut n8rket r0r @em, 8s produoad, la this ii810
rt a mm OOX't81flpur thOiU6nd oublo t@Ot SR whleh 8B#8 YOU
kay uw suoh taarkot reluo l8 to gem whlnh 1s prooomed by
the produou 8fl6 dlereg8rd 8~y erl8tlng oontraote r0r th8
881~ 0r g88 providing for a por08ntegr 0r th0 g8aO1luO ana
r881Cue g88 dultod th8rofron, ti 8rrlViOg 8t th0 181UR Ot
the @Ml for t8X 9l.U&WBe8.
t?OAOrablO George B. aoppm6, Pega 4
6W8tiOA 2
"ff nmidua i8 ~616 at b# per UC?, end thm
prwhmmr ummm mom58 rboldue ln lmau op4rmtloa,
would thm gem hm umem bm tmxmblo at I& or mt 21
.MSuriA(L that ma16 pro&au noelTern SOB or tbm
41 naldao 8ol.d by the opentorTw
We 868utam that
in thlo Oama tha prduoor mm118
hio gam to
thm oprmtor of the gmollna p lea tunder l oon-
treat whereby the produomr nomlvmm l paraeatago ot t&m
gmmolism aad other prodart extrmotml, plum ml1 of the
remidum gmm whioh ho may am.4 far hmmm opmrmtlon, pl\rm
pa% Of kbd pWWI68 fTOA the 88h Of the -8iAh& FSb~&IO
gmm. IA roof3 mmme t!lm tmabl8 78h8 ot the gma 88 pro4ow6
1s to be dmtmnalnm6 by the8 9ortloa of Xoumo
Bill 8, Arti-
ale II, edgm8a in our oplaiom 60. o-3516 mm +ule 4~.
whloh nmdmr
"IA oama the who18 or 8 part of the oonmidmr-
8tloA for tha 8818 O? gmm im aAY f)ortioa
of WI.
tmnluo tsltr a o to dfrar maah KM. thm tax lhmll
km OonSptmd 011 the groom t81uG O? the produotm
IO thim iA&tAWOe the ZOSiduS ~mm reOaiTOd by the
pro&au from thr gamollnm plmnt 8A4 used by him iA lmmmo
opontlon 18 onm ot tha *other thlngm OS tmlum rmamitmd*,
IZOAti0A.d iA th. 8t8tUk. 2318 T88idUS 4f88, OM@8tSd et
it8 a8rk.t tmlum (*ioh r*t Or AAl Wt bm thm 8mPI l8 tho
prior tor whloh the raaldam gee 18 mold by thr gmmollae
91mA%) Will be OAS Ot thb i88tOl’8 iU dlt.Fdif~ t&e tU-
lble rmlum or 8hm &mm *a8 pro4uma4'. 190lrm am8aaiAg the
this remidw gmm ummd by the probttmor iA lmrmm OpWmtiOn
lm not klag injootod hi&a the lmrth ior mtormgm, rmprmm-
muting Or lifttn(( Oil 80 (Lb t0 )aiAg it Withh the eX*wgiO8
ot =rulm 6'.
IA the mitU8biAA ~m@AtOd br yoorumOOtBAdQAm8tiOA
t&a tmxmblo raho of thm gmm "mm poduoed~~ wiL1 bm the aw&
ot the folloulsq ltaial
(11 the gromm trlum or the produoer~m mhmn ot
pmmoll~m and aehar 9rOdUOt8 oxtreatmd.
no~o~Nm Oeorgm H. r'hmppmrd, ?mgm 5
(2) Tar mwkot vmluo of 811 tb reelbum @a ummd
by the produoor for lmmma opmrmtlonother thmn that la meted
into thm l8rth for ltormds, rmpremmur~~, or llftlag 0 i 1.
(3) ?lttr pmrrmntof the gomm prommmdm or thm
ruidw (Isa mold br thm (86olbo PlaAk.
“IA 0888 them 18 A0 mrkmt lOr 88id N8fda.,
mad I- WOUU br rmntmd fat0 t&m Sir 88 thr pi&At,
would th0 U8m ot 9N.t Ot 8aSb F86idU6 by t&m m
auoer at111 bm kxmbht It the e8 had bmmo t*ze&
et the linbur rots ot U/l50 of l# per MCI et the
nll he8d, would the rmmidum urn@6 by thm prduemr
bm tared ldm1n?n
Roplyiod to tha flzbt pmrt of four qumtioa, wm
lmmunm t&t than is no carkot for 8 ot thm rmmldw gmm,
mlnmm 700~ et&to that mmmie of tha rmm -a w would k vauted
into the llr. Fornrome rmmldum &amuood bytbm prodwou
ham a *urn* valuea to him, 88 it mmvmm him h6vl~d to buy Sum1
or poumr la other fom, muoh a m llsotrfsity, 011 or gmmollnm.
numb ralum or tha realduo gem aoulcl bu A8trrafnmd bf the
prmraillag prioom p8ld by otkrrm ;!Ithe field r0r 8lnilmr
UM8. ?%boagh tb8FW bo 80 urket tor & ot the ramldaa gae
lrm~lmbl8, 18 dOm8 aot r0u0w tkct the nmiduo 888 l otaully
used by the produoar 18 vorthlua, or that bm would slvw
awar rm8ldAr to him A814bbr rLtROUt Ohm-. CA3.J irr the
went thmt you fit4 *a bmiryr ~gulmrly &rma lumt frme ln
the tlold, should you oanmidmr th ?mmidum &mm used by 8
produou In lmmmm opmrrtloa mm vmluelmm8. Shllm tha reel&urn
gas ltmolt 1s not taublm, Oha trlum ot so a&eb thenof ae
thv pro&soar wmb mhauld k tmkma Into rmoouAt ln loputin~
the tmrmblmrrlw Of him &am %S pWdUmmdw~
M to Ohm momend par8 ot pur ahid quertima, um
mmmuw that the minti tar he FOWL ~$6 br tb, parok8nr
0A th0 born10 or hia Mtt~0BOAt with t&o prodamer. Am lta t6d
above, when the grodummr 88318 ki8 gme for 8 9mrmmatm6m of
the produetsltr a o tomad d thm nmidw gem, t&m ralum at the
gas 'se produoedg lo to bm o~patmd under 9~10 5. by tkm
ltllcet tbruo ltmr (1) thm nl,w ot thm proAamer’8 mhmn
or thm 1lqulAm lxtrmotbA, plum (2) the ~elmm OS the produomr~m
lhmre of the n&i&w 8old, plum (3) the VmhIm ot tke rosidw
Eoaorable Gaorgs 8. ?hopparQ, P8go 6
used by the produ44r In 14444 oporstlon. rhir third itor
should be 00n~ld4md 88 VUt O? th4 aC(gMg8t8 ~41~4 O? Oh8
**rr -aa rnC rh4n produo4d’. Ii tb4 l& -x q r ~81~4 t4 of the
thr84 it4u 18 144 per Y.C.?. or 1081, t&4 hirlim\lr t8x
of ll/lsO of 16 9ar M.C.? ., ~810 br th8 parohaB4r would be
tha oorreot tax. Rat lf the mm of the thrro items bring
th4 W1U8 Of tba 648 “88 probUO@d- t0 ISDr4 th8ll t.U# Per
x.c.t., thmn tbo tar rOti k p8y8bh 8t 5.2s Of 8U8h V81U4
bad the PrOdPOW WUld St111 OI the t8X Oli iUlJ V81UO Of
th4 gas In 4xoe81 of l.bl# pu M.C.I. aftor the puroh488r
hd ptdd tb4 &iniati kX.
Yourr v4ry truly
Untitled Texas Attorney General Opinion
Combined Opinion