Hon. Robert S. Calvert
Comptroller of Public Accounts
Austin, Texas                  Opinion No. V-1492

                                Re: Applicability of motor fuel
                                     sales tax to purchases of
                                     graoline under Lease and
                                    Operating Agreement be-
                                     tween Reconstruction Fin-
                                   , ante Corporation and United
Dear Sir:                            States Rubber Company.

         We quote the following exc,erpt from your letter re-
questing our opfnion on the above captioned matter.

         “We desire the opinion of your office as to whether
    or not motor fuel sold in Texas to the United States Rub-
    ber Company.under the conditions set out hereinbelow is
    subjects to the motor fuel tax imposed by Article 7065b,
    Vernon’s Annotated Civil Statutes of Texas.
                                       ,’
          “The United States Rubber Company has entered into
    an agreement with the Reconstruction Finance Corpora-
    tion acting by and through its Office of Rubber Reserve,
    to .Iea.&, operdte. ,and mainfairrh systhetk rgbber plant
    located near Port Ned&s ;Texas,, said plant being owned
    by R;F.C.‘s   agent, Rubber Reserve, and leased and opar-
    ated by the United States Rubber Company under which
    appears to us to be a cost-plus-a-fixed-fee    contract.

         “This department has construed the opinions ren-
    dered by your office holding that private persons or
    corporations engaged to perform c~ost-plus contracts
    for the Federal Government are not subject to immunity
    from the State tax imposed upon motor fuel purchased
    and used by skid contractors, to be applicable here, and
    has notified the selling distributors that the taxes should
    be collected.  These opinions are No. O-4389, dated May
    28, 1942; No. O-4689, dated July 21, 1942: No; O-4731,
    dated September 4, 1942; NO. O-5214, dated April 28, 1943;
    and Opinion No. 0-5309A, dated March 13, 1944.”
Hon. Robert S. C,alvert. page 2 (V-1492)



         From your letter and the file attached thereto we have
gathered the following facts.

         sunder the submitted contract, Reconstruction Finance
Corporation (acting by and through its Office of Rubber Reserve),
a corporation created by and existing under the laws of the Uni-
ted States (hereafter referred to as “Reserve”), entered into a
lease and operating agreement with United States Rubber Corn-
pany (hereafter referred to as ‘Operator*).

          Reserve owns a synthetic rubber plant near Port Neches,
Texas. Reserve agreed to lease the plant to Operator, who agreed
to use and properly maintain it for the manufacture of synthetic
rubber. We will summarize only pertinent portions of the lengthy
contract.

          Operator is required to obtain satisfactory insurance,
payable to or naming Reserve as assured, protecting agafnst
loss or damage to the ,Plant and against liabflity to third parties
by reasqn of Operator’s activities under tha contract. Operator,
after approval by Reserve, is to pay all taxes,, a&iassr&ants,. and
similar charges which may be imposed upon Oparator or Reserve
with respec,t to or upon the Plant or any part thereof.

             In numerous sections of the contract (see, for example,
Sections 8. 10, 13, li’. and 21 Operator is refer~red to as “Agent
for Reserve” and as acting 1.for the account and at the expense
and risk of Reserve” in reactivating and managing the Plant; but
 u
   e 6 . it is expressly understood that all persons engaged in,the
performance of this contract by Operator shall be employed or
retained by Operator and shall not be tbo employees of Reserve
for any purpose whatsoever.“, Section 9 (a).

          ,Reserve is to reimburse Operatar for costs incurred fn
the reactivation and mana’gement of the Plant and, in addition, is
to pay Operator tin operating fee as provided in Section 14. TRe
quote the following excerpts from Se&ion 10, which gives exampEes
of such “costs.*

           “(b) The cost of all facilities, machinery, tools,
     dies, jigs, office equipment, BuppLias, manufacturing
     aids, aLterationa. improvem$ntx, repLacemerits. and ,,
     additions to the mar&acQxring bxildiags or equipment ‘~
     facilities connected therewith, re@iked for tba effib+    ~,
     performance of this contract and for which Operator fa       .,
     not otherwise reimbursed; and the eoBt of all maintenance
     and repairs incLuding the cost of replacing, repairing or
     recondi.tioning any of the machinery or 0quLpment com-
     prising the Plant,, damaged or destroyed, but onIy to the
 .




Hon. Robert S. Calvert,   page 3 (V-1492)



     extent that the damage to or destruction of said mach-
     inery or equipment is not covered by insurance and
     only to the extent that the replacing, repairing or re-
     conditioning is necessary to the efficient operation or
     maintenance of the Plant.

           “It is hereby understood that title to any and all
     property of whatever character, the cost of which is
     paid by Reserve pursuant to this subsection (b) of this
     Section 10, shall vest directly in Reserve, and that
     title to such property shall in no event vest in Operator,



            “It is hereby further understood that in the ac-
      quisition, purchase and installation of any machinery,
      equipment,.maferials.,   or supplies in connection with
     ‘any alterations, improvements: or betterments  .?~
                                                         ,of,
      or additions to, the Plant, or in coniiection WIW a$
      replacements made in the Plant, and in the negotia-
      tion, execution and supervision of all contracts with
      third parties in connection therewith, Operator shall
      act as Agent for and on behalf of Rese.rve; provided,
      however, that as a condition percedent to reimburse-
      ment under the terms of this subsection (b) any such
      expenditure for the acquisition, ,purchase or inaSalla-
      tion of machinery, equipment, material~s or supplies
      in connection with any alterations, improvements or
      betterments of, or additions to, t&e Plant involving
      more than One Thousand Dblla,rs: ($1,000) shall be first
      approved in writing by Reserve; and provided, further,
      that as a condition precedent to reimbursement under
      the terms of this said subsection (b), any such expendi-
      ture for the acquisition, pur,chase or installation of
      machinery, equipment, materials or supplies in con-
      nection with any replacement in the Plant involving
      more than Five Thousand Dollars ($5,000) shall be
      first approved in writing by Reserve,

          “(c) The amount of all taxes, licenses, fees or
     other charges levied by any competent governmental:.
     authority, including those levied on the Plant, or for
     the privilege of operating the Plant, or on the product
     manufactured therein, or on any materials or supplies,
     including the amount of any payments made by Opera-
     tor under the Social Security Act (empLoyer ‘s contri-
     bution), and any applicable Federal, state or local
     taxes, assessments or charges (excluding any taxes
     on net income, .any. excess profits taxes, capital stock
     tax or any other taxes based upon the capital or in-
                                                                .




Hon. Robert S. Calvert, page 4 (V-1492)



     come of Operator) Which Operator may be required
     to pay to such governmental authority, and which are
    ‘incum-ed in connection with the performance of this
     contract, and including the amount of any additional
     taxes or, contributions required to be paid by Ope~ra-
     tor at any time during the performanc e of this cDn-
     tract or within five (5) years thereafter pursuant to
     the Unemployment Compensation Act of any state
     and arising out of the layoff or discharge of persons
     on account of the aforesaid reactivation or intermit-
     tent operation of the Plant or termination of this
     contract.

          “(d) The amount of all premiums or other costs
    of any bonds or insurance, including public Liability,
    employers’~ liability, property damage, workmen’s
    compensation, fidelity, fire, theft, burglary or other
    insurance, which Reserve may specifically require
    Operator to carry under this contract. In the event
    Reserve and Operator shaI1 cove‘lc workmen’s com-
    pensation risks on a self-insurance basis. such ar-
    rangements shall be %ffectuated in a manner mutually
    satisfactory to the parties hereto.

          *(e) The amount, if any, paid by Operator as
     damages for any&jury to or death of a person or
     persons, or for any injury to property,’ the liability
     f~orwhich is incurred by Operator during the term
     of this contract arising through the occupancy of the
     Plant, or through the performance of this contract,
     but such amount, if any, shall be included her.ein
     only to the extent that operator is ac.tually ont-of-
     pocket therefdr without indemnity of any kind through
     insurance coverage or otherwise and only to the ex-
     tent that Operator is le’gally liable for such damages
     as determined by due process of law OP pursuant to
     a settlement made with the express approval of Rc-~
     serve, and provided that the liability of Reserve un-
     der this subsection (e) of this Section 10 shall be lim-
     ited as provided by Section 11. n

          Section 14, which relates to the operating fee. contains the
following statement:

          ‘@Ris, understood that said operating fee is in-
     tended to compensate Operator for making avuila-
     ble exe,cutive management and the knowledge, skill
     and experience of its organization in connection
     with the operations to be conducted hereunder. and
    Hon. Robert S1 Calvert,    page 5 (V-1492)



         al,so to cover certain expenses incident to the opera-
         tion and maintenance of the Plant which are not capa-
         ble of being identified and charged directly hereunder.
              II
         . 0.

.             Section 12 provides for supplying Operator with electric
    power, gas, water, and compressed ,air previously contracted for
    by Reserve.    In the event of insufficiency, Operator will receive
    these utilities as allocated by Reserve., Detailed provisions .re-
    late to sewage disposal, track maintenance, cafeteria facilities,
    pipeline~s ,@nd other facilities.

                Section 13 reads, in part, as follows:

                “It i&understood that in the performance of this
         contract, Operator is acting as Agent for Reserve, for
          the account and at the expense and risk of the latter,
         and, that, accordingly, Operator shall in no event be
          libale for, but shall be held harmless by Reserve
         against any damage to or loss or destruction of prop-
          erty (whether owned by Reserve or others) or any
         injur’y to or,,death of persons, in any manner, arising
          out of .or in connection with the work hereunder,
       ~‘.‘unless it be shown to have been caus~dddirectly by
         bad faith or ,wilful misconduct on the part of any
          officer ‘of Operator or anylrepresentative of,,Opera-
          tor having supervision and direction of the, ,Plant. as
          a whole, acting within the scope of his authority and
          employment, ,or unles~s it results from the failure
          of Operator toicarr,y Such ,insurance e;o.verage as
          Operator may be required to carry ~utiderthis con-
          tract. . e -”

              Section 15 provides that Res,erve will furnish Operator
    with wcrrking capital to meet,Operator’s   costs, and sets out in
    detail the procedure to be fo’llowed in so doing.

               Reserve is to pay Operator monthly the amount of “costs”
    not otherwise reimbursed, and the amount of the operating fee for
    ,the preceding calendar month-

                Reserve also contracts to supply Operator with certain
    materials    to manufacture’ synthetic rubber.

                Section 17 contains the following provisiOn:

              ‘“Operator, as agent for Reserve, shall use its
         best efforts to procure all [other ] materials s o 0
         necessary   for the manufacture of Synthetic Rubber
Hon. Robert S. Calvert,         page 6 (V-1492)



     0   .but, to~the extent Operator :is:tinable to obtain ‘~
             a

     such materiaIs. Reserve shall endeavor to ob,tain
     such materials and to make arrangements for de-
     livery thereof to Operator at the Plant. Title to all
     materials purchased by Operator hereunder shall
     ve~st directly in Reserve.”

           Reserve is to indemnify Operator for any costs in any
way connected with alIeged infringement of patent or patent ap-
plications or patent royalty claims “as the result of any action
of Operator hereunder as agent for Reserve, or as the result
of aply action taken after the date of commencem,ent of operations
‘in the Plant by Operator, or by any third party cooperating with
Operator in anticipation of the manufacture of Synthetic Rubber
under this contractfi and Reserve shall take all necessary action
(including defense of any suit or suits) and shall b,ea~raI costs
and expenses whatsoever (including attorneys’ fees) incurred in
conne~ction with the defense, adjustment and payment of any such
claitns, .demands, cau$es of actiiin or suits, but Reserve shall
assume no responsibility whatsoever under this Section 18 for any
action not pertinent to the manufacture of Synthetic Rubber under
or in conne~etionwith this’agreement. e e *Se

          Technical information acquired in connection with or re-
sulting from the operation of the Plant is to be made freely availa-
ble to Reserve, and Reserve has no obligation to pay for costs~ of
patents, etc., owned or controlled by Operator.

          The Plant is to be operated on a monthly basis with Re-
serve notifying Operator in advance how much rubber Reserve
de~sires Operator to produce during the coming month.

                 Section 21 reads as follows:

          “All contracts which Operator may execute in con-
     nection with the operation or maintenance of the Plant
    ,which run for a period of str (6) months or more. or
     which represent an obli ation in an aggregate sum of
     Five Thousand Dollars f $5.000) or more, shall be sub-
     mitted to Reserve for approval prior to execution; pro-
     vided, however, that contracts for materials and sup-
     plies necessary for the manufacture of, Synthetic Rubber
     hereunder. unless running for a period of six (6) months
     or more or unless containing a provi~sion for liquidated
     damages, need not be so submitted to Reserve for ap-
     proval, but three conformed copies of all contracts for
     such materials and supplies representing an obligation
    ‘on the part of Operator, as Agent for Reserve, in an
     aggregate sum of Ten Thousand Dollars ($10,000) or
Hon. Rober,t S. Calve‘rt, page 7 (V-1492)



     more, shall be forwarded to Reserve immediately
     after the execution thereof.. All arrangements or
     agreements, pursuant to which Operator may itself.
     furnish supplies or services to the operationdf the
     Plant, shall be first submitted to Reserve for ap-
     proval prior to execution-

       ” Section 3,2 reads as foIlotis:

          “This contract shall be cotistrued according to :
     the law of the State of Texas.”

          The opinions of this office which you cite as controlling
in the instant case may be summarized as follows:

          Opinion O-4389. The Austin Company was constructing
the Forb%‘oith,Airo’raft .ilss~emtily Plant fpr the’Uni&d States.
~The’government purchased from the distributor t.he&otor fuel ’
used by the company. Under the terms of the contract, title to
all materials delivered to the site of the work vested in the United
States upon delivery. The company was held to be an independent
contractor.  The sale from the distributor to the gove~rnment was
not taxable but the tax was held to accure .when the company ac-
quired and used the motor fuel unless the contractor occupied,
some status of immunity or exemption. However, the foll&ihg
statements appear on pages 9 and 10 of the opinion:           .’
          Y
             e e .If said Austin Company were a mere agent
    ‘or instrumentality, under its contract, of the United
     States Government, for the construction of the plant
     in question, use of motor fuel by said company upon
     the highways of this State would be, in contemplatfon             .
     of law, use of such motor fuel by the Federal Govern-
     ment; and no tax would probably accrue, unless such
     tax should be considered a toll or charge for use of
     property or facilities of the State and therefore coi-
     lectible even from the Federal Gove-em,        a question
     not necessary to determine here. If, on-the other hand,
     The Austfn Company is an independent contractor rather
     than an agent of the government, its use of the motor
     fuel upon the highways would be taxable to the extent
     of 4$ for each and every gallon so used, the same as
     such use of motor fuel by any other person, firm ,or
     corporation engaged in business in this State, whether
     construction or otherwise. D D**

           Opini& O-4689 held that an Architeot-Engtieer-Manager-
cost-plus-a-fixed-fee  cuptractor was not’an agency or instrumen-
tality of the Federal Government and was not exempt from payment
                                                             r      .




How   Robert S. Calvert,    page 8 (V-1492)




of the motor fuel tax.     We quote the following excerpt from page
3 of the opinion:

            “As stated by the authorities gener.ally (See 3% C.J.
       l318-1319) and contrary to the contentions urged by con-
       tractor’s counsel, there is nothing peculiarly inherent
       in a contract calling for engineeying, architectural,or
       managerial services, as distinguished from ‘conBtruc-
       tfon’ contracts, which preclude’s the former type of con-
       tract from creating the relationship of independent con-
       tr~actor if the parties so desire to contract. A c,ontract
      ‘to furnish the architectural, engineering OP managerial
       setvices for the construction of a given project for the
       Government is just as ne~cessary and occupies no dif-
       ferent classification or status, as relates to the law
       governing tKe relationship of master and servant or
       independent c~ontractor, as the usual contra&, to actu-
       ally construct OP build the plant or project. Under the
       instant contract the contractor undertakes and obligates
       himself OP itself to furnish the plans and specifications
       and to pe‘rfomm all other services expressly contem-
       plated ther,ein, in coxmection with a specifically des-
       cribed project, and to furnish the labor. materials,
       tools and supplies therefor, with right of reimburse-
       ment by the Government for the cost of the work0 D q sm

            Opinion O-4731 dealt with the cement tax levted by Arti-
 cle 7047, V.C.S., and held that since the tax is levied upon the
 manufacturer and imparter of cement it makes no difference to
 its impusition that such manmbacturers and impo%&.rs .thereafter
,make sales directly ta the United States Government OP one of
 its instrume’ntalitfes. Alabama v. King and Boo+er, 314 U.S.
 1 (1941); Cw~y v. Untted States, 314 U.S. 14 (1941)a

           Op&aiiop062L4 held .#I+$ since tie Defense Supplies Cor-
#mtior#f   a &bddi&y~f    $2e+@.ru@;tion    !$ina~e.:+ZbX%tion,    was
a F&de$al agency 0~ i&&un&faIity       a&d bpzesdy      dxesnpt +om
~sales, use. storage, andpurchabe taxes by Section 610;15 U.S.CA.,
T,exas distributors cbald sell aviat%on gasoline tax frees to the
Corporation. However, the opinEon expressly stated:

            *Nothing herein should be construed as hold-
      fng . . . that motor fuel purchased from the,. . .
      Corporation and subsequently sold or used by a
      ‘distributba’ is tax exempt.”

         Opinion O-5309A peconaidered     and afbbmd   04389.
Tke opinion held (I) that ‘no tax may be imposed on sales to OP
uses by the Federal government or Federal agencies         and instra-
 .




Hon. Robert S. Calvert,    page 9 (V-1492)


mentalities which Congre,ss has exempt from such tax, (2) that
use of motor fuels by a cost-plus contractor with a tax exempt
agency is subject to tax, and (3) that the motor fuel tax accrues
where motor fuels are both sold to and used by such cost-plus
contractors.

           .Ths photostat.which you have furnished of apur~chase
order fsr,g&oline directed to the Texas Qompany shows that
it is a purchase    order’from Reconstrttctibn Finance Corporation
acting by and through United States RubberCompany, agent. Ship-
ment is to be made to Reconstruction Finance Corporation, United
States Rubber Company, Agent, Port Neches, Texas.            Section 8
of the Reconstruction Finance Corporation Act, as amended, 12
U.S.C.A., Sec. 607, expressly provides that the Corporation is
exempt ffrom all taxation ,). , imposed!. . .by any State . . . ex-
cept that real property of the Corporation shall be subject to
. . . State . . ; taxation . . . ‘according to its value as other real
property is taxed. The exemptions provided . . . with respect
to taxation (which shall, for all purposes, be deemed to fnclude
sales, use, storage, and purchase taxes) shall be construed to
be applicable not only to the Corporation but also with respect
to any other public corporation . . . wholly financ~ed and ‘wholly
managed by the Corporation.”

          In view of the opinions previously summarized,     the hold-
ings of which are hereby r~eaffirmed, sales to the Reconstruction
Finance Corporation, acting by and through its agent, United
States Rubber Company,are tax exempt. Consistently with other
conclusions reached in these opinions, however, we think that the
use by U. S. Rubber of the motor fuel on the highways of this State
is subject to tax and that U. S. R.ubber is liable for the tax.

          We have reached this latter co&lusion for the following
reasons. The contract expressly states that it is to be construed
in accordance with the laws of the ‘State of Texas. The fact that
the contrac~t,designated Operator as “Agent” of Reserve is not
conpolling.,  Th’e r&&onship   between the parties to the contract
must be defermin@d b$ all t&e provisions~ of the cbntract itself.
2 Tex. Jur., Agency, SlZ,.p. 394; Falls Rubber Co. tr. LaFon,
256 S.W. 577 (Tex. Comm. App. 1923).

          Carruth v. Valley Ready-Mix Concrete Co., 2,21 S.W.
2d 584, 592 [Tex. Civ. App. 1949, error ref. n.r.e.), recognizes
as controlling in Texas the following fundamental principles of
~theLaw of Agency:

          ,:’” ‘fin tnde,$etient contract~or and an ,agent are
     “not always easy tk~distinguish, and there is no oni-
      form criterion by which they map be differentiated.
      Generally, however, the relations are distinguished
                                                                   .




Hon. Robert S. Calvert,   page 10 (V-1492)



     by the extent of the control which the employer ex-
     ercises over the employee in the manner in which
     he performs his work.



            * ‘Where a contra& contains provisions which,
      if they stood alone, would indicate that the true re-
      lation was that of independent contractor and others
      which indicate that the relationship was that of prin-
      cipal and agent, the spirit and essence of the contract,
      considered as a whole, must be looked to.



           * ‘One may be an independent contra,ctor and at
      the same time for certain purposes be an agent of
     ‘the employer. Anyindependent contractor becomes
      an agent by his employer ag.reeing to be responsi-
      ble for obligations incurred by him in the comple-
      tion of his undertaking, but payment of workmen
      by an owner or empIoyer does not necessarily
      transform an independent contractor into an *gent.’
      2 C.J.S., Agency, SZ, pages 1027, 1029.”

          The first of the last quoted principles has long been
recognized as the law in Texas. In 2 Tex. Jur., Agency, E 10,
p. 390, the rule is stated thus:

            “An independent c,ontractor is unlike an agent
      in that he is responsible to his employer for the
      resu1.t only of the work to be, done; the employer
      has no control over the mann@ of doing the work
      nor any right to select the contractor”6 employees
      or  to supervise their work.”

           In Bertrand v. Mutual Motor Company, 38 S.W. 2d,
,4i7 (Tex. Civ. App. m t error re . I)the court said:

           *An independent contractor may act for and
      in behalf of another, but, since he is not under
      the other’s control; it is held that the relation of
      agency does not exist.”

           In holding that one of the parties to the contract under
mnaideratinn
--..-.---       ocrunind
          - -----
                ---- =___ the    status of
                          ----------    ~~~an
                                           --~ indewndent
                                               ~---.-~~~--~ contractor.
the court in Highgrade Lignite Company v. Courson. 219 S-W.
230 (Tex. Civ. App. I920, error dism.). stated ti i?The following
fac.ts necessitated that conclusion. The party in question had the
Hon. Robert S. Calvert,   page 11 (V-1492)



 exclusive management and control of the leased m&e. He had
 authority over the employee~s, power to hire and dkxharge them,
 and to direct their work. No one told the contractur when to work
 or how to work. He merely received shipping orderu from the other
 party to the contra&, who took all the coal that was mined, paid all
 operating expenses of. every kind or character incident to or con-
 nected ~ith,~he,mining~‘ol)eraSiops, and paid tb,e operator df the
,mine hfs cgmpenaati~ ,I?! f+&dJmonthly &urns. ;” 1’
                              ,
          It has also been said that it is the right to interfere in
the mode of doing the work contracted for rather than the fact of
actual interference with c~onfrol that makes the difference between
a servant or agent and an independent contractor.      56 C.J.S., Mas-
ter and Servant, g 3(3), pp. 49,54; West Lumber Company v. Powell,
221 S.W. 339, 341 (Tex. Civ. App. 1920. err~or dism.); Corrigan v.
Huebler, 167 S.W. 159, 160 (Ten. CLv. App. 1914).

            In the instant case Operator hires and dischar’ges the
employees who operate the plant. Operator ,directs their work.
Section 9 of the costtract expressly states that persons engaged,,
in the performante ,of the contract shall not be employees of R%
serve for any pur,pose’whatsoever.     Reserve has retained no right
to. interfere in the manner in which the employees ‘perf,orm’their
work. Sections 8 and 9 require Operator to make all preparations
necessary to reactivate the plant and to operate and maintain it;
but the choice of such perparations and the method of said opera-
tions are nowhere prescribed in the contract but are left to Opera-
tor’s discretion.    Indeed, Reserve’s motive for entering into the
contract, evidenced throughout the entire instrument and expressly
stated in Section 14, was to obtain the benefit of Operator’s execu-
tive ability and “the knowledge, skill and experience ofits organi-
zation in connection with the operations to be conducted hweunder.”
Reserve‘s interest is clearly limited to results--to   obtaining speci-
fied amounts of rubber (Sets. 17, 19) and the ,latest technical.develop-
ments (Sec. 18).

           Thus, under the authorities previously discnss,ed. Opera- .:
tor ‘s relationship to Reserve in the production of synthetic rubber,
the operation of pilot plants for experimental purposes, and in its
research and developmental work is clearly that of independent
contractor.    This status is impliedly recognized fn Section 10 (c)
which lists as an example of the “cDsts* for which Operator will
be reimbursed by Re~serve %axes, licenses, fees OT other charges
levied . . . for the privilege of operating the Plant, or on the product
manufactured therein, or on any materials or supplies, . . . and
any applicable Federal, state or local taxes, assessments or
rharges’(excluding any taxes on net income, capiLa1 Stock tax or
any other taxes based upon the capital OCR   income of Operator)
which Operator may be required to pay to such governmental
                                                                  ,   .




 Hon. Robert S. Calvert,   page 12 (V-1492)


 authority, and which are incurred in connection with the perform-
 anc~eof this contract, . D On Since this section enumerates many
 taxes from which Reconstruction Finance Corporation is exempt
 under Section 8 of the Reconstruction Finance Corporation Act,
                                  .
 quoted, in part, on page 9 of this Opinion, it negates the proposi-
 Lion that .Operator .is Reserve’s agent in the performance of’the
 contract in its entirety. For if such weie~operator’s    true status,
 his entire operations would be acc’orded all of the tax immunity
 which has been confeired upon.Reconstructi~on .Finance Corpora-
 tion.

         . In so far as the provisions of the contract under con-
 sideration deal with the actual production of synthetic rubber
 and with Operator’s research activities, they are analogous from
 both the practical and legal standpoint to the provisions of the con-
 tract considered in Att’y Gen. Op. O-5309A. The existenc~e of an
 agency relationship under the submitted contract for certain pur-
 poses and the contractual designation of Operator as agent for
 Reser,ve are not sufficient to justify a departur~e from the holding
 of that opinion. You are therefore advised that when Operator
 acquires the motor fuel and uses it upon the highways of this
 State the motor fuel tax accrues and Operator is liable therefvr.

                              SUMMARY

            Under the terms of the contract between Recon-
      struction Finance Corporation ,and United States Rubber
      Company for the operation of a synthetic rubber plant
      located near Port Neches, Texas, United States Rubber
      Company i.s. made the agent of Reconstruction Finance
       Corporation for certain. purposes. Sales of motor fuel
      to Reconstruction Finance Corporation; acting by and
       through its agent, United States Rubber Company, are
      not subject to the motor fuel tax levied by Article 7065b-1.
       et seq., V,C.S. In the operation of the synthetic rubber
       plant and in its research and developmental work under
       the contract, United States Rubber Company is an inde-
       pendent contractor.    Therefore, when United States Rubber
       Company acquires motor fuel ,and uses it upon the ,high-
      .ways of this State in the d,ischarge of its contractual obli-
       gations, the motor fuel tax accrues and United States Rub-
       ber Company is liable therefor.

 .APPROVED:                                   Yours very tiuly,

 ~W. V. Geppert                                PRICE DANIEL
 Taxation Division                            Attorney General

‘~ Mary K. Wall
   Reviewing Assistant
                                                Marietta McGreg
  Charles D. Mathews                            Assistant       v~
  First Assistant
