          L     --




                       E         ORNEY         GENERAL

                                        EXAS


  FVIILL WILSON
AITORNEYGENERAL                   August 29, 1960


   HonorableRobert S. Calvert            opinionlo. WW-gag
   Comptrollerof PublicAccounts
   state Capitol                         Be: Whether or not a dietrlbutor
   Austin,Texae                              of gas, electricityor water
                                             to an Air Force Base, located
                                             within the city limitsof an
                                             incorporatedcity of more than
                                             1,000 inhabitants,should
                                             Includethe receiptsitim the
                                             salea to the Air Force Base
   Dear Hr. Calvert:                         BB taxablegrow receipts.

             Your recent letterbroughtto the attentionof thie office
    certainfaote concerningan Air Borce Baee locatedwithin the city
    Usita of an iuaorporatedcity of more than 1,000 inhabitante.

              Tip Base purchase@gas from the Lone Star Gas Company
    throu& a singlemeter locatedat the base boundary. The gae is then
    dletrlbutedthrougha dlstrlbutionsyetemowned by the United Statea
    ,p~f~Amerioa:hitle used for ordinarypurpoms - - - heating,cooking,
   'hot water service,etc. Gas is separatelymetered by the baae and a
    caeh charge ie made to certainprivateconceeeionsusing gas ou the air
    base, such as laundryand gasolinefillingstation. The remainderof
    the &as, vhioh is used by the variousair force facilities, is pro-rated
    and chargedon an estimatedconsumptionbasic againstthe atioounta  and
    availablefunds of the facilitiesas * metter of governmentalfiecal
    aocountlng.

               With referenceto theee facts,you aek two questions:

             (1) Ia the Air Base located"withinan incorporated
        aity" within the meaning of Article 11.03,Title l22A,
        Taxatloa4enerelTex.Rev. Civ. Statute8 (1925)formerly
       ~'~oodlfied
                 a.8Article 7060,V.A.C.S.'T

             (2) If the Air Force Base ie located "within'%e
        oitp lW.te, Is the FederalGoverumenta "gas plant"
        or "distributor"withid the meaning of Article 11.037

               Pertinentproviaioneof the Articlein queetlonare (18
    followsc

               "(1) Laoh individual,oompany,corporation,or
HonorableRobert S. Calvert,page 2 @W-909)



    aerooiatlonowning,operating,managingor con-
    trollingany gae, electriclight,electricpower,
    orwater worlm, or water and light plant, located
    within a~ incorporatedtown or city in thle
    State, and used for local-ealeand dietributlon
    in raid town or city, and chargingfor such @a,
    eleotrioli&te, e&trio powa;, or water, -
    ahallmake quarterly,on the first day of Jauuary,
    April, July and Octoberof each year, a report to
    the Ccmptrollerunder oath of the individual,or of
    the preeldant,treasureror superintendent   of such
    company,or corporation,or aeeociationehowiq the
    gross amount receivedfrom such baainees'doneIn
    each euoh incorporated oity or town within thie
    State in the paymentof ohargesfor such EM,
    electricli&te, electricpower, or water for the
    quarternext preceding. . . Nothingherein
    nhall apply to any such gas, electriclight,
    power or water works, or vater and 11&t plant,
    within this State, owned and operatedby any
    city or town, nor to any countyor water jmprovement
    or conrervatlondistrict . . .*

         (2) Rothlngherein shall be construedto
    requirepaymentof the tax on grose reoeipts
    hereih l&vied more.thaaonoe on the a8me
    c&modlty, and where the commodityla produced
    by one iadividua?.,company,corporation,or
    association,and distributedby another,the
    tax ahall be paid by the dlatribut~ralone."

         It is undisputedthat the Air Base ie loaated within the
gqographioalllmltaof the city; it is, therefore,"within'the city
ad comprehendedby Article 11.03

          It ie axiomaticthat the State cannot lay LLdirect tax on
an inotrumentality of the BederalGovernment. TherePore,the only
seriousqueetlonpresentedby your requestis whetherthe Air Base lo
a "gas plant" or "distributor"within the meaning of Article 11.03.

         The court in the c*ae of Utilitieslatural@as Co. v. State,
118 S.W.a gZ%tated that the tax laid by Article 706Ow~w an exolse

   'This case wee reversedby the Commissionof appeala in .snopinion
reported,&n125 S.W, 26 11553, .'EBeCosmioalonheld that the rale to a
mingle conamnerin the city of Victoriadid not amount to "local sale
and dintributlon" of gae In the city aa comtemplatedby the statute;
however,the court did not quarrelwith Me definitionof "gas plant"
stated by the Court of Civil Appeals.
HonorableRobert S. Calvert,page 3, @W-909)



on those engagedin the businessof owning,operating,msnsglng,or
controllinge gas plant within an Incorporatedtown or city used for
local sale and distribution.The definitionof "ges works" es used in
Article 7060 we8 held by the case of Eddine-Waleh&Butane Company
Calvert, 156 Tex. 587, 298 S.W. 2d 93 (1957) to mean (1) an establilh-
ment in which gee is manufactured,producedor processed/or (2) a
dlntrlbutionsystemconsistingof pipes throughwhich the gas flows and is
deliveredto the premisesof consumers. Construingthe two cases
together,It apsearethat to come within the terms of Article 11.03,
it is necessarythat a tax payer be engagedin the businessof operating,
managingor controllingen establishmentIn which gas is menufeatured,
producedor processedfor local sale end distribution,or in the business
of owning,operating,controllingor managinga distributioneystem
consistingof pipes throughwhich gas flows and is deliveredto the
premisesof aonsumers. The Air Force Base is not In eithersuch
business. In all but a few instances,the Air Force, or one of it's
components,is the conszxker of the gee. And, under the rationaleof
the Commissionof Appealsopinionin UtilltleaNatural GM Co. Y. State,
128 S.W. 26 1153 (See footnotel), it is olear that the sales of gas by
the Base to the privateconcessionaires  locatedwithin the enclavedo
not put the Air Force in the businessof operatings gas works or
distributionsystemwithin the meaning of the Article in question.
Consequently,you are advisedthat Lone Star Gae Co., 8s the "looal
distributor",la requiredto pay the tax imposedby Article 11.03
on the gas sold to the Air Force Base.



        An Air Force Base locatedwithin the limitsof an
    incorporatedcity which purchasesgas throughe single
    meter locatedat the base boundaryend consumesall gse
    except for s certainBmountwhich is sold to private
    concessionaires using gas on the base Is not in the
    businessof operatinga "gas works" or a "distribution
    system"'withinthe meaning of Art. 11.03,Title l22A,
    Taxation-General, Tex.Rev.Civ.Statutes (1925).

                                   Yours very truly,

                                   WILL WILSON
                                   AttorneyGenera1of Texas




JNP:bg                                Assistant

APPROVER
honorable Robert 3. Calvert,page 4, (VW-909)



OPINIONcok&!rllm:
HoughtonBrownlee,Chairman

Ian-y Hargrove
Arthur Sandlip
CharleeD. Cablneas
GrundyWIlllamp

RRXWEDFORTXEA!lTORRRYG~L
BY: LeonardPasnmore
