i



               OFFICE OF THE ATTORNEY GErfRAL    OF TEXAS
                                AUSTIN
     GROVER SELLERS
     ATTORNEYGENER*L

    HpnorableDurwood Manford
    Chalrattn,COimSltteeon Highways and R&da
    Rousa of Repreaentativea
    .Porty-ninthLegislature
    Austin, Texas
    Dear Mr. MarUmd:




              We are in raaaipt                cf February 13, 1945,
    reading as iollowa:
                                                memorandum cpirlion
                                               ed Statea and
                                               1 Counaal of the
                                             of L3teaam    with
                                            old to the F&era1




         ~~~dtheR*dsC-ltteeTbthaRouse,it
                      Fe ated If you would give this matter your
                        advise this Committee if it would ba possible
                      e of Texas to collect a tax on gasoline sold
         within the State of Texas to agenolas of the Federal
         0 overnaent."
              Prior opinions oi this department have dealt with the
    question presented in your latter in ona fm   or another, and
    from these ve think asg be gathered what ve aonaeive the law
    to be upon the right of'the Stete to levy and oollect the
Honorable Durwood Hen?ord, page 2


motor fuel tax (Artlale 706513,V.A.C.3.) f'romthe Federal Gov-
ernment or the instrumentalitiesthereo?.
         We stated in opinion lo. 0-5309-A, tha Sollowing:
         "Motor fuels sold to and used by federal agencies:
    Sea. 2(d) of the Notor Fuels Tax Aat (Art. 7??6$,V.A.C.S.)
    provides in part as follwat
         "Wo tax shall be lmpoaed upon the sale, uao,
    or distributiono? any motor fuel, the imposing of
    which vould oonstltutean uulaw?ul burden on interstate
    commerae and vhiah is not subjeot to be taxed under the
    Constitution of the State of Texas and the United Stated.1
         "Althoughlarge inroads have been made on the doa-
    Wine of inter-govemmental tax 1maunltV as establishad
    by Chief Justice Narshall in the attao of NaCullooh v.
    Maryland, 4 Wheat 316, 4 U. 8. 579 (L. Ed.), the dootrine
    at111 persists at least to the extent o? affording Immunity
    from state taxation to the iederal government itrel? and to
    thore federal agenoiea and lnrrtruwntallties  vhlah Congress
    haa ahoaen to dealam tax exempt, Pitt&an v. B. 0. L. C.,
    308:IJ.S. 21, 84 L. Ed. 11, 60 Sup. Ct 15. Typiaal of
    the latter type of agamy is the De?en& Plant Corporation,
    vhioh is Sea. 610 of Title 15, U.S.C.A., the Oongrair has
    dealared to be exempt fraa all sales, use,aterage and
    f~~haae taxes lmpeaod by any atits or politlorl 8ubdlvi-
           We are of tha opinion that this doatriw and the
    abovi quoted provision o? OUF tax statute preolude the
    lapositlon of our motor fwl8 tax upon aales or uaea by
    the fsderal gwernwnt and by federal lgemS.ea and lnstru-
    wntalltlea whlah Cowess has exemptad. ConaequentlV,
    you are reapeatfullyadvised that DO tax should be levied
    or aollsated upon such aalsa or usea.”
          Briefly stated, this opinion pronouwes the law to be:
The tax cannot be assessed and aolleoted ?rom the Federal ffovern-
wnt and the agemiss therao? if Congmsa has expreaslf exewted
the Federal Government and Its agenoies from the tax. %?eVW,
aa stated in opinion No. O-5995, in thoae instanaeawhere Congress
has expressly aohssnted to the imposition o? the tax, a8 ia done
by the Buok Amendment of the Hajden-CartwrightFederal Aid Aat
with respeat to motor fuel sold "post exahange8, ship 8tore8,
ship service stores, oomd.ssarles,filling atationa, licensed
traders, and other similar agenalea, located on United States
HonorableDurwood ?&n?ard, psge 3


mll%taFy or other rasemtions, vhm awh fuels ama not ?m
$8 emlwlve use of the Dnlted 9totoa," the tax may ba ootlmt-
  . Then, ia thWe?are nodoubt oithe~lght ofthe State to
impose this tax upon the F&e~l Ga*ewnt      aa lta agemiea
by aonsnaaiowl grant, but vhere this right baa km     lx p r ~a a iy
vithhald by Cmgreaa,  or thr Lagialstw has emmrded en axsop-
tion, ths tax aaunot be asaeaaad or ‘oolleatodby the Stata.
           There is a third pwslbilitjr,not covered by tha tvo
amtlngewlaa noted above, that la, ubme tbre baa bean wit-p
a awgmaaiowl    grant OF the vlthholdiug theno? ampreaaly de-
0leFul by C00gna5, or an 8xpnaaed lxu8ptim In the at&a atat-
utea, but the Wauuity Tram the tax, I? any, must nat upon the
Carrtltutlm Itself, to vhlah vo next turn our attention.
           3eatiw 2a of our motor fuel taxing atetute pr?aadea
in part 58 follcarar
          *There ah811 be and I.8herrby levied mxl 4088d
     (eaooptae her8ina?terprovld8d) upaatha rlntulo,
    dfatr%butlen OF we a? motor fwl In this State an
    ououpatbnal ur exalao tax ef Four (4) oonta per mllaa
    or hvatlowl part thena? as rold, diatr)ikrkd,or wed
    in this Stak. . .




     tex levied herein et the SQUWUW a? aald Ilotm fwl in
     Texea or as sum theroaftep as the aaaa mw be aubdwt
     to bei& tax8 a. . . .   #a!pbaals adaed)

           m   pertlwnt ltxpay in thla aonwattota iar Whom
does the legal lwldense s? the tax mat? It 18 ritbin tha
exelwive prwinue of our supreme Court to detema&w t-his qwa-
tien.  Alabaw v. Klug & Booaer, Suprow Court o? the UnLted Stata,
86 L. Ed. 1. 0th suprom~ court ln the uaae of State v. City of
El Paso, epwking through JwtLoe Ctita, WLd:
            @Fras the se-1   statutm prarialQW lt S.a
     evidsnt that the lagialativeintent, as expruaed
     ln ths ebo*e statutes, La to Lowe a wmtor ?wl tax
     of four abnta par gallon on the first ml.0 e? 8atOr
     fwl, where   awh fwl la WetWllY sold in lka8. It
     1s further evident that the La~lalatun intended to -we
Honorable Durvood Manford, page 4


     a four oenta par gallon wer tax on all motor fuel
     used oh the pub110 highvaya of this State in Inatanaea
     vhera tha user obtains auoh motor fuel under auah olr-
     aumstanaes that no aatual sale thereof trahaalrea in




           When the statute by its terms Imposed a tax upon the
first sale, first distribution or first use in this 3tato, it
was deeaaa naoeaaary to uka oora emlrort vho la to pay tha
tax. To this end the Legislaturede&ad it expedient-todefine
oertaln terms wed in the Aot, and to those deflnltiona   ve must
adhere. We aovered this in our opinionDo. O-5995, Tram vhlah
va quote as ?ollwat
         "We deem It helpful as ve proceed to note oertaln
    de?lnitlonsoar&aimed in Art. 7065b-1, just aa the
    oourt did in the ocmalderatlono? tha oaae a? State v.
    City o? El Paso, (Sup. Ct.) 143 S.W. (26) 366, in aan-
    *truing our motor fwl tax statute 55 it then,ex&atad
    and before it van amended. Nuah said in this aaaa is not
    luspprapriatein aonaidering our pvaaent statute.   Tha
    oourt deemed it helpful to note tha deflnltlanaaohta@ad
    in the aot, eapaolally the da?inltlon of the tax, vhZoh
    was the aaam as aontalwd in the present act, and is as
    ?ollwa:
          "'An oaaupationor exaiae tax o? 4+?per gallon o?
     motor fuel or fraationalpart themof.'

          “The tax, by the exprasa language of the rtatute,   is
     upon the first sale, first distribution,or firat we      of
     motor fw~thla      St-     Our present statu~flnea        a
     first sale thus:
          H*FIrat sale' shall mean the first sale or dlatrlbu-
     tion in this State of motor tuel rafiwd, bleadad, imported
     into, or in any other manner, produced in, aaquired or
     brought into this State.'
$onoraBa Durvood ManCord, page 5


         "who under the statute InltOIteaa firat sale, .a
    diatr%bution or we o? motor fuel upon vhioh the tax ia
    levied? Tha statute anavera: (a) ldLatributort. Who
    is a idlstributorl? Again the atatute awwera aa
    ?011wsr
          "lDiatributorshall mean and inalude every person
    lnthia State vho raflwa, dlstllla, manu?aaturaa,prodwea,
    blends, or oompounda motor fuel or blended amteriala, or
    in any other manner aaquirea OS poaseaaea motor fuel or
    blended material for the purpose a? making a first sale,
    we, or distribution of the same in this State; and it
    shall also lnolude every pdrean La this State vho ships,
    transports, or Imports any motor fuel or blended material
    into this State and makes the ifrat sale, we, or dlatri-
    bution o? aap)bin this State3 the said term shall also
    lnalude every person in this State vho prodwea 01 oolleata
    the liquid realdwnt of natural'gaa, ooansonl~laaavnas
    drip gasoline, or vho la responsiblefor the praduatlon
    or foraiatlontof said drip gasoline, lntentionall~or
    otherw1ae, unless said produat is totally dostrayed or ran-
    dered neutral as motor fuel or as a prodwt aapable of
    we as motor fuel in this State.'
         ‘In order that there be no loophole fo r laoape in
    thoae lnatanaeavhere the tax falls upon the firat we or
    dlatrlbutlon o? motor fuel as dlatlngtiahad?8aa1a I1 t
    sale, ve again look to oertain defInitionaOOntai!&a&%tha
    a+    -8a   are as follwar
         'Ther term *user* shall be oonatrwd to mean any person
    who wea or aonaumea lllqw?iad gases’ and 'other llquld
    fuels* vithln this State in internal oombwion engines for
    the genarstlcm a? pover to prapel motor vehlalea upon the
    pub110 hlghvags of this State.
         *'*Matrlbutlon" shall mean and lnalude any tranaao-
    tiona, other than a sale, in vhiah amerahip ar title to
    motor fuel, or any derivative of arude oil or natural gas,
    passes from one parson to another.*
         "'"Person"shall mean and lnalude every indlvldwl,
    firm, aaaaalaticn,aoint atoak company, ayndioate,aopmtner-
    ship, oorporation (public,private or av.anioipal),
                                                     trustee,
    agenay or reaelver. t

         "@Dealer' ahall mean and inoludeeveryperson other
    than a distributorvho engages in the bualnaaa in this State
    of dlatributingor selling motor fuel within this State."
I   honorable BUIWOOCINR~CIO~CI,
                              page 6


              Conalatent vith the opinion oi Judge Crltr in the came
    of State v. City of El Pam, aupm, the tax la Lapoaodupon
    the first uae in this State In the aame aenaethat it la imposed
    upon the first sale In this Stete. In other vorda, a firat une
    is a statutory Sirat aale. The legal lnaidsnos of the motor
    f&i01   tax   iS   UpOU   the   U~tdfiKBte   WMW   or   0OxMUmer   Of   IIIOfiOrfbel
    upon the highvaya of thla State, and that the atatutorllydeflnad
    "dlatrlbutor"oi mwh.fuel ¶.amwely au agenay of the State for
    the purpoee oi aUlng in the aolleotl0n of tha tex, except ln
    thoae iuatanoeawhere auOh dlatributoratightltaolf be a flrat
    uaer vithln the purview Of the rtatute,  In lwh aaae a dlatrlbu-
    tor might itself be sub@t to th@ ax. Swtlon (d) of the
    aut prOvIdea in part:
                 "In the event thla Artiole la in oontliot vith the
            Constitution or any 1~ of the United Strtea vlth reaped*
            to the tax levied upon the first aale, diatrlbutim, or uae
            o? a&or ?uel in this Stek, then it ia hemby deolared
            to be the Intention of thta Artlole to lmp08e the tax
            levied herein upon the Fiat aubaeqwnt aalo, dlafrlbutlen,
            or uae cd'raid notm fuelvhio~ may bo aubjeot to beiw
            texed."
              Therefore, in view of the p~rtl)n O? Seat&on (d)
    gqod, aupn, ve think It my k aafe1T aaid that      thaugh the
     *ale" of moto;l?fuel to the Foderel O~rnmvnt Q 8erkin Of
    it8 agendea sight ba tax oxeapt, it van the fntodtiorroi thm
    Legialrtum to lev a tax on sly aubaequent "nale" or "uai" of
    auoh f-1 vhleh might o~natitutlomallPbe taxed. We thluk there
    vod.d be &o.eonrtltutlanalprohibition  agalnat~the taxing 0.fa
          uunt~aale or use Of motor fuel If the Federal Owerment
    or ta 8genalea vere not the aubjaot of the laoldenae O? the tax
    "T-
    ma a dimat pwohaaer or vendee iOr it8 am Me.
              Swrlzlq     brletly vhat ve have aomvh8t ted10ualP
    amid, the tax m@y be lmpoaed under lpeolflo ~ongr~aal~l gmnt
    UPOU a direat aale oc uae to tba Fedev814OvoX%EtentO? itcragen-
    alea, and amy not be impwod vhem Cangnea haa apeolfloal4
    forbidden the lmpoaltiono? the tax, 0~ the State has made au
    eroeptlon. But if noue of these oontlugermlaaexist,   tba tax
    may not ba lmpesed~upon dlreot aalea to the Federal ffOvernmentor
    lta agenalea if the lnoldmwe of!the tax rest8 upon the Federal
    Oovernawnt or its agenalea aa the lmned5.atOvmdcm and user of
    the motor fuel for It8 dlreat use and benefit. But be)raudthis,
Bononblo IIurvoodHanford, page 7


when there la a flrat male or float use, not ao reatrloted,a
tax may be lmpoaed upon such vendee or uaer.
          You aubmlt vlth your opinion request a oopy of the
ruling of the ComptrollerGeneral of the United States upon the
lav of North Dakota aa la ao ably diamaaed by the Supreme Court
of that atate and alao oomenta from the general oounael of the
SflghvarDepartment of the State of Lwlalana am appllaable to
the aale of motor iuel ln thoae atatea, and ve take the liberty
of pointing out the dlatlnotlonbetveen our lav and the law of
lorth Dakota and Leulaiuu.
          Briefly at&ted, the dlatlnetion la thlar the legal
incldenoe pt the tax uuder the North Bkota law la upon the
vendor and Is lmpoaed prlmarlly em an oooupatlon tax, vlth the
privilege of sddlng the tax to the price for vhloh the dealer
aella the gas, whorear under our Icw the legal lnoldenoe of the
tax la upon the flrat vendee or the first uaer a? the gas for
uae upon the publla highwaya. To expreaa it another way, the
tax la upon ~theflrat male or the ilrat use ln this State legally
aubjeot to the tax. Am arid by Judge Crlta in the earnoof State
v. City OS El Paao, aupra, for the purpose of our tax, ilrat
male and firat uee mean the aune thing. In other vorda, am said
by hlm, Slrat we is a statutory flrat arle. It la, therefore,
apparent that the declalve faotor ln the lorth DPkot.8lav la
that the lnoldenae of the tu la not upon the vendee but upon
the vendor enqged in the oooupation of aelllng gas . It la man-
lfeat that ii the North Dnkota law had plaoed the lnoldenoe of
the tax upon the vendee and the Federal Oovernwnt should be
the vendee 5~ the purabaae o? gas for lea uae. then oenatltu-
tional dltflcuitlesvould have been emoountered,and no doubt
the proneunoementof the law dlffeawmt. The general oeunael of
the Highway Depmtaent of Louislana stated that the altuatlon
in that atate warncllmllarto that in North Dakota; henoo the Law
would be the ma&w.
          Polntlng eut the dlatlnotienbetveon the law In our
State and Barth Dakota and Louisiana la an far am ve feel at
liberty to go In attempting to lay down a rule for the Leglala-
tun tb roliow in any prophmd leglrtstlonupen the subject.

                                       Very truly youra,

                                       ATTONNHY
                                              PlsBHIuLOF TZtAS




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