        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
