                                                                               575



                     OFFICE OFTHEATTORNEY     GENERALOFTEXAS
                                         AUSTIN




lioaolrblo         aem. 8. 3hep&mrU
Oomptrollerof PublIe          Aeoouate
Auatb,           !hxas

war      “ll-t




                                                     a8ve    nattu       be8
                                                     U&b    rroa     your
request a8 fullouDt




               *They hare filed   a sepwt   uadrr probeet,
         sad atata that tbsy are not ani have not at any
         t&5$ imgagso in the tralwpor0ation     of oil.   Thay
         tmamport    the motor fuel mad kwmaaao di*tiLlate
                                                                                                   I




                                                                                             576
             Mo. H. Sheppard,
    Bonarfiblo                                     Page 2


          eon tour natural gar rooyoling pluats.                             The j?ro-
          duoen           of theere produote         pay the tax aa provldod
         -r0r in Artiols     7Ob7 R and the residue X.Sr*tumed
         bp the rsoyollng mttwd to the ame, gee produolng
         tommtton      underlg~ng the lend frim wbleh the gas
         la produeeii.hurtng       the year 1942, they tran*
          ported          2 255,986      barrels     on wblah they ohare&
          tariiie          lo.    t&8   MwVnt of     $211.65 l36r ‘Phi8pi&N--
         line baa til the eqmeta od:an 0L pipeline in
         es mueh atiit ie separately inoorpomted. ft haa'
         l euperinkadent,                 and paf8       fedoral      trmrportotlon
         snd iJM0~    tax46              OQ It8    net    i;iOOEie,

               Yi’he’main problem here, Is rhethnr    or                       not     the
         tracmportatioa   Bf kero&one, di8tillate   and                        mote0
         fuel omstitutee    the olaoe oi oil plpellne                          tea-
         panlea,as defined in Chapter L, Title 122,                             rItb
         Amsndercrata,‘Fax on Zn(;Mgible Amete.     . .                         ."
                      Io addition         to the faotr  stated   by port, we hare
    ohooked         *he   ebuter bi this        oorporcrtioo   la bt!e ortioo  of
    the Seeratary  ef Stat6               and fine tha parpoau the*eaf,       arr
    stated in said ahartu,                 to be a& follcws~

                "2.              The purpose ioruhloh    it ie SonuQ is
          to atom                tramport,   buy awl eel1 oil,  &as, salt,
         brine d                 ether mlnorsl solution, im@ludlog t&o
         prlvllegae ena pow+8 granted bl and eutherired
         in Chapter lst Title 32 Reviae4 UirU 3totute8
         of Texts, whieb ie bere'66y adopted*
                      You 8tate
                        tkmt the produeorr aS t&o pau0ta             tmm-
    ported by utS.8 ao8qmy  hate pita   the taxer  prwliloa      rbr In
    Artlole  7047b. Thie artiele   provldee   for an oao&mtioa         tax
    an produoarr of natural gas and, 88 aaondm% by the Aotb ot
    the 47th Legislature In 19&X, pa e 269, Chapter         184,  Artiale
    II, seotlon 1, Isaida&tale   par f dm tbett
               V&em4 gas is prooeos&     for it0 1iQUid hydra-
         c+arbon oontent .md reeldue gas ia returned    by re-
         oyoling method8 to the mne $ahpreduoiog,fornretion
         uderlylag the 1-a fro& rhi6h the gas is prodweb,
         the tazable   value of saab Rae e&all he tlwee4fZthe
         (3/5)  of  the fpm.6 value of all p.roduWia ertraioted,
         seperatod and esved 'from two& &LUr”




I
            tie aWo undomtand     tht  t&e produootr of Nm po-
duote tranrgorted    bl thin oompaay bm      not paid t&o taua
proridmd for la hrtlole     7057a, mhloh levie8     au ooaupatbn
ter on oil produced within     this st'&e,   Smtion    2 of whiah
we5  antad&    by the Aota of the 47th Legialatura      in 19&l,
ptqp 269, Chapter 16J+, Article     1, Seation 1.

                  It    is   the
                             OS ttriu   depart&ml
                                    opinbm          that aaid
ompmy is           not subjeot to
                          the provialoas      of Chapter 4
Title 122,         QC the Rerisud
                         Girl      Statuten   of Tswis, an: in
eupport oi this aonahnion we dirbot JIOUEattention       to the
mlloldn@ I
                  The statutea under mhloh thin etxcpaay was lnror-
porsted         oontaln the f'ollowtn~ prwl&mot     Artiola l495 lr
in part &alfallout:
                 Yhia        Chapter         wabraoes     oorporattoa5     oroated
          ror   the     purpaeo       OS coring,          tmrlsport~,       byror
          eind sellbg  all gao        salt ba-lne and othw *imrrnl
          6~utm~      m riqd0d           dn~rdl~~ . ..ead    tbo
          LIP?             of o%l and $a&    (As amendedAota 1935,
                        +, pw 296, oh. l&G, @ 2.1"
                 Arti           a.496 la in ~4x3 ee rd.bfm
                 "Suah       oorporetionr          &al&     hnve pcwerr
                 *1. To &ore an3 tlrruport   oil* (lam,bYin,
          cad other &noml    uelutio~ and liquiffod    nin.mU,
          . . . . and b us&e mawxtabl,     ohar&ps lhorafor.
           As ammdad kote %935, bt&h Lo&,, p, 296, ah. X1.6,
          A 3.1"
                 brtial;        nbs
                        OS said Chapter 4 Title 122, cvdt~mimnd-
ed by tbo 47th I.e&Lature,    1941, e&e 2&P, Cheytar l&4, ;d-
iclo XIII, Ssotlon 1, in whigh armeadmeat 110 ahang* ~66 lade
effw~~;    the mattm? hsma under ooaaldoratien, is in pert a*

                 *Weoh inoorporatod    . . . o%l pip0                    lfcr abJc
          pang, and all oe~moa wirrier      pipe line                    ooammies
          of every oharaoter     whatmaver,    engaged                   i+ the tram-
          portatiotr  uf oil,   . . w doing budnese                      whally or
                                                                                         578




        in art within th3.aState . . . and every otbmr
        Ind s vldual,   oompary, corporation,     or amQoIation
        aQ*      buntwIn8m of the mm0 oharaoter      In t&la State,
        irk additiorr   to the ad ~aloF8m    tarsa a11 ta.agIble
        propert1er     . . . shall  pa,s an annual tax to the
        state,    ba&mlnp, with the Sis~~t day ot Ja~uaw
        uf moh year, cm th@Zr fnter@bls           asacte F&C?pro-
        pepty, and looul Iu@x~&I   thereon tQ the eOWtIm8 ia
        whloh its kil!JImss Is omlae         ark*
                  ArtIaie 70578, Notion                 i(5),   o.f the Herlaud Ciiil
statutes, dimfinsce oil               60 fol&~~s:

                  “(5).      *oil1     shall      mfm    orude oFI,   6r other


                  8s iax aa w. haw                hem nbU to aoaertain  cl], Is
otx&d.~            &a be a dlffueti                mIm.x~l prcduut fmm @ata,cn!
ttm liquid         byibwaxboaa prodwed from &as iu                     fuot   Artialo
m7ba ef @he Herimd GLril l?~batutes, hor&msbaoo nfermd
to,a0ntaIne ap~wIaIon that %.ll liquid hydro-oarhna                               that
ape mewadfmmgao                        bpmbam        of a separatc~rorb~~thw
nomaoomntatrl*          &alla&hods                 be.tasod at the ERIMrate ao
oil as levied             by Art&lo
                         I of this BOt* therbby alearly
shark  t4at pFaduot8 ti gas an not oii, at least   they am
no M oonddu#A   for tax purpas~e.
                  In az’der    t;o brIw           tbie oaqmny within ths tomu of
Chapter      i+    Title 122, be bald chat. it; is an Wmur-
                                      It   must
-ted    ail plpslinu ocmpany- oaaaged in ttha tranaporb*tion
of oil, 0~ that It 58 a *oammn earrlu   gipslina   eoqaufl  OS
8om* eharmotsr 8np+paA fa the tlVUmpsrfdt0a sf Ofi, or that
it la *Q@%q btmineaa” In this state OS the “mm eharaatu-
aa aae,cn tl4sother of said nonasrtm
                  The InW6ible                           gaaecld in
                                           tax Ia’R 1788 orI6Inally
1005.     Et was amended in I.907and #i&ah in 1933,        Tho k933
amerubmnt imesrted    for tha Tirltt   tl3    the wordar   *oil pipe-
lixm fsfaspgaap ma all emson    oarrier    pipeline  aompaai~a of
STew ahrmoter whatsoever, engaged In the *ransp0rtati0nof
Oil’.  This a.wndmnt of 1933 eaprrsatsdlIts Lqialatire                            tn-
tent and purpose in the SollowIng pro+I6Ionl
                  “The purposs harooS Is to ~1Res dIl1 Qot%wodl
        aatrler      011 pipe lias  06mpa5ies mdsr ail of the
Fonorable      Coo. R..Shippard,      Isage 5


      pr~+i~i~t~   oi t&s Intaaglbti     Asset Tar L6~8 Of
      this State    and, for the purpoee of plaol~~ uadsr
      raid nat a 1 1 taxpayers  eImIlarly     aitueted,   aa
      to bring about P better     olasaIfIastIon      end a wider
      dlrtributioc   of the burdone ot taxatlor,,       a8 far
      88 thin olaoa of tc\rpyars      in c~ncaruad.~'

            In dealing with this etatute    in a oaso wherein it
wa8 nooeasarp to oocstrue    ita meaning, the Zastland    Court of
Civil Appeals nrado thr ibllowin~   hold-     ir the case of Col-
Tax Refining   Coqmny 1. Hart at al.j     144 2. 1:. (2) 909, writ
XMUlWl:
             -*Inthis l~uae~ tbs mpese    OS the that I6
     olaarlf              It '(WEdoawed
                   tipr4b6e6a.             to extend the
     term o? tbs Intwiblo      tar ~~baauxbto a strq
     anU @-ci+iae; alaas oi clrrpafma who badtJiW'.to-
     fore esaaped tbla pnrtloular type o? tax.     This
                      6otman oarriar oil pip8 lina ooqmniea
     of evtry okari%oter whatWWW'        and kll    taxpa;rmra
     aimilarlp   situetod*    mnd ln u cdendiog      10 it
     was deslgded     to *br&   about a brttor   ~laacfiiaa-
     tlon ana a wfdor dfstributlon      0r ths burdens of
     taxation,   ae far ad th&a olans of taxpayer8       fo
     ronoemrd’.
           "iWurally  a 00-n    4arrI.r oil pipb line
     ooapmy roulU oarry en the budn6u       af trstnrport-
     Ing oil by pipe linen a8 Its busiaeaw durQprecar;Pp-
     tive1p ior tar..   It would ba a towma pcoduaimg
     oonoern within itaelt,  and as 6uoh would telailp
     fall wIthIn the elnso of' taxpayers greeumably club-
     Jsat to the intaaglble tas ox mu&t Co bs rrub$eot-
     ed to thmt tax.
               “Upon the 8ma       prIncIpl* 8~16ior the muse ma-
     sons,      an inoorpomtsd       o&l pbps line acxtpan~~would
                  The businers rou3.d have a8 Its objsot
     a profit & Inaoas Sor the a*ncrr, and that   would
     be true whether  it ~88 a pr&Wts or pub110 aaSX'f%r.
     The very purposcrat Its          exlsten6e and hmGure Of
     lta buainsaar at woe inuggast it wa6 cskmilar &Y4
     eltwtfon    (as d subjeot rbr trxation) to tllot 09
      the OOEIBLM   oarrfu pfpe lina osqmuy, and, there-
      fcre, a propar aubjeot for the applioatlon              or the
      l#gzkngible tax meanuru whloh the Lq$&ature                wee
      oeekiafi to ax&ma to tazmyers         l~linllarly      sItuatedt.
      It wotild, therefore,     aem logical     not only to
      bring auoh onnpenieo within the epread of this
      tax meearure,but alao to extelld the same and die-
      ttibute its burden to **, * * crsrg other Icdiri-
      dwl,    ooa~,     oorportitiou or smooIntIon           doing
      buadne6m or the Muno ebarnoccrr in this           :itato'.
      Mt. 7105.
           "The motion     or tha statute just quoted de-
      r&Dates   a ohsa    of pereons whIoh would loe,Ioelly
      fall ppithin the term of the Intan$Ibl.e     Cax mee-
      8~   (IS dofInItely   ale the tirrt two alasaee  dia..
      Ot$SU4. The provlaicn      leeveo no both% es to who
:i    would be eabraoed in its        tuxus.     Xt speaiff 0aH.y
                                                  ocxupany,warpor-




      te be 0r the mw otraraetu a* wmt bohg doam ay
      the Ineorporafeapfpe llna ooIqwiy* aal-rler,eta.,
      that Is, e%I@wQd in the tmmaportation  0 oil a8
      a busluw%1),and prerum!$ital~ for b&e.   . . .*
            In bOld1~ th8tl the Col4en           RsftnIng coelJp!&nywae
oo?i an "oil pipeline    oompaay", or a oorpcratiosr         doing buei-
nt)mn I& the *saw3 ohraoter*,         ~ith.h the mnina 0r btkkifj
?lo5, and, tlmr~foma, oot aubjeat 00 t&m tax provided for
ttmre&m,   mid ?astlend     Sourt of SItI        Ap? ala oallad attan-
tien to the Zaot that "at the tins (1933 7 the wordr *mob
" * * oil pipe line oornpaay * * ' of every oharao'dar what-
aoever, eagsged In the transportation            0r  oil* ytem laoerted
Iu the Intangible     tnx law, nad Art. 7105 took %bmprosent
form, AZ% 6016, iii c. 3. 1925, aaa than a pa%% of our gan-
es&, ste~tutetaad had &on elne            1017."     A ritfomnoe to sala
Article   60119 showa thmt    pipeline    oarriere    whloh are therein
daolered to be oi?~on oerti~srs are 8UQb f&o transport             qomade
petroleum*   My,    therefere,      the oompany bare uder        ooneidere-
tlon mild mt pmsibly         OQ;DI)  uader the, term      "mm&a eaPrler
             We alee direat     ye&w attention    to the tact 6hmt the
&A&M      ia the ewe et Col4rx          Refining  Conpsay v. Ilart et
al.,   wpra,   wee handed dorm oa ootober 11, 19&C, md reheer-
iap deelod on kieveraber 8, 1940 and ttat tberufter                the 47th
l,&rl~tur81    amwdotl Artiole      7d5 in 194       but that lt baado
w oI&angeln uldnrticle           ineef'ar aa Chematter       here mdex
oonoiduatkao      lo oonoonted.      By tihbt sleondarsttt sala Intw-
ble TRX Lawme ma80 tc apply to eaoh %wter bun ao~~p(uv*,
AS dofin. in the A&s of~tho Legislntumttherein                 re;termd    te,
a na l8oh wocumcm oarrier       0Mor wirzlof*     op~ra~~g uadu au-
thority   ot the Rellroed Comlstalon, but imld larr was not amoM-
od w a0 to inelude,th*        ts8a8pertatlon     ot proiluots of natural
gas au& ae are’ hsn       brln@, ~wmld~8rad.      Thfs   evlaentiy    war an
appro+al of) 6r UD aoquieooonoe in, br the Le&elatum                  of the
haldiM    it3 arid o~inirua, AA well SA tbA OfXL5tl’UOthA           -Oed
itpofi oaid    law by your ilapiXrtaPant in sAa8eptiAg           PywA%           Of kma
UAdrr ArOl01e 7047e, ratltu   tkaJ3 aadu nrklole                      70578,     t&m R.&t-
rril ml. &OVA¶%~SMJ  AAAb BitAAtiOA baa      set                out     in     39 TM.
hr.,  000~ 132, pg. 2&8-2%.    in the ?ellwiaig                  l~~et

             Weubtlaao      qho tegleleture,    in eaaotlng,
      AmoAdiagOf repo8llqg a mtatuts,           &u&y  b8 prAAUaad
      to hare knwn faota         of OOUOA notori*tgin elm
      Stats,    de ~11 148 eny oirowuetenoee         ox aondlUose
      afSsotlag     OY relating to tinapartloular ataat5wtr
      And It avy be praolslrsd      Wit tka LeglAlAtbim           %AAu*,
      ‘hAd &A IdAa’,       or  hae  familiar   with'   the     'law of
      trio 1aAd       that in, t&O t%RUtitUtiOA        #he OoyPg
      law, *x&d%          statutes Qltd the iSho& thateot~ ala0
      prlox   dsoidona      ef the eour%*,-aC      Lea&      those of
      lest XWQ3%,--~XttiA~             to the aub~wbmatter,

             The I~e&elatuxv IIB prs5ktd to hare wlabcr
      stood the mem&      of' lnncg~~&e WeiD it eraployed,
      atid to bAOCrkA0WAthe WcUUtXUOtiOA     SACSOd UJWAb&A
      5ame  OX B siolilar abatube by the agpellats    oourQ8
      an8 by ereoutiva or adndnbatrstiv~ officsera.        aad
      it rap ?a pxotiwiad ln a roper wee     thst the 5b-
      ~ielature has aoq&Boed L-4 Ike OOAll aXuOEfQzlof a
      prtioular  aot, or that if it hed not bew eat&-
      sic4 titer; ouoh %onsltruotlon       it wourd h%+e %tuln#ni
      the ~6rbia(gs OS the 3.8~ so        as   to   AIAow   a   Contras
      iateotiixl.

               ”
                    ”   l   . .*
                                                                                          ..
                                                                                                 582
Efonorabls   a#.      ff. Shop-d,          Pscro 8


               This oonpany not bsiag pri oil ~Ipelltw  oompany, or
a 00~0~ oar&em pipeline         Oo~pnny, atqgnged in ths traarjuwta-
tiOA of oil,       end not bei% a ociqmny ongegsd in doI@ buai-
nosi of the sam oharsoter,        8s est forth and deaorIb+d in
nala  iirtiol4     7105, w think It IP alsax that it doe8 not ocma
within tha 41~3s of 011 pI.pelin* o4mpanlee a% d&i-d           In
ChapOer 4, Tit14 122, and amendmutto.

             Tkw3tIng that          thIe    Mtilritkotorlly          enavmra       your    in-
quiry,   we rrslaln

                                                              Vary    truly    yours

                                                     AT'l'OMrfP      CBlWRhL 0% Ff2XU&



                                                     Jw
                                                                      hm.     @.    Bt458ott
                                                                               A~salatant
