Bon. S. C. McIntosh, Director,
ffasUtlllti@.aDlvislon
Railroad Comm$sslon
Austin, Texas            op~nioa no. v-476




Dear Sir:
          This la in further referenoe to the.requeet
cotltalnedin hour letter of December 16, 1947, for the.
opinion of this office vhether ths gross lnoome tax
levied by Article 6060, Vernon's Civil Statutes, ap-
pllea to the operations of Reyaosa Pipe Line Company.
            From   your letter and other inform%tioa we
are advised that the Reyuosa Pip6 Line Compahv is a
corporation   organized under the lava of the St%te 'of
Texas, with Its prlnclpel plaoe of buslwss at Corpus
Chrlstl;~exaa, and Is a wholly-ornsd subsidiary of
La Gloria Corporation, another Telraseorporatiosk. Un-
der au authorization Issued by the F%der%l Povsr Com-
mission, pursusnt to the provisions of tn6 Natural Gas
Act (52 Stat. 831; 15 U.3X.A.    % ?17-?1Tr, inci,), Rey-
nosa ia delivering to a Mexican corporation at the
Interrmtloaal   border approximately 20,000 KF of natu-
ral gas per day‘ This naturerlgas is pure&ass8 by
Reynosa from its parent, La Gloria, from rea6rve6 in
Hldalgo County,.Texas, and 18 transported by Reynosa
through its pipe iins system approxluatel~ 17 mfles
to the Rio GtiandcRiver.     ..~
          Rejnosa'makes no sales or dsliveriea In this
State, but, aocordlng to a letter from Rsynosa aocom-
panying your request, sells to t&6 Mexican company "at
the point where the pipe line facllitles constructed
by Reynosa across and under the Rio Grands River cross
the International boundary of the UAt6d States of
America and the Republic:of Mexicor"
                                                                     -.   .
                  ..

Bon. S. C. Nofntosh       -       iage   2                   v-476


          btiob        6060   reads   as follows:
          "BP8ry gas Utility Subject t0 the pro-
     vlalons of this subdivlslon oh or before the
     first day of January and quarterly tper6-
     after, shall file with the Comlsslon a state-
     ment, duly V8rifi8d as true and oorrect by
     the pIWSid8nt, tZWasUr8r or general mannper
     if a oompany or corporation, or by the owner
     or Oh8 of theplif an ladlvldual or co-part-
     asrshlp, shoving th8 gross receipts of such
     utility for the qwrt8r next pr8c8ding or
     for such portion of sold quarterly period as.
     such utility ray have been conducting any
     busIn8ss, and at such time shall pay into
     the State Treasury at Austin a s\m equal to
     one-rourth of'one p8r arnt of the gross ln-
     comer8c8iv8d from all business done by it
     ultbln this StateX~urlnn said auarter." (Ram-
     +618   SupPlied)
          Seotlon 10 of Chapter 73 of the Acts          of    th6
42nd L8glelatur8, 193P, reads a8 follows:
          "That Article 6060 of the Revlaed Cl~ll
     Statutes of 1925, except Insofar as it ia-
           a 1iC8nS8 fee or tax of'one-fourth Of
     ItOS88~
     oae per cent against persons omihg, open-
     ltlng, or mauaglug pipe linen, as provided
     tn section 2 of Article 6050, 18 hereby re-
     pealed and said fund shall be uSed for 8h-
     forelag the proviQlons of Artiol8S 6050 to
     6060; iLl01USiV8."-
     .,
          Section      2 of Adial        6050, 2'8f6rredto, limits
the tax to those,
          .*Oxming or operating or managlug a pipe
     line for the transportation or carriage of
     natural gas, &ether for public him or not,
     if any part Of the right Of way for said 1iU8
     has been acquired, or may hereafter be ac-
     quired by the exercise of therlght of emi-
     nent domain; or If said 111~ or any part
    ~th8rsOf 18 laid upon, Over ormder   any pub-
     110 road or highway of this Statb, or street
     or alley of any muuiolpsllty, or the right of
     way of any railroad or other public utlilty;
..   .   -                                        .
                                                                    \ .


             Hon. 9. C. MccfntOah             -   -88   3           V-476


                                    also an? natural gas utility author-
                                    V t0 8xel'C188the right of 8min8nt

                                See zhoamoq Y. 9 nlted Gas Oomorat1on, 190
             5.   If.    (2d)    504 (Texr Civ, App. 19%) ,Vrit  IW.IS8d.
                        It vi11 be noted thatths tax levied      by Ar-
             ticle 6060 is based won a ueroentane ‘of the R3Oss ln-
             OOQ8 r8C8ived from ati &wliieis don; by it wIti& this
                    during said quarter.* !Phtithe'qu8stloo to be
                         Is whether a pipe line oompBn3 transmrtlnn
             natural gas In Texas to %h6 United Statei' border, ma&
             ing sales 8xclwl~8ly at that       lat, Is taxable uqler
             the Aot, aa "bustaesr dOCI8by r th4~OOlspany)vlthln this
             Stat%. .. . .'~ tlhdo'ubtedly, the W318srby the company
             ar8 sales  In foreign oommerce. For exalmle of a slml-
             lar altuatlon held-to be intemtate ind iot lntreetate
             OOBEUerC8,se8 Jnterstate N-al        (fa8 Comane v. psderal
             gower ami88i0n      (u. s. 8. at. 1947).   91 L. IEd. 1355..
                         3~ ~.
                           :.
                        In an analogous cad8 arising under Article
             7084, Vernonls Civil Statutes, It was held that shlp-
             m&s    or crude 011 originating in Texas destlned to
             points outside the state but transpOrted to seaboard
             In Texad and loaded on ships In Texas ports did not
             aN?uDt to "buslnels d&e in 'rexas" under the statute
             providing for a frEinchis8tax based on-the gross re-
             ceipts of such buslneess, See lark Y. Atlantro Pl~8
                              134 Se W. (26)             Fiv. App. 1959),
                  refused, vhereln Chief Justice McClendon said:
                                .v8 hold~that the laagbge 'bus%ness
                        .don8 1a Texas~,~~as'employ8dis.thls statute
                        908 lntsnded .to man bUsia88s begun and coa-
                          l&ted   I&n-Texas,at&d not buBInes8 b6gM in
                        B 4xa8 and sompleted.ln oome.other atate Or
                         fol'4ign li6~~OP,'.Or vies Ter88.  fti Other
                        word8, tha$.it means lntraetate busicmss."
                       See ala0 Jlowers v. >rics2
                                           Pan          Refininn COr-
             poratlon, 154 S. y. (26) 982, writ refused; and &wsog
             Y. etroleum Nav, -Co., 170 9. W. (2d) 571.
                       The holdings ih these OaseB ape based In psrt
             upon $oustoe B:k~T, Ry. Co. v. Stats,. 108 Tex, 314, 193
             S. W. 1054..and like cases by th6 'United States Sunrente
             Court, to ih8 effect that a state gross ssrelpts tix on
             reoelpts frqn lnterst&te and Porelgertomeroe 1s unooo-
             stltutloEkaL
                                          .
                                                                         _   -.   ..

,.*-‘*


         Boa. s..c. mcfntosh       -   Page 4                    v-476




                      "The transportation of gas from veils
               outside Ohio by the line8 of the producing
               cXbmpsnleSto the state line bad thence by
               mean8 of appellant9s high pressure   trans-
               mlesl0n llaes to their conn6ctlon with lta
               I0001 systems Is ersentlally national--not                              .
             'ltial--in    oharacter and 18 lnteretate eotn-
               merce within a8 well as without that etate,
              The mere faot t&at the title or the oustody
               of the gas passes while it Is en ro-utefrom
               state to state is not determinative of the
               question where Interstate 001poerceends."'
                   In OUFoplololrths aetivitieu Of Repooa  Pipe
         Line Company as described in thle oplalos We not taxahls
         under Article 6060, Vernon38 Civil Statutels,
                               SUMMARY
                   A Texas  natural gas pipe line company
              engaged exelusivelg In purchaeing and trans-
              porting gas IiiT6xae for sale la forsigz mm-
              merc8 la not eut:jsc,% to the gross lnzome tax
              levied by Articls 6060, VertoE:B Olvii Stat-
              utes 0
                                           Yours very %rulg
                                       A!EORNRY CRNRRAL OP TEXAS



                                                Same8 D. Smul:el;
                                                      ABBlSt&l#.t
         J-Ds:jt

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