Dr. Geore Y. 00x 

State Health Offloor 

Stab Board of-Heal+& 

AueJtln, exam 

Dear sir: opinion Ho. o-4935 

Rer Should deductions be me& 

from the salariee of employeea 

of the Saltwater Control 

offioe for Social Seonrliq* ~ 

purposesl 

Your request for an opinion as to whether a stenographer and 

clerk employed in the Tyler field a?fice of the Governing CamnIttes far 

SaZtUater Control setup in e~pliance with an agr!33IItent between ths 

plaintiffs and the defendants In the case of the State of Term ve. Stzu 

Oilccmgany, HO. 46,%5-F in the District Court of Dallas County, Texas, 

1.l6t.b Judloial District, is subject to Federal Social Security taxee, has 

be,m received. 

The laquag of the plan !3ubmittedpumlantto the agre~t 

setting up the governing ocmimittee ie ae follow: 

"The plalnti.ff Stat.8 of Texas is represented by the AttornsJ 

General'e Department, the State Board of Health, the Board of 

Water Engineers and the State Game, Fish & Oyster Ccmulsslon. ;I 

These four departments will constitute a governing omittee tc3 

supervise and. enforce the administration of the agreement op, 

b@iklf of the plaintiffi Dr. George U. Cm, State Health Of'f$jer; 

will serve aa chainnan of the committee, and he shall have the 

respousiblllty of administering the plan umber the direction of 

thb ccamittee. All plane and reports required by this lnetrtwmt 

to be filed witi the plaintiff ehallbear an identification file 

Ho. AG 385, and ehallbe forwarded to the State Health Officer, 

Austin, ~Texae. 

The field office was eetabliehed at Tyler in caiplianoe with the 

provlsiona of the plan under the direction of a field engineer for the 

purpose of a&klnieterlng the plan. The general terms of the plsn agreed 

upon are a8 follows: 
- - 

Dr, George U. Cox, Page 2 (O-4935) 

"(1) To provide adequate storage In pits or other 

containwe, 80 construoted a8 to pmiveat maepage euch a8 

would reeult in the pollution of public watere. 

“(2) To oontraot with salt water holding oanpanies 

or ooneervatiou dletriota, whioh have adequate and approved 

etorage faoilitier for handling the ralt water p&duoed 

by the dlaoharglng wells, pro~lded there faailtier oonfo~ 

to the requirmentm’and objeotlres of thin lmtmaent; or 

"(3) To proride lnjeotlon well8 adequate 3n oapacity 

to dlepoee of the ealtwater produoed on their reepeotive 

lea.sen and with adequate lmpenlonm etoauge oapacl+g to 

hold the saltwater during necessary nhutdowne. 

“(4) To employ my other method or oombiaation of 

methodm to effect the objeotlvee and intmmlmente of this 

instrcment." 

With this preliminary &et& and year letter, which we quote 

below ae a baels of the facts, we have reached the oonclurtion that this 

employee ie not subject to FederalSocialSeourlty tax. We quoti your 

letter a8 followet 

*I&e. Katherine Drumwright, nee Williams, haa been ermployed 

ae etenographer and clerk in ae Tyler field office of Salt 

Water Control under the Governing Costimittee for about 11 or 

l2konthe at a ealary of $112~50 permonth. During this time 

no deductions have been made fram her salary for Social Security. 

"The fund6 fran which her sal&ry ie paid are derived 

fram fees collected frcp oil operators, defendante in the 

above named oause. !&em feea are paid into the treasury of 

the 116th District Court, Dallae County, Texas, at a rate of 

$1.50 per well that is produoing 5 per oent or more of salt 

water o 

"The budget of the field office is itied by the Governing 

Camnfttee on Salt Water Cent&-o1 ccmsgosed of Dr. George Ii. Cox, 

State Health Officer, ae Chai-, and Honorable,Mrald C. Menu, 

Attorney General of Texas, b!r. C. 5. Clark, Chairman, State 

Board of Wster~Engineere, and Mr. Willicun J. Tuoker, ExecutfveSecretary, Oame, Fish,& Oyster Ccpmalesion. When the budget fa 

fixed, It la tranemltted to tha Judge of the 1~6th District 

Court for approval, and if it is approved by him an Order ie 

directed to the Clerk of the court to pay the emount of the 

monthly budget to the engineer in charge of the field office. 
‘. 1 

Dr. George W. Cox, Page 3 (O-4935) 

"l&en these funds are received by the engineer 

from the Clerk of the court he deposits &em in a local 

bank to his owu credit and draws checke a&nst the 

account for payment of salaries and other of-floe and 

operating expermes. * * *” 

Every pereon le an mployer under Tltla 42&b-Title VIII, 

Vol. 40-42, U.S.C.A. of the Booial Security Aot with whloh we are here 

oouoerued, if he employa 0110 or more employeee, but it doe6 not follow 

that all eervloes performed for tie employer are subject to tar. Certain 

eervioes me epeolfically exempt mder the Social Security Act. lie need 

here be ooucerned with only or&e of theee exoeptlm, for tmlees this 

employee falb within the purview of this exoeption, her employment aud 

services 16 subject to the Act> and, therefore, texable. Roue of the 

other exceptima expressed in tbe Act could possible have any applicatiou. 

This exceptiou ia ae follows: 

%ervice performed in the employ of a state, a political 

subdivisiou thereof, or au imtmmentality of one or more 

statee or political subdivisions.” Title 429ub-section VIII, 

loll U.S.C.A., Vols. 40-42, page 239. 

If the service of the stenographer aud clerk is performed in 

the employ of the state, or au ilLstrmentallty thereof, her aervioe is 

specifically exempt under the provisloua of the Act noted above and need 

not be reported. She Is, in our opinion, an employee of au iustrumentality 

of the state; ncwnely~ the Goveruiug Committee 011 Salt Water Control ccmposed of the Attorney General08 Departamut, the State Board of Health, 

the Board of Water Engineers and the State Game, Fish & Oyster Comuissiou, 

a8 provided in the plau uader the headiug of ‘Governing Committee”. You 

are Oonditutea, under the plau, Chairmu of the Cmmlttee aad ves,tea wi& 

the reeponelbiPfty of admirnfetering t&e plan under the dire&ion of the 

Cmuittee . The Attorney GeueralOs DepaPlxneut is established by the Constitution, end hiti office is, therefore, a constitutional office. The State 

Board of Health, (Art. 4415A9 Vernon% Revised Civil Statutes), the 

Board of Water Engineers, (Art, 7477$ 74.88, Vernon’s Revised Civil Statutes), 

aa the State Game, Fish & Oyster &emuiasion, (Art. 4016-4018, Vernon’s 

Revised Civil Statutes), are oreated and their duties aud activities are 

prescribed by statute. The StateBoard of Health, theBoard of Water 

Engineers and the State Game, Fish & Qyater Cam~iesion are all 

appointed by the Governor and confirmed by the Senate, and you, 

ae State Heal% Officer, are, of eouree, appointed by a majority 

vote of the State Board of Health. The Attorney General is the legal 

representative of the State in all litigation in whioh the state ia a 

party in eonnectlou with the admiuiatratim of the affaira of these 

atate departmenta, parties to the plau. We a0 not aearn it necessary to 

cover in detail the work and activities of ,theee various deparizuents to 

supportthe statemeut that they are imtrmeutallties of the state. Artiole 

4444 of Vernon's Revised Civil Statutee haa a direct bearing upon the work 

perforaedby the Eltate Board &Health and the Game,Fieh& OyeterCcvnmission in oonnection with pollutlou of public bodies of water. It 
Dr. George W. &IX, Pcge k (O-4935) 

read6 aa foYPaopf3: 

“Ho pereon, firm a- e~rporatfm~ private or iumlofpal, 

ahalP pollute my water couree br other public b&y of 

water, by t&reving, caatirmg or depositing or cauelng to 

be thrown, oaet or depoeited any made petmUumt oil or 

atier like rubetdmoe tierein, or pollute any water OQU~~C,, 

or other public body of water fxxaa which water la taken 

for the u,eee of farm Piveetoak, drinking end dc-meatic 

purpoeee, in this State> by the dieclharge, direotly or 

iriabeat3.yy, of any eewage or mlean water or unohua 

Or pOtitbg matter or thing ~&IePeina, or iu euch prOXimity tiersto that it will probably ma&, 6nd po3.lut.e the 

watem of au& water OQUEU~ or a tier publtfc body of water 

from whfeh water ie taken, for said woes- Drab di&hefl, 

where waste oil finds ifs way f~to water course6 ox 

public bodies of water, &all be equipped with trap of 

mfYiefent oapcclty to arrest t&e flm of oil, InaoP~ 

a0 emeems the protection of ffah and oysters9 tie 

Gsme, FPsh & Oyster Ccmmfsaioner or hfs deputies, may 

have jurledfctlon in the enforceme& hereof. * * * 

Upon the conviction of aany percon for violating this paw, 

the court or judge themof in whfeh sppeh eonviatkm is 

had, shall. issue a rrft of in$unction enjoining and 

restraining the person 01” eorporat.ion responsible for 

ew.& poPlIlt Ion. 0 For A vi~I.aat%on of e-it& ,tijunotion, 

the said court an& the jwlge thereof’ shal.1 have tie 

power of fine and impr~ieo~~~& as Par ~x3ntempt of court 

within the Lirnfts preserihe~ by 3md in other oases, 

ma ttnfs re~~edy by ti~~tm;r;r~~ ~3. p~~f~$nasrat for vblati0n 

therecf shall. be ewmalcctPre 0P tie fire Smposed. The 

state maPa Qf HeaEth k&a:%& enrfraB:c thAQa3iOnE!-z thfs -~~%*-. 

artielea, 

We do not quote thfs provfsion of the sta%uts upon the aesumption you are not fadifar with 02, but as an sid fn mpport of our 

conclusion. The preveotiou of poUwt$on 0f ~oumee of water supply such 

as rivers, lakes, mr.c9.3~, reserooim 9 etos ,9 if3 Q:P vital fntereat to the 

public welf’are and health of the s,&t.e ana, .se wf9,1 be obeerved from. 

Arti,ole @&4, the eontzol au& preven~+Lon thereof is espeefally delegated 

to your department. Iti is true +ihat the salmq OP this3 emp3lo~ee is not 

paid frmn state funds, but by .the operatcra far. the fieLB upon a prorate 

baais, the details of which are ee,t acxt, in your Letter, But this, in 

OUT opfifom., in not a con.ta~ll.lf~~g facstor, The Committee Es a feasible 

end convenfent Ins~exgtalfty to aceomp:%f& a p&lfe servfee, Bo one 

derives any prfvcte OF personal benefft from ftdl cotiv8ities. The 

operatore exe;Ps:fse no contzol, whatsoever o+er the operat,fons Wf the offfce 

or its ermployees. The Federal So&al Seawrity Beard has mlaa in a ease 

in which the Licensed Carrrmfseion of 8, eEty, stationed. polfoe officers at 

a place of amusement, fixing +&e r3munerstian for the services of the 
Dr. Oeorge W. Cox, Page 5 (o-4935) 

offloem whhieh MB paid by the muaement ocmpany, that such policemen 

are employeea of tlae oity and are exempt under the Soolal Seourity 

Aot. They WBM subjeot to the oontrol of the Pollee Departnmnt of the 

city not only aa rem the resulta to be acmaupliaheb, but also ae to 

tie detalle and meam by which the reenlte were to be 8oocmpllahecL 

!Fhe fact that euoh offloera were pai& by the amusamnt ormpany wa@ held 

not euffiolent to oonatltuta them employees of the company. (Opinion 

Sooial Security Tax Division, Bureau of InternalRevenue, 327). 

In a case involving the employment of utility inepeotors where 

the utilities are required under their franohise from the city to pay 

for the inspection of all their construction work, and where the inepeotors, 

thou&~ paid by the utltpfty are appointed by the mayor and subjeot to the 

control of the city, it wa8 held that such inepeetom were exempt under the 

statute9 (Opinion, Social Security Tax Division, Bureau of Internal 

Revenue 9 339) o 

Inaoaae involving inJletnzotom teaching olaseea in industrial 

plants under the Ohio VooationaP Education System (Estebliahed under the 

Smith-Hughes Aot), the inatruuetom were fomer employeea of the ocnnpany 

and were reoasmnernded by it but in this work they were held to be employed 

by the Board of Education and not by the oanpany. The Board controlled 

their services end had the Bole right to &fs&arge them if their services 

were unsatfsfaetory, The Board ffxed the salary, although the oompany 

paid half of such salary, The ruling of the Social Seourity Board in this 

inetanoe wa8 that the Board of Education wae an instrumentality of the 

State of Ohio. 

There hae been little @dieial determination of this question, s 

hence we have had to rely main3.y upon, rulinsngs of the Social Security Board 

a8 you wfll note above. One PaBe, however, hae: ~QW uncier our observation, 

not b cdl mespecta pm?wlLeP %o the faota here under considaratian, but 

we think with enough aualogy to be helpful. This ia the case of Cayne, 

Colleetir of Internal Revenue ~8~ Brueh, in re CuUen Hardware Corporation. 

30 Federal Supplement, paga 71ke The Cullen Hardware Corporation wae 

adjudged a bankrupt upon an tivoluutary petftion filed by ita creditors. 

Larkin M. Brush was appointed by the Referee ti Bankruptcy truetee and he 

duly qualified a8 such+ Mica Isabel1 E. Shea, a former employee of the 

Cullen Hardware Corporation, was by pernisafon of the Court, engaged in a 

clerical capacity to assist the truetee in 0olPeoting the aooounts. Her 

wages were paid out of funds belonging to the bankrupt estate in the hands 

of the trustee. The eolleotcr of Internall Revenue filed with the Referee 

in Bankruptcy a claim for taxes on aocount of the employment of Mrs. Shea. 

The Court ruled t&at the Clerk06 salary was exempt under the Social Security 

Act sirme the trustee wae ex~ instrumen~lity of the United States, the 

Clerk employed to help him was likewiaeiexempt. 
The ScmlaB Seeurlty Tax Division, in Qpiaion Bo. 127, found 

in Unemnp~oyment Ccmq3emsation &umf85ion Serviffie, Volume 3> Ilo. 2> 

April 15, 1939, page 2.224, ruled that the Lower CcJ.ora&o River Authority 

in tbia eta% is an innstrumenta;Pty of the State of Texas within the 

meauing of the exoeptiona expressed in the Section of the Act, eupra, 

that neither the Iower Colorado RSvar authority or i@ employee8 were 

eubjeot to the tax Imposed by ,thne Social Seourity Aot. True, the 

CoPomdo River Authbnority 18 create& by I). eeparate a& of the LegieLatnre, 

end the 0cmrpePPeation of the o%fi”ioera ati employeea ie paid fran State 

fundu, md ie mom 01LIBppLy an Inatnaeeutaalif;~ of the etatxi ~tban the 

Qavemlng Camittee, but no more ded’inibly 0~0 fn&rwnentaaPity of the 

state than the State Board 0 FLaaEth, the State Board of Water Engineers 

and the State &wne, Fdeh b Qyster @~snalesi,mn, We are of tie opinion that 

this Goveruing Cmmfttee, aetirng within tke mope of the work of all three 

of tbeee instzuaental%t%ea of the state ia PtsebP none the Pees an fnetrumentality of the stats, 

Im the ir&~~ee we have here “t$is etenogrqnher ami clerk is 

employed by the @-ittee ~&VU& i% Ezeoutive Searetary and dire&or, 

the resident engineer, who is m employee of the Stati Boar& of Health, 

Her salary is fixed by “the dIrector and tinbJect at al1 timea to the Coverning Camn&tb?e mder the direc,ti,m of the Exeeutfve Dfreetor Bnd: could be 

dfsoharge~ br tie acmn&ttee or t&e Executive Director at any time. In 

other WQP&~~ the f.hvsmXr~ @cllmnl.L:es aud Exeeutfve Dereetcr have oomplete 

and absolute eontr~l ov.sr ,&la smp:Lo~ee, and her services fall within the 

exemption expressed ti!. ,tke Soe:ial Security Act, ff we are correct in our 

statement that thi.8 Gwern~g C~nnafttee is an fnLst.runentalitg of the state, 

aud we th4nak it 1.~~