L --

E ORNEY GENERAL
EXAS

FVIILL WILSON AITORNEYGENERAL August 29, 1960

Honorable

Robert S. Calvert opinionlo. WW-gag Comptroller

of PublicAccounts state Capitol Be: Whether or not a dietrlbutor Austin,

Texae of gas, electricity or water to an Air Force Base, located within the city limitsof an incorporated

city of more than 1,000 inhabitants,

should Includethe receipts itim the salea to the Air Force Base Dear Hr. Calvert: BB taxable grow receipts.

Your recent letter broughtto the attention of thie office certainfaote concerning an Air Borce Baee located within the city Usita of an iuaorporated city of more than 1,000 inhabitante. Tip Base purchase@ gas from the Lone Star Gas Company throu& a single

meter located

at the base boundary. The gae is then dletrlbuted

througha dlstrlbution syetemowned by the UnitedStatea ,p~f~Amerioa:

hitle used for ordinary purpoms - - - heating,cooking, 'hot water service, etc. Gas is separately meteredby the baae and a caeh charge ie made to certain privateconceeeions using gas ou the air base, such as laundry and gasoline

fillingstation. The remainder of the &as, vhioh is used by the variousair force facilities, is pro-rated and chargedon an estimated consumption

basic againstthe atioounta and available

funds of the facilities as * metter of governmental fiecal aocountlng.

With reference

to theee facts,

you aek two questions:
(1) Ia the Air Base located"within an incorporated aity" within the meaning of Article 11.03, Title l22A, Taxatloa4enerelTex.Rev. Civ. Statute8 (1925)formerly ~'~oodlfied

a.8 Article 7060,

V.A.C.S.'T
(2) If the Air Force Base ie located "within'%e oitp lW.te, Is the FederalGoverument a "gasplant"
or "distributor"

withid the meaning of Article 11.037
Pertinent

proviaione

of the Articlein queetlon are (18 followsc
"(1) Laoh individual, oompany,

corporation,

orHonorable Robert S. Calvert, page 2 @W-909)

aerooiatlon

owning,operating,

managingor controlling

any gae, electriclight,electric power, orwater worlm, or water and lightplant, located within a~ incorporated town or city in thle State, and used for local-eale and dietributlon in raid town or city, and charging for such @a, eleotrioli&te, e&trio powa;, or water, - ahallmake quarterly, on the first day of Jauuary, April,July and Octoberof each year, a report to the Ccmptroller

under oath of the individual, or of the preeldant,

treasurer

or superintendent

of such company,or corporation, or aeeociation

ehowiq the gross amount received from such baainees'done In each euoh incorporated oity or townwithin thie State in the paymentof ohargesfor such EM, electricli&te, electric power, or water for the quarter

next preceding

. . . Nothingherein nhall apply to any such gas, electriclight, power or water works, or vater and 11&t plant, within this State, owned and operated by any city or town,nor to any countyor water jmprovement
or conrervatlon

district

. . .*
(2) Rothlng

herein shall be construed to require

paymentof the tax on grose reoeipts hereih l&vied more.thaa onoe on the a8me c&modlty, and where the commodity la produced by one iadividua?., company,

corporation,

or association,

and distributed

by another,

the tax ahall be paid by the dlatribut~r alone."

It is undisputed that the Air Base ie loaated within the gqographioal

llmltaof the city; it is, therefore, "within'

the city ad comprehended

by Article 11.03

It ie axiomatic

that the State cannot lay LL direct tax on an inotrumentality of the BederalGovernment. TherePore, the only seriousqueetlon

presented

by your requestis whetherthe Air Base lo
a "gas plant" or "distributor" within the meaning of Article 11.03.

The court in the c*ae of Utilities latural@as Co. v. State, 118 S.W.a gZ%tated that the tax laid by Article 706Ow~w an exolse

'This case wee reversed by the Commission

of appeala in .sn

opinion reported,&n

125 S.W, 26 11553,

.'EBe Cosmioalon

held that the rale to a mingleconamnerin the city of Victoria did not amount to "local sale and dintributlon"

of gae In the city aa comtemplated by the statute; however,the court did not quarrel with Me definition of "gasplant" statedby the Court of Civil Appeals.Honorable Robert S. Calvert, page 3, @W-909)

on those engagedin the business of owning,operating, msnsglng,

or controlling

e gas plantwithin an Incorporated town or city used for local sale and distribution. The definition

of "gesworks" es used in Article 7060we8 held by the case of Eddine-Waleh&ButaneCompany Calvert, 156 Tex. 587, 298 S.W. 2d 93 (1957) to mean (1) an establilhment in which gee is manufactured, produced

or processed/or (2) a dlntrlbution

systemconsisting

of pipes through

which the gas flows and is delivered

to the premises

of consumers. Construing the two cases together,

It apsearethat to come within the terms of Article 11.03, it is necessary

that a tax payer be engagedin the business of operating, managingor controlling en establishment

In which gas is menufeatured, produced

or processed

for local sale end distribution, or in the business of owning,operating, controlling

or managinga distribution eystem consisting

of pipes through

which gas flows and is delivered to the premises

of aonsumers. The Air Force Base is not In eithersuch business. In all but a few instances, the Air Force, or one of it's components,

is the conszxker

of the gee. And, under the rationale of the Commission

of Appealsopinionin Utilltlea NaturalGM Co. Y. State, 128 S.W. 26 1153 (See footnotel), it is olear that the sales of gas by the Base to the privateconcessionaires located within the enclave do not put the Air Force in the business of operating

s gas works or distribution

system within the meaning of the Article in question. Consequently,

you are advisedthat Lone Star Gae Co., 8s the "looal distributor",

la required

to pay the tax imposed by Article 11.03
on the gas sold to the Air Force Base.

An Air Force Base located within the limits

of an incorporated

city which purchases gas throughe single meter located

at the base boundary end consumes

all gse except for s certainBmount which is sold to private concessionaires

using gas on the base Is not in the businessof operating a "gasworks" or a "distribution system"'within

the meaning of Art. 11.03, Title l22A, Taxation-General,

Tex.Rev.Civ.

Statutes (1925).

Yours very truly,

WILL WILSON Attorney

Genera1of Texas

JNP:bg

APPROVER Assistanthonorable Robert 3. Calvert, page 4, (VW-909)

OPINIONcok&!rllm: HoughtonBrownlee, Chairman
Ian-yHargrove Arthur Sandlip CharleeD. Cablneas GrundyWIlllamp
RRXWEDFORTXEA!lTORRRYG~L BY: Leonard

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