L -- 

E ORNEY GENERAL 

EXAS 

FVIILL WILSON 

AITORNEYGENERAL August 29, 1960 

Honorable Robert S. Calvert opinion lo. WW-gag 

Comptroller of Public Accounts 

state Capitol Be: Whether or not a dietrlbutor 

Austin, Texae of gas, electricity or water 

to an Air Force Base, located 

within the city limits of an 

incorporated city of more than 

1,000 inhabitants, should 

Include the receipts itim the 

salea to the Air Force Base 

Dear Hr. Calvert: BB taxable grow receipts. 

Your recent letter brought to the attention of thie office 

certain faote 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 through a dlstrlbution syetem owned by the United Statea 

,p~f~Amerioa: hit le used for ordinary purpoms - - - heating, cooking, 

'hot water service, etc. Gas is separately metered by the baae and a 

caeh charge ie made to certain private conceeeions using gas ou the air 

base, such as laundry and gasoline filling station. The remainder of 

the &as, vhioh is used by the various air force facilities, is pro-rated 

and charged on an estimated consumption basic against the 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 Federal Goverument a "gas plant" 

or "distributor" withid the meaning of Article 11.037 

Pertinent proviaione of the Article in queetlon are (18 

followsc 

"(1) Laoh individual, oompany, corporation, or 
Honorable Robert S. Calvert, page 2 @W-909) 

aerooiatlon owning, operating, managing or controlling any gae, electric light, electric power, 

orwater worlm, or water and light plant, 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, 

eleotrio li&te, e&trio powa;, or water, - 

ahallmake quarterly, on the first day of Jauuary, 

April, July and October of 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 town within thie 

State in the payment of oharges for such EM, 

electric li&te, electric power, or water for the 

quarter next preceding . . . Nothing herein 

nhall apply to any such gas, electric light, 

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 payment of 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 llmlta of 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 Bederal Government. TherePore, the only 

serious queetlon presented by your request is whether the 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 

mingle conamner in 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 "gas plant" 

stated by the Court of Civil Appeals. 
Honorable Robert S. Calvert, page 3, @W-909) 

on those engaged in the business of owning, operating, msnsglng, or 

controlling e gas plant within an Incorporated town or city used for 

local sale and distribution. The definition of "ges works" es used in 

Article 7060 we8 held by the case of Eddine-Waleh& Butane Company 

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 system consisting of pipes through which the gas flows and is 

delivered to the premises of consumers. Construing the two cases 

together, It apseare that to come within the terms of Article 11.03, 

it is necessary that a tax payer be engaged in the business of operating, 

managing or 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 managing a distribution eystem 

consisting of pipes through which gas flows and is delivered to the 

premises of aonsumers. The Air Force Base is not In either such 

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 Appeals opinion in Utilltlea Natural GM Co. Y. State, 

128 S.W. 26 1153 (See footnote l), it is olear that the sales of gas by 

the Base to the private concessionaires 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 advised that 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 through e single 

meter located at the base boundary end consumes all gse 

except for s certain Bmount which is sold to private 

concessionaires using gas on the base Is not in the 

business of operating a "gas works" 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 Genera1 of Texas 

JNP:bg 

APPROVER 

Assistant 
honorable Robert 3. Calvert, page 4, (VW-909) 

OPINION cok&!rllm: 

Houghton Brownlee, Chairman 

Ian-y Hargrove 

Arthur Sandlip 

Charlee D. Cablneas 

Grundy WIlllamp 

RRXWEDFORTXEA!lTORRRYG~L 

BY: Leonard Pasnmore