r

~). ....

Q.

“: ....:.... 0 **OFFICE OF**  **THE AlTORNEY**  **GENERAL OF**  **TEXAS** 0 **AUSTIN**

Hanowbls Oeo. H. Shep,mrd Captrollo OSPubaLa Accounts AUB tlo, ?ox8*
Qe8r Sir:

dered our rdv 09, 8ddro8B8d to you, bore eeptlon end mm0 UJBOEX

the f8QtB whloh you t the80 opinlonr 8ro sll lng themhereln. lnlaw oited ebovo dealt vlth

lmtiom vhich are edmittsdl~ d instrumeatrlltlee, euch ee the the ‘c;aPDopllrtaont 8nd the Deorateton, an en&aged ia war vork in furthemnco of their *otivitier, ion8 have ontored into ‘e08t-plUem hmztxuaetswith rarlous private aontmatora, uuoh as the Fort Worth Aircraft. **Asawmbig Pleat**  **mad** the libergenq Plpe1lner, Inc. In generel there contreata follov a comon petters, with provi8lom whereby the fedeml sgoncies reimburse the contmotors tar matertils and labor ured by the ~htter,

### 567

Honorable 5eo. H. Sheppard, Page 2

and, In addition, p~iyto the contmcton e atIgulated profit. Although the contrectr normally provide that, subject to aortain oontrols, the oontsmctors may themeelver pu~chess the necessary inatorlals, the federal agencies reserve tho rlght to purohase such mstterihls and to furnld them to tho contracton vhenmor they clodeBee* Ulth reference to the eativitloa of the fod-

~‘,‘,“~~~t~~~~~~~~~Qr?~) %:ooz&~ (LM rold to the fedexml agenoier and ueod by them; b) motor fuels are sold to the fedoml egwmiea and are then turned over to the oontractore for use by them; (0) motor fkele am cold to end wed by the oontrectors. ‘phe queurtlona dleoussod In our former oplniona save orfsen In conaectlon vlth tholssothree ultuatlonB. Por purponer of this oplnlon vo roil that It 18 hmateriel vhether theae f ’uela are wed in vshlalsa owned by the f ’ederex agencfes, In vehlolm ovaed by the oontreetom, or ln vehleloe oumd by tho federal ugenolor and leaeed to the contmritoru. I,

Motor fuels~sold to end used fedajral a enelesr Section 2(d) of the E tor Fuels Tax Act CA.) provides in ptwt 8s follova~ Article 70 5b V.A. f!!

“Ho tax shell be Imposed upon the eale, uoe, or dL6trlbutlan of any IlIotor fuel. the InposIng Of vhshich

vould mnetitute an unlevN burden on lntemtate camuerce and vhifkh Ia not subject to be texod under the Constltutl&n of the State of Texas and the Gnttod Stutoe. ” Although large inroads have been *de on the doctrine of Inter-governmental tax Zmmunltyae establlahed by Chief Justioe Uars~.aall In the aaee of ’ MoCulloch v. Blarylati, 4 Wheat 3x6, 4 U.S. 57$(t. Ed.), the dootrine at111 pereiata et least to the exteri? or affosc!ing immunity frora utate taxation to the568

f0th~i 80-mt it80u d to th000 

## r040m ag02kt310~ and laatmmenklltl~a whlah Coajpora lm8 ohown to declare tax oxompt, Pittman v. H. 0. L. c., 508U.S. 21, 84 L. M. 11, 60 aup. Ct. 15. Typltml of ti l8tter typa at 4eney is tho 4foa~o Plant Corporcrtlon, whloh la saatlon 610 of Tlt10 15, U.S.O.A., the aongPoaahr 4loakPed

# tohe

# exempt into all H~OB, wo, atom&e and -H tax.8 lmpoaed 

# by any l kk or polltiM 

### 8ubdlvlolarr. Weare of the oplalon that tuB &ootPlae @adtb above qwted pPovl*ltfa of mm tax rtatcto p~~aluao tbo irporltian 0r ommotor a018 tax upon Sal.8 0Pua.l er the fml~lwlgov*rmuitmd~ radonrl 

### l geaoloil

aJldlnat-ta11ti.a vhloh Csagrera b&a oxapted. ConaoquemtS~,

ymsm-0napoetfull~ ad*imd tlmt a0 tu should k lwlad or eolleoted upcrm auah nlar OP uaea. II. Motor faola aold to toderrl 4uwlom uul uati W oantrrotona Won c~~motorfwlr Lua males Lu, **doubt** ma 

# th-r0d0~i ~OVOPXBIW~~~OXOBP~~~~~~~ 40mea urd lad-talltlea oould pwobB~0 the fu.1 w pmlu~l~~ wo by tholr 

### aaaItMotoM lahaut th4 l.aeuPPwam llat&lyf&rBl&ah ax. ""t WP, %a7 OUP tax pla iBBeP0

. moti6a 20) of tba t8x rtatutepPwldea in partt 

## l

nlePedullka adlBhePmbylevLoduadiBposti (axoopt aa benlwtter prov&M) apon the riw ~10, ai8tributiak or ~0 0f rotor lhui in or oxoin tu of PmIP

g8llQab*beello0llMted* the rid tax ahsllk 

### ad&e& te the l *ll.iry p

IHcuio~blo 0.0. R. Sheppard, Fag. 4

I(oroovoc, SootIon (d) provldu In part: “In tha wont this Artlole Is In oonfliat vlth tha Conatltutlon or any law ot the 0hIt.d Stat.8 vlth ns~at to the tax lovhd upan the rim ~ls, di6ttibai0tb 0~ ~0 0f wt0r ~1 ia thI6 aata, then it ti brro~ doolasod to k the IntentIon of thie Artiolo to Imporethe tax 1evi.d horan upon tb rirot 6ubrequeJat aale, dI6trIbutlon, or 

### us0 of aaid rotor fwZ vhloh may be rubjoot to beln# tutod.” lbghdle88 

### of howour to&r motor ml6 tax atrtute (Aat6 1993, 43r4 Lag., p. ?8 ah. 44, 88 ammdedby hots 1935, 44th Leg., p. 558, ah. 2 j 

# m¶.@t hva m oanatruod, woem utIrfled that 

# tb legal Inoldonoo of tha

# prosent tax ir upon tba tlltlmate usor or uomumr of motor -16 8ad t&t th6 6tatutorllJ dafixmd %l8tributor” of l wh fuel.a I# wrml~ a bonded ftdualary or agent of the Stak for tha purpou of aiding tn the sollootlon of the tax. Moreovo~, In vleu of the portlam of Sekotlan(d) quoted supm, w feel 

### that own: though the "6alo" oi motor fuolr to the fodorrl govemmmt or 

### aortain o$’Its IrgonaIo6 might 80 tas oxmpt, it nr the lskmtloa of the legIa&rtum to levy 8 tax on 70 tuod. 

### aubamt “uam’ of l 

### uoh fuelm vhleh right aonatltuttona1l.y It ml.lu to k soon uWtber the tax maraonatttut%65ally bmloviod upon00~1 tmatura of the typo under diaouaaion whouse l wh fuels.

That awohmat-plus oontraatora lu noithec agonaloa
nor %natruwntalItIoa of ths fodorrl gov*nrmt la va iael, l ettlod W the OC.S~S of Alabara v. Xlng &Booaer, 62 Sup. Ct. 43, 66 L. M. la snd Ckwy v. Wted stataa, 62 mp.. ct. 48, 86 L. gd. 9. Thase waw am quoted end 

### disowud at loagth in our Oplnian Ilo. 

### O-4389, and ve 

### adhan to the ana1~606 of the 086.6 thorn made. 

### Hovover, oven though the aantmoton tamp8olvos are 

### nelthorfedelrl agamI*a m-t*InatmmaitalItIoa, tlaa aqpmont ia r&o that a tax upon the use of rator%alr by aort- ~1x16aontrrotor6 Is i;l offoot 6 tu upon * hdorel l gema~or 

### lnatnmonta1l.t~ alnae 

### the 8mwit of the tax will 

### ba nilmated In th8 lnoruud oost of the mtwlal6 to the organIution6 which oaploy l

wh oontrrretora. 5% r ow0OSl uah 8n

### arguwnt Is deatroywl wheneonaldrrrd in the 

### ll@tt of the nuwroua resent oases tmlah hold that a general, mm-diaarkixmtory tax16 not const:tutiomlly objectionable merely because its

imp~oait:on upon G vendor or contractor mayreeult in a slight incream in the cost of goods or services acquired by the federal ~overnmcnt. Tnus, in ; l&ama v. King F: Boozer, stipra, Chief Juatlce Stone ecrldr

“The mlrerted right of tks one (government) to be free of taxation by the other doea not spell lmmunlty from pay* th6 added co*t sttrlbutable to the taxation of thosa who fUurai6h cup- ~1106 to the government and vho have been granted no tax Inanun1ty. so far an 0 d!.ffbrent viev ham prevailed, 608 Panhandle 011 Co. v. )II66i68lppi and Graves v. Texar Co., supra, ve think It no longer tenable. * (Parenthetical word added) LIkevise, in Curry v. United States, aupm, the Chief Yustios aaid:

“If the atats law laya the tax upon tti (coat-plus contractors) rather than the indivld~l with whomthey enter into a cost-plus oontmot 1lJm the present one, then it affect8 the Government, like the indlvldual, only a6 the eoonomlc burden is shifted to It through operation of the contract. As pointed out In the opinion in the gin&J $2BOOBctP t%ASe, b OOIltW68iO~ Of the **~VOXll** ment and on authority, the Cozmtltutlon, wlthout lmplemmtatlon by oongresslonel legislation, doen not prohibit a tax upon Oovernwnt contractors because lta burden Is pssaed on economlcelly by the term6 of the oOntr8Ot or othervise a6 a the conrrtruotion oost to the Oovernmsnt. ~thetlcal vord added) “r&nSee also James v. Dravo Contmcting Co., 302 U.S. 134, 58 Sup. ct. 208, 82 L. I%%.155; Federal Lsnd ~cnk of St. ma **V.** CQ Rochford, 287 E.W. 522 (E.D.); Western LithoUr& Board of Equslleation, 11 C&l. (26) 156, 78 P. 26) 731. ph co. v. state Conaequontly, you are reopectfully edvised that when n tax exempt fedeml agency purchase8 motor fuel6 in this State and permits the u6e of such fuel6 by It6 cost-plus contractors, our motor fuels ttaxattaches to the use of such fuels nnd the contractors are llebte for nuoh tax.

### 571

Rcootiblm

0.0.H.Sheppaxdd.

Page6



### III.
**HOtOr fUO16**  sold **t0** and used w the aOntmatOm8 

### ~Tbs abon disouaston

aapalr 

### tbooonaluslcm tinttherotor fwla 

### taxaoorwa 

### ina sltwtion 

### when motorfuoloareboth **sold** to **and used**  **by** a aoat-plw **aontrrator** 

### of the typa wdor dlaowalen, and rou arm napoatfully advised 

### that tha tu Is duoin awh a l

### ltwtlw.

This 

### oplnlen

wnly amplltioa

ant4 

## asrim8theaonolualma raaabodinouroplnlonlo.0-4I&P,ud Inlnnowy lntmdod torlkrruob0piaIon. 8iaoothlaoplnloalain dlmot o&lot ylth moat 

### of tba **statemoats** awl eonolwIonm 

### Inoro&lntw~~0-5309, the 

### latter @pinion la hereby over-

. 

### Trusting that the iongol@g aatiafaetorllf na6lvma 

### my aonfllata

vhlohmayhaveexistedIn the oplnlwa 

### of thla dopwtamt, w am

vary truly yew6 A¶ToltxY -0FTXA8