575 

OFFICE OFTHEATTORNEY GENERALOFTEXAS 

AUSTIN 

lioaolrblo aem. 8. 3hep&mrU 

Oomptroller of PublIe Aeoouate 

Auatb, !hxas 

war “ll-t 

a8ve nattu be8 

U&b rroa your 

request a8 fullouDt 

*They hare filed a sepwt uadrr probeet, 

sad atata that tbsy are not ani have not at any 

t&5$ imgagso in the tralwpor0ation of oil. Thay 

tmamport the motor fuel mad kwmaaao di*tiLlate 
I 

576 

Bonarfiblo Mo. H. Sheppard, Page 2 

eon tour natural gar rooyoling pluats. The j?roduoen of theere produote pay the tax aa provldod 

-r0r in Artiols 7Ob7 R and the residue X.S r*tumed 

bp the rsoyollng mttwd to the ame, gee produolng 

tommtton underlg~ng the lend frim wbleh the gas 

la produeeii. hurtng the year 1942, they tran* 

ported 2 255,986 barrels on wblah they ohare& 

tariiie lo. t&8 MwVnt of $211.65 l 36r ‘Phi8 pi&N-- 

line baa til the eqmeta od: an 0 L pipeline in 

es mueh ati it ie separately inoorpomted. ft haa' 

l euperinkadent, and paf8 fedoral trmrportotlon 

snd iJM0~ tax46 OQ It8 net i;iOOEie, 

Yi’he’main problem here, Is rhethnr or not the 

tracmportatioa Bf kero&one, di8tillate and mote0 

fuel omstitutee the olaoe oi oil plpellne teapanlea, as defined in Chapter L, Title 122, rItb 

Amsndercrata, ‘Fax on Zn(;Mgible Amete. . . ." 

Io addition to the faotr stated by port, we hare 

ohooked *he ebuter bi this oorporcrtioo la bt!e ortioo of 

the Seeratary ef Stat6 and fine tha parpoau the*eaf, arr 

stated in said ahartu, to be a& follcws~ 

"2. The purpose ioruhloh it ie SonuQ is 

to atom tramport, buy awl eel1 oil, &as, salt, 

brine d ether mlnorsl solution, im@ludlog t&o 

prlvllegae ena pow+8 granted bl and eutherired 

in Chapter lst Title 32 Reviae4 UirU 3totute8 

of Texts, whieb ie bere'66y adopted* 

You 8tate tkmt the produeorr aS t&o pau0ta tmmported by utS.8 ao8qmy hate pita the taxer prwliloa rbr In 

Artlole 7047b. Thie artiele provldee for an oao&mtioa tax 

an produoarr of natural gas and, 88 aaondm% by the Aotb ot 

the 47th Legislature In 19&X, pa e 

II, seotlon 1, Isaid a&tale 

269, Chapter 184, Artiale 

par f dm tbett 

V&em4 gas is prooeos& for it0 1iQUid hydrac+arbon oontent .md reeldue gas ia returned by reoyoling method8 to the mne $ahpreduoiog, fornretion 

uderlylag the 1-a fro& rhi6h the gas is prodweb, 

the tazable value of saab Rae e&all he tlwee4fZthe 

(3/5) of the fpm.6 value of all p.roduWia ertraioted, 

seperatod and esved 'from two& &LUr” 

I 
tie aWo undomtand tht t&e produootr of Nm poduote tranrgorted bl thin oompaay bm not paid t&o taua 

proridmd for la hrtlole 7057a, mhloh levie8 au ooaupatbn 

ter on oil produced within this st'&e, Smtion 2 of whiah 

we5 antad& by the Aota of the 47th Legialatura in 19&l, 

ptqp 269, Chapter 16J+, Article 1, Seation 1. 

It is the opinbm OS ttriu depart&ml that aaid 

ompmy is not subjeot to the provialoas of Chapter 4 

Title 122, QC the Rerisud Girl Statuten of Tswis, an: in 

eupport oi this aonahnion we dirbot JIOUE attention to the 

mlloldn@ I 

The statutea under mhloh thin etxcpaay was lnrorporsted oontaln the f'ollowtn~ prwl&mot Artiola l495 lr 

in part &al fallout: 

Yhia Chapter wabraoes oorporattoa5 oroated 

ror the purpaeo OS coring, tmrlsport~, byror 

eind sellbg all gao salt ba-lne and othw *imrrnl 

LIP? of o%l and $a& (As amended Aota 1935, 

6~utm~ m riqd0d dn~rdl~~ . ..ead tbo 

+, pw 296, oh. l&G, @ 2.1" 

Arti a.496 la in ~4x3 ee rd.bfm 

"Suah oorporetionr &al& hnve pcwerr 

*1. To &ore an3 tlrruport oil* (lam, bYin, 

cad other &noml uelutio~ and liquiffod nin.mU, 

. . . . and b us&e mawxtabl, ohar&ps lhorafor. 

A 

As ammdad kote %935, bt&h Lo&,, p, 296, ah. X1.6, 

3.1" 

brtial; nbs OS said Chapter 4 Title 122, cvdt~mimnded by tbo 47th I.e&Lature, 1941, e&e 2&P, Cheytar l&4, ;diclo XIII, Ssotlon 1, in whigh armeadmeat 110 ahang* ~66 lade 

effw~~; the mattm? hsma under ooaaldoratien, is in pert a* 

*Weoh inoorporatod . . . o%l pip0 lfcr abJc 

pang, and all oe~moa wirrier pipe line ooammies 

of every oharaoter whatmaver, engaged i+ the tramportatiotr uf oil, . . w doing budnese whally or 
578 

in art within th3.a State . . . and every otbmr 

Ind s vldual, oompary, corporation, or amQoIation 

aQ* buntwIn8m of the mm0 oharaoter In t&la State, 

irk additiorr to the ad ~aloF8m tarsa a11 ta.agIble 

propert1er . . . shall pa,s an annual tax to the 

state, ba&mlnp, with the Sis~~t day ot Ja~uaw 

uf moh year, cm th@Zr fnter@bls asacte F&C? propepty, and looul Iu@x~&I thereon tQ the eOWtIm8 ia 

whloh its kil!JImss Is omlae ark* 

ArtIaie 70578, Notion i(5), o.f the Herlaud Ciiil 

statutes, dimfinsce oil 60 fol&~~s: 

“(5). *oil1 shall mfm orude oFI, 6r other 

8s iax aa w. haw hem nbU to aoaertain cl], Is 

otx&d.~ &a be a dlffueti mIm.x~l prcduut fmm @ata, cn! 

ttm liquid byibwaxboaa prodwed from &as iu fuot Artialo 

m7ba ef @he Herimd GLril l?~batutes, hor&msbaoo nfermd 

to,a0ntaIne ap~wIaIon that %.ll liquid hydro-oarhna that 

ape mewadfmmgao bpmbam of a separatc~rorb~~thw 

nomaoomntatrl* a&hods &all be. tasod at the ERIM rate ao 

oil as levied by Art&lo I of this BOt* therbby alearly 

shark t4at pFaduot8 ti gas an not oii, at least they am 

no M oonddu#A for tax purpas~e. 

In az’der t;o brIw tbie oaqmny within ths tomu of 

Chapter i+ Title 122, It must be bald chat. it; is an Wmur- 

-ted ail plpslinu ocmpany- oaaaged in ttha tranaporb*tion 

of oil, 0~ that It 58 a *oammn earrlu gipslina eoqaufl OS 

8om* eharmotsr 8np+paA fa the tlVUmpsrfdt0a sf Ofi, or that 

it la *Q@%q btmineaa” In this state OS the “mm eharaatuaa aae,cn tl4s other of said nonasrtm 

1005. 

The InW6ible tax Ia’R 1788 orI6Inally gaaecld in 

Et was amended in I.907 and #i&ah in 1933, Tho k933 

amerubmnt imesrted for tha Tirltt tl3 the wordar *oil pipelixm fsfaspgaap ma all emson oarrier pipeline aompaai~a of 

STew ahrmoter whatsoever, engaged In the *ransp0rtati0n of 

Oil’. This a.wndmnt of 1933 eaprrsatsdl Its Lqialatire tntent and purpose in the SollowIng pro+I6Ionl 

“The purposs harooS Is to ~1Res dIl1 Qot%wodl 

aatrler 011 pipe lias 06mpa5ies mdsr ail of the 
Fonorable Coo. R..Shippard, Isage 5 

pr~+i~i~t~ oi t&s Intaaglbti Asset Tar L6~8 Of 

this State and, for the purpoee of plaol~~ uadsr 

raid nat a 1 1 taxpayers eImIlarly aitueted, aa 

to bring about P better olasaIfIastIon end a wider 

dlrtributioc of the burdone ot taxatlor,, a8 far 

88 thin olaoa of tc\rpyars in c~ncaruad.~' 

In dealing with this etatute in a oaso wherein it 

wa8 nooeasarp to oocstrue ita meaning, the Zastland Court of 

Civil Appeals nrado thr ibllowin~ hold- ir the case of ColTax Refining Coqmny 1. Hart at al.j 144 2. 1:. (2) 909, writ 

XMUlWl: 

-*In this l~uae~ tbs mpese OS the that I6 

olaarlf tipr4b6e6a. It '(WE doawed to extend the 

term o? tbs Intwiblo tar ~~baauxb to a strq 

anU @-ci+iae; alaas oi clrrpafma who badtJiW'.tofore esaaped tbla pnrtloular type o? tax. This 

6otman oarriar oil pip8 lina ooqmniea 

of evtry okari%oter whatWWW' and kll taxpa;rmra 

aimilarlp situetod* mnd ln u cdendiog 10 it 

was deslgded to *br& about a brttor ~laacfiiaatlon ana a wfdor dfstributlon 0r ths burdens of 

taxation, ae far ad th&a olans of taxpayer8 fo 

ronoemrd’. 

"iWurally a 00-n 4arrI.r oil pipb line 

ooapmy roulU oarry en the budn6u af trstnrportIng oil by pipe linen a8 Its busiaeaw durQ precar;Pptive1p ior tar.. It would ba a towma pcoduaimg 

oonoern within itaelt, and as 6uoh would telailp 

fall wIthIn the elnso of' taxpayers greeumably clubJsat to the intaaglble tas ox mu&t Co bs rrub$eoted to thmt tax. 

“Upon the 8ma prIncIpl* 8~16 ior the muse masons, an inoorpomtsd o&l pbps line acxtpan~~ would 

The businers rou3.d have a8 Its objsot 

a profit & Inaoas Sor the a*ncrr, and that would 

be true whether it ~88 a pr&Wts or pub110 aaSX'f%r. 

The very purposcr at Its exlsten6e and hmGure Of 

lta buainsaar at woe inuggast it wa6 cskmilar &Y4 

eltwtfon (as d subjeot rbr trxation) to tllot 09 
the OOEIBLM oarrfu pfpe lina osqmuy, and, therefcre, a propar aubjeot for the applioatlon or the 

l#gzkngible tax meanuru whloh the Lq$&ature wee 

oeekiafi to ax&ma to tazmyers l~linllarly sItuatedt. 

It wotild, therefore, aem logical not only to 

bring auoh onnpenieo within the epread of this 

tax meearure, but alao to extelld the same and diettibute its burden to **, * * crsrg other Icdiridwl, ooa~, oorportitiou or smooIntIon doing 

buadne6m or the Muno ebarnoccrr in this :itato'. 

Mt. 7105. 

"The motion or tha statute just quoted der&Dates a ohsa of pereons whIoh would loe,Ioelly 

fall ppithin the term of the Intan$Ibl.e Cax mee8~ (IS dofInItely ale the tirrt two alasaee dia.. 

Ot$SU4. The provlaicn leeveo no both% es to who 

:i would be eabraoed in its tuxus. Xt speaiff 0aH.y 

ocxupany, warporte be 0r the mw otraraetu a* wmt bohg doam ay 

the Ineorporafea pfpe llna ooIqwiy* aal-rler, eta., 

that Is, e%I@wQd in the tmmaportation 0 oil a8 

a busluw%1), and prerum!$ital~ for b&e. . . .* 

In bOld1~ th8tl the Col4en RsftnIng coelJp!&ny wae 

oo?i an "oil pipeline oompaay", or a oorpcratiosr doing bueint)mn I& the *saw3 ohraoter*, ~ith.h the mnina 0r btkkifj 

?lo5, and, tlmr~foma, oot aubjeat 00 t&m tax provided for 

ttmre&m, mid ?astlend Sourt of SItI Ap? ala oallad attantien to the Zaot that "at the tins (1933 7 the wordr *mob 

" * * oil pipe line oornpaay * * ' of every oharao'dar whataoever, eagsged In the transportation 0r oil* ytem laoerted 

Iu the Intangible tnx law, nad Art. 7105 took %bm prosent 

form, AZ% 6016, iii c. 3. 1925, aaa than a pa%% of our ganes&, ste~tuteta ad had &on elne 1017." A ritfomnoe to sala 

Article 60119 showa thmt pipeline oarriere whloh are therein 

daolered to be oi?~on oerti~srs are 8UQb f&o transport qomade 

petroleum* My, therefere, the oompany bare uder ooneideretlon mild mt pmsibly OQ;DI) uader the, term "mm&a eaPrler 
We alee direat ye&w attention to the tact 6hmt the 

&A&M ia the ewe et Col4rx Refining Conpsay v. Ilart et 

al., wpra, wee handed dorm oa ootober 11, 19&C, md reheeriap deelod on kieveraber 8, 1940 and ttat tberufter the 47th 

l,&rl~tur81 amwdotl Artiole 7d5 in 194 but that lt baado 

w oI&angeln uldnrticle ineef'ar aa Chematter here mdex 

oonoiduatkao lo oonoonted. By tihbt sleondarsttt sala Intwble TRX Lawme ma80 tc apply to eaoh %wter bun ao~~p(uv*, 

AS dofin. in the A&s of~tho Legislntumt therein re;termd 

a na l 8oh wocumcm oarrier 0Mor wirzlof* op~ra~~g uadu aute, 

thority ot the Rellroed Comlstalon, but imld larr was not amoMod w a0 to inelude,th* ts8a8pertatlon ot proiluots of natural 

gas au& ae are’ hsn brln@, ~wmld~8rad. Thfs evlaentiy war an 

appro+al of) 6r UD aoquieooonoe in, br the Le&elatum of the 

haldiM it3 arid o~inirua, AA well SA tbA OfXL5tl’UOthA -Oed 

itpofi oaid law by your ilapiXrtaPant in sAa8eptiAg PywA% Of kma 

UAdrr ArOl01e 7047e, ratltu tkaJ3 aadu nrklole 70578, t&m R.&trril ml. &OVA¶%~SMJ AAAb BitAAtiOA baa set out in 39 TM. 

hr., 000~ 132, pg. 2&8-2%. in the ?ellwiaig l~~et 

Weubtlaao qho tegleleture, in eaaotlng, 

AmoAdiag Of repo8llqg a mtatuts, &u&y b8 prAAUaad 

to hare knwn faota of OOUOA notori*tg in elm 

Stats, de ~11 148 eny oirowuetenoee ox aondlUose 

afSsotlag OY relating to tina partloular ataat5wtr 

And It avy be praolslrsd Wit tka LeglAlAtbim %AAu*, 

‘hAd &A IdAa’, or hae familiar with' the 'law of 

trio 1aAd that in, t&O t%RUtitUtiOA #he OoyPg 

law, *x&d% statutes Qltd the iSho& thateot~ ala0 

prlox dsoidona ef the eour%*,-aC Lea& those of 

lest XWQ3%,--~XttiA~ to the aub~wbmatter, 

The I~e&elatuxv IIB prs5ktd to hare wlabcr 

stood the mem& of' lnncg~~&e WeiD it eraployed, 

atid to bAOCr kA0WA the WcUUtXUOtiOA SACSOd UJWA b&A 

5ame OX B siolilar abatube by the agpellats oourQ8 

an8 by ereoutiva or adndnbatrstiv~ officsera. aad 

it rap ?a pxotiwiad ln a roper wee thst the 5b- 

~ielature has aoq&Boed L-4 Ike OOAll a XuOEfQzl of a 

prtioular aot, or that if it hed not bew eat&- 

sic4 titer; ouoh %onsltruotlon it wourd h%+e %tuln#ni 

the ~6rbia(gs OS the 3.8~ so as to AIAow a Contras 

iateotiixl. 

” 

î l . .* 
. . 582 

Efonorabls a#. ff. Shop-d, Pscro 8 

This oonpany not bsiag pri oil ~Ipelltw oompany, or 

a 00~0~ oar&em pipeline Oo~pnny, atqgnged in ths traarjuwtatiOA of oil, end not bei% a ociqmny ongegsd in doI@ buainosi of the sam oharsoter, 8s est forth and deaorIb+d in 

nala iirtiol4 7105, w think It IP alsax that it doe8 not ocma 

within tha 41~3s of 011 pI.pelin* o4mpanlee a% d&i-d In 

ChapOer 4, Tit14 122, and amendmutto. 

Tkw3tIng that thIe Mtilritkotorlly enavmra your inquiry, we rrslaln 

Vary truly yours 

AT'l'OMrfP CBlWRhL 0% Ff2XU& 

Jw 

hm. @. Bt458ott 

A~salatant