### 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 

### requesta8 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 madkwmaaao di*tiLlateI 

### 576 Bonarfiblo

Mo. H. Sheppard, Page 2



### eon tournaturalgar rooyolingpluats. 

### The j?roduoen of theere produote pay the tax aa 

### provldod -r0r in Artiols 7Ob7 R 

### and theresidueX.S r*tumed 

### bp thersoyollngmttwd to 

### theame,geeproduolng 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**  

### MwVntof $211.65 

## l 36r 

### ‘Phi8

pi&N-- 

### linebaa til theeqmeta 

### od: an 0 L pipeline in esmuehatiit ie separatelyinoorpomted. 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 tea

### panlea,

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, 

### brined ethermlnorslsolution, im@ludlogt&o prlvllegae ena **pow+8** granted bl and eutherired in Chapter lst Title 32 Reviae4 UirU 3totute8 of Texts, whieb ie bere'66yadopted* You 8tate tkmt the produeorr aS t&o **pau0ta tmm**  

### ported 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 

### Aotbot the47th 

### LegislatureIn 19&X,pa e II, seotlon 

### 1, Isaid a&tale 269, Chapter 184, Artiale

par dm f tbett V&em4 gas is prooeos& for it0 1iQUid hydrac+arbonoontent .md reeldue 

### gas ia returned by reoyoling method8 to the mne 

### $ahpreduoiog,fornretion uderlylag 

### the1-a fro&rhi6h thegas isprodweb, the tazable value of saab Rae e&all he tlwee4fZthe (3/5) **of** 

### the **fpm.6** 

### value of all p.roduWia ertraioted, seperatodand esved 'from **two& &LUr** **”**



# I**tie aWo**  undomtand **tht t&e**  **produootr of**  **Nm po** 

duote 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 OSttriu 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 

### eupportoi this aonahnion we dirbotJIOUE attention to the mlloldn@ I**The statutea**  under mhloh thin etxcpaay was lnrorporsted **oontaln the**  **f'ollowtn~ prwl&mot**  **Artiola** l495 lr in part &alfallout:

Yhia Chapter wabraoes oorporattoa5 oroated ror the purpaeo OS coring, tmrlsport~, byror eindsellbg 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& hnvepcwerr *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~mimnd**ed by**  **tbo 47th**  **I.e&Lature,** 1941, e&e 2&P, Cheytar l&4, ;diclo XIII, **Ssotlon** 1, **in** whigh **armeadmeat**110ahang* ~66 **lade** effw~~; the mattm? hsma under **ooaaldoratien,** is in pert a*

*Weohinoorporatod

. . . o%l pip0 lfcr abJc pang, and all oe~moa wirrier pipe line ooammies of every oharaoter whatmaver, engaged i+ the tramportatiotr uf oil,

. . wdoing budnese whally or

### 578

in artwithin th3.a State
. . .andeveryotbmr Ind vldual, s oompary, corporation, or amQoIation aQ* buntwIn8mof the mm0 oharaoter In t&la State, irkadditiorr to the ad **~aloF8m** tarsa a11ta.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 

### asacteF&C?propepty, and looul 

### Iu@x~&I thereon tQ the eOWtIm8 ia whlohits kil!JImss Is omlae ark* 

### ArtIaie 70578,Notion i(5), o.f 

### theHerlaudCiiil 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 

### prcduutfmm @ata, cn! ttmliquid 

### byibwaxboaa prodwed from&as iu fuot 

### Artialo m7ba ef @heHerimd GLril l?~batutes, hor&msbaoo nfermd to,a0ntaIne 

### ap~wIaIon that %.ll liquid hydro-oarhna that 

### apemewadfmmgao bpmbam ofa separatc~rorb~~thw nomaoomntatrl* a&hods &all 

### be. tasod at the ERIM

### rateao 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 tbieoaqmny withinths 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*eharmotsr8np+paA 

### fa the tlVUmpsrfdt0asf Ofi,or that it la *Q@%q btmineaa” In this state OSthe “mm eharaatu

### aa aae,cntl4s

other of saidnonasrtm
1005. The InW6ible tax Ia ’R 1788orI6Inally gaaecld in 

### Etwas amendedin I.907 **and #i&ah**  **in 1933,**  Tho k933 amerubmnt imesrted for tha Tirltt tl3 the wordar *oil pipelixm fsfaspgaapma all emson oarrier pipeline aompaai~a 

### of STew ahrmoter whatsoever,engagedIn the *ransp0rtati0n of Oil’

. 

### This a.wndmnt of 1933 eaprrsatsdl 

### ItsLqialatire 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 theFonorable 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 a11 taxpayers eImIlarly aitueted, **aa** to bring about Pbetter 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 nradothr ibllowin~ hold- ir the case of ColTax Refining Coqmny 1. Hart at al.j 144 2. 1:. (2) 909, writ XMUlWl: 

### -*In

thisl~uae~ **tbs** mpese OSthe that I6 olaarlf tipr4b6e6a. It '(WEdoawed 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 oarriaroil 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 trstnrport

### Ingoil by pipe linen a8 **Its busiaeaw** **durQ precar;Pp**  **tive1p ior**  **tar.. It**  would **ba a**  **towma** pcoduaimg oonoern within **itaelt,** and as 6uoh would telailp fall wIthIn the elnso of' **taxpayers** greeumably **club Jsat**  **to** the **intaaglble tas**  **ox mu&t**  **Co**bs **rrub$eot** ed to thmt tax. “Upon the 8ma prIncIpl*8~16ior 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 

### wa6cskmilar &Y4 eltwtfon (as d subjeot rbr trxation) to tllot 09the 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 die**ttibute** its burden to **, * * crsrg other Icdiridwl, ooa~, oorportitiou or smooIntIon doing buadne6m or the Munoebarnoccrr 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$Ibl.e Cax mee8~ (ISdofInItely ale the tirrt two alasaee dia.. Ot$SU4. The 

### provlaicn leeveo no both% es 

### to who **:i would**  **be eabraoed**  **in its**  **tuxus.** Xt **speaiff 0aH.y**  **ocxupany,**

**warpor**

te be 0r the mw 

### otraraetua* wmt 

### bohg doamay the Ineorporafea

pfpellnaooIqwiy*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)mnI& the *saw3 ohraoter*, ~ith.h the mnina 0r btkkifj ?lo5, and, tlmr~foma, oot aubjeat 00 t&mtax 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 

### thetransportation 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 gan**es&, ste~tuteta** 

**ad had**  **&on** elne 1017." A 

### ritfomnoeto sala Article 60119showa 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 

### eaPrlerWealee direat ye&wattention 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 

### the47th 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 TRXLawme ma80 tc apply to eaoh %wter bun ao~~p(uv*, AS

### dofin. in the 

### A&s of~tho 

### Legislntumt therein re;termd ana l 8oh wocumcmoarrier 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 UDaoquieooonoe in, br the Le&elatum of the haldiM it3 arid o~inirua, AAwell SA tbA **OfXL5tl ’** **UOthA** -Oed **itpofi** oaid **law by**  **your ilapiXrtaPant**  **in** sAa8eptiAg **PywA% Of**  **kma** UAdrr ArOl01e 7047e, ratltu tkaJ3aadu nrklole 70578, t&mR.&trril ml. &OVA¶%~SMJ AAAbBitAAtiOA 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 148eny oirowuetenoee ox aondlUose afSsotlag 

### OY relatingto tina 

### partloular 

# ataat5wtr And It 

### avybe 

### praolslrsd Wit 

### tkaLeglAlAtbim %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~~&eWeiDit eraployed, atid to bAOCr

kA0WAthe **WcUUtXUOtiOA** SACSOdUJWA b&A **5ame** OXB 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**  **a Ike**  **OOAll 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 OSthe 3.8~so **as to**  **AIAow a**  **Contras iateotiixl.** 

**”**î l . .*.. 

### 582

Efonorabls a#. ff. Shop-d, Pscro8

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