Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Austin, Texas Opinion No. V-1492 

Re: Applicability of motor fuel 

sales tax to purchases of 

graoline under Lease and 

Operating Agreement between Reconstruction Fin- 

, ante Corporation and United 

Dear Sir: States Rubber Company. 

We quote the following exc,erpt from your letter requesting our opfnion on the above captioned matter. 

“We desire the opinion of your office as to whether 

or not motor fuel sold in Texas to the United States Rubber Company.under the conditions set out hereinbelow is 

subjects to the motor fuel tax imposed by Article 7065b, 

Vernon’s Annotated Civil Statutes of Texas. 

,’ 

“The United States Rubber Company has entered into 

an agreement with the Reconstruction Finance Corporation acting by and through its Office of Rubber Reserve, 

to .Iea.&, operdte. ,and mainfairrh systhetk rgbber plant 

located near Port Ned&s ;Texas,, said plant being owned 

by R;F.C.‘s agent, Rubber Reserve, and leased and oparated by the United States Rubber Company under which 

appears to us to be a cost-plus-a-fixed-fee contract. 

“This department has construed the opinions rendered by your office holding that private persons or 

corporations engaged to perform c~ost-plus contracts 

for the Federal Government are not subject to immunity 

from the State tax imposed upon motor fuel purchased 

and used by skid contractors, to be applicable here, and 

has notified the selling distributors that the taxes should 

be collected. These opinions are No. O-4389, dated May 

28, 1942; No. O-4689, dated July 21, 1942: No; O-4731, 

dated September 4, 1942; NO. O-5214, dated April 28, 1943; 

and Opinion No. 0-5309A, dated March 13, 1944.” 
Hon. Robert S. C,alvert. page 2 (V-1492) 

From your letter and the file attached thereto we have 

gathered the following facts. 

sunder the submitted contract, Reconstruction Finance 

Corporation (acting by and through its Office of Rubber Reserve), 

a corporation created by and existing under the laws of the United States (hereafter referred to as “Reserve”), entered into a 

lease and operating agreement with United States Rubber Cornpany (hereafter referred to as ‘Operator*). 

Reserve owns a synthetic rubber plant near Port Neches, 

Texas. Reserve agreed to lease the plant to Operator, who agreed 

to use and properly maintain it for the manufacture of synthetic 

rubber. We will summarize only pertinent portions of the lengthy 

contract. 

Operator is required to obtain satisfactory insurance, 

payable to or naming Reserve as assured, protecting agafnst 

loss or damage to the ,Plant and against liabflity to third parties 

by reasqn of Operator’s activities under tha contract. Operator, 

after approval by Reserve, is to pay all taxes,, a&iassr&ants,. and 

similar charges which may be imposed upon Oparator or Reserve 

with respec,t to or upon the Plant or any part thereof. 

In numerous sections of the contract (see, for example, 

Sections 8. 10, 13, li’. and 21 

for Reserve” and as acting 1. Operator is refer~red to as “Agent for the account and at the expense 

and risk of Reserve” in reactivating and managing the Plant; but 

u 

e 6 . it is expressly understood that all persons engaged in,the 

performance of this contract by Operator shall be employed or 

retained by Operator and shall not be tbo employees of Reserve 

for any purpose whatsoever.“, Section 9 (a). 

,Reserve is to reimburse Operatar for costs incurred fn 

the reactivation and mana’gement of the Plant and, in addition, is 

to pay Operator tin operating fee as provided in Section 14. TRe 

quote the following excerpts from Se&ion 10, which gives exampEes 

of such “costs.* 

“(b) The cost of all facilities, machinery, tools, 

dies, jigs, office equipment, BuppLias, manufacturing 

aids, aLterationa. improvem$ntx, repLacemerits. and ,, 

additions to the mar&acQxring bxildiags or equipment ‘~ 

facilities connected therewith, re@iked for tba effib+ ~, 

performance of this contract and for which Operator fa ., 

not otherwise reimbursed; and the eoBt of all maintenance 

and repairs incLuding the cost of replacing, repairing or 

recondi.tioning any of the machinery or 0quLpment comprising the Plant,, damaged or destroyed, but onIy to the 
. 

Hon. Robert S. Calvert, page 3 (V-1492) 

extent that the damage to or destruction of said machinery or equipment is not covered by insurance and 

only to the extent that the replacing, repairing or reconditioning is necessary to the efficient operation or 

maintenance of the Plant. 

“It is hereby understood that title to any and all 

property of whatever character, the cost of which is 

paid by Reserve pursuant to this subsection (b) of this 

Section 10, shall vest directly in Reserve, and that 

title to such property shall in no event vest in Operator, 

“It is hereby further understood that in the acquisition, purchase and installation of any machinery, 

equipment,.maferials., or supplies in connection with 

‘any alterations, improvements: or betterments ,of, .?~ 

or additions to, the Plant, or in coniiection WIW a$ 

replacements made in the Plant, and in the negotiation, execution and supervision of all contracts with 

third parties in connection therewith, Operator shall 

act as Agent for and on behalf of Rese.rve; provided, 

however, that as a condition percedent to reimbursement under the terms of this subsection (b) any such 

expenditure for the acquisition, ,purchase or inaSallation of machinery, equipment, material~s or supplies 

in connection with any alterations, improvements or 

betterments of, or additions to, t&e Plant involving 

more than One Thousand Dblla,rs: ($1,000) shall be first 

approved in writing by Reserve; and provided, further, 

that as a condition precedent to reimbursement under 

the terms of this said subsection (b), any such expenditure for the acquisition, pur,chase or installation of 

machinery, equipment, materials or supplies in connection with any replacement in the Plant involving 

more than Five Thousand Dollars ($5,000) shall be 

first approved in writing by Reserve, 

“(c) The amount of all taxes, licenses, fees or 

other charges levied by any competent governmental:. 

authority, including those levied on the Plant, or for 

the privilege of operating the Plant, or on the product 

manufactured therein, or on any materials or supplies, 

including the amount of any payments made by Operator under the Social Security Act (empLoyer ‘s contribution), and any applicable Federal, state or local 

taxes, assessments or charges (excluding any taxes 

on net income, .any. excess profits taxes, capital stock 

tax or any other taxes based upon the capital or in- 
. 

Hon. Robert S. Calvert, page 4 (V-1492) 

come of Operator) Which Operator may be required 

to pay to such governmental authority, and which are 

‘incum-ed in connection with the performance of this 

contract, and including the amount of any additional 

taxes or, contributions required to be paid by Ope~rator at any time during the performanc e of this cDntract or within five (5) years thereafter pursuant to 

the Unemployment Compensation Act of any state 

and arising out of the layoff or discharge of persons 

on account of the aforesaid reactivation or intermittent operation of the Plant or termination of this 

contract. 

“(d) The amount of all premiums or other costs 

of any bonds or insurance, including public Liability, 

employers’~ liability, property damage, workmen’s 

compensation, fidelity, fire, theft, burglary or other 

insurance, which Reserve may specifically require 

Operator to carry under this contract. In the event 

Reserve and Operator shaI1 cove‘lc workmen’s compensation risks on a self-insurance basis. such arrangements shall be %ffectuated in a manner mutually 

satisfactory to the parties hereto. 

*(e) The amount, if any, paid by Operator as 

damages for any&jury to or death of a person or 

persons, or for any injury to property,’ the liability 

f~or which is incurred by Operator during the term 

of this contract arising through the occupancy of the 

Plant, or through the performance of this contract, 

but such amount, if any, shall be included her.ein 

only to the extent that operator is ac.tually ont-ofpocket therefdr without indemnity of any kind through 

insurance coverage or otherwise and only to the extent that Operator is le’gally liable for such damages 

as determined by due process of law OP pursuant to 

a settlement made with the express approval of Rc-~ 

serve, and provided that the liability of Reserve under this subsection (e) of this Section 10 shall be limited as provided by Section 11. n 

Section 14, which relates to the operating fee. contains the 

following statement: 

‘@R is, understood that said operating fee is intended to compensate Operator for making avuilable exe,cutive management and the knowledge, skill 

and experience of its organization in connection 

with the operations to be conducted hereunder. and 
Hon. Robert S1 Calvert, page 5 (V-1492) 

al,so to cover certain expenses incident to the operation and maintenance of the Plant which are not capable of being identified and charged directly hereunder. II 

. 0 . 

. Section 12 provides for supplying Operator with electric 

power, gas, water, and compressed ,air previously contracted for 

by Reserve. In the event of insufficiency, Operator will receive 

these utilities as allocated by Reserve., Detailed provisions .relate to sewage disposal, track maintenance, cafeteria facilities, 

pipeline~s ,@nd other facilities. 

Section 13 reads, in part, as follows: 

“It i&understood that in the performance of this 

contract, Operator is acting as Agent for Reserve, for 

the account and at the expense and risk of the latter, 

and, that, accordingly, Operator shall in no event be 

libale for, but shall be held harmless by Reserve 

against any damage to or loss or destruction of property (whether owned by Reserve or others) or any 

injur’y to or,,death of persons, in any manner, arising 

out of .or in connection with the work hereunder, 

~‘.‘unless it be shown to have been caus~dd directly by 

bad faith or ,wilful misconduct on the part of any 

officer ‘of Operator or anylrepresentative of,,Operator having supervision and direction of the, ,Plant. as 

a whole, acting within the scope of his authority and 

employment, ,or unles~s it results from the failure 

of Operator toicarr,y Such ,insurance e;o.verage as 

Operator may be required to carry ~utider this contract. . e -” 

Section 15 provides that Res,erve will furnish Operator 

with wcrrking capital to meet,Operator’s costs, and sets out in 

detail the procedure to be fo’llowed in so doing. 

Reserve is to pay Operator monthly the amount of “costs” 

not otherwise reimbursed, and the amount of the operating fee for 

,the preceding calendar monthReserve also contracts to supply Operator with certain 

materials to manufacture’ synthetic rubber. 

Section 17 contains the following provisiOn: 

‘“Operator, as agent for Reserve, shall use its 

best efforts to procure all [other ] materials s o 0 

necessary for the manufacture of Synthetic Rubber 
Hon. Robert S. Calvert, page 6 (V-1492) 

0 . a but, to~the extent Operator :is:tinable to obtain ‘~ 

such materiaIs. Reserve shall endeavor to ob,tain 

such materials and to make arrangements for delivery thereof to Operator at the Plant. Title to all 

materials purchased by Operator hereunder shall 

ve~st directly in Reserve.” 

Reserve is to indemnify Operator for any costs in any 

way connected with alIeged infringement of patent or patent applications or patent royalty claims “as the result of any action 

of Operator hereunder as agent for Reserve, or as the result 

of aply action taken after the date of commencem,ent of operations 

‘in the Plant by Operator, or by any third party cooperating with 

Operator in anticipation of the manufacture of Synthetic Rubber 

under this contractfi and Reserve shall take all necessary action 

(including defense of any suit or suits) and shall b,ea~r aI costs 

and expenses whatsoever (including attorneys’ fees) incurred in 

conne~ction with the defense, adjustment and payment of any such 

claitns, .demands, cau$es of actiiin or suits, but Reserve shall 

assume no responsibility whatsoever under this Section 18 for any 

action not pertinent to the manufacture of Synthetic Rubber under 

or in conne~etion with this’ agreement. e e *Se 

Technical information acquired in connection with or resulting from the operation of the Plant is to be made freely available to Reserve, and Reserve has no obligation to pay for costs~ of 

patents, etc., owned or controlled by Operator. 

The Plant is to be operated on a monthly basis with Reserve notifying Operator in advance how much rubber Reserve 

de~sires Operator to produce during the coming month. 

Section 21 reads as follows: 

“All contracts which Operator may execute in connection with the operation or maintenance of the Plant 

,which run for a period of str (6) months or more. or 

which represent an obli 

Five Thousand Dollars f 

ation in an aggregate sum of 

$5.000) or more, shall be submitted to Reserve for approval prior to execution; provided, however, that contracts for materials and supplies necessary for the manufacture of, Synthetic Rubber 

hereunder. unless running for a period of six (6) months 

or more or unless containing a provi~sion for liquidated 

damages, need not be so submitted to Reserve for approval, but three conformed copies of all contracts for 

such materials and supplies representing an obligation 

‘on the part of Operator, as Agent for Reserve, in an 

aggregate sum of Ten Thousand Dollars ($10,000) or 
Hon. Rober,t S. Calve‘rt, page 7 (V-1492) 

more, shall be forwarded to Reserve immediately 

after the execution thereof.. All arrangements or 

agreements, pursuant to which Operator may itself. 

furnish supplies or services to the operationdf the 

Plant, shall be first submitted to Reserve for approval prior to execution- 

” Section 3,2 reads as foIlotis: 

“This contract shall be cotistrued according to : 

the law of the State of Texas.” 

The opinions of this office which you cite as controlling 

in the instant case may be summarized as follows: 

Opinion O-4389. The Austin Company was constructing 

the Forb%‘oith,Airo’raft .ilss~emtily Plant fpr the’Uni&d States. 

~The’government purchased from the distributor t.he&otor fuel ’ 

used by the company. Under the terms of the contract, title to 

all materials delivered to the site of the work vested in the United 

States upon delivery. The company was held to be an independent 

contractor. The sale from the distributor to the gove~rnment was 

not taxable but the tax was held to accure .when the company acquired and used the motor fuel unless the contractor occupied, 

some status of immunity or exemption. However, the foll&ihg 

statements appear on pages 9 and 10 of the opinion: 

.’ 

Y 

e e .If said Austin Company were a mere agent 

‘or instrumentality, under its contract, of the United 

States Government, for the construction of the plant 

in question, use of motor fuel by said company upon 

the highways of this State would be, in contemplatfon . 

of law, use of such motor fuel by the Federal Government; and no tax would probably accrue, unless such 

tax should be considered a toll or charge for use of 

property or facilities of the State and therefore coilectible even from the Federal Gove-em, a question 

not necessary to determine here. If, on-the other hand, 

The Austfn Company is an independent contractor rather 

than an agent of the government, its use of the motor 

fuel upon the highways would be taxable to the extent 

of 4$ for each and every gallon so used, the same as 

such use of motor fuel by any other person, firm ,or 

corporation engaged in business in this State, whether 

construction or otherwise. D D ** 

Opini& O-4689 held that an Architeot-Engtieer-Managercost-plus-a-fixed-fee cuptractor was not’an agency or instrumentality of the Federal Government and was not exempt from payment 
r . 

How Robert S. Calvert, page 8 (V-1492) 

of the motor fuel tax. We quote the following excerpt from page 

3 of the opinion: 

“As stated by the authorities gener.ally (See 3% C.J. 

l318-1319) and contrary to the contentions urged by contractor’s counsel, there is nothing peculiarly inherent 

in a contract calling for engineeying, architectural,or 

managerial services, as distinguished from ‘conBtructfon’ contracts, which preclude’s the former type of contract from creating the relationship of independent contr~actor if the parties so desire to contract. A c,ontract 

‘to furnish the architectural, engineering OP managerial 

setvices for the construction of a given project for the 

Government is just as ne~cessary and occupies no different classification or status, as relates to the law 

governing tKe relationship of master and servant or 

independent c~ontractor, as the usual contra&, to actually construct OP build the plant or project. Under the 

instant contract the contractor undertakes and obligates 

himself OP itself to furnish the plans and specifications 

and to pe‘rfomm all other services expressly contemplated ther,ein, in coxmection with a specifically described project, and to furnish the labor. materials, 

tools and supplies therefor, with right of reimbursement by the Government for the cost of the work0 D q sm 

Opinion O-4731 dealt with the cement tax levted by Article 7047, V.C.S., and held that since the tax is levied upon the 

manufacturer and imparter of cement it makes no difference to 

its impusition that such manmbacturers and impo%&.rs .thereafter 

,make sales directly ta the United States Government OP one of 

its instrume’ntalitfes. Alabama v. King and Boo+er, 314 U.S. 

1 (1941); Cw~y v. Untted States, 314 U.S. 14 (1941) a 

Op&aiiop 062L4 held .#I+$ since tie Defense Supplies Cor- 

#mtior#f a &bddi&y~f $2e+@.ru@;tion !$ina~e.:+ZbX%tion, was 

a F&de$al agency 0~ i&&un&faIity a&d bpzesdy dxesnpt +om 

~sales, use. storage, andpurchabe taxes by Section 610;15 U.S.CA., 

T,exas distributors cbald sell aviat%on gasoline tax frees to the 

Corporation. However, the opinEon expressly stated: 

*Nothing herein should be construed as holdfng . . . that motor fuel purchased from the,. . . 

Corporation and subsequently sold or used by a 

‘distributba’ is tax exempt.” 

Opinion O-5309A peconaidered and afbbmd 04389. 

Tke opinion held (I) that ‘no tax may be imposed on sales to OP 

uses by the Federal government or Federal agencies and instra- 
. 

Hon. Robert S. Calvert, page 9 (V-1492) 

mentalities which Congre,ss has exempt from such tax, (2) that 

use of motor fuels by a cost-plus contractor with a tax exempt 

agency is subject to tax, and (3) that the motor fuel tax accrues 

where motor fuels are both sold to and used by such cost-plus 

contractors. 

.Ths photostat.which you have furnished of apur~chase 

order fsr,g&oline directed to the Texas Qompany shows that 

it is a purchase order’from Reconstrttctibn Finance Corporation 

acting by and through United States RubberCompany, agent. Shipment is to be made to Reconstruction Finance Corporation, United 

States Rubber Company, Agent, Port Neches, Texas. Section 8 

of the Reconstruction Finance Corporation Act, as amended, 12 

U.S.C.A., Sec. 607, expressly provides that the Corporation is 

exempt ffrom all taxation ,). , imposed!. . .by any State . . . except that real property of the Corporation shall be subject to 

. . . State . . ; taxation . . . ‘according to its value as other real 

property is taxed. The exemptions provided . . . with respect 

to taxation (which shall, for all purposes, be deemed to fnclude 

sales, use, storage, and purchase taxes) shall be construed to 

be applicable not only to the Corporation but also with respect 

to any other public corporation . . . wholly financ~ed and ‘wholly 

managed by the Corporation.” 

In view of the opinions previously summarized, the holdings of which are hereby r~eaffirmed, sales to the Reconstruction 

Finance Corporation, acting by and through its agent, United 

States Rubber Company,are tax exempt. Consistently with other 

conclusions reached in these opinions, however, we think that the 

use by U. S. Rubber of the motor fuel on the highways of this State 

is subject to tax and that U. S. R.ubber is liable for the tax. 

We have reached this latter co&lusion for the following 

reasons. The contract expressly states that it is to be construed 

in accordance with the laws of the ‘State of Texas. The fact that 

the contrac~t,designated Operator as “Agent” of Reserve is not 

conpolling., Th’e r&&onship between the parties to the contract 

must be defermin@d b$ all t&e provisions~ of the cbntract itself. 

2 Tex. Jur., Agency, SlZ,.p. 394; Falls Rubber Co. tr. LaFon, 

256 S.W. 577 (Tex. Comm. App. 1923). 

Carruth v. Valley Ready-Mix Concrete Co., 2,21 S.W. 

2d 584, 592 [Tex. Civ. App. 1949, error ref. n.r.e.), recognizes 

as controlling in Texas the following fundamental principles of 

~the Law of Agency: 

,:’ ” ‘fin tnde,$etient contract~or and an ,agent are 

“not always easy tk~ distinguish, and there is no oniform criterion by which they map be differentiated. 

Generally, however, the relations are distinguished 
. 

Hon. Robert S. Calvert, page 10 (V-1492) 

by the extent of the control which the employer exercises over the employee in the manner in which 

he performs his work. 

* ‘Where a contra& contains provisions which, 

if they stood alone, would indicate that the true relation was that of independent contractor and others 

which indicate that the relationship was that of principal and agent, the spirit and essence of the contract, 

considered as a whole, must be looked to. 

* ‘One may be an independent contra,ctor and at 

the same time for certain purposes be an agent of 

‘the employer. Any independent contractor becomes 

an agent by his employer ag.reeing to be responsible for obligations incurred by him in the completion of his undertaking, but payment of workmen 

by an owner or empIoyer does not necessarily 

transform an independent contractor into an *gent.’ 

2 C.J.S., Agency, SZ, pages 1027, 1029.” 

The first of the last quoted principles has long been 

recognized as the law in Texas. In 2 Tex. Jur., Agency, E 10, 

p. 390, the rule is stated thus: 

“An independent c,ontractor is unlike an agent 

in that he is responsible to his employer for the 

resu1.t only of the work to be, done; the employer 

has no control over the mann@ of doing the work 

nor any right to select the contractor”6 employees 

or to supervise their work.” 

In Bertrand v. Mutual Motor Company, 38 S.W. 2d, 

,4i7 (Tex. Civ. App. m t error re . I) the court said: 

*An independent contractor may act for and 

in behalf of another, but, since he is not under 

the other’s control; it is held that the relation of 

agency does not exist.” 

In holding that one of the parties to the contract under 

--..-.--- mnaideratinn - ----- ocrunind ---- =___ the ---------- status of ~~~ an --~ indewndent ~---.-~~~--~ contractor. 

the court in Highgrade Lignite Company v. Courson. 219 S-W. 

230 (Tex. Civ. App. I920, error dism.). stated ti 

fac.ts necessitated that conclusion. 

i?The following 

The party in question had the 
Hon. Robert S. Calvert, page 11 (V-1492) 

exclusive management and control of the leased m&e. He had 

authority over the employee~s, power to hire and dkxharge them, 

and to direct their work. No one told the contractur when to work 

or how to work. He merely received shipping orderu from the other 

party to the contra&, who took all the coal that was mined, paid all 

operating expenses of. every kind or character incident to or connected ~ith,~he,mining~‘ol)eraSiops, and paid tb,e operator df the 

,mine hfs cgmpenaati~ ,I?! f+&dJmonthly &urns. ;” 1’ 

, 

It has also been said that it is the right to interfere in 

the mode of doing the work contracted for rather than the fact of 

actual interference with c~onfrol that makes the difference between 

a servant or agent and an independent contractor. 56 C.J.S., Master and Servant, g 3(3), pp. 49,54; West Lumber Company v. Powell, 

221 S.W. 339, 341 (Tex. Civ. App. 1920. err~or dism.); Corrigan v. 

Huebler, 167 S.W. 159, 160 (Ten. CLv. App. 1914). 

In the instant case Operator hires and dischar’ges the 

employees who operate the plant. Operator ,directs their work. 

Section 9 of the costtract expressly states that persons engaged,, 

in the performante ,of the contract shall not be employees of R% 

serve for any pur,pose’ whatsoever. Reserve has retained no right 

to. interfere in the manner in which the employees ‘perf,orm’their 

work. Sections 8 and 9 require Operator to make all preparations 

necessary to reactivate the plant and to operate and maintain it; 

but the choice of such perparations and the method of said operations are nowhere prescribed in the contract but are left to Operator’s discretion. Indeed, Reserve’s motive for entering into the 

contract, evidenced throughout the entire instrument and expressly 

stated in Section 14, was to obtain the benefit of Operator’s executive ability and “the knowledge, skill and experience ofits organization in connection with the operations to be conducted hweunder.” 

Reserve‘s interest is clearly limited to results--to obtaining specified amounts of rubber (Sets. 17, 19) and the ,latest technical.developments (Sec. 18). 

Thus, under the authorities previously discnss,ed. Opera- .: 

tor ‘s relationship to Reserve in the production of synthetic rubber, 

the operation of pilot plants for experimental purposes, and in its 

research and developmental work is clearly that of independent 

contractor. This status is impliedly recognized fn Section 10 (c) 

which lists as an example of the “cDsts* for which Operator will 

be reimbursed by Re~serve %axes, licenses, fees OT other charges 

levied . . . for the privilege of operating the Plant, or on the product 

manufactured therein, or on any materials or supplies, . . . and 

any applicable Federal, state or local taxes, assessments or 

rharges’(excluding any taxes on net income, capiLa1 Stock tax or 

any other taxes based upon the capital OCR income of Operator) 

which Operator may be required to pay to such governmental 
, . 

Hon. Robert S. Calvert, page 12 (V-1492) 

authority, and which are incurred in connection with the performanc~e of this contract, . D On Since this section enumerates many 

taxes from which Reconstruction Finance Corporation is exempt 

under Section 8 of the Reconstruction Finance Corporation Act, 

. quoted, in part, on page 9 of this Opinion, it negates the proposiLion that .Operator .is Reserve’s agent in the performance of’the 

contract in its entirety. For if such weie~operator’s true status, 

his entire operations would be acc’orded all of the tax immunity 

which has been confeired upon.Reconstructi~on .Finance Corporation. 

. In so far as the provisions of the contract under consideration deal with the actual production of synthetic rubber 

and with Operator’s research activities, they are analogous from 

both the practical and legal standpoint to the provisions of the contract considered in Att’y Gen. Op. O-5309A. The existenc~e of an 

agency relationship under the submitted contract for certain purposes and the contractual designation of Operator as agent for 

Reser,ve are not sufficient to justify a departur~e from the holding 

of that opinion. You are therefore advised that when Operator 

acquires the motor fuel and uses it upon the highways of this 

State the motor fuel tax accrues and Operator is liable therefvr. 

SUMMARY 

Under the terms of the contract between Reconstruction Finance Corporation ,and United States Rubber 

Company for the operation of a synthetic rubber plant 

located near Port Neches, Texas, United States Rubber 

Company i.s. made the agent of Reconstruction Finance 

Corporation for certain. purposes. Sales of motor fuel 

to Reconstruction Finance Corporation; acting by and 

through its agent, United States Rubber Company, are 

not subject to the motor fuel tax levied by Article 7065b-1. 

et seq., V,C.S. In the operation of the synthetic rubber 

plant and in its research and developmental work under 

the contract, United States Rubber Company is an independent contractor. Therefore, when United States Rubber 

Company acquires motor fuel ,and uses it upon the ,high- 

.ways of this State in the d,ischarge of its contractual obligations, the motor fuel tax accrues and United States Rubber Company is liable therefor. 

.APPROVED: Yours very tiuly, 

~W. V. Geppert PRICE DANIEL 

Taxation Division Attorney General 

‘~ Mary K. Wall 

Reviewing Assistant 

Marietta McGreg 

Charles D. Mathews 

First Assistant 

Assistant v~