Gerald C. Mann 

Agricultural & Mechanical 

College of Texas 

College Station, Texas 

Opinion No. O-4617 

Re: Collection of inspection tax 

on fertilizer distributed in Texas 

by the Agricultural Adjustment 

Attention: G. S. Fraps 

State Chemist. 

Administration. 

Dear Sir: 

You request an opinion of this Department on the question whether the inspection tax imposed by Texas law on commercial fertilizers sold in Texas may be collected from the Agricultural Adjustment Administration, which distrtbutes in Texas to 

Texas farmers fertilizers purchased by it outside of Texas. 

Texas Revised Criminal Statutes, 1925, Arts. 1709 

through 1720, and Civil Statutes, Arts. 94 through 108, regulate 

the sale of commercial fertilizer,within the State of Texas. TO 

defray expenses of inspection and enforcement of these regulatory laws, an inspection fee of 253 per ton is provided for commercial fertilizer “sold or exposed, or offered for sale in this 

State” by “all corporations, firms or persons”. 

The Agricultural Adjustment Kdministration is a federa, 

agency or instrumentality. From your letter and accompanying 

documents it appears that the A.A.A. is distributing to farmers 

in Texas commercial fertilizer purchased by the A.A.A. outside 

of Texas, in the following manner: The farmer is furnished 

fertilizer on the basis of a price of so much per hundred pounds. 

To the extent of the quantity of fertilizer furnished the farmer at the stipulated price, when the farmer makes application 

for his Agricultural Conservation Payment the amount of fertilizer theretofore furnished to him by the B.A.A. is deducted from 

that payment. 

This activity of the A.A.A. is authorized by 16 U.S.C. 

1940 ed. 590h(b), which provides: 

I’(b) Subject to the limitations provided in subsection (a) of this section, the Secretary shall have 

power to carry out the purposes specified in clauses 

Cl), (21, (31, (41, and (5’) of section 7(a) by making 

payments or grants of other aid to agricultural producers, including tenants and sharecroppers, in amounts 

determined by the Secretary to be fair and reasonable 
Agricultural & Mechanical College of Texas, page 2 (O-4617) 

in connection with the effeottidtion of such purposes 

during the year with respect to which such payments 

or grants are made, and measured by (1) their treatment or use of their land, or a partthereof, for 

soil restoration, soil conservation, or the prevention of erosion; (2) changes in the use of their land; 

(3) their equitable share, as determined by the Secretary, of the normal national production of any commodity or commodities required for domestic consumption; 

or (4) their equitable share, as determined by the 

Secretary, of the national production of any commodity 

or commodities required for domestic consumption and 

exports adjusted to reflect the extent ‘to which their 

utilization of cropland on the farm conforms to farming practices which the Secretary determines will 

best effectuate the purposes specified in section 7 

(a); or (5) any combination of the above. In arid or 

semiarid sections, (1) and (2) above shall be construed to cover water conservation and the beneficial 

use of water on individual farms, including measures 

to prevent run-off, the building of check dams and 

ponds, and providing facilities for applying water to 

the land. In determining the amount of any payment 

or grant measured by (1) or (2) the Secretary shall 

take into consideration the productivity of the land 

affected by the farming practices adopted during the 

year with respect to which such payment is made. In 

carrying out the provisions of this section in the 

continental United States, the Secretary is directed 

to utilize the services of local and State committees 

selected as hereinafter provided. The Se cre.tary shall 

designate local administrative areas as units for administration of programs under this section. No such 

local area shall include more than one county or parts 

of different counties. Farmers within any such local 

administrative area, and participating or cooperating 

in programs administered within such area, shall elect 

annually from among their number a local committee of 

not more than three members for such area and shall 

also elect annually from among their number a delegate 

to a county convention for the election of a county 

committee. The delegates from the various local areas 

in the county shall, in a county convention, elect, 

annually, the county committee for the county which 

shall consist of three members who are farmers’in the 

county. The local committee shall select a secretary 

and may utilize the county agricultural extension 

agent for such purpose. The county committee shall 

select a secretary who may be the county agricultural 

extension ag.ent . If such county,agricultural extension apent shall not have been elected secretary of 
Agricultural & Mechanical College of Texas, page 3 (O-4617) 

a member of 

-. - 

such committee, he shall be ex officio 

the county commi.ttee. The county agricultural extension agent shall not have the power to vote. In 

any~county in which there is only one local committee 

the local committee shall also be, the county committee. 

In each State there shall~be a State committee for the 

State composed of not less than three or more than five 

farmers who are legal residents of the State and who 

are appointed by the Secretary. The State director 

of the Agricultural Extension Service shall be ex officio a member of such State committee. The ex officio 

members of the, county and State committees shall be in 

addition t‘o the number of members of such committees 

hereinbefore specified. The Secretary shall make such 

regulations as are necessary relating to the selection 

and exercise of the functions of the respective committees, and to the administr,ation, through such committees, .of such programs. In carrying out the provisions 

of this section, the Secretary--shall, as far as practicable, protect the interests of tenants and sharecropper,s; is authorized to utilize the agri,cultural extension service and other approved agencies; shall 

accord such recognition and encouragement to producerowned~and producer-controlled cooperative associations 

as will be in harmony with the policy toward cooperative associations set forth in existing Acts of Congress and as will tend to promot’e efficient methods of 

marketing and distribution; shall not have power to acquire any land ore any right or interest therein; shall, 

in every practicable manner, protect the interests of 

small producers; and shall in every practical way encourage, and provide for soil-conserving and soil-rebuilding practices rather than the growing of soil-depleting 

crops. Rules and regulations governing payments or 

grants under this subsection shall be as simple and direct as ,possible, and, wherever practicable, they shall 

be classified on two bases: (a) ,Soil-depleting crops 

and practices, (b) soil-building crops and practices. 

Notwithstandins anv other provision of law. in making 

available conservation materials consistin? of seeds; 

seed ino,culants. fertilizers. liming and other souconditionina mate’rials. trees. or slants. or in making 

available s ;il;c;n;e;;- or soil-buildins servic,es. to 

asricultura D 0 u e under this subsection. the Secretarv mav make oavments. in advance of determination of 

gerformance bv the producers. to aersons who fill uur- 

. . - ‘chase orders coverins, aaoroved conservation materials 

pr coverinn soil-conservinn or soil-building services, 

fu ni hed to D oducers at not to exceed a fair Drice 

fi~edsin accordance with reaulations to be orescribed 
Agricultural & Mechanical College of Texas, page 4 (O-4617) 

Jw the acretarv. or who mnbr Services to the Setretarv in uverina to producers aDDroved COIISB~VBThe agricultural conservation program in which the 

United States is engaged is designed to conserve the soil~resources of the U. S. Section 8, clause 1, of the Constitution 

of the U. S. confers upon the Congress the power “to lay and 

collect taxes, duties, imposts, and excises, to . :. . provide 

for the . . . general welfare of the United States; . . .I1 

The power exercised by the Congress in the establishment of the 

Soil Conservation Program is the power necessarily implied from 

the power thus expressly conferred by the Constitution, to wit, 

the right to expend the “taxes, duties, imposts, and excises” 

collected for the purpose of promoting “the general welfare of 

the United States”. 

It may well be doubted that the distribution of the 

fertilizer in Texas by the A.A.A. constitutes a “sale”, within 

the purview of our State laws. It would seem that the fertilizer 

is “granted” to the farmer in advance of performance of the conditions entitling him to a cash grant or payment; that the fertilizer grant is in lieu of the cash grant, and that the price 

or value of the fertilizer. is established in order that the 

amount of cash to be deducted from the cash grant or payment may 

be determined. Whether this constitutes a sale, within the meaning of the Texas law, we find unnecessary to determine, for we 

are of the opinion that, even though the transaction is a sale, 

the inspection tax or fee cannot be collected from the Federal 

agency. 

It is a familiar princi le established since McCulloch 

v. Maryland, 4 Wheat. 316 (U.S. 1 8 193, that the States cannot 

interfere with, burden or impede the Federal government or its 

authorized instrumanta~ities in the exercise of any of the powers vested by the Constitution of the United States in the Congress of the United States. The principle has been announced 

most frequently in those cases involving an attempt to collect 

a State tax from a Federal instrumentality. 

equal application to the enforcement of State 

It has, however, 

regulatory laws 

against Federal instrumentalities. Johnson v. 

51; Hunt TV. U.S., 

Maryland, 254 U.S. 

278 U.S. 96; Arizona v. California, et al, 283 

U.S. 423; Ohio v. Thomas, 173 U,S. 276; Easton v. Iowa, 188 U.S. 

220; Ex parte Willman, 277 Fed. 819; Posey v. T.V.A., 93 F.(2) 

726; United States v. Query, 21 Fed.Supp. 784. ~. 
./. ^ 

Agricultural & Mechanical College of Texas, page 5 (O-4617) 

The exaction presently involved is an inspection fee, 

rather than a tax. But whether it be a tax or an inspection 

fee, an exertion of the taxing power or of the police power of 

the State, it operates directly and immediately upon the Federal instrumentality in the exercise of the power conferred 

upon it by the Congress, and directly burdens the lnstrumentality in the exercise of that power. The agency of the United 

States is immune from and cannot be required to pay the fee or 

tax involved. 

The fee or tax cannot be justified by reasoning that 

there is no real burden because the instrumentality might pass 

the fee or tax on to the farmer by increasing the price of the 

fertilizer, or might require those from whom it purchases the 

fertilizer outside of the State to comply with Texas regulations. 

Tstith equal plausibility every state tax on Federal activities 

might be justified by the observation that no real burden exists 

because the amount of the State tax may be passed on by the Federal government through the collection of increased Federal 

taxes. 

The situation here is not to be confused with the cases 

where the burden or regulation affects the Federal instrumentality only remotely or indirectly, as in the case where the tax 

or regul&tion operates directly upon a private person or corporation not an instrumentality or agent of the Federal government. 

See Alabama v. King & Boozer, 314 U.S. 1; James v. Dravo Contracting Co., 302 U.S. 134. Thus a private person, firm, or 

corporation selling commercial fertilizer to the Agricultural 

Adjustment Administration in Texas is subject to its laws; the 

fact that the sale is made to the Federal instrumentality does 

not clothe the vendor with the immunity possessed by the vendee. 

Likewise, we are not to be understood as holding that 

employees of the United States and its agencies secure a general 

immunity from State laws while engaged in the performance of 

their duties. Such State regulations as affect only incidentally 

the mode of carrying out those duties may well apply to the emplz;e;~s of Federal Instrumentalities (see Johnson v. Maryland, 

; the.immunity, however, does extend to those regulations 

which directly impede or burden the employee in the discharge 

of his Federal duties. 

APPROVED JUL 13, 1942 

/s/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

APPROVED: OPINION COMMITTEE 

BY: BWB, CHAIRMAN 

RWrmp:wb 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By /si R. W. Fairchild 

R. W. Fairchild, Assistant