OFFICE OF THE ATTORNEY GENER.lL STATE OF TEX*S 

JOHN CORNYN 

July 14, 1999 

The Honorable Carole Keeton Rylander 

Comptroller of Public Accounts 

Lyndon B. Johnson Building 

111 E. 17th Street 

Austin, Texas 78701 

Opinion No. JC-008 1 

Re: Whether a local government must collect 

sales taxes on beach user fees charged pursuant to 

chapter 61 of the Natural Resources Code and 

General Land Oftice rules (RQ-0003) 

Dear Comptroller Rylander: 

Chapter 61 of the Natural Resources Code authorizes local governments to charge fees for 

beach parking and the use of other beach facilities and services, see TEX. NAT. I&s. CODE ANN. 

5 61 .Ol l(b) (Vernon Supp. 1999), 5 61.070 (Vernon 1978) and authorizes the General Land Office 

to adopt rules governing these fees, see id. $5 61.001(l), 61.01 l(d)(4), 61.022(b) (Vernon Supp. 

1999). Your predecessor in office asked whether local governments that charge beach parking and 

other fees pursuant to chapter 61 and General Land Office rules must collect and remit sales taxes 

on the fees. We conclude that because the legislature has specified in chapter 61 that local 

governments may charge these fees only to cover the costs of discharging their beach-related 

responsibilities, that the fees may not exceed the costs of public beach facilities and services, and 

that these fees may not unfairly limit public access to and use of public beaches, see id. $61 ,011 (b), 

the legislature did not intend for persons paying these fees to pay sales taxes on the fees. 

Accordingly, we conclude that these fees are not subject to sales tax under chapter 15 1 of the Tax 

Code. 

Chapter 61 of the Natural Resources Code aftirms and protects the public’s “free and 

unrestricted right of ingress and egress to” beaches on the Gulf of Mexico. See id. 4 61 .Ol l(a).’ 

Since 1969, chapter 61 has recognized that local governments may assess “a reasonable fee for offbeach parking or for the use of facilities provided for the use and convenience of the public.” Zd. 5 

61.070 (Vernon 1978);*seealso Tex. Att’y Gen. Op. No. JM-345 (1985) (concluding that inclusion 

of authority to impose reasonable fee for off-beach parking in chapter 61 excluded authority to 

‘For a discussion of the nature of the public’s right of access to and use of Gulf of Mexico beaches, see, e.g., 

Feinman v. State, 717 S.W.Zd 106, 109, 111-12 (Tex. App.-Houston [lst Dist.] 1986, writ refd n.r.e.). 

‘NaturalResources Codesection61.070 derives froma 1969amendment to the statutory predecessor tochapter 

61. See Act of Sept. 9, 1969,61st Leg., 2d C.S., ch. 17, $ 3, 1969 Tex. Gen. Laws 128, 129. 
The Honorable Carole Keeton Rylander - Page 2 (X-0081) 

impose fee for on-beach parking). Furthermore, in 199 1, in recognition that “in order to provide and 

maintain public facilities and public services to enhance access to and safe and healthy use of the 

public beaches by the public, adequate funds are required to provide public facilities and public 

services,” TEX. NAT. RES. CODE ANN. 5 61.011(b) (Vernon Supp. 1999), section 61.011 was 

amended to authorize local governments that are responsible for the regulation, maintenance, and 

use of public beaches to charge reasonable fees “to cover the cost of discharging its responsibilities 

with respect to such beaches, provided such fees do not exceed the cost of such public facilities and 

services, and do not unfairly limit public access to and use of such beaches,” id.3 The Commissioner 

of the General Land O&e is required to promulgate rules on “imposition of beach access, user, or 

parking fees.” Id. 5 61 .Ol l(d)(4). A local government may not impose or increase public beach 

access, parking, or use fees “in any manner inconsistent with the policies of Section 61.011 or 

the rules promulgated thereunder.” Id. § 61.022(b). 

Pursuant to its rule-making authority under chapter 61, the General Land Office has 

promulgated rules authorizing local governments that have obtained state approval of a dune 

protection and beach access plan to charge beach user fees. See 31 TEX. ADMIN. CODE § 15.8(a) 

(1998). The rules define the term “beach user fee” as “[a] fee collected by a local government in 

order to establish and maintain beach-related services and facilities for the preservation and 

enhancement of access to and from and safe and healthy use of public beaches by the public.” Id, § 

15.2. For purposes of the rules, the term “beach-related services” means: 

Reasonable and necessary services and facilities directly related to the 

public beach which are provided to the public to ensure safe use of and 

access to and from the public beach, such as vehicular controls, 

management, and parking (including acquisition and maintenance of 

off-beach parking and access ways); sanitation and litter control; 

lifeguarding and lifesaving; beach maintenance; law enforcement; 

beach nourishment projects; beach/dune system education; 

beach/dune protection and restoration projects; providing public 

facilities such as restrooms, showers, lockers, equipment rentals, and 

picnic areas; recreational and refreshment facilities; liability insurance; 

and staff and personnel necessary to provide beach-related services. 

Beach-related services and facilities shall serve only those areas on or 

immediately adjacent to the public beach. 

Id. 

The General Land Office rules preclude a local government from imposing a fee “for the 

exercise of the public right of access to and from public beaches.” Id. 5 15.8(c)( 1). Rather, fees may 

be charged only in exchange for services and must be reasonable: “A reasonable fee is one that 

‘Subsections(b) through(e) were added to section 61.011 in 1991. See Act ofMay 21, 1991,72d Leg., RX, 

ch. 295.5 5, 1991 Tex. Gen. Laws 1220, 1222. 
The Honorable Carole Keeton Rylander - Page 3 (JC-0081) 

recovers the cost of providing and maintaining beach-related services.” Id. Local governments must 

deposit beach user fees in a separate bank account and may use revenues only for expenditures for 

beach-related services. See id. 9 15.8(f)-(g). These rules include off-beach parking “to provide access 

to and from the public beach” as a beach user fee. Id. 3 15.8(c)(l). 

Your predecessor in office, noting that chapter 151 of the Tax Code, the Limited Sales, 

Excise, and Use Tax Act, applies to the State of Texas and its political subdivisions when they make 

sales that are subject to taxation, see Tex. Att’y Gen. Op. No. JM-987 (1988) at 4, specifically 

concluded that beach parking fees charged by local governments pursuant to chapter 6 1 ofthe Natural 

Resources Code are fees for a taxable service under chapter 151 of the Tax Code. As explained 

below, we conclude, based on the legislative purpose of chapter 61 of the Natural Resources Code, 

that beach user fees charged pursuant to chapter 61 are not subject to sales tax. 

As a court has noted in a recent case regarding taxation of services under chapter 15 1 of the 

Tax Code, our main focus is the language of the relevant statutory provisions: “The primary rule of 

statutory construction is that a court must look to the intent of the legislature and must construe the 

statute so as to give effect to that intent.” Rylander v. Associated Technics Co., 987 S.W.2d 947,949 

(Tex. App.-Austin 1999, no. pet.). Here, we believe, the proper focus of analysis is not chapter 151 

of the Tax Code, the provision governing sales tax generally, but rather chapter 61 of the Natural 

Resources Code, the statute specific to beach access and fees. See TEX. GOV’T CODE ANN. 9 

3 11.026(b) (Vernon 1998) (special provision prevails as exception over general). Based on the 

limitations on the amount and use of beach user fees in chapter 61, we conclude that the legislature 

did not intend these fees to be subject to sales tax. See id. 5 311.023(l), (5) (in construing statute, 

court may consider, among other things, object sought to be obtained and consequences of a particular 

construction);seealsoFeinman v. State, 717 S.W.2d 106, 109 (Tex. App.-Houston [lst Dist.] 1986, 

writ ref d n.r.e.) (relying on section 3 11.023 of the Government Code in construing nature of public 

beach easement under chapter 61 of the Natural Resources Code). 

Chapter 6 1 charges local governments with the regulation and maintenance ofpublic beaches. 

See TEX. NAT. RES. CODE ANN. $5 61.011(b), 61.015 (Vernon Supp. 1999) (local governments 

charged with adopting beach access and use plans); id. ch. 61, subchap. C (Vernon 1978 & Supp. 

1999) (beachmaintenance); id. ch. 61, subchap. D (county regulation oftraffic, litter and swimming); 

see also id. ch. 63 (dune protection). In recognition of the monetary costs associated with these 

responsibilities, chapter 61 authorizes a local government to charge fees “to enhance access to and 

safe and healthy use of the public beaches.” Id. 9 61 .Ol l(b) (Vernon Supp. 1999). Significantly, the 

legislature has strictly limited the amount and use of these fees. As noted above, local governments 

may charge these fees only to cover the costs of discharging their beach-related responsibilities. See 

id. The fees may not exceed the costs of public beach facilities and services. See id. Furthermore, 

these fees may not unfairly limit public access to and use of public beaches. See id. The General 

Land Oftice rules, which are consistent with chapter 61, limit a local government to charging beach 

user fees to finance beach-related services -services that ensure beach users’ health and safety. See 

31 TEX. ADMIN. CODE $5 15.2, 15.8 (1998). 
The Honorable Carole Keeton Rylander - Page 4 (~~-0081) 

Under ‘the Tax Code, the purchaser of a taxable item or service is liable to the seller for the 

tax as part ofthe sales price. S~~TEX.TAXCODEANN. 5 151.052(a)(l), (2) (Vernon 1992) (sales tax 

“becomes a part of the sales price” and “is a debt of the purchaser to the seller until paid”). Thus, if 

beach user fees were subject to sales tax, members ofthe public paying the fees would ultimately bear 

the burden of the tax. If required to collect sales taxes on beach user fees, a local government would 

face two choices, neither of which is consistent with the purposes of chapter 61. On the one hand, 

a local government could decide to increase amounts charged to the public, collecting more money 

than necessary to cover its beach facilities and services costs, and further burdening beach access. 

On the other hand, a local government could decide to maintain charges at current levels and remit 

a portion of its revenues to the state, thus collecting less than an amount adequate to cover its costs. 

Given that the legislature has specified in chapter 61 that local governments may charge these fees 

only to cover the costs of discharging their beach-related responsibilities, that the fees may not exceed 

the costs of public beach facilities and services, and that these fees may not unfairly limit public 

access to and use of public beaches, see TEX. NAT. RES. CODE ANN. $ 61 .Ol l(b) (Vernon Supp. 

1999), we believe that the legislature did not intend for persons paying these fees to pay sales taxes 

on the fees. Nor do we believe that the legislature intended to decrease the amount of monies 

collected by local governments, given that it expressly authorized local governments to charge these 

fees in recognition that adequate funds are required “in order to provide and maintain public facilities 

and public services to enhance access to and safe and healthy use of the public beaches by the public,” 

id. 

In sum, taxation of chapter 61 beach user fees under chapter 151 of the Tax Code is 

inconsistent with the purposes for which the legislature has authorized local governments to charge 

these fees. Accordingly, we conclude that beach user fees charged by local governments under 

chapter 61 and the General Land Office rules are not subject to sales tax. 

Finally, we note that your predecessor took the position that beach parking fees charged by 

local governments pursuant to chapter 61 oftheNatura1 Resources Code are subject to sales tax under 

section 151 .OlOl of the Tax Code, which specifically lists “motor vehicle parking and storage 

services” as a taxable service. See TEX. TAX CODE ANN. 5 151.0101(a)(4) (Vernon 1992); see also 

id. 59 151.010 (term “taxable item” means “tangible personal property and taxable services”), 

15 1.05 1 (a) (chapter 15 1 imposes a sales tax on each sale of a “taxable item” in this state). Noting that 

the General Land Office rules provide that a local government may not impose a fee “for the exercise 

of the public right of access to and from public beaches,” ~~TEX.ADMIN.CODE$ 15.8(~)(1)(1998), 

your predecessor concluded that beach parking fees are fees for “motor vehicle parking and storage 

services” under the terms of section 151.0101(a)(4). 

Subsection(b) of section 15 1 .OlOl of the Tax Code provides that the Comptroller “shall have 

exclusivejurisdiction to interpret Subsection (a) ofthis section.” TEX. TAXCODEANN. 5 15 1.0101(b) 

(Vernon 1992). As one court recently noted, however, “[t]he Comptroller has exclusive jurisdiction 

to interpret the scope of taxable services, subject to a reasonableness standard of review. See 

Hammerman & Gainer, [Inc. v. Bullock,] 791 S.W.2d [330,] 333 [(Tex. App.-Austin 1990,no writ)] 

(court is bound to accept Comptroller’s interpretation of scope of taxable services ifthat interpretation 
The Honorable Carole Keeton Rylander - Page 5 (X-008 1) 

is reasonable).” Rylander v. Associated Technics Co., 987 S.W.2d at 949-50 (emphasis added). “[A] 

court may accept the statutory construction of the Comptroller as long as the construction is 

reasonable and does not contradict the plain language of the statute.” Id. For the reasons explained 

above, we believe that a construction of section 15 1 .OlOl (a)(4) of the Tax Code that includes beach 

parking fees charged under chapter 61 of the Natural Resources Code within the meaning of “motor 

vehicle parking and storage parking services” is contrary to the intent of chapter 61 and is therefore 

unreasonable. 

We also note that the General Land Office takes the position that beach parking fees are not 

fees for “motor vehicle parking and storage services,” citing the “essence of the transaction” test 

developed by then courts to determine whether an item is subject to sales tax, as formulated in Sharp 

v. Direct Resourcesfor Print, Inc., 910 S.W.2d 535,538 (Tex. App.-Austin 1995, writ denied). The 

“essence of the transaction” test was developed by the courts in the 1970’s to distinguish between 

sales of intangible property, such as services, which were not taxable,4 and sales oftangible personal 

property, which were taxable. See, e.g., Bullockv. Statistical Tabulating Corp., 549 S.W.2d 166,168 

(Tex. 1977) (applying test to distinguish between tangible personal property and intangible property); 

Williams &Lee Scouting Serv.. Inc. v. Calvert, 452 S.W.2d 789,792 (Tex. Civ. App.-Austin 1970, 

writ ref d) (applying test to distinguish between tangible personal property and a service). Although 

the “essence of the transaction” test has been applied more recently to transactions that mix the sale 

oftaxable tangible personal property and nontaxable services,’ we are not aware of any cases applying 

this test to distinguish between sales ofnontaxable and taxable services, such as those listed in section 

15 1 .OlOl We do not need to resolve whether the “essence of the transaction” test is an appropriate 

method to distinguish between sales of nontaxable and taxable services, however, given that we 

conclude that beach user fees are not subject to sales tax on the basis of chapter 61 of the Natural 

Resources Code. 

‘Services were not subject to sales tax until 1984. See Act of July 3, 1984, 68th Leg., 2d C.S., ch. 3 1, art. 7, 

1984 Tex. Gen. Laws 193,222. 

‘See. e.g., Sharp v. DirectResourcesforPrinf, Inc., 910 S.W,2d535,538-39n.3 (Tex.App.-Austin 1995,wit 

denied); Comptroller ofPub. Accounts v. Austin Multiple Listing Serv.. Inc., 723 S.W.Zd 163, 165 (Tex. App.-Austin 

1986, no writ). 
The Honorable Carole Keeton Rylander - Page 6 (X-0081) 

SUMMARY 

Beach user fees charged by a local government under chapter 

61 of the Natural Resources Code and General Land Office rules, see 

31 TEX. ALIMIN.~ODE $5 15.2,15.8 (1998), arenot subject to sales tax 

under chapter 15 1 of the Tax Code. 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK KENT ERVIN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

Prepared by Mary R. Crouter 

Assistant Attorney General