February 20, 1950

Hon. Jimmy P. Horany, Chairman Subcommittee on Revenue and Taxation Revenue and Taxation Committee House ofRepresentatives 51st Legislature Austin, Texas Opinion No. V-1909; ..! Re: The adequacy of designated. provisions in House Bill No. Dear Sir: 7. 51st Leg., 1st~C.S.. 1950.

Your request for an,opinion reads as follows: “The Committee desires a general ruling from your Department as to the.sufficiency and general adequacy of the term ‘gathering’ as defined inSubdivision 2 of Section 1. page 2of this bill, and also.as to the adequacy of Section 2. page 4 in preventing the tax imposed by this bill from being passed on to the producer.”,Subdivision 2 of Section 1of House Bill No. 7reads as follows:

“(2) ‘Gathering’ gas shall mean the first, taking

or acquiring of custody, possession, title or control. in Texas, from the producer of gas produced in this State. after the severance of such gas from the earth, and after the passage of such gas through any separator, drip, trap or meter that may be located at or near the well, and prior to its admission into any transmission line for any purposes whatsoever .except those herein provided. Provided that in the case of gas containing gasoline or liquid hydrocarbons that are removed or extracted in commercial quantities at a plant by scrubbing, absorption, compression, or any,similar process, the term ‘gathering gas’ shall mean the first taking or the first retaining ofpossession of such gas for transmission through a pipe line after such gas has .passed through the outlet of such plant.” Section 2 of the Bili reads, in part: .’

### Hon. Jimmy P. Horany, Page 2(V-10’09)

“Provided that the,tax herein levied being strictly a privilege tax for the privilege of engaging in such business of gathering gas produced in this State shall in no case be deducted from any payments due by gath

### erers to producers of gas.” It is fundamental that laws must be certain and definite in order to be valid. 3

In State v. International and G. N. Ry. Co., 107 Tex. 349, 179 S.W. 867 (1915), the Supreme Court said (at page 868):

“The provisions of the acti in order for it tobe enforceable, should be plain enough in meaning for those operating the industry affected by it toknow and realize whether 

### byengaging inan act of repair they would breach its terms. Ifthe act meets and fulfills the requirements of this rule, it would be sufficiently definite in meaning tobe operative. Ifit is not sufficiently plain in meaning for those engaged in the line of industry affected to so understand its terms and provisions, then the act would and should be held void for uncertainty, as itwould be inexcusable for a government to fine or punish its citizens for an infraction of a law which in its terms could not be understood by them. But it is equally true that, if the act of the Legislature is as definite in meaning as the nature ofthe subject would allow, no more than this should be expected to meet the rule ofcertainty required; to hold otherwise would be to nullify the power of the.Legislature to legislate at all on a proper subject for its consideration.” The word “gathering” as used in House Bill No. 7is defined in language that is specific and definite and its meaning can be clearly understood.

Subject to constitutional restrictions the Legislature has the inherent power to determine the persons, property, and privileges to be taxed, the mode, form and extent of the tax, and the manner and means of enforcing the tax. 51 Am. **Jur.** 73, 85. 432, Taxation, Sets. **43, 55,**  **409.**

The Supreme **Court** ofAlabama is upholding a provision in **a** sales tax **statute** requiring the retailer toadd or “pass on” the amount of the tax to the sales price said:

“The taxpayer, the seller, is charged with the mandatory duty to’add the amount of the tax to his sales price, and to collect itfrom the purchaser alongHon. Jimmy P. Horany, Page 3,(V.-10.09) ,:. .~

with the sales +Pice.
.‘Hi?has’,all then a&hority:to coi- so lect this added sum whiclrhe has to c.ollect,.his. sales price. The flaw intervenes”and adds the amount of’the sales. tax which th’sseller must pay to the state to the .’ price he niust collect from the purchaser.” Doby v. State Tax Commission, 234 Ala. 150. 174 So. L33. 237 * (Emphasis adaed throughout.) ‘
. The Supreme **Court** of Illinois has upheld a statute providinn~that the’retailer could not collect the retailer’s occunation tax from the purchaser. Thatxurt in People’s Drug Shop v;,tioysey, 384 111.283, ~51N.E.2d 144, 146 (1943) , said: -



# I

(. *

. a . that the tax imposed is upon retailers an& .i ~. not upon consumers, and that the sole duty of paymg the **tax,rests** upon the former. Itfollows necesSarily
.‘
. that plaintiff was without legal authority to collect fro&~ its customers: the defendant. -then challenged item& in’& invoices representing additional charges ftii retail&s occupation taX;” -. Section 2 ofthe Bill piovides that the gathering tax cannot be ‘passe8 on” to the producer. erer ” The implication is that the “gathmust either absorb the tax or “pass it on” to the transmission pipe line operator to be ultimately’assumed by thenconsumer:

.Itis our contilu&on that the terniinology of Subdivision 2 of Sectioti~ l~and’~of Section 2 of the Bill is Sufficient to d&&mine the legislative intent and i$ adequate toaccomplish the purl&e’s for which they were‘ included in the 5ill. The 1egislatiLe inter+, when ascertained, is the law. City ofWacb v. McGraw. 127 Tex. 268. 93 S.w.2d 717 (1936); Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941; leave to file petition for mandamus denied 315 U.S. .8, 1.9’42); Thompson v. United Gas Corp.. 190 S.W.2d~504 (Tex. Civ. App. 1945. eirw 39 Tex. Jur. 166. Statu.tes. Sec. 90.

This opinion ISlimit&d tothe specific ~question asked and is ziiota Pulitig on the effecfiv~~&ss Orvalidrty of the Bill as’! who!&. ~.:. ::. * SUMMARY : t Subdivision 2 ofSection 1and Section 2 of H.B. No. 7, Acts’ 51gt Legislature, 1st C;S.,- 1950;relative~ to a’gas gathering tax, are sufficiently definite toa&er-

. .,Hon. Jimmy P. Hprany, Page 4 **(V-1009)**

tain the legislative intent and are adequate toaccom- .plish the purposes for which they 

### were inserted in the Bali Yours very truly, PRIGE DANIEL Attorney General
APPROVED: W. V. Geppert Taxation Division Assistant
Charles D. Mathews Executive Assistant
FL/mwb