i 

OFFICE OF THE ATTORNEY GErfRAL OF TEXAS 

AUSTIN 

GROVER SELLERS 

ATTORNEYGENER*L 

Hpnorable Durwood Manford 

Chalrattn, COimSlttee on Highways and R&da 

Rousa of Repreaentativea 

.Porty-ninth Legislature 

Austin, Texas 

Dear Mr. MarUmd: 

We are in raaaipt 

reading as iollowa: 

cf February 13, 1945, 

memorandum cpirlion 

ed Statea and 

1 Counaal of the 

of L3teaam with 

old to the F&era1 

~~~dtheR*dsC-ltteeTbthaRouse,it 

Fe ated If you would give this matter your 

advise this Committee if it would ba possible 

e of Texas to collect a tax on gasoline sold 

within the State of Texas to agenolas of the Federal 

0 overnaent . " 

Prior opinions oi this department have dealt with the 

question presented in your latter in ona fm or another, and 

from these ve think asg be gathered what ve aonaeive the law 

to be upon the right of' the Stete to levy and oollect the 
Honorable Durwood Hen?ord, page 2 

motor fuel tax (Artlale 706513, V.A.C.3.) f'rom the Federal Government or the instrumentalities thereo?. 

We stated in opinion lo. 0-5309-A, tha Sollowing: 

"Motor fuels sold to and used by federal agencies: 

Sea. 2(d) of the Notor Fuels Tax Aat (Art. 7??6$,V.A.C.S.) 

provides in part as follwat 

"Wo tax shall be lmpoaed upon the sale, uao, 

or distribution o? any motor fuel, the imposing of 

which vould oonstltute an uulaw?ul burden on interstate 

commerae and vhiah is not subjeot to be taxed under the 

Constitution of the State of Texas and the United Stated.1 

"Although large inroads have been made on the doaWine of inter-govemmental tax 1maunltV as establishad 

by Chief Justice Narshall in the attao of NaCullooh v. 

Maryland, 4 Wheat 316, 4 U. 8. 579 (L. Ed.), the dootrine 

at111 persists at least to the extent o? affording Immunity 

from state taxation to the iederal government itrel? and to 

thore federal agenoiea and lnrrtruwntallties vhlah Congress 

haa ahoaen to dealam tax exempt, Pitt&an v. B. 0. L. C., 

308:IJ. S. 21, 84 L. Ed. 11, 60 Sup. Ct 15. Typiaal of 

the latter type of agamy is the De?en& Plant Corporation, 

vhioh is Sea. 610 of Title 15, U.S.C.A., the Oongrair has 

dealared to be exempt fraa all sales, use, aterage and 

f~~haae taxes lmpeaod by any atits or politlorl 8ubdlviWe are of tha opinion that this doatriw and the 

abovi quoted provision o? OUF tax statute preolude the 

lapositlon of our motor fwl8 tax upon aales or uaea by 

the fsderal gwernwnt and by federal l gemS.ea and lnstruwntalltlea whlah Cowess has exemptad. ConaequentlV, 

you are reapeatfully advised that DO tax should be levied 

or aollsated upon such aalsa or usea.” 

Briefly stated, this opinion pronouwes the law to be: 

The tax cannot be assessed and aolleoted ?rom the Federal ffovernwnt and the agemiss therao? if Congmsa has expreaslf exewted 

the Federal Government and Its agenoies from the tax. %?eVW, 

aa stated in opinion No. O-5995, in thoae instanaea where Congress 

has expressly aohssnted to the imposition o? the tax, a8 ia done 

by the Buok Amendment of the Hajden-Cartwright Federal Aid Aat 

with respeat to motor fuel sold "post exahange8, ship 8tore8, 

ship service stores, oomd.ssarles, filling atationa, licensed 

traders, and other similar agenalea, located on United States 
Honorable Durwood ?&n?ard, psge 3 

mll%taFy or other rasemtions, vhm awh fuels ama not ?m 

$8 emlwlve use of the Dnlted 9totoa," the tax may ba ootlmt- 

. Then, ia thWe?are nodoubt oithe~lght ofthe State to 

impose this tax upon the F&e~l Ga*ewnt aa lta agemiea 

by aonsnaaiowl grant, but vhere this right baa km l x p r ~a a iy 

vithhald by Cmgreaa, or thr Lagialstw has emmrded en axsoption, ths tax aaunot be asaeaaad or ‘oolleatod by the Stata. 

There is a third pwslbilitjr, not covered by tha tvo 

amtlngewlaa noted above, that la, ubme tbre baa bean wit-p 

a awgmaaiowl grant OF the vlthholdiug theno? ampreaaly de0leFul by C00gna5, or an 8xpnaaed l xu8ptim In the at&a atatutea, but the Wauuity Tram the tax, I? any, must nat upon the 

Carrtltutlm Itself, to vhlah vo next turn our attention. 

3eatiw 2a of our motor fuel taxing atetute pr?aadea 

in part 58 follcarar 

*There ah811 be and I.8 herrby levied mxl 4088d 

(eaooptae her8ina?terprovld8d) upaatha rlntulo, 

dfatr%butlen OF we a? motor fwl In this State an 

ououpatbnal ur exalao tax ef Four (4) oonta per mllaa 

or hvatlowl part thena? as rold, diatr)ikrkd, or wed 

in this Stak. . . 

tex levied herein et the SQUWUW a? aald Ilotm fwl in 

Texea or as sum theroaftep as the aaaa mw be aubdwt 

to bei& tax8 a. . . . #a!pbaals adaed) 

m pertlwnt ltxpay in thla aonwattota iar Whom 

does the legal lwldense s? the tax mat? It 18 ritbin tha 

exelwive prwinue of our supreme Court to detema&w t-his qwatien. Alabaw v. Klug & Booaer, Suprow Court o? the UnLted Stata, 

86 L. Ed. 1. 0th suprom~ court ln the uaae of State v. City of 

El Paso, epwking through JwtLoe Ctita, WLd: 

@Fras the se-1 statutm prarialQW lt S.a 

evidsnt that the lagialative intent, as expruaed 

ln ths ebo*e statutes, La to Lowe a wmtor ?wl tax 

of four abnta par gallon on the first ml.0 e? 8atOr 

fwl, where awh fwl la WetWllY sold in lka8. It 

1s further evident that the La~lalatun intended to -we 
Honorable Durvood Manford, page 4 

a four oenta par gallon wer tax on all motor fuel 

used oh the pub110 highvaya of this State in Inatanaea 

vhera tha user obtains auoh motor fuel under auah olraumstanaes that no aatual sale thereof trahaalrea in 

When the statute by its terms Imposed a tax upon the 

first sale, first distribution or first use in this 3tato, it 

was deeaaa naoeaaary to uka oora emlrort vho la to pay tha 

tax. To this end the Legislature de&ad it expedient-to define 

oertaln terms wed in the Aot, and to those deflnltiona ve must 

adhere. We aovered this in our opinion Do. O-5995, Tram vhlah 

va quote as ?ollwat 

"We deem It helpful as ve proceed to note oertaln 

de?lnitlons oar&aimed in Art. 7065b-1, just aa the 

oourt did in the ocmalderatlon o? tha oaae a? State v. 

City o? El Paso, (Sup. Ct.) 143 S.W. (26) 366, in aan- 

*truing our motor fwl tax statute 55 it then,ex&atad 

and before it van amended. Nuah said in this aaaa is not 

luspprapriate in aonaidering our pvaaent statute. Tha 

oourt deemed it helpful to note tha deflnltlana aohta@ad 

in the aot, eapaolally the da?inltlon of the tax, vhZoh 

was the aaam as aontalwd in the present act, and is as 

?ollwa: 

"'An oaaupation or exaiae tax o? 4+? per gallon o? 

motor fuel or fraational part themof.' 

“The tax, by the exprasa language of the rtatute, is 

upon the first sale, first distribution, or firat we of 

motor fw~thla St- Our present statu~flnea a 

first sale thus: 

H*FIrat sale' shall mean the first sale or dlatrlbution in this State of motor tuel rafiwd, bleadad, imported 

into, or in any other manner, produced in, aaquired or 

brought into this State.' 
$onoraBa Durvood ManCord, page 5 

"who under the statute InltOItea a firat sale, .a 

diatr%bution or we o? motor fuel upon vhioh the tax ia 

levied? Tha statute anavera: (a) ldLatributort. Who 

is a idlstributorl? Again the atatute awwera aa 

?011wsr 

"lDiatributor shall mean and inalude every person 

lnthia State vho raflwa, dlstllla, manu?aaturaa, prodwea, 

blends, or oompounda motor fuel or blended amteriala, or 

in any other manner aaquirea OS poaseaaea motor fuel or 

blended material for the purpose a? making a first sale, 

we, or distribution of the same in this State; and it 

shall also lnolude every pdrean La this State vho ships, 

transports, or Imports any motor fuel or blended material 

into this State and makes the ifrat sale, we, or dlatribution o? aap)b in this State3 the said term shall also 

lnalude every person in this State vho prodwea 01 oolleata 

the liquid realdwnt of natural'gaa, ooansonl~ laaavn as 

drip gasoline, or vho la responsible for the praduatlon 

or foraiatlon tof said drip gasoline, lntentionall~ or 

otherw1ae, unless said produat is totally dostrayed or randered neutral as motor fuel or as a prodwt aapable of 

we as motor fuel in this State.' 

‘In order that there be no loophole for l aoape in 

thoae lnatanaea vhere the tax falls upon the firat we or 

dlatrlbutlon o? motor fuel as dlatlngtiahad ?8aa1 a I1 t 

sale, ve again look to oertain defInitiona OOntai!&a&%tha 

a+ -8a are as follwar 

'Ther term *user* shall be oonatrwd to mean any person 

who wea or aonaumea lllqw?iad gases’ and 'other llquld 

fuels* vithln this State in internal oombwion engines for 

the genarstlcm a? pover to prapel motor vehlalea upon the 

pub110 hlghvags of this State. 

*'*Matrlbutlon" shall mean and lnalude any tranaaotiona, other than a sale, in vhiah amerahip ar title to 

motor fuel, or any derivative of arude oil or natural gas, 

passes from one parson to another.* 

"'"Person" shall mean and lnalude every indlvldwl, 

firm, aaaaalaticn, aoint atoak company, ayndioate, aopmtnership, oorporation (public, private or av.anioipal), trustee, 

agenay or reaelver. t 

"@Dealer' ahall mean and inoludeevery person other 

than a distributor vho engages in the bualnaaa in this State 

of dlatributing or selling motor fuel within this State." 
I honorable BUIWOOCI NR~CIO~CI, page 6 

Conalatent vith the opinion oi Judge Crltr in the came 

of State v. City of El Pam, aupm, the tax la Lapoaod upon 

the first uae in this State In the aame aenaethat it la imposed 

upon the first sale In this Stete. In other vorda, a firat une 

is a statutory Sirat aale. The legal lnaidsnos of the motor 

f&i01 tax iS UpOU the U~tdfiKBte WMW or 0OxMUmer Of IIIOfiOrfbel 

upon the highvaya of thla State, and that the atatutorlly deflnad 

"dlatrlbutor" oi mwh.fuel ¶.a mwely au agenay of the State for 

the purpoee oi aUlng in the aolleotl0n of tha tex, except ln 

thoae iuatanoea where auOh dlatributor atight ltaolf be a flrat 

uaer vithln the purview Of the rtatute, In l wh aaae a dlatrlbutor might itself be sub@t to th@ ax. Swtlon (d) of the 

aut prOvIdea in part: 

"In the event thla Artiole la in oontliot vith the 

Constitution or any 1~ of the United Strtea vlth reaped* 

to the tax levied upon the first aale, diatrlbutim, or uae 

o? a&or ?uel in this Stek, then it ia hemby deolared 

to be the Intention of thta Artlole to lmp08e the tax 

levied herein upon the Fiat aubaeqwnt aalo, dlafrlbutlen, 

or uae cd' raid notm fuelvhio~ may bo 

texed." 

aubjeot to beiw 

Therefore, in view of the p~rtl)n O? Seat&on (d) 

gqod, aupn, ve think It my k aafe1T aaid that thaugh the 

*ale" of moto;l? fuel to the Foderel O~rnmvnt Q 8erkin Of 

it8 agendea sight ba tax oxeapt, it van the fntodtiorr oi thm 

Legialrtum to lev a tax on sly aubaequent "nale" or "uai" of 

auoh f-1 vhleh might o~natitutlomallP be taxed. We thluk there 

vod.d be &o. eonrtltutlanal prohibition agalnat~the taxing 0.f a 

"Tuunt~ aale or use Of motor fuel If the Federal Owerment or ta 8genalea vere not the aubjaot of the laoldenae O? the tax 

ma a dimat pwohaaer or vendee iOr it8 am Me. 

Swrlzlq brletly vhat ve have aomvh8t ted10ualP 

amid, the tax m@y be lmpoaed undel peolflo r ~ongr~aal~l gmnt 

UPOU a direat aale oc uae to tba Fedev814OvoX%Etent O? itcr agenalea, and amy not be impwod vhem Cangnea haa apeolfloal4 

forbidden the lmpoaltion o? the tax, 0~ the State has made au 

eroeptlon. But if noue of these oontlugermlaa exist, tba tax 

may not ba lmpesed~ upon dlreot aalea to the Federal ffOvernment or 

lta agenalea if the lnoldmwe of! the tax rest8 upon the Federal 

Oovernawnt or its agenalea aa the lmned5.atO vmdcm and user of 

the motor fuel for It8 dlreat use and benefit. But be)raud this, 
Bononblo IIurvood Hanford, page 7 

when there la a flrat male or float use, not ao reatrloted, a 

tax may be lmpoaed upon such vendee or uaer. 

You aubmlt vlth your opinion request a oopy of the 

ruling of the Comptroller General of the United States upon the 

lav of North Dakota aa la ao ably diamaaed by the Supreme Court 

of that atate and alao oomenta from the general oounael of the 

Sflghvar Department of the State of Lwlalana am appllaable to 

the aale of motor iuel ln thoae atatea, and ve take the liberty 

of pointing out the dlatlnotlon betveen our lav and the law of 

lorth Dakota and Leulaiuu. 

Briefly at&ted, the dlatlnetion la thlar the legal 

incldenoe pt the tax uuder the North Bkota law la upon the 

vendor and Is lmpoaed prlmarlly em an oooupatlon tax, vlth the 

privilege of sddlng the tax to the price for vhloh the dealer 

aella the gas, whorear under our Icw the legal lnoldenoe of the 

tax la upon the flrat vendee or the first uaer a? the gas for 

uae upon the publla highwaya. To expreaa it another way, the 

tax la upon ~the flrat male or the ilrat use ln this State legally 

aubjeot to the tax. Am arid by Judge Crlta in the earno of State 

v. City OS El Paao, aupra, for the purpose of our tax, ilrat 

male and firat uee mean the aune thing. In other vorda, am said 

by hlm, Slrat we is a statutory flrat arle. It la, therefore, 

apparent that the declalve faotor ln the lorth DPkot.8 lav la 

that the lnoldenae of the tu la not upon the vendee but upon 

the vendor enqged in the oooupation of aelllng gas . It la manlfeat that ii the North Dnkota law had plaoed the lnoldenoe of 

the tax upon the vendee and the Federal Oovernwnt should be 

the vendee 5~ the purabaae o? gas for lea uae. then oenatltutional dltflcuitles vould have been emoountered, and no doubt 

the proneunoement of the law dlffeawmt. The general oeunael of 

the Highway Depmtaent of Louislana stated that the altuatlon 

in that atate warn cllmllar to that in North Dakota; henoo the Law 

would be the ma&w. 

Polntlng eut the dlatlnotien betveon the law In our 

State and Barth Dakota and Louisiana la an far am ve feel at 

liberty to go In attempting to 

tun tb roliow in any prophmd 

lay down a rule for the Leglalaleglrtstlon upen the subject. 

LPL/JCP 

Very truly youra, 

ATTONNHY PlsBHIuL OF TZtAS