i

OFFICE OF THE ATTORNEY GErfRAL OF TEXAS AUSTIN **GROVER SELLERS**  **ATTORNEYGENER*L** HpnorableDurwood Manford Chalrattn,

COimSlttee

on Highwaysand R&da Rousa of Repreaentativea .Porty-ninth

Legislature Austin, Texas
Dear Mr. MarUmd:

We are in raaaipt readingas iollowa: cf February 13, 1945,

memorandumcpirlion 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 0overnaent

." Prior opinionsoi this departmenthave dealt with the questionpresentedin your latter in ona fm or another,and from theseve think asg be gatheredwhat ve aonaeive the law to be upon the right of' the Stete to levy and oollect theHonorableDurwood Hen?ord,page 2

motor fuel tax (Artlale706513, V.A.C.3.) f'rom

the Federal Government or the instrumentalities thereo?.
We stated in opinionlo. 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 distributiono? any motor fuel, the imposingof which vould oonstltutean uulaw?ul**burden** on interstate commeraeand vhiah is not subjeot to be taxed under the Constitutionof the State of Texas and the United Stated.1 "Althoughlarge inroadshave been made on the doaWine of inter-govemmental tax 1maunltVas establishad by Chief JusticeNarshall in the **attao** of NaCulloohv. Maryland,4 Wheat **316, 4**  **U. 8.**  579 (L. Ed.), the dootrine at111 persistsat least to the extent o? affordingImmunity from state taxationto the iederal governmentitrel? and to thore federalagenoieaand 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 Oongrairhas dealared to be exempt fraa all sales, use,aterage and f~~haae taxes lmpeaodby any atits or politlorl8ubdlviWe are of tha opinion that this doatriw and the abovi quoted provision o? OUF tax statute preolude the lapositlonof our motor fwl8 tax upon aales or uaea by the fsderalgwernwnt and by federal l gemS.eaand lnstruwntalltlea whlah Cowess has exemptad. ConaequentlV, you are reapeatfully advised that DO tax shouldbe levied or aollsatedupon such aalsa or usea.” Briefly stated, this opinionpronouwes the law to be: The tax cannot be assessedand aolleoted ?rom the Federal ffovernwnt and the agemiss therao? if Congmsa has expreaslfexewted the Federal Governmentand Its agenoies from the tax. %?eVW, aa stated in opinionNo. O-5995, in thoae instanaea where Congress has expresslyaohssntedto the impositiono? 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 similaragenalea, located on United StatesHonorableDurwood ?&n?ard,psge **3**

mll%taFyor 

### otherrasemtions, 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 imposethis 

### tax upon the F&e~l Ga*ewnt aa lta agemiea by aonsnaaiowl grant, but vhere this right baa km l xp r~a aiy vithhaldby Cmgreaa, or thr Lagialstw has emmrded en axsoption, ths tax aaunot be asaeaaad or ‘oolleatod by the Stata. There is a third pwslbilitjr, not coveredby tha tvo amtlngewlaa noted **above,** that la, ubme **tbre** baa bean wit-p a awgmaaiowl grant OF the vlthholdiugtheno? ampreaalyde0leFulby C00gna5, or an 8xpnaaed l 

## xu8ptimIn 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

*Thereah811 be and I.8 herrby leviedmxl 

### 4088d **(eaooptae** her8ina?terprovld8d)upaatha rlntulo, dfatr%butlenOF 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 leviedherein

## 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 aonwattotaiar Whom does the legal lwldense s? the tax mat? It 18 ritbin tha exelwive prwinue of our supremeCourt 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 throughJwtLoe Ctita, WLd:

@Fras the se-1 statutm prarialQW lt S.a evidsnt that the lagialativeintent,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 intendedto -weHonorableDurvood 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 olraumstanaesthat no aatual sale thereof trahaalreain

When the statute by its terms Imposeda tax upon the first sale, first distribution**or** first use in this 3tato, it was deeaaa naoeaaaryto uka oora emlrort vho la to pay tha tax. To this end the Legislaturede&ad it expedient-to define oertalnterms wed in the Aot, and to those deflnltiona ve must adhere. We aovered this in our opinionDo. O-5995,Tram vhlah va quote as ?ollwat

"We deem It helpful as ve proceed to note oertaln de?lnitlonsoar&aimedin Art. 7065b-1, just aa the oourt did in the ocmalderatlono? tha oaae a? State v. City o? El Paso, (Sup.Ct.) 143 S.W. (26) **366,** in aan- *truing our motor fwl tax statute55 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 deflnltlanaaohta@ad in the aot, eapaolallythe da?inltlonof the tax, vhZoh was the aaam as aontalwd in the present act, and is as ?ollwa:
"'An oaaupationor exaiae tax o? 4+? per gallon o? **motor** fuel or fraationalpart themof.' “The tax, by the exprasa languageof 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*FIratsale' 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.'$onoraBaDurvood ManCord,page **5**

"who 

### underthe statute InltOIteaa firat sale, .a diatr%butionor we o? motor fuel upon vhioh the tax ia levied? Tha statuteanavera: 

### (a) ldLatributort.Who is a idlstributorl?Again the atatuteawwera 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

### manneraaquireaOS poaseaaeamotor fuel or blendedmaterial **for** the purpose a? making a first sale, we, or distributionof the same in this State; 

### and it shall also lnolude every pdrean La this State vho ships, transports,**or** Importsany motor fuel **or** blendedmaterial 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 responsiblefor the praduatlon or foraiatlon

tof said drip gasoline, lntentionall~ or otherw1ae, unless said produat is totallydostrayed **or** randered neutralas motor fuel or as a prodwt aapable of we as motor fuel in this State.'
‘In order that there be no loopholefor l aoape in thoae lnatanaeavhere the tax falls upon the firat we or dlatrlbutlono? motor fuel as dlatlngtiahad?8aa1 

### a I1 t sale,ve again look to oertaindefInitionaOOntai!&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 'otherllquld fuels*vithln this State in internaloombwion engines for the genarstlcma? pover to prapel motor vehlalea upon the pub110 hlghvags of this State. *'*Matrlbutlon" shall mean and lnaludeany tranaaotiona, other **than** a sale, in vhiah amerahip ar title to motor fuel, or any derivativeof 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 dlatributingor sellingmotor fuel within this State."

# I honorableBUIWOOCI NR~CIO~CI,

page 6

Conalatentvith 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 othervorda, a **firat une**  **is a**  **statutory Sirat**  aale. The legal lnaidsnosof 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 aolleotl0nof tha tex, except ln thoae iuatanoeawhere auOh dlatributoratight ltaolfbe a flrat uaervithln 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 oontliotvith the Constitutionor any 1~ of the United Strteavlth 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 Intentionof 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~thetaxing 0.f a
"Tuunt~

aale or use Of motor fuel If the Federal Owerment or ta 8genalea vere not the aubjaot of the laoldenaeO? the tax ma a dimat pwohaaer or vendee iOr it8 am Me.

Swrlzlq brletlyvhat ve have aomvh8t ted10ualP amid, the tax m@y be lmpoaed 

### under l peolflo ~ongr~aal~l gmnt UPOU a direat aale oc uae to tba Fedev814OvoX%Etent O? itcragenalea, and amy not be impwod vhem Cangnea haa apeolfloal4 forbiddenthe lmpoaltiono? 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 Oovernawntor its agenaleaaa 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 lmpoaedupon such vendee or uaer.

You aubmltvlth your opinion requesta oopy of the ruling of the ComptrollerGeneral 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

Departmentof 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 dlatlnetionla thlar the legal incldenoept the tax uuder the North Bkota law la upon the vendor and Is lmpoaedprlmarllyem 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 lnoldenoeof 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 ~theflrat 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 statutoryflrat arle. It 

### la, therefore, apparent that the declalve faotor ln the lorth DPkot.8 lav la that the lnoldenaeof the tu la not upon the vendee but upon the vendor enqged in the oooupationof aelllng gas . It la manlfeat that ii the North Dnkota law had plaoed the lnoldenoeof the tax upon the vendee and the Federal Oovernwnt shouldbe the vendee 5~ the purabaae o? gas **for** lea uae. then oenatltutional dltflcuitles vould have been emoountered,and no doubt the proneunoementof 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 dlatlnotienbetveon 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