OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

Eoaomblo Ooorgo Ii. Zhoppard 

Cc4mptroll~r orPubllr AoroIlntr 

Auatlti, mur 

nt end hereby 

thantor the 

MO he ha6 km 

a oarboa ccmpany r0r 30$ of the sarbon xzodr 

~0iiio the 781~0 or urid 30$ k taxer at 1004 

or money ta1u*9- 
onormblo Oeorp II. 'hopBird, l'8go 2 

In the altuatlon pre8ettt.d la thin quutlott the 

t-0d~03 p08bu0~ hi8 O*D gu, uheerarr thbn IS 80 

f the gU 88 

I880 It * 

upon tiOh th0 ~81118 th8nOr 

8M Ot8 O8OOOO8rl t0 l OOrt8itl tb0 VOlU Ot 

b l8 & .. lB produae6, MO b8for8 it im pro8uaeo la tk* g8aIiD8 Qhtttt, U&Or th. to-8 Of H. a. MO. 6 0881mkO4 

s fhb ‘O8OOll0 MOSUJI” Of RtdO 1 bt OtU Opl&t ii0. o-3516, 

hiOh -8&t 

=. . . l tty 8ua of monby t&t su8h gu la1 

H@sombl;l bTh# ii pPOdttO& a 8OMI 118 8000&den&e dtb th8 ?u18B 8ad ~tUl8t~OM Of thb 

%8tO.* 

h rtrtoa in raid opinion RO. 0.3516, 

%t 8ppliO4tlOht O? 6db rU& 1 (ChDOtd hrinltlon or tIarkrt Vslu8) l 811r for 8 dotorminatlon 

by tho CmDtron8r Or Pnbllo Aaootmt8 Or ‘IrI’kOt 

V8lU8', thst 18, the aorrgtrollor or Publlo Aooounte 

c tta l t ~~lnb 811 evmilrblo OTidOMO, inobtding 

881.0 ot OtbSr 08O b thb W8R8 688 r&Old, that 

chow or tend to ahow *market V8hO’ 8Pd rPar, that 

l Tid8nOO n8k O l riadiAg Or r8Ot U t0 Uhtth8r O? 

not thr g88 bM b68n 8014 for itG 'v&he Or Ub8t 

the g8O WOUid POMOM~ b?bg if it hsd kOtt 

produU6 end 801d i& l t OOal’08llOO With the 18W0, 

rti8o 8ld r8gUl8tioM 0f thi8 %8tO.* 

YOU 8t8tO that .th8 protailiag pri80 iCU tho 8-8 

ADO Or 880 itt thtI O-8 ii016 i@ 20$ O? th8 C880mO 8OatOat 

per oherooel te8t et thb pria qtrotod In l tr84o pabli~tloa 

pi~8 504 or thb TURBO 8810e. I? yw hrto icod that thla 

LB th8 #&8eOt VIM Or th0 go 10 th&8 fiOld, th0 %8X #had 

b6 b88Od Ott rueh t8lP8, 8tWl thOU@l it b0 bS8d Upoll &pglll'WitLy arbitrary ~mBum(l rueh 8B %ho guolltn owknt par ohm- 

~orl k8t* u16 tho prloo oi 88rollao nbloh 18 Wtotod Sa l 

tr 800 prb liUtiOII,î ir TUp b OtiV8 Or th0 8OtM i 8BOUd O? ICUallno ortraoted, or tho pfloo et rkloh tk ~rollae lm l O= 

truny rold. no ri8h to point out, hmnv8r. t hat th8 r00t 

tk ut l mjorlty of tha grs in mob flol4 18 balag so14 W8r 

long ten3 ooatr116ta whenun~or the proboor roooiv88 2ti of 

th8 gaBOlin by obroO81 tort 8ttd s* O? th8 rO8idm &8a 

B81O0 r&d iS ~810 rOr hlr 8hUt'8 Or tho gUOlitt0 8t th6 9riOO 

CuoteC in 8 tr8do prrblio8tlon. i8 I%Ot ll8OOlJO8rily dOtOMh8- 

tire of th6 present wsrk8t reluo 0t tkm cp8. The rrket volu 

, 

I 

;’ s 

.,: 

I \ 
Or tb ~88 dght OOfiO8iv8Uy mOhUt8, UlLhOU(& rO8T. Of 

tl:O gFi8 Ol?UthiU8d t0 be! SOid 8t ihOd priOSQ Wie8r 1~ 

ten1 0ontrsotS. A rSW TMMt OOIItr8Ot8 rOr th0 Ml0 Or 

l lmllrr eer ln the rlolnity would b@ l yore l oourate lndl08tiOtt Or &WOMttt r!8ri:8t T81UO thsn WUld th8 t8l’RS prodded la ooatrroto m8ar 88vu81 years 860 under rhloh roe 

or th8 ~88 in tb rl8id i. Still b8ing sold. r.'hara &a8 ir 

sol0 by the produou, h?r tox Ir baa04 upon his groor raoolptr therMor (88 prmi400 lo Ruls 3 or 4 or Oplnloa NO. 

0.3516) mgrrci88s 0r *OR h0 t34y h&r8 tmd ittt0 m0h 

COntnOt O? S818. Ir him ger 18 801a uno8r 8 low tom oontraot hi8 t82 till Oolitillltb t0 be band UpOn th8 t8h;B Of 

hi8 oontract, lrn89aotlto or fluotuotlonr ia th8 mrkot 

~011~0 Of tb8 g88 in #C riS& 3ut whom, u la the sltwtlon u&or oonalder8tiOn, th8 pxotluoor prooraaee hla om 

gcla, his t6r is to bQ owputed upoa the market rrlue of 

th8 Un9rO88SScO 588 On YOU FL8y filtd thu r&me to b @urine 

the eonth ior uhioh the tu 18 pOy8bh. Ir VU rhtc 8UCh 

market v8lU8 to bo a oompon8nt 0r Vo$ 0r the ~sollns content Fer OharC t@St 8t t)?@ p?iOO quOtd :II 8 tr8d8 publl08tiOCI 9lU8 so"5 Or the r88ioUO 80108". thMI YOU 8hOtm US0 

suoh r8OtOra in OUUpUtt8& mrkOt VtiU8. lf on the othu 

h8R6, you find the pm8OtLt RSrket Value Or tho UUpWO88Std 

,ras to b6 bared upon tho aotusl noorarg or grr8OllJi8 8t tho 

prloe ror wbloh it lo eotu8lly fold, then these 8r8 tlm propar ractoro for you to osnnl4or ln detcrv.lnin;; the mtrrret 

relum or the c88 8a produood. 

fh8 pHBVi8lOll8 Or th8 ?Oydty OOntrQOt8 8rO ContWJlllUg 88 t0 t&O Teh~ Or t)\8 l&h royelty int8mUt, bUt 

‘%a prlae rtodln4 by th* royalty ownus would not naoesmrilf detomitie th0 38rk8t.V8lU8 Or the 108JSM'S 7/11th8 Of 

?OO 8IWWW8 t0 tir8t aOOond, thm doff rO%Wth 

~*~ozl in Opinion Ho. o-351& 

Tour problor h&a ln to G8tolmiw tho fiOrhbt t8luo 

Or tha 6US 8t the llrOUth Of th0 b8ll. tOU nf&ht fm tt8t 

them 18 8 ptw6ut n8rket r0r @em, 8s produoad, la this ii810 

rt a mm OOX't81fl pur thOiU6nd oublo t@Ot SR whleh 8B#8 YOU 

kay uw suoh taarkot reluo l 8 to gem whlnh 1s prooomed by 

the produou 8fl6 dlereg8rd 8~y erl8tlng oontraote r0r th8 

881~ 0r g88 providing for a por08ntegr 0r th0 g8aO1luO ana 

r881Cue g88 dultod th8rofron, ti 8rrlViOg 8t th0 181UR Ot 

the @Ml for t8X 9l.U&WBe8. 
t?OAOrablO George B. aoppm6, Pega 4 

6W8tiOA 2 

"ff nmidua i8 ~616 at b# per UC?, end thm 

prwhmmr ummm mom58 rboldue ln lmau op4rmtloa, 

would thm gem hm umem bm tmxmblo at I& or mt 21 

.MSuriA(L that ma16 pro&au noelTern SOB or tbm 

41 naldao 8ol.d by the opentorTw 

We 868utam that in thlo Oama tha prduoor mm118 

hio gam to thm oprmtor of the gmollna p lea t under l oontreat whereby the produomr nomlvmm l paraeatago ot t&m 

gmmolism aad other prodart extrmotml, plum ml1 of the 

remidum gmm whioh ho may am.4 far hmmm opmrmtlon, pl\rm 

pa% Of kbd pWWI68 fTOA the 88h Of the -8iAh& FSb~&IO 

gmm. IA roof3 mmme t!lm tmabl8 78h8 ot the gma 88 pro4ow6 

1s to be dmtmnalnm6 by the8 9ortloa of Xoumo Bill 8, Artiale II, edgm8a in our oplaiom 60. o-3516 mm +ule 4~. 

whloh nmdmr 

"IA oama the who18 or 8 part of the oonmidmr8tloA for tha 8818 O? gmm im aAY f)ortioa of WI. 

tmnluo tl s tr a o to d frar maah KM. thm tax l hmll 

km OonSptmd 011 the groom t81uG O? the produotm 

IO thim iA&tAWOe the ZOSiduS ~mm reOaiTOd by the 

pro&au from thr gamollnm plmnt 8A4 used by him iA lmmmo 

opontlon 18 onm ot tha *other thlngm OS tmlum rmamitmd*, 

IZOAti0A.d iA th. 8t8tUk. 2318 T88idUS 4f88, OM@8tSd et 

it8 a8rk.t tmlum (*ioh r*t Or AAl Wt bm thm 8mPI l 8 tho 

prior tor whloh the raaldam gee 18 mold by thr gmmollae 

91mA%) Will be OAS Ot thb i88tOl’8 iU dlt.Fdif~ t&e tUl ble rmlum or 8hm &mm *a8 pro4uma4'. 190 l rm am8aaiAg the 

this remidw gmm ummd by the probttmor iA lmrmm OpWmtiOn 

lm not klag injootod hi&a the l mrth ior mtormgm, rmprmmmuting Or lifttn(( Oil 80 (Lb t0 )aiAg it Withh the eX*wgiO8 

ot =rulm 6'. 

IA the mitU8biAA ~m@AtOd br yooru mOOtBAd QAm8tiOA 

t&a tmxmblo raho of thm gmm "mm poduoed~~ wiL1 bm the aw& 

ot the folloulsq ltaial 

(11 the gromm trlum or the produoer~m mhmn ot 

pmmoll~m and aehar 9rOdUOt8 oxtreatmd. 
no~o~Nm Oeorgm H. r'hmppmrd, ?mgm 5 

(2) Tar mwkot vmluo of 811 tb reelbum @a ummd 

by the produoor for lmmma opmrmtlon other thmn that la meted 

into thm l 8rth for l tormds, rmpremmur~~, or llftlag 0 i 1. 

(3) ?lttr pmrrmnt of the gomm prommmdm or thm 

ruidw (Isa mold br thm (86olbo PlaAk. 

“IA 0888 them 18 A0 mrkmt lOr 88id N8fda., 

mad I- WOUU br rmntmd fat0 t&m Sir 88 thr pi&At, 

would th0 U8m ot 9N.t Ot 8aSb F86idU6 by t&m m 

auoer at111 bm kxmbht It the e8 had bmmo t*ze& 

et the linbur rots ot U/l50 of l# per MCI et the 

nll he8d, would the rmmidum urn@6 by thm prduemr 

bm tared l dm1n?n 

Roplyiod to tha flzbt pmrt of four qumtioa, wm 

l mmunm t&t than is no carkot for 8 

-a 

ot thm rmmldw gmm, 

mlnmm 700~ et&to that mmmie of tha rmm w would k vauted 

into the l lr. Fornrome rmmldum &am uood bytbm prodwou 

ham a *urn* valuea to him, 88 it mmvmm him h6vl~d to buy Sum1 

or poumr la other fom, muoh a m l lsotrfsity, 011 or gmmollnm. 

numb ralum or tha realduo gem aoulcl bu A8trrafnmd bf the 

prmraillag prioom p8ld by otkrrm ;!I the field r0r 8lnilmr 

UM8. ?%boagh tb8FW bo 80 urket tor & ot the ramldaa gae 

l rm~lmbl8, 18 dOm8 aot r0u0w tkct the nmiduo 888 l otaully 

used by the produoar 18 vorthlua, or that bm would slvw 

awar rm8ldAr to him A814bbr rLtROUt Ohm-. CA3.J irr the 

went thmt you fit4 *a bmiryr ~gulmrly &rma l umt frme ln 

the tlold, should you oanmidmr th ?mmidum &mm used by 8 

produou In lmmmm opmrrtloa mm vmluelmm8. Shllm tha reel&urn 

gas ltmolt 1s not taublm, Oha trlum ot so a&eb thenof ae 

thv pro&soar wmb mhauld k tmkma Into rmoouAt ln l oputin~ 

the tmrmblm rrlw Of him &am %S pWdUmmdw~ 

M to Ohm momend par8 ot pur ahid quertima, um 

mmmuw that the minti tar he FOWL ~$6 br tb, parok8nr 

0A th0 born10 or hia Mtt~0BOAt with t&o prodamer. Am l ta t6d 

above, when the grodummr 88318 ki8 gme for 8 9mrmmatm6m of 

the produets l tr a o tomad d thm nmidw gem, t&m ralum at the 

gas 'se produoedg lo to bm o~patmd under 9~10 5. by tkm 

l tllc et tbruo ltmr (1) thm nl,w ot thm proAamer’8 mhmn 

or thm 1lqulAm l xtrmotbA, plum (2) the ~elmm OS the produomr~m 

l hmre of the n&i&w 8old, plum (3) the VmhIm ot tke rosidw 
Eoaorable Gaorgs 8. ?hopparQ, P8go 6 

used by the produ44r In 14444 oporstlon. rhir third itor 

should be 00n~ld4md 88 VUt O? th4 aC(gMg8t8 ~41~4 O? Oh8 

**rr -aa rnC rh4n produo4d’. Ii tb4 l & -x q r~81~4 t4 of the 

thr84 it4u 18 144 per Y.C.?. or 1081, t&4 hirlim\lr t8x 

of ll/lsO of 16 9ar M.C.? ., ~810 br th8 parohaB4r would be 

tha oorreot tax. Rat lf the mm of the thrro items bring 

th4 W1U8 Of tba 648 “88 probUO@d- t0 ISDr4 th8ll t.U# Per 

x.c.t., thmn tbo tar rOti k p8y8bh 8t 5.2s Of 8U8h V81U4 

bad the PrOdPOW WUld St111 OI the t8X Oli iUlJ V81UO Of 

th4 gas In 4xoe81 of l.bl# pu M.C.I. aftor the puroh488r 

hd ptdd tb4 &iniati kX. 

Yourr v4ry truly