Court Opinion

ID: 9770414
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:04:10.858144+00
Date Added: 2024-06-11T07:31:17.179435
License: Public Domain

GRAY, Justice
(dissenting).
I am unable to agree with the conclusion reached by the majority in this cause. In stating the reasons for my dissent I will refer to the Act as quoted in the footnote to the majority opinion giving only the numbers of the articles and the sections thereof.
Clearly the problem here is the same as stated in Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 74 S.Ct. 396, 401, 98 L.Ed. 583:
“* * * whether here the State has delayed the incidence of the tax beyond the step where production and processing has ceased and transmission in interstate commerce has begun.”
If the tax is on the production of gas then concededly it is valid. Utah Power and Light Co. v. Pfost cited in the majority opinion. To my mind it is such a tax.
Section (1) of Art. 22.01 levies the tax:
“ * * * on the occupation or privilege of obtaining the production of Dedicated Gas within this State, and on the business or occupation of producing such gas, * * * ”
Section (2) of that article provides the method for determining the market value of the gas, at the mouth of the well, for the purpose of the tax. Section (3) recites what the tax is as the terms are defined in the succeeding article. Section (4) fixes the liability for the taxes as that of the producer if produced for his own use or independent sale but if the gas is produced for or sold to a severance beneficiary then the tax shall be the liability of such beneficiary. Section (5) provides who shall pay the tax to the State Comptroller, and section (6) provides when the tax shall be due.
Art. 22.02 defines terms for the purpose of the Act. There producer, first purchaser, dedicated gas and severance beneficiary, with other terms, are defined. Dedicated gas and severance beneficiary are defined as follows:
*687“(3) ‘Dedicated Gas’ shall include all gas withdrawn from the lands or waters of this State for the use and benefit of a severance beneficiary.
“(4) ‘Severance Beneficiary’ shall mean any person for whose use and benefit gas is withdrawn from the land or waters of this State.”
Art. 22.03 to 22.07 are not of importance here and I pass to Art. 22.08 which I quote:
“Art. 22.08 Nonliability of producer
“The tax hereinabove imposed shall never be the liability or the obligation of the producer, except in those cases where the producer is the severance beneficiary as herein defined.”
At most the article merely states a condition or proviso as to the person liable for the tax, and, combining its terms with the definition of severance beneficiary, it means that the tax shall be the liability of the person for whose use and benefit gas is withdrawn from the'land or waters of this State. It is to be noticed, and said, that the tax is actually levied at the time the gas is produced and its value, for tax purposes, is determined at the mouth of the well. Then if the tax attaches at such time liability for its payment continues and can be discharged only by payment, the liability for which the statute fixes as that of the “person for whose use and benefit gas is withdrawn” — the severance beneficiary. Other persons such as those engaged in the physical task of bringing the gas to the surface are exempted from liability for the payment of the tax.
There is nothing in the Act that either requires or contemplates that the gas, when produced, shall be transported or sold into interstate commerce for which reason any such transportation or sale may be deemed as merely incidental. Wiloil Corporation v. Commonwealth of Pennsylvania, 294 U.S. 169, 55 S.Ct. 358, 79 L.Ed. 838.
In any event a first purchaser or a severance beneficiary takes the gas produced subject to the tax levied by Art. 22.01 and fixed by Art. 22.06. Otherwise a mere taking of possession of the gas produced, or the transfer of its possession, would avoid the tax levied on its production and which is made the liability of the severance beneficiary.
Other questions are raised in the briefs which are not decided by the majority. Suffice it to here say that in determining the constitutionality of the Act it is necessary to look to the meaning of the Act and to the meaning of the section of the Federal Constitution alleged to be violated. Duncan v. Gabler, 147 Tex. 229, 215 S.W.2d 155. And the spirit, purpose and scope of the constitutional provision áre all to be consulted to determine the. meaning of its terms. Aransas County v. Coleman-Fulton Pasture Company, 108 Tex. 216, 191 S.W. 553. While the commerce clause is given a broad and liberal construction and application and taxing cases are given little value in determining its meaning it does not deprive the states of their rights under their reserved powers. 15 C.J.S. Commerce § 6, p. 260, et seq. Here the question relates to the power of the State to levy a tax. As shown supra this tax is levied on gas produced. The Act does not deal with the transportation of such gas in intrastate or interstate commerce. However appellees say: they are pipelines engaged in the business of transporting gas in interstate commerce; also, are severance beneficiaries as defined by the Act, and that therefore their rights under the commerce clause are violated. The holding in Wiloil Corporation v. Commonwealth of Pennsylvania supra answers this contention.
It is my opinion that the tax here attaches when the gas is withdrawn from the land or waters of this State for the use and benefit of a severance beneficiary as that term is defined in the Act and that liability for the payment of the tax follows the gas. This irrespective of whether such gas *688is or is not transported in interstate commerce. Accordingly I would reverse the judgment of the trial court and here render, judgment upholding the Act.