Court Opinion

ID: 4137778
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:28:49.997591+00
Date Added: 2024-06-11T14:44:56.128709
License: Public Domain

Hon. Robert S, Calvert             O&ion    No, V-994.
Comptroller   of Public Accounts
Austin, Texas                      Ret   The authority of the Comp-
                                         troller to collect gross re-
                                         ceipts tax from the El Paso
                                         Natural Gas Company under
Dear Sir6                                facts submitted.

            Your request   fot an opinion reads tn part1

            “Please advise me if under the following facts
      the El Paso Natural Gas Company is subject to the
      gross receipts tax provided for under Article 7060,.
      R. C. S, 19250

             “The Company has five industrial   customers
      within the State of Texas, as follows-

              “1 - Phelps Dodge Corporation (successor  to
      Nichols Copper Company) under a renewal contract
      dated February 20, 1939 (effeotive June, 1941) for a
      term expiring December 4, 1951. This contract is in
      renewal and extension of an original contract dated
      June 19, 1929 between El Paso Gas Utilities Corpora-
      tion (later assigned to El Paso Natural Gas Co.) and
      Nichols Copper Company (later assigned to Phelps
      Dodge Corporation).

            “2 - Standard Oil Company of Texas under a re-
      newal contract dated March 6# 1947 for a term expb-
      ing March 5, 1952.

             “3 - The Texas Company under a renewal con-
      tract dated March 17, 1947 for an additional term of
      five years,

             “4 - American Smelter 81Refining Company un-
      der a renewal contract dated January I, 1948 for a term
      of ten years.

             “5 - Southwestern Portland Cement Company un-
      der a renewal contract dated May 23, 1945 for a term
      of five years,
Hon. Robert    Se Calves&   Page 2 (V-994)

             “6 - In addition, residue gas is sold to Sid Rick-
      ardson Carbm     Co. for utilization in its carbon black
      plant in Ector County under contract dated Novembar
      24, 1948 for a term ending December 31, 1953.

              -Prior to Aprdl 1, 1948 none of the industrial
      customers were located in the City limits of El Paso.
      Effective April 1, 1948 the city extended its limits so
      as to include three of the plants,‘”

              Article   7060, V.C.S,,   reads in part:

            “Each individual, compsny, corporation,     or asso-
     ciation owning, operating, managing, or controlling any
     p/ o a , works 0 0 0 located within any incorporated     town
     or city i-State,       and used for local sale and distri-
     bution in said town or oity, and charging for such gas
     -11
     o.os       make quarterly, on the first day of January,
     April, July, and October of each year, a report to the
     Comptroller    under oath . e (1showing the gross amount
     received from such business done in each such incor-
     porated city or town within this State in the payment of
     charger for such gas OOo for the quarter next preced-
     ing. Said individual, company, corporation,     or associa-
     tion, at the time of making said report b , 0 for any in-
     corporated town or city of ten thousand (10,000) inhab-
     itants or more, aocordlng    to the last Federal Census
     next preceding the’filing of 8ald report, the said individ-
     ual, company, corporation.     or association, at the time
     of making said report, shall pay to, the Taeasurer of
     this State an occupation tax #or the quarter beginning
     on aaid date an amount equal to one and five thousand
     one hundred twenty-five ten-thoussadths (1,5125) per
     cent of sa6d gross receipts0 as shown by said weport,”
      (Emphasis added throu(lhout.)

               The facts wMeh have boas aebm(tted fn aonnection with
this request are that prior to April 1, 1948, mane 01 the sompamy’s
hdurtskl     customers we?e located wlithin the c&y limits of El Paso,
but effective April 1, 1948, the city extended fis Urn&s so as to in-
cludo tke plants of the Phelps Dodge Corperation,    the Standard Oil
Compa8y ef Texas, and The Texas Company,* The gas which is de-
l&verea to the three above-mentioned    custotiers is transported from
tke #as fields loaated in New Mexico and delbered     directly to the
three customers for their own consumption and not for resale.       Tk
g~a moves in a continuous stream from New Mexico to the plants of
the three industrdal customers.    The terms of the $as sales contracp
provide for delivery by the seller to the prem&ses of the customers
plants,
Hon. Robert   S. Calvert,   Page 3 (V-994)

            We must first determine if the El Paso Natural Gas
Company is a ‘gas works” and subject to the occupation tax levied
by Article 7060, V.C.S.

             The only case which has construed the statute with re-
gard tg the meaning of “gas works”, as used in the statute, is Util-
ities Natural Gas co. v. State, 133 Tcx. 313, 128 S.W.2d 1153 C-l-939).
That case involved the liabimv of a pas -niiw
                                            -  line comnany
                                                        -   . for ‘tax-.
es levied by Article 7060, V.C-,S., on seles to a public utility com-
pany of gas which was used as fuel to produce steam for an electric
generating plant. The Court said (at page 1155)r

             u , , . we have no doubt that the simple fact that
      a delivery of gas is made in the city, by means of said
      pipe line, to a single customer, and to nobody else, was
      not intended by the legislature    to be comprehended by
      the term ‘distribution’ as used, This term as useddoes
      not mean the transfer of the possession of gas, by means
      of the pipe line, to a single purchaser where such pur-
      chaser is the onlv customer to whom the eas comnanv
      sells gas in the city. It means the transftr of posses-
      sion of gas to various   individuals or concerns in thecity.
      Any other construction of the term would, in our opin-
      ion, involve a departure from the legislative     intent,”

              The test laid down by that decision is that there must
be a sale of gas to “various” purchasers or consumers for there to
be a “distribution”   ox gas as this term is used in the statute,

             In Opinion No. O-3776, dated August 1, 1941, this office
held that if there was a sale of gas to more than one customer or
purchaser within a city the distributor was a “gas works” under the
statute and subject to the tax. We quote from that opinion:

             “It is the opinion of this department in line with
      the above quoted cases that any individual or corpora-
      tion selling or distributing liquid petroleum gas to more
      than one consumer in any incorporated city within the
      population brackets stated in Article    7060 ~ s ~ would be
      subject to the gross receipts tax levied therein,”

             rft is thus our opinion that the El Paso Natural Gas Com-
pany, by virtue of the fact that it sells and distributes natural gas
to three industrial consumers within an incorporated      city, is a ‘“gas
works” and subject to the occupation tax on the gross receipts of
such sales as levied by Article    7060, V.C.S.

             The next problem is that of determining whether-the sales
to the three industrial consumers are exempt from State taxation under
                                                                            .   .

Hon. Robert S. Calvert,     Page 4 (V-994)

the “Commerce    Clause”,    Article   I, Section 8, of the Constitution
of the United States.

             It is elemental that a State cannot levy a tax so as to
place a direct burden on, discriminate    against, or interfere with
interstate commerce,

               We will not attempt to review or to reconcile the deci-
sions of the U. S, Supreme Court on this subject. It is an area of
“nice distinctions”.1    The Constitution has granted to Congress, by
the Commerce Clause, the power to regulate the taxation of inter-
state commerce,       Congress has, however, left the determination    of
what State taxes are permissible,     and are not permissible,  to the
courts.   It is consequently impossible to determine with exactness,
or lay down inflexible rules with respect to, the power of the States
to tax instrumentalities    of commerce.    The U. S. Supreme Court
recognized    this fact when it said. “The federal courts have sought
over the years to determine the scope of\a state’s power to tax in
the light of the competing interests of interstate commerce,      and of
the states, with their power to impose reasonable taxes upon inci-
dent~2connected with that commerce       , , . We continue at that task
000      The scope of that power, in view of the recent decisions, is
apparently growing larger, 3

              For many years it was well settled that gross receipts
from interstate commerce,     or sales, could not be directly taxed by
a State. This rule of law has, however, been greatly narrowed by
the decisions of the Supreme Court.     While the Court has said that
the principle of the immunity of interstate commerce from State
taxation will be “jealously guarded”, the tendency has been to limit
the field of immunities from State taxation. The Circuit Court of
Appeals, in Stone v. Interstate Natural Gas Co., 103 F,Zd 544, 549
(C,C,A, 5th 1939, aff. 308 U.S. 522), saidt

             ““The principle of stare decisis     in constitutional
      interpretations   has recently received      shattering blows
      in the Supreme Court, and especially        in the field of im-
      munities from general taxation, The         increasing social
      burdens assumed by our governments,           both State and
      national, will require increasing    and    more searching

1 G., H, and S, A, R. Co. v. Texas,       210 U.S. 217, 225 (190S),

2 Memphis    Natural   Gas v. Stone, 335 U.S. 80, 85 (1948).

3 Interstate Oil Pipe Line v, Stone, 337 U.S. 662 (1949)l Central
  Greyhound Lines vg Mealey, 334 U.S. 653 (1948); MempbisNat-
   ural Gas v. Stone, supra.
.   .

        Hon. Robert   S. Calvert,    Page 5 (V-994)

              taxation for their support. Any immunity from equal
              general taxation appears more and more inconvenient
                            The recent reexamination   of the basis for
              SF?=. immunities has resulted in an upheaval. The cur-
              rent of authority has been turned. For the judicial nav-
              igator ,the cases are, no longer the beacons marking out
              a fixed if tortuous channel. He must for awhile fix his
              eyes anew upon the Constitution as the pole star of his
              firmament and steer his course rather by principle than
              by precedent.“4

                     The Supreme Court formerly     used various tests in de-
        termining the validity of State tax laws.~ In Illinois Natural Gas Co.
        v. Central Illinois Public Service Co., 314 U.S. 498, 504 (1942). the
        Court said:

                        “This Court has held that the retail sale of gas at
              the burner tips by one who pipes the gas into the state,
              or by one who~is a local distributor acquiring the gas
              from another who has similarly brought it into the state,
              is a sale in intrastate commerce,        since the in:terstate
              commerce was said to end unon the introduction of the
              gas into the service pipes of-the distributor,        Public Util-
              ities Commission v. Landon, 249 U.S. 236; East Ohio Gas
              Co. v. Tax Commission,         283 U.S. 46%;. Iii applying this
              mechanical test ior determininp when interstate corn -
              merce ends and intrastate commerce begins, this Court
              has held that the interstate transportation and the sale
              of gas at wholesale to local distributing companies is not
              subject to state control of rates, Missouri Y. Kansas Gas
              Co., su ra; see Public Utilities
              Gifira,*;       cf. P blic Utilities C%z?zvyOG$?o
              -73          U.S. 8J,“89, or to a state privilege   tax, S     Tax
              Emmiss,ion       v. Interstate Gas Co,, su ra, Yet, state reg-
              ulation of local retail rates to ultima *-s- e consumers has
              been sustained where the gas so distributed was purchased
              at wholesale from one who had piped the gas into the state,
              Public Utilities Commission v. Landon, supra, as has a
              state tax measured by receipts from localretail           sales of
              pas bv one who has similarl?        brought the QaS into the state.
              &ast bhio Gas Co. v. Tax Commission,           &,

                     ‘In other cases, the Court, fn determining the valid-
              ity of state regulations, has been less concerned% find a
              point in time and space where the interstate commerce in

        4 See also Coverdale        v. Arkansas-Louisiana   Pipe Line Co., 303
U.S. 604 (1938).
                                                                        .   .

Hon, Robert   S. Calvert,   Page 6 (V-994)

     gas ends and intrastate commerce begins, and has
     looked to the nature of the state regulation involved,
     the objective of the stats, and the effect of the regula-
     tion upon the national interest in the commerce,         Cf.
     South Carolina Highway Dept. v. Barnwell Bros., 303
     U S 171 185 187 et seq.; California v. Thompson,
     3i3’U.S.‘109,‘113,‘~ckworth              v. Arkansas, ante,
     p. 390. Thus, in Pennsylvania Gas Co. v. PublicServ-
     ice Commission, 252         . .
     transported byipe       line from one state into another
     and there sold directly to ultimate local consumers, it
     was held that, although the sale was a part of interstate
     commerce,      a state public service commission      could
     regulate the rates for service to such consumers.          While
     the Court recognized      that this local regulation would to
     some extent affect interstate commerce in gas, it was
     thought that the control c&rates was a matter so pecu-
     liarly of local concern     that the regulation should be
     deemed within state power. Cf. Arkansas Louisiana
     Gas Co, v. Dept. of Public Utilities, 304 U.S. 61. And,
     similarly,   this Court has sustained a non-discrimina-
     tory tax-on the sale to a buyer within the taxing state of
     a commodity shipped interstate in performance          of the
     sales contract, not upon the ground that the delivery was
     not a part of interstate commerce,        see East Ohio Gas
     Co. v. Tax Commission,        supra, but because the tax was
     not a prohibited regulationor           burden on, that com-
     merce.     Wiloil Corporation v. Pennsylvania,      294 U.S.
169; McGoldrick      v. Berwind-White     C O., 09 U.S. 33, 50.
     In Southern Gas Corp. v. Alabama, 301 U.S. 148, 156-57,
     on which the Illinois Supreme Court relied, we held only
     that the sale of gas to a local industrial consumer by one
     who was piping the gas into the state was a local busi-
     ness sufficient to sustain a franchise tax on the privilege
     of doing business within the state, measured by all the
     taxpayer’s property located there, including that used for
     wholesale distribution of gas to local public service com-
     panies I)

            “In the absence of any controlling act of Congress,
     we should now be faced with the question whether the in7
     terest of the state in the present regulation of the sale
     and distribution of gas transported into the state, bal-
     anced against the effect of such control on the commerce
     in its national aspect, is a more reliable touchstone for
     ascertaining   state power than the mechanical distinctions
     on which appellee relies,*

             While there may have been doubt under the older deci-
sions as to the point at which inter&ate commerce ended and intra-
state commerce began, there is little doubt, in view of recent de-
cisions, that the sales by the El Paso Natural Gas Company to the
Hon. Robert     S. Calvert,   Page   7 (V-994)

three industrial consumers in El Paso are interstate sales. The
case of Panhandle Eastern Pipe Line Co, v. Public Service Commis-
sion of I n iana.      . .
ana of the sale of natural gas which had been transported  from  gas
fields in Texas and Kansas by an interstate pipe line directly to in-
dustrial consumers in Indiana. The Court said (at page 512)1

                “Nor do we question that these sales are inter-
         state transactions.    The contrary suggestion left open
         in the state supreme court’s treatment rests upon the
         view that gas transported interstate takes on the char-
         acter of a commodity which has come to rest or broken
         bulk when it leaves the main transmission      line and, un-
         der reduced pressure, enters branch lines OT laterals
         irrevocably   on its way to final distribution or consump-
         tion. Those merely mechanical considerations        are no
         lon er effective, ,it ever they were exclusively,    to deter-
         mine tor regulatory    purposes the interstate or intrastate
         character of the continuous, movement and resulting sales
         we have here.

                “Thus gas furnished to local utilities for resale is
         supplied unquestionably, both as to transportation and
         as to sale, in interstate commerce.      Yet it is subjected
         to practically  identical changes in pressure    with the gas
         sold by appellant directly for industrial use. Neither
         practical common sense nor constitutional sense would
         tolerate holding that reduction in prersure     makes the
         fndustrial sales to Anchor-Hocking      wholly intrastate for
         purposes of local regulation while deliveries      at similar
         pressure to utility companies remain exclusively inter-
         state, Variations~ inmain pressure      are not the criterion
         of the state’s regulatory powers under the commerce
         clause. Cf. Interstate Natural Gas Co. v. Federal Pow-
         er Comm., 331 U.S. 682 689, 67 S. Ct. 1482, 1486 The
         sales here were clearly’in    interstate commerce,” ‘5-

               Section   l(b) of the Natural     Gas Act of 1938’ providesa

                 “The provisions   of this chapter shall apply to the
         transportation   of natural gas in interstate commerce,
         to the sale in interstate commerce      of natural gas for re-
         sale for ulti&ate.public    consumption for domestic, com-
         mercial,   industrial, or any other use, and to natural-gas

5 See also Illinois Natural Gas Co, v. Central           Illinois   Public   Serv-
  ice Co., 314 U *S . 498 ( 1942).

6   15   U.S.C.A.   g 717, et seq,
Hon. Robert   S. Calvert,   Page 8 (V-994)

      companies engaged in such transportdtion or sale, but
      shall nbt apply to any other transportation  dr sale of
      natural gas or to the facilities used tor such distribu-
      tion or to the productinn or gathering of natural gas.”

            The Court in the Panhandle Eastern Pipe Line case, in
upholding the power of the State to ,regulate direct sales to indus-
trial consumers, said (at page 516)i

              “The omission of any reference   to other sales,
      that is, to direct sales for consumptive use, in the af-
      firmative   declaration of coverage was not mnadvertent.
      It was deliberate.    For Congress made sure its intent
      could not be mistaken by adding the explicit prohibition
      that the Act ‘shall not apply to any other *** sale **+.’
      (Emphasis added.) Those words plainly meanit           the
      Act shall not apply to any sales other than sales ‘for re-
      sale for ultimate public consumption for domestic, com-
      mercial, industrial, or any other use.’ Direct sales for
      consujnptive use of whatever sort were excluded.

              “The line of the statute was thus clear and com-
      plete. It cut sharply and cleanly between sales for re-
      sale and direct sales for consumptive uses. No excep-
      tions were made in either category for particular uses,
      quantities or otherwise.    And the line drawn was that
      one at which the decisions had ariived    in distributing
      regulatory   power before the Act was passed.”

              The Court further   said (at page 519);

             “Congress,   it is true, occupied a field. But it was
      meticulous to take in only territory    which this Court
      had held the states could not reach. That area did not
      include direct consumer sales, whether for industrial
      or other uses. T-had                been regulated by the
      states          regulation had been repeatedly sustained.
      In no instance reaching this Court had it been stricken
      down.

             “It is true that no case came here involving state
      regulation of direct industrial sales wholly apart from
      sales for other uses. In the cases sustaining state pow-
      er, whether to regulate or to tax, the company making
      the industrial sales was selling also to domestic and
      commercial     users. But there was no suggestion, cer-
      tainly no decision, that a different rasult would follow
      if only direct industrial sates were being made, Neither
      the prior judicial line nor the statutory line was drawn
Hon. Robert   S. Calvert,     Page 9 (V-994)

      between kinds of use or on the relation between sales
      for different uses. Both lines were drawn between sales
      for use, of whatever kind, and sales for resale. Cf C 1
      orado Interstate Gas C,o. v. hederal Power CommO;’ 3%-
      U.S. 581, 595, 596, 65 S&t. 829, 836, 89 L,Ed, 126 0,

              “The’ Natural Gas Act therefore was not merely
      ineffective  to exclude the sales now in question from
      state control.   Rather both its policy and its terms con-
      firm that control.    More than ‘silence’ of Congress is
      involved 0 q n p*q

              We.may    point out here that the Court has said1

              “In a case like. this nothing. is gained, and clarity
      is lost, by not starting with recognition of the fact that
      it is interstate commerce which the State is seeking to
      reach~and candidlv facinn the real auestion whether what
      theate      is exacting is a-constitutionally  fair demand by
      the State for that~aspect of the interstate commerce to
      which the State bears a special relation ; v ( distinctions
      would be clearer land more reasonably made if II 0 0 a tax
      . 0 0 had been frankly sustained on the ground that the tax
      did not burden interstate commerce in the constitution-
      al sense rather tlrrn on the ground that it was not inter-
      state commen‘ee.

             The Supreme Court has sustained State taxation on, and
regulation of, the sale of gas and electricity to customers for actual
consumption,   In Missour;v,   Kansas Natural Gas Co., 265 US, 298,
309 (1924), the Court said!

              “The business of supplying, on demand, local con-
      sumers is a local business:
                            businessi &~‘
                                        even
                                           though
                                              though the gas bebrought
      from another State and drawn for distribution directly
      from interstate mains1 and this is so whether the local
      distrrbution be made by the transporting company or by
      indeoendent
      independent distributinn
                     distributing oompanies,      In such case the lo-
      cal, interests ns paramount,~. and
                                       iid-&?nterference
                                           the interference  with
                                                             wath in-
      terstate;rammerce,       nf any@ indirect and of minou Hmpor-
      tancc,“O

7 Central   Greyhound       Lines v, Mealey,   334 U,S. 653, 661 (1948),

8 See also.Southern Natural Gas Corp. v, Alabama, 301 U,S, 148
  (lJl,7,l  East Ohio Gas Co,v, Tax Commission,   283 US, 465 (193A)r
           Utilities Commission v, Landon, 249 US, 236 (1919),
Hon. Robert     S. Calvert,   Page   10 (V-994)

             The Court in Memphis         Natural   Gas Co. V. Beeler,   315
US.   649, 653 (1942), said:

                “This Court has often bad occasion to rule that
       the   retail sale of gas at the burner tips by one who pipes
       the   gas into the state or by a local distributor acquiring
       the   gas from another who has similarly      brought it into
       the   state is subject to state taxation and regulation.”

            The Couzt in McGoldrick    v. Berwind-White          Coal Min-
ing Co., 309 U.S. 33, 45 (1940), held:

              “Section 8 of the Constitution declares that ‘Con-
      gress shall have power . . . to regulate commerce with
      foreign Nations, and among the several States , . . .’
      In imposing taxes for state puaposes a state is net ex-
      ercising any power which the Const&ution has conferred
      upon Congress.      It is only when the tax operates to reg-
      ulate commerce between the states or with fozelgn na-
      tions to an extent which infringes the authority conferred
      uwn Conaress. that the tax can be said to exceed consti-
      titional lymitations.     See Gibbons v. Ogden, 9 Wheat. 1,
      18 I South Carolina Highway L)ept. v. Barnwell Bz,os.,
      303’U.S. 1 t7 185. Forms of state taxation whose tend-
      ency is to pr’ohibit the corkmerce    or place it at a disad-
      vantage as compared or in competition with intrastate
      commerce,      and any state tax which discriminates    against
      the commerce,      are familiar examples of the exercise of
      state taxing power in an unconstitutional manner, because
      of its obvious regulatory effect upon commerce between
      the states.

               “But it was not the purpose of the commerce clause
       to relieve those engaged in interstate commerce of their
       ‘ust share of state tax burdens, merely because an inci-
         ental or consequential etfect of the tax is an increase in
       the cost of doing the business, Western Live Stock v. Bu-
       reau. 303 U.S. 250, 254. Not all state taxation is to be
       condemned because, in some manner, it has an effect up-
       on commerce~~between the states, and there are many forms
       of tax whose burdens, when distributed through the play of
       economic forces, affect interstate commerce, which nev-
       ertheless fall short of the regulation of the commerce which
       the Constitution leaves to Congress.     A tax may be levied
       on net income wholly derived from interstate commerce.
       Non-discriminatory     taxation of the instrumentalities ofin-
        tezstate commerce is not prohibited.”
Hon. Robert   S. Calvert,   Page   11 (V-994)

             T& mow potent decision by the U. S. Supreme Coupt
OILWr rubject b Interstate Of1 Pipe Line Co. v, Stone, 337 U.S. 662
(1949).  That case involved the validity  f   Mi ssissippt statute wbLrh
lmporcd a gross receipts tax on tbe priv”&it a OS operating 4 pip
line within that State. The Court (at page 6 %6) rrid~

            “The statute is not invalidated by the aommexce
      clause f0   c                     ofi merely because, u**
      nke the statute attacked in Gmphis      Natural Gas co, v(

           e contrary rhouIdai no                       o yp Grand
      ~;~$;kCJo,,      142 U.S. 217 35 L,ed. 994, dt         121 if& 6
                  om 807, which &ly      rules the case at bat&
      That ease sustained a state statute which imporod upon
      an interstate gailroad corporalen      ‘an annual exotse tw
                   by apportioned gtosr
        ege of exercising   its framchfaes
      Grand Trunk decision      bar been approved b
      as recently as the

      ted New York to impose a tax on the g;o$s tcoeiptr from
      the operation of an interstate bus line, provided that tax
      was apportioned according to mileage traveled within b&e
      state, The Mealey Case is not distinguished by saying
      that it involved only a tax on     oes receipts and not a tax
      0~ interstate commetce    itee f , for gross receipts taxer
      have long been regarded as ‘direct. In cases which are
      rupporpd to support the proposition that ‘dWqct. taxes
      & tnteirtstu    commerce are invalid under the commerae
      claurrc,

             “Since all the activities upon which the tax is im-
      posed are carried on in Mississippi,    there is no due
         ocess obJect;Lon to tira tax. The tax does not disczim-
      Ynate against Interstate tremmerce in favor of compet-
      ing intrastate commeras of like character,      The nature
      of tlw subject QI taxatlod makes apportionment unneces-
      nary1 theta is no attem t to tax iaterstate   activity car-
      ried on outside Misslss Pppi’s borders,    No other state
      can repeat the tax& For these reasons     the commerce
      clauro does not invalidate this tax..

             The tax in this instance is levied upon the local sale to
the ultimate consumer,     The tax is not discriminatory,   nor does &t
lay a direct burden on interstate commeroq        The tax cannot result
in multiple taxation because no other state can repeat the tax, The
tax ia thus not prohibited by the Commerce Clause. Opi,nion No.
2998, dated February 2, 1937, is overruled in so far as it conflicts.
Hen, Rebert   S. Calvert,   Page   12 (V-994)

            It is our conelusion that, inasmuch as the City of El
Paso has a population of more than 10,000, the El Paso Natural Gas
Company is liable for an occupation tax equal to one and five thou-
sand ene hundred twenty-five    ten-thousandths (1,5125) per cent of
the gross receipts from business done within the city from April 1,
1948, the date the company began operating a “gas works” within
that city.

                                    SUMMARY

             A    pipe line which sells to three industrial con-
      sumers      within a city is operating a “gas works” and
      is liable    for the occupation tax levied by Article 7060,
      V.C.S.      Opinion No. O-3776.

             Taxes on the local sale of gas to ultimate con-
      sumers is not prohibited by the “Commerce Clause”
      of the U.S. Constitution.  Opinion No. 2998 overruled
      in so far as it conflicts.

                                                 Yours very   truly

APPROVED4                                         PRICE DANIEL
                                                 Attorney General
W. V, Geppert
Taxatisn Division, .’

Charles D. Mathews                                 * ‘hank    Lake
Executive Assistant                                      Assistant

FL!wb:mwb