Untitled Texas Attorney General Opinion ( 1942 )

Gerald C. Mann
Agricultural & Mechanical Opinion No. O-4617
College of Texas Re: Collection of inspection tax
College Station, Texas on fertilizer distributed in Texas
by the Agricultural Adjustment
Attention: G. S. Fraps Administration.
State Chemist.
Dear Sir:
You request an opinion of this Department on the ques-
tion whether the inspection tax imposed by Texas law on commer-
cial fertilizers sold in Texas may be collected from the Agricul-
tural Adjustment Administration, which distrtbutes in Texas to
Texas farmers fertilizers purchased by it outside of Texas.
Texas Revised Criminal Statutes, 1925, Arts. 1709
through 1720, and Civil Statutes, Arts. 94 through 108, regulate
the sale of commercial fertilizer,within the State of Texas. TO
defray expenses of inspection and enforcement of these regula-
tory laws, an inspection fee of 253 per ton is provided for com-
mercial fertilizer “sold or exposed, or offered for sale in this
State” by “all corporations, firms or persons”.
The Agricultural Adjustment Kdministration is a federa,
agency or instrumentality. From your letter and accompanying
documents it appears that the A.A.A. is distributing to farmers
in Texas commercial fertilizer purchased by the A.A.A. outside
of Texas, in the following manner: The farmer is furnished
fertilizer on the basis of a price of so much per hundred pounds.
To the extent of the quantity of fertilizer furnished the farm-
er at the stipulated price, when the farmer makes application
for his Agricultural Conservation Payment the amount of fertil-
izer theretofore furnished to him by the B.A.A. is deducted from
that payment.
This activity of the A.A.A. is authorized by 16 U.S.C.
1940 ed. 590h(b), which provides:
I’(b) Subject to the limitations provided in sub-
section (a) of this section, the Secretary shall have
power to carry out the purposes specified in clauses
Cl), (21, (31, (41, and (5’) of section 7(a) by making
payments or grants of other aid to agricultural pro-
ducers, including tenants and sharecroppers, in amounts
determined by the Secretary to be fair and reasonable
Agricultural & Mechanical College of Texas, page 2 (O-4617)
in connection with the effeottidtion of such purposes
during the year with respect to which such payments
or grants are made, and measured by (1) their treat-
ment or use of their land, or a partthereof, for
soil restoration, soil conservation, or the preven-
tion of erosion; (2) changes in the use of their land;
(3) their equitable share, as determined by the Secre-
tary, of the normal national production of any commod-
ity or commodities required for domestic consumption;
or (4) their equitable share, as determined by the
Secretary, of the national production of any commodity
or commodities required for domestic consumption and
exports adjusted to reflect the extent ‘to which their
utilization of cropland on the farm conforms to farm-
ing practices which the Secretary determines will
best effectuate the purposes specified in section 7
(a); or (5) any combination of the above. In arid or
semiarid sections, (1) and (2) above shall be con-
strued to cover water conservation and the beneficial
use of water on individual farms, including measures
to prevent run-off, the building of check dams and
ponds, and providing facilities for applying water to
the land. In determining the amount of any payment
or grant measured by (1) or (2) the Secretary shall
take into consideration the productivity of the land
affected by the farming practices adopted during the
year with respect to which such payment is made. In
carrying out the provisions of this section in the
continental United States, the Secretary is directed
to utilize the services of local and State committees
selected as hereinafter provided. The Se cre.tary shall
designate local administrative areas as units for ad-
ministration of programs under this section. No such
local area shall include more than one county or parts
of different counties. Farmers within any such local
administrative area, and participating or cooperating
in programs administered within such area, shall elect
annually from among their number a local committee of
not more than three members for such area and shall
also elect annually from among their number a delegate
to a county convention for the election of a county
committee. The delegates from the various local areas
in the county shall, in a county convention, elect,
annually, the county committee for the county which
shall consist of three members who are farmers’in the
county. The local committee shall select a secretary
and may utilize the county agricultural extension
agent for such purpose. The county committee shall
select a secretary who may be the county agricultural
extension ag.ent . If such county,agricultural exten-
sion apent shall not have been elected secretary of
Agricultural & Mechanical College of Texas, page 3 (O-4617)
such committee, he shall be ex officio a-.member
- of
the county commi.ttee. The county agricultural ex-
tension agent shall not have the power to vote. In
any~county in which there is only one local committee
the local committee shall also be, the county committee.
In each State there shall~be a State committee for the
State composed of not less than three or more than five
farmers who are legal residents of the State and who
are appointed by the Secretary. The State director
of the Agricultural Extension Service shall be ex of-
ficio a member of such State committee. The ex officio
members of the, county and State committees shall be in
addition t‘o the number of members of such committees
hereinbefore specified. The Secretary shall make such
regulations as are necessary relating to the selection
and exercise of the functions of the respective commit-
tees, and to the administr,ation, through such commit-
tees, .of such programs. In carrying out the provisions
of this section, the Secretary--shall, as far as prac-
ticable, protect the interests of tenants and share-
cropper,s; is authorized to utilize the agri,cultural ex-
tension service and other approved agencies; shall
accord such recognition and encouragement to producer-
owned~and producer-controlled cooperative associations
as will be in harmony with the policy toward coopera-
tive associations set forth in existing Acts of Con-
gress and as will tend to promot’e efficient methods of
marketing and distribution; shall not have power to ac-
quire any land ore any right or interest therein; shall,
in every practicable manner, protect the interests of
small producers; and shall in every practical way en-
courage, and provide for soil-conserving and soil-rebuild-
ing practices rather than the growing of soil-depleting
crops. Rules and regulations governing payments or
grants under this subsection shall be as simple and di-
rect as ,possible, and, wherever practicable, they shall
be classified on two bases: (a) ,Soil-depleting crops
and practices, (b) soil-building crops and practices.
Notwithstandins anv other provision of law. in making
available conservation materials consistin? of seeds;
seed ino,culants. fertilizers. liming and other sou-
conditionina mate’rials. trees. or slants. or in making
available s ;il;c;n;e;;- or soil-buildins servic,es. to
asricultura D 0 u e under this subsection. the Secre-
tarv mav make oavments. in advance of determination of
gerformance bv the producers. to aersons . who fill . uur- -
‘chase orders coverins, aaoroved conservation materials
pr coverinn soil-conservinn or soil-building services,
fu ni hed to D oducers at not to exceed a fair Drice
fi~edsin accordance with reaulations to be orescribed
Agricultural & Mechanical College of Texas, page 4 (O-4617)
Jw the acretarv. or who mnbr Servicesto the Set-
retarv in uverina to producers aDDroved COIISB~VB-
The agricultural conservation program in which the
United States is engaged is designed to conserve the soil~re-
sources of the U. S. Section 8, clause 1, of the Constitution
of the U. S. confers upon the Congress the power “to lay and
collect taxes, duties, imposts, and excises, to . :. . provide
for the . . . general welfare of the United States; . . .I1
The power exercised by the Congress in the establishment of the
Soil Conservation Program is the power necessarily implied from
the power thus expressly conferred by the Constitution, to wit,
the right to expend the “taxes, duties, imposts, and excises”
collected for the purpose of promoting “the general welfare of
the United States”.
It may well be doubted that the distribution of the
fertilizer in Texas by the A.A.A. constitutes a “sale”, within
the purview of our State laws. It would seem that the fertilizer
is “granted” to the farmer in advance of performance of the con-
ditions entitling him to a cash grant or payment; that the fer-
tilizer grant is in lieu of the cash grant, and that the price
or value of the fertilizer. is established in order that the
amount of cash to be deducted from the cash grant or payment may
be determined. Whether this constitutes a sale, within the mean-
ing of the Texas law, we find unnecessary to determine, for we
are of the opinion that, even though the transaction is a sale,
the inspection tax or fee cannot be collected from the Federal
agency.
It is a familiar princi le established since McCulloch
v. Maryland, 4 Wheat. 316 (U.S. 18193, that the States cannot
interfere with, burden or impede the Federal government or its
authorized instrumanta~ities in the exercise of any of the pow-
ers vested by the Constitution of the United States in the Con-
gress of the United States. The principle has been announced
most frequently in those cases involving an attempt to collect
a State tax from a Federal instrumentality. It has, however,
equal application to the enforcement of State regulatory laws
against Federal instrumentalities. Johnson v. Maryland, 254 U.S.
51; Hunt TV. U.S., 278 U.S. 96; Arizona v. California, et al, 283
U.S. 423; Ohio v. Thomas, 173 U,S. 276; Easton v. Iowa, 188 U.S.
220; Ex parte Willman, 277 Fed. 819; Posey v. T.V.A., 93 F.(2)
726; United States v. Query, 21 Fed.Supp. 784. ~.
./. ^
Agricultural & Mechanical College of Texas, page 5 (O-4617)
The exaction presently involved is an inspection fee,
rather than a tax. But whether it be a tax or an inspection
fee, an exertion of the taxing power or of the police power of
the State, it operates directly and immediately upon the Fed-
eral instrumentality in the exercise of the power conferred
upon it by the Congress, and directly burdens the lnstrumental-
ity in the exercise of that power. The agency of the United
States is immune from and cannot be required to pay the fee or
tax involved.
The fee or tax cannot be justified by reasoning that
there is no real burden because the instrumentality might pass
the fee or tax on to the farmer by increasing the price of the
fertilizer, or might require those from whom it purchases the
fertilizer outside of the State to comply with Texas regulations.
Tstith equal plausibility every state tax on Federal activities
might be justified by the observation that no real burden exists
because the amount of the State tax may be passed on by the Fed-
eral government through the collection of increased Federal
taxes.
The situation here is not to be confused with the cases
where the burden or regulation affects the Federal instrumental-
ity only remotely or indirectly, as in the case where the tax
or regul&tion operates directly upon a private person or corpor-
ation not an instrumentality or agent of the Federal government.
See Alabama v. King & Boozer, 314 U.S. 1; James v. Dravo Con-
tracting Co., 302 U.S. 134. Thus a private person, firm, or
corporation selling commercial fertilizer to the Agricultural
Adjustment Administration in Texas is subject to its laws; the
fact that the sale is made to the Federal instrumentality does
not clothe the vendor with the immunity possessed by the vendee.
Likewise, we are not to be understood as holding that
employees of the United States and its agencies secure a general
immunity from State laws while engaged in the performance of
their duties. Such State regulations as affect only incidentally
the mode of carrying out those duties may well apply to the em-
plz;e;~s of Federal Instrumentalities (see Johnson v. Maryland,
; the.immunity, however, does extend to those regulations
which directly impede or burden the employee in the discharge
of his Federal duties.
Yours very truly
APPROVED JUL 13, 1942 ATTORNEY GENERALOF TEXAS
/s/ Gerald C. Mann By /si R. W. Fairchild
ATTORNEY GENERAL OF TEXAS R. W. Fairchild, Assistant
APPROVED:OPINION COMMITTEE
BY: BWB, CHAIRMAN
RWrmp:wb