Untitled Texas Attorney General Opinion ( 1943 )

575 OFFICE OFTHEATTORNEY GENERALOFTEXAS AUSTIN lioaolrblo aem. 8. 3hep&mrU Oomptrollerof PublIe Aeoouate Auatb, !hxas war “ll-t a8ve nattu be8 U&b rroa your request a8 fullouDt *They hare filed a sepwt uadrr probeet, sad atata that tbsy are not ani have not at any t&5$ imgagso in the tralwpor0ation of oil. Thay tmamport the motor fuel mad kwmaaao di*tiLlate I 576 Mo. H. Sheppard, Bonarfiblo Page 2 eon tour natural gar rooyoling pluats. The j?ro- duoen of theere produote pay the tax aa provldod -r0r in Artiols 7Ob7 R and the residue X.Sr*tumed bp the rsoyollng mttwd to the ame, gee produolng tommtton underlg~ng the lend frim wbleh the gas la produeeii.hurtng the year 1942, they tran* ported 2 255,986 barrels on wblah they ohare& tariiie lo. t&8 MwVnt of $211.65 l36r ‘Phi8pi&N-- line baa til the eqmeta od:an 0L pipeline in es mueh atiit ie separately inoorpomted. ft haa' l euperinkadent, and paf8 fedoral trmrportotlon snd iJM0~ tax46 OQ It8 net i;iOOEie, Yi’he’main problem here, Is rhethnr or not the tracmportatioa Bf kero&one, di8tillate and mote0 fuel omstitutee the olaoe oi oil plpellne tea- panlea,as defined in Chapter L, Title 122, rItb Amsndercrata,‘Fax on Zn(;Mgible Amete. . . ." Io addition to the faotr stated by port, we hare ohooked *he ebuter bi this oorporcrtioo la bt!e ortioo of the Seeratary ef Stat6 and fine tha parpoau the*eaf, arr stated in said ahartu, to be a& follcws~ "2. The purpose ioruhloh it ie SonuQ is to atom tramport, buy awl eel1 oil, &as, salt, brine d ether mlnorsl solution, im@ludlog t&o prlvllegae ena pow+8 granted bl and eutherired in Chapter lst Title 32 Reviae4 UirU 3totute8 of Texts, whieb ie bere'66y adopted* You 8tate tkmt the produeorr aS t&o pau0ta tmm- ported by utS.8 ao8qmy hate pita the taxer prwliloa rbr In Artlole 7047b. Thie artiele provldee for an oao&mtioa tax an produoarr of natural gas and, 88 aaondm% by the Aotb ot the 47th Legislature In 19&X, pa e 269, Chapter 184, Artiale II, seotlon 1, Isaida&tale par f dm tbett V&em4 gas is prooeos& for it0 1iQUid hydra- c+arbon oontent .md reeldue gas ia returned by re- oyoling method8 to the mne $ahpreduoiog,fornretion uderlylag the 1-a fro& rhi6h the gas is prodweb, the tazable value of saab Rae e&all he tlwee4fZthe (3/5) of the fpm.6 value of all p.roduWia ertraioted, seperatod and esved 'from two& &LUr” I tie aWo undomtand tht t&e produootr of Nm po- duote tranrgorted bl thin oompaay bm not paid t&o taua proridmd for la hrtlole 7057a, mhloh levie8 au ooaupatbn ter on oil produced within this st'&e, Smtion 2 of whiah we5 antad& by the Aota of the 47th Legialatura in 19&l, ptqp 269, Chapter 16J+, Article 1, Seation 1. It is the OS ttriu depart&ml opinbm that aaid ompmy is not subjeot to the provialoas of Chapter 4 Title 122, QC the Rerisud Girl Statuten of Tswis, an: in eupport oi this aonahnion we dirbot JIOUEattention to the mlloldn@ I The statutea under mhloh thin etxcpaay was lnror- porsted oontaln the f'ollowtn~ prwl&mot Artiola l495 lr in part &alfallout: Yhia Chapter wabraoes oorporattoa5 oroated ror the purpaeo OS coring, tmrlsport~, byror eind sellbg all gao salt ba-lne and othw *imrrnl 6~utm~ m riqd0d dn~rdl`` . ..ead tbo LIP? of o%l and $a& (As amendedAota 1935, +, pw 296, oh. l&G, @ 2.1" Arti a.496 la in ~4x3 ee rd.bfm "Suah oorporetionr &al& hnve pcwerr *1. To &ore an3 tlrruport oil* (lam,bYin, cad other &noml uelutio~ and liquiffod nin.mU, . . . . and b us&e mawxtabl, ohar&ps lhorafor. As ammdad kote %935, bt&h Lo&,, p, 296, ah. X1.6, A 3.1" brtial; nbs OS said Chapter 4 Title 122, cvdt~mimnd- ed by tbo 47th I.e&Lature, 1941, e&e 2&P, Cheytar l&4, ;d- iclo XIII, Ssotlon 1, in whigh armeadmeat 110 ahang* ~66 lade effw``; the mattm? hsma under ooaaldoratien, is in pert a* *Weoh inoorporatod . . . o%l pip0 lfcr abJc pang, and all oe~moa wirrier pipe line ooammies of every oharaoter whatmaver, engaged i+ the tram- portatiotr uf oil, . . w doing budnese whally or 578 in art within th3.aState . . . and every otbmr Ind s vldual, oompary, corporation, or amQoIation aQ* buntwIn8m of the mm0 oharaoter In t&la State, irk additiorr to the ad ~aloF8m tarsa a11 ta.agIble propert1er . . . shall pa,s an annual tax to the state, ba&mlnp, with the Sis``t day ot Ja~uaw uf moh year, cm th@Zr fnter@bls asacte F&C?pro- pepty, and looul Iu@x~&I thereon tQ the eOWtIm8 ia whloh its kil!JImss Is omlae ark* ArtIaie 70578, Notion i(5), o.f the Herlaud Ciiil statutes, dimfinsce oil 60 fol&``s: “(5). *oil1 shall mfm orude oFI, 6r other 8s iax aa w. haw hem nbU to aoaertain cl], Is otx&d.~ &a be a dlffueti mIm.x~l prcduut fmm @ata,cn! ttm liquid byibwaxboaa prodwed from &as iu fuot Artialo m7ba ef @he Herimd GLril l?~batutes, hor&msbaoo nfermd to,a0ntaIne ap~wIaIon that %.ll liquid hydro-oarhna that ape mewadfmmgao bpmbam of a separatc~rorb``thw nomaoomntatrl* &alla&hods be.tasod at the ERIMrate ao oil as levied by Art&lo I of this BOt* therbby alearly shark t4at pFaduot8 ti gas an not oii, at least they am no M oonddu#A for tax purpas~e. In az’der t;o brIw tbie oaqmny within ths tomu of Chapter i+ Title 122, be bald chat. it; is an Wmur- It must -ted ail plpslinu ocmpany- oaaaged in ttha tranaporb*tion of oil, 0~ that It 58 a *oammn earrlu gipslina eoqaufl OS 8om* eharmotsr 8np+paA fa the tlVUmpsrfdt0a sf Ofi, or that it la *Q@%q btmineaa” In this state OS the “mm eharaatu- aa aae,cn tl4sother of said nonasrtm The InW6ible gaaecld in tax Ia’R 1788 orI6Inally 1005. Et was amended in I.907and #i&ah in 1933, Tho k933 amerubmnt imesrted for tha Tirltt tl3 the wordar *oil pipe- lixm fsfaspgaap ma all emson oarrier pipeline aompaai~a of STew ahrmoter whatsoever, engaged In the *ransp0rtati0nof Oil’. This a.wndmnt of 1933 eaprrsatsdlIts Lqialatire tn- tent and purpose in the SollowIng pro+I6Ionl “The purposs harooS Is to ~1Res dIl1 Qot%wodl aatrler 011 pipe lias 06mpa5ies mdsr ail of the Fonorable Coo. R..Shippard, Isage 5 pr~+i~i~t~ oi t&s Intaaglbti Asset Tar L6~8 Of this State and, for the purpoee of plaol`` uadsr raid nat a 1 1 taxpayers eImIlarly aitueted, aa to bring about P better olasaIfIastIon end a wider dlrtributioc of the burdone ot taxatlor,, a8 far 88 thin olaoa of tc\rpyars in c~ncaruad.~' In dealing with this etatute in a oaso wherein it wa8 nooeasarp to oocstrue ita meaning, the Zastland Court of Civil Appeals nrado thr ibllowin~ hold- ir the case of Col- Tax Refining Coqmny 1. Hart at al.j 144 2. 1:. (2) 909, writ XMUlWl: -*Inthis l~uae~ tbs mpese OS the that I6 olaarlf It '(WEdoawed tipr4b6e6a. to extend the term o? tbs Intwiblo tar ``baauxbto a strq anU @-ci+iae; alaas oi clrrpafma who badtJiW'.to- fore esaaped tbla pnrtloular type o? tax. This 6otman oarriar oil pip8 lina ooqmniea of evtry okari%oter whatWWW' and kll taxpa;rmra aimilarlp situetod* mnd ln u cdendiog 10 it was deslgded to *br& about a brttor ~laacfiiaa- tlon ana a wfdor dfstributlon 0r ths burdens of taxation, ae far ad th&a olans of taxpayer8 fo ronoemrd’. "iWurally a 00-n 4arrI.r oil pipb line ooapmy roulU oarry en the budn6u af trstnrport- Ing oil by pipe linen a8 Its busiaeaw durQprecar;Pp- tive1p ior tar.. It would ba a towma pcoduaimg oonoern within itaelt, and as 6uoh would telailp fall wIthIn the elnso of' taxpayers greeumably club- Jsat to the intaaglble tas ox mu&t Co bs rrub$eot- ed to thmt tax. “Upon the 8ma prIncIpl* 8~16ior the muse ma- sons, an inoorpomtsd o&l pbps line acxtpan``would The businers rou3.d have a8 Its objsot a profit & Inaoas Sor the a*ncrr, and that would be true whether it ~88 a pr&Wts or pub110 aaSX'f%r. The very purposcrat Its exlsten6e and hmGure Of lta buainsaar at woe inuggast it wa6 cskmilar &Y4 eltwtfon (as d subjeot rbr trxation) to tllot 09 the OOEIBLM oarrfu pfpe lina osqmuy, and, there- fcre, a propar aubjeot for the applioatlon or the l#gzkngible tax meanuru whloh the Lq$&ature wee oeekiafi to ax&ma to tazmyers l~linllarly sItuatedt. It wotild, therefore, aem logical not only to bring auoh onnpenieo within the epread of this tax meearure,but alao to extelld the same and die- ttibute its burden to **, * * crsrg other Icdiri- dwl, ooa~, oorportitiou or smooIntIon doing buadne6m or the Muno ebarnoccrr in this :itato'. Mt. 7105. "The motion or tha statute just quoted de- r&Dates a ohsa of pereons whIoh would loe,Ioelly fall ppithin the term of the Intan$Ibl.e Cax mee- 8~ (IS dofInItely ale the tirrt two alasaee dia.. Ot$SU4. The provlaicn leeveo no both% es to who :i would be eabraoed in its tuxus. Xt speaiff 0aH.y ocxupany,warpor- te be 0r the mw otraraetu a* wmt bohg doam ay the Ineorporafeapfpe llna ooIqwiy* aal-rler,eta., that Is, e%I@wQd in the tmmaportation 0 oil a8 a busluw%1),and prerum!$ital~ for b&e. . . .* In bOld1~ th8tl the Col4en RsftnIng coelJp!&nywae oo?i an "oil pipeline oompaay", or a oorpcratiosr doing buei- nt)mn I& the *saw3 ohraoter*, ~ith.h the mnina 0r btkkifj ?lo5, and, tlmr~foma, oot aubjeat 00 t&m tax provided for ttmre&m, mid ?astlend Sourt of SItI Ap? ala oallad attan- tien to the Zaot that "at the tins (1933 7 the wordr *mob " * * oil pipe line oornpaay * * ' of every oharao'dar what- aoever, eagsged In the transportation 0r oil* ytem laoerted Iu the Intangible tnx law, nad Art. 7105 took %bmprosent form, AZ% 6016, iii c. 3. 1925, aaa than a pa%% of our gan- es&, ste~tutetaad had &on elne 1017." A ritfomnoe to sala Article 60119 showa thmt pipeline oarriere whloh are therein daolered to be oi?~on oerti~srs are 8UQb f&o transport qomade petroleum* My, therefere, the oompany bare uder ooneidere- tlon mild mt pmsibly OQ;DI) uader the, term "mm&a eaPrler We alee direat ye&w attention to the tact 6hmt the &A&M ia the ewe et Col4rx Refining Conpsay v. Ilart et al., wpra, wee handed dorm oa ootober 11, 19&C, md reheer- iap deelod on kieveraber 8, 1940 and ttat tberufter the 47th l,&rl~tur81 amwdotl Artiole 7d5 in 194 but that lt baado w oI&angeln uldnrticle ineef'ar aa Chematter here mdex oonoiduatkao lo oonoonted. By tihbt sleondarsttt sala Intw- ble TRX Lawme ma80 tc apply to eaoh %wter bun ao``p(uv*, AS dofin. in the A&s of~tho Legislntumttherein re;termd te, a na l8oh wocumcm oarrier 0Mor wirzlof* op~ra``g uadu au- thority ot the Rellroed Comlstalon, but imld larr was not amoM- od w a0 to inelude,th* ts8a8pertatlon ot proiluots of natural gas au& ae are’ hsn brln@, ~wmld~8rad. Thfs evlaentiy war an appro+al of) 6r UD aoquieooonoe in, br the Le&elatum of the haldiM it3 arid o~inirua, AA well SA tbA OfXL5tl’UOthA -Oed itpofi oaid law by your ilapiXrtaPant in sAa8eptiAg PywA% Of kma UAdrr ArOl01e 7047e, ratltu tkaJ3 aadu nrklole 70578, t&m R.&t- rril ml. &OVA¶%~SMJ AAAb BitAAtiOA baa set out in 39 TM. hr., 000~ 132, pg. 2&8-2%. in the ?ellwiaig l``et Weubtlaao qho tegleleture, in eaaotlng, AmoAdiagOf repo8llqg a mtatuts, &u&y b8 prAAUaad to hare knwn faota of OOUOA notori*tgin elm Stats, de ~11 148 eny oirowuetenoee ox aondlUose afSsotlag OY relating to tinapartloular ataat5wtr And It avy be praolslrsd Wit tka LeglAlAtbim %AAu*, ‘hAd &A IdAa’, or hae familiar with' the 'law of trio 1aAd that in, t&O t%RUtitUtiOA #he OoyPg law, *x&d% statutes Qltd the iSho& thateot~ ala0 prlox dsoidona ef the eour%*,-aC Lea& those of lest XWQ3%,--~XttiA~ to the aub~wbmatter, The I~e&elatuxv IIB prs5ktd to hare wlabcr stood the mem& of' lnncg``&e WeiD it eraployed, atid to bAOCrkA0WAthe WcUUtXUOtiOA SACSOd UJWAb&A 5ame OX B siolilar abatube by the agpellats oourQ8 an8 by ereoutiva or adndnbatrstiv~ officsera. aad it rap ?a pxotiwiad ln a roper wee thst the 5b- ~ielature has aoq&Boed L-4 Ike OOAll aXuOEfQzlof a prtioular aot, or that if it hed not bew eat&- sic4 titer; ouoh %onsltruotlon it wourd h%+e %tuln#ni the ~6rbia(gs OS the 3.8~ so as to AIAow a Contras iateotiixl. ” ” l . .* .. 582 Efonorabls a#. ff. Shop-d, Pscro 8 This oonpany not bsiag pri oil ~Ipelltw oompany, or a 00~0~ oar&em pipeline Oo~pnny, atqgnged in ths traarjuwta- tiOA of oil, end not bei% a ociqmny ongegsd in doI@ buai- nosi of the sam oharsoter, 8s est forth and deaorIb+d in nala iirtiol4 7105, w think It IP alsax that it doe8 not ocma within tha 41~3s of 011 pI.pelin* o4mpanlee a% d&i-d In ChapOer 4, Tit14 122, and amendmutto. Tkw3tIng that thIe Mtilritkotorlly enavmra your in- quiry, we rrslaln Vary truly yours AT'l'OMrfP CBlWRhL 0% Ff2XU& Jw hm. @. Bt458ott A~salatant