OFFICE OF THE ATTORNEY GENERAL OF TEXAS

AUSTIN

XEly0, 1939

HonorableTom L. Beauchamp Seoreterpof State hustln,Texas

Iher slrr

.



### ot you? lottarorHonorable Tom L. Beauchamp, Iday8, 1939, Page 2

. more from date of issue. For your oonvenienoe

in determining the issue8 at hand, we em herewith handing to you a copy of the offloe memorandum oonk.aInIng

the signed ruling ot Ssoretarg of State Jane Y. IdcCallum that suoh gas pipe lines are not publlo~utIlItles. Pte are also herewith enclosingour correspondenoe with this oorporntlon and Its attorneysgoing Into the faota OS the ease; when you ham oompleteb your research upon this question we would thank you t0 retW& 0~ OOr~BpOnb~00 iii43 With thb oorporation. , "We4 would themrore ~apprsolatm.your oolwida&ioJl t%Ud Optfd011

Upon the iOlhVing ~MstiO~l

'Am we to ola8sIr under eubUirIr$on

*. 00mputed as r0iimii:.

...~. ..*
On'~prll 14, 1930, Jane..Y. MaCallum, then Searotary

or state,made the r0ii0wingdspatitmental rulingtaonorable Tom L. Beauchamp, Say 8, 1939, Page 3

"There ar*>

numerous deolsions of various courts holding oertain enterprisea to be publio utilltles and t!;ore are several statutory provIsIons deiinlng oertain b&ineose8 55 pub110 utilities,whloh are in the nature of mere polioe qgulations or whioh have to do with condemnation prooeedfnge of private property for publio us5 or whlah Involve the validityof a tax to supporta pub110 see. Aa pointedout on Page 5S7 of 262 U. S. Reporta,the Legislatars nay levy a tax 

### ror any purposa In whIoh the State way~aa~. mob pr40tio4iiy

### oovora th6 ri4id or

*Tide dapartmsnttherotorsaUopt8 

### the qonatmotlon *hioh Is saggertetd 3.4 

### the opinion 

### 0r tha ~.i: su~ra4~a;oOurt ot the United State* retorrad to; -that. !~publlo

utlllty ooiporatIona*, aa used In Houaa Bill I.#!,

lnoludaonly those oorporatlona .rhlghara‘ln Saot pub110 utility oorporatlona

. and angaeemy In bualneaaaa auoh, only Ii thalr aervloaor ratas are aubbjeot to regular .tIon by law, other than for msra purposaa of pOlIoa regulation,wul that any aorporation whiah oannot olearly astabllsh Itsolrto be withIn thI6 olaaawill be held to oome within Paragtaph (A)
as a privatebufalneaa oorporatlon.

"Ths rollowingolaeaea of oo,rporation .arenot reoognized as publio utiUt+rs:.......

"10. Gaa pipe line?. t3as pipe lines, we are \morcble Tar L. Beauohamp, May 8, 1939, Pace 4

advised. are not common carriers bccauso In practice It Is Imposelble to provide place of storage for gas.-

hrtlcles 6050, amended, classify the 6051, 6052, and 6053, R. C. S., 1925, various kind5 of business engaged in oduolog, transporting, Cellvering, and selling natural gas the public for domestic or other use, and deolares eaohto
a -gas ut111tp-, 'public utl2.It.y" or %tIIItyw, afieoted th the pub110 Intarest,and aubjeotto the regulation and ntrol'btthe RailroadCommlaaIon. Evarp aaah gas otllltf requ,Jred to keep %aoka, aooounts,papers, reaorda,tiIpta, veuohers, and other data nqulrsd by the OamaIaaIon,a
an orrlae In Tsxaa. 064 

### pipe lInea 

### engfiged In produolqg, &Ins, transporting, delivaMng, or othsrwIae daaling~in .taral aa are eaah-daolared to be a publIa utlllty, a%-. @tad with the pub110 

### latareat, ax@ In nature and aooardIq Ith6 eatablIahed

method of ooaduotlngsame a monopaly,and tblaaf in xYmp&Otto all-theirhaldIngs partainIa&fo .th8 ,.,
111 bualneasand In-all ralqtlonato the publlg,and Iansprat t their produoing,

traaaporting,

maaIrlng and d.IatrIbatlag rotIlItlea,

to the ipll,andoo ' the RailroadCauaIaalon. "glate, oontrol aad aupervlalon Aut orltf Is also (#van tha Qam-- ~aalon to fix, establlah,and 

### l tioroa a reaaonablarate whIeh Lpa1Iaqa may ohargs .for 

### gas dellraradat tha 

### olty gateto aothar dl8trIbutIng

oompanyor aunIoIpalIty; to Six a iaaonabi+zat&ror ,4as sold and deliveredby pipe lIsaa og therdlstrIbutIng

oaaqanlaato tha pub118 ior dcmaatlaaz ther aqe; and to-fir aad astabliaha fair and 8quItabla 1vIaIonOi tha prcioa@da or tha aala of lratllrdL &a8 batuaan hh-pgmluaIng,or

transporting

ampa.nIsaaad the~ooaganlaa latrlbutlng

or aellIng It to the ultimate aonauaar. Stata

. Fubllo ServIoe Coru&atlon.oi Texas (T. 0. A. 19SS) 88 S.'W. ; $1 6i7+ se& also.

6t.e f. Lone star ais Compaiy (T.-a.r-i 955) ea s. w. (21 484.

Ee reoagnIa@the dootrlna oited by the Seorstarl or tats that a legl5latIre deolaratlon that a patilaular buaInesa ,, a a public utility or afreotsd with a $iublic

### interest la not eaeasarlly binding upon the ooqzt In all In5tanee8, yet auoh deolaratlon is entitled to **e&ious** oonslderation. In this artloular Instanoe It would aripearthat the courts hav'oSOopted the leglrlatlte olaselfloatlon and treated such oorpora- *ionsa8 It they ware in 

## faot pub110 utilities. See alsoZonorabte Tom L. Beauchemp, Key 8, 1939, Page 5

Railroad Commission v. Eumble Oil end Refining Coqany (T. C. A, 1936, :':rit

gr&nted) l@l S. 'A'. (2) 614. The Supreme Court of Texas refused a writ of error in the Lane Star case, and it
was finally passed upod by the Supreme Court of the United States In Lone Star Gas Company v. Yt:ite of TSXa8, (19X3) 304 U. 3. 224, 53 S. Ct. Rep. 883. The Yupreme Court did not question the status of suah companies or the right of the state to regulate their rates, but the case ms reversed upon the grollod that the rate whioh had been sat ~88 unraa8onable, In that It aid not takes into .00aa0tati0n the over-all l fiaenoe. Th$s 0atie

has again been passad upon by the Court OS Clril Appeals in State of Texas Y. r0prtea. &me star Gee compsny, pot yet Th& OOUI%, In 0038piying With tha m&at0 iXQla.thO _, SapromeCourt that It o0ntInUoWith rurtherprooesdlagcr not i : Inoonslstent

with Its opinion,

### has rgalnUphela the 

### aotlon of-the Baflroaa aaamieslonIn 8ettIog the rate;tobs ohdqed - Sor gem at the oity gate. L; It was heli In O~lf Stat.6 UtIlltler &aqany ve '~. State (T. C. A., 1932) 46 S, OF. (2) lOlS, that 

### a 0ompw'-ongagea in the mamSaotw0 ana 0uppl.y 0s 100 to th6 p~bllowarn no6 a pub110 Utlllty wIthIn OCR tran6hIso tax stat&e, there *. " being no &at&r deflaingit as such, and Q0t being in faot iaetagaa

fn that type of buslness. atag BlaIr,:inwriting : 

### the apInIon

of.theoourt,atatsdt "Passingto a aonaIileratI0n di ~sUbaIvI6Ion (a), aupra, of the FranohIseTax Aot of 1QW
wo slnd that it noslther expresslynor lmpldly
v lnoluaesor olaemiflesror taxingpurposesprlvat8 oorporatlons0ng*gea laths man&aotUra and sale .of108 to the publio Ia ‘fsxas do *pub110 utility oor PatIons.' Under the Jang~age of 6ubalvlslon a) anl

$” 3 tlons,whloh shall 

### Iao 'pub110utility oorparaUse every maoh oorporatlon engaged solely in.the buSillss8 Of & publIo utllitrwhose rates or serrioe Is regolated, or aubjeot'

to re@.latlon,in whole or In part, by law,l,are Included. It if3 BVUli?aStflWIl

this, languagethat the.La.gialature did not intend to inc1ua.e within t&6 statute any~ooqwratlon whloh'lt .had

not theretofore,or might thereaft,er;,deolare

to be *by law' a pub110 utilityVonorable Tom L. Beauohamp, May 8, 1939, Page 6

corporation or business. The phrase 'every suoh oorporation* is neaessarily limited to *all public Utility corporations' deolared to be 8UCh *b-J

law*. whlah means. as applied here. by 1 Rlslative anaotment. If the language Lyebe regarded as of doubtful meaning in this reeard, then we think that suoh oonstruction is manifestlv the intention of the Legislature iron its lone-continued poliop of anaotingfrom time to ttie deolaratory statutes,daolaring 

### buelneswo or anterprises to ba pub110 utIlItlea,or to be affoot88 with the pub110 inttbrsst, and In subjsotlngthem to soma sort o?.publIorogdla-' tlon or oontrol. And aspeoIallyhasthIa been the praotlosof the LegIslaturcwIth~ " raspsot to businessas

### or ~aterprlrres uhIoh

~egal'matters

of astermInIng

wba* brulquse ati publIo.utIlIty busInaasee,'ol!

wh& We porationsare pub110 utlllty~oorpo~tlons
or of determInIngthe mattsr qf what publio utility oorporatlons* rata8 or urrloa ara subjaotto regulation. It i8 w8ll 8etti0a that the forum Sor dsr4arIoga budnose to bs atteotsdwith tha inablLo Interoat,and -iOr 8UbjQilting

its FatO8'OrU3lTiOO t0 ramlatlon, is fn the first i~tanoe the Legislature, and, until the &#slatura haa 80tea,

we do not think abrlnl8tratire ofrlolals or departments OS ~srnn~6 8~ ‘d'eteraine the questlons. 1 Thampsonen Oorporatlona (3a m.) p. 1706.......*Honoreble Tom L. Beauchamp, Kay 8, 1939, Zag% 7

This reasoning Is equally sound and is equally applicable in determining whether a corporation declared to be
a public utility by.the Legislature should be so classified by the Seoretery of Stats in applyin subdfvlsion (0) of Art1010 7084 R. C. s., 1925, as amended.

Mile it ls.withsome reluotasoethat we disagree with a aontemporaneous oonstruotlon by your department, we think thst In the light of more reoent expressions OS the saa&, not availeblawhan tha ruling was made, that a gas &s 1xns s@zpozatIonsuoh as dssorlbs~ In your latter should bs olasslrlaaas a pabklo Utility.



### This aepurtieat 

### Is OS tti8 oplnloa 

### thatthose &as pips line osmpanlesileflnsa In Artlsls 6OSO B.. 0. S., 1925, 

### aa publIo

utllltlss

ahoultl 

### be olas8iried

as pub110

utIlIty 00rporatioa8

as the term 

## is u86ain Art1018m34 (b) 1923;a~t~~0M~,proiia~, 

### ~OUWW theirbud.nsssIs that

## or a publlo utlllty. Thla rul& la, of OOurH~ to.rinal 

### ~oldl .aetemIaatlon that a gas Ipe llao la Art1010 6080 Is'%st"In.faot a publio uti

E tp and llot sub

### Aiot * reg9latIon.

: **Very truly**  **yours .** 

**., ATTORRETWUERALOFTJU42**