The Attorney General of Texas 

Octxker 15, 1980 

MARK WHITE 

Attorney General 

Honorable John Ii. Poerner 

Chairman 

Railroad Commission of Texas 

P. 0. Drawer 12967 

Austin, Texas 78711 

Opinion No. M-258 

Re: Effect of Senate Bill 833 

Dear Chairman Poerner: 

You have requested an opinion on several questions about the effect of 

Senate Bill 833, Acts 1979, 66th Legislature, chapter 216, section 1, at 473, 

which amended article 6050, section 2, V.T.C.S. Article 6050, V.T.C.S., also 

known as the Cox Act, with the portion repealed by Senate Bill 833 placed in 

brackets, reads as follows: 

The term ‘gas utility’ and public utility’ or 

‘utility,’ as used in ~this stidivlsion, means and 

includes persons, companies and private corporations, 

their lessees, trustees, and receivers, ownirg, managing, operating, leasmg or controlling within this 

State any wells, pipe lines, plant, property, equipment, facility, franchise, license, or permit for either 

one or more of the following kinds of business: 

. . . . 

2. Owning or operating or managing a pipe line 

for the transportation or carrisge of natural gas, 

whether for public hire or not, if any part of the right 

of way for said line has been acquired, or may 

hereafter be acquired by the exercise of the right of 

eminent domain. [or if said line or any part thereof is 

laid won, over or under any public road or highway of 

this State, or street or alley of any municipality, or 

the right of way of any railroad or other public 

utility; including also any ratural gas utility 

authorized by law to exercise the right of eminent 

domain.1 

Ycu ask, first, what kind of businesses or business entities have been 

excluded from the definition of “gas utility” by the bilL The terms URity”, 

“public utility”, and “gas utility” will be used interchangeably. Article 6050, 

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Honorable John H. ~oerner - Page Two (m-258) 

V.T.C.S., as amended by Senate Bill 833, no longer contains language which would 

make one in the business of transporting gas a utility solely because its gas pipelines 

are upon or cross any public road or the right-of-way of any utility or railroad. 

Article 6050, V.T.C.S., has not historically been construed as making any entity a 

utility solely because it owned, operated, or managed pipelines which carried natural 

gas across a public road or other right-of-way listed in section 2. To be a utility under 

that section the entity must also be engaged in the business of transporting gas. A 

producer may operate such pipelines as an incident of its production business without 

affecting its status as a gas utility. Attorney General Opinions WW-926 (1960); WW625 (1959); G-3524-A (1942). Such a producer could be a utility under article 6050, 

V.T.C.S., sections 1 and 3, but its operation of a pipeline across a public road would not 

make it one. Similarly, a distributor of gas necessarily operates pipelines which 

frequently cross roads and other rights-of-way. While such distributors are utilities, 

thev are not made utilities bv section 2 of article 6050. V.T.C.S.. because thev are not 

in <he business of gas transportation. Thompson v. United Gas Corporation, 196 S.W. 2d 

504 (Tex. Civ. App. - Austin 1945, writ ref’d). 

Before the passage of Senate Bill 833, one who was in the business of 

transporting natural gas and either crossed a named right-of-way or held the power of 

eminent &main, was a utility under section 2. Under the section as amended, only 

those engaged in the gas transportation business and holding or having exercised the 

power of eminent &main would be included. The right of eminent domain is conferred 

upon gas corporations by article 1436, V.T.C.S. By its terms, the statute applies only 

to corporations. Its predecessor statute, Acts Ml, 32nd Legislature, chapter 3, section 

4, at 228, was similarly worded and was so construed in Van Valkenburgh v. Ford, 207 

S.W. 405 (Tex. Civ. App. - Galveston 19181, aff’d on other grounds, 228 S.W. El4 (Tex. 

Comm’n App. 1921). Accordingly, only corporations can now be included in the 

definition of a gas utility stated in section 2. The amendment &es not limit the types 

of business entities which may be gas utilities under sections 1 and 3, nor is there such 

a limitation in the Public’Utility Regulatory Act (PURA), article 1446c, V.T.C.S. 

In answer to your first question, we conclude that one engaged in the business of 

transporting gas whose pipelines cross a public road or utility or railroad right-of-way 

and who has no other utility characteristics hes been excluded by the amendment from 

the definition of a utility found in article 6050, V.T.C.S. 

Your second question is what businesses have been excluded from liability for the 

gross receipts tax imposed by article.6060, V.T.C.S. Whle article 6060, V.T.C.S., 

states that the tax is imposed on “every gas utility subject to the provisions of this 

subdivision,” it has not applied so broadly since its partial repeal in 193L Acts 1931, 

42nd Leg., ch. 73, SlO, at llL That amendment provided that the tax would be imposed 

only upon utilities as defined by section 2 of article 6050, V.T.C.S. The amendment 

was upheld and construed in Thompson v. United Gas Corporation, w. The effect of 

Senate Bill 833 is to nsrrow the scooe of section 2, as discussed in resoonse to vour 

first question. Only those entities engaged in the business of trabsporthg gas whose 

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Honorable John H. Poerner - Page Three M+256) 

pipeline rights-of-way have been or may be acquired by exercise of the power of 

eminent &main, whether or not such lines cross public roads or other rights-of-way, 

remain subject to the tax. 

Your third question, whether businesses exclude from the amended Cox Act’s 

definition of a gas utility are nevertheless “public utilities” under article I446c, section 

3(c)(3), V.T.C.S., requires an examination of the latter statute, which provides: 

(c) The term ‘public utility or utility,’ when used in this Act, 

includes any person, corporation, river authority, cooperative 

thereof, corporation, or any combination,. . . or their lessees, 

trustees, and receivers, now or hereafter owning or operating 

for compensation in this state equipment or facilities for: 

. . . . 

(3) transmitting or distributing combustible hydrocarbon 

natural or synthetic natural gas for sale or resale in a manner 

which is not subject to the jurisdiction of the Federal Power 

Commission tmder the Natural Gas Act (15 U.S.C.A., Section 

717, et seq.) (‘gas utilities’ thereinafter) provided that the 

production and gathering of natural gas, the sale of natural gas 

in or within the vicinity of the field where produced, the 

distribution or sale of liquified petroleum gas, and the transportation, delivery, or sale of natura1 gas for fuel for irrigation 

wells or any other direct use in agricultural activities is not 

included. 

In Bavou Pipeline Corporation v. Railroad Commission, 568 S.W. 2d 122 (Tex. 

1978X a gas gathering company challenged the Railroad Commission% assertion of 

jurisdiction over it as a utility under section 2 of article 6050, V.T.C.S. The 

corporation, which gathered g& produced by others by means of a pipeline which 

crossed public mads, argued that the definition in article 1446c, section 3(c)(3), 

V.T.C.S., excluded it, and that, therefore, a conflict existed between article 6050, 

section 2, V.T.C.S., and the PURA. Article 1446c, section 90(a), V.T.C.S., repeals any 

statutory provision in conflict with any provision of the PURA; accordhtgly, Bayou 

argued that the definition in the PURA controlled and the corporation was excluded 

from utility status. The Supreme Court held that there is no such conflict between 

article 6050, section 2, V.T.C.S., and article 1446c, section 3(c)(3), V.T.C.S. It held 

that the PURA’s exclusion of “production and gathering”, upon which the corporation 

relied, did not exclude a gatherer of gas produced by another. 

The question presented in Bayou Pipeline Corporation v. Railroad Commission, 

suora. whether or not a aas mtherer whose lines cross wbhc roads is a oublic uahtv 

under- article 6050, sect&n 2; V.T.C.S., has arisen frequently. Generally, the courts, 

the Attorney General, and the Railroad Commission have distinguished between those 

who gather only the gas they have produced and those who gather gas belonging to 

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Honorable John H. Poerner - Page Four @W-258) 

others. The former are not utilities, Attorney General Opinions WW-625 (1959); G3524-A (1942); see also Thedford v. County of Jackson, 502 S.W. 2d 899 (Tex. Civ. 

App. - Corpus Christi -1973, writ ref’d n.r.e.1; the latter are. Bayou Pipeline 

Corporation v. Railroad Commission, supra; Re Amarillo Oil Company, Tex. R.R. 

Comm’n, Gas Utilities Docket No. 747; Re Champlin Petroleum Company, Tex. R. R. 

Comm’n. Gas Utilities Docket No. 1066;i ie Gulf Oil Corporation, Tex. R. R. Comm’n, 

Gas Util&s Docket No. 1081. 

In Bayou Pipeline Corporation v. Railroad Commission, slpra, at 126, the court 

stated that %as gathering pipelines may be considered as utilities in both PURA and 

the Cox Act.” The repeal of part of the Cox Act definition by Senate Bill 833 has no 

effect (XI the PURA definition. Accordingly, at least some gatherers no longer 

included under article 6050, section 2, V.T.C.S., will still be utilities under the PURA. 

Whether or not a particular entity now removed from gas utility status under the Cox 

Act is still a utility under the PURA must be determined by examining its particular 

activities. 

SUMMARY 

Senate Bill 833 has removed from the definition of a “gas 

utility” under section 2 of article 6050, V.T.C.S., businesses and 

business entities which are in the business of transporting gas 

and whose pipelines are laid lpcn or under a right-of-way 

~designated in article 6050, section 2, V.T.C.S., and which do not 

have any other characteristics which would bring them within 

that definition. All businesses and business entities except 

those which are in the business of transporting gas and which 

hold the power of eminent domain have been excluded from 

liability for the ‘gross receipts tax imposed by article 6060, 

V.T.C.S. Some businesses and business entities which have been 

removed from the definition of “gas utility” under article 6050, 

V.T.C.S., by Senate Bill 833 are included in the definition of 

“public utility” in article 1446c, section 3(c)(3), V.T.C.S. The 

activities of each business will have to be examined to 

determine whether it falls within that definition. 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

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Honorable John H. Poerner - Page Five (m-258) 

Prepared by Phyllis Schunck 

Assistant Attorney General 

APPROVED: 

OPINION COMMTTTEE 

C. Robert Heath, Chairman 

David B. Brooks 

Bob Gammege 

Susan Garrison 

Rick Gilpin 

William G. Reid 

Phyllis Schunck 

Scott Wilson 

Bruce Yamgblood 

p. 820