# The Attorney General of Texas

Octxker 15, 1980 MARK WHITE AttorneyGeneral Honorable John Ii. Poerner Chairman Railroad Commission ofTexas P.0. Drawer 12967 Austin, Texas 78711 Opinion No. M-258
Re: Effect ofSenate Bill 833

Dear Chairman Poerner:
You have requested an opinion onseveral 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473, which amended article 6050, section 2,V.T.C.S. Article 6050, V.T.C.S., also known as the Cox Act, with the portion repealed bySenate Bill 833placed in brackets, reads as follows: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 ofthe 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 ornot, if any part ofthe right of way for said line has been acquired, or may hereafter be acquired by the exercise of the right of eminent domain. [orifsaid 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 beused interchangeably. Article 6050,

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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 orthe right-of-way ofany utility orrailroad.
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 apublic road or other right-of-way listed insection 2. To be autility under that section the entity must also be engaged in the business of transporting gas. A producer may operate such pipelines as an incident ofits 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 1and 3,but its operation ofapipeline across apublic road wouldnot 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 2of article 6050. V.T.C.S.. because thev are not in<hebusiness ofgas transportation. Thompson v. United Gas Corporation, 196S.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 wouldbe included. The right of eminent domain isconferred upon gas corporations by article 1436,V.T.C.S. Byits terms, the statute applies only to corporations. Its predecessor statute, Acts Ml, 32nd Legislature, chapter 3,section 4, at 228, was similarly worded and wasso construed inVanValkenburgh v.Ford, 207 S.W.405 (Tex. Civ. App.-Galveston 19181,aff’d onother grounds, 228S.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 begas utilities under sections 1and 3,nor isthere such alimitation inthe Public’Utility Regulatory Act (PURA), article 1446c,V.T.C.S.
In answer to your first question, we conclude that one engaged inthe business of transporting gas whose pipelines cross a public road or utility or railroad right-of-way and whohas no other utility characteristics hesbeen excluded by the amendment from the definition ofautility found inarticle 6050, V.T.C.S.
Your second question iswhat 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 wasupheld and construed inThompson 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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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 agas utility are nevertheless “public utilities” under article I446c, section 3(c)(3), V.T.C.S., requires an examination ofthe latter statute, which provides:

(c) The term ‘public utility or utility,’ when used inthis 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 inthis 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 (15U.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. 1978Xa 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, didnot exclude agatherer ofgas produced byanother.
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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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. ie Gulf Oil Corporation, Tex. R. R. Comm’n, Comm’n. Gas Utilities Docket No. 1066;i 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 ofpart of the Cox Act definition by Senate Bill 833has no effect (XIthe 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 nowremoved 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 2of 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 inarticle 6050, section 2, V.T.C.S., and which donot 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 ofTexas
JOHN W.FAINTER, JR. First Assistant Attorney General

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Prepared byPhyllis Schunck Assistant Attorney General
APPROVED: OPINION COMMTTTEE
C. Robert Heath, Chairman David B.Brooks BobGammege Susan Garrison Rick Gilpin William G.Reid Phyllis Schunck Scott Wilson Bruce Yamgblood

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