R-458

45 t.WX?ICE OF 

## TEE AIYTORNEY 

# GENERAL

Ausq~. TEXAS

PRICE DANIEL ArTO*NeYGENERAL

Eon. Ernest 0. Thompson chalrman Railroad Commlssion~of Texas Au&in, Texas July 23, 19%

Opinion No. V-309

Re: The necessityof approvalby the Railroad Commlsslon of Texas of
a dlscontlnuance of the supply of gas to a munlclpallty by a gas utility,pursuant to'contract

between the parties. And related questions.

Dear Sir:

You have requested ment In letters establishingthe opinion of this Departthis factual situation:

"111 May, 1928, the Mobeetlb Gas Company made a contractwith certain lndlvldtilsto furnish-gasto-the alty'llmltsof Mkuul, Roberts County,Texas; these l~lvlduals having a franchise from the City running for; a period of~20.years;the Mobeetle Gas Company to constructa 4 Inch line and furnishing gas to the city limits of the City of Miami. This contractwas .&lso for a period of 20 years. This contract ~111 expire in 1948.

"The Publio-SeFvice Corporationof Texas is successorto the M6beetle Gas Company, and desires to dlscontln~e furnlshlng 'gasto the ol$g llmlts of the city of Miami at the explratXonof Its coatract for the reason, 'among

others, that its

will require the constructionof a new 15 Iidle line since the old line Is not In condition to coritlnue

service after the expiration &ate.Hon.



### 46 Ernest 0. Thompson - Page 2 v-309

"

. . . Public Service Cbrporatlon has In m,lnd that It will give notlce to the owners of the franchise in the City of Miami and to the said City In ample time for them to make other arrangements before the expirationof the contract."

Your questionsare as follows:

"Pleaseadvise If It Is necessary for the Public Service Corporationof Texas to apply for permissionfrom the Railroad Commission to discontinuethe servicedescribed In the enclosed letters and If it is necessary for a hearing to be held If such appllcation Is to be required.

"Also please advise us If notice to the customersof the utility are required to be given notlce,prlorto discontinuance of aervlce Ln the event applicationto the CommlsslonIs not required."

The Public Service CorporationIs a "gas utllor 'public utility" as defined In Article 6050, 1ty" V.C.S.) as follows:

"The term 'gas utility' and 'publicutllltys' or 'utility,*

as used In this subdlvlsion, means and Includespersons, companies and private corporations,their lessees, trustees,and receivers,owning,managing, operating,leasing Or controlling within this State tiny

wells, pipe lines, plant; property,equipment, facility, franchise, license, dr permit for elther,oneor more of the followingkinds of business:

"1. Producing or obtaining,transporting, conveying distributingor delivering natwal~gas: [a) for public use or service for ccmpensatlon; (b) for sale to municipalities or persons or companies,In those
cases referred to In paragraph 3 hereof, engaged in distributingor selling natural gas to the public; (c) for sale or delivery of natural gas to any person or firm or corportatlon operatingunder franchiseor a contract with any municlpalltyor other legalRon..Ernest0. Thompson - Page 3 v-309 47

subdlvlslon

of thls.State.;

or, (a) for sale
or delivery of natural gas to the public for domesticor other use.

"2. Owning or operatingor managing a pipe line for the transportation or carriage of natural gas, whether for public hire or not, if any,part of the right of way for said line haa been acquired, or may hereafterbe acquiredby the exercise of the right of emInentdomaIn; or If said line
or any part thereof,.ls laid upon, over-or under any public road or highway of this State, or street or alley of any munlclpality, or the right of way of any rallroad or other,public utility; Includingalso any natural.gas~utillty authorize&by law to exercise the right of eminent domain.

“3
e Producing or purchasingnatural gas and transporting

or causing the same to be transported

by pipe .llnes

to or near the llmlts oft

any munlclpalltyln~whlch.saSd gas Is receivedana dlstFlbutedor sold to the public by another public utility or by said munlclpallty,In all cases where such buslness Is In fact that only or practically.excluslve agency of supply of natural gas to such utility or municipality,is hereby declared to be virtual monopoly and a business and calling affectedwith a DubllC.interest. and the said business and thereinwithin this State to the provisionsof this risdlctlon

and regulation
as a gas utility. property employedshall be subject law and to the juof the Commission

'%very such gas utllftg Is hereby declared to be affectedwith a public interest, and subject to the jurisdiction, control and regulationof the Commissionas provided herein."
"Jurlsdlctlon,

control and regulation"of.the utility are vested In the Railroad Cominisslon by Artlcle 6050, supra. 'This "j~urlsdlctlon"~and "conttiol"

may not be divestedwlthotit the. consent of,the Railroad Commlsslon. For only the Railroad Commlsslonmay terminate that "jui3sdlctlon" and ,control;"

## 48 Eon. Ernest 0. Thompson - Page 4 v-309

Section 1 OS Article 6053, V.C.S., providesas follows:

'The Commission after dtie

notice shall fix and establishand enforce the adequate and reasonableprice of gas and fair and reasonable

rates of charges and Fegulatlons for transporting,

producling,

dlstrlbutlng, buying, selling,and deliveringg a by such 1 pipe lines In this State; and sha 1 establlsh fair and equitable rules and regulations for the full control and SupervIsIon of said gas pipe lines and all their holdings pertainingto the gas business in all their relationsto the public, as the Commlsslonmay frcm time to time deem proper; and establisha fair and equitabledlvislon of the proceeds of the sale of gas between the companies transporting or protiualng

the gas and the companiesdlatrlbutlng or selling It; and prescribeand enforce rules and regulatlonafor the governmentati control of such pipe lines in respect to their gas elpe lines and produalng,receiving,transporting, and dlstrlbutlngfaOllitle8; and regulateand apportion the supply of gas between towns, cities, and corporations, and when the supply of gas controlledby any gas pipe line shall be Inadequate,the Commlssloashall prescribe fair and reasonable rules and regulationsrequiring such gas-pipe lines to augment their supply of gas, when-in-thejudgment cjf the Commlsslon it la practicableto do so; and It shall exercise its power, whether upon Its own motion or upon petition by any person, corporation,

munlclpkil

corporation,

county, or Commlssloners

precinct showing a substantial Interest.

In the subject,~ortipon petition of the Attorney~G~neral;~or 6f any County or DistrictAttbrneg in any county wherein such business or any part thereofmay be carried on."
By virtue of Article-6053,8.iipra, the Commlssion Is empoweredwith'"full oontrol and~supervlslon of said gas pipe lines and alltheir holdingspertaining to the gas business In all their relations to the &- lie." It Is ft@her%szered ~1-5 -m overnmentandHon. Ernest 0. Thompson - Page 5 v-309 *9

control of such pipe lines In respect to theif gas pipe lines and producing,receiving,transporting and dlstrlbutlngfacilities" and. empoweredto "re&.ate and appo;il$n the supply of gas controlled bynany gas pipe

. It may exercise Its power upon Its own motion
or upon petition."

It would be an empty "jurisdiction" and an empty "full control" if the Commissioncould not continue
a serviceby a utility. Otherwisethe utlllty could abandon at will and bargain on that basis. It Is stated In State ex reL Public Service Commlsslon v. Mlssourl SouthernR. Co. (Sup. Ct. MO, lglg), 214 S. W. 381.: (pp. 384-385 I
11 Can appellantabandon this service witio&, applying to the commissionfor leave to do so? If so, any carrier can abandon any servicewithout such leave, and, doubtless,change fares and take oft equlpment, whenever It comes to the conclusion that the facts jtistlfy such action.. If this
course be lawful, the ccaumlsslon will became littlemore than a figureheadso far as carriers are concerned,and Its powers can be Ignored or Invokedas the carriermay desire. In this case the carrierwas operatingIn submissionto'the commissionand under rates
on file. A rate was changed.,Instead of applying to the commlsslonfor an Increase elsewhere,or for leave to abandon the service, the carrier said, In effect, that It would not submit to the change, but would take up the track. It may be It is entitled to an order permittingIt to do so. It should have applied to the connnlsslon for the leave. Unless the power of the commlsslon to pass on this question Is conceded, then~lt is apparent the exercise of 801118 of Its express powers is conditioned upon the consent of the carHer. The expresspower of the commissionover facllltles, equlpent, and honstructlon,

and changes therein,and
over the operation of trains (sections 49, 41, ~avs lg13), pp. 588, sgo), is of.no avail, if appellant'scontention $8 sound. As .was said by the Kansas Suprenie Court:

"'If these utilitg~corporatlons~magabandon this particularservicewithout the'consent of the commlssfon, may they not take50 Hon. Ernest 0. Thompson - Page 6 v-309

off their pass6nger trains,take up and abandon unprofitable

branch lines,changethe fares and rates of transportation for passengers and freight,or raise the chargefor telegraph

messageswithout the consent of the'commlsslon? These questions answerthemselves. To yield approval to the contention of defendantsIs to concedethat the state's program for the regulation and control

of public service corporations 1s Ineffective; that the Public Utllltles Act has been enacted In vain.' State ex rel. v. Postal Tel. co., supra."

It Is further stated in State v. KansasPostalTelearauh-Cable

Co. (Sup. Ct. Kans. 1915),15C P. 544: '(P. 5471

II

. . . In view of all these,can there be any doubt of the duty of the defendant, before dismantlingIts stationat Syracuse and abandoning Its business thereat, t@ secure the approval of the ConmIssion for such
an Importantchange in Its mode of service? How Is the Public lJtllltles Commission

to discharge Its important duties if the pnbllc service companies may quit business

here, there, or anywhere In the state vlthout 811 opportunityfor the %omisslon to detezi:ne the propriety of such a course?

"It Is clear that, If the defendant my forego Its business In Syracuse vithotithe sanction of the Commlsslon, it can close its office in Topeka,Wichita, or Kensas CLtr, without the consentof the Comlsslon. Jf this public utility,'&telegraph compsv, can close one of its officesand qult bus'3ess without the-consent of the Commlsslon,

6~ dther'ptibllc

utility, like the SantaP? Zallw&y, So* exempl6; could close Its depctat DMg6 City, Htitchlnson, or Emporia

vitt?zt the consent of the Cominli~sloh. Where r--nld this end? If these utility corporatlozs gay abandon this partlculsrservice wlthorr.

:he consent of the Commlssion;may they net -zke off their passenger trains,take up ati sbandon unprofitable

branch lines,changet% fares and rates of transportation for 1Ji'-

sengers and freight, or raise the c-e forRon. Ernest 0. Thompson - Page 7 v-3.09
51

telegraph

messages without the consent of the CCmmlSslon?'

These questldnsanswer themselves. To yield approval to the contention of the defendant Is to concede th8t the state'sprogram for the regulationand control of public service corporationsis Ineffective; that the public utllltlesact has been enacted In vain."

Further reason dictates that this jurisdiction may not be terminated without the consent of the Rallroad Commission. For, If the conversebe true, a utility, against the will of the State, could abandon Its pipe line, tear up the line and sell it before replacement could be made. The possible effects of such a claimed power could be utter disaster to the great lnterests of the community. Destructionof private property, in which the entire community Is Interested, could result. The life of the citizen as well as the property could be jeopardized.

It Is well establishedthat "as a general rule, the proprietorof a public utility or service Is bound to continue the business until such time as he shall have been granted permission to discontinueIt." 34 Tex. Jur., "PublicUtllltles and Services," Section 15, p. 717; 43 Am. Jur., "PublicUtllltlesand Services," Section 78, p. 621; 5 Corpus Jurls, "Public Utllitles," Section 17, p. 8. Section 215, pp. See 5 P. U. R. Digest, "Service,"

4611-4614.

Moreover, this has been the practiceand constructionof the Railroad Coxnlssionover a period of years. During this period of years, utllltleshave made applicationto the Railroad Commissionfor permissionto discontinuetheir service. The construction and lnterpretationof a statute by the Departmentcharged with its administration Is entitled to great weight and will be adhered to unless clearly erroneousor unsound. 39 Tex. Jur., "Statutes," Section 126, pp. 235-237.

In answer to your first question, therefore, the Public Service Corporation must have the consent of the Railroad Commissionto discontinuethe furnishingof gas to the dfstPlbutor for the City of Miami.

Section 1 of Article 6053, supra, provides, in part, as follows:

"The Commissionafter due notice shall fix and establish

. . .'Isf2 Hon. Ernest 0. Thompson - Page 8 v-309 '

Section 14 of Article 6053, v.c.s., provides as follows:

"Roticeof 8ny hearing,and of the time and place thereof, shall be given by reglstered'mall

not less than ten (10) claysexclusive of the day of mailingbefore such hearing, addressed to all partieswhom the Comml~slon

may deem to be interestedIn the subjectmatter of such hearing. Any llcensee against whom a complaint has been filed shall be notified of the hearing on such complaint as herein provided,and shall have the right to appear at such hearing, file answer, Introduceevidence,
son and by counsel." and be heard both in p,erIn answer to your second question, It Is our opinion that the statutes contemplate a hearing by the Railroad Commlsslon upon applicationfor discontinuance of service,because the Commission must enter an order upon such applicationunder Article 6053, supra,which must be after "due notice." Section 14, supra, provides that "noticeof any hearing" shall be qlven to "lnterested" parties, ing." not less than 10 days before such hearIn view of this opinion,your third question does not require an ansver.

SWMARY

1. It Is necessary for the Public Service Corporation,

a "gas utility"as defined bg~our statutes (Article6050, V.C.S.), to have the consent of the Railroad Conrmlsslon to discontinuethe furnishingof gas to the distributorfor the City of Miami. State ex rel. Public Servfce Commission v. Mlssourl Southern R. Co; (Sup. Ct. MO. lglg), 214 3~. W: 381, 384; State v. Kansas Postal-Telegraph-cable Co. (Sup. p. 544, 547.

2. A hearingmust be held by the Commlsslon on an 8ppllcatlonof a "gas utility" for requestedpermission to discontinueHon. Ernest 0. Thompson - Page 9 

### 53

v-309

service to a municipality. Article 6053, V.C.S.

Yours very truly

A!l3!ORNEYGElW3ALOFTEXAS

BY

EMH:jt