I<. ,/ 

.;.. .; 

'THE.&%TORNEY GENERAL 

OF TEXAS 

General __.~~~ Ernest 0. Thomnson Onlnion No. WW-754 

Chairman, Railroad Commission - 

Tribune Building Re: 

Austin, Texas 

Applicability of Article 

6060, V.C.S., to gas pipe 

line operations classi - 

fied as field sales from 

the gathering system, and 

Dear General Thompson: related questions. 

We quote from your opinion request as follows: 

“This application for an opinion concerns the 

applicability of Article 6060, R.C.S. as amended, 

to gas pipe line operations as hereafter described. 

The principles Involved are common to several pipe 

line-operators in the State; however, we have 

chosen one company the Colorado Interstate Qas 

Company, and will outline its operations and the 

questions we have regarding the taxes for whioh 

they are pliable under the above statute. 

“Colorado Interstate Qas Company is a large interstate gas transmission system, purchasing and producing gas principally in the Texas Panhandle and 

delivering It to market In Colorado. 

“(1) For the year 1958, the company regorted in 

its Annual. Report to the Railroad Commission of 

Texas the followi 

7 

Cross Recipts for Texas operatians: Tnd,ustrlal 2,931; Qovernmental - $989,586, 

Drilling Fuel - $2,469; Misoellaneous - $5,8C2~ 

totaling $1,000,788. On this amount the oompany 

has not pald.the gross reasipts tax, stating that 

this constitutea field sales frcmm the gathering 

system, and, hence3 not taxabla. In thaa oonnection It ehould.~ be pointed out thst the gathe;piag 

system oonnects to a large number of wells, only 

about half of which are operated by company. 

“(2) The aompany also made In 1958, sales to El 

Paso Natural Gas. totaling $2,419,050, delivered at 

Dumas, Texas. This gas after dellvery to El, Paso 

undoubtedly enters interstate commerce. On this 

amount, aleo, the company has not paid the gross 

receipts tax (3) In addition the company also 

recieved $14,259. during 1958 which It classified 
Gen. Ernest 0. Thompson, Page 2 

as Rent from Gas Property, 

classification. 

(Opinion No. WW-754) 

without any further 

"The questions to be answered for the above numbered paragraphs are as follows: 

"(1) Is the Colorado Interstate Gas Company llable for the gross receipts tax on the amount 

which the company has classified as field sales 

from the gathering system? In this connection It 

should be pointed out that a different fact situation exists than existed in the Republic Natural 

Gas Company situation in the. Opinion of Attorney 

General Gerald C. Mann, No. 0-3524-A. 

"(2) Is the Colorado Interstate Gas Company liable for the gross receipts tax on the amount 

which the company received from El Paso Natural 

Gas Company for the sale of gas at Bumas, Texas? 

“(3) Assuming that the revenue received classifled.as Rent from Gas Properties was all from 

Texas properties and with no further classifica- 

;zr is this amount subject to the gross receipts 

Article 6060, V.A.C.S., is as follows: 

"Every gas utility subject to the provisions 

of this subdivision on or before the first day of 

January and quarterly thereafter, shall file with 

the Commission a statement, duly verified as true 

and correct by the president, treasurer or general manager if a company or corporation; or by 

the owner or one of them if an individual or copartnership, showing the gross receipts of such 

utility for the quarter next preceding or for 

such portion of said quarterly period as such 

utility may have been conducting any business,- 

and at such time shall pay into the State Treasury at Austin a sum equal to one-fourth of one 

per cent of the gross income received from all 

business done .by it within this State during said 

quarter." 

The scope of the taxes imposed by the foregoing 

article was limited by Section.10, H.B. 547 of the 42nd 

Legislature (Acts of 1931, 42nd,Leg., R.S;, Ch. 73, page 

ill), which reads:.' 

ii:. 
Gen. Ernest 0. Thompson, Page ~3 (Opinion No. WW-754) 

"Section ;O. That Article 6060 pf the 

,:Revised Civil Statutes of 1925, except insofar as 

it imposes the license fee or tax of-one-fourth 

of one per cent against persons owning, operating, 

or managing pipe lines, as provided in Section 2 

of Article 6050, is hereby repealed and said fund 

shall be used for enforcing the provisions of 

Articles 6050 to 6066, inclusive." 

The.pertinent portions of Article 6050 are as follows: 

"The term 'gas utility' and 'public utility-' 

or 'utility,' as used in this subdivision, means 

and includes pereons, companies and private corporations, their lessees, trustees, and receivers, 

owning, managing, operating, leasing 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 carriage 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 upon, 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; includingalso any natural gas utility 

authorized by law to exercise the right of emlnent domain." 

The question that must be determined Is whether the 

Colorado Interstate Gas Company owns, operates or manages a 

pipe line within the purview of the forgoing section. 

Prom the facts set forth in your letter, it appears 

that the Colorado Interstate Gas Company operates a large 

interstate gas~transmisslon system. This system is connected 

to a'number of wells, about half of which are operated,by 

Colorado Interstate. The, natural gas transported in the 

transm%ssion system isdelivered principally to market in 

Colorado,, but some is delivered and.sold~ to El Paso Natural 

Gas Company in Pumas, Texas. Colorado Interstate has the 
Gen. Ernest 0. Thompson, Page 4 (Opinion No. ~~-754) 

right of eminent domain.1 Under this set of Circumstances 

there can be no doubt but that the Colorado Interstate Gas' 

Company is a corporation "owning or operating or managing 

a pipe line for the transportation or carriage of natural 

gas," within the meaning of Section 2.of Article 6050. 

In answer to Question No. 1, you are advised 

that the Colorado Interstate Gas Company is liable for the 

gross receipts tax on the amount which the company has 

classified as field sales from the gathering system. 

is assumed that all such sales are made in Texas. In $ZZr 

letter you state that the company in.its annual report 

described certain gross receipts from Texas operations, 

which it classified as field sales from its gathering system. The gross receipts tax is due upon all receipts if 

actually gained from Texas operations; however, the act 

has no extra-territorial effect, and the tax is not due 

upon out-of-state sales. ) 

In line with the foregoing discussion, Question 

No. 2 is answered in the afflrmatlve. 

Eased on your assumption that all revenue classlfled as rent from gas property was received from Texas 

properties, Question No. 3 is.also answered in the affirmative. 

' Article 1497, V.A.C.S., provides that any corporation 

created for the purpose of storing, transporting, buying 

and selling oil, gas, salt, brine and other minerals, solutions and llquified minerals has the right of eminent domain. It Is not necessary that a corporation be chartered 

for all of such purposes in order to have the right of 

eminent domain. See note 3 at page 353, Vol. 16, Tex.Jur., 

Sec. 87. The Colorado Interstate Corporation is a Delaware 

Corporation having a permit to do business in Texas. Any 

foreign corporation having obtained a permit to do business 

in Texas can exercise the power of eminent domain in all 

cases where corporations created under the State laws may 

exercise that power. 

western Telegraph and Telephone C 0.3 61 S W 40b T ci 

App.7901, error refused). The case of ThoApson i.ekitzd 

Gas Corporation, 190 S.W.2d 504 (Tex.Civ.App. 1945 error 

refused) states at page 509 that the gas utilities'described 

in each of the Sections 1, 2 and 3 of Article 6050 have the 

right of eminent domain. Consequently, it is apparent that 

Colorado Interstate Gas Company~has the right of eminent 

domain. 
Gen. Ernest 0. Thompson, Page 5 (Opinion No. WW-754) 

SUMMARY 

The Colorado Interstate Gas Company 

is operating a pipe line for the transportation of natural gas within the purview of Section 2 of Article 6050, V.A.C. 

S. Consequently, It is required to pay 

the gross receipts tax imposed by Article 

6060, V.A.C.S., on its gross receipts 

from Texas operations, which includes receipts from field sales in Texas and rent 

received from Texas properties. 

Very truly yours, 

WILL WILSON 

Attorney General 

JNP:bct 

APPROVED: 

OPINION COMMITTEE: 

Houghton Brownlee, Jr., Chairman 

Paul Floyd 

Howard May-s 

Elmer McVey 

REVIEWED FOR THE ATTORNEY GENERAL 

BJT: W. V. Geppert