Court Opinion

ID: 4136225
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:11:13.526654+00
Date Added: 2024-06-11T14:44:48.097847
License: Public Domain

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         'THE.&%TORNEY                GENERAL

                         OF   TEXAS

General
__.~~~  Ernest 0. Thomnson        Onlnion No. WW-754
Chairman, Railroad Commission      -
Tribune Building                  Re: Applicability of Article
Austin, Texas                          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 pliableunder the above statute.
     “Colorado Interstate Qas Company is a large inter-
     state gas transmission system, purchasing and pro-
     ducing 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     Cross Recipts for Texas opera-
     tians: Tnd,ustrlal
                      7  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 frcmmthe gathering
     system, and, hence3 not taxabla. In thaa oonnec-
     tion 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    (Opinion No. WW-754)

     as Rent from Gas Property, without any further
     classification.
     "The questions to be answered for the above num-
     bered paragraphs are as follows:
     "(1) Is the Colorado Interstate Gas Company lla-
     ble 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 situ-
     ation 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 lia-
     ble 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 classi-
     fled.as Rent from Gas Properties was all from
     Texas properties and with no further classifica-
     ;zr   is this amount subject to the gross receipts

                                                             ii:.
          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 gen-
     eral manager if a company or corporation; or by
     the owner or one of them if an individual or co-
     partnership, 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 Treas-
     ury at Austin a sum equal to one-fourth of one
     per cent of the gross income received from all
     business done .byit 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:.'
Gen. Ernest 0. Thompson, Page ~3          (Opinion No. WW-754)

         "Section ;O. That Article 6060 pf the
   ,:RevisedCivil 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 corp-
     orations, their lessees, trustees, and receivers,
     owning, managing, operating, leasing or control-
     ling 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 nat-
     ural 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 eml-
     nent 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 sys-
tem.  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 classl-
fled as rent from gas property was received from Texas
properties, Question No. 3 is.also answered in the affir-
mative.

' 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, solu-
tions and llquified minerals has the right of eminent do-
main. 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 C0.3 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 trans-
      portation of natural gas within the pur-
      view 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 re-
      ceipts 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