Court Opinion

ID: 4131803
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:19:47.295005+00
Date Added: 2024-06-11T14:26:45.544502
License: Public Domain

The Attorney               General of Texas
                                         Octxker   15, 1980
MARKWHITE
Attorney General
                   Honorable John Ii. Poerner                 Opinion No. M-258
                   Chairman
                   Railroad Commission of Texas               Re:   Effect of Senate Bill 833
                   P. 0. Drawer 12967
                   Austin, Texas 78711

                   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                   known as the Cox Act, with the portion repealed by Senate Bill 833 placed in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, mana-
                              ging, operating, leasmg or controlling within this
                              State any wells, pipe lines, plant, property, equip-
                              ment, 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,

                                                     p. 816
.   .

        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); WW-
        625 (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 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

                                             p. 817
,   .

        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 trans-
                    portation, 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

                                                  p. 818
.   -

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

        others.   The former are not utilities, Attorney General Opinions WW-625 (1959); G-
        3524-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

                                                p. 819
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

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