THE ATNDRNEY GENERAL
OF~XAS
The Honorable Joe C. Banns Opinion No. E-830
Chairmcm
Coeeaittee on Energy Reao*cea lb: Whether a natural
Bourns of Representatives gam pipeline is a common
P. 0. Box 2910 carrier mubject to Rail-
Aumtin, Texar 18767 road Coemiaeion regulation.
Dear Chairman Henna:
You have requested our opinion regarding the authority
of the Railroad Comiemion to regulate natural gas pipelines.
Specifically, you aekt
1. Whether a nat)lrel gas pipeline or
a gas utiltity, es defined in a,rticle
6950, V.T.C.S., is a common carrier.
2. Whether the Railroad Commission may
require a natural gam pipeline or a gas
utility to transport natural gas for
others.
Article 6050, on which your first question is premised, pro-
vides in pertinent partr ..
The term ‘gas utility’ and 'public
utility' or 'utility,' as used in this
eubdivimion, means ana includes persona,
companies and private cerporatione, their
leeeeea, trustees, lna.receivere, owning,
managing, operating, leasing or controlling
within this State any wells, pipe linem,
plant, property, equipment, facility, franchise,
license, or permit for either one or more of
the following kinds of bueineeer
p. 3503
: . \.”
The Honorable Joe C. Banns,- page 2 (H-830)
1. Producing or obtaining, tranepor-
ting, conveying, distributing or delivering
natural gas: (a) for public use or
service for compensationi (b) for sale
to municipalitiee or persons or companies,
in those cases referred to in paragraph
3 hereof, engaged in distributing or
selling natural gas to the public; (c)
for sale or delivery of natural gas to
any ptreon or firm or corporation operating
under franchise or a contrac$ with any
municipality or other ltgal subdivision
of this Stattt or, W for salt or
delivery of natural gas to the public
for domestic or othtr use.
2. Owning or operating or managing
a pipt lint for tht transportation or
carriagt of natural gas, whether for
public hirt or not, if any part of the
right of way for Said line has been
acquired, or may htrtafttr be acquired
by tht lxtrciee of the right of eminent
domaint or if said line or any part
thtreof 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 of
other public utility; including also any
natural gas utility authorized by law to
exerciet the right of eminent domain.
3. Producing or purchasing natural
gas and transporting or cauming tht came
to bt transported by pipe lines to or
near tht Umita of any municipality in
which said gas is rectivtd and aietributtd
or sold to tht public by ano+htr public
utility or by said municipality, in all
caste whert such bueintee is in fact the
only or practically exclueivt agency of
supply of natural gas to such utility-or
municipality, is htreby declared to be
..
p. 3504
The Honorablt Joe C. Banns - pagt 3 W-830)
virtual monopoly and a business and
calling effected with a public inttrtet,
and tht said business and property
employed thertin within this Statt shall
be subject to the provisions of this law
and to the jureidiction and regulation
of the Commieeion as a gas utility.
Rvery such gas utility is htreby
aeclarta to be afftctta with a public
interest and aubjtct to tht jurisdiction,
control and regulation of the Comeieeion
as provided herein.
Oil pipelines are by statute expreeely dtclartd to bt
common carriers. V.T.C.S. art. 6018. There is no e,uch pro-
vision rtgarding either natural gas pipelinte or gas utilities,
however, and their statue as coxnon carritre is therefore deter-
mined by article 882, V.T.C.S.:
The duties and lihbilitiee of carriers
in this Statt and the remedicie against
them, shall be the emne as art prescribed
by the common law txctpt whtre otherwise
provided by this title.
In Producers Transportation Corn an v. Railroad Commission
of California, 251 U.S. 218 * Fiit Unittd States Supreme
i%urt held that a Dimline is a common carrier where it "in
truth, [carries] oil-for all producers seeking its service;
in other words, for the public.' 251 U.S. at 232. Whether
the actual business conducted by a pipeline is that of a
common carrier is a qutetion of fact.
common carrier if it holds itself out as available to trane-
port gas to all who may desire its eervicee. Otherwise, it
is a private carrier.
p. 3505
Tht Honorable Jot C. Banns - 4 (H-830)
However, the authority of tht RailrOad Commieeion to
require a pipeline or a gas utility to transport natural gas
for others does not depend upon its statue as a common
carritr . Article 6053, V.T.C.S., ptovidte in per:inent
part:
Sec. 1. Tht Coeunieeion after aut
notice shall fix and eetablieh and enforce
the adequate and rtaeonablt prict of gas
and fair and reaeonablt rates of chargte
and regulatione for traneporting, producing,
dietributing, buying, selling, and de~ivtring
gas by such pipt lines in this State; and
shall establish fair and equitable rules
and regulations for tht full control and
eupervieion of said gas pipt lines and
all their holdings pertaining to the gas
bueineem in all their relations to the
public, as the Commieeion may from time
to time deem properr and tetablieh a fair
and equitable divieion of tht ptocteda of
the sale of gas bttwten tht c~paniee
traneporting or producing tht gas and the
companite dietributing or etlling it; and
preecri~ and enforct rulte and rtgulatione
for tht government and control of such
pipe lines in respect to their gas pipe
lines and producing, rtctiving, traneporting,
and dietributing facilitite; end regulatt
and apportion the supply of gas between
towns, cities, and corporations, and when
the supply of gas controlltd by any gas
pipe lint shall bt inadtquate, the Commieeion
shall prescribe fair and reaeonablt rules
and regulations requiring such gas pipe
lines to augment their supply of gas,
whtn in tht judgment of the Commission it
is practicablt to do sot and it shall
txerciee its power, whether upon its own ,
motion or upon petition by any person,
corporation, municipal corporation,
county, or Comnieeionere precinct showing
a eubetantial interest in the subject, or
upon petition of the Attorney General, or
of any County or District Attorney in any
county wherein such business or any part
thereof may be carried on.
p. 3506
The Ronorablt Jot C.. Eanna - pagt 5 (H-830)
In Railroad Coemiiemion of Texas 524
s.w.za 2Z2 (Tax. sup. 197IT,ThGTii+mm
the Coeueieeion has jurieaiction to
regulatt and apportion tht ealte and
diepoeition of gas owned.by each gas
utility, so as to protect the public
inttrtet. 524 S.W.2a at 280.
The Supreme Court htld that whilt tht Commimeion lackm
juriediction over the aiepoeition of gas not owntd by the
gas utility through whose pipelint it is being tranexnitted,
it has full authority over the pipelint itself, and it may
mrtquire a utility to deliver gas to etvtral cities and
corporations in amounts at variance with their contracts."
Ia. at 281. Thus, it Would appear that, proviatcl tht
ztr of the gas is a gas utility, the Commrieeion may require
a gas pipeline to transport natural gas for othke.
In momt inetancte, such a pipeline would be embraced
within the atfinition of "gas utility" in article 6050. In
any evtnt, by tht terms of article 6053, the Couenieeion is
granted full authority over piptlinee regardless of whether
they may be dttmed to be gae~utilitiem. It is therefore our
opinion that, provided the owner of the gas is a gas utility,
the Railroad Cozmnieeion may requirt a natural gas pipeline
to transport natural gas for others.
SUMMARY
Whethtr a natural gas pipeline or a gas
utility is a coeeeon carritr depends upon
whether it holds itself out as available
to transport gas to all who may deeire its
lervicte. Providtd the owntr of tht gas
is a gas utility, tht Reilroaa Connnieeion
is unpowered to require a natural gas
pipelint to transport natural gas for others.
Very truly yours,
L4&.
Attornty General of Texas
‘P
p. 3507
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II
. .* .
Tht Ronorablt Joe C. Banns - pagt'6 (H-830)
Opinion
jwb
Committtt
p. 3508