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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