Untitled Texas Attorney General Opinion

Honorable Ernest 0. Thompson, Chairman Railroad Commission of Texas Austin, Texas Opinion No. WW-625 Re: Applicability of Articles 6060 and 6050 to a gas plpeline operation which crosses a pub- lic road In one or more places Dear General Thompson: .:. Your request for an opinion states the following: "If a gas producer is required, in order to sell his gas, to construct approximately five miles of pipeline: which crosses a publlc;.roadin one or more places and for which eminent domain proceedings were not used in obtaining the right-of-way; and if the purchaser of said gas Is a public utility pay- ing the tax provided in Article 6060; Is the~pro- ducer liable for the tax provided In Article 6060?" Article 6060, Vernon's Texas Civil Statutes, places a tax on one of the three types of gas utilities described in Article 6050. The classification of gas utilities set out in Article 6050 describes three general categories, being persons, companLes, and corporations engaged in 'one or more of the following kinds of business: "1 . Producing or obtalnlng, transporting, convey- ing, distributing or delivering natural ga31b)(;Lr for public use or service for compensation; sale to municipalities or persons or companies, In those cases referred to in paragraph 3 hereof, en- gaged in distributing or selling natural gas to the public; (c) for sale or delivery o@natural gas to any person or firm or:corporation 'operatingunder franchise or a contract with any municipality or other legal subdivision of this State; or, (d) for sale or delivery of natural gas to the public for domestic or other use. . - Honorable Ernest 0. Thompson, page 2 (~~-625) "2 . Owning or operating or managing a plpeline 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; including also any natural gas utility authorized by law to exer- cise the right of eminent domain. “3. Producing or purchasing natural gas or trans- porting or causing the same to be transported by pipelines to or near the limits of any municipality in which said gas is received and distrLuu.Ledor sold to the public by another public utility or by said municipality, in all cases where such business is in fact the only or practically exclusive agency of supply-of natural gas to such utility or munlci- , pality, Is hereby declared to be virtual monopoly . and a business and property employed therein within this State shall be subject to the provisions of this law and to the jurisdiction and re~gulatlonof the Commission asa gas utility." Sections 4 and 4a of Article 6050,have no application to this case, being exemption3 of natural gas used for argicul- tural purposes. The ga3 utility tax provided in Article 6060, since the Act of 1931, applle3 only to gas utilities described in section 2 of Article 6050. Questions have arisen in the application of the classl- ficatlon statute because of the fact that a business in one category may have some of the.attributes of a business in another cate.&ory. An opinion of Attorney General'Gerald C. Mann, No. 0-3524-A, held that the gas gathering system of Republic Natural Gas Company on its lease in the Saxet Field in Nueces County did not come under Section 2 of Article 6050 because Republic Natural Gas Company was engaged in the busi- ne3s of producing gas and the gathering:lines, which were pipes running from it3 wells to a central point on its own lease, did not put it in the business of transportation of natural gas. . - t!onorableLrncst 0. Thompson, page 3 (WW-625) The opinion in Thompson vs United Gas Corporation, 190 S.W.2d 504,509, confirms the emphasis which the 1942 opinion of the Attorney General had placed upon making a determination of the kind of business in which the operator is engaged, although the Court did not mention the opinion of the Attorney General. The Court's opinion states that the classifications in Article 6050 "generally represent three businesses, namely, production, transportation, and distrl- bution and sale of gas." United Gas Corporation was held in that case to be in the business of distribution and sale of gas a3 described in section 3 rather than in the business of transportation of gas as described In Section 2. There- fore, the corporation was not subject to the gas utilities tax in question. The Court pointed out that gas utilities described in all three sections of Article 6050 would have the right of eminent domain. It is to be assumed also that a company In the business of distributing gas would likely have pipe- lines laid across public roads and highways as well as would companies in the business of transportation or transmission of gas. Such facts did not convert the distribution business of United Gas Corporation into a transportation or transmis- sion business as a matter of law when, In the cited case, the trial court had found the business to be that of a gas distributing company. -I* It is our opinion that each such case involves a fact question: What type of business is %he operator actually engaged in? Of course, an operator might well be engaged in more than one of the three types of business described in Article 6050. The fact3 stated in your request for an opinion des- cribe the subject a3 a gas producer who, in order to nell gas from his well, found it necessary to lay approximately five milco of 3" line to connect with a transmlnnion line The lint cro33cc a public road in one or more place::,btltall of the pipeline right of way was obtained by purchase wi.thoutresort to eminent domain proceedings. It 13 our opinion that such facts do not establish that this gas producqr is also in the business of transporta- tion of gas a3 described In section 2 of Article 6050. While this is a fact question, we do not believe that the fact3 stated would be sufficient to support a determination by the Railroad Commission that this operator entered into the busi- ness of transportation or transmission of gas by the construc- tion and use of such pipeline. Therefore, the producer would not be subject to the tax provided in Article 6060. Honorabl~eErnest 0. Thompson, page 4 (WW-625j SUMMARY Under the facts as stated, the utility tax of Article 6069 does not apply to gas pipe line owned by a gas producer crossing a public road when the producer, in order to sell gas from his well, constructed approximately five miles of 3” line to connect with transmission line, because producer did not thereby engage in the business of transportation Bf gas as described in Section 2 of Article 6050. Very truly yours, WILL WILSON Attorney General of Texas '+ Assistant JW/grb APPROVED: . OPINION COMMITTEE George P. Blackburn Houghton Brownlee, Jr. James Irlon W. Ray Scruggs Joe G. Rollins APPROVED FOR THE ATTORNEY GENERAL BY: W. V. Geppert