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
