Case Information

*1 R-458 t.WX?ICE OF TEE AIYTORNEY GENERAL

Ausq~. TEXAS PRICE DANIEL July 23, 19% ArTO*NeYGENERAL

Eon. Ernest 0. Thompson Opinion No. V-309 chalrman

Railroad Commlssion~of Re: The necessity of

Texas approval by the Au&in, Texas Railroad Commls-

slon of Texas of a dlscontlnuance of the supply of gas to a munlcl- pallty by a gas utility, pursuant to'contract be- tween the parties. And related ques- tions.

Dear Sir:

You have requested the opinion of this Depart- ment In letters establishing this factual situation:

"111 May, 1928, the Mobeetlb Gas Company made a contract with certain lndlvldtils to furnish-gas to-the alty'llmlts of Mkuul, Roberts County, Texas; these l~lvlduals having a franchise from the City running for; a period of~20.years; the Mobeetle Gas Company to construct a 4 Inch line and fur- nishing gas to the city limits of the City of Miami. This contract was .&lso for a period of 20 years. This contract ~111 ex- pire in 1948.

"The Publio-SeFvice Corporation of Tex- as is successor to the M6beetle Gas Com- pany, and desires to dlscontln~e furnlsh- lng 'gas to the ol$g llmlts of the city of Miami at the explratXon of Its coatract for the reason, 'among others, that its will re- quire the construction of a new 15 Iidle

line since the old line Is not In condition to coritlnue service after the expiration &ate.

Hon. Ernest 0. Thompson - Page 2

" . . . Public Service Cbrporatlon has In m,lnd that It will give notlce to the owners of the franchise in the City of Miami and to the said City In ample time for them to make other arrangements before the expiration of the contract."

Your questions are as follows: "Please advise If It Is necessary for the Public Service Corporation of Texas to apply for permission from the Railroad Com- mission to discontinue the service described In the enclosed letters and If it is neces- sary for a hearing to be held If such appll- cation Is to be required.

"Also please advise us If notice to the customers of the utility are required to be given notlce,prlor to discontinuance of aervlce Ln the event application to the Commlsslon Is not required." The Public Service Corporation Is a "gas utll- 1ty" or 'public utility" as defined In Article 6050, V.C.S.) as follows:

"The term 'gas utility' and 'public utll- ltys' or 'utility,* as used In this subdlvl- sion, means and Includes persons, companies and private corporations, their lessees, trustees, and receivers, owning, managing, operating, leasing Or controlling within this State tiny wells, pipe lines, plant; property, equipment, facility, franchise, license, dr permit for elther,one or more of the following kinds of business: "1. Producing or obtaining, transport- ing, conveying distributing or delivering natwal~gas: [a) for public use or service for ccmpensatlon; (b) for sale to munici- palities 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 person or firm or cor- portatlon operating under franchise or a con- tract with any municlpallty or other legal *3 Ron..Ernest 0. Thompson - Page 3

subdlvlslon of thls.State.; or, (a) for sale or delivery of natural gas to the public for domestic or other use.

"2. Owning or operating or managing a pipe line for the transportation or car-

riage of natural gas, whether for public

hire or not, if any,part of the right of way for said line haa been acquired, or may hereafter be acquired by the exercise of

the right of emInentdomaIn; or If said line or any part thereof,.ls laid upon, over-or under any public road or highway of this

State, or street or alley of any munlcl-

pality, or the right of way of any rall-

road or other,public utility; Including also any natural.gas~utillty authorize&by law to exercise the right of eminent domain.

“3 e Producing or purchasing natural gas and transporting or causing the same to be transported by pipe .llnes to or near the

llmlts oft any munlclpallty ln~whlch.saSd gas Is received ana dlstFlbuted or sold to the public by another public utility or by said munlclpallty, In all cases where such busl- ness Is In fact that only or practically.ex- cluslve agency of supply of natural gas to such utility or municipality, is hereby de- clared to be virtual monopoly and a business and calling affected with a DubllC.interest.

and the said business and property employed- therein within this State to the provisions of this shall be subject law and to the ju- risdlctlon and regulation of the Commission as a gas utility.

'%very such gas utllftg Is hereby de- clared to be affected with a public interest, and subject to the jurisdiction, control and regulation of the Commission as provided herein."

"Jurlsdlctlon, control and regulation" of.the utility are vested In the Railroad Cominisslon by Artl- cle 6050, supra. 'This "j~urlsdlctlon"~and "conttiol" may not be divested wlthotit the. consent of,the Railroad Com- mlsslon. For only the Railroad Commlsslon may terminate that "jui3sdlctlon" and ,control;"

48 Eon. Ernest 0. Thompson - Page 4

Section 1 OS Article 6053, V.C.S., provides as follows:

'The Commission after dtie notice shall fix and establish and enforce the adequate and reasonable price of gas and fair and reasonable rates of charges and Fegulatlons for transporting, producling, dlstrlbutlng, buying, selling, and delivering g a by such pipe lines In this State; and sha 1 estab- llsh fair and equitable rules and regula- tions for the full control and SupervIsIon of said gas pipe lines and all their hold- ings pertaining to the gas business in all their relations to the public, as the Com- mlsslon may frcm time to time deem proper; and establish a fair and equitable dlvislon of the proceeds of the sale of gas between the companies transporting or protiualng the gas and the companies dlatrlbutlng or sell- ing It; and prescribe and enforce rules and regulatlona for the government ati control of such pipe lines in respect to their gas elpe lines and produalng, receiving, trans- and dlstrlbutlng faOllitle8; and porting, regulate and apportion the supply of gas between towns, cities, and corporations, and when the supply of gas controlled by any gas pipe line shall be Inadequate, the Commlssloa shall prescribe fair and rea- sonable rules and regulations requiring such gas-pipe lines to augment their supply of gas, when-in-the judgment cjf the Commlsslon it la practicable to do so; and It shall exercise its power, whether upon Its own motion or upon petition by any person, cor- poration, munlclpkil corporation, county, or Commlssloners precinct showing a substantial Interest. In the subject,~or tipon petition of the Attorney~G~neral;~or 6f any County or District Attbrneg in any county wherein such business or any part thereof may be carried on."

By virtue of Article -6053, 8.iipra, the Commls- sion Is empowered with' "full oontrol and~supervlslon of said gas pipe lines and alltheir holdings pertaining to the gas business In all their relations to the &- -m lie." It Is ft@her%szered ~1-5 overnment and *5 Hon. Ernest 0. Thompson - Page 5 *9 control of such pipe lines In respect to theif gas pipe lines and producing, receiving, transporting and dls- trlbutlng facilities" and. empowered to "re&.ate and ap- po;il$n the supply of gas controlled bynany gas pipe

. It may exercise Its power upon Its own motion or upon petition."

It would be an empty "jurisdiction" and an emp- ty "full control" if the Commission could not continue a service by a utility. Otherwise the utlllty could abandon at will and bargain on that basis. It Is stated In State ex reL Public Service Commlsslon v. Mlssourl Southern R. Co. (Sup. Ct. MO, lglg), 214 S. W. 381.: (pp.

384-385 I Can appellant abandon this serv-

ice witio&, applying to the commission for leave to do so? If so, any carrier can aban- don any service without such leave, and,

doubtless, change fares and take oft equlp- ment, whenever It comes to the conclusion that the facts jtistlfy such action.. If this course be lawful, the ccaumlsslon will became little more than a figurehead so far as car- riers are concerned, and Its powers can be Ignored or Invoked as the carrier may desire.

In this case the carrier was operating In submission to'the commission and under rates on file. A rate was changed., Instead of applying to the commlsslon for an Increase elsewhere, or for leave to abandon the serv- ice, the carrier said, In effect, that It would not submit to the change, but would take up the track. It may be It is entitled to an order permitting It to do so. It

should have applied to the connnlsslon for the leave. Unless the power of the commls- slon to pass on this question Is conceded, then~lt is apparent the exercise of 801118 of Its express powers is conditioned upon the consent of the carHer. The express power of the commission over facllltles, equlpent, and honstructlon, and changes therein, and over the operation of trains (sections 49, 41, ~avs lg13), pp. 588, sgo), is of.no avail, if appellant's contention $8 sound. As .was said by the Kansas Suprenie Court:

"'If these utilitg~corporatlons~mag aban- don this particular service without the'con- sent of the commlssfon, may they not take *6 50 Hon. Ernest 0. Thompson - Page 6

off their pass6nger trains, take up and aban- don unprofitable branch lines, change the fares and rates of transportation for pas- sengers and freight, or raise the charge for telegraph messages without the consent of the'commlsslon? These questions answer them- selves. To yield approval to the contention of defendants Is to concede that the state's program for the regulation and control of public service corporations 1s Ineffective; that the Public Utllltles Act has been enact- ed In vain.' State ex rel. v. Postal Tel. co., supra."

It Is further stated in State v. Kansas Postal- Telearauh-Cable Co. (Sup. Ct. Kans. 1915),15C P. 544: '(P.

II . . . In view of all these, can there be any doubt of the duty of the defendant, before dismantling Its station at Syracuse and abandoning Its business thereat, t@ se- cure the approval of the ConmIssion for such an Important change in Its mode of service? How Is the Public lJtllltles Commission to discharge Its important duties if the pnb- llc service companies may quit business here, there, or anywhere In the state vlthout 811 opportunity for the %omisslon to detezi:ne the propriety of such a course?

"It Is clear that, If the defendant my forego Its business In Syracuse vithoti the sanction of the Commlsslon, it can close its office in Topeka, Wichita, or Kensas CLtr, without the consentof the Comlsslon. Jf this public utility,'& telegraph compsv, can close one of its offices and qult bus'3ess without the-consent of the Commlsslon, 6~ dther'ptibllc utility, like the Santa P? Zall- w&y, So* exempl6; could close Its depct at DMg6 City, Htitchlnson, or Emporia vitt?zt the consent of the Cominli~sloh. Where r--nld this end? If these utility corporatlozs gay abandon this partlculsr service wlthorr. :he consent of the Commlssion;may they net -zke off their passenger trains, take up ati sban- don unprofitable branch lines, change t% fares and rates of transportation for 1Ji'- sengers and freight, or raise the c-e for *7 Ron. Ernest 0. Thompson - Page 7 v-3.09

telegraph messages without the consent of the CCmmlSslon?' These questldns answer themselves.

To yield approval to the contention of the de- fendant Is to concede th8t the state's program for the regulation and control of public serv- ice corporations is Ineffective; that the pub- lic utllltles act has been enacted In vain."

Further reason dictates that this jurisdiction may not be terminated without the consent of the Rall- road Commission. For, If the converse be true, a util- ity, against the will of the State, could abandon Its pipe line, tear up the line and sell it before replace- ment could be made. The possible effects of such a claimed power could be utter disaster to the great ln- terests of the community. Destruction of private prop- erty, in which the entire community Is Interested, could result. The life of the citizen as well as the property could be jeopardized.

It Is well established that "as a general rule, the proprietor of a public utility or service Is bound to continue the business until such time as he shall have been granted permission to discontinue It." 34 Tex. Jur., "Public Utllltles and Services," Section 15, p. 717; 43 Am. Jur., "Public Utllltles and Services," Section 78, p. 621; 5 Corpus Jurls, "Public Utllitles," Section 17, p. 8. See 5 P. U. R. Digest, "Service," Section 215, pp. 4611-4614.

Moreover, this has been the practice and con- struction of the Railroad Coxnlssion over a period of years. During this period of years, utllltles have made application to the Railroad Commission for permission to discontinue their service. The construction and lnter- pretation of a statute by the Department charged with its administration Is entitled to great weight and will be adhered to unless clearly erroneous or unsound. 39 Tex. Jur., "Statutes," Section 126, pp. 235-237.

In answer to your first question, therefore, the Public Service Corporation must have the consent of the Railroad Commission to discontinue the furnishing of gas to the dfstPlbutor for the City of Miami.

Section 1 of Article 6053, supra, provides, in part, as follows:

"The Commission after due notice shall fix and establish . . .'I

sf2 Hon. Ernest 0. Thompson - Page 8 '

Section 14 of Article 6053, v.c.s., provides as follows:

"Rotice of 8ny hearing, and of the time and place thereof, shall be given by regls- tered'mall not less than ten (10) clays ex- clusive of the day of mailing before such hearing, addressed to all parties whom the Comml~slon may deem to be interested In the subject matter of such hearing. Any llcen- see against whom a complaint has been filed shall be notified of the hearing on such com- plaint as herein provided, and shall have the right to appear at such hearing, file answer, Introduce evidence, and be heard both in p,er- son and by counsel."

In answer to your second question, It Is our opinion that the statutes contemplate a hearing by the Railroad Commlsslon upon application for discontinuance of service, because the Commission must enter an order upon such application under Article 6053, supra, which must be after "due notice." Section 14, supra, provides that "notice of any hearing" shall be qlven to "lnter- ested" parties, not less than 10 days before such hear- ing."

In view of this opinion, your third question does not require an ansver.

SWMARY 1. It Is necessary for the Public Serv- ice Corporation, a "gas utility" as defined bg~our statutes (Article 6050, V.C.S.), to have the consent of the Railroad Conrmlsslon to discontinue the furnishing of gas to the distributor for the City of Miami. State ex rel. Public Servfce Commission v. Mlssourl Southern R. Co; (Sup. Ct. MO. lglg), 214 3~. W: 381, 384; State v. Kansas Postal-Tele- graph-cable Co. (Sup.

p. 544, 547.

2. A hearing must be held by the Com- mlsslon on an 8ppllcatlon of a "gas utility" for requested permission to discontinue *9 Hon. Ernest 0. Thompson - Page 9

service to a municipality. Article 6053,

V.C.S.

Yours very truly A!l3!ORNEYGElW3ALOFTEXAS BY

EMH:jt