PUBLIC SERVICE COMMISSION OF WEST VIRGINIA, CHARLESTON Entered by the Public Service Commission of West Virginia, at the Capitol in the City of Charleston on the 29th day of July, 1971. GPS CASE No. 40 TENNESSEE GAS PIPELINE CO.-INVESTIGATION OF FAILURE TO PAY SPECIAL LICENSE FEE Proceeding upon motion of the Commission. Whereas, Chapter 24B of the West Virginia Code, 1931, as amended requires that any person engaged in the transportation of gas by pipeline shall pay a special license fee according to the number of three-inch equivalent pipeline miles included in their pipeline facility; and Whereas, the records of the Gas Pipeline Safety Division of this Commission show that Tennessee Gas Pipeline Co. has failed to pay its special license fee for the fiscal year 1971-72 as required by Chapter 24B of the West Virginia Code; and Whereas, the Commission is of opinion that there should be an investigation to determine why Tennessee Gas Pipeline Co. has failed to comply with the laws of the State of West Virginia. It is, therefore, ordered that Tennessee Gas Pipeline Co. be made respondent to this proceeding and that this matter be set for hearing to be held in the Commission's Hearing Room at the Capitol in the City of Charleston on the 1st day of October, 1971, at 10:00 a.m., EDST, at which time and place the respondent shall appear and show cause, if any it can, why it should not comply with the laws of the State of West Virginia relating to the payment of its special license fee. It is further ordered that the Secretary of the Commission give notice of this proceeding to respondent by mailing to it a copy of this order by United States Certified Mail, return receipt requested. A Copy. Teste: Secretary. TENNESSEE GAS TRANSMISSION CO., Mr. JOSEPH C. CALDWELL, Office of Pipeline Safety, Department of Transportation, DEAR JOE: Tennessee Gas Pipeline Company has been served by mail with a show cause order by the Public Service Commission of the State of West Virginia. Attached is a copy of the show cause order and the covering certified mail letter. I am informed that Texas Eastern was similarly served. You will recall that we discussed this matter by telephone on May 25, 1971, and by letter of May 26, 1971, I furnished you copies of several background letters. My memory is that you intended to follow up on the matter at that time, but to my knowledge you have not corresponded with PSC. In particular, there has been no response to my letter to you of April 30, 1971, a copy of which is attached, and this may have led the Commission into the show cause order. Also attached is a copy of the Commission's assessment letter dated June 21, 1971, to which Tennessee did not reply. Our position had been made abundantly clear in earlier correspondence, and I believe you have copies. The United States Court of Appeals, Fourth Circuit, in a case decided February 16, 1971, styled Public Service Commission of West Virginia v. The Federal Power Commission, upheld the preemption under the Natural Gas Act against PSC contentions. A copy of this decision (437 F.2d 1234) is attached. For this reason I believe PSC is relying on its belief that “. . . the Office of Pipeline Safety through its Acting Director. Joseph C. Caldwell, rescinded its edict against states assessing interstate facilities" as stated in the PSC letter to me of April 22, 1971, thereby allowing PSC to make this assessment acting as an Agent of the Department of Transportation. Your comments in this regard would be very much appreciated. Very truly yours, JERRY P. FORTENBERRY. SEPTEMBER 1, 1971. Re GPS case No. 40, dated July 29, 1971. Chairman, West Virginia Public Service Commission, Charleston, W. Va. DEAR MISS HALLANAN: The Tennessee Gas Pipeline Company has referred to us for comment an order and related documents of your Commission, setting for hearing on October 1, 1971, the alleged failure of that Company to pay a special fiscal year 1971-72 license fee of $2,321.93 "for support of the Gas Pipeline Safety Division of the Public Service Commission." The Tennessee Gas Pipeline Company owns and operates interstate gas transmission facilities in a number of States, including West Virginia. It is our understanding that the Company neither owns nor operates any intrastate gas facilities in West Virginia. As you know, the OPS guidelines for States serving as agents of the Department of Transportation for interstate transmission facilities, dated October 30, 1970, copy enclosed, point out on pages four and five that the Natural Gas Pipeline Safety Act of 1968 does not authorize the Department of Transportation to assess interstate transmission operators inspection or surveillance fees. Therefore, any State agency, in acting as an agent of the Department, does not have authority to assess such fees for their safety services as our agent. On page five of these guidelines it is stated that: "Any additional requirements other than those set forth in the minimum standards imposed by a State agency on interstate operators must be under the authority of State law for some purpose other than those covered by the Natural Gas Pipeline Safey Act. (Underscoring added.) This Office has issued two clarifications of that policy statement. The first is my letter of December 18, 1970, to Mr. Richard A. Solomon, copy enclosed, regarding the filing of construction and design plans. The second is my letter of March 15, 1971, to Chairman George I. Bloom of the Pennsylvania Public Utility Commission. In that letter I again stated that the Secretary of Transportation has no authority, either express or implied, to impose or authorize fees or assessments on interstate pipeline operators. The letter continued: "Following the principle of law that an agent can have no more authority than his principal, it is equally clear that he cannot delegate to State agencies any authority for assessments when acting under the Natural Gas Pipeline Safety Act as agents of the Secretary with respect to interstate transmission facilities. "This does not, of course, affect the rights of a State or State agency to impose fees on the interstate operators under any other authority that it might possess. The Secretary cannot restrict the authority of a State agency when it is acting in any other capacity or under any other legal authority. To the extent that our letter of October 30, 1970, may have implied that a State could not, in some capacity other than as our agent, assess fees for their services, it is not controlling and is modified in accordance with the preceding statement." In view of the foregoing and the fact that we have been informed that other interstate operators face the same situation, we would greatly appreciate hearing from you about the precise purpose for which the special license fee is being assessed against interstate gas transmission operators. If the fee is intended to contribute toward financing the safety functions being performed by your Gas Pipeline Safety Division as an agent of the Department to aid in safety enforcement of interstate transmission facilities, it appears that there is no legal basis for the assessment. Similarly, if the fee is intended for safety purposes of the Commission in its own right, there can be no legal basis for it because the Natural Gas Pipeline Safety Act of 1963 preempted safety jurisdiction over all interstate gas facilities and vested that jurisdiction in the Department of Transportation. On the other hand, if the fee is authorized by State law for the purpose of financing any legitimate function of your Commission, other than safety, which has been assigned to your Gas Pipeline Safety Division, it would be helpful to all interested parties if your Commission would identify such function. Your reply will help to clarify any misunderstanding which may exist on this subject. Sincerely, JOSEPH C. CALDWELL, Acting Director, Office of Pipeline Safety. Hon. JOSEPH C. CALDWELL, WEST VIRGINIA PUBLIC SERVICE COMMISSION, Acting Secretary, Office of Pipeline Safety, Office of the Secretary of Transportation, Washington, D.C. DEAR MR. CALDWELL: This is to acknowledge receipt of your letter of September 1, 1971, concerning this Commission's proceeding against Tennessee Gas Pipeline Company for failure to pay its 1971-72 license fee. The authority under which be billed Tenneco is found in Chapter 24B, Article 5, Section 3 of the Code of West Virginia, 1931, as amended, which states as follows: "(a) Every pipeline company shall pay a special license fee in addition to those now required by law. The amount of such fees shall be fixed by the public srevice commission and levied by it upon each of such pipeline companies according to the number of three inch equivalent pipeline miles included in its pipeline facilities, and shall be apportioned among such pipeline companies upon the basis of the pipeline companies' reports submitted to the commission in such form as the commission may prescribe, so as to produce a revenue of not more than ninety thousand dollars per annum, which fees shall be paid on or before the first day of July in each year." As you will note from the above section the total money collected through this formula is $90,000.00, and approximately $60,000.00 is collected from interstate facilities. To exclude interstate facilities from our assessment formula would result in exorbitant fees being charged the small companies and the independent producers. The amount of federal funds available to this Commission would in no way offset this loss of revenues. This poses a rather difficult problem for this Commission, because, on the one hand we are requested to regulate interstate facilities and, on the other, we are advised that we cannot collect money from these companies unless it is in the "guise" of a tax. Should DOT and the interstate companies insist upon forcing this prohibition, this Commission may have to reconsider its decision to participate in the federal gas pipeline safety program! Very truly yours, ELIZABETH V. HALLANAN, Chairman. SEPTEMBER 28, 1971. Miss ELIZABETH V. HALLANAN, Chairman, West Virginia Public Service Commission, DEAR MISS HALLANAN: I appreciate your letter of September 13, 1971, concerning the provisions of the Code of West Virginia relating to the assessment of license fees against interstate pipelines. This letter affirms the views we stated in earlier correspondence, namely, that the Natural Gas Pipeline Safety Act of 1968 does not authorize the Department of Transportation to assess fees against any gas operator subject to that Act. Therefore, the Department cannot delegate, to any State that serves as an agent of the Secretary to aid in enforcing safety standards applicable to interstate gas facilities, any authority to assess fees for performing that function. If we can be of further assistance to you, please let me know. Sincerely, JOSEPH C. CALDWELL, Acting Director, Office of Pipeline Safety. FOURTH ANNUAL REPORT OF THE SECRETARY OF TRANSPORTATION ON THE ADMINISTRATION OF THE NATURAL GAS PIPELINE SAFETY ACT OF 1968 Your reply will help to clarify any misunderstanding which may exist on this subject. Sincerely, JOSEPH C. CALDWELL, Acting Director, Office of Pipeline Safety. Hon. JOSEPH C. CALDWELL, WEST VIRGINIA PUBLIC SERVICE COMMISSION, Acting Secretary, Office of Pipeline Safety, Office of the Secretary of Transportation, Washington, D.C. DEAR MR. CALDWELL: This is to acknowledge receipt of your letter of September 1, 1971, concerning this Commission's proceeding against Tennessee Gas Pipeline Company for failure to pay its 1971-72 license fee. The authority under which be billed Tenneco is found in Chapter 24B, Article 5, Section 3 of the Code of West Virginia, 1931, as amended, which states as follows: "(a) Every pipeline company shall pay a special license fee in addition to those now required by law. The amount of such fees shall be fixed by the public srevice commission and levied by it upon each of such pipeline companies according to the number of three inch equivalent pipeline miles included in its pipeline facilities, and shall be apportioned among such pipeline companies upon the basis of the pipeline companies' reports submitted to the commission in such form as the commission may prescribe, so as to produce a revenue of not more than ninety thousand dollars per annum, which fees shall be paid on or before the first day of July in each year.' As you will note from the above section the total money collected through this formula is $90,000.00, and approximately $60,000.00 is collected from interstate facilities. To exclude interstate facilities from our assessment formula would result in exorbitant fees being charged the small companies and the independent producers. The amount of federal funds available to this Commission would in no way offset this loss of revenues. This poses a rather difficult problem for this Commission, because, on the one hand we are requested to regulate interstate facilities and, on the other, we are advised that we cannot collect money from these companies unless it is in the "guise" of a tax. Should DOT and the interstate companies insist upon forcing this prohibition, this Commission may have to reconsider its decision to participate in the federal gas pipeline safety program. Very truly yours, ELIZABETH V. HALLANAN, Chairman. SEPTEMBER 28, 1971. Miss ELIZABETH V. HALLANAN, Chairman, West Virginia Public Service Commission, DEAR MISS HALLANAN: I appreciate your letter of September 13, 1971, concerning the provisions of the Code of West Virginia relating to the assessment of license fees against interstate pipelines. This letter affirms the views we stated in earlier correspondence, namely, that the Natural Gas Pipeline Safety Act of 1968 does not authorize the Department of Transportation to assess fees against any gas operator subject to that Act. Therefore, the Department cannot delegate, to any State that serves as an agent of the Secretary to aid in enforcing safety standards applicable to interstate gas facilities, any authority to assess fees for performing that function. If we can be of further assistance to you, please let me know. Sincerely, JOSEPH C. CALDWELL, Acting Director, Office of Pipeline Safety. |