BUTZNER, Circuit Judge:
This appeal raises the narrow issue of whether the Natural Gas Pipeline Safety Act of 1968
There is no dispute about the facts. Tenneco, Inc., and Texas Eastern Transmission Corp. are engaged in the interstate transportation of natural gas by pipeline through West Virginia. Neither company conducts intrastate business there. Acting under authority of state law, the West Virginia Public Service Commission assessed special license fees in the amount of $2,375.33 and $1,077.44, respectively, against the companies based on the length of their adjusted interstate pipeline mileage.
The Natural Gas Pipeline Safety Act of 1968 directed the Secretary of Transportation to establish minimum federal safety standards for the design, installation, inspection, testing, construction, extension, operation, replacement, and maintenance of pipeline facilities used for the transportation of gas. The Act's text,
The first test of preemption— whether the nature of the regulated subject matter permits no other conclusion but preemption—depends primarily on whether the state law under scrutiny obstructs the Congressional objectives. See Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). The facts of this case demonstrate that West Virginia's pipeline assessment law fosters state-federal cooperation. Confessing to a lack of staff,
We turn to the second test of preemption: has Congress unmistakably ordained that the states are barred from taxing interstate pipelines to help defray the cost of inspection? The companies urge that a 1972 amendment to the Act requires an affirmative answer to this question. The 1968 Act made no provision for reimbursing the states for the expenses they incurred as agents of the Secretary of Transportation. A number of states protested this omission and urged the enactment of legislation to correct it. In 1971, the National Association of Regulatory Utility Commissioners proposed that the states be awarded grants-in-aid to cover up to 50 per cent of their expenses, and that the states' regulatory commissions be authorized to assess interstate pipelines to defray the costs of the states' share of the safety program that was not available from other sources.
We find in the 1972 amendment and in its legislative history no unmistakable congressional intention to bar states from assessing pipelines to pay the remaining 50 per cent of the states' expenses. The fact that Congress chose not to enact legislation that would authorize state regulatory commissions to assess interstate pipelines under federal law does not establish that Congress intended to prohibit such assessments under state law. To the contrary, the legislative history of the 1972 amendment indicates that Congress was willing to allow the states to select the most feasible means of financing the balance of their costs in light of their own tax structures and budgetary requirements. The Senate Report on the 1972 amendment discloses that Congress was aware that federal officials were administering the Act on the assumption that the states were not inhibited from assessing interstate pipelines to defray the expense of conducting safety surveillance as agents of the Secretary.
Finally, the companies argue that the Secretary has not delegated to the states that are acting as his agents authority to levy fees against interstate pipelines. This argument, based on a literal application of the law of agency, misconceives the source of the states' taxing power. Concededly, the Secretary cannot authorize states to impose a tax on pipelines, but states possess inherent power to tax that can be exercised in the absence of constitutional prohibition or congressional preemption. Braniff Airways v. Nebraska State Board, 347 U.S. 590, 597, 74 S.Ct. 757, 98 L.Ed. 967 (1954). Here the companies do not invoke the Constitution, and the Secretary, acting through the Office of Pipeline Safety, recognizes that the Act does not preempt the states' taxing power over interstate pipelines. Initially, the officials administering the Act expressed the opinion that states were not authorized to assess fees against interstate pipelines. However, recognizing that this stand was an impediment to cooperation between state and federal governments, the Office of Pipeline Safety changed its position. It now acknowledges that, considering the overall objectives of the Act, there is no "basis for implying an intent on the part of Congress to preempt the authority of States to tax, assess, or impose fees on interstate operators."
The judgment of the district court is affirmed.
The scope of the states' authority is explained in 35 Fed.Reg. 13249-50 (1970) quoted in Federal-State Relations in Gas Pipeline Safety 10 (1973):
After reiterating that the Secretary could not delegate authority to a state commission to assess fees against interstate pipelines, the Acting Director wrote in his letter of February 17, 1972: