Gas Districts.

Ala. Code tit. 11, tit. 2, ch. 50, art. 12

in effect

Ala. Code § 11-50-390 Definitions.

11-50-390. Definitions. When used in this article, the following words and phrases shall have the following meanings, respectively, unless the context clearly indicates otherwise: (1) MUNICIPALITY. Any incorporated city or town in the State of Alabama. (2) GOVERNING BODY. The council, commission, or other governing body of such municipality. (3) MAYOR. The mayor, president, or chairman of the commission or other chief executive officer of such municipality. (4) GAS TRANSMISSION SYSTEM. A plant and system for the manufacture, transmission, delivery, and transportation of natural or manufactured gas, together with all appurtenances thereto and all property, real, personal, or mixed, used or useful in connection therewith, including franchises and easements. Such gas transmission system shall include facilities for making sales and deliveries of gas to industrial and institutional users and to line tap residential and commercial users as well as to gas distribution systems. (5) GAS DISTRIBUTION SYSTEM. A plant and system for the distribution and sale of gas and gas services in a municipality and the surrounding territory, including the sale and distribution of gas to residential, commercial, industrial, institutional, and all other users, together with all appurtenances thereto and all property, real, personal, or mixed, used or useful in connection therewith, including franchises and easements. A gas distribution system may make sales and deliveries of gas to other distribution systems. (6) GAS SYSTEM AND SYSTEMS. One or more gas transmission systems and one or more gas distribution systems. (7) RESOLUTION. A resolution adopted by a majority vote of a quorum present of the governing body of a municipality. All resolutions of a general or permanent nature adopted or promulgated by the governing body of a municipality under the provisions of this article shall be published in a newspaper of general circulation in the municipality, but if no newspaper is published within the limits of such municipality, such resolution may be published by posting a copy thereof in three public places within the limits of the municipality. (Acts 1951, No. 762, p. 1319, §2.)

Ala. Code § 11-50-391 Creation.

11-50-391. Creation. Any two or more municipalities are hereby empowered and authorized to cause to be organized and incorporated a gas district as a public corporation with all the power and authority provided in this article for the purpose of securing for such municipalities a supply of natural or artificial gas and for the purpose of transporting gas and for the purpose of the local distribution and sale of gas and gas services in any one or more of such municipalities or for any one or more of such purposes. Such power and authority shall be exercised by the governing body of each such municipality. The determination of such governing body to exercise the power and authority in this section granted shall be evidenced by a resolution which shall declare the desirability of organizing and incorporating a gas district, name the municipalities which are to be members of such district, set forth a brief description of the gas system or systems to be owned and operated by such district, and authorize the mayor of such municipality to proceed with the organization and incorporation of such gas district. Whenever the governing bodies of all of the municipalities which are to be members of such gas district shall have adopted such resolutions, the chief executive officer of each such municipality shall sign the certificate of incorporation and cause the same to be filed as provided in subsection (a) of Section 11-50-392. (Acts 1951, No. 762, p. 1319, §1.)

Ala. Code § 11-50-392 Contents, Acknowledgment, Filing, and Recordation of Certificate of Incorporation; Procedure for Amendment Thereof; Dissolution of District and Disposition of Systems, Etc., Upon Payment of Indebtedness of District in Full.

11-50-392. Contents, Acknowledgment, Filing, and Recordation of Certificate of Incorporation; Procedure for Amendment Thereof; Dissolution of District and Disposition of Systems, Etc., Upon Payment of Indebtedness of District in Full. (a) The certificate of incorporation of any gas district incorporated under this article shall state: (1) The name of the corporation, which shall be a name indicating in a general way the area or municipalities proposed to be served by the district (e.g., “The South Alabama Gas District” or “The _____ County Gas District” or “The _____, _____, and _____ (naming the municipalities which are members thereof) Gas District”); (2) The names of all the municipalities which are to be members of the district; (3) The location of the principal office of the district and its post office address; (4) The period for the duration of the corporation (if the duration is to be perpetual, this fact should be stated); and (5) The objects for which the district is organized. The certificate of incorporation may also include any provision or provisions not contrary to law which the incorporators may choose to insert for the regulation and conduct of the affairs of the district. The certificate of incorporation shall be acknowledged before an officer authorized by the laws of this state to take acknowledgments of deeds and shall have appended thereto a certified copy of the resolution of each municipality which is to be a member thereof and which authorized its mayor to participate in the incorporation thereof. The certificate of incorporation shall be filed in the office of the judge of probate of the county in which the principal office is to be located; and said judge of probate shall forthwith file such certificate and record the same, and thereupon the incorporators shall constitute a public corporation under the name stated in the certificate of incorporation. As soon thereafter as convenient, the judge of probate shall transmit a copy of the certificate of incorporation to the Secretary of State. (b) The certificate of incorporation of any gas district incorporated under this article may at any time and from time to time be amended in the following manner: The board of directors of the district shall adopt a resolution setting forth the proposed amendment, which may include any proposed change in the name of such district, the inclusion of other municipalities as members thereof, or any matter which might originally have been included in the certificate of incorporation. If the governing body of each of the municipalities which authorized the incorporation of the district and the governing body of each municipality which it is proposed shall be added as members of the district and the municipalities shall by resolution of their respective governing bodies consent to such proposed amendment, the chairman of the board of directors or other chief executive officer of the district and the secretary of the district shall then file in the office of the judge of probate in the county in which the certificate of incorporation of the district is filed a certificate in the name and on behalf of the district, under its corporate seal, reciting the adoption of the said respective resolutions by the board of directors and by the governing bodies of such municipalities and setting forth the proposed amendment. The proposed amendment shall become effective upon the filing of such certificate in the said office. (c) Whenever all the indebtedness and obligations of the district shall have been paid in full and a plan for the distribution and disposal of all the systems and property of the district shall have been made and approved by its board of directors and by the governing body of each of the municipalities which are members of the district, a certificate reciting these facts and that it is the desire of the board of directors of the district and of the governing bodies of each of the municipalities which are members thereof that the district be dissolved shall be filed in the office of the judge of probate of the county in which the certificate of incorporation is filed, and thereupon the district shall be dissolved and the members of the board of directors of the district shall be trustees of its systems and properties to distribute and dispose thereof in accordance with said plan. (Acts 1951, No. 762, p. 1319, §3.)

Ala. Code § 11-50-393 Board of Directors - Composition; Compensation; Removal Actions.

11-50-393. Board of Directors - Composition; Compensation; Removal Actions. (a) Each district incorporated under this article shall have a board of directors of not less than three members, and the members shall elect a chair of the board. Unless otherwise provided in the certificate of incorporation, the board of directors shall consist of at least one member for each municipality that is a member of the district. Unless otherwise provided in the certificate of incorporation, the member of the board of directors representing each member municipality shall be elected by the governing body of each municipality and shall serve for a term of office concurrent with the term of office of the mayor of the municipality. A representative of each municipality may be, but need not be the mayor thereof. (b) The members of the board of directors shall serve without compensation, except that they shall be reimbursed for actual expenses incurred in the performance of their duties under this article, and, at the discretion of the board of directors, they may be paid a director’s fee not exceeding one thousand seven hundred fifty dollars ($1,750) for each director’s meeting attended, but not to exceed one meeting each calendar month. The chair of the board of directors shall serve without compensation, except that he or she shall be reimbursed for actual expenses incurred in the performance of his or her duties under this article, and, at the discretion of the board of directors, he or she may be paid a director’s fee not exceeding two thousand dollars ($2,000) for each director’s meeting attended, but not to exceed one meeting each calendar month. (c) Members of the board of directors shall hold office until their successors are appointed and qualify. Appointments to fill a vacancy shall be for the unexpired term. (d)The appointing authority may remove any member of the board of directors within the term for which he or she is appointed after giving the member a copy of the charges against him or her and an opportunity to be heard in his or her defense. The removal action of the appointing authority shall be final and nonreviewable. (Acts 1951, No. 762, p. 1319, §6; Acts 1982, No. 82-529, p. 878; Acts 1993, No. 93-721, p. 1410, §1; Act 2004-553, p. 1191, §1; Act 2009-588, p. 1733, §1; Act 2024-282, §1.)

Ala. Code § 11-50-394 Board of Directors - Organization; Officers.

11-50-394. Board of Directors - Organization; Officers. Promptly after their appointment, the members of the board of directors shall meet to organize. At such meeting and at the first meeting in each year thereafter, the members of the board shall choose from their number a president. They shall also choose a secretary and a treasurer who may but need not be members of the board. (Acts 1951, No. 762, p. 1319, §7.)

Ala. Code § 11-50-395 Board of Directors - Powers Generally; Resolutions.

11-50-395. Board of Directors - Powers Generally; Resolutions. (a) The board of directors shall constitute the governing body of the district. The board shall do all things necessary or convenient in acquiring, owning, operating, developing, and improving the gas system or systems owned or to be owned by the district and shall exercise all the powers of the district including but not limited to the following powers: (1) To adopt and amend bylaws for the management and regulation of its affairs and the enterprises in which it is engaged; (2) To use, with the consent of any of its member municipalities, the agents, employees, or facilities or property of such municipalities and to provide for the payment of the agreed proportion of the costs therefor; (3) To appoint officers, agents, and employees, including attorneys, and to fix their compensation; (4) To contract with any person, firm, or corporation for the entire supervision, operation, and management of any one or more systems of the district, including the collection and distribution of the revenue therefrom, for such period of time as the board may deem advisable and at such compensation and upon such terms as may be agreed upon and approved by the board of directors; and (5) To provide for the execution of deeds, mortgages, indentures of trust, bonds, obligations, and other instruments of the district. (b) Action of the board of directors shall be taken by resolution. Any resolution of a general or permanent nature shall not become effective until it has been published in some newspaper of general circulation in the district, but if no such newspaper is published within the limits of the district, such resolution may be published by posting a copy thereof in three public places within the limits of the district. (Acts 1951, No. 762, p. 1319, §8.)

Ala. Code § 11-50-396 Powers Generally.

11-50-396. Powers Generally. Each district incorporated under this article shall have each and all of the following powers, together with all powers incidental thereto or necessary to the discharge thereof in corporate form: (1) To have succession in its corporate name for the duration of time (which may be in perpetuity) specified in the certificate of incorporation, or until dissolved as provided in subsection (c) of Section 11-50-392. (2) To sue and be sued and to defend civil actions against it. (3) To have and use a corporate seal and alter the same at pleasure. (4) To acquire, purchase, construct, receive, own, operate, maintain, enlarge, extend, and improve any one or more gas systems the operation of which is provided for in the certificate of incorporation of the district (whether or not such system or systems were in existence or whether or not such system or systems were privately owned or municipally owned prior to the acquisition by such district). (5) To receive, acquire, take, and hold, whether by purchase, gift, or lease, devise, or otherwise, real, personal, and mixed property of any nature whatsoever that its board of directors may deem a necessary or convenient part of or useful in connection with such system or systems. (6) To borrow money for any corporate purpose and to issue in evidence of the borrowing interest-bearing bonds payable solely from the revenues derived from the operation of any one or more of its systems. (7) To pledge to the payment of its bonds any revenues from which the bonds are made payable and to mortgage, pledge, or otherwise convey as security for such bonds the system or systems the revenues from which are so pledged. (8) To make such covenants in connection with the issuance of bonds or in order to secure the payment of bonds as a private business corporation can make under the general laws of the state, notwithstanding that such covenants may operate as limitations on the exercise of other powers granted by this article. (9) To purchase, manufacture, produce, or otherwise secure a supply or supplies of natural gas or manufactured gas or both. (10) To transport and to sell at wholesale all or any part of its gas supply to any municipality or any gas or utility board for distribution to the inhabitants of any municipality and the surrounding territory or to any other user, residential, industrial, institutional, or commercial. (11) To transport and distribute and to sell gas and to furnish gas services from its system or systems. (12) To establish rates and charges for its gas and gas services and to alter such rates and charges by resolution, which resolution shall be published in some newspaper of general circulation in the district; but, if no newspaper is published within the limits of the district, such resolution may be published by posting a copy thereof in three public places within the limits of the district. (13) To collect and enforce collection of such charges. (14) To lease, exchange, sell, convey, and otherwise dispose of its real, personal, or mixed property by any form of conveyance or transfer, with it being expressly provided that a district may sell and convey a gas system or systems to utility companies or corporations regulated by the Alabama Public Service Commission. (15) To appoint and employ officers, agents, and employees, including attorneys, as its business may require and to fix their compensation. (16) To provide for such insurance as its board of directors may deem advisable. (17) To exercise all powers of eminent domain now or hereafter conferred on municipalities in this state. (18) To own and operate liquefied petroleum gas systems, including vehicles and containers for delivery and dispensing liquefied petroleum gas, and to distribute, dispense, and sell liquefied petroleum gas within and without the state. (Acts 1951, No. 762, p. 1319, §4; Acts 1969, No. 634, p. 1161, §1; Act 2005-307, 1st Sp. Sess., §1.)

Ala. Code § 11-50-397 Exercise of Powers of Eminent Domain Generally.

11-50-397. Exercise of Powers of Eminent Domain Generally. The powers of eminent domain granted and conferred upon districts incorporated under this article shall be exercised in the same manner and subject to the same limitations as in the case of municipal corporations; provided that the power of eminent domain shall not be exercised by any such district in order to acquire those properties of any natural gas company which are subject to the regulation of the Federal Power Commission or any properties of any person which are to be used for the distribution of liquefied petroleum gas. (Acts 1951, No. 762, p. 1319, §5; Act 2005-307, 1st Sp. Sess., §1.)

Ala. Code § 11-50-398 Acquisition, Construction, Operation, Etc., of Gas Distribution Systems Outside Territory of Municipalities by Which Incorporated.

11-50-398. Acquisition, Construction, Operation, Etc., of Gas Distribution Systems Outside Territory of Municipalities by Which Incorporated. Any such gas district may, if its certificate of incorporation shall so provide, acquire, construct, own, and operate gas distribution systems and any other facilities suitable to provide for the distribution and sale of gas outside of the territory of the municipalities which are members of such gas district and outside of the territory surrounding such municipalities. (Acts 1953, No. 436, p. 542, §2.)

Ala. Code § 11-50-399 Acquisition of Competing Gas Systems, Etc.

11-50-399. Acquisition of Competing Gas Systems, Etc. All districts incorporated under the provisions of this article shall have all powers and be subject to all limitations with respect to the acquisition of competing gas systems and the duplication of existing privately owned gas systems to the same extent as boards under the provisions of Sections 11-50-266 through 11-50-270. (Acts 1951, No. 762, p. 1319, §17.)

Ala. Code § 11-50-400 Use of Public Highway Rights-of-Way.

11-50-400. Use of Public Highway Rights-of-Way. Each such district is hereby authorized to use the right-of-way of public highways for construction of gas lines along the margin of said right-of-way subject to the district’s obtaining written permission from the appropriate county commission or the State Department of Transportation as applicable. (Acts 1951, No. 762, p. 1319, §19; Acts 1969, No. 476, p. 932.)

Ala. Code § 11-50-401 Promulgation of Rules and Regulations as to Installation, Maintenance, Etc., of Gas Fixtures, Pipes, Etc., Served by District - Authorized.

11-50-401. Promulgation of Rules and Regulations as to Installation, Maintenance, Etc., of Gas Fixtures, Pipes, Etc., Served by District - Authorized. Any gas district now or hereafter organized in this state under the provisions of this article is hereby authorized and empowered to promulgate rules and regulations governing and relating to the installation, connection, maintenance, and servicing of gas fixtures, pipes, appliances, and equipment with respect to properties served by it. Such rules and regulations may require that any person so installing, connecting, maintaining, or servicing any such fixtures, pipes, appliances, and equipment be licensed by the gas district promulgating such rules and regulations. (Acts 1955, No. 362, p. 880, §1.)

Ala. Code § 11-50-402 Promulgation of Rules and Regulations as to Installation, Maintenance, Etc., of Gas Fixtures, Pipes, Etc., Served by District - Procedure.

11-50-402. Promulgation of Rules and Regulations as to Installation, Maintenance, Etc., of Gas Fixtures, Pipes, Etc., Served by District - Procedure. Any such rules or regulations promulgated by a gas district under the authority conferred by this article shall be incorporated in a resolution of its board of directors, which resolution shall be deemed a resolution of general or permanent nature and shall be published in the manner required of resolutions of a general or permanent nature by the provisions of Section 11-50-395; provided however, that where such rules or regulations have been printed as a code in book or pamphlet form, they may be adopted by reference thereto without publication or posting if, prior to adoption thereof, the board of directors of such gas district shall hold a public hearing thereon and shall give public notice of the time, place, and purpose of such hearing. Such notice shall be sufficient if published once a week for two successive weeks in a newspaper published within the territory served by the gas district proposing to adopt such code or, if there be no newspaper published within the territory served by such gas district, in a newspaper of general circulation within such territory. The first of such publications shall be not less than 10 days before the date fixed for such public hearing. (Acts 1955, No. 362, p. 880, §2.)

Ala. Code § 11-50-403 Rules and Regulations Not to Supersede Rules, Regulations, Etc., of Municipalities in Territory Served by District; Municipal Rules, Regulations, Etc., to Govern in Event of Conflict.

11-50-403. Rules and Regulations Not to Supersede Rules, Regulations, Etc., of Municipalities in Territory Served by District; Municipal Rules, Regulations, Etc., to Govern in Event of Conflict. No rules or regulations promulgated by a gas district pursuant to the authority conferred by this article shall supersede any valid rules, regulations, or codes promulgated by a municipality situated in the territory served by such gas district with respect to the installation, connection, maintenance, and servicing of gas fixtures, pipes, appliances, and equipment within the corporate limits of such municipality or its police jurisdiction. In the event of any conflict between any rules or regulations promulgated by a gas district pursuant to this article and those adopted by a municipality situated in the territory served by such gas district, those adopted by such municipality shall apply and shall be controlling with respect to the installation, connection, maintenance, and servicing of gas fixtures, pipes, appliances, and equipment within the corporate limits of such municipality and its police jurisdiction. (Acts 1955, No. 362, p. 880, §3.)

Ala. Code § 11-50-404 Transfer of Systems to District by Municipalities.

11-50-404. Transfer of Systems to District by Municipalities. Each municipality in Alabama which now or hereafter owns a gas plant and system is hereby authorized to transfer and convey all or any part of such plant and system or any rights incident thereto, without the necessity of authorization at an election of the qualified voters of such municipality, to a gas district incorporated as a public corporation under the provisions of this article, whether such municipality is a member of the district or not. Any such transfer or conveyance may be made with or without pecuniary consideration and on any such terms and conditions as the governing body of the municipality owning such plant and system may determine. Any such transfer and conveyance shall be made only upon the adoption by the governing body of the municipality owning such plant and system of an ordinance or resolution authorizing such transfer and conveyance. (Acts 1953, No. 641, p. 900.)

Ala. Code § 11-50-405 Bonds - Authorization for Issuance; Form, Terms, Denominations, Etc.; Execution and Delivery; Sale; Refunding and Exchange; Issuance of Interim Receipts or Temporary Bonds.

11-50-405. Bonds - Authorization for Issuance; Form, Terms, Denominations, Etc.; Execution and Delivery; Sale; Refunding and Exchange; Issuance of Interim Receipts or Temporary Bonds. The bonds of a district incorporated under this article shall be authorized by resolution of the board of directors of the district and may be issued in one or more series, may bear such date or dates, mature at such time or times, bear interest at such rate or rates, be in such denominations, be in such form, either coupon or registered or both, be executed in such manner, be payable in such medium of payment, at such place or places, be nonredeemable or subject to such terms of redemption, with or without premium and be subject to being declared or becoming due before the maturity date thereof as such resolution or resolutions may provide. Said bonds may be issued for money or property, either at public or private sale and for such price or prices as the board of directors shall determine. Such authorizing resolution shall provide for the execution and delivery of bonds of the district by its officers therein designated. Coupons may be executed with the facsimile signature of any officer designated by the board of directors. Any bonds issued by the district may thereafter at any time (whether before, at or after maturity thereof) and from time to time be refunded by the issuance of refunding bonds, which may be sold by such district at public or private sale at such price or prices as may be determined by its board of directors, or which may be exchanged for the bonds to be refunded or which may be partly sold and partly exchanged. Any such refunding bonds may be issued at any time and from time to time as the board of directors may deem it advisable, whether or not the bonds to be refunded are then subject to redemption, and may be issued in a principal amount not exceeding the principal amount of the bonds to be refunded plus any premium necessary to redeem or retire such bonds, any interest (accrued or to accrue) on such bonds to the date of redemption or retirement thereof and any expenses estimated to be incurred in connection with such refunding; and, if deemed advisable by the board of directors, bonds may be issued by any district incorporated under this article for the combined purpose of so refunding any outstanding bonds and of acquiring, constructing, providing, improving or extending any gas system or systems. The district may pay all expenses, premiums and commissions which its board of directors may deem necessary or desirable in connection with any financing done by it. All bonds issued by such district shall be construed to be negotiable instruments although payable solely from a specified source, and bona fide holders of such bonds for value shall be entitled to all benefits provided by the negotiable instruments law of the State of Alabama. Pending the preparation or execution of definitive bonds, interim receipts or certificates or temporary bonds may be delivered to the purchaser or purchasers of said bonds. Any bonds issued by it may be purchased by a district out of any funds available for such purchase, but such right of purchase may be limited in the authorizing resolution. All bonds so purchased shall be cancelled. (Acts 1951, No. 762, p. 1319, §9; Acts 1965, No. 694, p. 1286, §1; Acts 1971, 1st Ex. Sess., No. 102, p. 183.)

Ala. Code § 11-50-406 Bonds - Disposition of Proceeds from Sale.

11-50-406. Bonds - Disposition of Proceeds from Sale. All moneys derived from the sale of any bonds issued by any district incorporated under this article shall be used solely for the purpose or purposes for which the same are authorized, including any engineering, legal or other expenses incident thereto and, in the case of bonds issued in whole or in part for the construction of a gas system or systems or any part thereof, interest on such bonds (or, if a part only of the bonds are issued for the purpose of such construction, on the part of such bonds issued for that purpose) prior to and during such construction and, in the case of bonds issued by a district for the purpose of refunding outstanding bonds of such district, any premium which it may deem necessary to pay in order to redeem or retire the bonds to be refunded and any interest (accrued and to accrue) on the bonds to be so refunded. The treasurer or other officer designated by the board of directors shall give a receipt for the purchase price to the purchaser of any such bonds, which receipt shall be full acquittal to such purchaser, and he shall not be under any duty to inquire as to the application of the proceeds of such bonds. (Acts 1951, No. 762, p. 1319, §14; Acts 1965, No. 694, p. 1286, §2.)

Ala. Code § 11-50-407 Provisions in Mortgages, Deeds of Trust, Etc., Executed as Security for Bonds as to Rights of Parties Thereto, Etc.; Execution, Etc., of Contracts as Security for Repayment of Moneys Borrowed.

11-50-407. Provisions in Mortgages, Deeds of Trust, Etc., Executed as Security for Bonds as to Rights of Parties Thereto, Etc.; Execution, Etc., of Contracts as Security for Repayment of Moneys Borrowed. (a) Any mortgage, deed of trust or pledge agreement made by any district incorporated under this article for the security of any of its bonds or to define the rights, remedies and privileges of the holders of such bonds and the duties of the district to such holders may contain such agreements, obligations, covenants and provisions as the board of directors may deem advisable respecting the operation and maintenance of the gas system or systems and the collection and application of the revenues subject to such mortgage, deed of trust or pledge agreement and respecting the rights and duties of the parties to such instrument or the parties for the benefit of whom such instrument is made, with it being expressly provided that any such mortgage or deed of trust may be subject to the sale of the system or systems at foreclosure to utility companies or corporations regulated by the Alabama Public Service Commission. (b) To further secure the repayment of any money borrowed by it, any such district may enter into a contract or contracts binding itself for the proper application of the money borrowed, for the continued operation and maintenance of any gas system or systems owned or to be acquired or constructed by it or any part or parts thereof, for the imposition and collection of reasonable rates for and the promulgation of reasonable regulations respecting any service furnished from its gas system or systems, for the disposition and application of its gross revenues or any part thereof and for any other act or series of acts not inconsistent with the provisions of this article for the protection of the loan and the assurance that the revenues from its gas system or systems will be sufficient to operate such system or systems, maintain the same in good repair and in good operating condition, pay all reasonable insurance thereon, pay the principal of and interest on any bonds payable from such revenues and maintain such reserves and funds as may be deemed appropriate for the protection of the loan and the efficient operation of such system or systems. (Acts 1951, No. 762, p. 1319, §11; Acts 1969, No. 634, p. 1161, §2.)

Ala. Code § 11-50-408 When Mortgages or Pledges of Property or Revenues and Liens Thereof Effective; Properties, Persons, Etc., Subject Thereto.

11-50-408. When Mortgages or Pledges of Property or Revenues and Liens Thereof Effective; Properties, Persons, Etc., Subject Thereto. Any mortgage or conveyance of property and any pledge of revenues to secure the bonds of a district incorporated under this article shall be valid and binding from the time when such mortgage or conveyance is delivered or such pledge made, and the system, properties, revenue, income and moneys so mortgaged, conveyed or pledged and thereafter received by such district shall immediately be subject to the lien of such mortgage, conveyance or pledge without any physical delivery thereof or further act, and the lien of any such mortgage, conveyance or pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the district, irrespective of whether such parties have notice thereof, from the time when a statement thereof is filed in the office of the judge of probate of the county or counties where the system or systems of the district are located. Such notice shall be sufficient if it states the date of the resolution authorizing the issuance of the bonds, the date of the bonds, the principal amount thereof, the maturity dates thereof and whether the system is one or more gas transmission systems or one or more gas distribution systems or both. The judge of probate shall file and index such notice in the record of mortgages in his office. (Acts 1951, No. 762, p. 1319, §12.)

Ala. Code § 11-50-409 Liability Upon Bonds, Etc.; Payment of Bonds.

11-50-409. Liability Upon Bonds, Etc.; Payment of Bonds. The bonds and other obligations of any district incorporated under this article shall not be a debt or obligation of the State of Alabama nor a debt or obligation of any municipality which is a member of the district; and neither the state nor any such municipality shall be liable in any way whatsoever thereon, nor may the holder of any such bonds or obligations compel the levy of any taxes for the payment thereof. Said bonds shall not be payable out of any funds other than the revenues of the gas system or systems of the district issuing the same, and each bond shall contain a recital to that effect. Neither the members of the board of directors nor any person executing said bonds shall be liable personally on said bonds by reason of the issuance thereof. (Acts 1951, No. 762, p. 1319, §10.)

Ala. Code § 11-50-410 Rights and Remedies of Bondholders and Trustees.

11-50-410. Rights and Remedies of Bondholders and Trustees. In addition to all other rights and all other remedies, any holder or holders of any bond or bonds of any district incorporated under this article, including a trustee for a bondholder, shall have the right, subject to any contractual limitation binding upon such bondholder or holders or trustee and subject to the prior or superior rights of others: (1) To bring an action on the bonds; (2) To enforce its rights against the district and the board of directors, by mandamus or other civil action or proceeding, including the right to require the district and such board to fix and collect rates and charges adequate to carry out any agreement as to or pledge of the revenues produced by such rates or charges and to require such district and such board to carry out the other covenants and agreements with such bondholder and to perform its and their duties under this article and under any mortgage, indenture of trust or contract; (3) To require such district by civil action to account as if it were the trustee of an express trust for such bondholder; (4) To enjoin by civil action any act or things which may be unlawful or a violation of the rights of such bondholder; and (5) To obtain by civil action or proceeding in any court of competent jurisdiction in the event of the default by the district in the payment when due of his or their bond or bonds or interest thereon, which default shall have continued for a period in excess of 60 days, or default in the performance of any other covenants or obligations of the district, which default shall have continued for a period of 60 days after notice to cure such default, the appointment of a receiver for the gas system or systems of the district, which receiver may enter and take possession of such system or systems or any part or parts thereof, including all property, land, property rights, easements, franchises, books, records, papers, accounts and other adjuncts of the system or systems of the district and may operate and maintain such gas system or systems, fix and collect all rates and charges and receive all revenues thereafter arising therefrom in the same manner as such district itself might do and shall deposit all moneys in a separate account or accounts and apply the same in accordance with the obligations of such district and as the court shall direct. (Acts 1951, No. 762, p. 1319, §13.)

Ala. Code § 11-50-411 Disposition of Net Profits of District; “Net Income” Defined; Distribution of Less Than Net Income for Fiscal Year; Availability for Payment in Future Fiscal Years.

11-50-411. Disposition of Net Profits of District; “Net Income” Defined; Distribution of Less Than Net Income for Fiscal Year; Availability for Payment in Future Fiscal Years. All the net income of the gas transmission system or systems, for each fiscal year, of a gas district incorporated under this article shall, unless otherwise provided in the certificate of incorporation of such district, be divided, within a reasonable time after the close of each fiscal year, among its member municipalities in proportion to the amount of gas sold to or within each such municipality. All the net income of each gas distribution system, for each fiscal year, of any such district shall, unless otherwise provided in its certificate of incorporation, be distributed and paid, within a reasonable time after the close of each fiscal year, to the municipality or municipalities within which such distribution system is located. The term “net income” as used in the preceding two paragraphs of this section shall mean, with respect to the system or systems and for the fiscal year in question, the net income thereof computed in accordance with generally accepted accounting principles plus depreciation and amortization less the sum of the following: If any gas district incorporated under the provisions of this article provides, in its certificate of incorporation, for the disposition of the net income of all its gas transmission and distribution systems in the same manner, it may, for purposes of such disposition, compute net income for all its gas transmission and distribution systems as a unit rather than separately; and, in any such case, such certificate of incorporation may provide for and authorize the distribution and payment, in the discretion of the board of directors of any such gas district, of an amount less than the net income of all such systems for any fiscal year, in which event (A) that portion of such net income for any such fiscal year not so distributed and paid shall be available for distribution and payment in future fiscal years as and to the extent provided in such certificate of incorporation, and (B) such certificate of incorporation may also specify that such provision and authorization shall operate both prospectively and retrospectively, so as to ratify and confirm (i) any prior distributions and payments of amounts less the net income of all such systems for any prior fiscal year, and (ii) the availability (for distribution and payment in future fiscal years) of any portion thereof not so distributed and paid. (Acts 1951, No. 762, p. 1319, §15; Acts 1983, No. 83-613, p. 950; Acts 1989, No. 89-705, p. 1410, §1.)

Ala. Code § 11-50-412 Taxation - Exemption of Property, Income, Bonds, Etc., of District Generally.

11-50-412. Taxation - Exemption of Property, Income, Bonds, Etc., of District Generally. All property and all income of any district incorporated under this article and any such district itself shall be exempt from all state, county, municipal and other taxation in the State of Alabama, including, without limitation, privilege and license taxation. All bonds of such district and the interest thereon shall be exempt from all state, county, municipal and other taxation in the State of Alabama. All deeds, mortgages, indentures of trust and other documents executed by or delivered to any such district shall be exempt from all state, county and municipal and other taxation in the State of Alabama; provided, that these exemptions shall not be retroactive in effect and shall not affect any taxes currently in existence nor any tax previously assessed whether collected or not; provided further, that as of September 1, 1965, the provisions of this section shall not affect or be applicable to any existing contracts, bonds, supporting taxes or existing exemptions, nor shall it affect or be applicable to the refunding of any gas district corporations incorporated of a debt existing on September 1, 1965, taxes or tax assessments and any municipality or county may continue in the future to levy and collect any tax now levied, the passage of this section notwithstanding. (Acts 1951, No. 762, p. 1319, §16; Acts 1965, No. 694, p. 1286, §3.)

Ala. Code § 11-50-413 Taxation - Levy and Collection of Privilege License Tax by Certain Municipalities.

11-50-413. Taxation - Levy and Collection of Privilege License Tax by Certain Municipalities. (a) The term “taxpaying gas district” as used in this section means any gas district organized under the provisions of this article that has, during any one calendar year, paid to at least one half of its member municipalities license taxes, including interest and penalties, in an aggregate amount in the case of each such municipality at least equal to two percent of the gross receipts from business done by such district in such municipality during the eight calendar years next preceding the calendar year during which such taxes were paid. (b) Any provision of law including, without limitation, Section 11-50-412, as amended, to the contrary notwithstanding, any municipality in this state that is a member of a taxpaying gas district may levy and collect for the calendar year next succeeding that during which the aggregate taxes referred to in subsection (a) of this section were paid, a privilege license tax on such taxpaying gas district in an amount not to exceed the sum of: (1) The amount by which a. Two percent of the gross receipts of such taxpaying gas district from business done in such municipality during the eight calendar year period referred to in subsection (a) of this section exceeds b. The total amount of license taxes, including interest and penalties, theretofore collected by such municipality from such taxpaying gas district with respect to such eight calendar year period, plus (2) Ten percent of the amount obtained as a result of the application of subdivision (1) of this subsection. (c) The provisions of subsection (b) of this section to the contrary notwithstanding, no municipality that is a member of a taxpaying gas district may levy or collect any such privilege license tax upon such district if it had theretofore collected from such district, during the aforesaid eight calendar year period, rentals aggregating as much as two percent of the gross receipts from business done by such district in such municipality during such eight calendar year period. (Acts 1967, Ex. Sess., No. 173, p. 222.)

Ala. Code § 11-50-414 Validation of Proceedings to Incorporate Gas Districts.

11-50-414. Validation of Proceedings to Incorporate Gas Districts. All acts or proceedings heretofore done or taken for the purpose of incorporating any gas district under the provisions of this article are hereby validated and declared legal, notwithstanding that the resolution adopted by the governing body of any municipality which is a member of such gas district authorizing its mayor to proceed with the organization and incorporation of such gas district in purported compliance with Section 11-50-391 does not set forth a brief description of the gas system or systems to be owned and operated by such gas district or fails to comply in other respects with the provisions of said Section 11-50-391, notwithstanding failure to publish any resolution and notwithstanding that the objects for which such gas district is organized as stated in the certificate of incorporation of such gas district, filed in the office of the judge of probate of the county in which the principal office of such gas district is located, include objects or purposes which are not authorized by said article; provided, that such gas district shall not have or exercise any power which is not conferred upon said district by said article or by any act amendatory thereof or supplemental thereto heretofore or hereafter adopted or by this section. (Acts 1955, No. 559, p. 1221.)

Ala. Code § 11-50-415 Exemption from Usury and Interest Statutes.

11-50-415. Exemption from Usury and Interest Statutes. Each gas district now or hereafter organized under the provisions of this article is hereby exempted from the laws of the State of Alabama governing usury or prescribing or limiting interest rates, including, without limitation, the provisions of Chapter 8 of Title 8 of this Code. (Acts 1975, No. 1128, §1.)

Ala. Code § 11-50-416 Purpose of Article; Proceedings, Notices, Etc., Required by Article for Incorporation, Etc., Exclusive; Exemption of Districts from Jurisdiction and Regulation of State Public Service Commission.

11-50-416. Purpose of Article; Proceedings, Notices, Etc., Required by Article for Incorporation, Etc., Exclusive; Exemption of Districts from Jurisdiction and Regulation of State Public Service Commission. (a) This article is intended to aid the state in the execution of its duties by providing appropriate and independent instrumentalities of the state with full and adequate powers to fulfill their functions. (b) Except as in this article expressly otherwise provided, no proceeding, notice or approval shall be required for the incorporation of any gas district or the amendment of its articles of incorporation, the acquisition of any property or system or systems or the making of any loans or the issuance of any bonds or instruments in evidence thereof or as security therefor, any other law to the contrary notwithstanding. (c) Every district incorporated under this article and every gas system of such district and the rates and charges thereof shall be exempt from all jurisdiction of and all regulation and supervision by the Alabama Public Service Commission. (Acts 1951, No. 762, p. 1319, §18.)

Ala. Code § 11-50-417 Provisions of Article Exclusive.

11-50-417. Provisions of Article Exclusive. Any district incorporated under this article insofar as the subject matter of this article is concerned shall be governed exclusively by the provisions of this article. (Acts 1951, No. 762, p. 1319, §20.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026