                         'P~HE,~xToRNEY                                             GENERAL
                                                      OPTEXAS




Honorable            Wardlow        Lane,       Chairman                       Opinion           No.    WW-          138
State      Affairs      Committee
Texas       State      Senate                                               Re:           Constitutionality                   of Senate
Austin,       Texas                                                                       Bill     390


Dear       Senator      Lane:


                       This     is in reply         to your          request        for    an opinion               of this        office
as to the constitutionality                     of S. B,       390.


                       The     proposed         Act    amends          Article         64501           reaffirming             the exist-
ing authorization               of the Railroad              Commission2                  to adopt           rules     and       regulations
to govern        its investigations,                hearin,gs,         consideration                and       approval             of a rail
carrier’s        application            to discontinue           any     portion          of its service,                  to abandon             or
change       the location          of any       office,      terminal          or    station,           or to take            any action
which       requires         the Commi.ssion’s                approval.


                      New       legislation         in this     Bi~ll provides              that when               any      requested
action      by a rail         carrier        is found        by the Commission                     to affect          the employees
to their      detriment,          then       as a condition            precedent            to the granting                   of the appli-
cati.on,     the rail        carrier         must     pay    the employees                 for     a designated                period        of
time,      unless      there      is a prior          contract        between          the applicant                 and itsemployees.
Section       2 of the Act         contains         a severabili.ty             clause;           Section           3 declares          that an
emergency            exists      and     suspends         the three         constitutional                   readings          requirement.


                      Article       10, Section           2, of the       Texas           Constitution               authorizes             the
Legislatu,re          to enact         law    regulating         railroad           tariffs,       and to establish                   agencies
to accomplish            this     purpose,          In 1891,         the Railroad                Commissi.on                 was     established.
(Now      Article       6445).         In the   same         year,     the Legislature                   prescribed                duties      of
the Commi.ssion               in regulating            the    Texas      rail       carrier            and    authorized             the Com-
mission       to regulate          in areas         beyond       that expressly                   set    forth       in the Constitution.
The     provisi.ons          of S. B.        390 are      not expressly               authorized              in the Constitution,
therefore        the question            you    ask,      in substance,             is whether               this     Bill     violates
other      provision-          of the Constitution.


                      S. B.     390 authorizes               the Commission                    to adopt         procedural              rules
in its     hearings       of applications              having        to do with           three         separate           and      distinct
Honorable              Wardlow          Lane,            Page     2 (WW-138)




purposes:              (1) rates,            (2) affecting             servi.ce,       and    (3) closing          or    removi.ng         of
offices,         shops,        termina1.s            and     similar         facilities        from       one     location     to another,


Rates:


                          That      part      of S. B.          390 authorizing              the Commission                 to adopt        pro-
cedural          rules       for     rate     hearing            is in substance             the     same       as the present             Article
6450.        This       proceeding             is authorized                 in the Constitution,                Article      10, Section            2.


Closing          or    removing             stations,           shops       and terminals:


                          That      part      of S. B.          390 requiring              Commission             approval         to close
stations,           and      to change         location           of shops          and terminals              supplements           present
statutes.


                          Commencing                 in 1889,          the Legislature               passed       a series        of statutes
pertaining             to keeping            shops,        terminals,             repair      shops       and     similar      facilities          at
certain          places.           Article      6275        ( maintaining            general          office     in Texas);         Article
6277      (maintaining               facilities           where        the    railroad        had      so contracted           to keep          them,
if there         was      such       a contract);               Article      6278        (providing          that certain         officials        had
to maintain             their       principal            office     and      place       of residence            in Texas);         Article
6280      (to do repair               work      in Texas);              Article        6281    (to keep         the company’s              books
in Texas);             and Article            6286        (no railroad             company           shall     change       the location           of
its general             office,       machine             shops,       roundhouses,                or home       terminals          except
with     permission                of the Railroad                 Commission,               originally         passed       in 1915 and
amended             in 1929).


                          These       Articles            relating         to the location             of the general          office,
shops,       and terminals                   have        been     sustained          as being         constitutional.             International
and G. N.             Railway         Co.     v. Anderson                 County,        174 SW.         305 (Tex.Civ.App.                 1915,
error       ref.)      affirmed,             246 U.S.           424,      62 L.Ed.         807 (1918).


                          That      part      of S. B,          390 requiring              prior      approval          of the Commis-
sion     before         changing            locations            of its     facilities       is constitutional.


Restricting             or    abandonment                  of service:


                          S. B.      390 supplements                      present        statutes.       Article         6479 authorizes
rail    carriers             tr: restrict           or    abandon          passenger          service          when      the Commission
finds      (1)    such       service          is not necessary                 to meet        the public’s              demand,       or    (2)
the expected               revenue           does        not pay       the cost        of the service             plus     a reasonable
return       upon         the property              used        in givi,ng      this      service.           Article      6479(a)     authorizes
Honorable           Wardlow             Lane,        Page          3 (WW-138)




the rail        carrier         to res,trict           freight            service       when      the Commission                finds        that
the service            which         it, the Commission,                         prescribes          is adequate         to meet           the
public’s         requirement.


                        In Texas             and N.        0.     Ry.      Co.     v. Railroad           Commission,                145 Tex.          541,
200 S,W.2d             626 (1947),            the Supreme                  Court        interpreted         Article      6479 as           a Legis-
lative      directive          to the Commission                          that it relax          passenger           service         require-
ments       when        a finding            was     made         that the          service       was     not paying          for    itself.          To
the    same        effect      is Texas             and N.         0.     Ry.     Co.     v. Railroad         Commission,                 220 S.W.2d
773 (Tex.Civ.App.                     1949,        error         ref.),     where         the Court        held      that the railroad’s
application            to discontinue                passenger              service         should       be granted         when          it was
shown       that the service                  is losing            money.


                        This     part        of S. B.           390 directing              the Railroad           Commission               to
adopt      rules       relating         to the abandonment                         or   restrictions           of service           is consti-
tutional.


The      condition          precedent              imposed           upon        the Commission’s                 action:


                        Under         S. B.        390,     before         taking       action      on an application,                the Com-
missior          must       make       a finding            as     to the effect            of the proposed             action        upon       the
employees;             if to their           detriment,              then       as a condition            precedent         to further
action,      the Bill        requires              that     prescribed              benefits       for    a designated              period       be
provided         for    the employees                     so affected.


                        This     condition            precedent              involves          the questions           of whether            it is
a regulation            of the        rail    carrier            which          is to protect         the public        interest,           as   con-
trasted         to protection              of private            interests.          The courts  have                 consistently   main-
tained      this    distincti.on.              In San Antonio                    & Aransas  Pass  Ry.                 Co. v. Wilson,
19 S.W.         910 (Tex.Civ.App.                    1892),         the Court             held   a statute        imposing           a 20 per
cent     penalty        upon     railroad            companies               for     failing      to pay      promptly         its employees
to be unconstitutional,                      because             it was      not passed           to prevent          threatened             damage
to the public,            but rather           was         a regulation              of internal          affairs.      Here         the Court
pointed         out the two-fold               character                of the rail         carrier--public             and      private.             It
was      held    that this           was     class         legislation            without        proper      justification           for     the
classification,             stating          that the same                 argument           which       could      be made         to sustain
this     statute       could     be extended                to every             public      agency       that    contributed             to the
public      necessity;           it is unconstitutional                          to single       out one type          of corporation
and    subject         it to a penalty               which         another          corporation           in a similar           situation
was    not subject             to.


                       The      conditi.on           imposed              upon     the Commission’s                  action      in S. B.          390
is a regulation              which         affects         the internal             operation           of the railroads             --    the
Honorable            Wardlow            Lane,         Page       4 (WW-138)




continued         necessity             of employment,                  wages        and the pa,yment                 of wages         to em-
ployees       no longer               in the employment                  of the company.                    It, in effect,          requires
that the regulations                    of the carriers                in the discharge                of their          duties      to the
public,      be subordinated,                      in some         instances,          to matters            affecting        internal
affairs      of the company.


                      As     a general               statement          of constitutional              interpretation                of legis-
lation      affecting        labor          and      management,              it can be said               that the statutes             which
have      the effect        of regulating                  internal      operations            of a privately               owned      enter-
prise      is not,      on this         ground            alone,      unconstitutional.                These         statutes        have        been
sustained         largely         as a val.id             exercise        of the State’s             police        power.


                      The        due       process          clause      (Article         1. Section           3, Texas            Constitution)
does      not prevent             an authorized                exercise         of the police              power,          It is constitu-
tionally      permissible                  for    the Legislature               to classify           subject         of legislation.
However,          the classification                      must      not be arbitrary             or     unreasonable                and must
be based       upon        substantial               distinction         which         makes         one     class       reallv      different
from       another.         Spann           v. City        of Dallas,          111 Tex,         350,       235 S.W.         513 (1921);
Fort      Worth       & D. C. Ry.                 Co.     v. Welch,          183 S.W.2d          730 (Tex.Civ.App.                    1940,
error    ref.). In Barbier    v. Connolly,   5 S.Ct. 357 (1885), the Court   stated,
I . a . that equal protection    and security    should be given to all under like
circumstan.ces     in the enjoyment     of their personal  and civil rights  I . . that
no greater           burdens           should           be laid      upon     one than         are     laid       upon     others      in the
same       calling      and conditions.“~


                      There           are        several       types     of transportation                   facilities       available
to the public           other         than        rail.     Each       of these        different        types        are     subject        to
classification             for    the purpose                of regulating             their    services             to the public           in
matters       peculiar            to their          type     of service          and     operation.


                      In our          opinion,            matters       affecting        the carrier              and      its employees
are common    to all types                         of carriers,              There       appears           to be no reasonable
basis for the classification                          of the rail            carrier       alone       (as     is done       in S. B.         390)
before      the Commission                       is authorized           to make          orders           affecting        the rail      carrier
and its      relations           with       the public             in matters          of rates,       service           and location             of
physical       facilities.              The        same      reason          that would        exist        for    the protection             of
employee          interests            in rail        exists        in all    types      of transportati.on.                  For      this
reason,       therefore,              we     conclude          that that part            of S. B.          390 which         creates          the
condition       p.recedent             to the Commission’s                       action        is unconstitutional;                  it is
class      legislation           and       Jiolative         of the Texas              constitutional.            provision          requir-
ing equal         rights         or    obligations            of all    in a similar            class,
                      --




Honorable         Wardlow              Lane,      Page        5 (WW-138)




                       In reaching             this    conclusion            we   are     not unaware               of the decision
of the U. S. Supreme                    Court         in U.     S. v. Lowden,             308 U.S.          225 (1935).            Here
the Court        upheld         the validity           of an order            entered          by the Interstate                Commerce
Commission                 requiring         that certain            benefits     be provided               for    employees          of
railroads        before         permitting            the consolidation                 of the applicant                railroad     corn-
panies.        In our        opinion,         the problem             before      the Interstate               Commerce            Commis-
sion    case     was        so different          in granting              the permission               to the consolidation               of
companies         operating             thousands         of miles           of lines         in several           states       that the
opinion      rendered           does         not necessarily               control      the determination                     of the validity
of S. B.       390.


                                                         SUMMARY


                       That     part     of S. B.        390 which            permits          the Railroad
                      Commission                to adopt        rules       and   regulations              to govern
                       its hearings            in matters            affecting         rail     carriers,          in
                       changes         of rates,         service           rendered           to the public           and
                      changes          of location            of any office,            terminal          or    station
                       is constitutional.                That        part    of S. B.          390 which           requires
                      as     a condition          precedent               to the Commission’s                     action
                      on such          application            that    it, the Commission,                      must      find
                      that     the employee              will     be in no worse                condition          after
                      the change              than    before         or    to pay wages           for     a designated
                      period       is unconstitutional                     as being       class        legislation          and
                      applicable             to only     one     kind       of a common                carrier,         and
                       violates        Article         1, Section           3, Texas          Constitution.


                                                                                  Very         truly     yours,


                                                                                  WILL          WILSON
                                                                                  Attorney             General          of Texas




                                                                                  By      d              -’  /%&-\-
                                                                                         Edwiz          P: Homer
EPH:tiw                                                                                  Assistant


APPROVED:
OPINION         COMMITTEE:
,H. Grady       Chandler,              Chairman
Houghton        Brownlee,              Jr.
Lenny       Zwiener
Wallace        Finfrock
                                                                                                      . .   -.




Honorable          Wardlow         Lane,   Page   6 (WW-138)




REVIEWED            FOR      THE      ATTORNEY          GENERAL
BY:       Geo.      P.    Blackburn




‘All    Articles         in this   opinion   refer   to Vernon’s      Civil   Statutes,     1925.

n

‘The     Railroad         Commission         of Texas    will   hereafter     be referred     to as
    the Commission.
