                         December 10, 1952


Eon. Olin Culberson, Chairman
Railroad Commission of Texan
Austin, Texas                    Opinion No. V-1549

                                 Re:   Authority of the Rail-
                                       road Commi8aion to pre-
                                       Bcribe joint or propor-
                                       tional rail-barge or
                                       truck-barge rates for
                                       traffic moving on the
Dear Sir:                              intracoaetal canal.

          You have requested the opinion of this office a8 to the
jurisdiction, if any, of the Railroad Commission to prescribe joint
rail-barge or joint truck-barge freight rates applicable to the
movement of traffic on the intracoastal canal. The information
you furnish reveals that a barge operator on the canal ha8 inquired
a8 to the ponsibility of the Commiesion'~ prescribing ouch joint
rates 80 that barge operatore may meet the competition of truck
and rail operation between points also served by barges.

          You set out the specific rates that would have to be
prescribed by the Commission to accomplish this, a8 followa:

          "1. That the Commission prescribe motor carrier,
     or railroad rates, from interior pointe in Texas to
     points along the lntracoastal canal, .ae proportional
     rates to be applied in connection with rubsequent move-
     ment by barge, which rate8 would be leaa than rates of
     the motor carriers, or rallroadn, for application from
     the same origin to the #ame destination on the canal on
     freight that would remain at that point.

          "2. That the Coauniasionprescribe ratee, via motor,
     carriers, or railroads, as the cane may be, from points
     on the intracoaetal canal, to interior points in Texae,
     as proportional rates on freight which ha8 originated at
     some point along the canal, moved by barge to another
     point on the canal, and to be moved therefrom to an in-
     terior point or points by motor carrier, or by rail,
     which would be less than would apply by motor carrier,
     or rail, a6 the case may be, from the same origin to the
     same destination but which had not had a prior barge move-
     ment,
                                                                       ,


Ron. Olin Culbereon, Page 2 (V-1549)



         “3.  That the Commission prescribe rates, via motor
    carrier, or via railroad, from points in the interior of
    Texas to points along the canal, and rates from other points
    along the canalto interior points, on which there has been
    an intermediate haul by barge.   This would involve two sep-
    arate motor carrier, or railroad movemente, one at origin
    and the other at destination end, which might be via the same
    or different carriers.

           “4.    That.the Commission prescribe through rates to be
    applied from interior points in Texas to interior points in
    Texas,     via motor carrier, or rail, thence via barge, thence
    via motor carrier or rail; or through rates from points on
    the canal via barge, thence motor carrier or rail, or vice
    versa."

          We think we can beet examine the proposal of the barge
operator by quoting directly from his letter accompanying your opin-
ion request, which gives a graphic illustration of the problem:
         II
          . . . Assume any commodity originating at Houston for
    destination Riseion, Texas, which Is an interior point lo-
    cated only a short dietance from the newly opened port of
    Harlingen.   The truck rate from Harlingen to Mission being
    a short haul is comparatively high.   The all rail rate from
    Houston to Mission ie,'of course, a through rate as is also
    the truck rate.   The spread between the Houston--Mission
    rail or truck rate and the truck rate from Harlingen to Miee-
    ion is very thin 80 that if a given commodity moved barge from
    Houston to Harlingen, truck Harlingen to Mission, there would
    be no spread from which the barge movement could be compen-
    Bated. The traffic is, therefore, denied movement in this
    manner.   If the Railroad Commission could, however, prescribe
    a through rate from Houston to Mission (or vice-versa) for
    application on a movement partly by truck and partly by water
    and only so applicable, in connection with which the partici-
    pating carriers could agree on divisions, then such movement
    could occur from a competitive standpoint and no question of
    discrimination would be involved because there would be no
    such thing a8 a truck line performing its portion of the
    service between Harlingen and Miesion or in the reverse at a
    rate less than it would perform the same service between Har-
    lingen and Mission or Mission and Harlingen, for only shippers
    between Houston and Mission or Mieeion and Houston would be
    involved."

          It appears, therefore, that the barge operation problem
is occasioned by an unfavorable competitive position caused by the
combination of barge rates with local rail and truck rates to points
on the canal, when contrasted with all-rail or all-truck rates
Hon. Olin Culberson, Page 3 (V-1549)



between the same ultimate points of the traffic movement.

          We observe initially that the Railroad Commission is
a regulatory agency which possesses only such authority as Is
conferred by law.   Texas & N.O. Ry. Co. v. Houston Belt &
Terminal Ry. Co., 227 S.W.2d 610 (Tex.Civ.App. 1950); Foster v.
Railroad Commission, 215 S.W.2d 267 (Tex.Civ.App. 1948m
road Commission v. Red Arrow Freight Lines, 96 S.W.2d 735-x.
Civ.App. 1936, error ref.).

          As such. the Railroad Commission has no authorltv con-
ferred by law to regulate barge rates or movement on the intra-
coastal canal.   See Consolidated Chemical Industries v. Rail-
road Commission, 201 S.W.2d 124 (Tex.Civ.App. 1947, error ref.
n.r.e.) and former Attorney General's Opinion, dated August 22,
1932.
          Insofar, therefore, a6 you propose to prescribe a rate,
either joint or proportional, to be collected for barge movement
per se, there is no statutory authority therefor, and the came
would be illegal.

          A different question arises as to your proposal to
prescribe proportional rates applicable to rail or truck move-
ment either preceding or following barge movement.   As indicated
in your opinion request, such proportional rates would necessarily
be subnormal rates in order to achieve competitive equality in
the overall rate to attract traffic now moving all-rail or all-
truck.

            A proportional rate has been defined in Atchison, T. &
S.F. Ry. Co. v, United States, 279 U.S. 768, 49 S. Ct. 494 (1929),
as follows:

             "A through rate Is ordinarily lower than the com-
        bination of local rates.   When a through rate Is made
        by combination ox'rates for intermediate distances, the
        rate for the later link in the shipment is, when lower
        than the local, spoken of as a proportional rate."

          For a similar definition, also Bee 9 Am. Jur. 101.6, -Car-
riers, sec. 946.

          It is necessary for proportional rates to be reasonable
and non-discriminatory in order for them to be legal.   Atchison,
T. & S.F. Ry. Co. v. United States, supra.
Hon. Olin Culberson, Page 4 (V-1549)



          We obserre from your request that the subnormal pro-
portional rates which would be applicable to the prior or subse-
quent rail or truck movement are not requested by the railroads
nor by the truckers, as they patently would not be, since the
application of these rates wouldattract traffic from its present
all-rail or all-truck movement to movement partially by barge.
Furthermore, the movement of traffic all-rail or all-truck be-
tween the same ultimate destinations, generally the ports, is
now moving on water-compelled rates which are lower than normal
rates and were requested by the rails or trucks to meet barge
competition.

          It becomes necessary to inquire whether the imposition
of these special subnormal proportional rates on the railroads or
the truckers would be discriminatory. We conclude that it would
be.

          It is required by law that rates promulgated by the Rail-
road Commission be non-discriminatory. Art. 6474, V.C.S. The
rates about which you inquire would in effect grant discriminatory
preferences to points located on the intracoastal canal insofar as
rail or truck rates to these points are concerned, when contrasted
with rail or truck rates for similar distances to points located
elsewhere than on the canal.   This is specifically set out in
your questions.

          The Court in Railroad Commission v. Galveston Chamber of
Commerce, 105 Tex. 101, 145 S.W. 573 (1912) made the following per-
tinent observations in discussing the discrimination question!

          "It seems to be in the mind of the attorneys for
     defendants in error that Galveston is entitled by law
     to some favor because of its location and water trans-
     portation.   The advantage exists, and that position
     would not cause adverse discrimination nor favorable
     indulgence. The benefit of access to the high seas be-
     longs to the people of all the states, and may be, and
     no doubt has been used by the Commission for the general
     good.   The bayou affords some competition with the
     railroads between Houston and Galveston, and, if it
     were sufficient, might force the railroads to seek lower
     rates to Galveston; but Galveston would have no right to
     demand lower rates on the railroads." (Emphasis supplied)

          In this connection, we emphasize that it does not appear
from your request that the railroads and truckers have requested
these subnormal rates which they would realize, and which would
cause them to lose much of the volume of their through traffic.
Hon. Olin Culberson, Page 5 (V-1549)



          We are of the opinion that the imposition of such rates
on the rails and truckers for the purpose you propose would be un-
reasonable and discriminatory as to the rails and truckers, and
therefore without authority in law.   Railroad Commission V. Hous-
ton Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591 (1935); Rail-
road Commission V. Galveston Chamber of Commerce, 115 S.W. 94-
(T~x.c~v.A~~. 1908, error ref.).

          Applying this conclusion to the~specific rate proposals
about which you inquire, we hold that the Railroad Commission has
no authority to prescribe any of the rail or truck rates set out.

                           SUMMARY

          The Railroad Commission has no authority to pre-
     scribe barge rates applicable to the intrastate move-
     ment of traffic by barge on the intracoastal canal.
     Former Attorney General's Opinion, dated August 22, 1932.

          The Railroad Commission may not prescribe propor-
     tional rail or truck rates applicable to the intrastate
     movement of traffic, by rail or truck and by barge on the
     intracoastal canal, if such rail or truck rates are lower
     than the local or other normal rate applicable to move-
     ment to the uoint on the canal at which the rail or truck
     movement ends or begins.   Art. 6474, V.C.S. Railroad
     Commission v. Houston Chamber of Commerce, 124 Tex. 375,
     78 S.W.2d 591 (1935); Railroad Commiselon v. Galveston
     Chamber of Commerce, 115
                           mrrerror
                              S.W. 9
     ref.).

APPROVED:                                Yours very truly,

E. Jacobson                                PRICE DANIEL
Executive Assistant                      Attorney General

Price Daniel
Attorney General
                                          BY


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