    ..




                                        OFTEXAS
                                    Auemm.   TEXAS      78711
  dOaN      I,.    aILL
Awl-ORNEY         GENERAL

                                       July 29, 1977



            Honorable Mack Wallace, Chairman            Opinion No. H-1030
            Railroad Commission of Texas
            P. 0. Drawer 12967                          Re: Authority of Railroad
            Austin, Texas 78711                         Commission to prohibit con-
                                                        tract provisions limiting
                                                        the liability of an LPG
                                                        dealer.

            Dear Mr. Wallace:

                 YOU have requested our opinion concerning the authority
            of the Railroad Commission to modify, delete, prohibit, or
            otherwise regulate the terms and conditions of an equipment
            rental contract between a licensed Liquified Petroleum Gas
            (LPG) dealer and a lessee customer. You specifically ask
            about such contract terms which purport to limit the liability
            of a licensed LPG dealer for negligence.

                     Section 3A of article 6066d, V.T.C.S., provides:

                              General. The Railroad Commission of
                            Texas is hereby authorized, empowered,
                            and directed, and it shall be its duty
                            to promulgate and adopt, in accordance
                            with this Act, adequate rules, regula-
                            tions, and/or standards pertaining to
                            any and all aspects or phases of the
                            LPG industry (except as provided in Sub-
                            section D. of this Section) which will
                            protect or tend to protect the health,
                            welfare, and safety of the general public.

            The Commission is granted jurisdiction to regulate "any and
            all aspects or phases of the LPG industry" in the interest of
            public health, welfare, or safety. Thus the Commission may
            regulate terms and conditions of such rental contracts at
            least to the extent that they may affect the public health,
            welfare or safety.




                                              P. 4252
Honorable Mack Wallace - Page 2   (H-1030)



     It has been suggested to us that the court's opinion in
Spence & HOwe Construction Co. v. Gulf Oil Corp., 365 S.W.2d
631 (Tex. 1963). rndicates
                  '        that there is no connection be-
tween clauses which limit liability and negligent conduct.
However, as we read the decision, the court was merely stating
that the connection was insufficient to mandate a general rule
of public policy which would preclude the enforceability of
such provisions in all instances. While the court noted the
lack of any distinction between indemnity clauses in a commer-
cial contract and common insurance policies on behalf of pri-
vate citizens, the opinion falls short of finding that there
is no connection between indemnity clauses and negligent con-
duct. The courts found such a connection in G., C. & S. F.
Ry. v. McGown, 65 Tex. 640 (1886), and Bisso v. 'Inland
                                                      ~~~Water-
ways Corp   349 U.S. 85 (1955). Furthel,..-
                                        more,  as in Allright,
Inc. v. Eiiedge, 515 S.W.2d 266 (Tex. 1974 ), the court in Spence
was dealing with a standard of ordinary care.

     As stated in Robert R. Walker, Inc. v. Burgdorf, 244 S.W.2d
506, 509 (Tex. 1951):

          From those who handle . . . combustible
          gases . . . the law exacts a duty to pro-
          tect the public which is proportionate
          to and commensurate with the damages in-
          volved.

Thus, LPG dealers are bound to exercise a "high degree of
carei to protect the public. Farmers Butane Gas Co., Inc. v.
Walker, 489 S.W.2d 949 (Tex. Civ. App. - Waco 1973, no writ).
The protection of the public is the clear intent behind arti-
cle 6066d.

     Since, in our view, the use of equipment rental contract
terms which limit the liability of LPG dealers for negligence
or provide for indemnification thereof by their customers could
have an adverse affect upon the public safety in light of the
standard of care required of LPG dealers, we believe the Rail-
road Commission has clear authority to regulate or prohibit
such terms.

     We believe these indemnification clauses are void and un-
enforceable as a matter of law since LPG dealers are charged
with a dutv of safetv on behalf of the public and the term
relates to-negligence in the performance of this duty to the
public. Western Union Telegraph Co. v. Linn, 26 S.W. 490




                           P. 4253
 Honorable Mack Wallace L.Fage        3. ',(H-1030)



 (Tex. 1894); G., C. & S. F. Ry. Co;, vCi?Gown,  supra; Lone Star
 Gas Co. v. Vea, 37m2d         89 (  . .,'~ hpp. -- East'land 1964,
 writ ref'd n.r.e.): Dittman v. City of~N:w Braunfels, 48 S.W.
 1114 (Tex. Civ. App.18 99, no writ): Restatement of Contracts
 S 575, cited in Spence & Howe Construction Co. v. Gulf Oil Corp.,
 supra at 633, and Crowell v. Ho
 495 S.W.Zd 887, 889 (Tex. 1973)
 vice Co., 85 S;E.Zd 169 (Ga.
 Conun. Code, S 2.719; Northwe E
 Inc., 351 F.2d 253 (9th Cir.
 versity of California, 383 P .
 County of Missoula, 517 P.2d

      Furthermore, the terms of contracts executed subject to
 the regulatory authority of the Railroad Commission are not
 protected from the jurisdiction of the Commission by article
 1, section 16. Houston Lig
 Commission of Texas, 529 S.
 v. Lo-Vaca Gathering Co., 5
 El Paso 1976, writ ref'd n.r.e.); Railroad Commission of Texas
                                                (Tex. Civ. APP.
                                              A, 358 U.S. 33
                                              '.2d 973 (Tex. Civ .
                                              #one Star Gas Co.,
                                               writ ref'd)       -'d
 on other grounds, 304 U.S. 224 (1938). -See Letter Advisory
 z. 136 (1977).

                                SUMMARY

              The Railroad Commission may act to pro-
              hibit the use of indemnity terms within
              existing and future equipment rental con-
              tracts between a licensed LPG dealer and
              its lessee.




                                      Attorney General of Texas

L/$

  DAVID   M. KENDALL,   First   Assistant




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Honorable Mack Wallace - Page 4   (R-1030)




C. ROBERT HEATH, Chairman
Opinion Committee
klw




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