Railroad Commission of Texae
Gentlemen I

                          Opinion No. O-3611'
                          Rer Validlty'of "grand-father"
                              Provision in-H. B. 351, 47th
                              Leg., and aonstruotlon to be
                              placed thereon,

          In your letter of recent date you direot atten-
tion to House'Bi.11 NO. 351, Forty-seventh Legislature,
and advise us of the following facts:
          "     . heretofore the Railroad Commission
     of Texis'ln the issuanoe of special oommodlty permite
     has not only not required pleadinga and proof that
     the pub110 oonvenisnoe and necessity required the
     operations aontemplated by said permits but haa not
     permitted such pleadings and proof;, and said permits--
     some 1200 in number--are now outsijanditigwithout there
     ever having been any pleadings or proof that the
     putaio convenle~noe and neoeasity required the
     operations or that the existing faaillties were
     inadequate.' Moreover, many of theas pennits give
     the holdera thereof authority to transport all of the
     oommodlties named in the spooLa oommodity statute
     but In a great number of oases the holders have
     transported only a portion of the named oommodltiea.n
          The 'Act referred to provides for the issuanoe    -
of ltspeolalized motor oarrler'1 certificates for authority
to conduct certain motor oarrler operations. Special oom-
modlty carriers, as they have been heretofore called, hold-
ing permits Issued under Secti& f3(d) of Article Qllb,
Vernonla &notated   CZvil Statutes, would be replaced by
carriers holding speo,ializad motor carrier certlfloktes.
The new statute contains'ths following provision?

          "j(b).. . W provided further that any pereon
     to'rhom a "Spsoial Commodity" permit for tha
     transportation of any or all-of eald oommod-
     itiss had bean issued under the provFslons of
     Seotfon 6, paragraph (d), Artiole- 911b, Title
                                        -      .




Railroad Commission of Texas, Page 2, O-3611



    25, Revised Civil Statute8 of the State of
    Texas, 1925, as amended, if such "Special Com-
    modity" permit shall have bean in force and
    effect on January 1, 1941, and if such person
    or lredcessor in interest may desire to con-
    tinua in the businsss of a motor carrier of
    suchcommodity orcommodities   shall file an ap-
    plication for a certificate of conveneince and
    necessity under the terms of this Act within
    sixty (60) days after the affective date hers-
    of, it shall be the duty of the Commission to
    issue without further proof a certificate au-
    thorizing the operation as a "Specialized Motor
    Carrier" for the transportation of such commod-
    ity or commoditisa oovdred by the ttSpecial Com-
    modity" permit held by the applicant, which
    %pecialized Motor Carrier" certificate shall
    bs issued to the applicant-and include all the
    rights and privilegsa granted under said "Spe-
    cial Commodity" permit."

          You request our opinion in response to twenty-one
que.stiona, reading as follows:

                       "First

           "In view of such decisions a8
     Cincinnati Tra&tion' Company vs. P.U.C. of Ohio,
           150 N. E. 308,
     Gollsn Gats Ferry Company vs Railroad Commission
           of California, 268 Pacific 355,
     State 8x rel Hanson vs. Brown, 31 S. W. (2) 208
     mo.1,
     In rs Stanley, 174 Atlantic 93 (Maine), and
     Gruber v8 Common wealth, 125 S.E. 427.(Virginie)
     is House Bill 351, wherein it directs, if it does
     direot, this Commission, without notice or hearing,
     to issue grandfather certificates of publio con-
     venience and necssaity to holders of preexisting
     special commodity permits 'in force and effect
     on January 1, 1941', valid and constitutional
     insofar as such grandfather certificates might
     be granted with respect to commodities named
     in the preexisting special commodity permits
     but which commodities wers not being actually
     transported on January 1, 1941, and prior thereto?
                       Second
              .    .




Railroad Commi8sion of Texas, Page 3



          "Or is said House Bill 351 valid and con-
    stitutional only, whenadministered  end applied
    in such fashion as to bring about an issuance by
    this Commission of grandfather certificate8 to the
    holder8 of preexisting special commodity permit8
    with respeht ONLY to named commodities which such
    holders were actually transporting for hire on
    January 1, 19411

                       Second-A

         "la it mandatory upon this Commission to
    hold hearings upon eaoh of the grandfather ap-
    plications contemplated by H. B. 351 for the
    purpose

         "(a) of determining whether each special
    commodity permit was 'in force and effect on
    January 1; 1941' as to each commodity named
    therein'or should the Commiaaion,f~rom a mere
    study of its own record8 issue a grandfather
    certifioate to each applying special commodity
    permittee, where the Commisslon*a record8,ahow
    such an-outstanding permit,--writing the grand-
    father certifioate in suchfashion   as to give the
    holder thereof authority to transport the very
    same commodities named in the special commodity
    permit whether SUGh special commodity permittee
    was actually transporting all of said commodities
    on January 1, 1941, or not?

         'l(b) Or is it mandatory upon this @ommission
    to set forhearing each of said grandfather eppli-
    cations and on the basis of such hearing issue to
    such applicant a grandfather certificate limited,
    not to all of the commodities named inhis pre-
    existing special commodity,permit, but only to the
    commodities named in said permkt and which were being
    actually transported by the permittee on January 1, 1941,
    and prior thereto,-- this, on the theory that such
    preexisting~permit was not in force and effect on
    January 1, 1941, as to named commodities not being
    actually transported on that date and prior thereto?

                       Third
         "In view of the fact that House Bill 351 is an
    amendment to,,the existing Motor Carrier Law of Texas,
    should this Commission, in the application and adminis-
                                        .      .




Railroad Commission of Texas, Page 4, O-3611



     tration of the Motor Carrier Law as amended by House
     fill 35., take the position that said Rouse Bill351,
     insofar a8 itauthorized   the grant of grandfather
     certifioetes covering a commodities named in the pre-
     existing special commodity permits but which were not
     being actually transported for hire on January 1, 1941,
     and prior thereto, is unconstitutional as thus
     construed; and, for that reason, in view of the rule
     that the Comuiasion should go in the direction of
     constitutionality, if pOSSibl8, set for hearing all
     applications for grandfather certificates and grant
     such certificates only if and when there shell be
     pleading8 and proof of just which commodities named
     in the preexisting special commodity permits were
     being actually transported on January 1, 1941, and
     then, upon such pleadings and proof, reduce the grant
     of right8 in such grandfather certificates down to the
     right to transport only those COmmOd%tieS shown to have
     been actually transported on January 1, 1941, and
     prior thereto, --taking the position that such pre-
     existing special commodity permlta were fin force and
     effect on January 1, 1941' only with respect to those
     commodities named therein which were actually being
     transported on January 1, 1941, end prior thereto,
     and that there had been an abandonment by the holders
     of said special commodity permits of the right to
     transport commodities named in their speoial commodity
     permits but whiah were not being aotually transported
     on January 1, 1941, end prior thereto?

                       Fourth

          "Assuming that there are a large number of
     outstanding special commodity permits which,
     on their face, give the right to transport all
     or nearly all of the commodities named in the special
     commodity statute but under whioh there was a failure
     actually to transport some of such commodities on
     January 1, 1941, and prior thereto, has the right to
     transport said commodities not so actually transported
     been abandoned in such fashion as not to have been 'in
     force and effect on January 1, 1941,' insofar as
     commodities not actually transported on that date and
     prior thereto are ~concerned, notwithstanding the fact
     that the Commission never, et any time, took any
     statutory steps to cancel for abandonment said permits
     after notice and hearing insofar as the commodities
     not so actually transported are concerned.
                       Fifth
          wAa8uming that we should reduce the grand-
              .    .




Railroad Commisstor,of Texas, Page 5, O-3611



    father rights down to the, right to %xnnspont
    commodities actually transported on January 1,
    1941, and prior thereto, then and in that event,
    in view of the wording of House Bill 351, doss
    this Commission have the power to give tiotices
    and hold hearings and make findings; and, thsre-
    on, issue ,grandfather certlfic,ates covering only
    commodities actually tranepor~ted on January 1, 1941,
    and prior thereto,--conducting ‘sucb.hearings and
    giving such notioes making such fandings under the
    Motor Carrier Law of Texas as it stands as amended by
    House Bill 351 or doing so independently of House
    Bill 351P                                          \
                       Sixth
                       --
          “Assuming, that House Bill 35& i&unconsti-
    tutional as to oommoditites note~actu@llg being
    transported eon January 3, 1941, and prior thereto,
    even when ,.considered,in connection w,ith the pre- -
    existing provisions of the ,MQto.r.~
                                       Carrier hot, does
    the Railroad Commission of Texas, under its rule-
    making power, have authority,, independently of the
    unconstitutional protions of’Hotise Bill 351, to
    adopt a plan by general order. or’ rula of hearing the
    special commodity permittees and allowing them to
    prove the public convenience and necessity and
    inadequacy of existing facilities and, ‘upon such
    pleadings and proof, grant to them grandfather
    certificates givtng the authdrity to transport for
    hire such commodities as thcpubllc    convenience and
    necessity requires to be transported and with respect
    to which the existing transportation fac.ilitFes are
    inadequate?

                       Seventh

         “Assuming that House Bill 351 ,is invalid as
    to:~cotiodities not actually transported on January 1,
    1941, and prior thereto, and assuming ,that we have
    no’power to val’idate outstanding special commodity
    permits in the method’ indicated bye the preceding
    question, then and in that event

          (a) is the remainder of House Bill 351 valid?

         (b) If valid, does the Railroad Commission of Texas
    have any alternative other than to require the holders
    of outstanding special ,commodity permits to come in
                                        .      .




Railroad Commission of Texas, Page 6, O-3611



    under such valid portions and prove the public
    convenience and ;lecessity and the inadequacy of
    existing facilities just as though they had never
    held any special commodity permits?

         (c) If said remainder of House Bill 351
    is invalid, is it mandatory upon the Railroad
    Commission of Texas to cancel out all outstanding
    special commodity permits?

                      Eighth     1
         May a certificate of public convenience and
    necessity or a contract carrier permit or a
    special commodity permit be abandoned, in whole
    or inpart, with no operations thereunder, and still
    remain 'in force and efrectr even where the
    Railroad Commission of Texas fails, after notice and
    hearing, to cancel the same on the grounds of aban-
    donment of service under the cancellation provisions
    of the Motor Carrier Act?,

                      Ninth

         "In detail, just what steps should this
    Commission take under House Bill 351 in order to
    carry out and administer said bill in accordance
    with its intent and purpose?

         ?Che passage of House Bill 351 was passed as
    a result of the decision of the Austin Court of
    Civil Appeals in The T and P Railway Cob vs.
    Railroad Commission of Texas(and Thomas G. Runter).

                      Tenth

         "If the Supreme Court of Texas upholds the
    Austin Court of Civil Appeals in the Hunter Case,
    (a) will all of such special commodity permittees
    be in exactly the same position they were in prior
    to the passage of House Bill 351 if said grandfather
    clause of said Bill is invalid, (b) or, if not in
    said same position, how shall they proceed and how
    shall this Commission proceed to cure the vices and
    defects pointed out in said Hunter case?
                      Eleventh
          "In connection with those questions listed above
    having to do with the words 'in force and effectt:
Railroad Commission of Texas, Page 7, O-3611



    were any of our some 1200 special commodity permits
    in force and effect in view of the decision in the
    Hunter case?

                      Twelfth

         YOUr attention is called to the words of Rouse
    Bill 351 reading: 'if such person or predecessor in
    interest may desire to continue in the business of
    a motor carrier of such commodity or commoditiest,
    and, in connection therewith, we ask this question:

         “HOW shall the Commission proceed to determine
    what business any holder of a preexisting special
    commodity permit was engaged in at any given time
    and how shall the Commission proceed~to authorize
    him to continue in such business?

                      Thirteenth

         "Some special commodity permittees not only
    do not exercise all of the rights shown on the face
    of their permits, so far as commodities are concerned,
    but they also do not exercise all of their named
    rights, SO FAR AS AREA IS CONCERNED, and we now re-
    quest you to give us your opinion with respect to
    AREA in all instances indicated above where we have
    asked your opinion with respect to COMMODITIES?

                      Fourteenth
         "The grandfather clause seems to authorize the
    Commission to issue a certificate to a holder of a
    special commodity permit authorizing such holder 'to
    continue in the business of a motor carrier of such
    commodities' as he was engaged in on January 1, 1941.
    In order for the Commission to issue such certificate
    to carrier so that he can continue in the business of
    a motor carrier as he was engaged in on January 1,
    1941, how is the Commission to determine what business
    the carrier was engaged in, both with respect to
    commodities and area, on such date; and what procedure
    should be followed to ascertain the extent of the
    authority that should be embraced in the certificate
    issued and enable such carrier to continue in such
    business?
                      Fifteenth
         fl~ndetermining whether each special commodity
Railroad Commission of Texas, Page 8, O-3611



     permit was tin force and effect on January 1,
     1941' would the fact that a particular permit was
     under suspension on January 1, 1941, or since that
     date, disqualify said applicant for a certificate
     of convenience and necessity under the so called
     'grandfather' clause of said Act?

          "In conneotion with the above and foregoing
    question, your attention is directed to the fact,
    and the same is now stated to you as a fact, that
    from time to time holders of special commodity permits
    apply to this Commission for authority to suspend
    service for a certain pe,riod of time under their
    particular permit. The length of time of suspension
    varies, but it is usually for a period of six months.
    These suspensions are granted by the Commission
    without hearing and all that is done by the Commission
    is to onter an order approving the suspension for a
    spgat;fc& period of time.

                      Sixteenth

         "If, end in the event , your answer to the above
    and foregoing question is in the negative, than
    please advise us in connection with the followingr

         "(a) Would the holder of the special commodity
    permit, which was under suspension, be required to
    reinstate said permit by filing proper insurance and
    fees before the Commission could consider, or issue,
    to the applicant a certificate under the so called
    'grandfather' clause of said aat?

         (b) Would such acts have to bedone before
    the applicant aould legally file a 'grandfather'
    application?

          “(C-l In the event that a partZau1ar. special
    commodity permit was under suspension, by order authorizing
    same, and said order, for example, authorized the permit
    to remain in suspension until September 1, 1941, would
    said perml.t holder be required toreinstate   said per-
    mit before this Commission oould consider, or grant
    to him a certlfioate under the so called rgrandfatherr
    clause of said act?
         “la) Or would 'the ermit holder be allowed,
    and authorized under saIId Act, to obtain a csr-
    tifloate under the -rgrandfatharr clause of the Aot,
    and said grandfather certificate than remain under
    suspension until September 1, 19414
                 .   -




Railroad Commission.of.Taxas,   Page 9;   O-3611

                         Seventeenth

          "Is determining whether,or not a s,pecial
     commodity permit is in 'force and effect on Jan-
     uary 1, 1941, r as to both commodities and ter-
     ritory, is thims Commission to take in,to,consid-
     eration any amendment, that may have~,been.granted,
     to the permit subsequent ,to January 1, 1941,
     and prior to ,the effective date on the act, pr
     shall we only consider, the permit as being in,
     'force and effect' as to those c~onunodities,,and
     the territory covered and named, in then. permit as
     of January 1, 19411 In other words would the
     gran~dfathsr certificate, as a maximum,,aoier,only
     such commoditi,e,s,and territory as.was,authorized
     in the permit as of:January 1, ~1941, or should,ws
     consider any amendment granted to the,permit sub-
     sequent to January l., 1941, and prior to the
     effective date of the act?

                         Eighteenth

          "By the express terms of the Act a person is
     prohibited from holding both a oommon carrier
     certificate and .a specialized motor carrier cert~i-
     ficate. In your opinion, having special reference
     to your prior opinions on ths subject, and the
     present Motor Carrier Law, may one and the same
     person   hold both a contract carriers permit and
     a specialized motor carrier certificate?

          "In connection with tht 'abays and foregoing
     question it is now stated to you as a fact that
     there are a number of operators within the state
     that hold both a special c.omtnoditypsrmit and
     contract carriers permit.,

                         Nineteenth

          %Ouss Bill 351 provides for a filing fee
     of $25.00, and specificially states that this
     CommFssion shall not consider, etc., any appli-
     cation unless it is accompanied by a filing fee of
     $25.00. But in this connection you'r attention is
     ~directed to the following factsl We now have on
     hand a,number of special commodity permit appli-
     cations which have (1) either be&heard     and not
     yet ac'ted upon,~ (2) or not set for hearing, butt on
     file, (3) or set for hearing but not yet heard or
     actad ,on. Each of these applications were accom-
     panied by a filing fee of $lO.bO as, required by. the
Railroad Copunisslon of Texas, Page 10, O-3611



     present law. With these fasts in mind please
     advise us in connection with the followingI

           "(a) Are we authorized to apply the $10.00
     filing fee whloh has been paid on those speolal
     commodity applications which have been filed, and
     heard, but not acted upon, on the $25.00 filing
     fee required under House Bill 351 for all
     applications for certificates to operate as a
     specialized motor carrier?

          "(b) Are we authorfzed to apply the $10.00
     filing fee which has been paid on those,special
     commodity applioations whioh have been filed, and
     set for hearing, but not yet heard or acted upon,
     on tha $25.00 filing fee required under House
     Bill 3519
          "(c) Are we authorized to apply the $10.00
     filing fee whioh has been paid on those speoial
     oommodity applications which have been filed, but
     neither set for hearing, nor heard, nor act&d
     upon, on the $25.00 filing fee required under
     House Bill 3511

                       Twentieth

          "Assuming that an applicant is not eligible
     for a-spedialized motor carrier certificate under
     the so called 'grandfather* clause of House Bill
     351, and he, therefore, files his appllcatlon and
     seeks to prove publia convenienae and necessity, -
     in proving, or attempting to prove that present and
     existing service is inadequate, wLl1 such applicant have
     to take into consideration and prove that all services
     (including regular route common carriers) are
     inadequate, or will he only have to prove that the
     present servioe of existing speoialized motor carriers
     is inadequate?"

          We think it well, first to consider the status of
the special commodity permits granted by the RaFlroad Com-
mission and outstanding on January 1, 1941, and which had
been issued without the h~earing of any .evldence on the ques-
tion of pub110 aonvenience and necessity.   In the case of
Texas'& Pacific Ry. Co. v. Railroad Commission, 138 S.W.r
(2d) 927, the Austin Court of Civil Appeals set aside a
speaial'commodity permit, holding that public neaessity had
to be alleged, proven and found, as in the aaae of common
carriers. In effeot, the Court of Civil Appeals s,aid that
              .,   .-




Railroad Commission of Texas, Page 11, O-3611



if the Statute should be construed so as to permit the
grantFng of such permits without suoh allegation, proof
and finding, it would be diacrimlnatory and unconstitutional.
This department, disagreeing with the opinion of the Court
Of civil AppeELb, filed an application'for'writ of error to
the Supreme Court. The writ was granted and the case was
submitted on briefs and oral argument several weeks ago, but
the Supreme Court has not yet announced its decision In the
0898. The Supreme COUPt  has r8qUest8d aounael for the
parties in the T. & P. case to s,ubmit to the Court their
views ooncerning the possible effect of this B. B. 351 upon
the permit involved in that case. We think the Commission
should accept and file all applic'ations to convert special
commodity permits into specfalized motor carrier ce.rtificates,
but that such applications should not be heard and determined
until the Supreme Court disposes of the T. & P. Casey. If
there is Unexpected delay,in the disposition of that cas8
and the n88d to determine these applications becomes pressing
we shall then be glad to give gou'our opinion as to the pro-
per course to pursue.
          In the light of what we have said above, we'beg
not to answer at this time your questions Ros. 1, 2, 2a, 3,
4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17,,18 and
the questions contained in your letter of June 20, 1941.

          In Seotion 58(c) .the Commission is prohibited
from hearing or determining any application for a special-
iZ8d motor carrier certificate (except the grandfather),
unless the application shall oontain certain allegations,
among them being:

           It'3. It shall be aocompanied by a map, showing
     the territory within which, or the points to or from
     or between whioh, the a pliCant desires to operate,
     and shall COnthin a liaE of any existing transpor-
     tation company or companies serving such territory,
     and shall point out the inadequacy of existing
     transportation facilities or service, and shall specify
     wherein additional facilities or servioe   are required
     and would be s8cUr8d by the granting of said
     application.

          "r(d) . . . The Commission shall have no
     authority to grant any application for a certificate
     of convenienoe and necessity authorizing operation
     as a "Specialized Motor Carrier" or any other common
     carrier unless it is established by substantial
     8Vid8nCe (1) that the services and facilities of the
     existing carriers serving the territory or any pert
                                          * .




Railroad Commission of Texas, Page 12, O-3611



    thereof are inadequate; (2) that there exists
    a public necessity for such service, and (3) the
    public convenience will be promoted by granting
    said applioation.   The order of the Commission
    granting said application and the oertificate
    issued thereunder shall be void unless the
    Commission shall set forth in its order full and
    complete findings of fact pointing out in detail
    then inadequacies of the se~rvioes and facilities of
    the existing carriers, and the public need for the
    proposed service. Likewise, the Commission shall
    have no authority to grant any contract carrier
    application for the transportation of any commod-
    ities in any territory or between any points where
    the existing carriers are rendering, or are capable
    of rendering, a reasonably adequate servioe in the
    transportation of such commodities.

          "r(e) Except where otherwise provided, ap-
     plications for and holders of certificates of
     public convenience and necessity, as provided for
     in this Section, shall be subject to all of the
     provisions of the Act relating to common carriers
     by motor vehicle."

          Based on the above, we answer your twentieth
question by saying that in our opinion the character of
services being rendered by existing common carriers as
well as specialized ,oarriers must be considered. If
viewing all the existing services of the different
carriers, there is no need for the operation applied for
then the application should be denied.   On the other hand,
if all the existing facilities fail to properly serve the
territory as to the commodities sought to be transported
then the certificate may be granted.

           Special commodity applications now pending, as
we understand, do not contain allegations meeting the
quoted requirements of an application under this Act.
Hence, new applications or amended applications satisfying
such requirements will have to be filed before the
tipecialized certificate may issue. Section 5a(f),
H'. B. 351, requires every application under such~Section
to be accompanied by a filing fee of $25.00. I;t is our
opinion that $10.00 fees deposited with the pending
special commodity carrier applications may be allowed as
a credit on suoh $25.00 filing fee and we answer each
Railroad Commission of Texas, Page 13, O-3611



subdivision of your nineteenth question in the
affirmative.




                              Yours very truly

                         ATTORNEY GENERAL OF TEXAS



                         BY
APPROVED JULY 1, 1941                Qlenn    R. Lewis
                                             Assistant
s/ Grover Sellers

FIRST ASSISTANT
Ai'TORNEX GENERAL


GRL;LM/cg


APPROVED OPINION COMMITTEE
By EWB, Chairman
