.     .




                      THEA~~OICNEY              GENERAL

                                 OF    TEAXAS

    Gerald C. Mann
    ATrORNEY   GWNs!xaAx.




          Hon. James E. Kilday        Opinion No. O-1310
          Director, Motor Trans-      Re: Whether Railroad Commission may
          portation Division          issue certificate of convenience and
          Railroad Commission of      necessity to operate as a common car-
          Texas                       rier motor carrier to a subsidiary of
          Austin, Texas               Missouri Pacific Railroad to operate
                                      parallel with and supplementary to the
                                      railroad, serving no new points or
                                      lines, without alleging and showing
                                      inadequacy of existing facilities and
                                      need of additional transportation
          Dear Sir:                   facilities.
                    We received your letter of August 22, 1939, wherein
          you outline to us the following facts:
                    Missouri Pacific Freight Transport Company is a Texas
          Corporation, the capital stock of which is wholly owned by the
          Trustee in Bankruptcy for the Missouri Pacific Lines. It has
          been recognized by the Railroad Commission of Texas as an ex-
          press company and has on file with the Commission tariffs re-
          specting its service. The Missouri Pacific Lines operate a
          line of railroad serving, among others, the towns of Taylor,
          Thrall, Thorndale, Rockdale, Milano, Gause, Hearne, Franklin,
          New F&den, Easterly, Marquez, Jewett, Buffalo, Oakwood, Pales-
          tine, Neches, Jacksonville, Henderson, Overton, Troup, Arp,
          Tyler, Lindale, Mineola, Kilgore ,and Longview. These towns
          are situated on United States Highways 79 and 69 and State
          Highways 43, 379 110, 64, 135 and 26. Missouri Pacific Freight
          Transport Company, as a rail transport company, already extends
          service to each of these towns to , from, and between points on
          the rail lines of the Missouri Pacific Lines, and principally
          Houston, Dallas, Fort Worth, San Antonio, Austin, Longview,
          Memphis, Tennessee and St. Louis, Missouri. As a rail trans-
          port company, Missouri Pacific Freight Transport Company al-
          ready competes with the highway truck lines serving the named
          points to, from, and between the various points on the Missouri
          Pacific Lines, including the towns last named.
                    Missouri Pacific Freight Transport Company has filed
          an application with the Railroad Commission of Texas for a
          certificate of convenience and necessity, authorizing it to
          serve the towns first listed by using the highways mentioned.
          As stated before, it already serves those towns as a rail trans-
          port company.
                                                             .      .




Hon. James E. Kilday, page 2   (O-1310)


          It is stated in the application that the extent and
design thereof is to improve the service of the applicant to,
from and between the towns it serves by using highway trucks
in coordination with and auxiliary to the rail service of it
and its parent. No new service will otherwise be inaugurated.
Ko towns except towns already served by it as a rail +remq-
port company will be served. No towns off the line of the rail-
road will be served. The further purpose of the application is
stated to be the rendition of highway and joint rail and high-
way service in addition to the service by rail exclusively
which the transport'company now renders and proposes to continue.
The application is to operate trucks over the highways only from
Taylor to Longview via Milan0 Junction and Palestine; from
Troup to Mineola via Tyler and from Henderson to Troup.
          You further advise that the application contains al-
legations that the certificate is sought for the purpose of
making possible a larger and more flexible service from points
on the routes over which the actual truck operation will be
conducted to all other points and routes served by the Missouri
Pacific Rail System and its rail connections and to expedite
the handling of L.C.L. shipments between all points located on
the Missouri Pacific Rail System and the points located on
the routes over which the actual truck operations will be
performed; that the principal shipping centers such as Dallas,
Fort Worth, Waco, Austin, San Antonio, Corpus Christ1 Houston,
Beaumont and Galveston will originate the principal t&nnage
which will be expedited so far as movement by the applicant
is concerned. That the plan of operation is to move that ton-
nage by rail to a junction point on the route over which the
trucks will actually operate, thereby relieving the highways
of their burdens and affording a facility for transportation
which will have for its general purpose the transportation of
freight the longest by rail and the shortest distance by truck
necessary to render adequate and speedy service between all
points in Texas on the one hand and points on the route above
described on which trucks will actually be operated on the
other hand. The application further states that from some of
the principal distributing points to the points located on the
route over which the truck operation proposed will be con-
ducted the common carrier truck lines operate direct over night
next day delivery service but that in some instances the serv-
ices are effected by inter-change between two or more common
carrier truck lines and that such lines do not have adequate
terminal and freight depot facilities for receiving and dis-
charging freight; and further that the movement of freight
from points between Taylor and Milan0 on the one hand and
points between Hearne and Tyler and Hearne and Longview on the
other hand by the present common carrier truck lines .isa
Han, James E, Kilday, page 3           (O-1310)


circuitous, indirect, irregular and independable servi.cenow
being performed by the common carrier motor carrier truck
lines and that the proposed service will operate a dl.rectone-
line haul between all of such points.
          The application contains allegations to the effect
that transportation of property for hire by existing common
carrier truck lines from points between Houston and Brownsville;
from points between San Antonio and Laredo; from poi.ntsbe-
tween San Antonio and Del Rio, fnvolves t.woor three inter-
changes and that the service is slow, indirect, irregular and
not dependable; that the proposed operation will set up a
service wherein the shipments will move upon the billing of
the Missouri Pacific Freight Transport Company by rail to some
junction point on the truck route between Taylor and Longview
and will then be transported by truck to consignee at final
destination on said truck route without dfvfded responsibilityO
          Said applicatfon contains allegations to the effect
that the only way the existing common carrier truck lines can
render the service from such great shipping centers as Dallas,
Fort Worth, Austin, Waco, San Antonio, Corpus Christi, Houston,
Beaumont and Galveston and from points between Houston and
Brownsville; San Antonio and Laredo; San Antonio and Corpus;
San Antonio and Del Rio is by operating trucks over great dis-
tances and interchanging such freight, which said operation of
trucks is an unnecessary use of the highways resulting in
interference wft~hthe use of such highways by the public gen-
erally and that for that reason the said existing common car-
rier truck service is inadequate and that there exists a pub-
lic need and requirement by the public for a transportation
facility and service whfch will.afford to the shippers and
receivers of freight a service by rail over the greater drs-
tances with expedited delivery by truck from the rail cars at
some pofnt along the route over which trucks are proposed to
be operated; that the proposed operation will provi,defor the
public such a system of transportation as will permit them to
procure adequate, expeditious service with a mir.imumarno-&?t
of use of their highways and will afford the great shfpping
centers of this state an opportunity and a plan of common ear-
riage service which will be conducted by a carrier without any
divided responsibilfty with any other carrier and will satisfy
the public convenience in the use of the highways in that it
wfll allow expeditious service to be rendered in the movement
of L.C,L, shipments to all of the points located on the route
between Taylor and Longview from any point in the State of
Texas at such times and in such manner as to meet the demand
of the public for rapid and expeditious movement of such L.COLO
shfpments from any and all points in Texas to all of ,the
points on said route without the use of any of the highly
                                                                 .   .




Hon. James E. Kilday, page 4   (o-1310)


traveled or highly congested highways of this state. That
the existing common carrier truck lines in rendering the serv-
ice between all points in the State of Texas, on the one hand,
and the points located on the route over which applicant pro-
poses to operate trucks are now operating many trucks over
highly traveled highways in this state and have no facilities
whereby they can move such shipments between the points in-
volved without operating their large line haul trucks over
such principal highways in such manner as to unreasonably
interfere with theuse of the highways by the public and in
that respect such facilities and services of the existing common
carrier truck lines are wholly inadequate to meet the require-
ments and the public convenience of the people of this state
in the use of their highways and in the transportation of their
property between such points.
          The application contains allegations to show the
kind and character of facilities devoted to the public service
and use by all of the Missouri Pacific rail lines on the one
hand and the facilities of the I. & G. N. line, a part of the
Missouri Pacific rail system located on the route over which
the applicant proposes to actually operate trucks. Further,
the application contains allegations to show that said facil-
ities are not being used to their capacity and that by the use
of such facilities the public convenience requiring that the
highly traveled and principal highways of this state be re-
lieved of the trucks for hire will be met and that the pro- '
posed operation will be a convenience to the public in that by
the use of such facilities already devoted to the rendition
of a common carrier service will be used in such manner as to
afford for the public a much improved service whereby special
handling of L.C.L. shipments between points located on the
route involved in the application and between those points
and all other points in Texas on the Missouri Pacific rail
lines and those to be reached by their connections.
          You submit to us a large number of questions and
advise that the application is on file in your office subject
to our inspection. However, we have not inspected the appli -
cation, believing that our answers to your specific questions
and the discussions which we shall make in connection with
such questions will be sufficient to meet your needs. Slight-
ly rearranged, your questions are substantially as follows:
          1. Is the allegation that the existing common car-
rier truck lines do not have facilities and cannot render a
service without operating trucks over the principal highways of
this State in the transportation of property from points in
this State to points along the route on which trucks are
Hon. James E. Kilday, page 5   (O-1310)


proposed to be operated an allegation of inadequacy of exist-
ing common carrier truck service?
          2. Is the allegation to the effect that the proposed
operation will relieve the highways of the transportation of
property over said highways by trucks an allegation which re-
lates to the question of public convenience and necessity7

          3. Does the allegation mentioned in question No. 2
in any sense meet the requirements of Section 10 of Article
911b, Revised Civil Statutes, with respect to the form and suf-
ficiency of the application?
          4. If said application contains the foregoing alle-
gations and none other with respect to public convenience and
necessity and proof is submitted to support such allegations
would the Railroad Commission be justified in making a finding
that public convenience and necessity requires such operation?
          5. Will proof that the proposed operation will afford
adequ+te service to the public with the minimum use of the high-
ways when the existing common carrier truck lines between many
of the principal shipping points in Texas and the points lo-
catedjon the route are already rendering reasonably adequate
service satisfy the requirement that the applicant prove that
public convenience and necessity requires such operation?
          6. Would a showing to the effect that the proposed
truck operation will afford a facility for transportation of
property which will result fin said property moving the longest
distance by rail and the shortest distance by truck to pro-
vide adequate and economical service to the public; that the
proposed operation will result in the use of freight depots
and other facilities in small towns to such an extent as to
make possible their continued maintenance and continued employ-
ment of agents at such small places to serve the public; and,
that the proposed operation will provide a transportation fa-
cility which if used by the public will greatly relieve the
most highly traveled highways of the State of a portion of the
burden of traffic they are now carrying constitute proof that
public convenience and necessity requires such operation?

          7. You call our attention to the fact that in hear-
ings upon applications filed by motor carriers engaged only in
interstate commerce the Railroad Commission is without authority
torequire showings of public convenience and necessity and in-
quire if there is any parallel between such cases as that and
the one at hand.
Hon. James E. Kilday, page 6   (O-1310)


          8. Should the Railroad Commission consider proof of
the improvement of the applicants and the Missouri Pacific rail
line service in the foregoing manner as proof that public ne-
cessity and convenience requires such operation?
          9. Can the Commission consider as proof of convenience
and necessity the fact that Missouri Pacific Freight Transport
Company is already serving the towns involved, service being as
a rail transport company moving many millions of pounds of
freight to, from and between the towns involved?
          Ey Article qllb, Revised Civil Statutes, motor car-
riers are placed under the regulation of the Railroad Commission
of Texas. In Section 3 thereof it is provided that "no motor
carrier shall after'this act goes into effect operate as a com-
mon carrier without first having obtained from the Commission
under the provisions of this act a certificate of public con-
venience and necessity pursuant to a finding to the effect that
the public convenience and necessity require such operation."
          Section 10 of said Article prescribes the contents
which an application for a certificate must necessarily contain.
The first paragraph of subdivision 4 thereof reads as follows:
          "It shall be accompanied by a plat or map showing the
     route or routes over which the applicant desires to oper-
     ate, on which plat or map shall be delineated the line or
     lines of any existing transportation company or companies
     serving such territory, and shall point out the inade-
     quacy of existing transportation facilities or service,
     and shall specify wherein additional facilities or serv-
     ice are required and would be secured by the granting of
     said application.V1
          The first paragraph in Section 9 of said Article 9llb
 reads as follows:
          "The Commission shall ascertain and determine if a
     particular highway or highways designated in an applica-
     tion for a certificate of public convenience and neces-
     sity are of such type of construction or in such state of
     repair, or subject to such use as to permit of the use
     sought to be made by the applicant, without unreasonable
   ,"interference with the use of such highways by the general
     public for highway purposes. And if the Commission shall
     determine, after hearing, that the service rendered by
     existing transportation facilities or agencies is reason-
     ably adequate, or that public convenience would not be
     promoted by granting of said application, and the opera-
     tion of motor vehicles on the public highways therein
.




    Hon. James E. Kilday, page 7   (O-1310)


        designated, or that such highway or highways are not in
        such state of repair, or are already subject to such use
        as would not permit of the use sought to be made by the
        applicant without unreasonable interference with the use
        of such highways by the general public for highway pur-
        poses, then in either or any of such events said appl,ica-
        tion may be denied and said certificate refused, otherwise
        the application shall be granted and the certificate issued
        upon such terms and conditions as said Commission may im-
        pose and subject to such rules and regulations as it has
        or may thereafter prescrfbe."
              From a reading of the Motor Carrier Act as a whole
    and in particular the parts which we have quoted above, it
    becomes clearly apparent tha,tconsiderations of highway condi- .
    tions and of public convenience and necessity form two dis-
    tinct and separate issues to be determined upon an application
    for a certificate to operate as a common carrier motor carrier.
    In Section 9 we find that the Railroad Commission may deny a
    certificate if it be found that the public convenience and ne-
    cessity would not be served, although the particular highway
    to be traversed should be entirely sufficient to bear the
    added traffic.   On the other hand the Commission is authorized
    to deny such a certificate where the highway will not stand the
    added traffic although public convenience and necessity would be
    promoted by the granting of the certificate. By this we do
    not mean to say that highway conditions might not in some in-
    stances enter into the question of public convenience and ne-
    cessity. We a.renot called upon to determine that question in
    this case. We do mean to say, however, that a new common car-
    rier motor carrier service cannot be inaugurated upon allega-
    tions and proof showing nothing more than that such service
    would be beneficial to the highways and to the traveling pub-
    lic upon the highways, with no showing of Inadequacy of prior
    existing facilities and the need of other facilities to serve
    the territory affected. The motor carrier act repeatedly re-
    quires the showing of public convenience and necessity as a
    requisite to the granting of a certificate to operate as such
    a carrier and in Section 10 thereof it is expressly provided
    that no application shall be ccnsidered by theCommission un-
    less it be in writing and set forth among other things the in-
    adequacy of existing common carrier services and shall specify
    wherein additional facilities are required and would be secured
    by the granting of the application. The case of Railroad Com-
    mission vs. Red Arrow Freight Lines, 96 S.V.(2d) 735, before
    the Austin Court of Civil Appeals is conclusive of this point,
    The facts involved in that case were briefly these: H. H.
    Lawler became the owner by purchase of two certificates of
    convenience and necessity, one to operate from Houston to San
                                                                .




Hon. James E. Kilday, page 8   (O-1310)


Antonio and intermediate points and the other from San Antonio
to the Rio Grande Valley via Edinburg and serving intermediate
points. He filed an application before the Railroad Commission
for a so-called re-routing to permit him to go directly from
Houston to Edinburg without serving intermediate points on that
route. His theory was that he could already haul freight from
Houston to Edinburg and points beyond and vice versa going by
San Antonio and that no new service was therefore involved. It
appeared, however, that the new route was about 120 miles
shorter than the one by way of San Antonio and that his service
between Houston and Edinburg would be shorten& by thirty hours.
Over the protest of competing carriers the Railroad Commission
limited the hearing and its findings to the adequacy of the
highways over which the re-routing was sought. The trial court
set aside the order of the Commission granting such re-routing
and an appeal was taken. The Court of Civil Appeals affirmed
the action of the trial court in an opinion written by Chief
Justice McClendon and from which we quote as follows:
         "The two certificates were granted at different times
    to different Individuals. They were granted to serve
    separate and distinct transportation requirements: The
    one served the territory from Houston to San Antonio and
    intermediate points; the other, that from San Antonio to
    the Valley and intermediate points. In considering the
    question of convenience and necessity as to each certifi-
    cate, only the need-s,requirements, etc., of the two termi-
    ni and intermediate points were involved. Neither certi-
    ficate had any relation to the other. The fact that common
    ownership was finally united in Iawler in no way modified
    their effect. They were manifestly not designed origi-
    nally, nor through common ownership thereafter, to provide
    a direct through service between Houston and Valley points.
    The order in suit manifestly conferred upon Lawler a
    right to render a service which was substantially differ-
    ent from that authorized in his two certificates, enabling
    him to compete directly with appellees in a manner in
    which he could not compete with them before, if in fact he
    could effectively compete with them at all before. It is
    elementary that advantage in service is one of the most
    important factors in competition, and that time is a prime
    element in transportation service. We are clear in the
    view that the application could not be granted as a mere
    rerouting under the two certificates, but that it.required
    a showing and commission finding of convenience and neces-
    sity."
          The applied for motor carrier operation would offer
many elements of competition to carriers already serving the
t




    Hon. James E. Kilday, page 9   (o-1310)


    territory in question which the railroad does not offer. Trucks
    can be operated upon schedules which it would be impossible as
    a practical matter for a railroad to duplicate and in particu-
    lar with reference to small shipments. Motor carriers can ren-
    der certain services which a railroad,cannot, just as on the
    other hand the railroad enjoys certain advantages over motor
    trucks with reference to certain kinds of shipments. That the
    motor carrier service apolied for would be a different one from
    the railroad service rendered by the Missouri Pacific is so ob-
    vious we think as to neeed no support in argument. The applica-
    tion in question is for a new service and it must comply with
    the statute is to showing inadequacy of present facilities and
    the need of the new service. We will now answer the above ques-
    tions with such additional discussion under each of them as we
    deem expedient.
              Our answer to your first question is a negative one.
    The question as to whether existing truck lines can render serv-
    ice without operating over certain principal highways of the
    State in the transportation of property from remote points in
    the State to points along the route on which trucks are proposed
    to be operated is not one which goes to the adequacy or inade-
    quacy of existing services but simply bears upon the matter of
    congestion of such highways. Such existing lines might very
    well operate over such principal highways and be rendering a
    perfectly satisfactory service.
              In the light that we think your second question is
    asked we also answer it in the negative. In this connection,
    however, we would again observe that we do not here express an
    opinion as to whether or not under some circumstances the fact
    that a proposed operation might relieve certain highways of an
    over-burdensome traffic would be'considered in connection with
    other evidence relating to public convenience and necessity and
    as evidence on that issue.
              For reasons given above, we also answer your third
    question in the negative.
              Your fourth question is given a like answer.
              We are forced also to the same answer to the fifth
    question above. Under the direct holding of the court in the
    Red Arrow case, supra, a certificate cannot be granted alone
    upon proof that the highways will stand the burden where exist-
    ing carriers are rendering satisfactory service and no need
    for such added operation is shown. The same answer follows to
    the sixth question.
Hon. James E. Kilday, page 10    (O-1310)
                                                                  .


          The reason that the Railroad Commission hears no evi-
dence upon the issue of convenience and necessity upon applica-
tions for certificates filed by carriers engaged in interstate
commerce only is that Congress has given to the Interstate Com-
merce Commission the exclusive power and authority to determine
that issue as to such interstate carriers. Such, however, is
not true in the case submitted to us and no analogy is there-
fore presented. Your seventh question, therefore, calls for a
negative answer.
          Your eighth question draws a similar answer. It does
not take into consideration the character of service being ren-
dered by other carriers to the territory in question. The fact
that the Missouri Pacific railroad service can be improved is
no proof that the services being rendered by the carriers serv-
- _ such territory are not>reasonably
ing                             -.   .adequate
                                        .      .to
                                                . meet
                                                   .   the pub-
                                                       -
11~ convenience ana necessity. Tne nlntn question 1s also an-
swered in the negative. If the fact that Missouri Pacific
Freight Transport Company is rendering a rail service to the
towns involved bears at all upon the issue of convenience and
necessity it is evidence that the public convenience and neces-
sity is already being served rather than that it is not being
sufficiently served.
          The service applied for is a new one. The fact is
not altered by the fact that the parent company already serves
the same towns with a rail service. Proof that the traffic on
certain heavily burdened highways would be lessened will not
substitute entirely for proof that the public convenience and
necessity requires the additional facility. Inadequacy of ex-
isting lines must be alleged and shown a.$ongwith the need of
additional service. We believe that the above will be suffi-
cient to meet your needs with respect to this application, If
not you will greatly oblige us by advising us to that effect
and requesting hour further opinion.
                                Yours very truly
APPROVEB SEP 9, 1939
/s/ Gerald C. Mann              ATTORNEY GENEPAL OF TEXAS
ATTORNEY GENERAL OF TEXAS       By /s/ Glenn II.Lewis
APPROVED: OPINION COMMITTEE     Glenn R. Lewis, Assistant
BY:       BWB, CRAIRMAN
GRL:N:wb
