**OFFICE OF**  **THE A-I-T** **’ ORNEY**  **GENERAL OF**  **TEXAS AUSTIN** 

a. Wallace Rughston,Direator Uotor TranspoxtationDivision Railroad CoMlissionof Texas AuatLn, Texas

Dear Xx. EUghetOnI

YOU inquirewhether is a mtojc carrier. subfeot t road Commlsslonunder the Tell 911b,V. A. G. g. any of Brownwood ne of the Rallier Aot, Article

t the lnroraEtion oanrere,noe

and way, counsel for The

youx request, I sqbtit otenent of our fjndings 80 far

"1. As to thepartloular case riled at Dayton, Texas, on Way 13, 1943, against D. Vaughan, driver of a truok owned by the Butane Co., of Brownwood, Texas, our Fnveatigatioa dlsoloses the following:
"a. 2265 gallons of oommerolal butane WEB transportedfrom Baytown, Texas, to Port Arthur, Texas. A copy of the Railroad Commission of TexasMotor Vehicle idanifest

taken from the files of the Gil and GasDivision of the Railroad Co.:lmissfon of Texas office at Houston, S~OOWSthe shipper of this cargo tohave been EU~FJ!J~CJ

oil and Refining Co., Daytown, Texas, and the consignee of the shipmentto have been the White Gas Co,, Port Arthur, Texas, aad that shipmentwas s&e by truck owned by the Butane COQWUW Of BZXYWwood, Texas, driven by D. vaughan.

"b, an examinationof the records of the White Gas %o., Port Arthur, Texas, show that this load of Butane was purchased **by** the PmiteGas CO.iroi%I Anchor Petroleum Corporation of Tulsa, Oklahoma,and that payment $or samewas made to the Anchor Petroleco., of Tulsa, Oklahoma, lndioatingto us that The Butane Compxq of Browlwood, Texas,was not involved fn the transaction ln any maauer exceptas the tz%mvportationagent.

"2.The same facts as to cmirests, ooatraots, purchasesand agmenta apply to a number of other cases lnvolvlug the sanuers Butane Gas Coupany of Houston; Winton Automtic Gas Oompany, Denumnt, Texas;Automatis Gas Co., PetroleumOorporatioti, Pasadena,Texas. of Beauuont,Texas; and the Crown Central

"'3The records of the Geir-JaoksonRe. oycll.~.~g

Plant at Grapelaud di'sclose that the entire output af this plant is oontraated to the Anohor Petroleum Co., Tulsa, Oklahoma, andthata largemajmlty qf the gas from this lant is transportedto the Gulf Gil Oorporattoon at art Arthur, Texas, in % trucks owned by The Dutaue Company of Brownwood, Mr. Blgglnbotham, of the Gulf Oil Corporation,advised one of our inspectors that they had a contractwith the Au&or Petroleum Company, Tulsa, Gklahowa, for the gas from Geir-JaoksonReoyoling Plant and did not.kaow,the Butane Company in aonneationwith the oontraot. He farther stated that the Gulf Oil Corporation is invoioed by the drnohorPetroleum Company and thatsuoh invoice8are paid to the Author Petroleum Company.

"4. One of our lcspectore has ohecked the reoords of the Distillate Production Corporation aud these disclose a contractby and between Distillate ProduotionCorporetion aad the knehor Petroleum Corporation,wherein it is oontraoted thatDistillate Produetlon Corporation agrees to sell and deliver to Anohor Petroleum Corporation from Distillate Produotiou Corporation tanks at the loading dook Into tank trucks to be rurnlshedby mahor Petroleum aorporatiou.Produots uuder this aontract are being deliveredby The Butane Companyof Drownwood to the Crown Central Petroleum Corporatiouate Pass-dena, to storageof that corporation. "5. In the reoords of the Cistillate Productlon Corporation,our inepeotor examined a letter addressed by the An&or Petroleum Corporation to Distillate Production Corporationwhioh read aa follows: 'As to trucking equipment for Liquefied Gas Products, we believe that our company owna or has more equipmentavailable 4 than any other concern. This equipment includes one large new propane transport, having a working pressureof 200 lbs. and a capacityof 4,000 gallons whioh we contemplateusing. Our trucking faoilities together with those of a large 1 truokingooacern In the State of Texas, with whom we have a closeworking arrangement, approximate 75,000 gallon capacity.' 1

"6. The Anchor Petroleum Corporation is an Oklahoma Corporationand has a permit to do buslnesa in Texas. Nothing in the files of the Seoretary of State's office show any oonneotlon between the Anohor Petroleum Corporation and The Butane Go., of Prownwood.

"7. The charter of the Butane Company of Brownwoodhas been cancelled aooordlng to records of the Secretaryof State.

"In conolusion, our investigationdisoloses that the produote transported by The Butane Company of Brownwoodare produots that have been purohased from various oonoerna by the Anchor Petroleum Corporation, that the purchasers of these producta are invoioed by theAnohor Petroleum Corporation, and that payment ismade to the Anchor Petroleum Corporation. The manifests covering these truck shipments aremade by the produoer to the Anchor Petroleum Corporation and that the Butane gempang of Brawnwood la not known ;r*r$$ognizedother than a8 the transportation agent.

Mr. Holloway has made tha following explanation of the activitiesof The Butane Company and the Anohor Petroleum Company, its associateI
Mr. Thurman Cole does business under the name of The Butane Company and is engaged in buying, selling and transportingButane gas. A few years ago when he entered this businessbutnne g.28 was a by-product of oil refineries; its

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k&c.irallace

Hoghston, page 4

productionwas irregularand the de,mnd thereforfluctuated with theweather. At times the refinerieswould have a surplus and would shoot it into the alrl an other occasions,when a localdistributorwould send his truck for a load the refinery would have none. Mr. Cole by oontracting la advanoewith a largenumber of refineries and securing the businessof a large number of looal dealers, haa been able to spread supply andde- -% aranteeing to refiners minimnm sales and to localdealers r a rega ar eapply.

The Butane Company has storage in several West Texas townsand in others. It sells to dealers having their own storage. The prioe to the oustomers is based on the oost of the product to The Butane Oompany plus the cost of transportation,whioh varieswith the distance. Wheneverthe localdealer sendshis own truck to the refinery ror gas, which he buys through The Butane Company,he raoeives a reduction in prioe based upon the company's saving on the oost of transportation.

The foregoing operations are oarriedon by The Butane Companyby itself+.

JOIWT OPBBATICMS OF TBB BUT&BE COYPhBY ABD TBE

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mJ!RoLETJbi

couipANy

In addition to the business oar&d on by The Butane Company in West Texas, it also carries on an extensive business jointlywith the anchor Petroleum Company, an Oklahoma oorporationwith a permit to do bueineas in Texas. Principally,this business is earried on in this way:

Xr. Baten, for and in the name of Anchor Petroleum Gontpany, oontraotsror the purchase or butane 

### froma refinery and, usually later, for its sale to a dealer. The oontraot la aotually for the jointaooount of Anohor and The Butane Company,but only the natae

of the Anohor Petroleum Company la known to the refiner and the dealer. Anohor operates no butane trucks in Texas; The Butane Company operates ao!ne thirty suoh truoks. All expenses of the transectionssuoh as ooste, purohase, sale, and tranaportaMan, are kept in a joint aoooant. The total expenaaeare deduotedfrom the reoeipts from sales and the resulting proritor loss is equally shared. Sometimeshr. Cole of The Butane Company doea thebuying himself. In either event, the oontraot ror the purohaseor sale is entered into by Anchor or The Butane Company only after securing the advioe and oonsent of its assooiate. Suoh approval is usually given by long distance telephone. The telephonebill of The Butane Company runs $300 or $400 permonth.Storage tanks are awned jointlyby the aonfederates at aaveral points,while other storage facilitiesare owned by one aompany or the other. kiowever, as far as the joint acoount is coaoerned all plants are owned and operatedby the joint amount.
An exception to the procledure of aeouring advance approval or both associates for eaoh contractappears to exist in Laredowhere the superintendentof the jointlyoperated teraina~l

makes sales without aeouring separate approvalror eaah traaaaotion.

faota The Butane hire. If it is, The question iswhether under the foregoing

Company isoperating trucks for compensationor it is a motor carrier. ,

Counael for The Butane Company bases his contention that it is not a atotorcarrier upon the following parts or the TexasMotor Carrier Act, V. A. C. s., Article Bllb, Seatlon la:

"(1) Provfded, however, that the term

'Mctor Carrier

’ and the term 'ContractCarrier' as defined in the preceding seotlon shallnot be held to lnolude:

ll+* * “(a) Where merely inoidentalto a regular, separate, fixed and established business, other than a transportation bwiness, the transportation of eaployeaa, petroleam produots,and lnoidental supplies used or aold in oonneetionwith the wholesale or Istail sale of suoh petroleumproductsfrom the refinery or place of productionor plaoe of storage to the plaae of storage or place of sale and distribution to the ultimate consumer, in a motor vehicle owned and used exaluaively by the marketer * * *-hlr.tiailaoe Hu+iton, p:ige0

In **our** view, transportationof butane for the joint aoaount ia not "merely inoidentalto a regular, separate, fixed and establishedb-other than a transportation bueInesaX" If the traneportation for the joint aoeountwere iaolated,oocaslonal, Irregular, oaeual and desultory, (~otatlo~. 125 A. L. R. MB), The Butane Company might not be aoting am a carrier)but where,.ae here, it employi some thirty trucks latenaively in transporting for the joint undertaking, where auah business ie so extensiveas to require severalhundred dollars telephone ealle a month for the ooordlnationof the operation of the two oompanie.e, wa are impelledto the view that the transportation ie not "merely Inoidental" to a bueine8s "other than a transportationbusiness" but that as to the joint operation the principal businese OS The Butane Company is that 0r transportation.

In our view the transportation la for compensation,notwithstanding the tact that the extent of the remuneration is uncertain and oontlngent upon profits. IP the opposite were true, a truak operatormight engage to transport for any number OS ooncerna and, be free of the supervisionof the Rallroad Co~uslon as long a8 hIa uoapenaationwae a percentage

or aontingent proffta. This would utterly destroyall attempt@ or the State to maintain uniform freight rates.

Counsel for The Butane Companyhaa also suggested thatThe Butane Companymay fall within ,thestatutory exoeption, rea(lingt *(d)Any utility aompany asing ita own

equipment transporting Its own property over the highwaya." :! I (

Pretermitting the question of whether It la a utility,The Butane 1

~ Company doee not fall within this reotlon, for In the jointoperatlon it doee not ownthe gas if transports, but at best has an ondivided intereet therein. (a) This laok of ownership prevents hi8 fallingwithin eroeptfon of the eame subseotlon. ‘I

It Is our opinion that you aoted properly In filing a complaintagainst the driver of The Butane Com-. .

&?r.tie.llace Hughston, page 7

i pany for operatinguuithouta permit from theRailroad ComtiSSiOL
Our opinion file contains additional lnformationon the aatlritieeof these aompanies. Kindly aaU on us if you require it.
Yours very truly, Al'T-ORNEYGENERAL0FTEXAS

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