. .

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 Commissionmay portation Division issue certificate of convenienceand Railroad Commission of necessity to operate as a common carTexas rier motor carrier to a subsidiaryof Austin, Texas Missouri Pacific Railroad to operate parallelwith and supplementaryto the railroad, servingno new points or lines, without alleging and showing inadequacy of existing facilitiesand need of additional transportation Dear Sir: facilities.

We receivedyour letter of August 22, 1939,wherein you outline to us the following facts:

Missouri PacificFreight 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 express company and has on file with the Commission tariffsrespecting 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, Palestine, Neches, Jacksonville,Henderson, Overton, Troup,Arp, Tyler, Lindale, Mineola,Kilgore ,andLongview. These towns
are situatedon United States Highways 79 and 69 and State Highways 43, 379110, 64, 135and 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 transport company,Missouri Pacific Freight Transport Companyalready competeswith 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 PacificFreight Transport Companyhas filed
an applicationwith the Railroad Commission of Texas for a certificateof convenienceand necessity, authorizing it to
serve the towns first listed by using the highwaysmentioned. As stated before, it already serves those towns as a rail transport 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 servesby using highway trucks in coordinationwith and auxiliary to the rail service of it and its parent. No new servicewill otherwise be inaugurated. Ko towns except towns already servedby it as a rail +remqport companywill be served. No towns off the line of the railroad will be served. The further purpose of the application is stated to be the rendition of highway and joint rail and highway service in addition to the serviceby rail exclusively which the transport'companynow renders and proposes to continue. The application is to operate trucks over the highways only from Taylor to Longviewvia Milan0 Junctionand Palestine; from Troup to Mineola via Tyler and from Henderson to Troup.

You further advise that the application containsallegations 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 operationwill be conducted to all other points and routes served by the Missouri PacificRail System and its rail connectionsand to expedite the handling of L.C.L. shipmentsbetweenall points located on the Missouri PacificRail System and the points located on the routes over which the actual truck operationswill be performed; that the principal shipping centers such as Dallas, Fort Worth, Waco, Austin, San Antonio, Corpus Christ1 Houston, Beaumont and Galvestonwill originate the principal t&nnage which will be expedited so far as movement by the applicant is concerned. That the plan of operation is tomove that tonnage by rail to a junctionpoint on the route over which the truckswill actually operate, therebyrelieving the highways of their burdens and affording a facility for transportation which will have for its general purpose the transportationof freight the longest by rail and the shortestdistance 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 truckswill actuallybe operated on the otherhand. The application further states that from some of the principal distributingpoints to the points located on the route over which the truck operationproposedwill be conducted the common carrier truck lines operate direct over night next day delivery servicebut that in some instances the services are effected by inter-changebetween two or more common carrier truck lines and that such lines do not have adequate terminaland freight depot facilities for receiving and discharging 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 otherhand by the present common carrier truck lines .isaHan, James E, Kilday, page 3 (O-1310)

circuitous, indirect, irregularand independable servi.ce now being performed by the common carriermotor carrier truck lines and that the proposed servicewill operate a dl.rectoneline haul between all of such points.

The application containsallegations to the effect that transportationof property for hire by existing common carrier truck lines from points betweenHouston and Brownsville; from points between SanAntonio and Laredo; from poi.ntsbetween San Antonio and Del Rio, fnvolves t.wo or three interchanges and that the service is slow, indirect, irregularand not dependable; that the proposed operationwill set up a servicewherein the shipmentswill move upon the billing of the Missouri Pacific Freight Transport Company by rail to some junctionpoint on the truck route between Taylor and Longview and will then be transportedby truck to consigneeat final destination on said truck routewithout dfvfded responsibilityO

Said applicatfon containsallegations to the effect that the only way the existing common carrier truck lines can render the service from such great shipping centersas Dallas, Fort Worth, Austin,Waco, San Antonio, Corpus Christi,Houston, Beaumontand Galvestonand 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 distances and interchanging such freight,which said operation of trucks is an unnecessaryuse of the highways resulting in interferencewft~hthe use of suchhighways by the public generally and that for that reason the said existing common carrier truck service is inadequateand that there exists a public need and requirementby the public for a transportation facility and servicewhfch will. afford to the shippersand receivers of freight a serviceby rail over the greater drstanceswith expediteddeliveryby truck from the rail cars at
some pofnt along the route over which trucks are proposed to be operated; that the proposed operationwill provi,de for the public such a system of transportationas will permit them to procure adequate, expeditious servicewith a mir.imum arno-&?t of use of their highways and will afford the great shfpping centers of this state an opportunity and a plan of common earriage servicewhich will be conducted by a carrierwithout any divided responsibilftywith 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 themovement 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 suchmanner as to meet the demand of the public for rapid and expeditiousmovement of such L.COLO shfpments from any and all points in Texas to all of ,the points on said routewithout the use of any of the highly. .

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

traveledor highly congestedhighways of this state. That the existing common carrier truck lines in rendering the service betweenall points in the State of Texas, on the one hand, and the points located on the route over which applicantproposes to operate trucks are now operatingmany trucks over highly traveledhighways in this stateand have no facilities whereby they can move such shipmentsbetween the points involved without operating their large line haul trucks over such principalhighways in such manner as to unreasonably interferewith theuse of the highways by the public and in that respect such facilitiesand servicesof the existing common carrier truck lines are wholly inadequate to meet the requirements and the public convenience of the people of this state in the use of theirhighways and in the transportationof their propertybetween such points.

The application containsallegations to show the kind and characterof 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 containsallegations to show that said facilities are not being used to their capacityand that by the use of such facilities the public conveniencerequiring that the highly traveled and principalhighways of this statebe relieved of the trucks for hire will be met and that the pro- ' posed operationwill be a convenience to the public in that by the use of such facilitiesalready devoted to the rendition of a common carrier servicewill be used in suchmanner as to afford for the public a much improved servicewhereby special handling of L.C.L. shipmentsbetween 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 discussionswhich we shall make in connectionwith such questionswill be sufficient tomeet your needs. Slightly rearranged,your questions are substantiallyas follows:

1. Is the allegation that the existing common carrier truck lines do not have facilities and cannot render a servicewithout operating trucks over the principalhighways of this State in the transportationof property from points in this State to points along the route on which trucks areHon. James E. Kilday, page 5 (O-1310)

proposed to be operated an allegation of inadequacyof existing common carrier truck service?

2. Is the allegation to the effect that the proposed operationwill relieve the highways of the transportationof property over saidhighways by trucks an allegationwhich relates to the question of public convenienceand necessity7

3. Does the allegationmentioned in questionNo. 2 in any sensemeet the requirements of Section 10 of Article 911b, Revised Civil Statutes,with respect to the form and sufficiency of the application?

4. If said application contains the foregoing allegations and none otherwith respect to public convenienceand necessity and proof is submitted to support such allegations would the Railroad Commissionbe justifiedin making a finding that public convenienceand necessity requires such operation?

5. Will proof that the proposed operationwill afford adequ+te service to the publicwith the minimumuse of the highways when the existing common carrier truck lines between **many** of the principal shippingpoints in Texas and the points locatedjon the route are already rendering reasonablyadequate service satisfy the requirement that the applicant prove that public convenienceand necessity requires such operation?

6. Would a showing to the effect that the proposed truck operationwill afford a facility for transportationof propertywhich will result finsaid propertymoving the longest distance by rail and the shortest distanceby truck to provide adequate and economical service to the public; that the proposed operationwill result in the use of freight depots and other facilities in small towns to such an extent as to make possible their continuedmaintenanceand continuedemployment of agents at such small places to serve the public; and, that the proposed operationwill providea transportationfacilitywhich if used by the public will greatly relieve the most highly traveledhighways of the State of a portion of the burden of traffic they are now carrying constituteproof that public convenienceand necessity requires such operation?

7. You call our attention to the fact that in hearings upon applications filed by motor carriersengaged only in interstate commerce the Railroad Commission is without authority torequire showings of public convenienceand necessity and inquire 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 considerproof of the improvementof the applicants and the Missouri Pacificrail line service in the foregoingmanner as proof that publicnecessityand conveniencerequires such operation?

9. Can the Commission consideras proof of convenience and necessity the fact that Missouri Pacific Freight Transport Company is already serving the towns involved, servicebeing as a rail transport companymoving many millions of pounds of freight to, from and between the towns involved?

Ey Article qllb, Revised Civil Statutes,motor carriers are placed under the regulation of the Railroad Commission of Texas. In Section3 thereof it is provided that "nomotor carrier shall after'thisact goes into effect operate as a common carrierwithout firsthaving obtained from the Commission under the provisionsof this act a certificateof public convenience and necessitypursuant to a finding to the effect that the public convenienceand necessity require such operation."

Section 10 of saidArticle prescribes the contents which an application for a certificatemust necessarily contain. The first paragraph of subdivision4 thereof reads as follows:

"It shall be accompanied by a plat or map showing the route or routes overwhich the applicant desires to operate, 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 inadequacy of existing transportationfacilities or service, and shall specifywherein additional facilities or service are required and would be secured by the granting of said application.V1

The first paragraph in Section 9 of saidArticle 9llb reads as follows:

"The Commissionshall ascertain and determine if a particularhighway or highways designated in an application for a certificateof public convenienceand necessity are of such type of constructionor 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 ,"interferencewith theuse of suchhighways by the general public for highway purposes. And if the Commission shall determine, after hearing, that the service rendered by existing transportationfacilities or agencies is reasonably adequate, or that public conveniencewould not be promoted by granting of said application, and the operation 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 suchuse as would not permit of the use sought to be made by the applicantwithout unreasonable interferencewith theuse of suchhighways by the general public for highway purposes, then in either or any of such events said appl,icationmay be denied and said certificaterefused, otherwise the application shall be granted and the certificateissued upon such terms and conditionsas said Commissionmay impose and subject to such rules and regulationsas it has
or may thereafterprescrfbe."

From a reading of the Motor CarrierAct as a whole and in particular the partswhich we have quoted above, it becomes clearly apparent tha,t considerationsof highway condi-

. tions and of public convenience and necessity form two distinct and separate issues to be determinedupon an application for a certificate to operate as a common carriermotor carrier. In Section 9we find that the Railroad Commissionmay deny a certificate if it be found that the public convenienceand necessitywould not be served, although the particularhighway to be traversed should be entirely sufficient to bear the added traffic. On the other hand the Commission is authorized to deny such a certificatewhere the highway will not stand the added traffic although public convenienceand necessitywould be promoted by the granting of the certificate. By thiswe do not mean to say thathighway conditionsmight not in some instances enter into the question of public convenienceand necessity. We a.re

not called upon to determine that question in this case. We do mean to say, however, that a new common carrier motor carrier service cannot be inauguratedupon allegations and proof showingnothing more than that such service would be beneficial to the highways and to the travelingpublic upon thehighways, with no showing of Inadequacy of prior existing facilities and the need of other facilities to serve the territory affected. The motor carrier act repeatedlyrequires the showing of public convenience and necessity as a requisite to the granting of a certificate to operate as such
a carrierand in Section 10 thereof it is expresslyprovided that no application shall be ccnsideredby theCommissionunless it be in writing and set forth among other things the inadequacy of existing common carrier servicesand shall specify wherein additional facilities are required and would be secured by the granting of the application. The case of Railroad Commission vs. Red Arrow Freight Lines, 96 S.V.(2d) 735, before the Austin Court of CivilAppeals is conclusive of this point, The facts involved in that case were briefly these: H. H. Lawler became the owner by purchase of two certificatesof convenienceand necessity, one to operate from Houston to San.

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

Antonio and intermediatepoints and the other from San Antonio to the Rio Grande Valley via Edinburg and serving intermediate points. He filed an applicationbefore the Railroad Commission for a so-called re-routing to permithim to go directly from Houston to Edinburgwithout serving intermediatepoints on that route. His theorywas thathe could already haul freight from Houston to Edinburg and points beyond and vice versa going by San Antonio and thatno new servicewas therefore involved. It appeared,however, that the new routewas about 120 miles shorter than the one by way of San Antonio and thathis service between Houston and Edinburgwould be shorten& by thirtyhours. 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-routingwas sought. The trial court set aside the order of the Commissiongranting such re-routing and an appeal was taken. The Court of CivilAppeals affirmed the action of the trial court in an opinionwritten by Chief Justice McClendon and from which we quote as follows:

"The two certificateswere granted at different times to different Individuals. They were granted to serve separate and distinct transportationrequirements: The
one served the territory from Houston to San Antonio and intermediatepoints; the other, that from San Antonio to the Valley and intermediatepoints. In considering the question of convenienceand necessity as to each certificate, only theneed-s, requirements,etc., of the two termini and intermediatepointswere involved. Neither certificate had any relation to the other. The fact that common ownershipwas finally united in Iawler in no way modified their effect. They were manifestlynot designed originally, nor through common ownership thereafter, to provide

a direct through servicebetweenHouston and Valley points. The order in suitmanifestly conferredupon Lawler a right to render a servicewhich was substantiallydifferent from that authorized in his two certificates,enabling him to compete directlywith appellees in a manner **in** which he couldnot competewith them before, if in fact he could effectively competewith 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 couldnot be granted as a mere rerouting under the two certificates,but that it. required
a showing and commissionfinding of convenienceand necessity."

The applied for motor carrier operationwould offer many elements of competitionto carriersalready serving thet

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

territory in questionwhich the railroad does not offer. Trucks
can be operated upon scheduleswhich it would be impossibleas a practicalmatter for a railroad to duplicate and in particular with reference to small shipments. Motor carriers can render certain serviceswhich a railroad,cannot, just as on the otherhand the railroad enjoys certain advantages overmotor truckswith reference to certainkinds of shipments. That the motor carrier serviceapolied for would be a different one from the railroad servicerendered by the Missouri Pacific is so obvious we think as to neeed no support in argument. The application in question is for a new serviceand it must complywith the statute is to showing inadequacy of present facilitiesand the need of the new service. We will now answer the above questionswith such additionaldiscussionunder each of them as we deem expedient.

Our answer to your first question is a negative one. The question as towhether existing truck lines can render servicewithout operatingover certain principalhighways of the State in the transportationof 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 inadequacy of existing servicesbut simply bears upon the matter of congestion of suchhighways. Such existing lines might very well operate over such principalhighways and be rendering a perfectly satisfactoryservice.

In the light thatwe think your second question is asked we also answer it in the negative. In this connection, however, we would again observe thatwe do not here express an opinion as to whether or not under some circumstancesthe fact that a proposed operationmight relieve certainhighways of an over-burdensometrafficwould be'considered in connectionwith other evidence relating to public convenienceand 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 directholding of the court in the Red Arrow case, supra,a certificate cannot be granted alone upon proof that the highwayswill stand the burdenwhere existing carriers are rendering satisfactory serviceand 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 Commissionhears no evidence upon the issue of convenienceand necessityupon applications for certificatesfiled by carriersengaged in interstate
commerce only is that Congresshas given to the Interstate Commerce Commission the exclusivepower 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 therefore presented. Your seventh question, therefore,calls for a negative

not take dered by that the
no proof ing such
-
_ answer.

Your eighth question draws a similaranswer. It does into considerationthe characterof servicebeing renother carriers to the territory in question. The fact Missouri Pacific railroad service can be improved is that the servicesbeing renderedby the carriers servterritory are not>reasonablyadequate to meet the pub-
-. . . .. . - 11~ convenienceana necessity. Tne nlntn question 1s also answered 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 convenienceand necessity it is evidence that the public convenienceand necessity is already being served rather than that it is not being sufficiently served.

The serviceapplied for is a new one. The fact is not altered by the fact that the parent company already serves the same townswith a rail service. Proof that the traffic on certainheavily burdenedhighways would be lessenedwill not substituteentirely for proof that the public convenienceand necessity requires the additional facility. Inadequacy of existing lines must be alleged and shown a.$ong with the need of additional service. We believe that the above will be sufficient tomeet your needs with respect to this application, If not you will greatly oblige us by advising us to that effect and requestinghourfurther 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

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