. . 

OFTEXAS 

Auemm. TEXAS 78711 

dOaN I,. aILL 

Awl-ORNEY GENERAL 

July 29, 1977 

Honorable Mack Wallace, Chairman Opinion No. H-1030 

Railroad Commission of Texas 

P. 0. Drawer 12967 Re: Authority of Railroad 

Austin, Texas 78711 Commission to prohibit contract provisions limiting 

the liability of an LPG 

dealer. 

Dear Mr. Wallace: 

YOU have requested our opinion concerning the authority 

of the Railroad Commission to modify, delete, prohibit, or 

otherwise regulate the terms and conditions of an equipment 

rental contract between a licensed Liquified Petroleum Gas 

(LPG) dealer and a lessee customer. You specifically ask 

about such contract terms which purport to limit the liability 

of a licensed LPG dealer for negligence. 

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

General. The Railroad Commission of 

Texas is hereby authorized, empowered, 

and directed, and it shall be its duty 

to promulgate and adopt, in accordance 

with this Act, adequate rules, regulations, and/or standards pertaining to 

any and all aspects or phases of the 

LPG industry (except as provided in Subsection D. of this Section) which will 

protect or tend to protect the health, 

welfare, and safety of the general public. 

The Commission is granted jurisdiction to regulate "any and 

all aspects or phases of the LPG industry" in the interest of 

public health, welfare, or safety. Thus the Commission may 

regulate terms and conditions of such rental contracts at 

least to the extent that they may affect the public health, 

welfare or safety. 

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

It has been suggested to us that the court's opinion in 

Spence & HOwe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 

631 (Tex. 1963). rndicates ' that there is no connection between clauses which limit liability and negligent conduct. 

However, as we read the decision, the court was merely stating 

that the connection was insufficient to mandate a general rule 

of public policy which would preclude the enforceability of 

such provisions in all instances. While the court noted the 

lack of any distinction between indemnity clauses in a commercial contract and common insurance policies on behalf of private citizens, the opinion falls short of finding that there 

is no connection between indemnity clauses and negligent conduct. The courts found such a connection in G., C. & S. F. 

Ry. v. McGown, 65 Tex. 640 (1886), and Bisso v. 'Inland 

ways Corp 349 U.S. 85 (1955). 

Inc. v. Eiiedge, 

Furthel,..- 

515 S.W.2d 266 (Tex. 1974 

~~~ Watermore, as in Allright, 

), the court in Spence 

was dealing with a standard of ordinary care. 

As stated in Robert R. Walker, Inc. v. Burgdorf, 244 S.W.2d 

506, 509 (Tex. 1951): 

From those who handle . . . combustible 

gases . . . the law exacts a duty to protect the public which is proportionate 

to and commensurate with the damages involved. 

Thus, LPG dealers are bound to exercise a "high degree of 

carei to protect the public. Farmers Butane Gas Co., Inc. v. 

Walker, 489 S.W.2d 949 (Tex. Civ. App. - Waco 1973, no writ). 

The protection of the public is the clear intent behind article 6066d. 

Since, in our view, the use of equipment rental contract 

terms which limit the liability of LPG dealers for negligence 

or provide for indemnification thereof by their customers could 

have an adverse affect upon the public safety in light of the 

standard of care required of LPG dealers, we believe the Railroad Commission has clear authority to regulate or prohibit 

such terms. 

We believe these indemnification clauses are void and unenforceable as a matter of law since LPG dealers are charged 

with a dutv of safetv on behalf of the public and the term 

relates to-negligence in the performance of this duty to the 

public. Western Union Telegraph Co. v. Linn, 26 S.W. 490 

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

(Tex. 1894); G., C. & S. F. Ry. Co;, vCi?Gown, supra; Lone Star 

Gas Co. v. Vea, 37m2d 89 ( . .,'~ hpp. -- East'land 1964, 

writ ref'd n.r.e.): Dittman v. City of~N:w Braunfels, 48 S.W. 

1114 (Tex. Civ. App.18 99, no writ): Restatement of Contracts 

S 575, cited in Spence & Howe Construction Co. v. Gulf Oil Corp., 

supra at 633, and Crowell v. Ho 

495 S.W.Zd 887, 889 (Tex. 1973) 

vice Co., 85 S;E.Zd 169 (Ga. 

Conun. Code, S 2.719; Northwe 

Inc., 351 F.2d 253 (9th Cir. 

versity of California, 383 P 

County of Missoula, 517 P.2d 

E 

. 

Furthermore, the terms of contracts executed subject to 

the regulatory authority of the Railroad Commission are not 

protected from the jurisdiction of the Commission by article 

1, section 16. Houston Lig 

Commission of Texas, 529 S. 

v. Lo-Vaca Gathering Co., 5 

El Paso 1976, writ ref'd n.r.e.); n.r.e.); Railroad Railroad Commission Commission of Texas 

(Tex. Civ. APP. 

A, 358 U.S. 33 

'.2d 973 (Tex. Civ 

#one Star Gas Co., 

writ ref'd) 

on other grounds, 304 U.S. 224 (1938). See Letter Advisory - 

z. 136 (1977). 

SUMMARY 

The Railroad Commission may act to prohibit the use of indemnity terms within 

existing and future equipment rental contracts between a licensed LPG dealer and 

its lessee. 

Attorney General of Texas 

. 

'd - 

L/$ 

DAVID M. KENDALL, First Assistant 

P. 4254 
Honorable Mack Wallace - Page 4 (R-1030) 

C. ROBERT HEATH, Chairman 

Opinion Committee 

klw 

p. 4255