December 10, 1952 

Eon. Olin Culberson, Chairman 

Railroad Commission of Texan 

Austin, Texas Opinion No. V-1549 

Dear Sir: 

Re: Authority of the Railroad Commi8aion to preBcribe joint or proportional rail-barge or 

truck-barge rates for 

traffic moving on the 

intracoaetal canal. 

You have requested the opinion of this office a8 to the 

jurisdiction, if any, of the Railroad Commission to prescribe joint 

rail-barge or joint truck-barge freight rates applicable to the 

movement of traffic on the intracoastal canal. The information 

you furnish reveals that a barge operator on the canal ha8 inquired 

a8 to the ponsibility of the Commiesion'~ prescribing ouch joint 

rates 80 that barge operatore may meet the competition of truck 

and rail operation between points also served by barges. 

You set out the specific rates that would have to be 

prescribed by the Commission to accomplish this, a8 followa: 

"1. That the Commission prescribe motor carrier, 

or railroad rates, from interior pointe in Texas to 

points along the lntracoastal canal, .ae proportional 

rates to be applied in connection with rubsequent movement by barge, which rate8 would be leaa than rates of 

the motor carriers, or rallroadn, for application from 

the same origin to the #ame destination on the canal on 

freight that would remain at that point. 

"2. That the Coauniasion prescribe ratee, via motor, 

carriers, or railroads, as the cane may be, from points 

on the intracoaetal canal, to interior points in Texae, 

as proportional rates on freight which ha8 originated at 

some point along the canal, moved by barge to another 

point on the canal, and to be moved therefrom to an interior point or points by motor carrier, or by rail, 

which would be less than would apply by motor carrier, 

or rail, a6 the case may be, from the same origin to the 

same destination but which had not had a prior barge movement, 
, 

Ron. Olin Culbereon, Page 2 (V-1549) 

“3. That the Commission prescribe rates, via motor 

carrier, or via railroad, from points in the interior of 

Texas to points along the canal, and rates from other points 

along the canalto interior points, on which there has been 

an intermediate haul by barge. This would involve two separate motor carrier, or railroad movemente, one at origin 

and the other at destination end, which might be via the same 

or different carriers. 

“4. That. the Commission prescribe through rates to be 

applied from interior points in Texas to interior points in 

Texas, via motor carrier, or rail, thence via barge, thence 

via motor carrier or rail; or through rates from points on 

the canal via barge, thence motor carrier or rail, or vice 

versa. " 

We think we can beet examine the proposal of the barge 

operator by quoting directly from his letter accompanying your opinion request, which gives a graphic illustration of the problem: 

II . . . Assume any commodity originating at Houston for 

destination Riseion, Texas, which Is an interior point located only a short dietance from the newly opened port of 

Harlingen. The truck rate from Harlingen to Mission being 

a short haul is comparatively high. The all rail rate from 

Houston to Mission ie,'of course, a through rate as is also 

the truck rate. The spread between the Houston--Mission 

rail or truck rate and the truck rate from Harlingen to Mieeion is very thin 80 that if a given commodity moved barge from 

Houston to Harlingen, truck Harlingen to Mission, there would 

be no spread from which the barge movement could be compenBated. The traffic is, therefore, denied movement in this 

manner. If the Railroad Commission could, however, prescribe 

a through rate from Houston to Mission (or vice-versa) for 

application on a movement partly by truck and partly by water 

and only so applicable, in connection with which the participating carriers could agree on divisions, then such movement 

could occur from a competitive standpoint and no question of 

discrimination would be involved because there would be no 

such thing a8 a truck line performing its portion of the 

service between Harlingen and Miesion or in the reverse at a 

rate less than it would perform the same service between Harlingen and Mission or Mission and Harlingen, for only shippers 

between Houston and Mission or Mieeion and Houston would be 

involved." 

It appears, therefore, that the barge operation problem 

is occasioned by an unfavorable competitive position caused by the 

combination of barge rates with local rail and truck rates to points 

on the canal, when contrasted with all-rail or all-truck rates 
Hon. Olin Culberson, Page 3 (V-1549) 

between the same ultimate points of the traffic movement. 

We observe initially that the Railroad Commission is 

a regulatory agency which possesses only such authority as Is 

conferred by law. Texas & N.O. Ry. Co. v. Houston Belt & 

Terminal Ry. Co., 227 S.W.2d 610 (Tex.Civ.App. 1950); Foster v. 

Railroad Commission, 215 S.W.2d 267 (Tex.Civ.App. 1948m 

road Commission v. Red Arrow Freight Lines, 96 S.W.2d 735-x. 

Civ.App. 1936, error ref.). 

As such. the Railroad Commission has no authorltv conferred by law to regulate barge rates or movement on the intracoastal canal. See Consolidated Chemical Industries v. Railroad Commission, 201 S.W.2d 124 (Tex.Civ.App. 1947, error ref. 

n.r.e.) and former Attorney General's Opinion, dated August 22, 

1932. 

Insofar, therefore, a6 you propose to prescribe a rate, 

either joint or proportional, to be collected for barge movement 

per se, there is no statutory authority therefor, and the came 

would be illegal. 

A different question arises as to your proposal to 

prescribe proportional rates applicable to rail or truck movement either preceding or following barge movement. As indicated 

in your opinion request, such proportional rates would necessarily 

be subnormal rates in order to achieve competitive equality in 

the overall rate to attract traffic now moving all-rail or alltruck. 

A proportional rate has been defined in Atchison, T. & 

S.F. Ry. Co. v, United States, 279 U.S. 768, 49 S. Ct. 494 (1929), 

as follows: 

"A through rate Is ordinarily lower than the combination of local rates. When a through rate Is made 

by combination ox' rates for intermediate distances, the 

rate for the later link in the shipment is, when lower 

than the local, spoken of as a proportional rate." 

For a similar definition, also Bee 9 Am. Jur. 101.6, Car- - 

riers, sec. 946. 

It is necessary for proportional rates to be reasonable 

and non-discriminatory in order for them to be legal. Atchison, 

T. & S.F. Ry. Co. v. United States, supra. 
Hon. Olin Culberson, Page 4 (V-1549) 

We obserre from your request that the subnormal proportional rates which would be applicable to the prior or subsequent rail or truck movement are not requested by the railroads 

nor by the truckers, as they patently would not be, since the 

application of these rates wouldattract traffic from its present 

all-rail or all-truck movement to movement partially by barge. 

Furthermore, the movement of traffic all-rail or all-truck between the same ultimate destinations, generally the ports, is 

now moving on water-compelled rates which are lower than normal 

rates and were requested by the rails or trucks to meet barge 

competition. 

It becomes necessary to inquire whether the imposition 

of these special subnormal proportional rates on the railroads or 

the truckers would be discriminatory. We conclude that it would 

be. 

It is required by law that rates promulgated by the Railroad Commission be non-discriminatory. Art. 6474, V.C.S. The 

rates about which you inquire would in effect grant discriminatory 

preferences to points located on the intracoastal canal insofar as 

rail or truck rates to these points are concerned, when contrasted 

with rail or truck rates for similar distances to points located 

elsewhere than on the canal. This is specifically set out in 

your questions. 

The Court in Railroad Commission v. Galveston Chamber of 

Commerce, 105 Tex. 101, 145 S.W. 573 (1912) made the following pertinent observations in discussing the discrimination question! 

"It seems to be in the mind of the attorneys for 

defendants in error that Galveston is entitled by law 

to some favor because of its location and water transportation. The advantage exists, and that position 

would not cause adverse discrimination nor favorable 

indulgence. The benefit of access to the high seas belongs to the people of all the states, and may be, and 

no doubt has been used by the Commission for the general 

good. The bayou affords some competition with the 

railroads between Houston and Galveston, and, if it 

were sufficient, might force the railroads to seek lower 

rates to Galveston; but Galveston would have no right to 

demand lower rates on the railroads." (Emphasis supplied) 

In this connection, we emphasize that it does not appear 

from your request that the railroads and truckers have requested 

these subnormal rates which they would realize, and which would 

cause them to lose much of the volume of their through traffic. 
Hon. Olin Culberson, Page 5 (V-1549) 

We are of the opinion that the imposition of such rates 

on the rails and truckers for the purpose you propose would be unreasonable and discriminatory as to the rails and truckers, and 

therefore without authority in law. Railroad Commission V. Houston Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591 (1935); Railroad Commission V. Galveston Chamber of Commerce, 115 S.W. 94- 

(T~x.c~v.A~~. 1908, error ref.). 

Applying this conclusion to the~specific rate proposals 

about which you inquire, we hold that the Railroad Commission has 

no authority to prescribe any of the rail or truck rates set out. 

SUMMARY 

The Railroad Commission has no authority to prescribe barge rates applicable to the intrastate movement of traffic by barge on the intracoastal canal. 

Former Attorney General's Opinion, dated August 22, 1932. 

The Railroad Commission may not prescribe proportional rail or truck rates applicable to the intrastate 

movement of traffic, by rail or truck and by barge on the 

intracoastal canal, if such rail or truck rates are lower 

than the local or other normal rate applicable to movement to the uoint on the canal at which the rail or truck 

movement ends or begins. Art. 6474, V.C.S. Railroad 

Commission v. Houston Chamber of Commerce, 124 Tex. 375, 

78 S.W.2d 591 (1935); Railroad Commiselon v. Galveston 

Chamber of Commerce, 115 mrrerror S.W. 9 

ref.). 

APPROVED: 

E. Jacobson 

Executive Assistant 

Price Daniel 

Attorney General 

Yours very truly, 

PRICE DANIEL 

Attorney General 

BY 

I!JC:mds