December 10, 1952

Eon. Olin Culberson, Chairman Railroad Commission of Texan Austin, Texas OpinionNo. 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 intracoaetalcanal.
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 intracoastalcanal. 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 operatoremay meet the competition of truck and rail operationbetween points also servedby barges.

You set out the specificrates that would have to be prescribedby the Commission to accomplish this, a8 followa:

"1. That the Commissionprescribemotor carrier, or railroad rates, from interiorpointe in Texas to points along the lntracoastalcanal, .aeproportional rates to be applied in connectionwith rubsequentmovement by barge, which rate8 would be leaa than rates of the motor carriers, or rallroadn, for application from the same origin to the #ame destinationon 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 interiorpoints in Texae, as proportional rates on freightwhich ha8 originated at somepoint 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 destinationbut which had not had a prior barge movement,,
Ron. Olin Culbereon, Page 2 (V-1549)

“3. That the Commissionprescribe rates, via motor carrier, or via railroad, from points in the interior of Texas to points along the canal, and rates from otherpoints along the canalto interiorpoints, on which there has been an intermediatehaul by barge. This would involve two separate motor carrier, or railroadmovemente, one at origin and the other at destination end, which might be via the same or different carriers.

“4. That.the Commissionprescribe through rates to be applied from interiorpoints in Texas to interiorpoints in Texas, via motor carrier, or rail, thence via barge, thence via motor carrier or rail; or through rates frompoints on the canal via barge, thence motor carrier or rail, or vice versa."
We think we can beet examine the proposal of the barge operatorby quoting directly from his letter accompanyingyour opinion request,which gives a graphic illustrationof the problem:

II

. . .Assume any commodity originatingat Houston for destinationRiseion, Texas, which Is an interiorpoint located only a short dietance from the newly openedport of Harlingen. The truck rate from Harlingen to Mission being a short haul is comparativelyhigh. The all rail rate from Houston to Mission ie,'of course, a through rate as is also the truck rate. The spreadbetween the Houston--Mission rail or truck rate and the truck rate from Harlingen to Mieeion is very thin 80 that if a given commoditymoved barge from Houston to Harlingen, truck Harlingen to Mission, there would be no spread from which the barge movement couldbe compenBated. The traffic is, therefore, deniedmovement 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 connectionwith which the participating carriers could agree on divisions,then suchmovement could occur from a competitive standpointand no question of discriminationwould be involvedbecause there would be no such thing a8 a truck line performing its portion of the servicebetween Harlingen and Miesion or in the reverse at a rate less than it would perform the same servicebetween Harlingen and Mission or Mission and Harlingen, for only shippers between Houston and Mission or Mieeion and Houstonwould be involved."
It appears, therefore, that the barge operationproblem is occasionedby an unfavorable competitiveposition causedby the combinationof barge rates with local rail and truck rates to points on the canal,when contrastedwith all-rail or all-truck ratesHon. Olin Culberson,Page 

### 3 (V-1549)

between the same ultimatepoints of the traffic movement.

We observe initiallythat the Railroad Commission is a regulatoryagency which possesses only such authority as Is conferredby 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 Commissionv. Red Arrow Freight Lines, 

### 96 S.W.2d 

### 735-x. Civ.App. 1936, error ref.).

As such. the Railroad Commissionhas no authorltv conferredby law to regulatebarge rates or movement on the intracoastal canal. See ConsolidatedChemical Industriesv. Railroad Commission, 201 S.W.2d 124 (Tex.Civ.App.1947, error ref. n.r.e.) and formerAttorney General's Opinion, datedAugust 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 statutoryauthority 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 followingbarge movement. As indicated in your opinion request, such proportional rates would necessarily be subnormalrates in order to achieve competitiveequality in the overall rate to attract trafficnow 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 intermediatedistances, 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-discriminatoryin 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 subnormalproportional rates which would be applicableto the prior or subsequent rail or truck movement are not requestedby the railroads nor by the truckers, as they patentlywould not be, since the application of these rates wouldattract traffic from its present all-rail or all-truckmovement to movement partiallyby barge. Furthermore, the movement of traffic all-rail or all-truckbetween the same ultimate destinations,generally the ports, is now moving on water-compelled rates which are lower than normal rates and were requestedby the rails or trucks to meet barge competition.

It becomes necessary to inquirewhether the imposition of these special subnormalproportional rates on the railroads or the truckers would be discriminatory. We concludethat it would be.
It is requiredby law that rates promulgatedby the Railroad Commissionbe non-discriminatory. Art. 

### 6474, V.C.S. The rates about which you inquirewould in effect grant discriminatory preferences to points located on the intracoastal canal insofaras rail or truck rates to these points are concerned,when contrasted with rail or truck rates for similardistances to points located elsewhere than on the canal. This is specifically set out in your questions.

The Court inRailroad Commissionv. Galveston Chamber of Commerce, 105 Tex. 101, 145 S.W. 573 (1912)made the followingpertinent observations in discussingthe discriminationquestion!

"It seems to be in the mind of the attorneys for defendants in error that Galveston is entitledby law to some favor because of its locationand water transportation. The advantage exists, and that position would not cause adverse discriminationnor favorable indulgence. The benefit of access to the high seasbelongs 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 competitionwith the railroadsbetween Houston and Galveston, and, if it were sufficient,might force the railroads to seek lower rates to Galveston;but Galvestonwould 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 unreasonableand discriminatoryas to the rails and truckers,and therefore without authority in law. Railroad CommissionV. Houston Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591 (1935);Railroad CommissionV. Galveston Chamber of Commerce, 115 S.W. 94- (T~x.c~v.A~~.1908, error ref.).

Applying this conclusionto 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 Commissionhas no authority to prescribebarge rates applicableto the intrastatemovement of trafficby barge on the intracoastalcanal. FormerAttorney General's Opinion, datedAugust 22, 1932. The Railroad Commissionmay not prescribeproportional 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 Commissionv. Houston Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591 (1935);Railroad Commiselonv. Galveston Chamber of Commerce, 115 S.W. 9 mrrerror ref.).
APPROVED:
E. Jacobson ExecutiveAssistant Price Daniel Attorney General Yours very truly,
PRICE DANIEL Attorney General

BY

I!JC:mds