TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-15-00728-CV

Westlake Ethylene Pipeline Corporation, Appellant

v.

Railroad Commission of Texas and Eastman Chemical Company, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT

NO. D-1-GN-15-001-009, HONORABLE TIM SULAK, JUDGE PRESIDING

O P I N I O N

Westlake Ethylene Pipeline Corporation (Westlake), a “common carrier” pipeline

transporting ethylene in Texas, appeals the district court’s final judgment affirming a final order of

the Railroad Commission of Texas concluding that Westlake’s 2013 tariffis discriminatory and may

not be enforced. See United Gas Corp. v. Shepherd Laundries Co., 189 S.W.2d 485, 489 (Tex. 1945)

(noting that under common law, common carriers may not unjustly discriminate). For the following

reasons, we affirm the judgment of the district court upholding the Commission’s final order. 

BACKGROUND1

Pursuant to a Commission-issued permit, Westlake owns and operates a pipeline that

solely transports liquified ethylene and runs between Mont Belvieu and Longview, Texas. In July

The facts in this section are taken from the Commission’s unchallenged findings of fact

1

and undisputed facts in the administrative record.
2013, Eastman Chemical Company filed a complaint with the Commission alleging that Westlake’s

new tariff, published and filed with the Commission in 2013 (the 2013 Tariff), was discriminatory.

See Tex. Nat. Res. Code § 81.053 (“In the discharge of its duties and the enforcement of its

jurisdiction under this title, the commission shall . . . hear and determine complaints.”); State v.

Crown Cent. Petrol. Corp., 369 S.W.2d 458, 463 (Tex. Civ. App.—Austin 1963, writ ref’d n.r.e.)

(noting that Commission has exclusive original jurisdiction to consider complaints of discrimination

by common carriers). Specifically, Eastman alleged that the 2013 Tariff’s cancellation of two preexisting services—backhaul and exchange —is discriminatorybecause it provides an unreasonable 2 3

preference and advantage in favor of another shipper that is an affiliate of Westlake, Westlake

Longview Corporation (Westlake Longview).4

MustangPipelineCompany(Mustang), a subsidiaryofEastman, originallyconstructed

the pipeline in 1996 to provide ethylene to its ethylene-consuming facilities in Longview. In 2002,

Eastman constructed the so-called “Williams Connection” at the pipeline’s Mont Belvieu terminal,

which both provided access to a common, fungible ethylene storage facility in Mont Belvieu 5

A “backhaul” is the physical flow of product such as ethylene through a pipeline in the 2

opposite direction from that usually provided by the pipeline. It is undisputed that the pipeline is

capable of bidirectional flow.

An “exchange” is a transaction whereby custody of a specific quantity or volume of a

3

fungible product such as ethylene is transferred from one location (e.g., the pipeline’s Longview end)

to another (e.g., the pipeline’s Mont Belvieu end) so that no physical movement of the product is

necessary.

Westlake Chemical Corporation is the parent company of both Westlake and Westlake 4

Longview.

Ethylene in the Mont Belvieu market is “fungible” because ethylene molecules are mixed 5

together in common storage facilities, and the ethylene can then be traded or sold to multiple parties

2
owned by the Williams Company and added the compression equipment in Longview necessary to

ship ethylene south to Mont Belvieu. At the time of the construction of the Williams Connection,

Eastman sought the ability to sell its surplus ethylene produced in Longview and to maintain

ethylene production when ethylene-consuming facilities in Longview were down for maintenance.

The configurations that Eastman made to the pipeline in 2002 allowed for the pipeline to accept

bidirectional flow, and backhaul service remains physically possible on the pipeline.

After adding the compression necessary to deliver ethylene south from Longview

to Mont Belvieu, Mustang issued a revised tariff (the 2002 Mustang Tariff). Unlike the previous

tariff, the 2002 Mustang Tariff identified Mont Belvieu and Longview as both origin and delivery

points. The 2002 Mustang Tariff also indicated that Mustang, the operator of the pipeline, would

offer exchange services. Ethylene has been transported in the southerly direction (backhauled) 6

from Longview to Mont Belvieu on several occasions in the following years: 2005, 2006, 2007,

2008, and 2013.

who pull specified amounts of ethylene out of the storage facilities without taking the exact same

molecules that were put in by the seller.

 With respect to exchanges and direction of flow, the 2002 Mustang Tariff provided: 6

In the event the pipeline is configured and equipped so that it is physically capable

of bi-directional flow, Carrier at its sole discretion will choose the direction of flow

between Point of Origin and Point of Delivery. Carrier will make a reasonable attempt

to accommodate Shippers through the exchange of product at Origin and Delivery

Points. Any exchanges will be subject to the same terms and conditions applicable

to shipments pursuant to this tariff, including the rate charged for such shipments.

The provisions of this tariff apply to all shipments or exchanges regardless of the

direction of flow or whether the product shipped or received is physically moved

from one point to another.

3
In 2006, Eastman and Westlake Chemical Corporation (Westlake Chemical)

negotiated a transaction in which (1) the Mustang pipeline assets (including the pipeline conduit)

were sold to Westlake, (2) certain ethylene-consuming facilities located in Longview and owned by

Eastman were sold to Westlake Longview, and (3) Eastman and Westlake Chemical entered into

the so-called “Ethylene Sales and Exchanges Contract” (ESA). Although the ESA was not submitted

into the record, the Commission found that under it Eastman “secured a guaranteed market for

ethylene” and Westlake Longview “secured an ethylene supplier.” The Commission found that the

ESA also “provided Eastman with the ability to exchange [with Westlake Longview] any excess

ethylene that Westlake Longview did not purchase from Eastman.”

Shortly before Westlake issued its new 2013 Tariff, Westlake’s “commercial team”

became aware of the 2002 Mustang Tariff for the first time when it accessed Eastman’s confidential

data room as part of Eastman’s efforts to sell some of its ethylene-producing facilities (referred to

in the record as “crackers” ). According to Westlake’s witness Amy Moore, its commercial team 7

reviewed the 2002 Mustang Tariff and “decided it was time that [the tariff] needed to be updated

. . . because it was 11 years old and did not reflect the services actually offered.” If the 2002

Mustang Tariff were to remain in place, the pipeline would continue to offer backhaul and exchange

services to Eastman (and to any other shippers, including a potential purchaser of the ethyleneThe term “cracker” refers to a facility in which natural gas liquids (NGLs, such as ethane 7

and propane, and referred to generically as “feedstocks”) are heated to over a thousand degrees to

“crack” the feedstock molecules so that they can be separated into the feedstock’s various

constituents, one of which is ethylene.

4
producing facilities that Eastman was seeking to sell); under the 2013 Tariff, the backhaul and

exchange services would no longer be available.

8

The Commission found that “Mont Belvieu is the largest market for ethylene

producers in the United States” and that “[i]t is reasonable to conclude that the ethylene producers

in Longview would require access to the ethylene market in Mont Belvieu.” It also found that

“Eastman and Westlake Longview each require movement of ethylene between Mont Belvieu and

Longview [and] access to the ethylene market[s]” in both cities and that “[t]he only difference is that

Eastman requires deliveries from Longview to Mont Belvieu and Westlake Longview requires

deliveries from Mont Belvieu to Longview.”

Based on its findings, the Commission concluded that Westlake’s termination of its

pre-existing backhaul and exchange services “provided an unreasonable preference and advantage

to its affiliate, Westlake Longview” and that such action was discriminatory because it “cut off

access to a market so that all other shippers on the pipeline are forced to sell or exchange their

product with a shipper on that same pipeline which is affiliated with the pipeline.”

Specifically, the 2013 Tariff made the following relevant changes: (1) it specified Mont 8

Belvieu as an “Origin Point” only (while the 2002 Tariff had specified the city as an “Origin/

Delivery Point”); (2) it specified Longview as a “Delivery Point” only (while the 2002 Tariff had

specified the city as an “Origin/Delivery Point”); and (3) it eliminated the following provision in the

section entitled “Direction of Flow”:

Carrier will make a reasonable attempt to accommodate Shippers through the

exchange of product at Origin and Delivery Points. Any exchanges will be subject

to the same terms and conditions applicable to shipments pursuant to this tariff,

including the rate charged for such shipments. The provisions of this tariff apply to

all shipments or exchanges regardless of the direction of flow or whether the product

shipped or received is physically moved from one point to another.

5
The Commission’s final order rejected Westlake’s 2013 Tariff, concluded that the

tariff may not be enforced, and ordered that Westlake publish and file with the Commission a

“revised tariff that is not discriminatory and conforms to the tariff attached to this Final Order as

Exhibit A.” In several issues, Westlake contends that the Commission (1) made legal errors in

concluding that the Pipeline had discriminated against Eastman (issues one and two), (2) did not

have the statutory authority to issue its order (issues three and four), and (3) acted arbitrarily and

capriciously in deciding Eastman’s discrimination complaint (issue five).

DISCUSSION

Final orders of the Commission are “deemed to be prima facie valid and [are] subject

to review under the substantial evidence rule.” H.G. Sledge, Inc. v. Prospective Inv. &Trading Co.,

Ltd., 36 S.W.3d 597, 602 (Tex. App.—Austin 2000, pet. denied) (quoting Imperial Am. Res. Fund,

Inc. v. Railroad Comm’n, 557 S.W.2d 280, 284 (Tex. 1997)). We review the Commission’s legal

conclusions for errors of law and its findings of fact for support by substantial evidence. Id. We are

not asked to determine whether the agency reached the correct conclusion, but whether some

reasonable basis exists in the record for the agency’s action. Cities of Corpus Christi v. Public

Util. Comm’n, 188 S.W.3d 681, 695 (Tex. App.—Austin 2005, pet. denied). Even if the evidence

preponderates against theCommission’sfinding, that findingmay be upheld aslong asthere is enough

evidence to suggest that the Commission’s determination was within the bounds of reasonableness.

Id. We will sustain the Commission’s order if the evidence is such that reasonable minds could

have reached the conclusion that the Commission must have reached in order to justify its action.

Texas Health Facilities Comm’n v. Charter Med.-Dall., Inc., 665 S.W.2d 446, 453 (Tex. 1984).

6
Common carriers under Texas anti-discrimination law

Under both the common law and by statute, common carriers in Texas are prohibited

from discriminating in providing their services. See Tex. Nat. Res. Code § 111.015 (“A common

carrier shall receive and transport crude petroleum delivered to it for transportation and perform its

other related duties without discrimination.”); United Gas Corp., 189 S.W.2d at 489; see also

Webster’s Third New Int’l Dictionary (2002) 648 (defining “discrimination” as “the act or practice

on the part of a common carrier of discriminating (as in the imposition of tariffs) between persons,

localities, or commodities in respect to substantially the same service”).

In its first two conclusions of law, the Commission concludes that Westlake (1) is a

“common carrier” as that term is defined under section 111.020(d) of the Natural Resources Code

and (2) is, therefore, subject to “all provisions of the Common Carrier Act [chapter 111 of the

Natural Resources Code].” See Tex. Nat. Res. Code § 111.020(d) (“A person may acquire the right

[to lay, maintain, and operate pipelines along, across, or under a public stream or highway in this

state] conferred in this section by filing with the commission a written acceptance of the provisions

of this chapter expressly agreeing that, in consideration of the rights acquired, it becomes a common

carriersubject to the duties and obligations conferred orimposed bythis chapter.”). Westlake contends

that it is not a common carrier under section 111.020(d) but that, even if it is, it is not subject to all

of the provisions of chapter 111, specificallythe statutoryprohibition against discrimination because

it does not transport “crude petroleum.” See id. § 111.015. Nonetheless, Westlake concedes that 9

In its fifth issue on appeal, Westlake contends that it is not subject to section 111.015’s 9

express prohibition against discrimination and that the Commission, accordingly, erred in relying

on the section in reaching its conclusions of law. We will address this issue infra. 

7
(a) it is a common carrier under the common law; (b) the Commission has jurisdiction over it as an

entity “owning or operating [a] pipeline[] in Texas,” see id. § 81.051(a)(3); and (c) what constitutes

discrimination under the common law also constitutes discrimination under the statute (which does

not define “discrimination”). Therefore, even if Westlake were not subject to the express statutory

prohibition against discrimination, it is prohibited under the common law from discriminating in

providing its services, and the Commission has jurisdiction “to hear and determine complaints”

against it. See id. § 81.053; Vista Med. Ctr. Hosp. v. Texas Mut. Ins. Co., 416 S.W.3d 11, 25 (Tex.

App.—Austin 2013, no pet.) (“[A] reviewing court must generally affirm an administrative order

if it is correct on any theory of law applicable to the case regardless of whether the agency purported

to rely on that legal theory or even relied on an erroneous one.”); United Gas Corp., 189 S.W.2d

at 489; see also Burnett v. Riter, 276 S.W. 347, 349 (Tex. Civ. App.—Beaumont 1925, no writ) (“A

common carrier is one who engages in the transportation of persons or things from place to place for

hire, and who holds himself out to the public as ready and willing to serve the public, indifferently,

in the particular line in which he is engaged.” (emphasis added)). Therefore, we need only analyze

Westlake’s appellate issues under the common law.

The common law has interpreted the term “discrimination” broadly to include a

carrier’s disparate treatment of similarly situated shippers as well as its providing an unreasonable

preference to a particular person. See Oil Field Haulers Ass’n v. Railroad Comm’n, 381 S.W.2d 183,

194 (Tex. 1964) (tracing history of Texas common-carrier legislation as “studied effort . . . to prevent,

through regulation, unfair, discriminatory, or destructive competition between such authorized carriers

as would ultimately impair their usefulness” with objectives of “providing transportation services

8
to all segments of business and industry where such services are necessary and of protecting those

services against unfair and destructive practices” (quoting Texas &Pac. Ry. Co. v. Railroad Comm’n,

138 S.W.2d 927, 931 (Tex. Civ. App.—Austin 1940), rev’d on other grounds, 157 S.W.2d 622 (Tex.

1941))); United Gas Corp., 189 S.W.2d at 489 (tracing development of law of common-carrier

discrimination and quoting 2 Hutchinson on Carriers, 3rd Ed., 570, Sec. 521, for proposition that

carrier’s action may be discriminatory “when it is either intended or has a natural tendency to injure

another shipper in his business and destroy his trade by giving to the favored shipper a practical

monopoly of the business”); Southwest Stone Co. v. Railroad Comm’n, 184 S.W.2d 691, 695 (Tex.

Civ. App.—Austin 1944, writ ref’d w.o.m.) (noting that Commission’s duty to prevent unjust

discrimination includes requirement of similar treatment of shippers who are similarly situated);

Fort Worth & D.C. Ry. Co. v. Frazier, 191 S.W. 808, 813 (Tex. Civ. App.—Fort Worth 1916,

no writ) (analyzing legal commentaries and concluding that “it is an unjust discrimination, under

the common law, for a common carrier ‘to make or give any undue or unreasonable preference

or advantage to any particular person’”); see also CenterPoint Energy Entex v. Railroad Comm’n,

208 S.W.3d 608, 621 (Tex. App.—Austin 2006, pet. dism’d) (noting that regulated utility may not

discriminate in providing services); Amtel Commc’ns, Inc. v. Public Util. Comm’n, 687 S.W.2d 95,

101–02 (Tex. App.—Austin 1985, no writ) (holding that under statutory and common-law antidiscriminatoryprinciples applying to public utilities, “dividing line” between unlawful and permissible

discrimination is “drawn by the rule of reasonableness” that asks whether discrimination is “founded

upon a substantial and reasonable ground of distinction between the favored and disfavored classes

or individuals”).

9
Within these parameters, the determination of “[w]hat constitutes an unjust or

unreasonable discrimination as between shippers is ordinarily a question of fact,” Southwest Stone

Co., 184 S.W.2d at 694, and we will, accordingly, review the Commission’s challenged findings

and conclusions in the context of the common law’s broad prohibition against discrimination and

the Commission’s discretion to resolve factual disputes and draw reasonable conclusions therefrom,

see Charter Med.-Dall., 665 S.W.2d at 452–53 (noting that in conducting “substantial evidence”

review, reviewing court may not substitute its judgment for that of agency on factual questions;

evidence may actually preponderate against agency decision and nonetheless amount to substantial

evidence; and if there is evidence to support either affirmative or negative findings on specific

matter, decision of agencymust be upheld). Our review asks “whether some reasonable basis exists

in the record for the action taken by the agency.” Id.

Challenges to the Commission’s discrimination findings and conclusions

In its second issue, Westlake contends that the Commission’s conclusion that

Westlake discriminated against Eastman for the “sole reason stated in its Order that Westlake

cancelled backhaul and exchange services under the 2013 Tariff” was legally erroneous. See 10

Tex. Gov’t Code § 2001.174(2)(d) (appellate court must reverse and remand agency decision where

appellant’s substantial rights have been prejudiced because agency’s findings, inferences,

conclusions, or decisions are affected by error of law). Essentially, Westlake argues that the tariff’s

elimination of the backhaul and exchange services could not be discriminatory because it treated all

In its related first issue, Westlake contends that the Commission’s fact finding that 10

Eastman is a similarly situated shipper is “erroneous as a matter of law.”

10
shippers “equally” in that henceforth no shipper would be entitled to request those services.

However, as we have already discussed, discrimination includes not only disparate treatment of

similarlysituated shippers but also the granting of an undue or unreasonable preference or advantage

to a particular shipper, e.g., Frazier, 191 S.W. at 813, and the Commission concluded that the tariff’s

elimination of the backhaul and exchange provisions did just that by “cut[ting] off access to a market

[Mont Belvieu] so that all other shippers on the pipeline are forced to sell or exchange their product

with a shipper on that same pipeline which is affiliated with the pipeline.”

The Commission made numerous findings of fact in support of its conclusion of 11

law that elimination of the backhaul and exchange provisions—under the particular circumstances

of this case—was discriminatory:

• Eastman uses about 600 million pounds of ethylene annually at Longview,

leaving about 800 million pounds of ethylene that must either be sold in

Longview or transported to, or exchanged at, Mont Belvieu each year.

• Other than Eastman’s own use, the only substantial market for ethylene in

Longview is Westlake Longview [Westlake’s affiliate].

• Mont Belvieu isthe largest market for ethylene producersin the United States.

• It is reasonable to conclude that the ethylene producers in Longview would

require access to the ethylene market in Mont Belvieu.

• Eastman produces large quantities of ethylene in Longview and has a physical

necessity to move ethylene to Mont Belvieu.

• The record in this case does not provide evidence of the impediment to

[Westlake’s] continued provisions [sic] of backhaul service.

Westlake does not contend that any of these findings are not supported by substantial 11

evidence.

11
• Any concern that this [pipeline] operator lacks the compression necessary to

provide backhaul service is addressed bythe language in the preexisting 2002

Mustang Tariff, which requires shippers to deliver and receive product at the

necessary pressure.

• There is no impediment for a pipeline to provide exchange service and the

risks associated with that service may be mitigated by appropriate language

in the tariff.

• The 2002 Mustang Tariff contained language that protected the pipeline

operator and is included in the 2013 Westlake Pipeline Tariff. Additional

language may be added to protect the operator as follows: Carrier is not

obligated to transport or exchange any volumes of ethylene unless Shipper

delivers those volumes to the common stream out of which deliveries are

made to Pipeline Customers.

• Due to the unique circumstances of the ethylene market in Longview, without

an exchange provision in the applicable pipeline tariff the only alternative

for Eastman is to engage in exchanges with Westlake Longview, the pipeline

operator’s affiliate.

• Eastman and Westlake Longview each require movement of ethylene between

Mont Belvieu and Longview.

• The only difference is that Eastman requires deliveries from Longview to

Mont Belvieu and Westlake Longview requires deliveries from Mont Belvieu

to Longview.

• Westlake Longview will continue to have access to the pipeline and the Mont

Belvieu ethylene market.

• Eastman would be shut out of the Mont Belvieu market by the changes in the

2013 Westlake Pipeline Tariff.

• Westlake [] has offered no reasonable basis for the disparate treatment as

regards to physical deliveries on the pipeline.

• Once [exchange] service is eliminated, Eastman must engage in exchanges

with Westlake Longview, an affiliate of the pipeline operator.

• The elimination of backhaul and exchanges, pre-existing services offered by

the common carriers of this pipeline, provides an unreasonable preference

in favor of Westlake Longview.

12
These fact findings, which are supported by substantial evidence in the record and

are unchallenged on appeal, demonstrate that there is a reasonable basis for the Commission’s

determination that the elimination of the backhaul and exchange provisions in the 2013 Tariff was

discriminatory by providing an unreasonable preference or advantage to Westlake Longview,

Westlake’s affiliate. See Charter-Med. Dall., 665 S.W.2d at 452; Suburban Util. Corp. v. Public

Util. Comm’n, 652 S.W.2d 358, 364 (Tex. 1983) (“The correct substantial evidence rule test is

whether the evidence as a whole is such that reasonable minds could have reached the conclusion

that the agencymust have reached in order to justify its action.”). While Westlake frames the effect

of the 2013 Tariff as having a disparate impact on different shippers rather than constituting 12

disparate treatment of them, such distinction is without a difference on this record, which supports

the Commission’s reasonable conclusion that the proposed tariff would provide an unreasonable or

undue preference to Westlake’s affiliate if permitted to take effect. The evidence as a whole is

such that reasonable minds could have reached the conclusion that the Commission must have

reached in order to justify its action. Suburban Util. Corp., 652 S.W.2d at 364. The Commission’s

discrimination findings and conclusions were not affected by any “error of law,” and we accordingly

overrule Westlake’s second issue.13

The Commission suspended the 2013 Tariff during the pendency of the regulatory 12

proceedings, and the 2002 Tariff has been in place through the present.

Because we uphold the Commission’s conclusion that Westlake discriminated against 13

Eastman by eliminating the backhaul and exchange services in its 2013 Tariff, we need not reach

Westlake’s first issue contending that the Commission’s fact finding that Eastman is a “similarly

situated shipper” is legally erroneous.

13
Challenges to the Commission’s statutory authority

In its third issue, Westlake contends that the Commission “lacks the statutory

authority to compel a common carrier to engage in a particular business service, such as hauling

product in a particular direction or performing a virtual exchange of a commodity.” See Tex. Gov’t

Code § 2001.174(2)(B)(Acourt reviewing an administrative decision underthe “substantial evidence”

rule “shall reverse or remand the case for further proceedings if substantial rights of the appellant

have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

. . . (B) in excess of the agency’s statutory authority.”). Central to Westlake’s argument on this issue

is its framing of the alleged “unauthorized action” taken by the Commission: its “dictat[ing] that an

ethylene pipeline engage in business activitiesit no longer wantsto offer.” However, theCommission

did not dictate that Westlake (or any pipeline) engage in any particular business activities but,

rather, that Westlake file a revised tariffthat “is not discriminatory” by “provid[ing] an unreasonable

preference or advantage to an affiliate at the expense of other shippers” and “cutting off [shippers’]

access to a market so that all other shippers on the pipeline are forced to sell or exchange their

product with a shipper on that same pipeline which is affiliated with the pipeline.”

The Commission has broad jurisdiction over all common-carrier pipelines in Texas,

see Tex. Nat. Res. Code §§ 111.013 (“A pipeline subject to the provisions of this chapter . . . shall

be operated as a common carrier and shall be subject to the jurisdiction of the commission.”); 81.051

(“The commission has jurisdiction over all: . . . persons owning or operating pipelines in Texas [and

such persons and their pipelines] are subject to the jurisdiction conferred by law on the

commission.”). As for the Commission’s authority to issue the order it did here—specifically,

14
requiring Westlake to reinstate the backhaul and exchange provisions in its tariff as a remedy to the

Commission’s finding of discrimination—we hold that the Commission has the express statutory

authority “[i]n the discharge of its duties and the enforcement of its jurisdiction . . . [to] hear and

determine complaints,” id. § 81.053, which is exactly what it did here when it heard and decided

Eastman’s discrimination complaint. See Crown Cent. Petrol. Corp., 369 S.W.2d at 463 (noting

that Commission has exclusive original jurisdiction to consider complaints of discrimination by

common carriers). Common carriers are specifically prohibited from discriminating under the

common law, e.g., Frazier, 191 S.W. at 811–12, and the Commission has the express statutory

authority to consider and decide discrimination complaints.

The Commission’s order is narrow and limited to the pipeline and facts in this

case; it does not require that any or all pipelines in Texas engage in any particular business

services—backhaul, exchange, or otherwise. In fact, the Commission’s dispositive legal conclusion

said as much: “There is no general duty for a common carrier to provide backhaul and exchange

services. Neither isthere a general duty to maintain services previously offered by a common carrier.”

However, based on its fact findings as supported by the evidence, the Commission determined that

under the facts and circumstances of this case, Westlake’s elimination of the two services so that

Eastman and other potential Longview shippers were cut off from the Mont Belvieu market except

by going through Westlake’s affiliate was discriminatory. Resolving Eastman’s discrimination

complaint in this fact-specific manner was well within the Commission’s authority, and we reject

Westlake’s contentionsthat it is not subject to theCommission’sjurisdiction and that theCommission

lacks the authority to issue the order it did here. We accordingly overrule Westlake’s third issue.

15
In itsrelated fourth issue, Westlake contendsthat theCommission’s order “improperly

interferes in private contractual matters by awarding Eastman functional control over property

(the pipeline) it had previously sold,” an action for which it “lacks statutory authority” and which

is “arbitrary and capricious.” See Tex. Gov’t Code § 2001.174(2)(b), (f) (providing that court must

reverse and remand agency’s decision when appellant’s substantial rights have been prejudiced

because administrative findings, inferences, conclusions, or decisions are in excess of agency’s

statutory authority or are arbitrary or capricious). As we concluded previously with respect to

Westlake’s third issue, the Commission has not exceeded its statutory authority by resolving the

discrimination complaint in the manner in which it did, despite Westlake’s attempt to frame the

agency’s decision as one “interfering in private contractual matters.”14

AsforWestlake’s contention that theCommission’s orderis “arbitraryand capricious”

because it “interferes in private contractual matters,” we conclude that Westlake has not identified

any of the circumstances under which courts have previously found agency orders to be arbitrary

and capricious. These include (1) the order not being supported by substantial evidence, (2) the

agency denying a litigant’s due process so as to prejudice its rights, (3) the agency improperly basing

its decision on non-statutory criteria, (4) the agency basing its decision on legally irrelevant factors

or not considering legally relevant factors, (5) the agency considering only relevant statutory

We also reject Westlake’s attempt to minimize the effects of its discrimination by

14

submitting that Eastman may nonetheless continue to obtain exchange services under the ESA and

so, therefore, will not be harmed or suffer any “stranding” of its ethylene in Longview by virtue of

the 2013 Tariff’s modifications. A common carrier’s obligations simply cannot turn on whether an

unfairly disadvantaged shipper has an alternative through a third-party contract, which is beyond the

reach of regulatory power. See Railroad Comm’n v. Permian Basin Pipeline Co., 302 S.W.2d 238,

253–54 (Tex. Civ. App.—Austin 1957, writ ref’d n.r.e.) (holding that private contracts do not

prevent exercise by Commission of its authority and are invalid to extent that they relieve common

carriers of their legal duties).

16
factors but reaching a completely unreasonable result, see Texas Dep’t of Ins. v. State Farm Lloyds,

260 S.W.3d 233, 245–46 (Tex. App.—Austin 2008, no pet.), and (6) the agency’s failure to follow

the clear, unambiguous language of its own regulations, see Reliant Energy, Inc. v. Public Util.

Comm’n, 153 S.W.3d 174, 199 (Tex. App.—Austin 2004, pet. denied). Accordingly, we overrule

Westlake’s fourth issue.

Challenges to the applicability of and the Commission’s reliance on section 111.015

In its fifth issue, Westlake argues that the Commission’s “stated basis for its decision”

(section 111.015) is “arbitrary and capricious as lacking any support in the law” because that

section “by its terms does not apply to ethylene pipelines” but only to the transportation of “crude

petroleum,” and ethylene is not crude petroleum. See Tex. Nat. Res. Code § 111.015 (“A common

carrier shall receive and transport crude petroleum delivered to it for transportation and perform its

other related duties without discrimination.”); cf. Vardeman v. Mustang Pipeline Co., 51 S.W.3d 308,

313 (Tex. App.—Tyler 2001, pet. denied) (“Ethylene is included in the broad definition of ‘crude

petroleum.’”). However, even if Westlake were correct that section 111.015 does not apply to it,

we must still uphold the Commission’s order because we have determined that its decision is

correct under the broad common-law definition of common-carrier discrimination, particularly the

prohibition against providing an unreasonable preference to an affiliate. See Charter Med.-Dall.,

15

665 S.W.2d at 452–53 (“A reviewing court is not bound by the reasons given by an agency in its

Furthermore, section 111.015 requires a common carrier “to receive and transport crude 15

petroleum delivered to it for transportation and perform its other related duties without

discrimination.” Tex. Nat. Res. Code § 111.015 (emphasis added). None of the parties have directly

addressed the issue of what a common carrier’s “other related duties” might include and

whether—assuming that “crude petroleum” does not include ethylene—those duties would include

the transport or exchange of other products such as ethylene.

17
order, provided there is a valid basis for the action taken by the agency.”); Vista Med. Ctr. Hosp.,

416 S.W.3d at 25 (noting that reviewing court must affirm agency order that is correct on any theory

of applicable law, even if agency purported to rely on erroneous theory). Accordingly, we overrule

Westlake’s fifth issue.

CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment upholding the

Commission’s final order concluding that Westlake’s 2013 tariff is discriminatory and may not

be enforced.

__________________________________________

David Puryear, Justice

Before Justices Puryear, Pemberton, and Field

Affirmed

Filed: December 7, 2016

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