THE-a ORNEY GxNERAL 

OFTEXAS 

Railroad CommissSon Opinion No. O-2867 

of Texas 

Austin, Texas Re : Whe.ther fact that applicant for 

motor bus certificate proposes to operate at lower fares than existing carriers, may be considered as evl.dence nn 

the, 1~ ssue of convenl,enca and neeessl*,y; 

Gentlemen : and other ,re.lated issues. 

In your Petter of October 21, 19klp you submit tc us, 

the following request for an opinion: 

“There is now pending before the Motor Transportation Dfvisfon of the Railroad Commission of Texas an application filed by a common carrier motor bus carrier, 

which is now authorized to transport, and is transpor%inr;_ ,* 

interstate passengers for hire9 for a cer’?:.If,lea,te of ::c‘n~= 

venience and necessi t.y, aut,horizir;g i t to I.r-anspor% ant- :;, 

&ate passengers Sipon !.he Same buses that the bus carrl.cr 

is now usi.ng Ir, its lr;tesstate ‘7~s cpera~!:;;.~ri. 

‘Pin the pending applicatlan, and a,? a hearing that 

““(9) That the type of sffvfce offered by th? applicant is a dlsti,nctive se~vicx b,y reason of the ‘Low ,cos’l 

of its transportation services te its passengere, :%t ‘befng asserted In the application that the rates of ,fare 

would be approximately %went”y,-,five oerczns (25%) lawer 

than the rates of f,sse offered by ,the ex:isLinlg bw:; facllfties serving ,the sa.me terri,tory, and by reapon, n,f o-ther 

advantages offered the trave:lLng pubile, ineL.wdl,ng free 

meals, are elements bearing upon, and having relati.un to, 

pu.bli c convenience and necessity and the adeq,uacy ,OS” 4nadequacy of existing carTier service, which would support 

an application for the certificate of conven.ience and 

necessity such as the appifcant is applying fo?, 

“(21 That Sn view of the existing interstate operation:; by the appliear:t and fts proposal ,Lo appl,y to fts 

proposed intrastate opera,tions for which a certificate of 
. . 

Railroad Commission of Texas, page 2 (O-2867) 

convenience and necessity is sought, the same rates which 

it now carries, is an element and factor bearing upon, 

and having relation to, public convenience and necessity 

and the adequacy or Inadequacy of existing carrier service 

which would support an application for the certificate of 

convenience and necessity such as the applicant Is applying for. 

“(3) That the granting of an application for the lnauguration of the service will create a competitive sltuation which Is highly desirable in the public Interest, 

which Is material to, and a proper element and factor of, 

public convenience and necessity, which would support an 

application for certificate of public convenience and necessity such as applicant is now applying for. 

“(4) That applicant’s proposed bus service will not 

affect other intrastate carriers serving the same terrftory, routes, and points, adversely, is material to, and a 

proper element of, public convenience and necessfty, and 

the adequacy or inadequacy of existing carrier facilities 

which would support an application for a certificate of 

convenience and necessity such as the applicant is now 

applying for O 

“(5) That by the application of lower rates to intrastate motor carrier bus fares, a new s&&a of bus traffic 

will be reached and opened up by reason thereof, whfch 

traffic is now moving either through the use of prtvate 

transportation facilities, travel bureaus, hitch hfking, 

other facilities, or not moving at all, due to the exfsting higher rates of fares, which new strata of bus traffic 

applicant is seeking to reach, and from which it proposes 

to obtain its bus traffic, in the event the application is 

granted 9 all of which are elements and factors of convenience and necessity and adequacy or inadequacy of existing carrier facilitfes which would support an application 

for a certificate of public convenience and necessity such 

as the applicant is now applying for. 

“(6) That the sleeper coach servfce, with facflitfes 

equivalent to that of a Pullman passenger train coach, 

and free meals to its passengers, which applicantproposes 

to furnish are factors and elements of public convenfence 

and necessity and the adequacy or inadequacy of existing 

carrier facilities which would support an application for 

a certificate of convenience and necessity such as the 

applicant is now applying for. 

“In presenting’such contentions the applicant urges 

same as elements of public convenience and necessity and 
Railroad Commission of Texas, page 3 (O-2867) 

the adequacy or inadequacy of existing carrier facilities 

whether considered separately, or in conjunction with 

each other, as well as other and USUAL proper constituent 

elements and factors of public convenience and necessity 

and adequacy or inadequacy of existing carrier facilities. 

wQuaere - Please give me your legal opinion as to 

whether or not the Railroad Commission of Texas should permit and consider allegations and proof In support of the 

UNUSUAL elements and factors herein above outlined in 

paragraphs numbered one to six, inclusive, and in d etermlnlng such application, consider same as elements and factors 

of9 and as bearing upon, and having relation to, public 

convenience and necessity and the adequacy or Inadequacy 

of existing passenger carrier facilitiesOn 

As we understand, a hearing was commenced on the application filed by All-American Bus Lines, Inc,, and was recessed 

in order to obtain an opinion for the Railroad CommissionUs 

guidance in conducting the hearing. In order to better understand 

these questions we obtained from you andhave read the application 

for certificate. You do not ask our opinion concerning the sufficiency of the application as respects any of the questions 

submitted by you and nothing herein said by us should be construed as touching upon the sufficiency or insufficiency of the 

application on any question. You specifically say in the seoond 

paragraph of your letter that the applicant offered the proof 

and contentions under “proper allegations,” and we assume that 

if the application does not now or is not made to contain proper 

allegations upon which to base the evidence that it will be rejected. 

We will first dispose of the types of evidence and contentions suggested in subdivisions numbered (2) and (3) of your 

letter in that order. 

If we understand contention No. (2) correctly, it seems 

that some advantage is claimed on account of the fact that AllAmerican already holds authority from the Interstate Commerce 

Commission to carry on an interstate business over the same 

route O It is our opinion that such fact is not involved in the 

question of inadequacy of existing intrastate services nor of 

the need of additional facilities to serve intrastate. The 

holder of an interstate certificate stands in no better light 

when applying for Intrastate rights than does one who has no certificate authorizing him to handle interstate traffic. He must 

establish the inadequacy of existing services and the need of 
Railroad Commission of Texas, page 4 (O-2867) 

additional facilities under the same rules, whether he already 

holds an interstate certificate or not. In the first place, 

the statute (Article qlla, Vernon's Civil Statutes) provides 

for no difference. And In the second place, the need of additional intrastate services had not entered into the action of 

the Interstate Commerce Commission. Purely Intrastate carriers 

would not have been prejudiced in the granting of interstate 

rights by the Interstate Commerce Commission and could hardly 

have protested the same. When an interstate carrier applies 

to the Railroad Commission for an intrastate certificate, it 

would seem that to indulge any presumptions in his favor on 

the issue of convenience and necessity, or to lighten the bur- 

&n on him, would be depriving existing carriers, in a measure9 

of the right to defend their services and prove the adequacy 

thereof. From the opinion of the Supreme Court of Ohio, in 

Canton v.. Public Utilities Commission, 174 N.E. 244, we quote: 

"An operator of an interstate motor transportation 

service, seeking a certificate of convenience and necessity to operate an intrastate motor transportation service, 

stands in no more favorable position by reason of his pas,- 

session of an interstate certificate than he woukd without 

such certificate, since his possession of such certificate 

Is not predicated upon the existence of a convenience and 

necessity. The burden upon such applicant of showing 

convenience and necessity is the same as though he were 

making his initial appearance in the motor transportation 

world. +**088 

"We can not escape the conclusion that the fact that 

the applicant possessed an interstate certificate over the 

same route, and by its application for an intrastate certificate simply sought permission to supplement its interstate service by an intrastate service, without either increasing its equipment or changing its schedule, was the 

controlling consideration in the minds of the commission 

in the finding and order made. on affirmance of such 

finding and order would but indicate a convenient and effective way to secure a certificate of convenience and 

necessity to operate a motor transportation company within 

the state wherever and whenever an applicant has established an interstate route, the establishment of which the 

commission was without power to prevent." " 

In so far as contention No. (2) concerns the offer of a 

lower fare, our discussion of contention No. (1) will be applicable. 
. . 

Railroad Commission of Texas, page 5 (O-2867) 

Regarding contention No. (31, it seems to us that 

whether competition is desirable is largely the ultimate question depending upon the adequacy or inadequacy of existing 

facilities and whether additional services are needed, There 

should be no assumption that another carrier should be in the 

field. It must be remembered that the burden Is on the applicant to plead and show by evidence that existing services are 

inadequate and that additional facilities or services are needed. 

Section 8 of Article qlla* Railroad Commission v. Shupee, 57 

S.W. (26) 295, 73 S.W. (2dj 505. The mere fact that competition 

would be introduced by the granting of a certificate should not 

be considered as having met to any extent whatsoever this burden upon the applicant. 

We now refer to contention No. ‘(l), which essentially 

resolves itself into the question as to whether the proposal 

to operate at substantially lower fares--attended we presume 

with proof to show that such operation is feasible and possible 

--may be shown and considered on the issue of convenience and 

necessity. A reading of the opinion of the Interstate Commerce 

Commission discloses that in granting All-American’s application 

for interstate rights that body received and considered such 

offer and evidence in support thereof on such issue. 

Section 3, and subsections (a) and (b) of Section 4, 

Article 911a, Vernon’s Civil Statutes, read: 

llSec. 3. It is hereby declared that when existing 

transportation facilities on any highway in this State 

do not provide passenger service which the Commission shall 

deem adequate to provide for public convenience on such 

highway, then such inadequacy of service shall be considered as creating a condition wherein the public convenience 

and necessity require the designation of, and provision 

for9 additional service on such highway, and it shall be 

the duty of the Commission to issue certificate or certificates as herein provided, if in the opinion of said Commission the issuance of such certificate will promote the 

public welfare. 

llSec. 4. (a) The Commission is hereby vested with 

power and authority, and it is hereby made its duty to supervise and regulate the public service rendered by every 

motor bus company operating over the highways in this 

State p to fix or approve the maximum, or minimum, or maximum and minimum, fares, rates or charges of, and to prescribe all rules and regulations necessary for the government of, each motor bus company; to prescribe the routes, 

schedules, service, and safety of operations of each such 

motor bus company; to acquire the filing of such annual or 
Railroad Commission of Texas, page 6 (o-2867) 

other reports and of such other data by such motor bus 

company as the Commission may deem necessary. 

"(b) The Commission is hereby vested with authority 

to supervise, control and regulate all terminals of motor 

bus companies, including the location of facilities and 

charges to be made motor bus companies for the use of such 

terminal, or termini; provided' that the Commission shall 

have no authority to interfere.in any way with valid contracts existing between motor bus companies and the owner 

or owners of motor bus terminals at the time of the passage of this Act." 

In Fornarotto v. Board of Public Utility Com'rs., 143 

Atl. 4509 Supreme Court of New Jersey, it was held that an offer to operate at lower fare does not alone establish necessity 

and convenience, authorizing the grant of a public utility franchise to a bus company. In Seaboard Air Line Ry, Co. v. Wells, 

130 So. 587? it was observed that "a cheaper rate, as we have 

seen, does not of itself authorize the granting of a certificate." 

While we are convinced that the mere offer to render 

the service at lower fares, standing alone, would not be a sufficient showing of public convenience and necessity to sustain 

a certificate., we have concluded that in a proper case such an 

offer -- especially when supported with proof tending to show 

that operations could be conducted successfully under the reduced fare -- may be considered by the Commission for what it 

is worth on the issue of convenience and necessity. In fact, 

as we understand the opinion in Southland Greyhound Lines v. 

Railroad Commission, 73 S.W. (2) 604, by the Austin Court of 

Civil Appeals, the lower fare proposed by the applicant was considered by the Court as evidence of public convenience and necessity in affirming the trial court's judgment sustaining a 

certificate. From that opinion we quote excerpts as follows: 

1' ***, Appellant contacted members of the board and 

offered to establish additional bus services, and submitted 

in writing its tentative or proposed bus schedules and 

rates or fares. Appellee likewise submitted proposed schedules and rates or fares. A comparison of thetwo proposals revealed that appellee's proposed services were better 

adapted to the needs of Randolph Field and provided for 

lower rates or fares. The concessions board recommended 

that appellee's proposal be accepted; and the contract attached to appellee's application for the permit was entered into between appellee and the War Department. A comparison of the bus services provided by the contract with 

those proposed by appellant reveals that they are better 

adapted to the needs of Randolph Field, as follows: (a) 
r~ailroad Commission of Texas, page 7 (O-2867) 

Appellee's services offered better schedules as to hours 

of operation; (b) more schedules; (c) appellee's services 

were not burdened with transporting the general traveling 

public between San Antonio and Rouston, thereby rendering 

practically exclusive services for the personnel of Randolph Field: (d) appellee's contract gave it the exclusive 

right to enter into the post or private government property 

for the purpose of picking up and discharging passengers, 

and appellee was required to post schedules and provide for 

sale of tickets at the Army Y.M.C.A. under the terms of his 

contract, and ,these privileges and services were shown to 

be much more convenient for the porscnnel of Randolph Field 

than the proposed services of appellant, which required 

them to go off the government post or property, and to board 

and leave buses on the public highway passing by or through 

a portion of Randolph Field; (a) appellee's rates or fares 

were lower; and (f) appellee unconditionally contracted to 

furnish a school bus for transporting the children of the 

enlisted men and officers to and from school in San Antonio. 

"The evidence showed that while appellant may have 

been able to render the additional services, it was neither 

ready nor willing to do so. At Least appellant was given 

the opportunity by the Randolph Field authorities to propose schedules and rates; but it only proposed tentative 

and unsatisfactory schedules and rates. As a competitor 

for the additional services, appellee proposed schedules 

better adapted to the needs of Randolph Field and lower as 

to rates or fares; and proposed to operate a school bus, 

which appellant did not propose to do unless there should 

be such a number of school children as would be satisfactory to appellant. In determining the adequacy of the additional services demanded by Randolph Pield, the Railroad 

Commission was also authorized to consider the fact that 

the War Department had investiga,ted and selected appelllee 

and had by contract clearly defined and prescribed the character of services desired, with special privileges granted 

appellee to enter on government properly in order that he 

might better serve the trafficen 

We regard the proposal to furnish free meals as being 

a part of the offer to operate at lower fares, 

We will not consider contention No. (5j, urging that 

applicant should be~permitted to show that a new strata of traffic will be reached, that is, a field composed of poor people 

unable to pay present fares and who now travel through travel 

bureal arrangements, as hitch-hikers, etc., and others who are 
Railroad Commission of Texas, page 8 (o-2867) 

now unable to travel at all on account of high fares. 

From Railway Co. v. State, et al, 25.2 Pac. 849s by 

the Supreme Court of Oklahoma, we quoter 

"It is held in Choate et al. v. Ill. Commerce Commission, 309 Ill. 248, 141 M.E. 12: 

"'That a proposed bus line, serving the same territory 

as an established interurban line, may accommodate a few 

individuals, does not justify a certificate permitting it 

to operate; the convenience and the necessity which the 

law requires being the convenience and necessity of the public,as distinguished from that of an individual, or any 

number of individuals."' 

To similar effect, see also Lake Shore Electric Co. v. 

Public Utilities Commission, 1% M.E.,239, Ohio Supreme Court; 

West Suburban Transp. Co. v. Chicago & W.T. Ry. Co., 140 M.E. 

56, Illinois Supreme Court. 

Nevertheless, until it hears the evidence the Railroad 

Commission cannot tell the extent to which it may go. The testimony which may be adduced in support of these allegations may 

prove to be trivial and may not even tend to show a public need 

for the new service. However, it is at least conceivable that 

substantial evidence of this nature may be offered showing a 

substantial public need. The Commission may hear this evidence 

and consider the same for what, if anything, it may be worth. 

It is thought that the showing sought to be made in contention 

MO. (4) is supplemental to that involved in No. (511 discussed 

immediately above, and our answer is the same as to it. 

We now address ourselves to contention MO. (6). We 

have already considered the matter of free meals. Whether there 

is actually a need for sleeper coach service over this route, 

and if so, the extent thereof, can be told only after hearing 

the evidence. The proposal to furnish overnight sleeping service between Dallas and Fort Worth on the one hand, and El Paso 

on the other, coupled with allegations that there is a public 

need and demand for it, and that such is not now available, to 

our minds presents a proper inquiry involving convenience and 

necessity. Whether such allegations may be properly sustained 

is another question. In our opinion the evidence should be andmitted for whatever, if anything, it may prove to be worth to 

the Commission. 
Railroad Commission of Texas, page 9 (O-2867) 

This answers your questions as best we can considering the form of their submission. 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By /s/ Glenn R. Lewis 

Glenn R. Lewis, Assistant 

APPROVED DEC 5, 1940 

/s/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

APPROVED: OPINION COMMITTEE 

BY: BWB, CHAIRMAN 

GRL:RSrwb