### THE-a ORNEY GxNERAL

OFTEXAS

Railroad CommissSon Opinion No. 

### O-2867 of Texas Austin, Texas Re: Whe.therfact that applicant for
motor bus certificate proposes to operate at lower fares than existing carriers, maybe considered as evl.dence nn the, 1~ ssue of convenl,enca andneeessl*,y; Gentlemen : and other ,re.lated issues.

Inyour Petter of October 21, 

### 19klpyou submit tc us, the following request for an opinion:

“There is nowpending before the Motor Transportation Dfvisfon of the Railroad Commission of Texas anapplication filed bya commoncarrier motor bus carrier, which is nowauthorized 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 it to I.r-anspor% ant- :;, &ate passengers Sipon!.he Samebuses that the bus carrl.cr is nowusi.ng Ir, its lr;tesstate ‘7~scpera~!:;;.~ri.

‘Pinthe pending applicatlan, and a,?ahearing that

““(9) That the type of sffvfce offered by th? applicant is adlsti,nctive se~vicx b,yreason 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 ,theex:isLinlg bw:;facllfties serving ,the sa.meterri,tory, and byreapon, n,fo-ther advantages offered the trave:lLng pubile, ineL.wdl,ng free meals, are elements bearing upon, andhaving relati.un to, pu.blic convenience and necessity and the adeq,uacy ,OS”4nadequacy of existing carTier service, which would support
anapplication for the certificate of conven.ience and necessity such as the appifcant is applying fo?,

“(21 That Snview of the existing interstate operation:; by the appliear:t and fts proposal ,Loappl,y to fts proposed intrastate opera,tions for which a certificate of. .

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

convenience andnecessity is sought, the samerates which it nowcarries, is an element and factor bearing upon, andhaving relation to, public convenience andnecessity and the adequacy or Inadequacy of existing carrier service which would support anapplication for the certificate of convenience andnecessity such as the applicant Is applying for.



### “(3) That the granting of anapplication for the lnauguration of the service will create a competitive sltuation which Is highly desirable in the public Interest, which Is material to, and aproper element and factor of, public convenience andnecessity, which would support an application for certificate of public convenience andnecessity such as applicant is nowapplying for.

“(4) That applicant’s proposed bus service will not affect other intrastate carriers serving the sameterrftory, 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 anapplication for a certificate of convenience andnecessity such as the applicant is now applying for O



### “(5) That by the application of lower rates to intrastate motor carrier bus fares, anews&&a of bus traffic will be reached and opened upbyreason thereof, whfch traffic is nowmoving 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 newstrata 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 9all of which are elements and factors of convenience andnecessity and adequacy or inadequacy of existing carrier facilitfes which would support anapplication for a certificate of public convenience and necessity such

as the applicant is nowapplying 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 andnecessity and the adequacy or inadequacy of existing carrier facilities which would support anapplication for

a certificate of convenience andnecessity such as the applicant is nowapplying for.

“In presenting’such contentions the applicant urges sameas elements of public convenience andnecessity andRailroad 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 andUSUALproper constituent elements and factors of public convenience andnecessity andadequacy 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 determlnlng such application, consider sameas elements and factors of9 and as bearing 

### upon, andhaving relation to, public convenience andnecessity and the adequacy or Inadequacy of existing passenger carrier facilitiesOn

Asweunderstand, ahearing was commenced on the application filed byAll-American BusLines, Inc,, andwas recessed

in order to obtain anopinion for the Railroad CommissionUs guidance in conducting the hearing. In order to better understand these questions weobtained from you andhave read the application for certificate. Youdonot ask our opinion concerning the sufficiency of the application as respects 

### any of the questions submitted byyou andnothing herein said byus 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,” andweassume that if the application does not nowor is not madeto contain proper allegations upon which to base the evidence that it will be rejected.

Wewill first dispose of the types of evidence and contentions suggested in subdivisions numbered (2) 

### and (3) of your letter in that order.

If weunderstand contention No. (2) correctly, it seems that someadvantage is claimed onaccount of the fact that AllAmerican already holds authority from the Interstate Commerce Commission to carry onan 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 nobetter light whenapplying for Intrastate rights than does one whohas no certificate authorizing him to handle interstate traffic. Hemust establish the inadequacy of existing services and the need ofRailroad Commission of Texas, page 4 (O-2867)

additional facilities under the samerules, whether he already holds an interstate certificate 

### ornot. In the first place, the statute (Article qlla, Vernon's Civil Statutes) provides for nodifference. AndIn the second place, the need of additional intrastate services had not entered into the action of the Interstate CommerceCommission. 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. Whenaninterstate carrier applies to the Railroad Commission for anintrastate certificate, it would seemthat to indulge any presumptions in his favor on the issue of convenience andnecessity, or to lighten the bur- &nonhim, would be depriving existing carriers, in ameasure9 of the right to defend their services and prove the adequacy thereof. Fromthe opinion of the Supreme Court of Ohio, in Canton v.. Public Utilities Commission, 174 N.E. 244, wequote:

"An operator of an interstate motor transportation service, seeking a certificate of convenience andnecessity to operate anintrastate motor transportation service, stands in nomore favorable position by reason of his pas,- session of aninterstate certificate than hewoukdwithout such certificate, since his possession of such certificate Is not predicated upon the existence of a convenience and necessity. Theburden upon such applicant of showing convenience andnecessity is the sameas though hewere making his initial appearance in the motor transportation world. +**088

"Wecan not escape the conclusion that the fact that the applicant possessed an interstate certificate over the

sameroute, andby its application for an intrastate certificate simply sought permission to supplement its interstate service byan 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. onaffirmance of such finding and order would but indicate a convenient and effective wayto secure a certificate of convenience and necessity to operate amotor transportation company within the state wherever andwhenever anapplicant has established an interstate route, the establishment of which the commission waswithout 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 andwhether additional services are needed, There should be noassumption that another carrier should be in the field. It must be remembered that the burden Is onthe applicant to plead and showby evidence that existing services are inadequate 

### and that additional facilities or services are needed. Section 

### 8of Article qlla* Railroad Commission v. Shupee, 

### 57 S.W.(26) 295, 73S.W. (2dj 505. Themere 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.

Wenowrefer to contention No. ‘(l), which essentially resolves itself into the question as to whether the proposal to operate at substantially lower fares--attended wepresume with proof to showthat such operation is feasible and possible --may be shown and considered on the issue of convenience and necessity. Areading 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 whenexisting transportation facilities onany highway in this State donot provide passenger service which the Commission shall deemadequate to provide for public convenience on such highway, then such inadequacy of service shall be considered as creating a condition wherein the public convenience andnecessity 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 madeits duty to supervise and regulate the public service rendered by every motor bus company operating over the highways in this State pto fix or approve the maximum, or minimum, or maximumand 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 orRailroad Commission of Texas, page 

### 6 (o-2867)

other reports and of such other data by such motor bus company as the Commission maydeemnecessary. "(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 bemademotor bus companies for the use of such terminal, or termini; provided' that the Commission shall have no authority to interfere.in anywaywith 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 NewJersey, it washeld that an offer to operate at lower fare does not alone establish necessity and convenience, authorizing the grant of a public utility franchise to abus company. In Seaboard Air Line Ry, Co. v. Wells, 130 So. 587? it was observed that "a cheaper rate, as wehave
seen, does not of itself authorize the granting of a certificate."

While weare convinced that the mere offer to render the service at lower fares, standing alone, would not be a sufficient showing of public convenience andnecessity to sustain

a certificate., wehave concluded that in aproper case such an offer -- especially when supported with proof tending to show that operations could be conducted successfully under the reduced fare -- maybe considered by the Commission for what it is worth on the issue of convenience andnecessity. In fact,

as weunderstand 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 andnecessity in affirming the trial court's judgment sustaining a certificate. Fromthat opinion wequote 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. Acomparison 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. Theconcessions board recommended that appellee's proposal beaccepted; and the contract attached to appellee's application for the permit was entered into between appellee and the War Department. Acomparison of the bus services provided by the contract with those proposed byappellant 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 SanAntonio andRouston, 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 upand discharging passengers, and appellee was required to post schedules andprovide for sale of tickets at the ArmyY.M.C.A. under the terms of his contract, and ,these privileges and services were shown to be muchmore convenient for the porscnnel of Randolph Field than the proposed services of appellant, which required themto go off the government post or property, and to board and leave buses on the public highway passing by or through

aportion 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 menand officers to andfrom school in SanAntonio.

"The evidence showed that while appellant mayhave been able to render the additional services, it was neither ready nor willing to do so. AtLeast appellant was given the opportunity by the Randolph Field authorities to propose schedules and rates; but it only proposed tentative andunsatisfactory schedules and rates. Asa 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 dounless there should be such anumber of school children as would be satisfactory to appellant. In determining the adequacy of the additional services demanded byRandolph Pield, the Railroad Commission was also authorized to consider the fact that the WarDepartment had investiga,ted and selected appelllee andhad bycontract 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

Weregard the proposal to furnish free meals as being

apart of the offer to operate at lower fares,

Wewill not consider contention No. (5j, urging that applicant should be~permitted to showthat anewstrata of traffic will be reached, that is, a field composed of poor people unable to pay present fares andwhonowtravel through travel bureal arrangements, as hitch-hikers, etc., and others whoareRailroad Commission of Texas, page 8 

### (o-2867)

nowunable to travel at all onaccount of high fares.

FromRailway Co. v. State, et al, 25.2Pac. 

### 849s by the Supreme Court of Oklahoma, wequoter

"It is held in Choate et al. v. Ill. CommerceCommission, 

### 309 Ill. 

### 248, 141 M.E. 12:

"'That aproposed bus line, serving the sameterritory
as anestablished interurban line, mayaccommodate afew individuals, does not justify a certificate permitting it to operate; the convenience and the necessity which the law requires being the convenience andnecessity of the public,as distinguished from that of an individual, or any number of individuals."'

Tosimilar 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., 140M.E. 

### 56, Illinois Supreme Court.

Nevertheless, until it hears the evidence the Railroad Commission cannot tell the extent to which it maygo. The testimony which maybe adduced in support of these allegations may prove to be trivial andmaynot even tend to showapublic need for the newservice. However, it is at least conceivable that substantial evidence of this nature maybe offered showing a substantial public need. The Commission mayhear this evidence and consider the samefor what, if anything, it maybeworth. It is thought that the showing sought to be madein contention MO. (4) is supplemental to that involved in No. (511 discussed immediately above, and our answer is the sameas to it.

Wenowaddress ourselves to contention MO.

### (6). We have already considered the matter of free meals. Whether there is actually aneed for sleeper coach service over this route, and if so, the extent thereof, can be told only after hearing the evidence. Theproposal to furnish overnight sleeping service between Dallas and Fort Worth on the one hand, andEl Paso

on the other, coupled with allegations that there is a public need and demandfor it, and that such is not nowavailable, to
our minds presents aproper inquiry involving convenience and necessity. Whether such allegations maybe properly sustained is another question. In our opinion the evidence should be andmitted for whatever, if anything, it mayprove to beworth to the Commission.Railroad Commission of Texas, page 9 (O-2867)

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

Yours very truly

ATTORNEY

GENERAL

OFTEXAS
By/s/ Glenn R. Lewis Glenn R. Lewis, Assistant

APPROVED

DEC

### 5, 1940 /s/ Gerald C. Mann ATTORNEY

GENERAL

OFTEXAS

APPROVED:OPINIONCOMMITTEE BY: BWB,CHAIRMAN

GRL:RSrwb