Railroad Commission of Texas v. City of Austin

Decision Date10 July 1974
Docket NumberNo. 12169,12169
Citation512 S.W.2d 345
PartiesRAILROAD COMMISSION OF TEXAS et al., Appellants, v. CITY OF AUSTIN et al., Appellees.
CourtTexas Court of Appeals

John L. Hill, Atty. Gen., Rex H. White, Jr., Asst. Atty. Gen., Austin, for appellant Railroad Commission.

W. Robert Brown, Liddell, Sapp, Zivley & Brown, Frank J. Knapp, Butler, Binion, Rice, Cook & Knapp, Houston, Keys, Russell, Watson & Seaman, Hayden W. Head, Jr., Head & Kendrick, Corpus Christi, J. I. Worsham, Worsham, Forsythe & Sampels, Dallas, Dan Moody, Jr., Graves, Dougherty, Hearon, Moody & Garwood, Austin, for appellants.

Tom R. Scott, Bullock & Scott, Midland, and Charles G. King III, Bracewell & Patterson, Houston, for intervenor-appellants.

Don R. Butler, City of Austin, C. C. Small, Jr., Small, Craig & Werkenthin, Austin, and Jon C. Wood, San Antonio, for appellees.

PHILLIPS, Chief Justice.

The question presented by this appeal is whether the Railroad Commission of Texas has jurisdiction under Articles 6050 et seq., Vernon's Annotated Civil Statutes, to inquire into the effect on the public interest of transactions under which Lo-Vaca Gathering Company, a gas pipeline utility, is diverting substantial amounts of its reserve gas supply by entering into contracts with specific customers prior to and during periods when it is unable to fulfill its delivery obligations to the cities of Austin and San Antonio and to the Lower Colorado River Authority and, if the public interest so requires, to apportion the gas involved in such transactions among these cities and the Lower Colorado River Authority.

The Railroad Commission denied its authority to apportion the gas as requested by Austin, San Antonio, and the Lower Colorado River Authority and dismissed their application for want of jurisdiction.

On trial to the district court, the court reversed the Commission and ordered the application reinstated holding that the Railroad Commission has jurisdiction under Articles 6050 et seq., V.A.C.S., over all agreements, commitments, obligations, and transactions of a gas pipeline utility which affect its ability to discharge its obligations as a gas pipeline utility; hence, the Commission has jurisdiction to consider on its merits the application of the cities and the Lower Colorado River Authority and to determine whether or not the matters complained of therein adversely affect the public interest and the Utility's ability to serve the public.

The Railroad Commission, represented by the Attorney General, and a number of intervenor corporations, 1 then perfected their appeal to this Court. We affirm the judgment of the trial court.


The caption of the Cox Act (now Art. 6050 et seq., V.A.C.S.) describes the law as: 'An Act defining and declaring certain natural gas pipe lines and business public utilities as virtual monopolies and subjecting same to the power and jurisdiction of the Railroad Commission of Texas to regulate and enact rules, regulations, orders and decisions for the government and conduct of the business of the same . . .' Acts 1920, 36th Leg., 3d C.S., ch. 14, p. 18.

Sec. 2 of the original Act states: 'It is declared that the operation of gas pipe lines to which this Act applies for buying, selling, transporting, producing or otherwise dealing in natural gas is a business which in its nature and according to the established method of conducting the business is a monopoly, in the mode of the conduct of which the public is interested, and as such is subject to regulation by law . . .' (Art. 6051)

The present Act (Art. 6050 et seq., V.A.C.S.) specifically declares that all orders and agreements of any such gas utility establishing and prescribing prices, rates, rules and regulations and conditions of service are subject to review, revision and regulation by the Commission and contains an unequivocal prohibition against discrimination by such gas utilities against any person, place or corporation either in apportioning the supply of natural gas or its charges therefor. (Arts. 6054, 6057)

It requires the Commission to '. . . establish fair and equitable rules and regulations for the full control and supervision of said gas pipe lines and all their holdings pertaining to the gas business in all their relations to the public . . .' (Art. 6053, sec. 1)

Article 6053 directs the Commission to '. . . regulate and apportion the supply of gas between towns, cities, and corporations, and when the supply of gas controlled by any gas pipe line shall be inadequate, the Commission shall prescribe fair and reasonable rules and regulations requiring such gas pipe lines to augment their supply of gas . . .' (sec. 1)

No statement of the law could be clearer. In Trimmier v. Carlton, 2 Judge McClendon, speaking for this Court, stated that where there is nothing to indicate that the legislature did not intend exactly what it said, its language is to be literally construed. The directive is simple, the mandate plain. The Railroad Commission has no recourse but to comply.

The Cox Act as enacted in 1920 set the pattern for the regulation of gas utilities by the State. Section 1 of Article 6053 derives from Section 3 of the Act of 1920, and was placed in its present form as amended by the Legislature in 1939. (Acts 1939, 46th Leg., p. 501, Sec. 1.) At that time gas was plentiful and, in many instances, was being flared and wasted into the atmosphere throughout the State of Texas. It is, perhaps, an interesting aside that the wisdom of the Legislature in enacting Articles 6050 et seq., V.A.C.S., was prophetic of the fact situation presently confronting the appellees in this case.


The Railroad Commission, as appellant, joined by the intervenor corporations, have assigned error to the judgment of the trial court by a multitude of points, all of which we overrule. For the purposes of this opinion, these points can be divided into several principal questions.

First comes the question concerning certain gas contracts entered into between Lo-Vaca Gathering Company and the other intervenor corporations. Here the complaint is made that pursuant to the abovementioned contracts title to the gas is in certain of the intervenors and that the judgment of the trial court erroneously clothes the Commission with authority to determine the legal question of title and to abrogate the contractual rights attendant thereto.

An examination of the contracts discloses that, in the main, each transaction is still executory on the part of Lo-Vaca and contains future service conditions performable by the Lo-Vaca pipeline system to deliver the gas involved. These transactions fall into three categories: first, transactions where Lo-Vaca had certain specific gas reserves under contract and agreed to sell the gas from such reserves exclusively to a particular party; second, transactions whereby Lo-Vaca had control of certain specific gas reserves which it could have had for the benefit of all its customers but which, for substantial fees, were channeled exclusively to particular parties; third, transactions where Lo-Vaca bought and paid for volumes of gas under so-called 'banking' arrangements which called for redelivery to particular parties of equivalent volumes out of its general system.

Under each of these transactions nothing more has taken place than the segregation of specific reserves for the special benefit of a particular customer. We cannot accept intervenors' contention that, because these transactions take the form of 'assignments' or 'sales' of reserves, the parties have put this gas beyond the reach of the curtailment jurisdiction of the Railroad Commission. This would allow the intervenors to allocate to themselves significant portions of these reserves for their own exclusive benefit. When such transactions impair Lo-Vaca's ability to serve its general system customers, the impermissible discrimination appears which requires regulation by the Commission.

We are well aware that the...

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2 cases
  • Railroad Commission of Texas v. City of Austin
    • United States
    • Texas Supreme Court
    • March 5, 1975
    ...San Antonio and the LCRA concede that the Commission has no power to determine the title to the gas. The Court of Civil Appeals affirmed. 512 S.W.2d 345. Our judgment is that for the reasons set out below the Commission did not err in dismissing without prejudice its Docket The Court recogn......
  • Texas Water Com'n v. City of Fort Worth
    • United States
    • Texas Court of Appeals
    • March 2, 1994
    ...LoVaca Gathering Co., 535 S.W.2d 722, 725 (Tex.Civ.App.--El Paso 1976, writ ref'd n.r.e.); see also Railroad Comm'n v. City of Austin, 512 S.W.2d 345, 348-49 (Tex.Civ.App.--Austin 1974), rev'd on other grounds, 524 S.W.2d 262 (Tex.1975). Fort Worth concedes that Arlington could seek relief ......

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