Texas Railroad Commission Oil Gas

The Railroad Commission of Texas is the state agency that regulates the oil and gas industry, gas utilities, pipeline safety, safety in the liquefied petroleum gas industry, and surface coal and uranium mining (despite its name, it no longer regulates railroads). Established by the Texas Legislature in 1891, the commission is the state's oldest regulatory agency.

The agency is headquartered in the William B. Travis State Office Building at 1701 North Congress Avenue in Austin.

Purpose

As is suggested by its name, the Railroad Commission was initially created to regulate railroads, terminals, wharves and express companies within the state. Pipelines were added to the commission's jurisdiction in 1917, followed by the oil and gas industry in 1919 and gas utilities in 1920. It does not have jurisdiction over public utility companies; that falls under the jurisdiction of the Public Utility Commission of Texas.

The East Texas oil field’s discovery sparked a boom in production that sent prices plummeting. After a lengthy battle, the Railroad Commission won the right to limit the production of oil to keep the price of oil from falling too low. Because of this regulation, the commission was important to the national and international energy supply until the 1970s. It also served as a model in the creation of OPEC.

The three-member commission was initially appointed by the governor, but an amendment to the state's constitution in 1894 established the commissioners as elected officials serving overlapping six-year terms. No specific seat is designated as Chairman; the Commissioners choose who among them will serve as Chairman. As of January 2006, the commission’s members are Chairman Michael L. Williams, Commissioner Elizabeth Ames Jones, and Commissioner Victor G. Carrillo. All three members are Republicans.

Effective October 1 , 2005 , the rail oversight functions of the Railroad Commission were transferred to the Texas Department of Transportation. The traditional name of the Commission was not changed despite the loss of its titular regulatory duties.

Court cases involving the Commission

The Shreveport Rate Case, also known as Houston E. & W. Ry. Co. v. United States , 234 U.S. 342 (1914) arose from the Railroad Commission's setting railroad freight rates unequally. Because of the low intrastate rates, shippers in eastern Texas tended to ship their wares to Dallas (in Texas), rather than to Shreveport, Louisiana, despite that Shreveport was considerably closer to much of eastern Texas. The Railroad Commission's (and the railroad's) position was that only the state could regulate commerce within a state, and that the federal government had no power so to do. The Supreme Court ruled that the federal government's ability to regulate interstate commerce necessarily included the ability to regulate intrastate "operations in all matters having a close and substantial relation to interstate traffic" and to ensure that "interstate commerce may be conducted upon fair terms".

The Railroad Commission has also figured prominently in two major U.S. Supreme Court cases on the doctrine of abstention:

• Railroad Commission v. Pullman Co. , a 1941 case in which the U.S. Supreme Court ruled that it was appropriate for federal courts to abstain from hearing a case to allow state courts to decide substantial constitutional issues that touch upon sensitive areas of state social policy.
• Burford v. Sun Oil Co. , a 1943 case in which the U.S. Supreme Court ruled that a federal court sitting in diversity jurisdiction may abstain from hearing the case where the state courts likely have greater expertise in a particularly complex and unclear area of state law which is of special significance to the state, where there is comprehensive state administrative/regulatory procedure, and where the federal issues cannot be decided without delving into state law.

See also

• Oil and gas law in the United States

Bibliography

• William R. Childs. The Texas Railroad Commission: Understanding Regulation in America to the Mid-Twentieth Century. (2005) online review

References

1. ^ "Contact." Railroad Commission of Texas . Accessed August 30 , 2008 .
2. ^ "Week of April 16 - 20, 2001." Railroad Commission of Texas . Accessed August 30 , 2008 .

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