Railroad Commission of Texas - Court Cases Involving The Commission

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.