A federal agency has ruled that Texas cannot regulate freight rates for goods shipped from a Texas warehouse to other points in the state if the warehouse is essentially a stopover for a shipment that began in another state.
The decision by the Interstate Commerce Commission in a trucking case involving a carpet manufacturer means potentially lower rates for many shippers.
The decision, issued April 3, also puts the ICC at odds with Texas and other states that claim such shipments are intrastate shipping and therefore not subject to federal regulation.
William P. Jackson, attorney for the carpet maker, called the ruling "a landmark decision in that it strikes down burdensome state regulation. It declares the primacy of interstate regulation."
The issue is money. Trucks moving in largely unregulated interstate commerce often charge lower rates than trucks moving in intrastate commerce, where -- in many states -- entry still is limited and rates still are set by regulators rather than by competition.
Intrastate shipping charges within Texas generally averaged 38 percent higher than interstate shipping charges for the same routes, according to an attorney for Armstrong World Industries, which brought the proceeding before the ICC.
E&B Carpet Mills, a division of Armstrong, began shipping carpet in late 1984 from its plant in Dalton, Ga., to a warehouse in Arlington, Tex., just outside of Dallas, according to Jackson. He said the company hired an interstate carrier to haul the carpet from Arlington to other points within Texas, but that this arrangement was challenged by Texas authorities.
After the state challenged Armstrong's choice of carriers, the company sought a declaratory judgment from the ICC that its shipments were interstate, he said. The Texas Department of Public Safety still is seeking an injunction against Armstrong and Reeves Transportation Co. of Georgia, the carrier, and fines of over $20,000, according to Jackson.
"I'm certainly hopeful that the Department of Public Safety and the state attorney general's office would not find this decision to be, in any way, an obstacle to proceed with this enforcement action," said Michael James, director of transportation for the Texas Railroad Commission, which regulates trucking within the state.
James said the Railroad Commission had registered its views with the ICC that all shipments except those that went to the warehouse already consigned to another destination were subject to state regulation. In doing so, the state agency was not conceding federal jurisdiction, just keeping the record straight, he said.
James said the Armstrong case has many parallels in Texas, generally the most tightly regulated state in terms of trucking. "Texas is still not a manufacturing state for many, many types of goods," he said. "A great many goods do come into distribution points" for further distribution within the state, he said.