..
OFTEXAS
Auemm. TEXAS 78711
dOaN I,. aILL
Awl-ORNEY GENERAL
July 29, 1977
Honorable Mack Wallace, Chairman Opinion No. H-1030
Railroad Commission of Texas
P. 0. Drawer 12967 Re: Authority of Railroad
Austin, Texas 78711 Commission to prohibit con-
tract provisions limiting
the liability of an LPG
dealer.
Dear Mr. Wallace:
YOU have requested our opinion concerning the authority
of the Railroad Commission to modify, delete, prohibit, or
otherwise regulate the terms and conditions of an equipment
rental contract between a licensed Liquified Petroleum Gas
(LPG) dealer and a lessee customer. You specifically ask
about such contract terms which purport to limit the liability
of a licensed LPG dealer for negligence.
Section 3A of article 6066d, V.T.C.S., provides:
General. The Railroad Commission of
Texas is hereby authorized, empowered,
and directed, and it shall be its duty
to promulgate and adopt, in accordance
with this Act, adequate rules, regula-
tions, and/or standards pertaining to
any and all aspects or phases of the
LPG industry (except as provided in Sub-
section D. of this Section) which will
protect or tend to protect the health,
welfare, and safety of the general public.
The Commission is granted jurisdiction to regulate "any and
all aspects or phases of the LPG industry" in the interest of
public health, welfare, or safety. Thus the Commission may
regulate terms and conditions of such rental contracts at
least to the extent that they may affect the public health,
welfare or safety.
P. 4252
Honorable Mack Wallace - Page 2 (H-1030)
It has been suggested to us that the court's opinion in
Spence & HOwe Construction Co. v. Gulf Oil Corp., 365 S.W.2d
631 (Tex. 1963). rndicates
' that there is no connection be-
tween clauses which limit liability and negligent conduct.
However, as we read the decision, the court was merely stating
that the connection was insufficient to mandate a general rule
of public policy which would preclude the enforceability of
such provisions in all instances. While the court noted the
lack of any distinction between indemnity clauses in a commer-
cial contract and common insurance policies on behalf of pri-
vate citizens, the opinion falls short of finding that there
is no connection between indemnity clauses and negligent con-
duct. The courts found such a connection in G., C. & S. F.
Ry. v. McGown, 65 Tex. 640 (1886), and Bisso v. 'Inland
~~~Water-
ways Corp 349 U.S. 85 (1955). Furthel,..-
more, as in Allright,
Inc. v. Eiiedge, 515 S.W.2d 266 (Tex. 1974 ), the court in Spence
was dealing with a standard of ordinary care.
As stated in Robert R. Walker, Inc. v. Burgdorf, 244 S.W.2d
506, 509 (Tex. 1951):
From those who handle . . . combustible
gases . . . the law exacts a duty to pro-
tect the public which is proportionate
to and commensurate with the damages in-
volved.
Thus, LPG dealers are bound to exercise a "high degree of
carei to protect the public. Farmers Butane Gas Co., Inc. v.
Walker, 489 S.W.2d 949 (Tex. Civ. App. - Waco 1973, no writ).
The protection of the public is the clear intent behind arti-
cle 6066d.
Since, in our view, the use of equipment rental contract
terms which limit the liability of LPG dealers for negligence
or provide for indemnification thereof by their customers could
have an adverse affect upon the public safety in light of the
standard of care required of LPG dealers, we believe the Rail-
road Commission has clear authority to regulate or prohibit
such terms.
We believe these indemnification clauses are void and un-
enforceable as a matter of law since LPG dealers are charged
with a dutv of safetv on behalf of the public and the term
relates to-negligence in the performance of this duty to the
public. Western Union Telegraph Co. v. Linn, 26 S.W. 490
P. 4253
Honorable Mack Wallace L.Fage 3. ',(H-1030)
(Tex. 1894); G., C. & S. F. Ry. Co;, vCi?Gown, supra; Lone Star
Gas Co. v. Vea, 37m2d 89 ( . .,'~ hpp. -- East'land 1964,
writ ref'd n.r.e.): Dittman v. City of~N:w Braunfels, 48 S.W.
1114 (Tex. Civ. App.18 99, no writ): Restatement of Contracts
S 575, cited in Spence & Howe Construction Co. v. Gulf Oil Corp.,
supra at 633, and Crowell v. Ho
495 S.W.Zd 887, 889 (Tex. 1973)
vice Co., 85 S;E.Zd 169 (Ga.
Conun. Code, S 2.719; Northwe E
Inc., 351 F.2d 253 (9th Cir.
versity of California, 383 P .
County of Missoula, 517 P.2d
Furthermore, the terms of contracts executed subject to
the regulatory authority of the Railroad Commission are not
protected from the jurisdiction of the Commission by article
1, section 16. Houston Lig
Commission of Texas, 529 S.
v. Lo-Vaca Gathering Co., 5
El Paso 1976, writ ref'd n.r.e.); Railroad Commission of Texas
(Tex. Civ. APP.
A, 358 U.S. 33
'.2d 973 (Tex. Civ .
#one Star Gas Co.,
writ ref'd) -'d
on other grounds, 304 U.S. 224 (1938). -See Letter Advisory
z. 136 (1977).
SUMMARY
The Railroad Commission may act to pro-
hibit the use of indemnity terms within
existing and future equipment rental con-
tracts between a licensed LPG dealer and
its lessee.
Attorney General of Texas
L/$
DAVID M. KENDALL, First Assistant
P. 4254
Honorable Mack Wallace - Page 4 (R-1030)
C. ROBERT HEATH, Chairman
Opinion Committee
klw
p. 4255