Early on, Texas encouraged railroads to come to the state. From the time of the Republic, building transportation was a policy recognized to attract settlers. But railroads are heavily capital intensive–it took a lot of money to do the necessary grading, buy and install the ties and rails, and purchase the steam locomotives and cars. Since the companies did not want to invest if there was no market–no people and no goods–the state sweetened the pot through land grants, bond issuances, and loans.
In the decades after the Civil War, the people of Texas began to recognize the power railroad companies held. Dirt roads for wagons were rough and short. The state had no navigable waterways. Railroads were the only way to ship materials in and products out.
On February 7, 1853, the Legislature approved, “An Act to Regulate Railroad Companies.” Although much of the early legislation regulating railroads was adapted to control inherent abuses in a monopolistic form of business enterprise, the administration of the laws left a great deal to be desired. Since there was no agency especially created to administer the provisions of the Act to Regulate Railroad Companies, the railroads generally did not comply.
Although the creation of a railroad commission to administer the railroad laws had been recommended as early as 1876, the recommendation was strongly opposed by some interests who considered such legislation hostile and branded the proposals as “injudicious interference with business by legislatures.”
Bills calling for a railroad commission were passed by the House in 1887 and 1889; however, the Senate refused to pass the bills on the grounds of constitutionality. This objection was circumvented by the adoption of a constitutional amendment authorizing the creation of a railroad commission. With the last obstacle out of the way, the Legislature passed an act creating the Railroad Commission of Texas in 1891. The fight for its creation had taken sixteen years. Some say it was the predominant political issue of the time.
In 1893, the Commission was granted statutory authority to regulate issuance of railroad stocks and bonds. In 1894 the constitution was amended to change the office of the three Commissioners from appointive to elective, with six year staggered terms.
When the Commission was founded in 1891, there were some 8,700 miles of track. When the railroads reached their peak in Texas in 1930, there were 17,500 miles. Following World War II, increasingly goods began to travel by truck and people by buses and cars and the miles of track began to shrink.
In 1894, the beginnings of the Texas age of oil were realized by the first major discovery–Corsicana in the east central part of the state. Then it seemed like it was one discovery right after another. The first true boom came from the 1901 Spindletop gusher of Anthony Lucas. Spindletop was not the last of the south east Texas fields. More followed. The next cluster of discoveries was in north central Texas between 1902 and 1920–Petrolia, Electra, and Burkburnett–and, during that same period, and a little further south–Breckenridge and Desdemona in 1918.
In 1917 the Legislature designated oil pipelines as common carriers and, more importantly, gave jurisdiction to the Railroad Commission which was already regulating a transportation industry–the railroads. By 1919, the Commission was also granted jurisdiction over oil and gas production. It was at that date the Oil and Gas Division was created.
Regulation did not truly take hold until the 1930s. Since then, the Railroad Commission has held a leading role in the regulation of oil and gas, one that has been recognized throughout the world. The state still produces more oil and gas than any other state. Indeed, if Texas were a nation, it would rank as one of the top fifteen producers in the world. Today, there are some 241,000 active oil and gas wells which produce an average of some 1.7 million barrels of oil a day and 11.5 BCF (billion cubic feet) of gas a day. The Commission’s Oil and Gas Division tracks that production and ensures that it follows allocations that are calculated each month. In addition, through its ten district offices, field inspectors visit the wells and facilities across the state to ensure compliance with Commission rules and regulations. Increasingly important, the division works to ensure that the water resources of the state are protected from damage by oil and gas field activities.
Over recent decades, the role of the Railroad Commission in the regulation of railroads changed, moving from economic regulation to safety regulation. The Federal Railroad Safety Act of 1970 vested rail safety responsibilities in the Federal Railroad Administration. In 1983, the Railroad Commission began a cooperative process with the federal government, implementing a rail safety program. The Rail Safety and Planning section of the Transportation/Gas Utilities Division monitored the state’s rail lines, inspecting railroad equipment, operations, and track. This section also maintained the state’s rail planning program and oversaw the use of federal funds for track rehabilitation projects.
Under provisions of the 1980 Federal Staggers Rail Act, the Railroad Commission recognized that it could hold only a passive role in rate setting. In 1984, the Railroad Commission ceased its historic role in economic regulation of the Texas rail industry.
Effective October 1, 2005, the 79th Legislature in HB 2702 transferred the remainder of Railroad Safety oversight from the Railroad Commission to the Texas Department of Transportation, leaving the Commission with no regulatory authority related to any aspect of the rail industry.
