TEXAS COURT CONTRADICTS AGENCY CARPET RULING

TEXAS COURT CONTRADICTS AGENCY CARPET RULING

A Texas state court said carpets trucked between points within the state but originating elsewhere are subject to Texas transportation laws, contradicting an important 1986 ruling by the Interstate Commerce Commission.

The District Court of Travis County barred Reeves Transportation Co., a truck line, and E&B Carpet Mills, a division of Armstrong World Industries Inc., from moving certain shipments within Texas until Reeves obtains motor carrier operating authority from the state.William P. Jackson, an attorney for Armstrong, said the company would appeal the decision to a higher Texas court.

The case involves a technical, but crucial, interpretation of what constitutes interstate transportation. After the trucking industry was substantially deregulated in 1980, interstate freight rates became subject to greater competition. But many states, including Texas, continued to regulate trucking, which kept intrastate rates higher than interstate prices.

As a result, shippers on several occasions have asked the ICC to classify contested freight movements as interstate, rather than intrastate, shipments to allow them to take advantage of the lower rates.

The Armstrong case involves the shipment of carpets from a Dalton, Ga., factory for ultimate delivery to customers in Texas. The carpets, however, were delivered first to a company warehouse in Arlington, Texas, where they remained for 30 days to 90 days before moving to other Texas locations.

Armstrong says the transportation is part of a continuous movement from Georgia to Texas, moving under a storage-in-transit provisions, and qualifies as interstate freight.

Texas maintains that movements from the Arlington warehouse to final delivery points inTexas are separate hauls and should be subject to state transportation rules.

The Travis County court sided with the state and enjoined Reeves and Armstrong from continuing the service.