[1] Established by the Texas Legislature in 1891, it is the state's oldest regulatory agency, and began as part of the Efficiency Movement of the Progressive Era.

With an annual budget of $79 million, it now focuses entirely on oil, gas, mining, propane, and pipelines, setting allocations for production each month.

It could set rates, issue rules on how to classify freight, require adequate railroad reports, and prohibit and punish discrimination and extortion by corporations.

I regard it as essentially foolish and essentially vicious.”[7] Clark lost the 1892 election to Hogg, but federal judge Andrew Phelps McCormick granted an injunction preventing the TRC from enforcing compliance and seeking to prosecute or recover penalties from railroad companies the same year;[8] the decision was overruled by the United States Supreme Court in 1894.

However, the railroads did not have rates high enough for them to upgrade their equipment and lower costs in the face of competition from pipelines, cars, and trucks, and the Texas railway system began a slow decline.

He believed that the agency should pursue two main goals: to protect consumers from unfair railway practices and excessive rates, and to support the state's overall economic growth.

To find the optimal rates that met these goals, he focused the TRC on the collection of data, direct negotiation with railway executives, and compromises with the parties involved.

Because of the expense involved, Texas railroads often allowed wealthier blacks to mix with whites, rather than provide separate cars, dining facilities, and even depots.

In the 1940s, the railroad commission's enforcement of segregation laws began collapsing further, in part because of the great number of African American soldiers that were transported during World War II.

The traditional TRC policy of negotiating compromises failed; the governor was forced to call in the state militia to enforce order.

Texas oilmen decided they preferred state to federal regulation, and wanted the TRC to give out quotas so that every producer would get higher prices and profits.

[15] As late as the 1950s, the TRC controlled over 40% of United States’ crude production, and approximately half of estimated national proved reserves.

[16] Gordon M. Griffin, chief engineer of the TRC during World War II, developed the formula for prorationing to keep production flowing for the military.

Within the oil and gas industry, it took into account production in other states, in effect bringing total available supply (including imports, which were small) within the principle of prorationing to market demand.

[24] Effective October 1, 2005, as a result of House Bill 2702,[25][26] the rail oversight functions of the Railroad Commission were transferred to the Texas Department of Transportation.

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: The commissioners are elected in statewide partisan elections for six-year terms, with one commission seat up for election every two years.