OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

QDULOCMucl4 

’ -.- 

;, 1 */,,Iryo ’ 

,., 9 A 

Eonorebla ?;illIem 1. Kerr : 

District Attorney 

Feccrs, Texas /--J-l\ 

Dear Sir: 

a 8 tru.etae 

e Board of DId Bluff fi’ater 

1940 you rendered 

Yy inqdry then wa6 

nortgace b'; 

o tho rights of ouch district to give a 

the terms or whloh all property, including 

right to Impound, store and distribute water, .wes 

plodged to secure the pa-lnent of bond obllgatlona, 

ths sold nortgaee provld 3 ng that poaaesalrm and poaeesacry right6 should Raan toa bank as trustee upon 

default in obligation; and 
i 

1 

Honorable %‘IllIa~ L. Kerr, Pago 2 

“(b) AsBurnIng that such right would exist and 

that on derault a bank could euooeed to all rights 

or suoh dlstriot, then would the reaoonable rules 

and regulations of the district prevell and under 

euoh reasonable rules and regulations OGuld oriminal 

proseoutlon be conducted where the subject matter oi 

auoh ruloa, phyaloal property and Impounded water, 

hed pasrred to a bank aa truetee. 

n 

. . . 

*The said dlstriot, acting by Ita off’icera, oxeouted a trust indenture by the terms of whloh auoh dlatrlct sold, oonvsyed, assigned, traneferred and oonfirmed unto the truates therein named forty-three parcels of land (the reservoir site.), Its permit No. 1217 

to appropriate unapproprlatsd waters of the Peoorr River, 

g 

Ita hydro-eleotrlo plant, tra:namiaaIon line@, etc., and 

kk ::: 

“‘All other propertlea’, real personal or nixed 

and all right8 of way, franchises, water rights 

and In faot everything oonneotod with the proper- 

-7.~ ties and system of the eald dIstrIot.c 

“The said Instrument was exoouted and delivered to 

seoure and Inaure the payment of a bond Iesue therein 

dssorlbed, and, I as8um, was executed under the authority or apparent authority of Article 76076, Sections 20- 

21 and ZlB, whloh authorized a water power control dlstrlot to ‘pledge and ilx a lien (on) and mortgage any 

property* etc.” 

The only quarrtlon with whIoh you could bs ooncsrned, 

and the only question wblch will be treated In this opinion, 

Is the right of tho El FRAO Nstlozal Bank, El Paso, Texas, a8 

trustee, to enforoe the reasonable rules and regulation6 as 

promulgated by the Board of Direotora or the Rsd Bluff Rater 

Power Control Dlatrlct. Therefore, may we restate your question to road: 

Kay the raaaonable rulee end regul.ations ae 

promulgated by the Board of Directors of ths Red 

Bluff Water Fower Control Dietriot be enforced by 

the El Peso National Bank, gl:PBao, Texas, truates? 
. . 74 

Honorable ?!illlam 1.. Kerr, Pa&s 3 

Shortly after the receipt of the opinion requoat 

from Ronorable Robert D. Fenn, County Attorney of Reeves 

County, Pecos, T8xa8, this Dopertment received a very exhaustlve brief rron the law firm, Rurpes, Burgea & Soott, 

Attorneys at Law, 21 Paso, Texns, on the !;uestIon aa to whather or not the rules and regulationa as ‘promulgated by the 

Board of Directors of the district could form the baols of a 

orimlnal proseoutlon. (@pinion ho. o-S.414). 

For additional facts, may we quote from tho brief 

0r Burges, z3urgse E< Scott. OS follows: 

,P. 

“The fed Bluff dam, reeorvolr, lrrlgatlon ena 

power eyatems represent an investment ofi more than 

twc millions of dollars. ThO prOjeOt ti3B COnStNOtCPd 

with the proceeds of three bend issue a. Fractlcnlly 

all of these bonds art) held by then Reconstruction 

Flnanoe Corporation. The first is,%8 of bonds IB secured by a pledge of all the proparties of the Dlstrlct, as well as the tax revenuea and all other Income of tho .DistrIct, while the aboond and third lsau86 are tax obligations. , . . 

“ITIor to January 1940 the Red Bluff DIatrIct had 

defaulted in the payment of both prinolpal and Interest on tho bonds held by the lioconstructlon l?I.nance 

Corporation. Acting’ under the term6 and ~rovislons of 

the indenture seauring the rirst bond lesue for ;‘1,050,- 

ooo.co, the Reconetructlon Finance Corporation requested 

the 21 t’asc Natlcnal Rank, Trustee under the indenture, 

to demand that poasesclon cf tho D~strlctqs lxopertles 

be delivered to the Trustee. Such demand WRS made, and 

abwt January 11, 1940, the Directors of the District 

voluntarily surrendered poaaaaeion. Since that time 

tho Dlotrlct ,h:ar b8en oporatsd by the Trustee under the 

direction cf the Eeconetruction Finance Corporation, 

end hr. J. D. Shnw 1s in active mnnaf;emant a8 the Trustoe’s Agent. . . :( 

A3 ii?~s ?olnted out in cur CDlnInn O-2414: 

nurrl*‘By Article 1%, SootIon 50 of tha Conntitutlon, 

the Legislature IR empowsred to authcrlze 

gadizkon of public or qussi-public cor.ooratIons 

the orohcr&ed vAth*the duty cf securing to 611 tbo Deopls all 

r” cf the bonoflts of conservstlcn, protectlr.~ rl.psr1a.n 
,-.Zonorable ::illlom 1,. Kerr, Page 4 

rights, if any exist, while saving the water8 thrt 

wculd othervilee be lost, and et the same time aecurlne to all of the people of the State the rlghts of 

flshlng and recreation. The management and control of ’ 

t.heas public or quasi-pub110 oorroretlcne Is vested 

eolely in e Board of Directors eleoted by the quallfled vcters of the terrltoky wherein such dlstrlot Is 

located. Chapter 2, Title 1X?, Vernon’e Civil Statutes, and amendment8 thereto.” 

:?‘a are not paBalng upon the valldlty of the El Fasb 

Natlonel Far&‘8 title to the phyaioel property of the Red 

Muff Yeter Power Control Dlatrict, but conceding, for the 

sake or the question, that the Dank’s title to said property 

Is volld in every respeot, nevertheless, the ilank ,*ould be unable to enfcroe the rul~ea and regulations aa promulr,ated by 

the district, The district, as created by the Leglalature, 

is e governmental agency, a body polltic, and oor.?orate, and 

(1s Buch, ezrclses such governmental functlone as conferred 

upon It by law. 

. . 

The Eank, by acqulrlng <he phyalcal propartiea of 

,/-‘ the dl,etrlct, would not beoome the district ner would ft ecqulre the official authority conferred upon the Board of Dlreotors of the district by the Legljlature of the State. If 

and when the property la taken over by, end is being operated 

by the Bank, oaid proporty oeesos to be public or State property, and becomes the privrte property of the Beuic, and as 

8uch, mulrt be operated a8 any other privete enterprise. To 

permit a private enterprise to enforoe rules end regulations, 

the violations cf which would constitute ,a penal offense, would 

amount to nothing lees than claee leglslatlon, which 1s In dl- 

’ rect contravention of Article I, Section 3, cl the Conotltutlon 

of ‘Iexas, which provides: 

“Section 3. hll rrea rzen, when they form a so0101 compact, have equal righta, and no mm, or set 

of non, Is sntltled to exclusive, separate public 

emolument.8, or privileges, but in conalderetfon of 

public aervicen.” 

Therefcre , yc~l ore respeotfully advised t%.%t it la 

the opinion or thle DepRrtment that the rules and regulations 

8s promulEatsd by the Board or Directors of the Red Eluff ~Xater 

Power Control District my ntit be enforced by the El foao Xatlonal Bank as trustee. 
Ronorabla ~i.llim L. Kerr, Fage 5 

I 

; : 

Trustlxq that this disposes of your InWirY, we 

main 

Paws very truly 

itT'.RRNBy GEX'ERAL C3 TS 

DBD:BiJB