**OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN**  **QDULOCMucl4 ’**  **-.-** 

# ;,

*/,,I’ ryo 1 ,. , 9 A

Eonorebla ?;illIem 1. Kerr : District Attorney Feccrs, Texas /--J-l\
**Dear** Sir:

**a 8**  **tru.etae**
e Board of DI**d** 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 ngthat poaaesalrm and poa3 eesacry right6 should Raantoa bank as trustee upon default in obligation; andi 1

Honorable %‘IllIa~ L. Kerr, Pago 2

“(b) AsBurnIngthat 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 Impoundedwater, hed pasrredto a bankaa truetee.
n

. . . *The said dlstriot, acting byIta off ’icera, oxeouted a **trust** indenture by the terms of whloh auoh dlatrlct sold, oonvsyed, assigned, traneferred and oonfirmed unto the **truates** therein namedforty-three parcels of land (the reservoir site.), Its permit No. 1217 to appropriate unapproprlatsd waters of the PeoorrRiver, g Ita hydro-eleotrlo plant, tra:namiaaIon line@, etc., and
kk ::: “‘All other propertlea’, real personal or nixed

andall 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 anddelivered 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 awater power control dlstrlot to ‘pledge and ilx a lien (on) andmortgage any property* etc.” The only quarrtlon with whIohyou could bs ooncsrned, andthe only question wblch will be treated In this opinion, Is the right of tho El FRAONstlozal Bank, El Paso, Texas, a8 **trustee,** to enforoe the reasonable rules andregulation6 as promulgated by the Board of Direotora or the Rsd Bluff Rater Power Control Dlatrlct. Therefore, maywerestate **your ques**  tion to road:

Kaythe 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&s3

Shortly after the receipt of the opinion **requoat** from Ronorable Robert D. Fenn, **County** Attorney of Reeves County, Pecos, T8xa8, this Dopertment received avery 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, maywe quote from tho brief 0r **Burges, z3urgse**  **E<**Scott. OSfollows:

,P. “The fed Bluff dam, reeorvolr, lrrlgatlon 

### ena

power eyatems represent an investment ofi more than twc millions of dollars. ThOprOjeOt ti3BCOnStNOtCPd with the proceeds of three bend **issue a.**  Fractlcnlly all of these bonds art) held by thenReconstruction Flnanoe Corporation. Thefirst **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 Incomeof tho .DistrIct, **while** the aboond and third lsau86are tax obligations. , . .

“ITIor to January 1940 **the** RedBluff 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 demandthat poasesclon cf **tho** D~strlctqs lxopertles be delivered to the Trustee. Such demandWRSmade, and **abwt** January 11, 1940, the Directors of the District voluntarily surrendered poaaaaeion. Since that time tho Dlotrlct ,h:arb8en oporatsd by the **Trustee** under the direction cf the Eeconetruction Finance Corporation, end hr. J. D. Shnw1s in active mnnaf;emanta8 the Trustoe’s Agent.

. . :( A3ii?~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 or**ohcr&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 andrecreation. Themanagementand 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 amendment8thereto.” :?‘aare not paBalng upon the valldlty of the El Fasb Natlonel Far&‘8 title to the phyaioel property of the Red Muff Yeter PowerControl 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~eaand regulations aa promulr,ated by the district, The district, as created by the Leglalature, is e governmental agency, abody polltic, and oor.?orate, and (1sBuch, ezrclses such governmental functlone as conferred upon It by law.

. .

TheEank, by acqulrlng <he phyalcal propartiea of ,/-‘ the dl,etrlct, would not beoome **the** district ner would ft ecqulre the official authority conferred uponthe Board of Dlreotors of the district by the Legljlature of the State. If andwhenthe property la taken over by, end is being operated by the Bank, oaid proporty oeesos to be public or State property, andbecomes the privrte property of the Beuic, and as 8uch, mulrtbe 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, whenthey 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~lore respeotfully advised t%.%tit la the opinion or thle DepRrtmentthat the rules andregulations 8s promulEatsd by the Board or Directors of the RedEluff ~Xater PowerControl District my ntitbe enforced by the El foao Xatlonal Bankas 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

C3TS

DBD:BiJB