### THE ATTORNEY GENERAL OF TEXAS

August25,1988

JIM MATF~x ATTORNEY ORNERAI.

Honorable Jim Hightower Opinion No. JR-946 Commissioner ofAgriculture P. 0. Box 12847 Re: Authority of the legislaAustin, Texas 78711 ture to transfer funds from the Produce Recovery Fund Board into the General Revenue Fund (RQ-1377)
DearMr. Hightower:
An act of the 69th Legislature provided forthe transfer of $337,348 from the Produce Recovery Fund (hereinafter "the fund") to the General Revenue Fund at the end of the 1986-1987 fiscal year. Acts 1986; 69th Leg., 3dC.S., ch. 16 (hereinafter "S.B. 6"). You askwhether the legislature had authority tomake such transfer.
The Produce Recovery Fund isa "special trust fund" established byActs 1977, 65th Legislature, chapter 386 (now chapter 103 of the Agriculture Code) for the payment of claims against commission merchants and retailers licensed by the Department ofAgriculture to "handleV*vegetables and citrus fruit under chapters 101and 102 of the code. The fundprovisions replaced aprior requirement that licensees be bonded. The fund * maintained "administeizd by the "with the state treasurer" and department, without appropriation." License renewal fees and late license renewal feesunder sections lp1.008 and 102.008, fees levied against licensees specifically for the fundunder section 103.001, and fifty percent of penalties assessed under sections 101.020, 102.021 and 103.013, go into the -fund. Interest earned on suchmoney stays inthe fund. Section 103.002(e). Section 103.009 provides that ifthe department pays from the fund aclaim against a licensee, the licensee shall reimburse the fund on a schedule to bedetermined by rule of the department. Section 103.002(d) provides that no

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more than ten percent of the fundmay be eYended in any year for administration of the claims process. According to information given inyour request, the $337,348 dollars transferred from the fundby S.B. 6 was part-of an approximate $525,000 surplus remaining in the fund at the end of the 1986-1987 fiscal year. Section 103.008 provides in subsection (e):

Payments from the fundduring a fiscal year may not exceed the amount of money deposited into the fund during that fiscal year, except that surplus funds remaining at the end of each fiscal year are available for thepayment of claims during any succeeding year. Section 1of Senate Bill 6,however, provided in part that "this Act supersedes' any law restricting the expenditure of [the transferred funds] to a particular purpose." The Produce Recovery Fund is not a Qconstitutional fund," and is thus not subject to the provision of Texas Constitution article VIII, section 7that "[t]he legislature shall not have power toborrow, or inanymanner divert 

### from itspurpose, any special fund thatmay, or ought to, come into the Treasury." Gulf Ins. Co.v. James, 185 S.W.Zd 966 (Tex. 1945); Brazes River Conservation and Reclamation pistrict v.McGraw, 91 S.W.2d 665 (Tex. 1936).
Your request letter and the letter we have received from the Comptroller*s office in connection with your request both suggest that resolution of the question whether the Produce Recovery Fund is in fact a "trust fund" should be dispositive ofyour question as to thepropriety of the Legislature's diversion of the $337,348 from the fund to the General Revenue Fund.
However, as Attorney General Opinion JM-539 (~1986) stated: [E]ven inthe case of a statutory trust fund,

the Texas Supreme Court has ruled that, so

1. You do not ask, andwedo not address, any question as to the constitutionality of the Produce Recovery Fund.

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lona as no vested riaht is imnaired. an amendment that serves to alter or reduce a benefit heretofore aranted bv statute is mssible. (Emphasis added.)
CLv of Dallas v. Tram 101 S.W.2d 1009 (Tex. 1937). Es&& Woods v. Reu I218A.W.2d 437 (Tex. 1949): Board g Pension Board of the Pension Svstem for the Citv ofHouston, 449 S.W.2d 33 (Tex. 1970); Devon v. Citv of SanAntonio, 443 S.W.2d 598 (Tex. Civ.App. -Waco 1969, writ ref'd); and Attorney General Letter Advisory No. 5 (1973). Clearly, novested rightswill have been impaired by the S.B. 6diversion unless anduntil the fund is actually depleted, and then only to the extent that the fund's depletion and consequent insufficiency formeeting claims6iz attributable to the diversion of fundmoneys by S.B. . Your request letter indicates, however, that the fund is stillviable, having abalance of approximately $141,600 as ofWarch 8, 1988, the date ofyour request. Neither your request nor the comptroller's letter discuss whether any vested rights have been or will be impaired by the S.B. 6diversion. Given the highly speculative nature of any argument that actual claimants* rights might eventually be impaired byvirtue of the S.B. 6transfer, we decline to hypothesize circumstances under which such impairments might occur or to rulewhether the S.B. 6transfer was unlawful as a result of such atpresent only potential impairments ofvested rights.
You also ask:
Ifthe legislature does have the authority tomake such a transfer, and the Fund is depleted, what isthe Board's responsibility as to the awarding of payment on valid claims?

2. h'venapart from the operation of S.B. 6,there is noguarantee under the statutory scheme of chapter 103 that the fundwill notbedepleted. See the discussion below of your second question.

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The board you refer to isthe Produce Recovery Board, which has the duty of advising the department on "all matters relating to the fund" and of conducting hearings on disputed claims. Sections 103.003 et sea.
We have difficulty discerning any lesml issues presented by your second question. Particularly under the circumstances assumed by your question, that the S.B. 6 transfer was lawful -- i.e. that novested rights have been orwill be impaired --we donot believe that the board's legal "responsibilities@'are altered byvirtue of the S.B. 6 transfer.
Even apart from the operation of S.B. 6, there is no guarantee under the statutory scheme of chapter 103 that the fundwill not be depleted. Your request letter ind,icates, for example, that for the fiscal year 1987-1988 up to the date ofyour letter (March 1, 1988) $47‘422.75 had come into the fundwhile $99,396.05 had been paid out. It is obvious that such arevenue shortfall vis avis expenditures is not the result of the diversion of funds under S.B. 6,but is a result, rather, of the statutory scheme of chapter 103which makes noprovision to assure that the fundhas sufficient revenues tomeet claims and administrative expenses. The Department ofAgriculture acting on the advice of the board appears tohave broad rulemaking authority under section 103.004 for confronting.such cash flow difficulties by reducing the amounts paid out in claims under section 103.008. The latter section generally only sets ceilings on such payouts on claims. Amounts orpercentages of claims to bepaid out could, we think, be reduced by administrative rule.Also, the department may seek, via its rule making authority under section 103.009 andperhaps bymore diligent efforts generally, to increase the amounts obtained in reimbursements under that section.
Whether appropriations should bemade to replenish the fund ifdepleted isof course amatter within the purview of the legislature.

The transfer of $337,348 from the Produce Recovery Fund to the General Revenue Fund by operation of Senate Bill 6, 3rd Called Session, 69th legislature, was lawful so long as it did not impair any vested

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rights. The transfer might result in impairment of vested rights of certain claimants, if the transfer results in depletion of the Produce Recovery Fund such that their claims cannot be paid. vested rights will be-impaired is,That any however, only a hypothetical possibility since the fund isatpresent stillviable.
S.B. 6did not alter the legal responsibility of the Produce Recovery Board in administering the fund.
Whether appropriations should bemade to replenish the fund ifdepleted, isof course amatter within the purview of the legislature.

JIM MATTOX Attorney General of Texas
MARYEELLER First Assistant Attorney General
LouMCCREARY Executive Assistant Attorney General
JUDGE ZOLLIE STEAELEY Special Assistant Attorney General
RICK GILPIN Chairman, Opinion Committee Prepared byWilliam Walker Assistant Attorney General

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