THE ATTORNEY GENERAL 

OF TEXAS 

August 25, 1988 

JIM MATF~x 

ATTORNEY ORNERAI. 

Honorable Jim Hightower Opinion No. JR-946 

Commissioner of Agriculture 

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) 

Dear Mr. Hightower: 

An act of the 69th Legislature provided for the 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., 3d C.S., ch. 

16 (hereinafter "S.B. 6"). You ask whether the legislature 

had authority to make such transfer. 

The Produce Recovery Fund is a "special trust fund" 

established by Acts 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 of Agriculture to "handleV* vegetables and 

citrus fruit under chapters 101 and 102 of the code. The 

fund provisions replaced a prior 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 fees under sections lp1.008 and 102.008, fees levied 

against licensees specifically for the fund under 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 such money stays in the fund. Section 

103.002(e). Section 103.009 provides that if the department 

pays from the fund a claim against a licensee, the licensee 

shall reimburse the fund on a schedule to be determined by 

rule of the department. Section 103.002(d) provides that no 

p. 4772 
Honorable Jim Hightower - Page 2 (JR-946) 

more than ten percent of the fund may be 

year for administration of the claims process. eYended in any 

According to information given in your request, the 

$337,348 dollars transferred from the fund by 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 fund during 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 

the payment of claims during any succeeding 

year. 

Section 1 of 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 7 that "[t]he legislature 

shall not have power to borrow, or in any manner divert from 

its purpose, any special fund that may, 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 of your question as to the propriety 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 in the case of a statutory trust fund, 

the Texas Supreme Court has ruled that, so 

1. You do not ask, and we do not address, any question 

as to the constitutionality of the Produce Recovery Fund. 

p. 4773 
C 

Honorable Jim Hightower - Page 3 (JM-946) 

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.) 

CL v of Dallas v. Tram 101 S.W.2d 1009 (Tex. 1937). 

Es&& Woods v. Reu I 218 A.W.2d 437 (Tex. 1949): Board 

g 

Pension Board of the Pension Svstem for the Citv of Houston, 

449 S.W.2d 33 (Tex. 1970); Devon v. Citv of San Antonio, 443 

S.W.2d 598 (Tex. Civ. App. - Waco 1969, writ ref'd); and 

Attorney General Letter Advisory No. 5 (1973). 

Clearly, no vested rights will have been impaired by 

the S.B. 6 diversion unless and until the fund is actually 

depleted, and then only to the extent that the fund's 

depletion and consequent insufficiency for meeting claims6iz 

attributable to the diversion of fund moneys by S.B. . 

Your request letter indicates, however, that the fund is 

still viable, having a balance of approximately $141,600 as 

of Warch 8, 1988, the date of your request. 

Neither your request nor the comptroller's letter 

discuss whether any vested rights have been or will be 

impaired by the S.B. 6 diversion. 

Given the highly speculative nature of any argument 

that actual claimants* rights might eventually be impaired 

by virtue of the S.B. 6 transfer, we decline to hypothesize 

circumstances under which such impairments might occur or to 

rule whether the S.B. 6 transfer was unlawful as a result of 

such at present only potential impairments of vested rights. 

You also ask: 

If the legislature does have the authority 

to make such a transfer, and the Fund is 

depleted, what is the Board's responsibility 

as to the awarding of payment on valid 

claims? 

2. h'ven apart from the operation of S.B. 6, there is 

no guarantee under the statutory scheme of chapter 103 that 

the fund will not be depleted. See the discussion below of 

your second question. 

p. 4774 
Honorable Jim Hightower - Page 4 (JM-946) 

The board you refer to is the 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 no vested rights have been 

or will be impaired -- we do not believe that the board's 

legal "responsibilities@' are altered by virtue 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 

fund will not be depleted. Your request letter ind,icates, 

for example, that for the fiscal year 1987-1988 up to the 

date of your letter (March 1, 1988) $47‘422.75 had come into 

the fund while $99,396.05 had been paid out. It is obvious 

that such a revenue shortfall vis a vis 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 103 which 

makes no provision to assure that the fund has sufficient 

revenues to meet claims and administrative expenses. 

The Department of Agriculture acting on the advice of 

the board appears to have broad rule making 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 or percentages of claims to 

be paid out could, we think, be reduced by administrative 

rule. 

Also, the department may seek, via its rule making 

authority under section 103.009 and perhaps by more diligent 

efforts generally, to increase the amounts obtained in 

reimbursements under that section. 

Whether appropriations should be made to replenish the 

fund if depleted is of course a matter 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 

p. 4775 
Honorable Jim Hightower - Pag.e 5 :UM-946) 

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 is at present still viable. 

S.B. 6 did not alter the legal responsibility of the Produce Recovery Board in 

administering the fund. 

Whether appropriations should be made to 

replenish the fund if depleted, is of course 

a matter within the purview of the legislature. 

JIM MATTOX 

Attorney General of Texas 

MARYEELLER 

First Assistant Attorney General 

Lou MCCREARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAELEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by William Walker 

Assistant Attorney General 

p. 4776