### TEE ATTORNEY GENERAL OF TEXAS

August 21. 1987

HonorableGrant Jones chai?Fman Finance committee Texas State Senate P.O. Box 12068 Austin, Texas 78711

HonorableClintHackney Chairman Energy Committee TexasRouse of Representatives P. 0. Box 2910 Austin.Texas 78769

Gentlemen:

You ask the followingquestion: OpinionNo. m-772

Re: Authority of the governor to effect the disbursement of petroleumoverchargefunds

Does the Governorhave authority to effect the disbursement of petroleum overcharge funds currently held by this State absent legislative appropriation of such funds by the Legislature? In other words, absent legislative appropriation tohimself or affected agencies,does theGovernor have the authority under federal or state law to direct the Comptroller to transfer the State's share of petroleum overcharge funds, currently held in the State Treasury, to the accounts of specified state agencies or commissions and in so doing, permit such agencies or conrmissionsto expend such funds pursuant to the Governor's directives?

You explain that your question arose because of money that Texas receivedas a result of two lawsuits: U.S.V. Exxon, 561 F. Supp. 816 (D.D.c.1983).aff'd. 773 F.2d 1240 (Temp.Emer.Ct.App. 1985).cert. denied, 106 S.Ct.92 (1986) (hereinafter Exxon), and In re:The Department of Energy StripperWell ExemptionLitigation, 578 F. Supp. 586 (D.Kan. 1983) settled,Final SettlementAgreementofM. D. L. No. 

### 378 (D. Kan. 1986) (hereinafter Stripper Well). Both of those lawsuits involved distribution of escrow accounts containing money



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collected from oil companies because of violations of the Emergency Petroleum AllocationAct, 15U.S.C. §7193. Because of the difficulty of identifyingwho actually paid the overcharges, the court in Exxon and the settlement agreement in Stripper Well fashioned remedies intended to approximate restitution. The bulk of the money involved in Exxon and Stripper Well was awarded to the states to be used for energyconservationprograms. Under the terms ofboth the court order in Exxon and the settlementagreement in StripperWell the stateshave discretion to determinehow themoney will be allocated among various conservation programs. You ask sevfral questions about the proper in-state distribution of that money. The disposition of the Exxon money raisesmore complex issues than the disposition of the Stripper Well money, andwe will address those issues first.

In Exxon the district judge ordered that the escrow funds be spent by the states in accordance with the terms of Section 155 of Public Law No. 97-377, 96 Stat. 1830, 1919-20 (1982) (hereinafter "section 155"). 561 F. Supp. at 856. Section 155, which Congress enacted to distribute $200million in petroleum overcharge funds that had been in an escrow account for severalyears,provides:

(a) It is the purpose of this section to provide the Secretary of Energy the exclusive authority for the disbursement of the designated petroleum violation escrow funds for limited restitutional purposes (1) which are reasonably expected to benefit the class of persons injured by such violations, and (2) which, based on informationpreviouslyprovided to Congressby the Secretaryof Energy, are likelynot to be, through procedures established by regulation, otherwise refunded to injuredpersonsbecause thepurchasers of the refined petroleum products cannot be reasonably identified or paid or because the amount of eachpurchaser'sovercharge is too small tobe capableof reasonabledetermination.

1. Since we drafted this opinion, the legislature has enacted and the governor has signed a bill that gives the governor's office certain authority in regard to distribution of petroleum overcharge funds. S.B. 33, 70th Leg., 2d C.S. ,(1987). The legislature also appropriatedoil overcharge funds for certainprojects. S.B. 1. 70th Leg., 2d C.S.. art. V, §81, at V-82 (1987). The appropriation and delegation of authority to the governor's office are in accord with theproperproceduresunder Texas law for.allocatingand appropriating the funds in question.

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P (b) As soon as practicable, the Secretary of Energy shall disburse designated petroleum violation escrow funds to the Governors of the States in accordancewith the formula set forth in subsection (d).
(c) Amounts disbursed to the Governor of any state shall be used by the Governor as if such funds were received under one or more energy conservation programs. The Governor shall identify to the Secretary within one year after the time of disbursement the energy conservation program or programs towhich the fundsare orwill be applied. Funds disbursed under this section shall be used ,to supplement, and not supplant, funds otherwise available for such programs under Federal or State law.
(d)The disbursementby the Secretaryof Energy to each State shall be based on the ratio, calculatedby the Secretary,which--

(1) the volume of refined petroleum products consumedwithin that State during the period beginning September 1, 1973, and ending January 28, 1981.bears to
(2) the volume of refined petroleum products consumedwithin.all Statesduring such period.

Calculationsmade by the Secretaryof Energyunder this subsection shall be based upon estimatesby the Secretary from reasonably available iufomation.
(e)For purposes of this section--
(1) The term 'designated petroleum violation escrow funds' means amounts (not in
excess of $200,000,000)which are derived from settlements from alleged petroleum pricing and allocation violations generally resulting in overcharges to purchasers of refined petroleum products and held in trust accounts administeredby theDepartmentof Energy on December 17, 1982, andwhich--

(A)are not likely tobe required for

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satisfying claims of potential claimants identified in the proceedings of the Office of Hearings and Appeals initiated prior to December 17. 1982, or identified in judicialproceedings initiatedprior to such date; and
(B) the use of under this section would be consistent with the remedial order or consent order covering such funds.
(2) -fh= term 'energy conservation programs'means--

(A) the program under Part A of the Energy Conservationand ExistingBuildings' Act of 1976 (42 U.S.C. 6861 and following);

(B) the programs under part D of title III of the Energy Policy and ConservationAct (relating to primary and supplemental State energy conservation programs; 42 U.S.C. 6321 and following);
(C) theprogramunder part G of title III of Energy Policy and ConservationAct (relating to energy conservation for schools and hospitals; 42 U.S.C. 6371 and following);
(D)programunder theNational Energy Extension ServiceAct (42U.S.C. 7001 and following);and
(E) the program under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 and following).
(3) The term 'State' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory
or possessionof theUnited States.
(4) The term 'Governor,'when used with respect to any States. means the Governor or the chief executiveofficer of that State.

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(5) The term 'refined petroleum product'

mean* gasoline, kerosene, distillates, (includingNumber 2 fuel oil), LPG (other than ethane),refined lubricatingoils,diesel fuel, and residual fuel oil, but does not include refineryfeedstocks.
(f)No funds disbursed under this section may be used for any administrative expenses of the Department of Energy or of any State, whether incurred in connection with any energy conservation program or otherwise. (Emphasis added).

In short, section 155 orders the Secretary of Energy to disburse the money to the states, and it directs the states to allocate themoney among the five energy conservation programs listed in section 155. Because section 155 provides that the secretary shall disburse the money to "the Governor" and that the money "shall be used by the Governor," questions have arisen about the role Congress intended governors to play in allocating section 155 money and, thus, Exxon money. Two different interpretations of the references to governors in section 155have been suggested.

One suggested interpretationis that Congress simply intended to disburse the section 155money to the states and to allow the states to use their traditional decision-making processes to +termine how the money would be distributed among the five programs. The other suggested interpretationof section 155.1s that the references to the governorwere intended to give a governor authority to determinehow the money would be allocated among the five conservation programs listed in section 155, regardlessof the role the governorplays in a state's decision-makingprocess under state law. For Texas there is

2. You explain that in 1983 when Texas received money under section 155. the governor did not exercise any authority in determining how the section 155 money would be spent. Rather, you explain, the Texas Energy and Natural Resources Advisory Counsel (TENRAC)recommended to the legislaturehow the money should be distributed among the conservationprograms listed in section 155. See generallyActs 1979, 66thLeg., ch. 666, at 1545 (establishingTEN= and authorizing TENRAC to recommend to the legislature and governor policies and actions affecting energy and natural resources). You state that the legislature appropriated the money in accordancewith TENRAC's recommendation.See Acts 1983, 68th Leg., ch. 1095,Art. V,

- 581,at 5729, 6233.

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an important difference between those two interpretations because under Texas law the legislature, not the governor, has authority to allocate and appropriate state funds. See Attorney General Opinion C-530 (1965)(federal funds deposited InThe state treasury become state funds). Before we address the question of the proper interpretation of section 155, we will explain the role of the legislature under state law in allocating and appropriating state funds, includingfunds received from the federalgovernment.

As a generalrule,money receivedby the state is tobe deposited in the state treasury. V.T.C.S. art. 4393-1, 14.004(a). Although there are several exceptions to that rule, funds received from th3 federal governmentare generallynot within any of those exceptions.

3. Article 4393-l. section 4.003(b), sets out four exceptions to the general rule that funds received by the state are to be deposited in the state treasury. One of those exceptions is for "funds held in trust or escrow for the benefit of a person or entity other than a state agency." V.T.C.S. art. 4393-l. 54.003(b)(2). See also Friedmanv. American Surety Co. of New York, 151 S.W.2d 570, 580 (Tex. 1941). That exception is sometimes referred to as the "trust fund" exception. In a different context, this officehas referred to ? federal funds as "trust funds." Attorney GeneralOpinionM-468 (1969) stated that federal funds to be expended for a specific purpose are held by the state in trust for the benefit of the programs being administeredand that interestearned on federal funds remainspart of the special fund or trust ,fund. Although most federal funds are "trust funds" inasmuch as they may not be diverted,we do not think that federal funds are, as a rule. within the "trust funds" exception to article 4393-l. That exception is formoney held in trust "for the benefit of a person or entity other than a state agency." We do not think that the the funds in question, or federal funds generally,are held "for thebenefit of a person or entityother than a state agency" forpurposes of that exception. The funds in questionwere awarded to the state to be used for conservation programs. Some state agency will administer the programs for which the funds are used. Although thoseprograms, like all activities of state government,are intended to ultimately benefit individuals rather than agencies, the individualswho will ultimately benefit are as yet unidentified. It is the responsibilityof the state to identifypreciselyhow the funds will be used and which individuals will benefit. In those circumstances,we think that funds that are intended for a progiram to be administeredby a state agency are funds held for the benefit of state agency, for purposes of the trust fund exception set out in article 4393-1, section 4.003(b)(2).

_ See Attorney General Opinion

(FootnoteContinued) ?

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See Attorney General Opinion E-120 (1973); see also General AppropriationsAct, Acts 1986, 69thLeg., 3d C.S., ch. 13,art.V, 520 at 594 (appropriatingfederal funds out of the state treasury). You tell us that the Exxon and Stripper Well money received pursuant to the court order in Exxonwas in fact deposited in the treasury.

Under the Texas Constitutionno money can be withdrawn from the state treasury except pursuant to an appropriation made by the legislature. Tex. Const. art. VIII, 96; Bullock v. Calvert, 480 S.W.2d 367, 370 (Tex.1972). This constitutionalprovisionapplies to all funds in the treasury, including funds dedicated to a special purpose. Attorney GeneralOpinionV-412 (1947).

Most federal funds, like the StripperWell and Exxon funds, are special funds andmay not be diverted from the purpose for which they
were granted to the state. Attorney General Opinion M-468 (1969). Because a state's discretion in the use of federal funds is often severely restricted, the legislature'sappropriationof federal funds is usually largely Pro forma. For example, the 69th Legislature appropriated federal funds received by the state in the 1986-87 biennium to the agencies that are to administer those funds:

All funds received from the United States government by state agencies and institutions named in thisAct are hereby appropriated to such agencies for the purposes for which the federal grant, allocation, aid, payment or reimbursement
was made subject to the following:
(1)Federal funds includingunexpendedbalances shall be deposited to and expended from the specific program identified under each agency's

(FootnoteContinued) M-468 (1969)~(federal funds for a specific program are held in trust for the benefit of the program). See also-Attorney General Opinion JM-479 (1986) ("ServiceCharge Trust Fund" held by the Texas Surplus Property Agency is a trust for the benefit of a state agency and not within the "trust fund" exceptionto the State FundsReformAct). Cf. Attorney General Opinion IN-363 (1981) (fund forbenefit of prison= is to be held outside state treasury). Thus. we believe that the money in questionwas properly placed in the state treasury. We also note that the legislaturehas routinely appropriatedfederal funds out of the treasury. See General Appropriations Act, Acts 1986, 69th Leg., 3d C.S., ch. 13,art. V. 120 at 594. See also Attorney General Opinion C-551 (1965)(discussingthe appropriation of federal "trust" funds).

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appropriationbill pattern.

No federal funds may be expended for programs or activities other than those which have been reviewed by the Sixty-ninth Legislature and authorized by specific language in this Act or encompassed by an agency's program structure as establishedby thisAct.

General art.V, Appropriations Act, Acts 1986, 69th Leg., 3d C.S., ch. 13,

$20 at 594 (emphasisadded). See also S.B. 1. 70th Leg., 2d C.S.. art. V, 921. at V-60 (1987);Acts 1983, 68th Leg., ch. 1095, art. V, §20, at 6216;Acts 1981, 67th Leg., ch. 875, art. V, %18, at 3808. The first paragraph of the provision above would appear to appropriatesection 155money--and thus Exxon settlementmoney--to the governor's office since the governor'soffice is the institutionthat is to receive 'section155money. The emphasized paragraph, however, negates any such appropriation by prohibiting the expenditure of federal funds for programs other than those reviewed by the 69th Legislature and encompassed by an agency's program structure. The program' structure for the governor's office under the 1986-87 appropriations act does not include the programs listed in section 155. Further, no general state statute currently in effect devolves upon the governor's office the authority to administer a program listed in section 155 such that the generalappropriationof funds for 1986-87 could encompass these disbursements. The legislation discussed in footnote 1 does, of course, give the governor's office authority to administer section 155programs for the 1988-89biennium.

A corollary of the legislature's exclusive control over the appropriation of state funds is its exclusive control over how state funds are tobe spent. Attorney GeneralOpinionJM-256 (1984). Under state law the governor has no power to make determinationsabout how statemoney is to be distributedunless that power is expressly given to him by constitutional or statutory grant. Attorney General Opinions H-120 (1973);M-910 (1971). See generally Tex. Const..art. IV, 510. Thus, under Texas law the governorwould have authority to determine how the Exxon money is to be allocated only if the legislaturedelegated that authority tohim.

With those aspects of Texas law in mind, we turn to the interpretationof section 155. If. as it has been suggested. section 155 was intended to give governors the authority to allocate and disburse the funds regardless of state law, a troublesome question presents itself as to whether Texas may accept the funds even though acceptanceof the fundsunder the terms of the grantwould require the governor to take action that is beyond his powers under state law. See Madden, The .Constitutional and Legal Foundations of Federal Grants, in Federal Grant Law (M. Mason ed. 1982)(pointing out that

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courtshave nenerallvconsidered federalgrants tobe inducementsthat states are -free td refuse). See also Brown, Federal Funds and National Supremacy: The Role of State Legislatures in Federal Grant Programs, 28Am. U. L. Rev. 279 (1979).

Several state courts have considered whether federal grant programs are intended to increase the power of governors to set priorities and allocate resources. In Opinion of the Justices, 381 A.2d 1204 (N.H. 1978). the court considered whether the state legislature could designate the state health planning agency for purposes of administering a federal grant program. The federal legislation stated that the agency should be "selected by the Governor." The New Rampshire courtwrote:

If this federal act precludes the legislature from creating the State health planning agency, the words, 'selected by the Governor,' must be read as, 'selectedby theGovernornotwithstanding State constitutionalrestrictionson his authority and to the exclusion of any legislative involvement in the process.' This, of course, presumes that the federal authorities, in drafting the NationalHealth Planningand ResourcesDevelopment Act of 1974, intendedthat the Governorof a State would select an agency~for designationon his own without any legislative involvement in the process. The legislativehistory doesnot justify such a conclusion. See [1974] U.S.Code Cong. 6 Admin.News, pp. 7891-x

The statutoryscheme is clear -- the Statemust work out the details of its commitment to health planning, presumably in compliancewith the State constitution, and then enter into agreement with the federal authorities. The thrust of both the FederalAct and itspredecessors is that the State should construct its own administrativeplan and designate itsplanning agency. Then theGovernor, acting as the agent of the State, will apply for designationof that agency. The federal act does not confer on the Governor the right to disregard the State's constitutionalprocesses in selecting the agency for the administration of the State healthplan.

. . . .

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If any doubt exists, the federal law shouldnot be interpreted to infringe upon those powers of the States that are essential to their 'abilityto functioneffectivelyin a federal system.’ Fryv. United States, 421 U.S. 542, 547 n.7, 95 S.Ct. 1792, 1796, 44L.Ed.2d 363 (1975);accordNational League of CitiesV. Usery, 426 U.S. 852, 96 S.Ct. 2465. As statedby the Court someyears earlier:

In a dual system of government in which, under the Constitution. the states are sovereign

. . . an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.

Parker V. Brown, 317U.S. 341, 351, 63 S.Ct. 307, 313, 87L.Ed. 315 (1943). Hence,we findno clear manifestation of congressional intent to override the constitutional powers of our legislature to determinewhich agency will be designated as the health planning office for New Hampshire. Shapp
v. Sloan, 27 Pa. Cmwlth.at 326, 367A.2d at 799.

381 A.2d at 1210-11. 'Because of theNew Hampshire court's resolution of that issue, the court did not have to reach another question raised: whether an attempt by Congress to require the governor to exercise certain powers would preclude New Hampshire's acceptance of the federal funds in question. 381A.2d at 1206.

In Shapp v. Sloan, 391 A.2d 595 (Pa. 1978). appeal dism'd sub
nom. Thornburgh v. Casey. 440 U.S. 942 (1979). the Supreme Court of Pennsvlvania uoheld the constitutionalitv of a state statute that

. __.._, ~~~~~~~~. required that all federal funds receivedby the state be deposited in the state's general fund and that also prohibited the ,expenditureof federal funds except pursuant to a specific appropriation by the state's general assembly. In response to the argument that federal funds are intended to be used by the state executive branch without legislativeapproval, the courtwrote:

Nothing in the federal legislationpursuant to which these funds are granted suggests that the

. same principles by which programs wholly state funded are operated are inapplicable to programs for which federal funds are supplied. That the executive agency or official must use federal monies within the program for which they were intended, and must provide an accounting to show that they were so used, does not lead to the

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C conclusion that the funds are under that official's control and outside the control of the legislature.
Shapp v. Sloan. 391 A.2d at 604. See also Anderson v. Regan, 425 N. E.Zd 792, 793-94 (N.Y. 1981) (under New York constitution federal funds are subject to appropriationsprocess).

A number of state courtshaveheld that federal funds are outside their states' legislativeappropriationprocesses. State ex rel. Sego
v. Kirkpatrick, 524 P.2d 975, 986 (N.M. 1974) (underNew Mexico law state legislaturehas no power to appropriatefederal funds);MacManus
v. Love, 499 P.2d 609, 610-11 (Colo.1972) (underColorado law federal funds are not subject to the power of the General Assembly to make appropriations). These decisions, however. have turned on requirements of state law, not requirements of federal law. In a recent affirmation of the position that federal funds are not subject to the Colorado legislative appropriation process, the Colorado SupremeCourt emphasized that its decisionwas based on state law and
was not requiredby federal law:

As long as the funds are not diverted from their intended purposes and the terms and conditions prescribed by the congress -are not violated, there is no inconsistency between the provisions of the federal programs and state legislative administration of the funds. The federal governmenthas expressly given the states
a wide discretion in dealing with these funds. That discretionismost logicallyexercisedby the branch of state governmentwhich is constitutionally empowered to exercise control over all expenditures.

. . . .
State courts have not felt constrained.by federal law to reach conclusions that uniformly grant state legislatures the power of appropriation over state funds. Congress has left the issue of state legislative appropriation of federalblock grants for each state to determine.

Colorado General Assembly v. Lamm. No. 85SA70, slip op; at 13 (Cola. June 1, 1987).

At least one law review article has considered whether federal grant programs can enhance the powers of governors. Brown, Federal Funds and National Supremacy: The Role of State Legislatures .in

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Federal Grant Programs, 28 Am. U. L. Rev. 279 (1979). Without conclusivelydeterminingthat a federalgrantprogram can increase the powers of -a governor; the author concluded that Opinion of the Justices, 381 A.2d 1204 (N.H. 1978). applied the proper test in requiring a,"clear manifestation of congressional intent" before it would conclude that Congress intended to invade the traditionalpowers of state legislatures. See also United Statesv. Bass, 404 U.S. 336, 349-50 (1971) (wherestatute is ambiguous,court assumes congressional intentnot to diminish statepower);L. Tribe,American Constitutional Law, 243-44, 304 (1978)(arule like the clear statementrequirement is essential in determining whether Congress intended to exercise its
commerce power in full because "Congress must be prevented from resorting to ambiguity as a cloak for its failure to accommodate the competing interests bearing on the federal-statebalance"); Bulletin 76-4 of the Advisory Commission on IntergovernmentalRelations (Nov. 1976)(recommendingthat state legislatures include a:;a:ed;;zl aid in appropriations bills). Therefore. we conclude proper approach to use in interpreting section 155 is to determine whether there is a clear manifestation of congressional intent to alter states' traditional decision-making processes. We now address that issue.

Section 155 states that petroleum violation escrow funds are to be disbursed to the governor of a state-and that the governor.is to
use those funds as if theywere receivedunder one or more of the five energy conservationprograms. It also states that the governor shall identify to the Secretary of Energy the program or programs towhich themoneywill be applied. On its face. then, section 155 appears to give the governor authority to determine how the money is to be allocated among the five energy conservationprograms. In Opinion of the Justices and Shapp, however, such references to "governors*were found to be inadequate to show a clear indication that Congress intended to upset states' traditionaldecision-makingprocesses.

The Congressional Record shows that the purpose of section 155
was to distribute .$200million in escrow .accounts that had been collectedsince 1978 for oil overcharges to consumers. 149Cong. Rec. S15,115-16 (1982) (daily ed. Dec. 16, 1982) (statement of Senator Warner). The issue that most concerned the House and the Senate was how themoney couldbe most fairlydistributedamong the states. See, x, 149Cong.Rec. at Sl5.131 (statementsof SenatorFord). Neither theHouse nor the Senatedemonstratedany concernaboutwhether or not state legislaturesplayed a role in allocating the funds once theyhad been distributed to the states. In the discussionsof section 155 in both the House and the Senate, some members talked about the bill in terms of distributionof themoney to the states for allocationby the states. Others talked in terms of distribution to the governors for allocation by the.governors. There was no discussion; however, of prohibiting legislatures from playing their traditional roles in

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decision-making. Because nothing in the statute and nothing in the legislativehistory of the statute indicatesthat Congress intendedto increase the powers of governors in those states in which the governor's powers were inadequate to allocate public money or that Congress intended to limit the role of legislatures,we conclude that Congressdid not intend to confer on a governor the right to disregard his state's constitutional process for appropriating and allocating funds. Opinion of the Justices, 381 A.2d at 1210. Therefore, in Texas the legislature must determine or delegate the authority to determine how the Exxon money should be allocated among the five conservationprograms listed in section 155, and the legislaturemust appropriate the e money in order for it to be withdrawn from the treasury. And, as indicated in footnote I, the legislature has now done so. Because we interpret section 155 as not disrupting the traditional state decision-making process, we need not address the difficult issue of whether Texas may acceptmoney under the condition that the governorexercisepowershe doesnot possessunder state law.

The same principles of Texas law governing allocation and appropriation of state funds are applicable to the money Texas receives pursuant to the Stripper Well settlement. The settlement requires that the money must be spent on energy programs. The ~settlementconditionsapplicableto the states include the following:

f. State Use of Funds. Funds available for distribution to the States shall be allocated among them on thebasis of historical consumption patterns of refined petroleum products in the United States during the Settlement Period in the proportions as set forth in Exhibit H hereto, provided that no funds shall be distributed to a State until such State has submitted the signed Letters of Assurance required by this Paragraph. The payment mechanism set forth herein shall be thenexclusivemeans of achieving distribution of the funds. The Attorney General of each State shall deliver to the Governor of such State, for theGovernor'sexecution,duplicate originalsof a Letter of Assurance in the form set forth in Exhibit I to this Agreement. Within 20 days following the date of the Approval Order, the AttorneyGeneral shalldeliver to the Clerk of the Court and to the Administrator of ERA, DOE, such Letters of Assurance signed by the Governor of such State. At the same time, the Attorney General of each State shall designate in writing to the disbursing official of the M.D.L. 378 Escrow whether disbursement shall be by check or by wire transfer, and if by wire transfer, shall

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provide instructionsfor the transmittal of funds. Disbursementof all funds to such State thereafter shall be in the form designated by the Attorney General and made payable to 'The State of

t Physical delivery of a check shall be made by the disbursing official to the Attorney General and in the case of a wire transfer,advancewritten notice of the date and amount of the wire transfer shall be delivered to the AttorneyGeneralprior to the sendingof eachwire transfer. Upon receipt of each check or wire transfer notice, the Attorney General shall deliver it promptly to theGovernor of such State. As used in this Paragraph II.B.3.f. 'Attorney General'means theAttorneyGeneral of a State,or his or her duly authorized representative, and includes any other State official who intervened in M.D.L. 378 prior to the execution of the Memorandum of Understanding of January 24, 1986 preceding this Agreement. In the case of any Statewhere an official other than or in addition to the Attorney General intervened in M.D.L. 378 prior to January 24; 1986,all references in this Paragraph II.B.3.f to the Attorney General shall
mean the Attorney General jointly with such official. Such funds (including interest earned
on the funds following their receipt by the States)will be utilized as follows:

I. Public Notice. Each State will give reasonable notice to the public that it has received the funds and will generally describe the types of restitutionaryprograms on which the State may expend the funds. Each State will conduct informal hearings at which the public may present its views concerning such expenditures. Any State which has held hearings with regard to the uses of Oil overcharge refunds during the two-year period preceding the date of the Approval Order will not be required to hold additional hearings. Legislative hearings in accordance with appligableStateprocedures shallbe sufficient to complywith the requirementsof this subsection.

ii. Restitutionary Program. Monies receivedby any State shallbe utilized to fund
one or more existing or new energy-related

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programswhich are designed tobenefit,directly or indirectly, consumers of petroleum products within the State. State governments
are familiar with the particular energy needs of their citizens.

. . . (Emphasisadded.)

In re: The Department of Energy StripperWell Exemption Litigation, M.D.L.No. 378. Final SettlementAgreement at 8 (D.Kan. 1983). Under that settlement "the state" is to-receive the money? The settlement states that before a state receives funds the governor must sign letters of assurance, to be providedby the state's attorney general, that the money will be spent for approved programs. Otherwise, the governor is not mentioned. There is no basis in the language of the settlement for arguing that the settlementwas intended to give the governor any role in determining how the funds should be allocated, much less a role that would be beyond his constitutionalpowers. It is the role of the legislatureto complywith the requirementsof the settlement in the allocation of the money, and to appropriate the money in accordancewith that allocation.

SUMMARY

The legislature, not the governor, has authority to allocate and appropriate oil overcharge funds distributed as a result .of two lawsuits. Section 155 of Public Law No. 97-377, 96 Stat. 1830 (1982),was not intended to increase the role of the governor in allocating and appropriatingfunds receivedunder that section.

JIM MATTOX AttorneyGeneralof Texas

MARY KELLER ExecutiveAssistantAttorneyGeneral

JUDGE ZOLLIE STKAKLFY SpecialAssistantAttorneyGeneral

RICK GILPIN Chairman,Opinion Committee
Preparedby SarahWoelk AssistantAttorneyGeneral

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