April 4, 1949

Hon. E. V. Spence, Chairman Board of Water Engineers Austiri, Texas Opinion Wo.V-003 c
Fle:Authority of Board to entertain appropriation application of Upper Colorado River Authority

The question 

### your letter, Dear Sir:

tained in lows: submitted for opinion is conwhich wecopy in part as fol.-

‘In Attorney Oeneral’a Opinion No. O-7338, approved August 9, 1946, it Is held thatthe Upper Colorado River Authority, aatate agency, created by act8 of the Regular Session of the 44th Legislature, Chapter 126, ia not required to secure apermit from the Board of Water Engineers to approprlate waters within Its boundaries and that the Authority ia not subject to payment of feea preecribed by Articles 7497 and 7532, Vernon’8 Annotated Civil Statutes of Texas. “Notwithrtandlng thle opinion, the Upper Colorado River? Authority cannot get its proposed projeata finanoed without having flrrt seuured apermit from theBoard of Water Engineers protecting ite source of water supply under the Doctrine of Approprlatlon. Therefore, the Authority filed its application and 

### wasgranted permit by the Board covering lta Robert bee project onthe ColoradoHon. E. V. Spence - Page 2-V-803

River in Coke County, and is nowpreparing to file an application to appropriate and use the waters stored in the North Conch0 River Flood Control Project In TomGreen County for munlcipal, Industrial and irrigation purposes.

"Article 7501, Vernon’s Annotated Civil Statutes of Texas, reade a8 fol1OWB:

“‘Every such application shall be accompanied by thefees hereinafter provided, add shall not be filed
or considered until such fees are paid. t

“In view of Artiole 7501, can the Board of Water Engineers file and conelder the application of the Upper Colorado River Authority for permit to appropriate the waters in the North Concho River Flood Control reeervolr wlthout It being accompanied by the feea prescribed by Articles 7532 and 75357 ”
The question which you raise has been the subject of manyprior opinions by thie office, which
we briefly review ae follows:

1. Letter opinion dated June 30, 1925, by Assletant Attorney General C. L. Stone, addressed to the Game, Fish &Oyster Commlsslon, decided that the Commleelon need notpay the statutory feea in order to acquire apermit to appropriate water for the purpoee of maintaining agameprerrerve and fish hatchery. The basis of the opinion Is that sincegame, fIeh, water, and permlt fees are all the property ofthe State, and slnoe the fee statutes donot 

### expressly require the oomml~slon to pay the 

### feen, none need be 

### paid,

2. Letter opinton dated January 3, 1938, by Asslntsnt Attorney Qeneral Ruaaell Rentfro, addressed to the Board of Water Engineers, Involves the liability of the Federal Farm Security Admlniatration for payment of Baid fees. The above oplnlon ofJune 30, 1925, was distinguished on the ground that the same community of interests between game. fish, water,ard fees ‘existing there did not,..*A.<*, exist in the case of the Federal Earm Security AG-Hon. E. V. Spence - Page 

### 3-V-803

ministration. The opinion holds that since the fees
are not taxes, 

### 80as to forgive payment thereof by the Federal Government, and Article 7532 being mandatory, your Board had no alternative but to collect the fees prescribed by said article-~



### '3.Letter opinion dated March 

### 8,‘ 1938, byAssistant Attorney General H..L..,Wllliford, addressed to the Brazes River Conservation and Reclamation District, holds Baid DiBtI?i,Ctexempt from the fees in question. It was suggested in the letter. requesting the opinion that since thefees~are paid by your Board directly Into the General Revenue Fund and since the net revenue of the Brazes Diatrlct is also paid. into said fund, payl. ment of the fees would be nothlng~ more than a bookkeeping transaction, and thesefore need not be pai.d. The opinion recognizes this argument but bases its holding upon utility considerations, stating that since “the entire enterpriee is an undertaking,by the State to conserve its public . waters and to utilize same for the benefit of the 

### State inita entirety ,~.. . the fees are not re-~ qulred. ”



### 4. Letter oplnlon dated May .4, 1938, by Assistant Attorney General H. L. Wllli~ford, addressed to Upper RedRiver Flood Control and Irrigation District holds such ,dlatrict not liable~ for the fees. Utility considerations were again employed, it being pointed out that the Irrigation District is a state agency exercising powers .and privileges in furtherance of governmental purpose. Xnaddltlon, It was stated that one deportment of government la not required to pay another department alicense or prlV.llege tax sin,ce this would bemerely paying the revenue ,of,the State Into the revenue of the State.

5.‘

. Letter oplnlo,n dated May

### 13,1939, by Assistant Attorney General ?Ngene Tate, addressed to Board of Water Engineera, overrules the Wllllford opinion of May 4, 1938, and holds the Upper RedRiver Flood Control &Irrigation District lfable for the fees. Earlier opinions were reviewed and the Game, Fish and Oyster Commission and Srazos District opinions approved. It isclear, however, that ?,he Brazes opinion was not approved upon the utility.

Hon. 

### E.V. Spence - Page 4-V-803

baais upon-which it naa decided but upon the basis euggested for decision, namely, that the net revenuea of the Brazoe Dlatrlct ultimately find their way into the General Revenue a8 do the fees collected by your Board. Baa&use the Upper RedRiver District’s Act did not contain thle net revenue provlalon, It
waeheld liable for the fees.



### 6. Opinion Uo.O-78, dated January 13, 1939, addressed to the State Parka Board, holds such Board not liable for the fees. This opinion reviews all prior opinions and adopts a8 lte basis the above indicated fee theory. It 18asserted that the Parke Board falls within that class of governmental agency which is not required to pay the fees since its revenues go into and comeout of a State fund.



### ‘7. Opinion So.O-4304, approved Pebruary 9, 1942, addressed to the LonerColorado River Authority, holds the Authority not liable for the feea, The basla of this opinion Is the inability of the Authorlty to spend its fund0 for any but a btatutory purpose. It wan decided that the Author,ity acquires noright through such apermit, its right,to appropriate being oonferred byIts hot, in consequence 

### ofwhiohpayment 

### ofthe fee in 

### order to ueoure the permit would beuse of Its fundr for anon-statutory purpose. The earlier oplnlonn onthe subjeot were not disouased. Neither the Upper

### norLower Colorado hot8 aontain aprovision whereby net revenuea go into the Qeneral Fund.

8. Opinion 

### No.O-7330,approved Awuat 

### 9, 1946,addreseed to the Upper Colorado RiverAuthority, reaohes the samererult and for the namerea.aon an that set forth in Opinion No.O-4304, Irupra.

Artiole 7532,V.C.B., aetaup thevarious fee8 in question, -The 

### opening rentenoe of said artlole 

### provider that “The Boardahall oharge and oolleot for the benefit of the State 

### the fees hereinafter provided.
, . .‘I The fee8 referred to under thlrr lanfuage 

### are of three typer, vie., filing fees,p;mgdlng 

### ee8 andfees for maklng

### oertlfied copies. m ample - a filing fee la required 

### for eaoh presentation, application for permit, petition for formation of a district, applioatlun for approval of bond IafJue, applioatlon for adjustment or fixing of rates, and application for extension of time. Arecording fee 18re-Hon. E. V. Spence - Page 

### 5-v-803

quired for the filing of any .instrumeBt which is recorded In,the office of the Board: A~feeis also provided for certification by the Board of any ‘in.- strument or mapdealred to be certified. In addition to the above fees, Article 

### 753'2 pr~ovides for a use fee, also to be collected for the,benefitof the State, such fees being required for the us,e of water for Irrigation, for hydraul.i,c power, for parks, pleasure.,, 

### resorts and game preserves and th,e amoun.ts in which these fees are payable are based upon the volume of the proposed power or water consumption. In conclusion, Article 7532 provides that “the fees paid upon application for apermit other thanthe filing fee herein provided,,shall be held~by the Board until said application is passed upon and If
same is not granted, such fees shall be returned to the applicant therefor.

. . .”

Article 

### 7533,V. C. S., provides that the fees Andycharges collected by the Board of Water EnglneerB,Bhall be’immediately deposited in the State Treasury to the credit of the General Revenue Pund.

Article 

### 7535,V. C. S., merely allows an installment method of payment when the fees exceed the Bumof $l,OOO.OO, and has ‘noreal bearing onthe subject involved herein.

Where this office has held that aparticular State agency need not pay the fees, this Is necessarily also aholding that, In drawing the statutory provisions dealing with feea, the Legislature intended In the first place to exempt such~agencies. It conslatently follows therefore that the Legislature did not Intend for Article ~7501to have a mandatory effect so as to requlre,ln these exceptional cases the collection by,you of the fe,Fo;f;+$ to your taking action onthe application. words, Article 

### 7501is not mandatory as to those agencies which are not required to pay fees.

Generally, thls,anBwepB your question. However, in order to fully reply, Itisnecessary to solve certain problema raiBed by the above opinions of this offlce~.

Excluding Opinion No. O-4304 dealing with LCRAand Opinion Ro.O-7338 dealing with UCRA,the ultimate conclusion of the above opinions Is that theHon. E. V. Spence - Page 6 -V-803

fees are not the receipts payable In two Instances: (1) If

of an agency go into some State fund and, because the feea go Intoa State fund, the agency la exempt; (2) Where the subject matter under the control of the agency la State property, such as fish, the water required for the protection thereof being also State property, no fee is required. Upto the time of Opiniona O-4304 and o-7338, the 

### foregoing werethe principal, if not only, twobares upon which exemption could be allowed, Although wehave excepted these opinions, actually they form 

### nobasis upon which aprospective exemption can be allowed. The holding of theae opinions is merely that the Districts require
no permit, obtain no right under It, and, being able to spend thelr funds only in furtherance of thestatutory purposes for which they were created,
are legally unable ‘to pay the feea.

It appears from the statement of facts contained In your 

### letter that In order to finance its North Conoho River Flood Control Project, It la neoeaaary for UCRAto acquire the usual permit forming the basis of 

### anapproprlatlve water right. It la evident that UCRArequires for a ;;ryhrectloal reason apermit In thlr 

### lnatanoe, Dlatrlota require a

### permit, it la no longer an anawerto the question 

### of payment of fees to say that ;;oauae they donot require it they cannot pay 

### for

. Anexamlnatlon 

### of the Acto 

### ofUpper and 

### LowerColorado

### River Authorities will show that thalr aota arenearly l4entloal. See LCRA,Aota 1934, 4C.9. oh.71UCRA,Aota 1935, 8mendmentai [both Aota areoarrled o in%;Edi and

followln Section Is

### Artiole 8197f). With one minor*e;oeptlon,

ofbothAota contains this Identical 

### provision (from

### UCRAlaAot)r

"~Seo.8. The Board shall establish 

### andoolleot rate8an4 otherohargerr 

### for the

### sale or uae of water, water oonneotlona, power, eleotrlo energy or other services sold, furnished, or supplied bythe Dlatrlct, whioh 

### fee8 and charges shall be reasonable and nondlaorlmlnatory and sufflolent to praduoe revenuea adequate, in addltlon to funds received from tax diversion;,

Hon. 6. V. Spence - Page 7-v-803

‘l(a) to pay all expenses necessary to the operation and maintenance of the propert?es and faclllties of the District;

“l(b) to pay the Interest on and principal of all bond? Issued under this Act when and aa the same shall become due and payable;

“l(c) to pay all sinking fund and/or
reserve fund payments agreed to be made In respect of any such bonds, and payable out of such revenuea, when and as the
same shall become due and payable; and

’1(d) to fulfill the terms of any agreements madewith the holders of such bonds and/or with any person in their behalf,

"'Out of the revenues which maybe received in excess of those required for the pur oBes specified In subparagraphs (a) (bP (c) and (d) above, the Board may’ln iis discretion establish areasonable depreciation and emergency fund, or retire (by purchase and cancellation or redemption) bonds issued under this Act,
or apply the same to any corporate purpose.

“‘It la the Intention of this Act that the rates and charges of the District shall not be In excess of what maybe necessary to fulfill the obligations imposed upon It by this Act.
, : .I”

The same degree of slmllarlty existing between the Colorado Acts does not exist between them and the Brazos River Reclamation and Conservation District ‘8Act. For the~most part, these differences lie In language employed rather than in substance. Substantially, and eepeclally as regards district objectives and functione, the Acts are the same. With respect to revenues, the Brazos Act (Acts 1935,

ch 368 sec.6 copied V.C.S. following ~~~l%~‘&&+) p&Ides 4s follows:

“lSec.6. It 

### Is contemplated by this Act that the Brazos River Conservation and.



### Hon.E,V. gpence - Page8- v-803

Reclamation Dletrlct will apply for 

### and receive the cooperation of the United States ofAmerica in alleviating the public calamity 

### herein declared, and that 

### beneficial usea maybe found for the flood waters 

### impounded, which are hereby deolared incidental to the purpose OSremoving 

### said public calamity, and that revenue0 will be derived from euch 

### lncjdental benefits; all of which, to ether 

### with the funda hereby 

### donated and7or granted shall be used during the, time and for the purposes herein specified, to 

### the end that 

### such publlo calamity maybe averted, Until all obligatione herein authorized have 

### been fully discharged, the tax money 

### hereby donated and/or granted to the District, together with 

### the net revenues asherein defined accruing to the District from any other 

### oourceBwhateoever shall be used exclualvely for the purpoae of diachargrng aaid obligations 

### andfor the proper operation and maintenanoe of 

### the l.mprovemente proposed. to be oonetructcd; but after all of such obligations have 

### been paid in full, then the revenuee accruing to the District rrom all 

### aourcea whatsoever, shall be ured

### bythe Dietrlct; %irst, to 

### paythe rearonable oost ot oolleoting suohrevenuesi second, for 

### the coat of the operation, maintenanoe, depreoietlon, replaoement 

### andbetterment of the 

### propertler aoquired andoontrolled bythe Dsstrioti third,for 

### the oompletlon of the neoesoary unit0 

### of the coordinated oonneoted aystem bywater oonservation that will prevent the pub110 oalamity declared to exlsti and 

### the balanoe of such


### revenues ahall bepaid annually, not later than Wlroh

### 18t ofeaohyear, to the Treasurer of 

### the State 

### ofTexas andby him plaoed in aOeneral Revenue Fund.

“The term 

### ‘net revenue’ 

### as ueed in 

### this Act shall be construed to 

### meanthe 

### revenuea of the Dlstrlot, fromwhatsoever aouroe

### derived remaining after the payment0rall oosts 

### 0roolleotion, all coat0 of operation and maintenance, depreoiatlon,Ron. E.V. Spence - Page 9- v-803

replacement and betterment of the properties owned and/or acquired and/or controlled by the Dlatrlct, and the establishment and the maintenance of an adequate depreciation~and emergency fund sufficient to construct, replace and/or repair works, and/or properties when and If necessary.”

Instead of llmltlng net revenue to operational coat and 

### providing that net revenue over and above these costs maybe devoted in furtherance of statutory purpose, as was done in the Colorado Acts, the Legislature has made provlalon in the Brazos Act for turning net revenue to the Qeneral Fund. This difference 

### Inmethod of diaposlng of net revenue should create no dfatinctlon, elnce all three Districts are conservation and reclamation districts created pursuant to Section 59, Article XVIof the Constitution; and under no circumstances would they be authorized to produce aprofit over and above conetitutlonal and statutory coats. Asapractical matter, of course, year to 

### year revenues might not exactly equal such costs and as to any net revenues 80produced some provision wa8necessary. In providing onthe one hand that theae net revenues be put back to corporate purpose and, on the other, that they beput In the Qeneral Fund should not create adistinction which can ‘have any material bearing onthe fee question here involved.

The Colbrado and Brazos District8 werecreated

### pursuant tothe 

### ooneervation amendmenttothe Constitution, Sec. 59, Art. XVI. Acasual reading of the Acts reveals that the Districts were intended to acoompllsh the same pub110 purpose. This elmllarltg has beenrecognized by our Supreme Court. See Brazos River Conservation dcReclamation District v. Mccraw, 

### 126Tex. 

### 506,91S.W.2d 

### 665,672;and Lower Colorado River Authority v. Mocraw, 125Tex. 268, 83 S.W.2d 629.



### In v5ewof this slmllarlty and because of the absence of any subntantlal difference 

### of result in the handling of net 

### revenuea, abthat difference relates to the fee question, weare of the opinion that the came exemption accorded the Brazos District should be accorded the Colorado Districts. Believing this to be sufficient reason for exem tlon, wewithdraw Opinion O-4304 and Opinion O-7338and substitute ln--. ,..

Hon. E. V. Spence - Page 10 - V-803

I

.:, stead this oplnlon. Acopy of this opinion has been

furnished the Upper and Lower Colorado River Authorlties to apprise them of this action.

As Indicated earlier, Article 7501 1s not mandatory as to those governmental agencies found to be exempt from the payment of fees. Such Article Is not mandatory as to the Upper Colorado River Authority and you mayrile and consider Its appllcatlon although not accompanied by the fees provided by Article 7532.

TheBoard of Water Engineers

mayfile and consider an approprlation application filed by Upper ColoradoRiver Authority even though such application 1s no,t accompanied by the 

### feea prescribed b$z Opinion8 O-4304 8rtlole 7532,V.C.S.

an’ O-7338by prevlous administration wlthdrpwn.

Yours very truly

ATTORNEY

OENERUOFTEXAS

HDP:bt BY H.D.Prueti,.Jr. Asslstant

.:.

.