ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

February 16, 2011 

The Honorable Allan B. Ritter 

Chair, House Committee on Natural Resources 

Texas House of Representatives 

Post Office Box 2910 

Austin, Texas 78768-2910 

Dear Representative Ritter: 

Opinion No. GA-0843 

Re: Authority of the Sandy Land Underground 

Water Conservation District to transfer certain 

assets to an individual or other entity 

(RQ-0904-GA) 

You ask about the authority ofthe Sandy Land Underground Water Conservation District (the 

"District") to transfer certain assets to an individual or other entity.' 

Under chapter 36 of the Water Code, an underground water conservation district is 

directed to "develop a comprehensive management plan which addresses [particular] management 

goals," including, inter alia, "conservation, recharge enhancement, rainwater harvesting, 

precipitation enhancement, or brush control, where appropriate and cost-effective." TEX. WATER 

CODE ANN. § 36.1071(a)(7) (West 2008) (emphasis added). You tell us that the District developed 

a comprehensive management plan that included among its goals that of cloud seeding for the 

intended purpose of "precipitation enhancement.,,2 Request Letter at 1-2; see SANDY LAND 

UNDERGROUND WATER CONSERVATION DIST., MANAGEMENT PLAN (2009-2014) at 14 (Goal #4). 3 

Because state funds are no longer available for cloud seeding operations, the District proposes to 

transfer certain assets of its cloud seeding program to "an individual or other entity that will 

essentially carryon the program's work so that the District can continue to benefit from program data 

gathering, research, and cloud seeding functions." Request Letter at 2. You ask whether, both in 

statutory and constitutional terms, the District may do so. ld. at 6. 

With regard to statutory authority, section 36.158 of the Water Code provides: 

A district may make or accept grants, gratuities, advances, or 

loans in any form to or from any source approved by the board, 

lRequest Letter at 1-2 (available at http://www.texasattorneygeneral.gov). 

2We presume that the executive management plan was submitted to and approved by the executive administrator 

of the Texas Water Development Board, in accordance with the statutory directive of sections 36.1071 and 36.1072 of 

the Water Code. See TEx. WATER CODE ANN. §§ 36.1071-.1072 (West 2008). 

'Available at http://www.sandylandwater.comldocuments.html(last visited Feb. 14,2011). 
The Honorable Allan B. Ritter - Page 2 (GA-0843) 

including any governmental entity, and may enter into contracts, 

agreements, and covenants in connection with grants, gratuities, 

advances, or loans that the board considers appropriate. 

TEX. WATER CODE ANN. § 36.158 (West 2008). Thus, in strictly statutory terms, the District is 

empowered to transfer the assets of its cloud seeding program to any entity "that the board considers 

appropriate." As you note in your request, however, we must also consider constitutional issues,. 

specifically section 52( a) of article III of the Texas Constitution, which prohibits the Legislature from 

authorizing any subdivision of the state "to lend its credit or to grant public money or thing of value 

in aid of, or to any individual, association or corporation whatsoever." TEx. CONST. art. Ill, § 52( a). 

We do not understand your request to question the facial constitutionality of section 36.158 

ofthe Water Code in so far as it generally authorizes the District to "make ... grants." Rather, we 

construe your request to assume the constitutionality of the statute by reading it to require any 

particular grant to conform to the relevant constitutional constraints. 

The Texas Supreme Court has frequently declared that the prohibition of article Ill, section 

52(a) means that the Legislature may not "require gratuitous payments to individuals, associations, 

or corporations." Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Compo Comm'n, 74 

S.W.3d 377, 383 (Tex. 2002); see also Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 740 

(Tex. 1995); Davis V. City of Lubbock, 326 S.w.2d 699, 709 (Tex. 1959). A political subdivision's 

transfer of public assets is not "gratuitous" if the political subdivision receives return consideration. 

Tex. Mun. League Intergov 'tl Risk Pool, 74 S.W.3d at 383. Such transfers are permissible so long 

as the statute authorizing them "serves a legitimate public purpose" and "affords a clear public 

benefit received in return." Id: 

The Texas Supreme Court has articulated a three-part test to determine whether a statute 

accomplishes a public purpose under section 52(a). The entity contemplating the grant must (1) 

ensure that its purpose is to "accomplish a public purpose, not to benefit private parties"; (2) retain 

public control over the public assets and/or rights associated with the transaction in order to ensure 

that a public purpose is accomplished and to protect the public's investment; and (3) "ensure that the 

political subdivision receives a return benefit." Id. at 384. In a prior opinion, we said that the 

determination of whether a particular contract or agreement accomplishes a public purpose and 

satisfies the three-part test articulated by the court is in the first instance a matter to be determined 

by the board of directors of the District, subject to judicial review. Tex. Att'y Gen. Op. No. GA0553 (2007) at 4; see also Tex. Att'y Gen. Op. No. JC-0080 (1999) at 5. 

Whether article Ill, section 52(a) authorizes the transfer contemplated here will depend upon 

the facts of any particular transaction, including, inter alia, whether the transfer will accomplish the 

'The Texas Supreme Court's decision was concerned with the facial constitutionality of the statute at issue in 

the Risk Pool case. As we have noted, we are concerned in the present instance only with the question of whether the 

statute under consideration here, section 36.158 ofthe Water Code, may be constitutionally applied by the District. See 

Tex. Mun. League Intergov'tl Risk Pool, 74 S.W.3d at 383-84. 
The Honorable Allan B. Ritter - Page 3 (GA-OS43) 

statntory goals of the District, e.g., precipitation enhancement. Because you have not provided us 

with sufficient information about the details of the transaction, we cannot determine whether the 

transfer in question satisfies the constitutional test. 

You also ask a series of questions about the circumstances and conditions under which the 

District may generally transfer assets from the cloud seeding program, including, potentially, a 

transfer of title to one or more aircraft. Request Letter at 6-7 . You suggest, inter alia, that the Board 

may wish to transfer assets to one or more members of the Board, or to its officers and/or employees. 

[d. To the extent these questions implicate the constitutional authority of the District to accomplish 

the referenced transfer of assets, we will address them together. However, we lack the necessary 

information to make that determination because such an inquiry would necessarily involve mixed 

questions of law and fact, and is therefore beyond the scope of an attorney general opinion. Like the 

determination about the constitutionality of the transfer of the District's assets, these matters belong, 

in the first instance, to the sound discretion of the District's board of directors, subject to judicial 

review. We can here, however, briefly advise you of certain statutory provisions that must be 

addressed when considering a transfer to any current director, officer, or employee of the District. 

Chapter 176 of the Local Government Code applies to a member of the governing board of 

the District, as well as to any officer and certain employees and vendors of the District. TEX. Loc. 

GOV'TCODEANN. §§ 176.001-.003, .005 (West200S). A person to whom chapter 176 is applicable 

is required, under certain circumstances, to file a "conflicts disclosure statement" under section 

176.003, the contents of which are described by section 176.004. See generally Tex. Att'y Gen. Op. 

No. GA-0446 (2006). 

Likewise, chapter 171 of the Local Government Code is applicable to every "local public 

official," defined to include a member of the board of directors of the District. See TEX. LOc. GOV'T 

CODE ANN. § 171.001(1) (West 200S). If a current District director "has a substantial interest in a 

business entity," and a transaction between the District board and that business entity will have a 

"special economic effect on the business entity that is distinguishable from the effect on the public," 

then the director is required to "file, before a vote or decision on any matter involving the business 

entity ... an affidavit stating the nature and extent of the interest," and to "abstain from further 

participation in the matter." [d. § 171.004(a). Violation of section 171.004 constitutes a class A 

misdemeanor. [d. § 171.003(b). Before the board of directors of the District enters into any 

transaction to dispose of the assets described in your request, we urge the board to consult with its 

attorney. 
The Honorable Allan B. Ritter - Page 4 (GA-0843) 

SUMMARY 

The board of directors of the Sandy Land Underground Water 

Conservation District has broad statutory authority to transfer 

certain assets to any individual or entity. Whether it may do so under 

article ill, section 52(a) of the Texas Constitution depends upon 

whether such transfer comports with the public purpose analysis 

promulgated by the Texas Supreme Court in Texas MunicipalLeague 

Intergovernmental Risk Pool v. Texas Workers' Compensation 

Commission, 74 S.W.3d 377 (Tex. 2002), and its progeny. 

DANIEL T. HODGE 

First Assistant Attorney General 

DAVID J. SCHENCK 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

Rick Gilpin 

Assistant Attorney General, Opinion Committee