.

Hon. C. H. Cavness Opinion No. V-1365 State Auditor Austin, Texas Re: Several questions pertaining to the use of soil conservaDear Sir: tion district funds.,

You have submitted for our consideration several questions pertaining to the expenditure offunds by soil consexvation districts. The first question is the following:

“1. Of the following types ofrevenue normally received by soil conservation districts from their operations, which, if any, should be deposited to State appropriated funds

. . .?:

‘A. Rental from equipment purchased from State appropriated funds. “B. Sale of seed, fertilizer or chemicals purchased from State appropriated funds. “C, Refunds on other expenditures made from State appropriated funds, “D, Sale ofobsolete equipment purchased from State appropriated funds.” House Bill 97, Acts 51st Leg,, R.S. 1949, ch. 5401 p. 1000 (Art. l65a-8, V.C.S.), appropriated to the several soil conservation districts ofTexas twoand a half million dollars for each of thefiscal years of 1950 and 1951. Section 5of HouseBill 97 provided that “any funds granted hereunder to atiy soil constirvation districts which shall remain unexpended at the end ofthe biennium shall revert to the General Fund,” InOpinion V-999 (1950) we advised you that the use ofgranted funds to purchase seed tobe resold would ‘notconstitute an expenditure ofthe funds so as to prevent the moneys received upon the resale from being a part ofthe granted funds.

The fact that fertilizer or chemicals were the subject matter ofthe sale would, of course, make nodifference inthis conclusion. By analogy, we think moneys received from refunds on expenditures made from State appropriated funds have notbeen.

I

c Hon. C. H. Cavness, Page 2 (V-1365)

“expended” and remain apart ,ofthe,granted funds. so, too, moneys obtained from the sale ofobsolete equipment purchased with State appropriated funds have not been “expended” in the sense thatwould prevent their classification as State appropriated funds. You are therefore advised that revenue received by a soil conservation district from the sale of seed, fertilizer, or chemicals purchased from State appropriated funds, refunds on other expenditures made from State appropriated funds, and the revenue received from the sale of obsolete equipment purchased from State appropriated funds should be deposited to ““Stateappropriated funds.”

Inour Opinion V-999, supra, in stating that the use of State appropriated funds to purchase seed tobe resold would not constitute an expenditure ofthe funds so’as to prevent the moneys received upon the resale from being apart of the granted funds, we assumed that the districts did not resell the seed at a profit. It is our opinion that the amount realized upon the resale over and above the amount expended for the seed would be in the nature of earnings of the district and uiould not constitute a part of “State appropriated funds” and should be deposited by the district inits local fund account.

It is our opinion that rentals received by a soil conservation district from equipment purchased from State appropriated funds would be inthe nature ofearnings ofthe soil conservation district and would not constitute State appropriated funds and should be deposited by the district in its local fund account.

Your second question is the following:

“2. Most districts which we have examined to date have local funds which have been accumulated principally through donations, the purchase and sale of seed and/or fertilizer at aprofit, and the rental of equipment purchased by the district or granted or loaned to the district. Are the expenditures from these local funds subject to the statutory regulations imposed upon the expenditures from State appropriated funds provided inHouse Bill 97, 51st Legislature, Regular Session as amended by House Bill 190, 52nd Legislature, Regular Session? ” To the extent that soil conservation districts may ex

### ercise only such powers as have been conferred upon them by law and must operate pursuant to the statutes creating them and‘regulating their operation, all funds of such districts, must be expended consistently with the prov,isions ofHouse’Bill 97,, supra, and House WH 190, Acts 52nd Leg., R.S. 1951, ch. 497, po 12-t. 165a:9,.

Hon. C. H. Cavness, Page 3 (V-1365)

V.C.S.). Thus, Section 3ofHouse Bill 190, re-enacting Section 6 of House Bill 97, providing:foT and regulating the deposit:and withdrawal of all grants ofassistance and funds received by adistrict, applies equally to State appropriated funds and to funds received from other sources. Likewise, the restrictions onpurcha,sfng or repairing machinery (Sec. 2a, H.B. 97;‘Sec. 2, H.B. 190), the provisions regulating surety bonds (Sec. 4, H.B. 97: Sec. 4; H.B. 190), audits (Sec. 4, H.B. 190). sale ofequipment, seed; and fertilizer (Sets. 7. 8, H.B. 190) are protective provisions which would apply regardless ofthe original **source** ofthe funds involved. Your second question is therefore answered in the affirmative.

Your next question reads as follows:

“3. Can the followfng types ofexpenditure,s be legally made from either State appropriated funds or local funds or both: “A. Awards for essay c&tests on**vaiious** sOi conservation subjects.

,.. *B. Contributions tothe Texas Association of Soil Conservation District Supervisors. “C. Awards for **various** soil conservation projects.

‘D. Purchased entertainment for the promotion of soil conservation. One District sponsored a ‘Bankers Relation Banquet,’ and invited all of thebankers and heads ofother loan agencies inthe District0 The purpose ofthe banquet 

### was to acquaint the bankers and other guests with the soil conservation program and needs of the District. The costs ofthe banquet were paid from the State appropriated funds,” The very broad purposes and over-all policies of **our** State soil conservation laws are set forth in Section 2ofArticle **IbSa-4,** V.C.S. Itis difficult to conceive ofa greater, and at the same **time** valid, grant of powers or d one more general in terms than that bestowed upon the State Soil Conservation Board by Scction 4 ofArticle 165a-4, V.C.S., and upon the supervisors ofsoil conservation districts by Section 7, Article 1658-4, substantially re-enacted in Section 4E. Article 165a-8, V.C.S. (w.B.‘.97)~, and Section 13of House.Bill 196. Nevertheless, WEdo~not believe tit the Legislature intended toauthorize the expenditure of either SW&eappropriated or local funds for the giving ofawards for essay contests onvafious soil conservation subjects, or for the giving of awards for var”lous soil conservation projects,‘or for theHon. C. H. Cavness, Page 4 (V-1365)

purchase ofentertainment for the promotion of soil conservation. A presumption will be indulged that the Legislature desired and intended toenact avalid law, Pickle v. Finley, 91 Tex. 484, 44 S,W. 480 (1898); Maud V, Terrell, 109 Tex. 97, 200 S.W. 375 (1918); 9 Tex. Jur. 481, Constitutional Law, Sec. 61. Since a statutory authorization for expenditures for the purposes enumerated in subdivisions A, Cand D ofyour third question would be unconstitutional, as we will hereinafter show, we are ofthe opinion that such expenditures were not contemplated or authorized by the Legislature, Section 52 ofArticle III of the Constitution ofTexas provides:

“The Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision ofthe State to lend its credit or to grant public money or thing ofvalue inaid of, or to any.individual, association, or corporation whatsoever, *. e. . This provision is broad enough to embrace not only State appro- .: priated funds but funds or things ofvalue donated to the political subdivision by others.

If, as we have been advised occurred in one instance, the Chamber of Commerce ofa certain city saw fit todonate funds for the purpose ofproviding entertainment designed topromote soil conservation, the organization could accomplish this result only by paying for the entertainment itself because once the funds are donated to the political subdivision of the State, they become public money and the property ofthe political subdivision.

In subdivision B ofyour third question you request our opinion as towhether expenditures may be made by a soil conservation district from kither State appropriated funds or local funds or both as “contributions tothe Texas Association ofSoil **Conser** vation District Supervisors.” We were unable todetermine the nature of the organization referred to as the “Texas Association of Soil Conservation District Supervisors” itithat nowhere inour soil conservation law could we find that such an association was provided for. However, you have advised us orally that the district supervisors ofall the soil conservation districts inTexas have ’ organized themselves into an association for the purpose of carrying **out** the over-all purposes ofthe soil conservation program. We believe that the supervisors had the authority to associate themselves together byvirtue ofSection 11 ofArticle 165a-4, which reads as follows:

,-The supervisors ofany two (2) or more districts organized under the provisions of this Act may cooperate with one another inthe exercise ofany or all powers conferred in this Act.”. .

Hon. C. H. Cavness, Page 5 (V-1365)

The legislative determinations landdeclaratiotis of policy contained in Section 2ofArticle 165a-4. V.C.S.,,the State Soil Conservation Law, set forth in general terms the.brbad purposes Andy

over-all policies of our State soil conservatibn laws. 1 Soil conservation districts created under theauthorization of Section 5~ofArticle 165a-4 are governmentalxubdivisions ofthe State, public bodies corporate and politic. See Sets. 5F, 7, Art. Ma-4, and Opinion V-999.

The supervisors of such districts,,under~ Section 6of Article 165a-4, have express rights, powers,and dutiesconferred upon them. We quote the following excerpt from Section 6:

I“Sec. 2. (c) The Appropriate Corrective Methods, ,That to conserve ~soilresources hnd control and prevent soil erosion, Lt: is necessary that land-use practices contributing to sol1 waNage and s,oil erosion may be discouraged and discontinued, **and** appropriate soil-conseruing land-use practices be adopted and carried out; tM among the procedures necessary fog aldespread’rdoption, ar~ethe’carrying on ofengineering operatfyrPs such as 

### the cmftruction d terraces, terrace outlets, check dams, dikes, **ponds,** ditches. and t&el*e; the utilization of strip cropping, lister **fur** 

### rowing, cm cultivating, and contour furrowing; land iwigatfoa, seeding and pknCdmfiofwaste, sloping, abandoned, or eroded land@ toarrter-conserving and erosti-preventing plants, trees, and prarrsen; tiestation and re&restation; rotation of crops, soil staMlizatioa with trees, grasses, legumes, and other thick-growing, **sdl-hold&g** crops, retardation of runoff by increasing absorption ef rahhl’t; and retirement from cultivation ofsteep, highly erosive areas and areas nowbadly Bullied or otherwise eroded,

“(d) Declarstfon ofPolicy. ft,is hereby declared tobe the policy ofthe Legislature to provide for the cotiservation of soil and soil resources ofthis State, and for the control and prevention # soil erosion, and thereby to preserve natural resources, controi fkmds. prevent impairment ofdams and reservoirs, assist in maintitiing the navigability of rivers and harbors, preserve wildlife. protect the tax base, protect public lands, and protedt and pomote the health, safety, and general welfare ofthe people of this State, ind thus to carry out the mandate expressed inArticle XVI, Section 59a, of the Constitution ofTexas. Itis further declared as a matter of Legislative intent and determination ofpolicy that the agencies created, powers conferred and the activities contemplated in this Act for the conservatton of soil and water resources and for the reduction ofpublic damage resulting from **failure** to conserve such natural **resources,** shall be supplementary and complementary to thework ofvarious river and other authorities now established inthe State and to other State officers, agencies, and distaicts engaged in closely related projects. and shall not be duplicative thereof nor conflicting therewith.”Hon. C. H. Cavness, Page 6(V-1365)

“The supervisors may employ such officers. agents, and employees, permanent and temporary, as they may require, and shall determine their qualifications, duties, and compensation. The supervisors may delegate to their chairman, to one or more supervisors, or to one or more agents or employees, such powers and duties as they may deem proper. The supervisors shall furnish to the State Soil Conservation Board, upon request, copies of such ordinances, rules, regulations, orders, contracts forms, and other,documents as they shall adopt or eA-l ploy, and such other information concerning their activities as it may require inthe performance ofits duties under this Act.” Section 7ofArticle 165a-4 likewise confers powers upon districts and supervisors, the pertinent powers being summarized below:

“(1) To carry out preventive and control measures within the district including, but not limited to, engineering operations, methods of cultivation,

. , . and the measures listed inSubsection 0, ofSection 2 ofthis Act, on lands owned or controlled by this State or any ofits agencies, with the cooperation ofthe agency
. . .having jurisdiction thereof,, and on any other ,lands within the district upon obtaining the consent ofthe occupiers

. . .

“(2) To cooperate
. . .with, and, within the limits ofappropriations duly made available to itby law, to furnish financial or other aid to, any agency
. . . or any occupier of lands within the district, in the carrying onoferosion control and prevention operations within the district I

. . .

“(3) To obtain options upon and to acquire, by purchase, exchange, lease, gift, grant, bequest, devise, or otherwise, any property, real or personal, or rights or interests therein; to maintain, administer, and improve any properties acquired, to receive income from such properties, andto expend such income in carrying out the purposes and provisions of this Act; and to sell, lease. or otherwise dispose ofany ofits property or interests therein infurtherance ofthe purposes and the provisions ofthis Act; s. .

“(6) To develop comprehensive plans for the conservation of soil resources and for the control and pre

### ventlcm of soil erosion within the district, which,plansHon. C. H. Cavness, Page 7(V-1365)

shall specify in such detail as may be possible, the acts, procedures, performances., and avdidanc,es which are necessary or desirable for the effectuation ‘,

. of such plans, including the specification~of engmeering operations, methods of cultivation, the growing of vegatation, cropping programs, tillage practices,~and ‘ j changes inuse of land; and to publish such plans and ” information andbring them to the attention of occupiers oflands within the district;

. . .” The Texas Association 

### ofSoil Conservation District Supervisors elected a president and five vice-presidents. The Association authorized and directed the president and five vicepresidents to form a corporation under the name of “Soil and Water Conservation, Inc.” InAugust, 1951, the corporation was granted,,a charter under Subdivision 2ofArticle 1302 ofthe Texas Revised Civil Statutes of 1925. The purpose clause as incorporated in its charter provides:

“(1) To promote tothe utmost theconservation ofsoil and water resources for the security of our country and its people.

“(2) To bring about exchange ofinformation that, will secure a constructive conservation program.

“(3) To disseminate scientific data and factual information concerning soil erosion control and flood prevention.

“(4) TOencourage uniformity ofbasic policies and objectives in ,soil andwater conservation work.

“(5) To foster and develop active farmer participation and leadership in conservation and in the affairs of soil conservation districts.

“(6) To encourage the closest co-operation possible between soil conservation districts and a coordinated effort on their part.

‘(7) To publish aperiodical and any other’publications which would further the purposes ofthis corporation.

“(8) To make gifts ofmoney or ofreal or:personal property or of other things ofvalue tonon-profit chaeitable, benevolent, literary, religious, agx%xdtural or educational organizations in the furtherance of the purposes ofthis corporation.”Hon. C. H. Cavness, Page 8 (V-1365)

The charter further provides that the president and five vice-presidents ofthe T,exas Association ofSoil Conservation District Supervisors elected for each year shall comprise theboard ofdirectors ofthe corporation. We were furnished with a copy oftheby-laws ofSoil and Water Conservation, Inc., and find nothing contained therein that is inconsistent with our soil conservation laws, We are ofthe opinion that the means or instrumentalities tobe used by the soil conservation districts in effectuating the powers and duties conferred on such districts were left to the sound discretion ofthe districts, and that the means employed as outlined above in cooperating with one another in the exercise ofthe powers conferred in the soil conservation laws is a legitimate exercise ofthe discretion reposed in the soil conservation districts.

The State Soil Conservation Board informed us that the main purpose ofthe cooperative program is to publish jointly a monthly magazine, in order to publish plans and information as towater and soil conservation and tobring them to the attention of thevarious soil conservation districts and to the occupiers of land within thevarious soil conservation districts. The corporation, as agent for the various districts, will publish and circulate the magazine. Itis our opinion that the soil conservation districts may use either State appropriated funds or local funds in making “contributions” or payments to the Texas Association ofSoil Conservation District Supervisors to be used by itor its agent, Soil and Water Conservation, Inc., in carrying out the “comprehensive plans for , . . conservation ofsoil resources” and in disseminating “information throughout the State concerning the activities and programs of

. . . Soil Conservation Districts” (Art. 165a-4, Sec. 4G(4) and inbringing them tothe attention of the various districts and “occupiers oflands within the districts;

. . .”

Your next question reads as follows:

“4. Do such funds represented by inventories of, or accounts receivable resulting from the sale of, seeds, fertilizers and chemicals bought tobe resold but onhand onAugust 31st, 1951, thatwere originally paid for out of proceeds ofthe State Appropriation provided inHouse Bill 97 of the 51st Legislature constitute a part ofthe unexpended State Appropriation that is reappropriated by the provisions ofHouse Bill 190 ofthe 52nd Legislature? (Since your answer toQuestion 4 inyour Opinion No. V-999 (p. 20 thereof) holds such stocks are a part of unexpended State funds, the proceeds will now go to General Revenue unless reappropriated by House Bill 190.)”Hod. C. H. Cavness, Page 9 (V-1365)

Opinion V-999 does hold, in effett, that stocks of seed purchased tobe resold constitute a part ofany unexpended State appropriated funds. The opinion further points out that

“if at the end ofthe biennium a soil conservation district has purchased seed onhand that is **later** resold, the amount received 

### from the resale should then be paid into the **General Fund**  ofthe State Treasury.” However, since House Bill !90 appropriates ~ the unexpended balances ofall the sums appropriated and,gra,nted to the several soil conservation districta foe the fiscal 

### year ending August 31, 1950, and for the fiscal **year** endlng Auggst 31, 1951, itfollows that the amount received from the resale of seed after the biennium would not be,paid to the General Fund byt 8&aiid be retained by U&i- soil **e6e8crvstion** dirtricte. Preceeda from resale offertilizers ad &cmicslr 

### rcceivid af**ter** the close of the fiscal rear ending **Augur,t** 31, 1951, khould likewisa **be** retained **by** the **individual** districts. Alset it makes aa difference ihether the proceeds were received by ‘reason 

### of anrecount receivable resulting 

### frox%ulc d t&esrads, fertflirer, er chemicala ptior to’the tnd d the Fiscal year OPwhether the sale itself took place **after** the et@ ofthe fiscal yabr.

Question No. 6reada &s

### ‘follows: “6. Inour ruditr we have found where one District purchased 1New Headberg ‘Uni-Grader’ with 9’ C~~cyor Elevator, Serial Noi 548, Model 12, Ford En- +e #1172-AlbAT D 162 SSuper V Belt - $2,,695.00. Other ,Districts have entered **into** rental purchase a-c grecments which have resulted in eqaipment being ” boa*t 

### for amounts inexceso of $l,OOO.OO. One Dis- ” trict entered into a rental purchase agreement and paid t&z ialtial monthly installments 

### from the District’s locally earned furdr. **However,** four monthly installment! at $350.00 each, totrlling $1,400.00, were paid from tkc StaLcA*proprhtad funds durin&,the purchase .~..,.agr’eame~t,peribd’

. In~tittker~of 

### thr8c instances did the Districts.plaee 

### their elders through the Board of 

### Control. 

### l See, 2a 

### ofHtmse Bill No, 97 d the 51rt Legislature reads as follows: ”

### ‘Anyitem ofmachhery or eqtripmcat, the purthee price ofwhich **excoode** One Thousad Dollars #&),OMj, dull be purchased through the Bwrd 

### ofConttel

### u&r **sack regtiatioms**  

### ad **tcrme** .WSis requirsdHon. C. H. Cavness, Page 10 (V- 1365)

by State Law governing purchases for the State or any ofits political subdivisions which make purchases through the Board ofControl.’ “Do these acts onthe part of the Board ofDistrict Supervisors ofthe Soil Conservation Districts constitute illegal expenditure of State Appropriated funds, and if so towhom and towhat extent are they liable 7” The provisions ofSection 2a above quoted are clearly mandatory. Both the State appropriated funds hndthe local funds used for these purposes 

### were illegally expended. The Board of District Supervisors ofthe Soil Conservation Districts are officers ofthe districts (so referred to inArticle 165a-4, Sec. 5, par. F) and the length oftheir employment is described as their *term ofoffice” (165a:4, Sec. 6). We quote the following summation ofthe rules governing the responsibility ofofficers for public funds from 34 Tex. Jur. 473-474, Public Officers, Sec. 86:

“Officers are personally responsible for any .; unauthorized or improper disbursement or misapplication ofpublic funds. This liability extends tomembers ofaboard who participate inthe misapproprfalion 

### or diversion and toa married woman who is a member of such aboard. But of course an officer not shown to have participated in the diversion or misappropriation is not responsible therefor.” 

### Under this **rule** district supervisors whowere responsible for the illegal expenditure ofthe State and local funds are liable to their respective districts to the extent 

### ofdamage, ifany, suffered by the particular district.

SUMMARY Revenues ofa soil conservation district derived from the sale of seed, fertilizer, or chemicals originally purchased with State appropriated funds for resale, with the exception ofprofits realized therefrom; money received from refunds onexpenditures made from State appropriated funds; and revenue received from the sale of obsolete equipment purchased with State appropriated funds should be deposited to “State appropriated funds.” Rentals received by a soil conservation district for the use 

### ofequipment are, inthe nature ofearningsHon. C. H. Cavness, Page 11(V- 1365)

of the soil conservattnn district and should be deposited by the district in its local fund account. Expenditures from local funds are subject to the statutory regulations imposed upon expenditures from State appropriated funds by Arts. 165a-8 and 165a-9, V.C.S. The following types of expenditures cannot be made from either State appropriated funds or local funds: (I) awards for essay contests on various soil conservation subjects; (2) awards for various soil conservation projects; (3) costs ofa banquet at which bankers and heads ofother loan agencies were guests ofthe district for the purpose ofacquainting them with the district soil conservation program. Soil conservation districts may use either State appropriated funds or local funds in making contributions to the Texas Association of Soil Conservation District Supervisors to be used by it or its agent, Soil and Water Conservation, Inc., in carrying out the objects and purposes of the soil conservation laws. State appropriated funds represented by accounts receivable and by inventories of seeds, fertilizers, and chemicals bought to be resold but on hand onAugust 31, 1951, are covered by the appropriation made by Art. 165a-9. Section 2a ofArt. 165a-8 requires that any item of machinery or equipment which costs more than $1,000 must be purchased through the Board of Control. This provision is mandatory, and State appropriated funds and local funds used to pay in whole or in part for machinery or equipment costing in excess of $1,000 and not purchased through the Board of Control were illegally expended.

‘KFYfEIPBVED: Yours very truly, PRICE DANIEL Attorney General

Ewes&t Wchinson Exe,&ve Assistant W. V. Geppert

Charles D. Mathews First Assistant WVG/&fMC/mwb Mrs. Marietta MC Assistants