, 

THE ATTORNEY GENERAL 

OF TEXAS 

Honorable David H. Cain Opinion No. JM-782 

Chairman 

Committee on Transportation Re: Whether article III, section 

Texas House of Representatives 18. or article XVI, section 40, of 

P. 0. Box 2910 the Texas Constitution prohibits a 

Ausein, Texas 78769 member of the Texas House of Representatives from being employed by 

the Brazes Transit System, a recipient of federal funds 

Dear Representative Cain: 

You ask whether a member of the House of Representatives may 

be employed as executive director by the Brazes Transit System, a 

recipient of state-administered federal grant funds under section 18 

of the Urban Mass Transit Act of 1964, codified es section 1614 of 

Title 49 of the United States Code. You inform us that the Brazes 

Transit System is also eligible under article 6663c, V.T.C.S.. for 

state funds to match the federal grant, but that it has nor. received 

any state matching funds. 

You do not ask us to address any specific provision; however, we 

believe your question requires an examination of article III, section 

18, and article XVI, section 40, of the Texas Constitution. Article 

III, section 18, of the constitution bars members of the legislature 

from being directly or indirectly interested in any contract with the 

state or any county "authorized by any law passed during the tern for 

which he was elected." Article XVI, section 40 provides in its last 

sentence that no legislator 

may hold any other office or position of profit 

under this State, or the United States, except as 

a notary public if qualified by law. 

Trx. Const. art. XVI, 540. 

Article III, section 18, has been held to prohibit a legislator 

from entering into a contract with the state authorized by a statute 

enacted during his term as a legislator. Lillard v. Freestone County, 

57 S.W. 338 (Tex. Civ. App. 1900, no writ). This office has 

determined that article III;-section 18, also bars legislators from 

contracting with the state if they were members of the legislature 

when the appropriation providing funds for the contract was enacted. 

p. 3686 
Honorable David H. Cain - Page 2 (JM-782) 

Attorney General Opinion Nos. JM-162 (1984); H-696, M-625 (1970); 

O-6582 (1943); O-1519; Conference Opinion No. 2411, January 30, 1922. 

In the present case, the legislator does not contemplate 

contracting with the state. He wishes to be employed by the Brazes 

Transit System which ie operated under the Brazes Valley Community 

Action Agency, a nonprofit corporation established by political 

subdivisions to receive and administer federal grant funds under 

various federal programs. See 42 U.S.C. 8§9901-9912 (providing for 

community services grants r0 states). See also Attorney General 

Opinion H-1212 (1978) (organization of community action agency under 

now repealed provisions of Economic Opportunity Act of 1964). T~hhe 

Brazes Transmit System receives funds under section 1614(b) of title 49 

U.S.C., which establishes a formula grant program for public transportation projects included in a state program of projects "for public 

transportation services in areas other than urbanized areas." 49 

O.S.C. §1614(b). These funds are administered by the State Highway 

and Public Transportation Department pursuant to section 3 of article 

6663~. V.T.C.S. See generally Attorney General Opinion MW-395 (1981) 

(discussing role of State Highway and Public Transportation Department 

in administering formula grants). The federal grant funds are 

appropriated to the Highway Department. See Acts 1985, 69th Leg., ch. 

980, at I-97, 98 (budget 104-05). The BrGs Valley Community Action 

Agency makes application to the Highway Department for the federal 

grant and receives them subject to its agreement with the Highway 

Department that it will cornply with the statutes, rules and 

regulations applicable to the grant. Thus, the grant process uses 

contractual controls to insure that the purposes of the federal law 

are carried out, and the recipient must contract with the Highway 

Department fo abide by those conditions to receive a grant. This is 

the "contract with the state" which must be looked at in light of 

article III, section 18, of the Texas Constitution. 

We assume that the legislator in question was a member of the 

legislature when the federal grant funds were appropriated to the 

Highway Department to distribute to local transit systems. According 

to facts provided us, the legislator's pecuniary interest in the 

contract consists of his salary as executive director of the transit 

system, an entity which receives the benefit of the federal grant. He 

is not a party to the contract between the Brazes Valley Community 

Action Agency and the State Department of Highways and Public 

Transportation. We do not believe he can be said to be directly 

interested in this contract. 

The facts of this request differ from those at issue in Attorney 

General Opinion MW-477 (1982), which concerned the interest of city 

councilmen in federal funds received in an Urban Development Action 

Grant by the city. The city council contracted on behalr of the city 

to receive the granr, and then individual council members contracted 

with the city council in their privates capacity as merchants to 

receive funds under the grant. Attorney General Opinion MW-477 (1982) 

determined that the city council members were pecuniarily interested 

p. 3687 
Honorable David H. Cain - Page 3 (JM-782) 

in a contract with the city and that they therefore violated common 

law restrictions against conflict of interest as well as city charter 

prohibitions against conflict of interest. 

The present request also differs from chat addressed in Attorney 

General Opinion M-714 .(1970), where a city councilman accepted .the 

position of executive director of a community action agency organized 

as a nonprofit corporation by the city, county, and school district. 

The expense of the executive director's salary was paid in part from 

the city treasury. Article 988, V.T.C.S., at that time barred any 

city council member from being interested in any work, business, or 

contract, the .expense of which was paid from the city treasury. 

See Act of March 15, 1975. Acts 1975, 14th Leg., ch. 100, 8147, at 

113, 154, 8 H. Gamil, Laws of Texas 526 (1898); repealed by Acts 

1983, 68th Leg., ch. 640, at 4082. The employment was expressly 

barred by statute. 

In the present case, the executive director of the Brazes Transit 

System would have no direct interest in any contract with the state. 

His interest in his salary with the transit system does not in our 

opinion constitute even an indirect interest in a contract with the 

state. The federal grant is forwarded from one level of government to 

another, subject at each level to promises to use it according to its 

terms and conditions. By the time any grant funds reach the executive 

director as salary, his interest in any contract with the state IS too 

remote to be considered an indirect interest under article III, 

section 18. See generally Attorney General Opinion K-625 (1970) 

(discussing remote or insubstantial interest in a contract). 

A recent judicial opinion on article III, secti‘m 18, of the 

Texas Constitution interprets that provision to give effect to the 

intent of the people who adopted it, in light of conditions existing 

at that time. Washington v. Walker County, 708 S.W.2d 493 (Tex. App. 

- Houston [lst Dist.] 1986, writ rrf'd n.r.e.). The case arose out of 

the appointment of a state legislator as attorney for an indigent 

prisoner accused of capital murder. 

The trial court directed the county and the state to pay the 

appointed attorney $50,000 under article 26.055 of the Code of 

Criminal Procedure. The State Comptroller forwarded to the county 

$50,000 in grant funds provided by the Governor's Criminal Justice 

Division. Washington v. Walker County, supra; Attorney General 

Opinion JM-287 (1984) (same facts as Washington v. Walker County, but 

declining to rule on validity of judicial order). The county refused 

to pay the state funds to the attorney, contending that article III, 

section 18 prohibited the payment. The court in Washington v. Walker 

County, 708 S.W.2d 493 (Tex. App. - Houston [lst Dist.] 1986, writ 

ref'd n.r.e.). evaluated article III, section 18, as foliows: 

Art. III. sec. 18 was intended to prevent 

personal gain and profit by members of the 

legislature as a result of the office they hold. 

p. 3688 
Honorable David H. Cain - Page 4 (JM-782) , 

It was first included in the Constitution of 1876 

in response to the graft that occurred during the 

reconstruction period following the Civil War. 

Tex. Const. art. III, sec. 16, interp. comentary 

(Vernon 1984). The negotiated agreement involved 

in the Lillard case was the kind of interest-Art. 

III, sec. 18 wes intended to prohibit. 

Washington v. Walker County, 708 S.W.Zd et 496. The court discussed 

the attorney's interest in his appointment to represent an indigent 

defendant and concluded that it was not a contract between the 

attorney end the state or county merely because the attorney received 

the incidental benefit of attorney fees. 

The court's remarks on article III. section 18, quoted above, are 

relevant to the present inquiry. The contract between the State 

Department of Highways and Public Transportation end the nonprofit 

community action agency is not the kind of negotiated agreement that 

article III, section 18, wes intended to prevent. The federal government establishes the terms upon which its money will be distributed, 

and every governmental entity acting es a conduit for the grant funds 

agrees to comply with those terms. The legislature's role is 

restricted to authorizing state entities to participate in the federal 

program. See, e.g., Attorney General Opinion MW-395 (1981); H-1272 

(1978). Under the facts presented there is little opportunity for 

"personal gain and profit by members of the legislature es a result of 

the office they hold." Washington v. Walker County, 708 S.W.Zd at 

496. The opinion of the court in Washington v. Walker County, lends 

support to our conclusion that article III, section 18, was not 

intended to prohibit a legislator's appdintment to the position 

of executive director of a transit system which receives state 

appropriated federal grant funds. 

Article XVI, section 40, of the Texas Constitution provides that 

No member of the Legislature of this State may 

hold any other office or position of profit under 

this State, or the United States, except as a 

notary public if qualified by law. (Emphasis 

added). 

Tex. Const. art. XVI, §40. The emphasized language has been held to 

prevent a legislator from receiving compensation as an employee of a 

state supported junior college, Letter Advisory No. 4 (1973); or a 

state university, Letter Advisory No. 153 (1978). See also Attorney 

General Opinion JM-32 (1983). Attorney General Opinion C-221 (1964), 

construing the language of a former version of article XVI, section 

33, of the Texas Constitution, concluded that an employee of the 

Sebine River Authority held a "position of honor, trust or profit" 

under the State of Texas. Tex. Const. art. XVI, 533 (1876, emended 

1972). The Sabine River Authority, was u a governmental agency of the 

State of Texas. a body politic and corporate." Acts 1949, 52st Leg., 

? 

p. 3689 
. 

Honorable David H. Cain - Page 5 (JM-782) 

ch. 110, 51, at 194. An employee of the river authority was therefore 

an employee of an agency of the state. 

The prior opinions of this office which have construed the phrase 

"position of profit under this State" or similar language have found 

it to apply to employees of state agencies and of political subdivisions which can be characterized as agencies of the state. Cases 

from other states have limited comparable provisions to employees of. 

state agencies or positions created by state statute. See Begich v. 

Jefferson, 411 P.2d 27 (Alaska 1968) (employee of state-operated 

school system holds position of profit under -the state); Wood v. 

Miller, 242 S.W. 573 (Ark. 1922) ("civil office" under this stateN 

means "under the laws of this state,” or by virtue of authority 

conferred by state es sovereign); State v. Peterson, 369 A2d 1076 

(Del. 1976) ("office of trust, honor or profit under this state" 

includes county officer with right to exercise some part of sovereign 

power of the state). 

The executive director of the Brazes Transit System is employed 

by a nonprofit corporation. He is not an employee of a state agency 

or of a political subdivision acting es an agency of the state to 

carry out a state policy locally. His .employment is not created 

"under state law." Cf. Cassiano v. Amigos de1 ialle, Inc., 776 F.2d 

1300 (5th Cir. 1985) (nonprofit corporation which uses federal funding 

to provide services for ;he elderly was not acting "under color" of 

state law). Article XVI, section 40, does not bar him from serving as 

executive director of the Brazes Transit Authority. See Attorney 

General Opinion H-1304 (1978) (legislator not necessarilybarred from 

receiving federal funds es officer of corporation which receives 

federal contract payment or grant). See also V.T.C.S. art. 6252-9b, 

557, 8; Attorney General Opinion H-696 (1975). 

SUMMARY 

A member of the House of Representatives is 

not prohibited by article 111, section 18, or 

article XVI, section 40, of the Texas Constitution 

from being employed by the Brazes Transit System, 

a recipient of federal funds administered by the 

State Department of Highways end Public Transportacion. I 

Very truly your 

. J-h 

J I M M A T-T 0 X 

Attorney General oi Texas 

MARY KELLER 

Executive Assistant Attorney General 

p. 3690 
Honorable David H. Cain - Page 6 (JM-782) . 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Susan L. Garrison 

Assistant Attorney General 

p. 3691