ATTORNEY GENERAL OF TEXAS GREG ABBOTT

April 8, 2008

The Honorable Homero Ramirez Webb County Attorney Post Office Box 420268 Laredo, Texas 78042-0268

Dear Mr. Ramirez: Opinion No. GA-0616 Re: Whether a county and school districts in the county may jointly develop or sell rights to the natural resources located on county school lands (RQ-0636-GA)

Youaskwhetheracounty and school districts inthe countymayjointlydevelop or sellrights to the natural resources andminerals located oncounty school lands, sharing expenses incurred and revenue realized.! Ifso, you ask whetherthey mayjointly create a local governmentcorporation or other association for that purpose. Request Letter, supra note 1, at 1. You do not ask about a specific plan and do not elaborate aboutthejointdevelopment and expenses you envision. As your questionis general, we will confineouranalysis accordinglyto generalprinciples concerningcounty school land. Your question concerns lands the state has given to counties to hold in trust for the benefit ofthe counties' public schools. Article VII, section 6 ofthe Texas Constitution governs a county's management and disposition ofits public school land: All lands heretofore, or hereafter granted to the several counties of this State for educational purposes, are ofright the property ofsaid counties respectively, to whichthey were granted, andtitle thereto is vested in said counties

. . . . Each county may sell or dispose ofits lands in whole or in part, in manner to be provided by the Commissioners Court ofthe county. Said lands, and theproceeds thereof, when sold, shallbe heldbysaidcounties alone as a trust for the benefitof public schools therein; said proceeds to be invested in [certain] bonds . . . , or in such other securities, and under such restrictions as may be prescribed by law; and the counties shall be

lSee Letter from Honorable Homero Ramirez, Webb County Attorney, to Honorable Greg Abbott, Attorney General ofTexas, at 1 (Oct. 10, 2007) (on file withthe Opinion Committee, also available athttp://www.oag.state.tx.us) [hereinafter Request Letter].The Honorable Homero Ramirez

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responsible for all investments; the interest thereon, and other revenue, except the principal shall be [the] available fund.
TEX. CaNST. art. VII, 

### § 6 (emphasis added). The fund for proceeds held intrust and the "available fund" mentioned in this provision are commonly known respectively as the "county permanent school" fund" and the "county available school fund." See TEX. EDUC. CODE ANN. 

### § 45.113(c) (Vernon Supp. 2007). The corpus ofthe county permanent school fund includes the proceeds from any sale or other disposition ofcounty school lands, held in an irrevocable trustinperpetuity for the benefitofthe county's public schools. 

### Id § 45.113(a)(2), (c). The incomefromthetrustconstitutes aportionofthe county available school fund that may be distributed according to law. 

### Id. § 45.113(c).2
A county's constitutional duty to hold the lands as trustee is reflected in the county commissioners court's statutory responsibility to "provide for the protection, preservation, and disposition oflands grantedto the county for educational purposes." TEX. Lac. GOV'T CODEANN. § 263.003(a) (Vernon 2005). The commissioners court's powers to manage the land under trust allow the courtto lease the surface ofsuch lands for the benefit ofthe county's public schools. See Falls County v. Delaney, 11 S.W. 492, 492 (Tex. 1889). A commissioners court also may sell a mineral interest in county school lands. Ehlinger 

### v. Clark, 8 S.W.2d 666, 670-72 (Tex. 1928) (holding that the county could grant an oil and gas lease for a royalty, inpartbecause "there was no authority in law for the county [itself] to enterupon the costly experiment ofexploring for oil onits school lands").
A county commissioners court and a school district board oftrustees are limited to the powers expressly granted to them by the constitution orby statute ornecessarily implied from such grants. See Canales v. Laughlin, 214 S.W.2d 451, 453 (Tex. 1948) (concerning county authority); Tex. Roofing Co. 

### v. Whiteside, 385 S.W.2d 699,701 (Tex. Civ. App.-Amarillo 1964, writ refd n.r.e.) (concerning school district authority). Neither article VII, section 6 nor any statute ofwhich we are aware expressly or implicitly authorizes a county and its school districts to "jointly develop or sell" rights to natural resources and minerals in county schoollands. To the contrary, article VII, section6 andrelated statutes prohibitthejointarrangementthatyourquestions seemto suggest. See Request Letter, supra note 1, at 1. The arrangementyou first describe, whereby the county and the school districts "share the expenses incurred and revenue realized from such [a] venture," id., indicates that a joint venture is contemplated. See id. A joint venture has "four elements: a community ofinterest in the venture; an agreementto shareprofits; an agreement to "share losses; and, a mutual right of control or management of the enterprise." Ayco Dev. Corp. 

### v. G.E. T. Servo Co., 616 S.W.2d 184, 186 (Tex. 1981) (emphasis added). Ajointventure to develop county school

2Former chapter 17, subchapter E contains similar provisions governing the county's duties with respect to county school land and the proceeds ofsales, rentals, and leases. See TEX. EDUC. CODE ANN. tit. 2 app. at 601-02 (Vernon 2006) (former Education Code §§ 17.81-.83). Chapter 17 was repealed in 1995, but continued in effect for school districts choosing to continue operating under its provisions. See Act ofMay 27,1995, 74th Leg., R.S., ch. 260, § 58(a)(I), 1995 Tex. Gen. Laws 2207, 2498; TEX. EDUC. CODE ANN. § 11.301 (Vernon 2006).The Honorable Homero Ramirez

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land resources would necessarily require the county to delegate a portion of its exclusive management authority under article VII, section 6 to the school districts in the county. The alternative proposal described in your second question also suggests a delegation of authority by the county. The proposal that the county and the school districts establish a separate corporation orassociationto develop or sell naturalresources andminerals from county school land appearsto contemplatethatthecommissioners courtwouldcedeits constitutionalauthority, inwhole or in part, to the corporation or association. Request Letter, supra note 1, at 1. The constitution, however, requires the county "alone" to hold the lands and proceeds in trust. TEX. CaNST. art. VII, 

### § 6 (stating that "Said lands, and the proceeds thereof, when sold,. shall be heldby said counties alone as atrust for the benefit ofpublic schools therein"). Reflecting this constitutionalmandate, theEducationCodemakesthemembers of the county's commissioners court the "sole trustees" ofthe trust established for the permanent school fund. TEX. EDUC. CODEANN. 

### § 45.113(b) (Vernon Supp. 2007). And not only are the members ofthe commissioners court the.· sole trustees ofthe land and the permanent school fund, they may not delegate their authority and responsibility under article VII, section 6, as a long line ofcases establishes. See, e.g., Williams 

### v. Pure Oil Co., 78 S.W.2d 929,931 (Tex. 1935); Potter County 

### v. C. C. Slaughter Cattle Co., 254 S.W. 775, 777-78 (Tex. Comm'nApp. 1923,judgm'tadopted);Logan 

### v. Stephens County, 83 S.W. 365,368 (Tex. 1904); Gano v. Palo Pinto County, 8 S.W. 634, 636 (Tex. 1888). Accordingly, this office has previously advisedthatacountymaynotdelegate its article VII, section 6responsibilities to the school districts in the county, relying on article VII, section 6 and the reasoning from the above-referenced cases. See Tex. Att'y Gen. Ope No. JC-0399 (2001) at 5. The same principles would apply here, whetherthe county shares its constitutional authority with the schooldistricts or cedes its authority to a separate corporation or association. Any arrangement to "jointly develop" county school lands in which the commissioners court shares or cedes its authority as sole trustee under article VII, section 6 would be tantamount to an unconstitutional delegation. Additionally, article VII, section 6 not only prohibits a county from delegating its trustee authority, it also would not allow the county or the schools to "share the expenses incurred and revenue realized." See Request Letter, supra note 1, at 1. The sale ofa mineral interestis a sale of a real property interest. Ehlinger, 8 S.W.2d at 670. The proceeds ofsuch a sale mustbe placed in the permanent school fund. See TEX. CaNST. art. VII, § 6. A county may not recoup its expenses incurred inthe performance ofits duties underthatconstitutionalprovisionfrom proceeds intended for the permanent school fund. Dallas County v.Club Land & Cattle Co., 66 S.W. 294,296-97 (Tex. 1902). And school districts are constrained in the use offunds derived from the county available fund. See TEX. EDUC. CODE ANN. § 45.105(a)-(b) (Vernon 2006) (limiting the use of "state and county available funds" to teacher and superintendent salary purposes). You observethatunderthe Texas TrustAct (the "Act"), atrustee mayreceive compensation andreimbursementfromthetrust. See RequestLetter, supranote 1, at 3-4 (citing TEX. PROP. CODE ANN. §§ 114.061(a), .063(a) (Vernon 2007)). You also note that an attorney general opinion has applied a provision ofthe Act to apermanent school fund. See ide at 3 (citing Tex. Att'y Gen. Ope No. M-ll04 (1972)). This office has subsequently cautioned, however, thatthe Act does not applyThe Honorable Homero Ramirez

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to the county as trustee to the extent such provisions would conflict with the county's duties under article VII, section 6. See Tex. Att'y Gen. Ope No. JC-0399 (2001) at 5. In 1902, the supreme court determinedthatwhile acountyis atrustee inthe contemplationofthelaw, unlike anordinarytrustee, a county must bear its expenses to administer the constitutional trust under article VII, section 6. See Club Land& Cattle Co., 66 S.W. at 297. Thus, the Act does not authorize a county to recoup its expenses as trustee under article VII, section 6.
In sum, a.county and school districts in the county cannot "jointly develop" or sell rights to natural resources and mineral rights in county school land ifsuch an arrangement means that the countywould surrenderits authority andresponsibilityas the soletrustee ofthe lands andthe county permanent school fund. A county may not delegate its authority under article VII, section 6 either by sharing its constitutional authority withthe school districts orby creating a separate corporation or association to exercise the county's authority. Furthermore, a county or school district may not recoup expenses to develop or sell natural resources and mineral rights from subsequent revenue. Finally, the county andthe school districts inthe county may not share inthe revenue realized from the sale ofnatural resources and mineral rights in such land.

### The Honorable Homero Ramirez

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SUMMARY 

### Article VII, section 6 of the Texas Constitution does not allow a county to cede or share its authority and responsibilities as sole trustee ofcounty school land and the county permanent school fund. Thus, a county and school districts in the county may not "jointly" develop or sell rights to natural resources and minerals in county school land by forming ajoint venture, a local government corporation, or other association to exercise the county's constitutional authority. A county or school district may not recoup expenses to develop or sell natural resources and mineral rights in county school land from subsequent proceeds or income from such land. The county and the school districts in the county may not share in the revenue realized from the sale ofnatural resources and mineral rights in such land.

KENT C. SULLIVAN First Assistant Attorney General ANDREW WEBER Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee William A. Hill Assistant Attorney General, Opinion Committee