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)

You ask whether a county and school districts in the county mayjointly develop or sell rights

to the natural resources and minerals located on county school lands, sharing expenses incurred and

revenue realized.! Ifso, you ask whether they may jointly create a local government corporation 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 about the joint development and expenses you envision. As your

question is general, we will confine our analysis accordingly to general principles concerning county

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 which they were granted, and title thereto is

vested in said counties . . . . Each county may sell or dispose of its

lands in whole or in part, in manner to be provided by the

Commissioners Court ofthe county. Said lands, and the proceeds

thereof, when sold, shall be held by said counties alone as a trustfor

the benefit ofpublic 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 with the Opinion Committee, also available at http://www.oag.state.tx.us)

[hereinafter Request Letter].
The Honorable Homero Ramirez - Page 2 (GA-0616)

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 in trust 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 of county

school lands, held in an irrevocable trust in perpetuity for the benefit ofthe county's public schools.

Id § 45.113(a)(2), (c). The income from the trust constitutes a portion ofthe 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 granted to the county for educational purposes." TEX. Lac. GOV'T CODE ANN.

§ 263.003(a) (Vernon 2005). The commissioners court's powers to manage the land under trust

allow the court to 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, in part because "there was no

authority in law for the county [itself] to enter upon the costly experiment ofexploring for oil on its

school lands").

A county commissioners court and a school district board of trustees are limited to the

powers expressly granted to them by the constitution or by statute or necessarily 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 school lands. To the contrary, article VII,

section 6 and related statutes prohibit the joint arrangementthat your questions seem to suggest. See

Request Letter, supra note 1, at 1. The arrangement you 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 agreement to share profits; an agreement to"share losses;

and, a mutual right ofcontrol or management ofthe enterprise." Ayco Dev. Corp. v. G.E. T. Servo

Co., 616 S.W.2d 184, 186 (Tex. 1981) (emphasis added). A joint venture 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 of sales, 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 - Page 3 (GA-0616)

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 or association to develop or sell natural resources and minerals from county school land

appearsto contemplate thatthe commissioners courtwould cede its constitutional authority, 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 held by said counties alone as a trust for the benefit of public schools therein"). Reflecting this

constitutional mandate, the EducationCodemakesthe members ofthe county's commissioners court

the "sole trustees" ofthe trust established for the permanent school fund. TEX. EDUC. CODE ANN.

§ 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 of cases 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 advised that a county may not delegate its article VII, section 6 responsibilities

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, whether the county shares its constitutional authority with the school districts 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 of a mineral interest is a sale of

a real property interest. Ehlinger, 8 S.W.2d at 670. The proceeds ofsuch a sale must be placed in

the permanent school fund. See TEX. CaNST. art. VII, § 6. A county may not recoup its expenses

incurred in the performance ofits duties under that constitutional provision from 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 of funds 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 observe that under the Texas Trust Act (the "Act"), a trustee may receive compensation

and reimbursement from the trust. See Request Letter, supra note 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 a permanent school fund. See ide at 3 (citing Tex. Att'y Gen. Ope

No. M-ll 04 (1972)). This office has subsequently cautioned, however, that the Act does not apply
The Honorable Homero Ramirez - Page 4 (GA-0616)

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

determinedthat while a county is a trustee in the contemplation ofthe law, unlike an ordinary trustee,

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 if such an arrangement means that the

county would surrender its authority and responsibility as the soletrustee ofthe lands and the county

permanent school fund. A county may not delegate its authority under article VII, section 6 either

by sharing its constitutional authority with the school districts or by 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 and the school districts in the county may not share in the revenue realized from

the sale of natural resources and mineral rights in such land.
The Honorable Homero Ramirez - Page 5 (GA-0616)

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 of county 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 a joint 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 of natural 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