Court Opinion

ID: 4130873
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:09:24.417873+00
Date Added: 2024-06-11T14:34:19.781615
License: Public Domain

Honorable Tom Craddick               Opinion No. JM-596
Chairman
Committee on Natural Resources       Re: Whether nonprofit water supply
Texas Rouse of Representatives       corporations are subject to the
P. 0. Box 2910                       Open Meetings and Open Records
Austin, Texas 78769                  Acts

Dear Representative Craddick:

     You inquire whether nonprofit water supply corporations are
re‘quiredto comply with the Texas Open Records Act, article 6252-17a,
V.T.C.S., and the Texas Open Meetings Act, article 6252-17, V.T.C.S.
Nonprofit water supply corporations may receive state financial
assistance under legislation implementing the Texas water development
plan. See Tex. Const. art. III, 5549-d -- 49-f, proposed by H.J.R. 6,
69th Lec(1985);    see also Water Code, chs. 15, 16, 17. Those that
receive financial assistance from the state are required by sections
15.006, 16.002, and 17.002 of the Water Code to comply with the Open
Records and Open Meetings Acts.

     You   express concern that other nonprofit water        SUPPlY
corporations which do not receive assistance from the state deny
access to their books and records to interested persons. You also
inquire whether nonprofit water supply corporations which do not
receive such assistance must comply with the Open Meetings and Open
Records Act. You specifically ask:

            Are nonprofit water supply corporations by law,
         whether statutory or otherwise, required to comply
         with the open meetings and open record laws of our
         state in circumstances other than those presented
         in the aforementioned sections 15.006, 16.002 and
         17.002? If affirmative, what are those circum-
         stances?

Article 1434a, V.T.C.S., authorizes the establishment of corporations
to furnish a water supply, sewer service, or both, to tons, cities,
private corporations, individuals, and military camps and bases.
V.T.C.S. art. 1434a, 81; Attorney General Opinion M-1242 (1972).
Three or more persons may form such a cdrporation and shall apply to
the secretary of state for a charter in the manner provided by law for

                                 p. 2661
Honorable Tom Craddick - Page 2    (m-596)

private corporations. Id. 53(a). Water supply corporations created
under article 1434a, V.-.S.,    are nonprofit corporations. Attorney
General Opinions M-840 (1971); O-3433 11941); see Parks v. Elliott;
465 S.W.2d 434 (Tex. Civ. APP. - Houston t14th DG.1  1971. writ refrd
n.r.e.). They are public~~utilities which are required- to hold a
certificate of convenience and necessity under article VII of the
Public Utility Regulatory Act, article 1446~. V.T.C.S., although they
are not subject to the rate-making provisions of that act. V.T.C.S.
art. 1446c, §3(c); §§49-62.

     A nonprofit water supply corporation that is not subject to
sections 15.006, 16.002 or 17.002 of the Water Code must fall within
the definition of "governmental body" found in the Open Records Act in
order to be subject to the access and disclosure provisions of that
statute. "Governmental body" is defined by the Open Records Act as
follows:

            (A) any board, commission, department, com-
         mittee, institution, agency, or office within the
         executive or legislative branch of the state
         government, or which is created by either the
         executive or legislative branch of the state
         government, and which is under the direction of
         one or more elected or appointed members;

             (B) the commissioners court of each county and
          the city council or governing body of each city in
          the state;

             (0   every deliberative body having rulemaking
          or quasi-judicial power and classified as a
          department, agency, or political subdivision of a
          county or city;

             (D) the board of trustees of every school
          district, and every county board of school
          trustees and county board of education;

             (E) the   governing    board    of   every   special
          district;

            (F) the part, section, or portion of every
         organization, corporation, commission, committee,
         institution, or agency which is supported in whole
         or in part by public funds, or which expends
         public funds. Public funds as used herein shall
         mean funds of the State of Texas or any govern-
         mental subdivision thereof;

                             p. 2662
Honorable Tom Craddick - Page 3 ~(JM-596)

             ,(G) the Judiciary is not inclu'dedwithin this
          definition.

V.T.C.S. art. 6252-17a, §2.

     A nonprofit water SUPP~V corporation is not a oolitical sub-
division. 'Tarrant County -h!a;erSupply Corporation v.' Hurst-Euless-
Bedford Independent School District, 391 S.W.2d 162 (Tex. Civ. App. -
Fort Worth 1965, writ ref'd n.r.e.1; Attorney General Opinion M-1070
(1972). Even though a city may contract with a water supply corpora-
tion to receive services, it may not delegate any of its sovereign
powers to the corporation. Attorney General Opinion M-1070 (1972).

     A water supply corporation is not an entity within the executive
or legislative branch of government, and thus does not fall within the
definition of governmental body stated in section 2(1)(A) of the Open
Records Act. Since it is not a political subdivision and may not
exercise delegated governmental powers, a nonprofit water supply
corporation is not a governmental body within subsections 2(1)(B)
through 2(1)(F) of the Open Records Act.       See also Open Records
Decision Nos. 343, 302 (1982); 228 (1979); compare Open Records
Decision No. 343 with No. 228. - Cf. Attorney General Opinion M-1070
(1972).

     The Open Meetings Act applies to meetings of governmental bodies.
V.T.C.S. art. 6252-17, 52(a). Therefore, to be subject to the Open
Meetings Act, an entity as an initial matter must be a governmental
body as that term is defined in the Act:

            (cl   'Governmental body' means any board, com-
         mission, department, committee, or agency within
         the executive or legislative department of the
         state, which is under the direction of one or more
         elected or appointed members; and every Commis-
         sioners Court and city council in the state, and
         every deliberative body having rule-making or
         quasi-judicial power and classified as a depart-
         ment , age*cy, or political subdivision of a county
         or city; and the board of trustees of every school
         district, and every county board of school
         trustees and county board of education; and the
         governing board      of  every   special district
         heretofore or hereafter created by law.

V.T.C.S. art. 6252-17, §l(c). Our discussion of the meaning of
"governmental body" in the Open Records Act demonstrates that an
article 1434a corporation is not "within the executive or legislative
department of the state" and that it is not any of the political
subdivisions or other local entities enumerated in the definition of

                              p. 2663
Honorable Tom Craddick - Page 4     (m-596)

"governmental body." See Tarrant County Water Supply Corporation V.
Hurst-Euless-Bedford Independent School District, m;          Attorney
General Opinion M-1070 (1972). The Open Meetings Act does not include
any prbvision comparable to the definition of "governmental body"
found in section 2(1)(F) of the Open Records Act, which refers to
corporations supported in whole or in part by public funds. We
conclude that a nonprofit water supply corporation need not comply
with the Open Meetings Act unless it is required to do so by sections
15.006, 16.002, or 17.002 of the Water Code. See generally Perlongo
V. Iron River Cooperative TV Antenna Corporation, 332 N.W.2d 502
(Mich. App. 1983) (state Freedom of Information Act and Open Meetings
Act did not apply to nonstock, nonprofit cable TV corporation).

     The Texas Non-Profit Corporation Act, article 1396, §§l.Ol-11.01,
V.T.C.S., however, provides access to certain kinds of information
held by a nonprofit corporation. See V.T.C.S. arts. 1396-2.23,
1396-2.23A. The Texas Non-Profit Corporation Act provides in article
1396-2.01, subdivision B, that its provisions shall not apply to any
corporation

          [ilf any one or more of its purposes for the
          conduct of its affairs in this State is to engage
          in water or sewer service and it has heretofore or
          is hereafter incorporated under . . . Article
          1434(a), Revised Civil Statutes of Texas, 1925.

V.T.C.S. art. 1396-2.01, subdiv. B(5).

     Section 2.01, subdivision B(5). was included in the original
Non-Profit Corporation Act, which was enacted in 1959. Acts 1959,
56th Leg., ch. 162, art. 2.01, at 286. A 1961 amendment added the
following provision:

            G. This Act shall not apply to those corpora-
         tions excepted under Article 2.01 B, Subsections
         (3). (4). and (5) of this Act; provided however,
         that if any of said excepted domestic corporations
         were heretofore or are hereafter organized not for
         profit under special statutes which contain no
         provisions in regard to some of the matters
         provided for in this Act . . . then the provisions
         of this Act shall apply to the extent that they
         are not inconsistent with the provisions of such
         special statutes.

V.T.C.S. art. 1396-10.04, subdiv. G; Acts 1961, 57th Leg., ch. 3C2. at
653.  The emergency clause of the bill which added subsection 10.04,
subdivision G, to article 1396 provides as follows:

                                  p. 2664
Honorable Tom Craddick - Page 5    ~(JM-596)

          [T]he fact that some types of non-profit corpora-
          tions are organized in this State under laws
          specifically applicable to them, which laws do not
          provide for many matters contained in the Texas
          Non-Profit Corporation Act, create[s] an emergency
          and an imperative public necessity. . . .

Acts 1961, 57th Leg., ch. 302, 93, at 653. The emergent:r clause in a
statute may be considered in ascertaining legislative intent, even if
it cannot be given effect as such. Grayburg Oil Co. V. Giles, 186
S.W.Zd 680 (Tex. 1945); Popham v. Patterson, 51 S.W.2d 680 (Tex.
1932). Section 10.04, subdivision G, modifies the section 2.01.
subdivision B, exemption for nonprofit water supply corporations from
the provisions of article 1396.        The quoted emergency clause
demonstrates that the provisions of the Texas Non-Profit Corporation
Act are to supplement the provisions of specific incorporation
statutes like article 1434a, V.T.C.S.

     Attorney General Opinion M-840 (1971) also concluded that article
1434a. V.T.C.S., should be supplemented by the provisions of article
1396, V.T.C.S.    It held that article 1396-10.04, subdivision G.
V.T.C.S., requires the articles of incorporation of a nonprofit water
supply corporation to state "that the corporation is a non-profit
corporation" in compliance with article 1396-3.02. subdivision A(2),
V.T.C.S.

     The Texas Non-Profit Corporation Act includes the following
requirements for access to certain records of corporations subject to
its provisions:

            A. Each corporation shall keep correct and
         complete books and records of account and shall
         keep minutes of the proceedings of its members,
         board of directors, and committees having any
         authority of the board of directors and shall keep
         at its registered office or principal office in
         this State a record of the names and addresses of
         its members entitled to vote.

            B. All books and records of a corporation may
         be inspected by any member, or his agent or
         attorney, for any proper purpose at any reasonable
         time.

V.T.C.S. art. 1396-2.23.

             A. A corporation shall maintain current true
          and accurate financial records with full and
          correct entries made with respect to all financial

                                  p. 2665
Honorable Tom Craddick - Page 6 (m-596)

          transactions of the corporation, including all
          income and expenditures, in accordance with
          generally accepted accounting practices.

            B. Based on these records, the board of
         directors or trustees shall annually prepare or
         approve a report of the financial activity of
         the corporation for the preceding year.        The
         report must conform to accounting standards as
         promulgated by the American Institute of Certified
         Public,Accountants and must include a statement of
         support, revenue, and expenses and changes in fund
         balances, a statement of functional expenses, and
         balance sheets for all funds.

            C. All records, books, and annual reports of
         the financial activity of the corporation shall be
         kept at the registered office or principal office
         of the corporation in this state for at least
         three years after the closing of each fiscal year
         and shall be available to the public for inspec-
         tion and copying there during normal business
         hours.   The corporation may charge for the
         reasonable expense of preparing a copy of a record
         or report.

            D. A corporation that fails to maintain
         financial records, prepare an annual report, or
         make a financial record or annual report available
         to the public in the manner prescribed by this
         article is guilty of a Class B misdemeanor.

             E. This article does not apply to:     [exemp-
          tions not relevant]. (Emphasis added).

V.T.C.S. art. 1396-2.23A.

     Article 1434a. V.T.C.S., includes no provision for record-keeping
by nonprofit water supply corporations or for inspection of corporate
records by corporation members or the general public. Accordingly,
section 10.04. subdivision G, of article 1396, V.T.C.S.. requires that
sections 2.23 and 2.23A of article 1396, V.T.C.S.. apply to nonprofit
water supply corporations. The inspection rights described in these
sections apply to all such water supply corporations, in addition to
any inspection rights under the Open Records Act which may apply to
particular nonprofit water supply corporations.

                               p. 2666
    Honorable Tom Craddick - Page 7     (X4-596)

                                  SUMMARY

                Sections 15.006. 16.002, and 17.002 of the
             Water Code require a nonprofit water supply
             corporation   organized   under   article   1434a.
             V.T.C.S.. to comply with the Texas Open Records
             Act, article 6252-17a. V.T.C.S., and the Texas
             Open Meetings Act, article 6252-17, V.T.C.S., if
             it receives state financial assistance. Nonprofit
             water supply corporations which are not subject to
             these Water Code provisions are not required by
             any other law to comply with the Open Meetings Act
             or the Open Records Act. All nonprofit water
             supply corporations organized pursuant to article
             1434a. V.T.C.S.,     are   subject   to   articles
             1396-2.23, and 1396-2.23A. V.T.C.S., relating to
             the inspection of certain records of nonprofit
             corporations.

C
                                              JIM     MATTOX
                                              Attorney General of Texas

    JACK HIGHTOWER
    First Assistant Attorney General

    MARY KELLER
    Executive Assistant Attorney General

    RICK GILPIN
    Chairman, Opinion Committee

    Prepared by Susan L. Garrison
    Assistant Attorney General

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