      OFFICE      OF THE      ATTORNEY        GENERAL     OF TEXAS

                                    AUSTIN



Honorable W. Lee O*Daniel
@overnor oi Texas
Austin, Texas

Deer Qovernor     OlDanlelt                 Opinion
                                               No. O-8313
                                       Ret Whether or not the Qulf
                                           Coast Water Company ia a
                                           utility oompany "02 any
                                           kind or charaoterwhatsoever*
                                           within the manin& of Seotlon
                                   ,/'     3, Aots 1934, 4Srd Leg., 4th
                                  ,/       0. S., Ch. 7, page Z3.
          We    reaeived      ~your’ist+m      dated June 15, 1940, requwt-




                                             ompany was lnoorporetedin 1931
                                              er to the publio for frrigation,
                                                       The Company apparent-
                                                     8 of Art1016 1308, Re-
                                                      elaum* in its oherter
                                                      go in eald article. It
                                                       authority uuder it8
                                                      which has been deolarad
                                                Se0 Gulf States Utllitlss 00..
                                                        rror   Refucred).

               e been informed that the Gulf Oaaat Water Uom-
               l.of Its water from the OoLorado RIveri that
the ooroganyhas approximatelyninety (90) oontraote for the
furnishing Or water to rios famere for irrigationpurpo444;
that the oorapanyfurnished water yaerly to irrigatr approximate-
ly thirty thousand (30,000) aores of land; that the aoazpanyowns
pumping plants, oanelr, laterale,ditohes, eto., used in furnlsh-
     Ronoreble I?,lea   O*Denlel,paga 8




     fog water to Its ouetomere and that the company doer not own
     eny lntereat in the land farmed to rlae.
              Wa deem it neceeeary to quote e part  of section 3,
     botcr1934, 43ra Leg., 4th Oalled 866dlion, Oh. 7, at pccge33
     alnoe your puery arises by 7irtua of the provleione of eala
     Aat. Said aeotlon reefla,in par6, as follower
               *That no gereon shall ho eligible for suoh
          appointment (to the boera of Qireators OS the Iawer
          Colorado River Authority)  if he haa, during the pre-
          cadlna three yearr berore his enrointmantbeen (IDI-
          ployeb:by en eleotrio pewer and-light company, gar



               Berore determiningwhether the dulf Ooaet water Company
    is a uttlltp oompanywlthln the meaning of the Aoh oreatlng tha
    l.ower Colorado River Authority, it 18 proper to ooneider the erl-
    dent intent of the legislature in  eneating the6 per6 of the above
    mentioned AoQ.
              An inepeotion0r sallate     Bill le?.8, Aete 43rd Leg.,
    4th C. 8.. ch. 9, page 19, reveals that      paver  has been conferred
    upon the Lower Colorado River Authority,       eating threugh it8 alr-
    eotore, to control, store, pre6brve, uee, dietributeand sell the
    weterm of the Colorado River, 60 develop, generate, dietribute
    and eel1 water power and sleatrloal      enorgy, to oonstruct,mein-
    taln, u8e ana operate tsoilitien,and meny ether poware toe nu-
    meroue to mention here.
              The legislatureintended thaf the afreotore of the
    Lower Colorado Rirer Authority should be persons who would aot
    for the bent intereetsof the.State. It there?ore sought to end
    did disqualifythose persons from being appointed to the Board of
    Direotors of the Lower Colorado River Authority whho,at the time
    of egpointzent,had been employedby an utility oompsnywithin
    three (3) yeere preaedingthe date od    e appolntmen6. This safe-
    guard waarenaoted to insure as far (18possible thet 6he affairs
    of the l,owerColorado River Authoritywould be oarrlsd  on to the




t
                                                                       510


    Reuoxable 1. Lea OvDanlel, page 3


    best Interestsor the State rather than for the Interest of
    private lndlvlduale.
              In this aouuectlan,It has been aalled to our atten-
    tlon that the Gulf Coast Water Corcpanyhas entered Into a aon-
    traat with the Rorrd 0r Dlreators 0r the Lower Colorado River
    Authority for the purahase or water. It 1s r4aUlIy seen that
    it a alreator, Officer or other employee or the Gull boast Water
    Wapany 18 eligible for the appOintdcent  la question, he rr,lght
    roll be mom InterestedIn seelug that the water oompany bene-
    fited rather than in protectInS the best interest8 or the Stste.
              Xn Title Xo. 188, Revised Clvll Lftatutee,
                                                       we flhd the
    followl~ articles whlah we believe  to be pertinent to the ques-
    tlon herein involved.  They are a8 followst
              *Artlalr 7466. Public rights
              =!fheaonservatlonand develnpmentor alt or
        the natural resourae8    or thla State, 1ncIkQlngthe
        aontrol. etorlm. 9reaervatlonand dletributlonof
        Its stoim and rid water8, the waters 0r Its rivers
        and streams ior irrigation,power and all other use-
        ?tulpurposes~ the reuu2m6ffonana Irrigation0r it8
        aria, semi-aridand other lauds needing irrigation;
        the realarcatlon   and drainage of its overflowedlands,
        and other lands needing drainage; the aonservatlon
        and deveIapuent~.of   Its forest, water and hgd?o-aleatrla
        power! the navlgatlon of its inland aad aoastal waters,
        ana tha preservationand oonservatlohoilall snah 1)1-
        tural  r46ources or the State dre each and all hersb
        dealared DubHa right4 and dufi~;s.~Iunaerscorlngo&a)

                      7467. Property of the State
              "Jirtlolo
             *The watera Or the ordlasry flbw ana underflow
        and tlaes of,every ilowing river or netural stream,
        of all lakes, bays or am.6 or tFisGull of Kexlco.
        and the eta&, fiood or rain watare or every rivb   or
        natural stream. eanvon. ravine. ao~r4ssloa or watar-
        shed, within the StkePot 'Paxa;,ai?4h&by &cl&d
                                         and the right t the
                                         ~roarlatldnin zhe
        manner and ior-the us& and piwp%ee-hereinafter pro-
        vlaea, and icaybe taken or diverted from its natural
        channel r0x any 0r the purpo64s expreesed la this
        chapter. Wen an appllaatlon16 aadr ror approprla-




c
Honorable W. L. OrDaniel, ~680 4


    tion af suah water for mining purpoaea, the owner of
    the land through which the water flows and whlah 28 to
    be arpropristedahell here the prior right to agpropri-
    ate dlamo,ana ehall be permitted to extrolse suah right,
    although nuah owner mey not hsts mde appl2oatlonprior
    to such eppliaationby another, and suah owner ahall have
    only ten days aftor the notice of applicationto appro-
    priate muoh water In whlcahto exeraiss his prior right
    to appropriate,whiah he shall do by written application
    filed with the Board of Water Xn&mers within suah
    time.*
          "Artiale 7858. Possessory tight
             ~till,ptrsana  who owa or h0ia a passes6cry risht
    or title to land adJoining cr aont2@ous to any dem,
    re84rvoir, aanal, dltah, rlume or let4s%l, oonstruatoa
    and maintained under the provisiona ot this ahapter,
    and who shall have esaured B ri&t to the ~4% of water
    in mild aand dltoh, iluin6,ldtcral, ~4%~0lf, aam
    or lake, shali be entitled to be supplied iram suah
    aanal, dltah, flume, lateral.,dam, nwrvolr or lake
    with nater ror irrl@tlon of suah Xand, and for mining,
    tilling,     manufaoturlng,   aevslopment0r power, ana
    etoakralslng,In accordanctwl%h the tsrmr of hir or
    their oontract."
         "Artlale 7656. Failure to fasrqeupon pria*~
               *ff the person, essoaletlon0r persona, or oor-
    port&ion owning or controllingrush wetek, and the
    person who own8 or hold8 a porssaaory rl&ht or tlfla
    to land aajofnlng or .co;lt2g~?us    to any eanrrl,ditah,
    rliie or lateral, lake or remxvolr, aonstruat4dor
    maintained       unQ,erthe provl62onsof'this ahapter, fall
    to aerse upon a price for a permanent~viater     right, or
    for the ~4 or rent@1 of the neeeasary water to lrrlgato
    the land or such person, or for mining, milling,      m4nu-
    taoturing,the aevslogmentof power, or stook raising,
    wch person, assoaiationof pereon8, 03 aorporatlon
    #hall, nsver8helesa+If h4, they or it, h4v4 or aontral
    any water not aontraatedto othrrs, ttmnish the neoes-
    sary water to euah pareon to irrigate his lads or
    ror mining, milling, manufcaatuing,the development
    or power or atook ralalnq, at aueh prices as aball be
    reasonableand .just,       and without d2aarlsinaflon.~”
Honorable2. lee O'Daniel, page 5


         WArticle 7565. Ford to fix rct68
           "The said Ecoardshall have Rower and eidhcrity,
    and it ~&till?e its duty to fix reasonablerates for
    the furniSbiIl&  0r water for the puryoaes or any SW-
    pose msntioned in this chapter."
         Urticle 7370. Rules and regulctiansmate and
    published
         TWery p6rSon, aasooiation0r persone, oorporatlon,
    or irrigationdistrict, coneervlngor 8uyFlyIngwater
    for any of the purpoaea authorized by this chapter;
    shall make and pu'bliahreeeonablerules and ngulatlonr
    relating to the method and manner of sqgly, u6e en4
    dietributionof rater, and prescribingthe time and
    manner of making eppllaationfor the une of water and
    payment therefor.W
         *Article 7883. Additional right or way obtained
          *Any person, asoooiatlon0r pereons, aorpcration,
    irrigbtlm or water improvementdistrlot, or any oity
    or town, may ale0 obtain the right 0r way over privatr
    lend8 and ale0 the lonae tar pumping plants, intakes,
    beadgates and atorace re8ervcslr8,    by oondemnetlon,by
    causing the darr%iges  for any Drivets property appTopried.ed
    by any euoh person, aoeooirtion0r persone, oorpor2tioq
    water improvementor irrigation district or city or town,
    to be aasesscd end paid for as provided.bythe Statutes
    0r thic Stctc and ae prcvided in Title 5Z 0r this Aot
    relating to 1E.  minent Domain* provided, however, that
    when the power granted by this section is eought to be
    exeroiaedby any person or aasoolaticnof persons, but
    net including irrigationoorporatlona,diatrfcte, cities
    or towns, he or they shall first make appliceEtion    to the
    Doz~rdci :vaterHnginsers for suoh condemnationand said
    Board shall make due inveatigotion     entl if it deems ad-
    visable ahall give notioe to the party ownihg the land
    8oU@t    to  be oondemned, end after hearing, may institute
    such oondsnn!Jtion   prooeedingsIn the name of the State
     d
    OL Texes    ror the use and benefit of said person or per-
    sons and eL1 others aimllwly      aitunted, the coats of
    said cult and condamnationto be paid by the person or
    persons at whooseinstance the same la Institutedin pro-
    portion to the benefit8 reoeived     by each a6 fixad by
    eaid board and to be paid before use is m<ideof such
    oondemnedrights of property; and thereafterall per-
    sane seeking to take the benefits of suoh condemnation
    proceedingsshall make applioation therefor to the IW>rd
 Honorable E. Lee C'Daniel,Rags 6


      of Water Rnginvieraand ii euoh appllotiticnis granted
      shall pay lees and clxrges 68 may be fixed by the
      Bocrd."
           The ?asr6 of Water Engineer8  is vested with broad pow-
ers in regulating the use o? water over whloh It has regulatory
ocntrol. Reoause the Gulf Coast Water Company takes all of its
weter out of the Colorado River and rdsllait to rioe farmers
for t!lerurpoae of irrigating rios land, the raid oompmny is
subject to regulationby the Roerd of Watsr Engineers ae pro-
vided in Title 128, Revised Civil Statutes. Artio1e 7555, 8upra,
provides  that the furnisher of water must supply water to *all
persons  who own or bold a possesscry right or title to land ad-
joining or oontiguouato any den, rcwervclr,tanal, ditch, flume
or letcrel*when they shall have asoured a rl ht to the use OS
the water. \:eare lnforrced that some ninety 790) persona have
secured the right to receive the water from the Gulf Coast Wa-
ter Company.
             Artioies 7556 and 7557, provide, thst water must be
supplied at suoh prices as shall be rsaeoneblsandwlthout die-
or#dntition.     Artiole 755.5$ivrs the Roard ot Water Engineers
power end authority to fix reasonablerntes lor the use of the
water. Article 7570 reqtirae the furnisher of water to make and
publish reasnncblerules and regulationsrslatiq to the manner
and x&hod of supply, usa and distribution,and preeorlblng
the time and manner OS making applloatlanfor the use of water
and ya~ymenttherefor,
          krtiole 9883 grants irrigationoonpaniesth,sright
of eminent doma:n. To make oertein that irrigationocn5p4aie4
had the right to condemn land under Artlols 7583, the 44th
Xegislature,Reguler  Eession, 1935, enaotsd Senate Bill Roe.
155, Ch. 48, page 126, clarifying aaid article. The emergency
oleuse of said Aot reads aa follows:
          "b00. 2. The Sect thet under the oodlfioation
     of 1925 the oodiilsrs, or else the printers, left a
     question unCer the new laws of 1925 as to the power4
     9f irrigationcorpora,tions to oondtvmnlend, whioh
     power has a,lwaysbeen expressly reoogninedin Texas,
     and it is necessary to clear up the question and it
     is vital to the agriculturaldevelopmentof this Stats,
     oreates an emargenoy and on imperativepublic neoeselty
                                                                       513


    Honorable W. Leo O*Daniel,page   7


         that the ConstitutionalRule requiringbills to be
         read on three several days la each House be surpended,
         and the name is hereby suspended,and that thlrrAot
         take effeot and be in foroe from and after its passage,
         and it is 80 eneoted.n
              In the oase of Colorado Canal Co., vs. KoFarland and
    5outhwel1,94 8. W. 400, the Court of Civil  ~ppealr went LIOfar
    aI to sag that the possessionof the right of anbent domain
    flxad the status of an Irrigationoompany as a quart publfa
    corporationregardlees of whether it exerolnesthe power or not.
              Wr. Justice Dibrall, speaking for the Supreme Court
    of Texas in the oase of Raywood Rice, Canal and YillSng Co., vs.
    V, F. Erp.and W. E. @right, 105 Texae 161, said:
             *The granting of the power of eminent domain
        imposes a public service in return. No authority
        under our law exists ror conferringthe power at
        eminent domain for private use. The moment suoh
        p-or is granted the grantee beoomm quasi publio
        in ohsraoter and while hi8 or Its funotlona are ex-
        erolaed for prorlt they must be exeroieed in the in-
        terent of the publio upon reasonableterme and without
        dlaerlm,fnation.* e en
              We quote from the oaee oi Amerioan Rio Wands Land and
    Irrigation Co., vs. Mercedes Plantation Ce., 155 8. W. 886, (re-
    r023d ani3 atrimed 208 6. w. 9041, as followa:


             *Appellantoorporatlonwae organlsedand ohartsr-
        sd under aeotion 11  o. El, p. 23, ot the dot8 of 1895
        (R. 5. ~1911,art. !&02 at seq.), and follows the language
        ot that aot In stating its purposes and powers. From
        these powers grow, by operation of law, ita duties, which
        cannot be #hanged or leeesnsd by Its intentions, In
        Borden t. Rio8 & Irrigation Co., 981Tex. 404, %b 3. #.
        11, 107 Am. St. Rep. 640, the Supreme Court of this state
        held that euoh a oharter create8 a quasi publio oorpora-
        tioa whiah is oharged with duties to the publio aoamienau-
        rate with the powers candprivilegesoonferred upon it
        by law. The Leglslsturein the above sot has not very
        olearly doiined the rights of the publio nor the duties
        of the eorporatlon, but a aartful rtudy of the langur,go
        of the aot in the light of the well-eetablisbedprinoi-
        pies OS law makes clam the meaning. As aptly raid by
        the learned Judge who wrote the opinion in the Borden




c
DonorableW. I,eeO'Daniel,page 8


    Caee the powers of the corporationare oonferred to
    enae*ie It to approprlntewater and to convey it 'to all
    persons entitled to the 8me$* to *all persons who OWA
    or hold a poeeeseory right or title to land adjoining
    or con"uiguous to any canal,* etc., aAd *bho shall h:ive
    aacured a right to the use of water * * * in aooordance
    with the terms of their oontraot.' In case-of a short-
    age of water, a plan for prorating the supply is Fm-
    vlded, and the sale of a permanentweter ri&t         is made
    an easement upon the land which will ycos with the title,
    eto. It is further provided that in case no ecntreoi can
    be agreed upon between the conamer and ttreIrrigation
    company, the conauxer shnll neverthelessbe entitled to
    water upon rez.scnable   terms. Such lmgusge, aided by
    the rule ot law that only puhlio or quasi puhllo aor-
    porations are endowed with the power of eainent dozmln,
    oan only bo understoodto mean that out of the grant of
    power to the oor?oretlonahall grow, ipso faoto, the
    right of the property owner to receive, upon reasonable
    texvca,a fair proportion    of the water taken from the
    water ceurse and conducted through its oanals, and that
    the power of the corporetionto contract for the aupplp
    of water ia limited to such subjects a8 do not oonfllct
    with the righte of the parties ae rlxed by the law.
    In the Eorden Case the court,    upon t,hla subject,    aaid:
     *The power to oontrtot,here given to the owmr of the
    plant, oannot, if the business is to he regarded as
    affected with a publia interest, be reaognized a8 ab-
    solute and LIAoOAtrolled.Comon carriers aAd othera
    engaged in publio oallings h:ve the power to Cantreat,
    but it cexmot he 80 employed as to absolve them from
    their duties to the puhllo or to deprive other8 of
    their rights. Right8 hre evidentlysecured by this
    statute to those 80 eitubted 38 to be able to avail
    themselves of the water provfded for, and those rights
     it is the duty of the owners of the contemplatedbusl-
    ne38 to rospeot; ami the power to contract, under the
    well-recngnizedprinciplea applicableto those oherged
    with auah duties, mu& be exercised in subordinationto
     suoh duties aAd rights. Reasonable contracts are what
    this statute means, and not contrecteemployed as
     evasions of duty.' 98 Tex. 511, 86 8. ?i. 15, 107 Am.
    St.   Rep.   640.”

          See 8 a. 1. R. 968, 13 k. I. R, I.?27and 44 Tex. Jur.
339-369 for a full dlsousslon and oit&tioA of authOritio8oonoern-
ing the question of an irrigationcompany being a utility oom-
                                                                 .
                                                                     5513

Ronorable W. Lee O*Danial,pi-ee9


g-4.

          Fran the above oiteb authorities,It ie apperent
that an irrigationoompany pamesses   many of the attributes
oommon to the more generallyknowi utflity  oompanies.    Further,
it seems to ua that there ere a6 many reeson~~,it not more, for
alequalifyinga director, of’ffoeror employee of an Irrigation
oom~enp than there would be OS disqualifyinge direator, of-
fioer or employs of a gas or telephens oomgany.      Certainly,
from e persoAa1 6teAdpoint,it would seem that e person in-
terested in e water oompeny is in a muoh better poaltlon to
profit from the appointmentin question than a person lnterest-
ed in a gas or telephoneoompanl.
          For the reason* herein ststed~,ve are of the
opinion that the Gulf aoast Water Company 18 a utility oom-
pany rlthln the meaning of 8eotion 3, Aata 1934, &Ml Leg.,
4th a. a., ah. 7, p. es. It follewr that a director, of-
ifaer or other employee of said oompany is lnelig~blsto
be appointed to the Emord of Direotora of the Lower aoloredo
River Authority a8 provided in maid Aat.
                                           Tows very truly
                                     ATTORNRT QEW?AL   OF   T!XXAS




                                                   Leo 8hoptaw

LS:ZF




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