                                ATTORNEY GENERAL OF TEXAS
                                             GREG        ABBOTT




                                                   April 8, 2008



The Honorable Homero Ramirez                            Opinion No. GA-0616
Webb County Attorney
Post Office Box 420268                                  Re: Whether a county and school districts in the
Laredo, Texas 78042-0268                                county may jointly develop or sell rights to the
                                                        natural resources located on county school lands
                                                        (RQ-0636-GA)

Dear Mr. Ramirez:

        You ask whether a county and school districts in the county may jointly develop or sell rights
to the natural resources and minerals located on county school lands, sharing expenses incurred and
revenue realized.! If so, 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
of the counties' public schools. Article VII, section 6 ofthe Texas Constitution governs a county's
management and disposition of its public school land:

                  All lands heretofore, or hereafter granted to the several counties of
                  this State for educational purposes, are of right the property of said
                  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 of the 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 of the
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 of lands 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 of such lands for the benefit of the 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 of exploring 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 of which
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 arrangement that 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 of interest 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
appears to contemplate that the commissioners court would cede its constitutional authority, in whole
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 Education Code makes the members ofthe county's commissioners court
the "sole trustees" of the trust established for the permanent school fund. TEX. EDUC. CODE ANN.
§ 45.113(b) (Vernon Supp. 2007). And not only are the members of the commissioners court the.·
sole trustees of the 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 of such 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 of the 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
