   .




Honorable Preston Smith        Opinion No. M-356
Governor, State of Texas
Capitol Building               Re:     Authority of the Legislature
Austin, Texas                          to reappropriate payments of
                                       royalties, bonuses and rentals
                                       from mineral leases of river
                                       beds, channels and areas with-
                                       in tidewater limits, including
                                       islands, lakes, bays and the
                                       bed of the sea belonging to
                                       the State of Texas, so as to
                                       credit all or part of these
                                       payments to the available
Dear Governor Smith:                   school fund.

          You have requested our opinion on the validity of an
Act of the Legislature which would reappropriate payments of
royalties, bonuses and rentals from mineral leases of river
beds, channels and areas within tidewater limits, including
islands, lakes, bays and the bed of the sea belonging to the
State of Texas, so as to credit all or part of these payments
to the available school fund.

          In Attorney General's Opinion M-347     (1969), this of-
fice stated:
            II
             . . . it is our opinion that anything which
       the state receives, in whatever form, in considera-
       tion of the oil taken or to be taken from the dedi-
       cated lands constitutes a part of the purchase
       price for the sale of such land~or a portion there-
       of, and therefore such proceeds must be placed in
       the permanent school fund.   . . ."

          The question now presented therefore concerns whether
the land referred-to in your request has been dedicated to the
permanent school fund and, if dedicated, whether the Legislature
may remove such land from the fund.

          The various portions of the public domain, including
the lands described in your request, bve heretofore been dedi-
cated to the permanent school fund by the Constitution of Texas

                              -1755-
Hon. Preston Smith, page 2 (~-356)



and a&s  of the Legislature.  Sections 2 and 5, Article VII,
Constitution of Texas; Articles 5415a, 5421c-3, V.C.S.

            Section 2 of Article VII of the Constitution of Texas
provides:

           "All funds, lands and other property hereto-
     fore set apart and appropriated for the support
     of public schools;' all the alternate sections of
     land reserved by the State out of grants hereto-
     fore made or that may hereafter be made to rail-
     roads or'other corporations of any nature whatso,-
     ever ; one half of the public domain of the State:
     and all sums of money that may come to the State
     from the sale of any portion of the same, shall
     constitute a perpetual public school fund."

          The effect of Section 2 of Article VII of the Consti-
tution of Texas was not to vest in the school fund an undivided
one-half interest of all the public domain unappropriated at
the time of its adoption, but to vest in the school fund one-
half of such public land as shoclld remain unappropriated for the
other purposes enumerated in the Constitution;- Hbgue v. Baker,
92 Tex. 63, 45 S.W. 1004 (1898).

          In State v. Bradford, 121 Tex. 515, 50 S.W.Zd 1065
(1932), the Supreme Court stated that the Constitution did not
independently of legislative acts place beds of channels of
navigable streams in the permanent school fund.

          In determining what was placed in the permanent school
fund, in Hogue v.~ Baker, supra, the Supreme Court in constru-
ing Section 2 of Article VII of the Constitution of Texas stated:
            II
                 .  The plain purpose of the section is
                     .   .

     to declare what shall be the school fund. Lands
     theretofore set apart to that fund are preserved
     tom it, ~:and..it
                     is further declared that one-half
     of the public domain shall constitute a part of
     the constitutional dedication.    In our opinion,
     it fixed the right of the school~fund in one-
     half of the ,unappropriated public domain, but
     left the legislature, as we have previously
     intimated, with extended authority over the
     segregation of that interest by partition of
     the lands or of their proceeds.    It gave to the
     school fund the right to an equitable half of
     the public domain, and,in so far the provision
     executed itself.    . . .
                                -1756-
Hon. Preston Smith, page 3 (~-356)



          "It follows from what has been said that, in
     our opinion, where the legislature has taken af-
     firmative action, and has provided pro tanto for
     the segregation of the interest of the school
     fund, its action is final.  . . .
          I,
           . . .

          "Having reached the conclusion that the half
     of the public domain not dedicated to the school
     Zun
     1     as alrea
     remains belongs equitably to that~fund, it fol-
     lows that the survey in controversy is not sub-
     ject to location for the purpose of.acquiring
     a homestead donation.   . . ." (Emphasis added.)

          Likewise it is stated in.Armstrong v. Walker, 73 S.W.2d
520, 524 (Tex.Comm.App. 1934):

          “By the pertinent provisions of chapter 11,
     Acts (1st Called Sess.) 26th Leg. (19001, and
     especially sections 1 and 3 thereof, all unap-
     propriated public lands of this state, with
     certain exceptions not important here, were
     set apart and~granted unconditionally to the
     public free school fund of this state. Under
     such act of 1900, when proof of~occupancy was
     not filed in the General Land Office and pay-
     ment of patent fees made, and patent applied
     for, before~January 1, 1902, thisland became
     absolutely-and unconditionally the~property
     of the said~public school fund. 'In fact,
     this land.became,unconditionally the-property
     of such fund as soon as the act~of-1900 be-
     came effective because no proof.of-occupancy
     could have.been made, in that no~~three years'
     occupancy ever occurred.

          "By the plain provisions of section 4 of
     article 7 of our Constitution above quoted, it
     is required that the land set apart to khe
     public free school fund shall be sold under
     such regulations as may be prescribed by law.
     Manifestly the above constitutional provision
     is exclusive in its terms and scope and operates
     to empower the Legislature to provide by law
     for the sale of the lands belonging to the
     public free school fund. Such constitutional
     provision further operates to deprive the
     Legislature of power to give away such lands.
                              -1757-
Hon. Preston Smith, page 4 (M-356)



     In other words, the above constitutional pro-
     vision operates to deprive the Legislature of
     the power to dispose of public free school
     lands in any way except by sale. Empire
     Gas & Fuel Co. v. State, 121 Tex. 138, 41
     S.W.(2d) 265. . . ."

           In 1836 the Congress of the~Republic of Texas defined
the boundaries of the Republic of Texas, which includedtthe lands
.described in your request.  1 Laws, Republic of Te,xas, p. 133; .~
1 Gammel's Laws of Texas 1193-1194.

          The legal history of the State's ownership of waters
and submerged lands within the tidewater limits of the Gulf. of,
Mexico is reviewed in Butler v. Sadler, 399 S.W.Zd 411 (Tex.Civ.
App. 1966, error ref. n.r.e.1. For the,purposes of this opinion
it is not necessary to review this entire history, but it may
be stated that submerged lands have always been treated in a
special category since the earliest days of the Republic.

          It was held in State v. Bryan, 210 S.W.2d 455 (Tex;
Civ.App. 1948, error ref. n.r.e.), that:

           "We think there can be no serious question
     but that the bed of Green Lake (regardless of
     its navigableness vel non) was a part of the
     public domain set aside to the permanent school
     fund. This appears from the tabulation that was
     made under Chap. XVI, p. 14, Gen.Laws, 26th Leg.,
     1899; and from the wording of the Settlement Act
     (Chap. XI, p. 29, 1st C.S. 26th Leg., 1900, now
     Art. 5416,  R.S.C., Vernon's Ann.Civ.St. Art.
     54161, passed pursuant to that computation, the
     pertinent portion of which Act reads:

          "'All lands heretofore set apart under the
     Constitutionand   laws of Texas. and all of the
     unappropriated public domain remaining in the
     State, of whatever character and wheresoever lo-
     cated, including any lands [hereafter] recovered
     by the State, except that included in lakes, bays,
     and islands along the Gulf of Mexico within tide-
     water limits  * * * 1s set anart and aranted to
     the permanent school fund of the State."' (Emphasis added.)

          In~Butler v. Sadler, supra, it was held that sub;
merged lands Qid not become a part of the public school fund.
until 1939, by the enactment of House Bill 3, Acts of the

                               - 1758 -
Hon. Preston Smith, page 5 (M-356)



46th Legislature, R.S., 1939, Ch. 3, p. 465. The Court pointed
out that the Settlement Act of 1900 specifically provided that
"this Act shall not have the effect to transfer to the school
fund any of the lakes, bays, and islands on the Gulf of Mexico
within tidewater limits, whether surveyed or unsurveyed."

           In 1898 the Supreme Court in Hogue v. Baker, supra,
judicially determined that the half of the public domain not
dedicated to the school fund had already been exhausted and
whatremains   "belongs equitably to that fund." The Court further
held:

          "In our opinion, it [Tex.Const., Art.  VTI,  Sec.
     21 fixed the right of the school fund in one-half
     of the unappropriated public domain, but left the
     legislature,, as we have previously intimated, with
     extended authority over the segregation of that in-
     terest by partition of the lands or of their pro-
     ceeds. It gave to the school fund the right to
     an equitable half of the public domain, and in so
     far the provision executed itself. The mode of
     partition or of the segregation of that half, ex-
     cept as to alternate certificates granted to rail-
     road companies and other corporations, was left
     wholly to legislative control; and it seems to
     us that, if the legislature had made a partition
     or provided a mode of segregation, its action
     would have been conclusive.   We see no good rea-
     son why value should not have been the guide in
     making a division, and, since this involved the
     determination of a question of fact, its action
     could hardly be the subject of review by the
     courts, unless, perchance, it should appear ob-
     viously and grossly inequitable.    . . .

          "It follows from what has been said that, in
     our opinion, where the legislature has taken af-
     firmative action, and has provided pro tanto for
     the segregation of the interest of the school fund,
     its action is final.  . . ." (Brackets ours.)

           Therefore the Court in construing Section 2 of Article
VII established the principle that the Constitution fixed the
right of the permanent school fund in one-half of the unappro-
priated public domain, but left to the Legislature the mode of
partit~ion or of segregation of that half and held that where
the Legislature had taken affirmative action with regard to
such partition its action is final. The Legislature in 1900
passed the Settlement Act which settled permanently the division
                               -1759-
                                                     ,   .




Hon. Preston Smith, page 6   (M-356)




of the public domain included in the Settlement Act. The Settle-
ment Act (S.S.B. 2, Acts of the 26th Legislature, 1st Called
Session, 1900, Ch. XI, p. 29) specifically provided:

         "Section 1. For the purpose of adjusting and
    finally settling the controversy between the perma-
    nent school fund and the State of Texas, growing
    out of the division of the public domain, there is
    hereby set apart and granted to said school fund four
    million, four hundred and forty-four thousand and
    one hundred and ninety-five acres or all of the     ;
    unappropriated public domain remaining in the State
    of Texas of whatever character, and wheresoever
    located, including any lands hereafter recovered.
    by the State, except that included in lakes, bays
    and islands,along the Gulf of Mexico within tide
    water limits, whether the same be more or less
    than said four million, four hundred and forty-
    four thousand one hundred and ninety-five acres;
    provided, this act shall not have the effect to
    transfer to the school fund any of the lakes, bays
    and islands on the Gulf of Mexico within tide
    water limits whether surveyed or unsurveyed."

          Nothing contained in the Constitution or in the cases
construing Section 2 of Article VII prevents the Legislature from
placing those lands excluded by Section 1 of the Settlement Act,
above quoted,~in the permanent school fund. The Legislature has
subsequently (in 1939 --Article 5421c-3, and in 1941--Article
5415a) placed these lands in the permanent school fund,and it
is our opinion the same rule must apply to those lands as was
applied to lands contained in the Settlement Act, to wit: the
legislative action is final.

          Furthermore, it was held in Eyl v. State, 84 S.W. 607
(Tex.Civ.App. 1904, error ref.):
          II
               .  If, however, on account of any de-
                   .   .

     fects in the certificates, or irregularities in
     their location or survey, said lands were not
     at once, upon such survey, appropriated to the
     school fund, they were so appropriated by the
     act of February 3, 1883; and in either case the
     Legislature could not by subsequent legislation
     change or destroy the character of these lands as
     public school lands.   . . ."



                                 -1760-
.   .




Hon. Preston Smith, page 7 (M-356)



          Although it is not necessary to the conclusion reached,
we note that Section 5 of Article VII of the Constitution of
Texas, as amended November 3, 1964, reiterates this principle
in the following language:

             "The principal of all bonds and other funds,
        and the principal arising from the sale of the
        lands hereinbefore set apart to said school fund,
        shall be the permanent school fund, and all the
        Interest derivable therefrom and the taxes herein
        authorized and levied shall be the available school
        fund. The available school fund shall be applied
        annually to the support of the public free schools.
        And no law shall ever be enacted appropriating any
        part of the permanent or available school fund to
        any other purpose whatever; nor shall the same, or
        anv part thereof ever be appropriated to or used
        fo; the support of any se&a&n    school; and the
        available school fund herein provided shall be
        distributed to the several counties according to
        their scholastic population and applied in such
        manner as may be provided by law."   (Emphasis
        added.)

          YOU are therefore advised that it is -   opinion that
the Legislature~does not have the authority to reappropriate
payments of royalties, bonuses and rentals from mineral leases
of river beds, channels and areas within tidewater limits, in-
cluding islands, lakes, bays and the bed of the sea belonging
to the State of Texas, so as to credit all or part of these
payments to the available school fund.

                            SUMMARY

             The,Legislature does not have authority to re-
        appropriate~payments of royalties, bonuses and rentals
        from mineral~leases of river beds,, channels and areas
        within tidewater limits, including islands, lakes,
        beys and the bed of the sea belonging to the State
        of Texas, so as to credit all or part of these pay-
        ments to the available school fund., This can only be
        accomplished by constitutional a    dment.
                                       97
                                          truly yours,



                                      At orney General, of Texas
                                        j
                                 - 1761v
                                          .,   .




Hon. Preston Smith, page 8 (M-356)



Prepared by John Reeves
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Roger Tyler
Houghton Brownlee
Alfred Walker
Harold Kennedy

W. V. GEPPERT
Staff Legal Assistant




                               - 1762 -
