    OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS

    JOHN CORNYN




                                               March 14,200l



The Honorable Ron Lewis                                 Opinion No. JC-0354
Chair, Committee on Energy Resources
Texas House of Representatives                          Re: Whether the Port of Port Arthur Navigation
P.O. Box 2910                                           District may adopt a policy limiting the number of
Austin, Texas 78768-2910                                years it will consent to allow an existing loading
                                                        and unloading contract to automatically renew to
                                                        five (RQ-0298-JC)
Dear Representative     Lewis:

         The Port of Port Arthur Navigation District of Jefferson County (the “Navigation District”
or “District”) has entered a two-year contract with a stevedoring company to load and unload cargo.’
The contract provides that it will automatically be renewed for one-year terms if “both parties wish”
the agreement to continue. Request Letter, supra, at 1; see Aetna Life Ins. Co. v. Eilers, 367 S.W.2d
732, 735 (Tex. Civ. App.-Waco           1963, writ ref d) (describing contract that extends its term
automatically as “self-operative at a predetermined point agreed upon”). The Navigation District
evidently has discussed adopting a policy that would limit the number of years that the District’s
governing body may agree to the contract’s automatic renewal to a total period of five years. See
Request Letter, supra, at l-2. At that time, we assume that, if the contract is valued at more than
$25,000, the District would notify the public that it will award a new contract and invite interested
parties to submit offers. If the policy you describe does not contravene any restrictions or covenants
in the District’s tax-exempt revenue bonds, we conclude that the Navigation District may adopt it.

         As a governmental agency, see TEX. CONST.art. XVI, 5 59(a), (b) (designating navigation
districts as governmental agencies); TEX. WATER CODEANN. 5 62.102 (Vernon 1988) (same), the
Navigation District has “only those powers that are expressly delegated to it by statute or that are
clearly implied from its express powers.” See Tex. Att’y Gen. Op. No. JC-0202 (2000) at 2 (citing
Tri-City Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945, 946 (Tex. 1940)). Implied
powers are “‘indispensable”’ to accomplishing the purposes for which the district was created; they
are more than “‘merely convenient”’ or “‘useful.“’ Id. (quoting Tri-City Fresh Water Supply Dist.
No. 2,142 S. W.2d at 947). Applicable statutes define the extent of the Navigation District’s express
and implied powers.




         ‘Letter from Honorable Ron Lewis, Chair, Committee on Energy Resources, House of Representatives,    to
Honorable John Cornyn, Attorney General of Texas (Oct. 17, 2000) (on file with Opinion Committee) [hereinafter
Request Letter].
The Honorable Ron Lewis - Page 2                   (JC-0354)




         The Navigation District is subject to several “layers” of laws. First, article XVI, section 59
of the Texas Constitution authorizes the legislature to create conservation and reclamation districts
as “governmental agencies and bodies politic and corporate with [the] powers of government”
authorized to exercise rights, privileges, and functions to conserve and reclaim natural resources “as
may be conferred by law.” TEX. CONST.art. XVI, 8 59(a), (b). Second, in accordance with its
authority under article XVI, section 59, the legislature in 1963 adopted specific enabling laws
creating the Navigation District to improve navigation; to maintain, develop, extend, and improve
port facilities, wharf and dock facilities; and to develop the Port of Port Arthur. See Act of May 27,
1999,76th Leg., R.S., ch. 1577,§ 1, sec. 1(a), 1999 Tex. Gen. Laws 5411,5411- 12; see also Act of
May 13,1963,58th Leg., R.S., ch. 197, 1963 Tex. Gen. Laws 528,528-39 (creating District). The
District has “all powers, rights, privileges[,] and functions conferred by General Law upon any
district . . . created,’ under article XVI, section 59 of the constitution and may adopt bylaws, rules,
and regulations to manage and regulate its affairs and to make contracts necessary to accomplish its
purposes. Act of Mar. 21,1979,66th Leg., R.S., ch. 25,§ 1, sets. 2(e), (f), 20,1979 Tex. Gen. Laws
41,41-42. Third, the District is subject to chapter 60 of the Water Code, which provides generally
for navigation districts, see TEX. WATERCODEANN. ch. 60 (Vernon 1988 & Supp. 2001), and to
chapter 62 of the Water Code, which applies to navigation districts created under article XVI, section
59 of the Texas Constitution, see id. $5 62.001(l), .021 (Vernon 1988). Certain of the District’s
public-works contracts are also subject to chapter 27 1, subchapter B of the Local Government Code,
but the contract about which you ask is not a public-works contract subject to these provisions. See
TEX. LOC. GOV’T CODEANN. § 271.024 (Vernon 1999) (limiting competitive-bidding               procedures
set out in that subchapter to contracts to construct, repair, or renovate structure, road, highway, “or
other improvement or addition to real property”).

         You state that the Navigation District has adopted the contracting requirements in chapter
60, subchapter N of the Water Code. See Request Letter, supra note 1, at 1. Section 60.401 of the
Water Code, part of subchapter N, states that the subchapter applies only to a port-authority district
that properly has adopted the subchapter “for a particular purchase or period or for all purchases and
contracts.” TEX. WATER CODEANN. 8 60.401(a), (b) (V emon 1988). Chapter 60, subchapter N
articulates noncompetitive procedures that may be used to award a contract valued at no more than
$25,000 and request-for-proposal     or competitive-bidding procedures for a contract valued at more
than $25,000. See id. $5 60.403, .406(a) (Vernon Supp. 2001). Insurance or high-technology items
may be purchased using the statutory request-for-proposal      procedures in section 60.405. See id.
0 60.405 (Vernon 1988). Purchases that will be competitively bid are subject to the competitive-
bidding procedures in section 60.404, concerning notice of a proposed purchase, see id. fj 60.404
(Vernon Supp. 2001); section 60.407, providing for opening of the bids, see id. 8 60.407 (Vernon
1988); and section 60.408, governing the contract award, see id. 8 60.408. A contract to purchase
“personal or professional services” is exempt from the requirements of sections 60.404 (containing
competitive-bidding notice requirements) and 60.405 (containing request-for-proposal requirements).
See id. §§ 60.404, .405, .412 (Vernon 1988 & Supp. 2001).

        A stevedoring company has executed a contract with the Navigation District to perform
loading and unloading services. See Request Letter, supra note 1, at 1. You indicate that the
The Honorable Ron Lewis           - Page 3                 (JC-0354)




primary term of the contract is limited to two years “[d]ue to certain restrictions and covenants
contained in tax-exempt revenue bonds issued and sold by the” District. Id. The contract provides
for its automatic renewal at the end of the two-year primary term “in the event both parties wish to
continue” the relationship. Id. If the contract is automatically renewed, the contract continues in
effect for an additional year. See id. We understand that the contract does not limit the number of
times the contract may be automatically renewed. See id.

         This office has considered various aspects of this particular contract before. Letter Opinion
97-03 1 concludes that the proposed contract, which we were informed was primarily for loading and
unloading services, must be competitively bid if its value exceeds $25,000. See Tex. Att’y Gen. LO-
97-03 1, at 2, 3. The opinion reasons that such a contract is not one for personal or professional
services that is excepted from chapter 60, subchapter N’s competitive-bidding        requirements even
though it includes incidental professional services, such as accounting. See id. at 2. Letter Opinion
97-059 subsequently affirmed that a contract that requires “only the provision of loading and
unloading services” is not a contract for personal or professional services that is exempt from
statutory competitive-bidding     requirements. See Tex. Att’y Gen. LO-97-059, at 1. Nevertheless,
Letter Opinion 97-059 continues, whether a particular contract for services that includes loading and
unloading services is a contract for personal and professional services and therefore exempt from
competitive-bidding    requirements is a fact question that the Navigation District must resolve. See
id. at l-2. After Letter Opinion 97-059 was issued, you recount, the District’s “Board of
Commissioners made a factual determination that the services to be provided under the loading and
unloading contract involved significant and varied management and marketing functions which
required special knowledge and a high order of leaming[,] skill[,] and intelligence and concluded
that the services to be provided under the loading and unloading contract . . . constitute professional
services.” Request Letter, supra note 1, at 1. “Therefore, . . . the Port utilized the request for
proposals procedures set forth in Section 60.405 of the Texas Water Code.” Id.

         We address your question-whether        the Navigation District may adopt a policy under which
a contract for loading and unloading services, which provides for its automatic renewal each year,
may be renewed no more than five years-based         upon several assumptions. We assume first that the
Navigation      District correctly determined       that this contract for loading and unloading
services is excepted from chapter 60, subchapter N’s competitive-bidding       requirements.* Because
of its fact-based nature, the District’s determination may be challenged only in court. See Tex. Att’y
Gen. LO-97-059, at 1. Second, we assume that this contract properly may be awarded using the
request-for-proposal     procedure set forth in section 60.405 of the Water Code.3 See TEX. WATER


          2But see generaZZy Tex. S.B. 670, 77th Leg., R.S. (2001), Tex. H.B. 1062, 77th Leg., R.S. (2001). These
companion bills, which were identical when filed, would validate and confm “in all respects” certain governmental
acts or proceedings taken by a port-authority district “before March 1,200l.” Tex. S.B. 670, $5 2,3, 77th Leg., R.S.
(2001); Tex. H.B. 1062, 6 2,3,77th    Leg., R.S. (2001).

          3But see generaZZy note 2, supra. To review a similar situation involving   the Port of Beaumont     Navigation
District, compare Attorney General Opinion JC-0233:
                                                                                                             (continued...)
The Honorable     Ron Lewis       - Page 4                 (JC-0354)




CODE   ANN. 8 60.405(a) (Vernon 1988) (stating that “[i]nsurance or high technology items may be
purchased under the procedure provided by this section.“). Construing analogous statutory language,
we recently have indicated that the statutory competitive-sealed-proposal   procedure with which a
municipality must comply may be used only to procure high-technology           items or to purchase
insurance. See Tex. Att’y Gen. Op. No. JC-0326 (2001) at 4 (suggesting that statute permitting
municipality to use competitive-sealed-proposal  procedure “only for high technology procurements
or. . . the purchase of insurance” does not apply to advertising contract).

        Nothing in the statutes either permits or prohibits the Navigation District to adopt a policy
limiting the term of an automatic-renewal option. Chapter 60, subchapter N of the Water Code does
not mention such a policy, even assuming that a contract for personal or professional services may
be awarded under section 60.404 or 60.405. See TEX. WATER CODE ANN. 8 60.412(a)(4) (Vernon
1988). Similarly, neither chapter 62 of the Water Code nor the District’s enabling acts address the
type of policy the Navigation District wishes to adopt.

         In our opinion, the District’s express authority to adopt rules and regulations to manage and
regulate its affairs, see Act of Mar. 21, 1979’66th Leg., R.S., ch. 25, 8 1, sets. 2(e), 20, 1979 Tex.
Gen. Laws 41,41,45, implies authority to adopt a policy limiting the number of times a contract
may be automatically renewed. A navigation district may execute contract terms “similar to those
made by citizens generally.” Cf: Tex. Att’y Gen. Op. No. H-1025 (1977) at 2 (quoting Ehlinger v.
Clark, 8 S.W.2d 666,671 (Tex. 1928)) (re ferring to county authority to include automatic-extension
provision in lease); Tex. Att’y Gen. Op. No. JM-1043 (1989) at 2 (same). Thus, a navigation district
may include in a contract an option to extend the contract or to automatically renew the lease. See
Tex. Att’y Gen. Op. Nos. J&I-l 043 (1989) at 3; H-l 025 (1977) at 2. Conversely, a navigation
district may, by regulation, limit the use of those terms, including the automatic-renewal option, by
adopting a policy to limit the number of years that the District may agree to continue the contract.

        Thus, the Navigation District may adopt a policy limiting the number of years it will permit
a contract for loading and unloading services automatically to renew. We assume such a policy
comports with any applicable restrictions and covenants contained in tax-exempt revenue bonds




                             This office concluded in Letter Opinion 97-03 1 that the Port of Beaumont
                  Navigation District must competitively bid a contract for the loading and unloading
                  of cargo. See Tex. Att’y Gen. LO-97-03 1, at 3. The Port does not concur with the
                  letter opinion but argues that the loading and unloading services must comply with
                  competitive bidding requirements or proposal procedures, and therefore it sought
                  proposals pursuant to section 60.405 of the Water Code instead of competitive bids
                  under section 60.404. [Citation omitted.]

Tex. Att’y Gen. Op. No. JC-0233 (2000) at 1 n. 1. Because the procedural issues were “not germane” to the question
presented in Attorney General Opinion JC-0233, we did not address them. See id. The legality of the request-for-
proposal procedure used by the Port of Port Arthur Navigation District here likewise is not germane to the issue you
present.
The Honorable Ron Lewis - Page 5                  (JC-0354)




issued by the District. You do not describe any restrictions and covenants; consequently,   we cannot
comment upon the impact they may have on a District policy.

                                        SUMMARY

                        The Port of Port Arthur Navigation District may adopt a
               policy limiting to five the number of years it will permit a contract for
               loading and unloading services automatically to renew, assuming that
               the policy does not contravene any restrictions or covenants in the
               District’s tax-exempt revenue bonds.




                                               Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General - Opinion Committee
