                                         The Attorney       General of Texas
                                                         July 25, 1984
   JIM MATTOX
   Attorney General


   Supreme Court Building              Mr. Charles E. Neml::                     Opinion No. JM-181
   P. 0. BOX 12646
   Au~lin, TX. 7671 l- 2546
                                       Executive~Director
   51214752501                         Texas Department o:iWater Resouries       Re: Validity of agreement
   Telex 910/674-1367                  P. 0. Box 13087, C;x),ltol
                                                                Station          between the city of Denison
   Telecopier  5121475.0266            Austin, Texas   78'1.l                    and   the Greater Texoma
                                                                                 Utility Authority
    714 Jackson, Suite 700
    Dallas, TX. 75202.4506             Dear Mr. Nemir:
    214/742-6944
                                            You ask whethI,::
                                                            the Greater Texoma Utility Authority [hereinafter
                                       the Authority] ma); contract with the city of Denison to acknowledge
    4624 Alberta Ave., Suite 160
    El Paso, TX. 799052793
                                       Denlson's exclusf?,t right to provide water service to certain
    9151533.3464                       geographical areas of Grayson County. Certain of these areas comprise
                                       service areas of thz Authority. In effect, you inquire as to whether
                                       the Authority may llind itself to provide service within these areas
,,lOOt     Texa$, Suite 700            only with the consl?llt
                                                             of the city of Denison.
      ,ouston, TX. 77002-3111
    713/223?s6M
                                            The Greater 1'e:xomaUtility Authority was created by the Sixty-
                                       sixth Legislature, Acts 1979, chapter 97. The Authority Is a con-
    806 Broadway, Suite 312            servation and reclmation district pursuant to article XVI, section 59
    Lubbock, TX. 79401.3479            of the Texas Comjtitution.      Initially, the jurisdiction of the
    606/747-5236
                                       Authority included only the cities of Denison and Sherman. However,
                                       additional areas hme been annexed by the Authority. In 1983, the
    4309 N. Tenth. Suite B             city of Denison requested that the Authority formally agree not to
    McAllen. TX. 76501.1685            provide water servt,:eto certain areas of Grayson County served by the
    5121882.4547                       city of Denison.

    200 Main Plaza. Suite 400               In Banker v. Jefferson County Water Control and Improvement
    San Antonio, TX. 76205.2797        District No. One, :?I7S.W.2d 130 (Tex. Civ. App. - Beaumont 1955, writ
    512/225-4191                       ref'd n.r.e.). the court held that a water district created uursuant
                                       to article XVI, tzection 59 is vested with certain gove&uental
                                       functions. Among ,cllesefunctions is the duty to determine the persons
    An Equal Opportunity/
    Affirmative    Actlon   Employer   to whom and the conditions upon which any water owned by the district
                                       is sold. The court held that such governmental functions are in the
                                       nature of police ptxrersand that:

                                                 The police power of a government or of a
                                                 governme:1:al agency can never be abdicated or
                                                 bargained away, and is inalienable even by express
                                                 grant.

                                       -Id. at 134.


                                                                 p. 797
                                                                         r   .




Mr. Charles E. Nemir - Page 2     (JM-181)




     The attempt of the Alchority to bargain away its governmental
duty to the city of Denison is in direct conflict vith Banker and is
therefore unenforceable. However, such a contractual provision is
unnecessary in the present situation.

     Both the city of DelLson and the Authority are regulated by
article 1446~. V.T.C.S., the Public Utility Regulatory Act (PURA) as
retail public utilities. Section 49(a) of PURA provides:

          'Retail public    utility' means    any  person,
          corporation, waiisr supply or Sewer service
          corporation, munL:ipality, political subdivision
          or agency. or cooperative corporation, now or
          hereafter operat:lug,maintaining, or controlling
          in Texas facilitL,?sfor providing retail utility
          service.

     As such, section 50(2) of PURA requires both entities to obtain a
certification of convenience!and necessity for any area they seek to
serve :

          Except as otherwise provided in this article no
          retail public ut3lity may furnish, make available,
          render, or extend retail public utility service to
          any area to which retail utility service is being
          lawfully furnishad by another retail public
          certificate of prlblic convenience and necessity
          that includes t:x area in which the consuming
          facility is located.

As provided in section 50(2) of PURA. only one retail public utility
may obtain a certificate oj' convenience and necessity for any given
area. The city of Deniscxl is certificated by the Public Utility
Commission to provide water service within certain areas of Grayson
county. The Authority therefore may not be certificated for that
area. The result is that t:heAuthority cannot nor need not bargain
away a governmental right which it does not possess.

                                SUMMARY

             The Greater 'I'rxomaUtility Authority may not
          contract with tha city of Denison to acknowledge
          Denison's exc1usix.eright to provide water service
          to certain geographical areas of Grayson County,
          some of which <,omprise service areas of the
          Authority, and bind itself to provide service
          therein only with the consent of the city of
          Denison.




                                          L-LAG
                                          Very truly yours
                                                 a


                                          JIM     MATTOX
                                          Attorney General of Texas


                                      u. 798
Mr.   Charles E. Nemir - Page :; (JM-181)




TOM GREEN
First Assistant Attorney Genwal

DAVID R. RICHARDS
Executive Assistant Attorne:rGeneral

Prepared by Jerry Benedict
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
Jerry Benedict
David Brooks
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton




                                       p. 799
