                                           February 7,200O



The Honorable Tim Curry                             Opinion No. JC-0179
Tarrant County Criminal District Attorney
401 West Belknap Street                             Re: Whether the Tarrant Regional Water District
Fort Worth, Texas 76196-0201                        may lease to a private telecommunications     carrier
                                                    excess capacity in a fiber-optics cable installed to
                                                    operate the Water District’s pipeline, and related
                                                    questions (RQ-0115-JC)


Dear Mr. Curry:

         The Tarrant Regional Water District (the “Water District”) has acquired pipeline easements
running from Tarrant County to reservoirs located in Henderson, Navarro, and Freestone counties
in east Texas. See Letter from Honorable Tim Curry, Tarrant County Criminal District Attorney,
to Honorable John Comyn, Attorney Genera1 of Texas, at 1 (Sept. 20, 1999) (on file with Opinion
Committee) [hereinafter “Request Letter”]. To run water from the reservoirs to Tarrant County, the
Water District intends to install a water pipeline and a fiber-optics cable, which will operate the
pipeline with a “Supervisory Control and Data Acquisition (SCADA) System.” Id. at 2. The Water
District will have excess capacity in the fiber-optics cable for many years. See id. You ask generally
whether the Water District may lease to a telecommunications           carrier “all or part of the excess
capacity of the bandwidth provided by the fiber optics cable” until the Water District needs the
additional capacity. See id. Because the Water District has statutory authority to lease property to
any person, see TEX. WATER CODE ANN. 5 49.225 (Vernon Supp. 2000), we conclude that the Water
District is not precluded by statute from doing so, although whether any particular easement permits
the installation or lease of fiber-optics cable is a question of fact. You ask us to assume, in reaching
this conclusion, that a telecommunication    carrier’s use ofpart ofthecapacity of the fiber-optics cable
“will not cause the cable to be any larger or cause any more detriment to the landowner’s land than
ifthe use of the fiber optics cable was limited to the SCADA operation of the water pipeline, which
the Water District has determined to be necessary.” Id. at 2.

        You specifically   ask seven questions:

                1.       Does the language ofthe subject pipeline easements submitted
                [with the Request Letter] authorize the Water District as a matter of
                law to install a fiber optics cable for the purpose of operating its
                pipelines with a SCADA system?
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               2.      Is the test for answering the above a factual inquiry as to
               whether or not the fiber optics cable use of the pipeline easement was
               “reasonably within contemplation during the acquisition of the right-
               of-way” or “whether the grantor could have reasonably contemplated
               such uses as within the easement at the time he granted it”?

               3.      Are the contemplated additional uses ofthe fiber optics cable
               by leasing the excess capacity to a telecommunication       carrier a
               “private use” prohibited by Texas law?

               4.       Even if the lease of the excess fiber optics cable capacity to a
               telecommunication     carrier is “aprivate use,” is the additional use still
               permitted under the “apportionment of easements doctrine”?

               5.       Is such fiber optics cable sharing also authorized by the
               powers expressly delegated to the Water District by the Texas
               Legislature or those powers which exist by implication?

               6.      Is the additional use of the fiber optics cable by a
               telecommunication    carrier, assuming that it causes no more damage
               to the land already burdened with a pipeline easement than if the
               cable were limited to the Water District’s authorized SCADA use,
               “an additional burden” which entitles the landowner to additional
               compensation,    or an “incidental use” for which the landowner
               receives no additional compensation?

               7.      Is this an illegal “recoupment”?

Request Letter, supra, at 3,8,16,   18,20.

        You first ask us to construe the language of the pipeline easements, and your second question
suggests why this office cannot do so: because it involves a “factual inquiry.” You tell us that the
easements:

               specifically provide for (I) “_          all necessary electric and
               communication lines . for the purpose ofoperating and maintaining
               the said pipeline”; (2) “. one water transportation pipeline, with all
               equipment and appurtenances incidental thereto. .“; and (3) “. one
               water transportation pipeline and appurtenant facilities, including all
               necessary electric and communication lines . as may be necessary
               for the purposes of operating such pipeline.”

Id. at 2.
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         Whether any particular easement allows the Water District to install a fiber-optics cable at
all or to lease excess fiber-optic cable capacity requires a court to, among other things, construe the
documents and examine the grantor’s intentions. “The test whether an easement acquired by a
public body may be burdened with” a particular use is whether the grantor reasonably could have
contemplated such a use as within the easement at the time the easement was granted. Tex. Att’y
Gen. Op. No. DM-420 (1996) at 9 (citing City of Sweetwater v. McEntyre, 232 S.W.2d 434 (Tex.
Civ. App.-Eastland 1950, writ refd n.r.e.) andMilam County v. Akers, 181 S.W.2d 719 (Tex. Civ.
App.-Austin     1944, writ ref d w.o.m.). The understanding of the parties to the easement may be
relevant to the documents’ construction, and that understanding            cannot be decided without
examining factual evidence. See Tex. Att’y Gen. Op. No. DM-420 (1996) at 9. This office cannot
resolve fact-based questions. See, e.g., Tex. Att’y Gen. Op. Nos. JC-0032 (1999) at 4 (stating that
question of fact is beyond purview ofthis office); JC-0027 (1999) at 3 (stating that questions of fact
cannot be addressed in attorney general opinion); JC-0020 (1999) at 2 (stating that investigation and
resolution of fact questions cannot be done in opinion process).

          Skipping to your tifih question, we conclude as a matter of law that the proposed fiber-optics
cable lease may be within the Water District’s express statutory powers. Section 49.225 of the
Water Code explicitly authorizes a general-law district, including the Water District, to lease real
or personal property to any person. See TEX. WATER CODE ANN. 5 49.225 (Vernon Supp. 2000).
“The lease may contain the terms and provisions that the board determines to be advantageous to the
district.” Id. The proposed lease of excess fiber-optics cable capacity is a lease of property to a
person under section 49.225.

         The fiber-optics arrangement you describe is analogous to the arrangement this office
approved in Attorney General Opinion H-1217. See Tex. Att’y Gen. Op. No. H-1217 (1978) at I.
There, the Lower Colorado River Authority, a water district organized under article XVI, section 59
of the Texas Constitution, asked whether it could permit a private corporation, Entex, to use part of
the natural-gas pipeline owned by the River Authority and running to the River Authority’s electric
generating plant. See id. at I. The statute applicable to the River Authority, former Water Code
section 51.137, repealed by Act ofMay 25, 1995,74th Leg., R.S., ch. 715, 5 40, 1995 Tex. Gen.
Laws 3755, 3802, authorized a district to “enter into a contract for the use by another of its water,
power, facilities, or service, either inside or outside the district, except that a contract may not be
made which impairs the ability of the district to serve lawful demands for service within the district.”
SeeTex. Att’y Gen. Op. No. H-1217 (1978) at 1 (quoting former TEX. WATERCODEANN. 4 51.137,
repealed by Act ofMay 25,1995,74th Leg., R.S., ch. 715, § 40, 1995 Tex. Gen. Laws 3755,3802).
The opinion concludes that section 51.137 authorized a private corporation’s use of the River
Authority’s natural-gas pipeline “so long as the proposed contract will not impair” the River
 Authority’s “ability to serve its lawful customer demands.” Id. at 2. Section 49.225 of the Water
 Code, which applies to the Water District, among other provisions, appears to have replaced section
 5 1.137 of the Water Code: the same legislation that repealed section 5 1.137 adopted section 49.225
 as a general provision applicable to all general-law districts. See Act of May 25, 1995,74th Leg.,
 R.S., ch. 715, 5 2, sec. 49.225, 1995 Tex. Gen. Laws 3755, 3775.
The Honorable Tim Curry - Page 4                  (JC-0179)




        In response to your third question, we conclude that the Water District’s proposed lease of
excess fiber-optics cable capacity to a private telecommunications     corporation is not a prohibited
“private use” ofpublic funds so long as the Water District receives adequate consideration from the
telecommunications    firm in exchange. Again, we considered a similar question in Attorney General
Opinion H-1217. See Tex. Att’y Gen. Op. No. H-1217 (1978) at 3. That opinion concludes that
Entex’s use of the River Authority natural-gas pipeline is not an unconstitutional       use of public
property for private benefit so long as the River Authority is adequately compensated for the use of
the pipeline:

               Article [III], section 5 I of the Texas Constitution prohibits the grant
               ofpublic money to corporations. See also Tex. Const. art. [III], 5 52.
               However, the lease of public property to a private entity does not
               violate this provision where the transaction serves a public purpose
               and where an adequate rental is paid. See Dodson v. Marshall, 1 I8
               S.W.2d 621 (Tex. Civ. App.-Waco 1938, writ dism’d); Attorney
               General Opinions H-445 (1974); H-109 (1973). In our opinion, the
               proposed transaction serves a public purpose. The Legislature has
               provided statutory authority for it, thereby indicating it is a proper
               undertaking of a conservation and reclamation district.           It will
               facilitate the transportation      of fuel to public schools and to
               consumers, an endeavor affected with a public interest even when
               engaged in by private entities. See V.T.C.S. art. 1446c, 5 2; art.
               6050, § 3. So long as LCRA receives adequate consideration for the
               use of its pipeline, the transaction will not grant an unconstitutional
               benefit to a private entity.

Id. Thus, the Water District may lease excess fiber-optics cable capacity to a private entity without
running afoul of constitutional restrictions on the use of public Iimds if the Water District receives
consideration from the private telecommunication     corporation commensurate with the value of the
fiber-optics cable capacity. Having so concluded, we need not answer your fourth question, which
is contingent upon a conclusion that the proposed lease arrangement is a prohibited “private use.”

         You ask whether a lease of excess fiber-optics cable capacity to a telecommunications carrier,
“assuming that it causes no more damage to the land already burdened with a pipeline easement than
if the cable were limited to the Water District’s authorized SCADA use,” constitutes an “additional
burden” for which the landowner receives additional compensation, or an “incidental use” for which
the landowner is not entitled to additional compensation.         Request Letter, supra, at 18. The
“incidental use doctrine,” for which you cite Mellon v. Southern Pacific Tramp. Co., 750 F. Supp.
226 (W.D. Tex. 1990) appears to apply only to railroad rights of way, which are bundles of rights
more substantial than easements. SeeMellon, 750 F. Supp. at 229-30 (in part quoting Western Union
Tel. Co. v. Pennsylvania R.R., 195 U.S. 540,570 (1904)). We do not understand the Water District
to have more than an easement, so we do not believe that the incidental use doctrine, as articulated
in Mellon, applies.
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         Nevertheless,    we agree that the landowners here may have a claim for additional
compensation.      Just as the question of whether a particular easement permits the Water District to
install fiber-optics cable or to lease its excess fiber-optics cable capacity, the question of whether the
easement grantor must be compensated for the installation or lease involves interpretation of the
easement itself and the resolution of numerous fact questions. Where an easement is granted for
general purposes, the subservient estate includes the use required at the time of the grant as well as
the right to use the easement for any purposes incidental to the use to which the property has been
put. See Clutter v. Davis, 62 S.W. 1107, 1108 (Tex. Civ. App.-Dallas 1901, writ refd); 31A TEX.
JUR.30 Easements & Licenses in Real Property 5 67 (1994). For example, in Joyce v. Texas Power
& Light Co., 298 S.W. 627 (Tex. Civ. App.-El Paso 1927, no writ), the court stated in dicta that
Texas Power & Light Company, which had a right to condemn land necessary to erect poles and
lines to transmit electric current, would not lose that right by also erecting telephone wires. Id. at
629. Such a secondary use “may or may not amount to an additional or other servitude upon the
land,” the court said. Id. Whether a secondary use constitutes an additional burden for which the
grantor must be compensated is a question that cannot be resolved in the opinion process. See, e.g.,
Tex. Att’y Gen. Op. Nos. JC-0032 (1999) at 4 (stating that question of fact is beyond purview ofthis
office); JC-0027 (1999) at 3 (stating that questions of fact cannot be addressed in attorney general
opinion); JC-0020 (1999) at 2 (stating that investigation and resolution of fact questions cannot be
done in opinion process).

          Finally, you ask whether the proposed lease constitutes “an illegal ‘recoupment.“’ Request
Letter, supra, at 20. “The ‘recoupment theory,“’ you state, “refers to a means by which the
government can finance a public project by taking more property rights than necessary for the project
itself to later resell or lease to third parties to generate income for the government with which it
might pay project costs.” Id.; see Atwood v. Willacy County Navigation Disc., 271 S.W.2d 137,141
(Tex. Civ. App.-San Antonio 1954, writ ref d n.r.e.), appenl dism ‘d, 350 U.S. 804 (1955) (per
curiam) (explaining recoupment theory). Texas courts do not appear to have adopted the recoupment
theory. See Atwood, 271 S.W.2d at 141-42. But we understand you to question whether using the
easement for the proposed lease exceeds the power of eminent domain and is therefore illegal
because proceeds from the lease may help pay the costs of the construction or operation of the
pipeline.

          A governmental body in Texas exceeds its power of eminent domain when “and only when”
it “condemns land for a use unconnected with its legitimate purpose[],          simply     to meet the
costs of its proper objectives.” Atwood, 271 S.W.2d at 141. “[Tlhe mere fact that a municipal
district, through its legitimate operations, may be expected to meet its expenses and even pay for the
construction costs of its plant and facilities[] does not render its exercise of the power of eminent
domain illegal.” Id.

         Assuming the facts are as you represent them, the proposed lease does not appear to exceed
the Water District’s power of eminent domain. Presumably, the Water District has acquired the
easements for the purpose of constructing pipeline to transport water from distant reservoirs to
District constituents. If the fiber-optics cable is necessary to operate the pipeline and the easements
The Honorable Tim Curry - Page 6                   (JC-0179)




permit its installation and lease, the proposed lease use appears incidental to a legitimate purpose of
the Water District. See TEX. CONS. art. XVI, 5 59(a). Conversely, it does not appear that the Water
District has acquired the easements solely to install a fiber-optics cable so that it could lease capacity
to a telecommunications     company and thereby raise money. Thus, the proposed lease does not
appear illegally to exceed the Water District’s power of eminent domain.

                                         SUMMARY

                         Whether a particular easement encompasses an easement to
                install fiber-optics cable to operate a water pipeline or the authority
                to lease excess fiber-optics cable capacity is a question of fact.
                Section 49.225 of the Water Code does not, as a matter of law,
                preclude the Tarrant County Regional Water District from leasing
                excess fiber-optics cable capacity to a telecommunications   company.
                So long as the Water District receives from the telecommunications
                company adequate compensation for the use of the fiber-optics cable
                capacity, the lease does not constitute an unconstitutional     private
                grant of public property.




                                                 Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General - Opinion Committee
