                                         The Attorney             General of Texas
                                                            July 5. 1982
MARK WHITE
Attorney General

                                        Honorable William P. Clements, Jr.         Opinion No.MW-484
Supreme      Court Building             Governor of the State of Texas
P. 0. Box 12546
                                        Office of the Governor                     lk:   Texas   Deepwater   Port
Austin, TX. 76711. 2546
512/475-2501                            State Capitol Building                     Authority
Telex    9101674-1367                   Austin, Texas   78711
Telecopier     5121475.0266
                                        Dear Governor Clements:
1607 Main St., Suite 1400
Dallas, TX. 75201.4709                       You ask whether there is statutory authority for the Texas
2 141742-8944                           Deepwater Port Authority to issue tax exempt industrial revenue bonds
                                        to finance the construction of a privately owned and controlled
                                        deepwater port facility. As noted in your letter, the pertinent
4624 Alberta       Ave., Suite    160
El Paso. TX.       79905-2793
                                        statutory provisions governing Texas Deepwater Port Authority, an
9151533-3484                            agency of the state of Texas, are sections 19.001, et seq. of the
                                        Water Code [hereinafter the "act"]. The act does not specifically
                                        mention "tax exempt industrial revenue bonds" and we note that the
1220 Dallas Ave., Suite          202
                                        determination of whether interest on a particular bond issue is tax
Houston,     TX. 77002.6966
713/650-0666
                                        exempt is a matter of federal law to be determined by the Internal
                                        Revenue Service.

606 Broadway,        Suite 312               Section 19.001 of the act provides:
Lubbock,     TX.    79401.3479
606/747-5236
                                                    (1) Texas urgently needs an offshore deepwater
                                                 port capable of accommodating supertankers for the
4309 N. Tenth, Suite B                           importation of    crude oil and other fluid
McAllen,     TX. 76501-1665                      commodities that may be carried in ships of that
5121662-4547                                     size;

200 Main Plaza, Suite 400                           (2) it    is   most  desirable   for   private
San Antonio.  TX. 76205.2797                     enterprise to own, construct, and operate such an
5121225.4191                                     offshore port;

An Equal      OpportunityI                          (3) in the absence of any active and viable
Affirmative     Action     Employer              plan to develop a deepwater, offshore port by
                                                 private enterprise, the State of Texas should
                                                 construct such a facility, which should be
                                                 self-supporting and whose design, construction,
                                                 and operation should be carried out by private
                                                 companies under contract;




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Honorable William P. Clements, Jr. - Page 2   (MW-484)




             (4) protecting the environment is essential to
          the proper operation of such a port;

            (5) the credit of the State of Texas shall not
         be pledged to finance such a port; and

             (6) the Texas Deepwater p,ort Authority be
          created to implement this policy.

     Section 19.131 provides in subsection (1) that the authority may
borrow money from time to time for any corporate purpose or in the aid
of any corporate purpose and in subsection (3) "issue and sell bonds
and provide the terms and conditions for repayment with interest and
rights of the bondholders." Sections 19.132 and 19.134, respectively,
provide for the form of the bonds and the security therefor. The
latter section provides that the bonds may be secured by a "pledge of
all or any part of the revenues or receipts of the authority or by the
revenues of any one or more... contracts... specified by the
resolution of the board." Subchapter (D) of the act states further
the powers and duties of the authority. Section 19.054 provides in
subsection (b) that the authority "may enter into contracts or
agreements with any person, corporation, trust, or partnership for the
financing, construction, operation, maintenance, and         sale by
installment or otherwise of a deepwater port or any facilities
relative to a deepwater port." (Emphasis added).

     Therefore, in response to your initial question, there is ample
statutory authority for the authority to issue revenue bonds to
construct a deepwater port and to sell the deepwater port by
installment sale or otherwise to a private corporation. The act
authorizes the authority to pledge the receipts under the installment
sale contract to the payment of the bonds. You also ask that should
our answer be in the affirmative that we cite statutory authority for
the authority to issue bonds to finance the construction. This we
have done in treating the first question.

     You next ask, "Is such statutory authority constitutional?"
Section 19.011 of the act recites that "[T]he Texas Deepwater Port
Authority is created as an agency of the state and pursuant to Article
XVI, Section 59, Subsection (a) of the Texas Constitution." It is our
opinion that the creation of the Texas Deepwater Port Authority is a
proper exercise of the constitutional mandate in the aforementioned
section of the constitution to "pass all such laws as may be
appropriate... [in] [t]he conservation and development of all of the
natural resources of this State including... the navigation of its
inland and coastal waters." This section of the constitution declares
that "the preservation and conservation of all such natural resources
of the State are each and all... public rights and duties...." Tex.
Const. art. XVI, §59.




                             p. 1708
Honorable William P. Clements, Jr. - Page 3   (VW-484)




     Sections 50, 51 and 52(a)      of    article   III    of   the   Texas
Constitution read as follows:

            Sec. 50.     The Legislature shall have no
         power to give or to lend, or to authorize the
         giving or lending, of the credit of the State in
         aid of, or to any person, association or
         corporation, whether municipal or other, or to
         pledge the credit of the State in any manner
         whatsoever, for the payment of the liabilities,
         present or prospective, of any individual,
         association of individuals, municipal or other
         corporation whatsoever.

            Sec. 51.     The Legislature shall have no
         power to make any grant or authorize the making of
         any~ grant of public moneys to any individual,
         association of individuals, municipal or other
         corporations whatsoever....

            Sec. 52.     (a) Except as otherwise provided
         by this section, the Legislature shall have no
         power to authorize any county, city, town or other
         political corporation or subdivision of the State
         to lend its credit or to grant public money or
         thing of value in aid of, or to any individual,
         association or corporation whatsoever, or to
         become   a   stockholder in    such   corporation,
         association or company.

     Sections 19.036(b) and (c) and 19.149(a) and         (b) of the act
follow these mandates of the constitution, viz:

         Section 19.036

            (b) No license or permit may be requested or
         accepted by the authority nor may the state be a
         party to a license or permit which would impose on
         the State of Texas or the authority any liability
         or financial obligation by virtue of contract,
         tort, or otherwise unless that liability or
         financial obligation is fully indemnified without
         expense of state funds.

            (c) With    the   exception of    the   initial
         appropriations from the General Revenue Fund to
         the Texas Deepwater Port Authority and revenues of
         the authority, the state may not pledge its faith
         and credit or contribute any state funds to a




                                p. 1709
Honorable William P. Clements, Jr. - Page 4 (MW-484)




         project of the Texas Deepwater Port Authority or
         for expenses of carrying out the powers and duties
         of the authority.      Bonds issued under the
         provisions of this chapter shall not be deemed to
         constitute a debt of the state or a pledge of the
         faith and credit of the state. The authority is
         not authorized to incur any liability or financial
         obligations which cannot be serviced from the
         revenues of the authority or from the initisl
         appropriations.

         Section 19.149

            (a) The provisions of this chapter shall not
         be construed to authorize the giving or lending of
         the credit of the state or to be a pledge of the
         credit of the state for the payment of any bonds
         or notes issued under the provisions of this
         chapter, and the purchasers and successive holders
         of any bonds or notes shall never have the right
         to demand payment from any money or revenues of
         the authority except those pledged to the payment
         of bonds or notes.

            (b) This chapter shall not be construed as
         obligating this state to the holders of any of
         those bonds or notes nor to constitute a contract
         on the part of this state to make money available
         for any of the authority's needs.

     This opinion is consistent with over thirty years of
interpretation by this office in approving bond issues authorized by
similar statutes for port authorities. river authorities and cities in
providing funds for the construction of such projects as port
facilities, pollution control facilities, airports, and electric
generation plants. All such facilities have been construed as being
for a public purpose and within the framework of the Texas
Constitution.

     We specifically do not rule on a particular financial plan or on
any particular contract at this time. Such review and decision will
be made when and if bonds are submitted for approval as required by
section 19.141 of the act.

                            SUMMARY

             The Texas Deepwater Port Authority has been
          crested as an agency of the state of Texas by




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Honorable William P. Clements, Jr. - Page 5 (MW-484)




         sections 19.001, et seq. of the Water Code. Such
         legislation grants authority to such agency to
         design, construct, and operate a deepwater port,
         to sell such deepwater port by installment sale or
         otherwise, and to issue revenue bonds for such
         purpose to be secured by the receipts payable to
         the authority pursuant to contracts, including an
         installment sale contract. Such legislation is
         consistent with the requirement in article XVI,
         section 59 of the Texas Constitution, requiring
         the legislature to pass all laws as may be
         appropriate for the conservation of natural
         resources.




                                        MARK      WHITE
                                        Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

Prepared by John W. Fainter, Jr.
First Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison, Chairman
John W. Fainter, Jr.
Patricia Hinojosa
Susan Lee Voss




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