             OFFICE    OF THE   ATTORNEY     GENERAL          OF TEXAS
                                    AUSTIN
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      Eonorebla ?;illIem    1. Kerr                   :
      District  Attorney
      Feccrs, Texas                                   /--J-l\
      Dear      Sir:


                                                                    a 8 tru.etae

                                                              e Board of DI-
                                                              d Bluff fi’ater




                                                    1940 you rendered




                                               Yy    inqdry       then   wa6


                          o tho rights of ouch district    to give a
             nortgace b'; the terms or whloh all property,     including
             right to Impound, store and distribute     water, .wes
             plodged to secure the pa-lnent of bond obllgatlona,
             ths sold nortgaee provld 3ng that poaaesalrm and poa-
             eesacry right6 should Raan toa bank as trustee upon
             default in obligation;   and
                             1
                        i




       Honorable %‘IllIa~ L. Kerr,   Pago 2


                  “(b)   AsBurnIng that such right would exist and
            that on derault a bank could euooeed to all rights
            or suoh dlstriot,    then would the reaoonable rules
            and regulations   of the district   prevell and under
            euoh reasonable rules and regulations      OGuld oriminal
            proseoutlon be conducted where the subject matter oi
            auoh ruloa, phyaloal property and Impounded water,
            hed pasrred to a bank aa truetee.
                   n . . .

                  *The said dlstriot,    acting by Ita off’icera,    oxe-
            outed a trust   indenture by the terms of whloh auoh dla-
            trlct  sold, oonvsyed, assigned,       traneferred  and oon-
            firmed unto the truates     therein named forty-three     par-
            cels of land (the reservoir      site.),   Its permit No. 1217
            to appropriate    unapproprlatsd    waters of the Peoorr River,
            Ita hydro-eleotrlo    plant, tra:namiaaIon line@, etc., and
g
                   “‘All  other propertlea’, real personal or nixed
kk          :::     and all right8 of way, franchises,    water rights
                     and In faot everything  oonneotod with the proper-
-7.~        ties   and system of the eald dIstrIot.c
                  “The said Instrument was exoouted and delivered  to
            seoure  and Inaure the payment of a bond Iesue therein
            dssorlbed,  and, I as8um, was executed under the author-
            ity or apparent authority   of Article 76076, Sections 20-
            21 and ZlB, whloh authorized a water power control dls-
            trlot to ‘pledge and ilx a lien (on) and mortgage any
            property* etc.”
                  The only quarrtlon with whIoh you could bs ooncsrned,
       and the only question wblch will be treated In this opinion,
       Is the right of tho El FRAONstlozal Bank, El Paso, Texas, a8
       trustee,  to enforoe the reasonable rules and regulation6   as
       promulgated by the Board of Direotora or the Rsd Bluff Rater
       Power Control Dlatrlct.    Therefore, may we restate your ques-
       tion to road:
                 Kay the raaaonable rulee end regul.ations  ae
            promulgated by the Board of Directors  of ths Red
            Bluff Water Fower Control Dietriot  be enforced by
            the El Peso National Bank, gl:PBao, Texas, truates?
                                                                              ..
                                                                                   74
      Honorable ?!illlam       1.. Kerr,   Pa&s 3


                Shortly after the receipt     of the opinion requoat
      from Ronorable Robert D. Fenn, County Attorney       of Reeves
      County, Pecos, T8xa8, this Dopertment received a very ex-
      haustlve brief rron the law firm, Rurpes, Burgea & Soott,
      Attorneys at Law, 21 Paso,     Texns, on the !;uestIon aa to wha-
      ther or not the rules and regulationa      as ‘promulgated by the
      Board of Directors    of the district  could form the baols of a
      orimlnal proseoutlon.      (@pinion ho. o-S.414).
                     For additional    facts,   may we quote from tho brief
      0r   Burges,    z3urgse E< Scott. OS follows:

                    “The fed Bluff dam, reeorvolr,      lrrlgatlon    ena
             power eyatems represent an investment ofi more than
             twc millions of dollars.       ThO prOjeOt ti3B COnStNOtCPd
             with the proceeds of three bend issue a.          Fractlcnlly
             all of these bonds art) held by then Reconstruction
             Flnanoe Corporation.     The first   is,%8    of bonds IB se-
             cured by a pledge of all the proparties         of the Dls-
             trlct,   as well as the tax revenuea and all other In-
,P.          come of tho .DistrIct,   while   the aboond and third ls-
             au86 are tax obligations.      , . .
                    “ITIor to January 1940 the Red Bluff DIatrIct had
             defaulted in the payment of both prinolpal       and Inter-
             est on tho bonds held by the lioconstructlon      l?I.nance
             Corporation.     Acting’ under the term6 and ~rovislons      of
             the indenture seauring the rirst bond lesue for ;‘1,050,-
             ooo.co,    the Reconetructlon   Finance Corporation requested
             the 21 t’asc Natlcnal Rank, Trustee under the indenture,
             to demand that poasesclon cf tho D~strlctqs       lxopertles
             be delivered to the Trustee.       Such demand WRSmade, and
             abwt    January 11, 1940, the Directors     of the District
             voluntarily    surrendered poaaaaeion.    Since that time
             tho Dlotrlct ,h:ar b8en oporatsd by the Trustee under the
             direction    cf the Eeconetruction   Finance Corporation,
             end hr. J. D. Shnw 1s in active mnnaf;emant a8 the Trust-
             oe’s Agent. . . :(
                     A3 ii?~s ?olnted   out in cur CDlnInn O-2414:
             nurrl*‘By Article  1%, SootIon 50 of tha Conntitutlon,
                     the Legislature   IR empowsred to authcrlze      the or-
             gadizkon    of public or qussi-public      cor.ooratIons
             ohcr&ed vAth*the   duty cf securing    to 611 tbo Deopls all
 r”          cf the bonoflts   of conservstlcn,    protectlr.~ rl.psr1a.n
,-.Zonorable   ::illlom   1,. Kerr,   Page 4


         rights,  if any exist,  while saving the water8 thrt
         wculd othervilee be lost, and et the same time aecur-
         lne to all of the people of the State the rlghts of
         flshlng and recreation.     The management and control   of             ’
         t.heas public or quasi-pub110 oorroretlcne   Is vested
         eolely in e Board of Directors    eleoted by the quall-
         fled vcters of the terrltoky    wherein such dlstrlot   Is
         located.    Chapter 2, Title 1X?, Vernon’e Civil Stat-
         utes, and amendment8 thereto.”
                 :?‘a are not paBalng upon the valldlty       of the El Fasb
   Natlonel Far&‘8 title        to the phyaioel property of the Red
   Muff Yeter Power Control Dlatrict,            but conceding,    for the
   sake or the question,        that the Dank’s title     to said property
   Is volld in every respeot,         nevertheless,    the ilank ,*ould be un-
   able to enfcroe the rul~ea and regulations           aa promulr,ated by
   the district,        The district,   as created by the Leglalature,
   is e governmental agency, a body polltic,            and oor.?orate,  and
   (1s Buch, ezrclses       such governmental functlone as conferred
   upon It by law.           .   .
                  The Eank, by acqulrlng    <he phyalcal propartiea of
,/-‘ the dl,etrlct,   would not beoome the district        ner would ft ec-
     qulre the official    authority   conferred upon the Board of Dl-
     reotors of the district     by the Legljlature       of the State. If
     and when the property la taken over by, end is being operated
     by the Bank, oaid proporty oeesos to be public or State pro-
     perty, and becomes the privrte property of the Beuic, and as
     8uch, mulrt be operated a8 any other privete enterprise.           To
     permit a private enterprise      to enforoe rules end regulations,
     the violations    cf which would constitute      ,a penal offense,   would
     amount to nothing lees than claee       leglslatlon,     which 1s In dl-
   ’ rect contravention    of Article   I, Section 3, cl the Conotltutlon
     of ‘Iexas, which provides:
               “Section 3. hll rrea rzen, when they form a so-
         0101 compact, have equal righta,     and no mm, or set
         of non, Is sntltled    to exclusive,  separate public
         emolument.8, or privileges,    but in conalderetfon   of
         public aervicen.”
              Therefcre , yc~l ore respeotfully  advised t%.%t it la
   the opinion or thle DepRrtment that the rules and regulations
   8s promulEatsd by the Board or Directors     of the Red Eluff ~Xater
   Power Control District   my ntit be enforced by the El foao Xa-
   tlonal Bank as trustee.
            Ronorabla   ~i.llim    L. Kerr,   Fage 5


                        Trustlxq    that   this   disposes   of   your InWirY,   we
            main
    I
                                                                  Paws   very truly
;       :




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