April 4, 1949
Hon. E. V. Spence, Chairman
Board of Water Engineers
Austiri, Texas
Opinion Wo. V-003 c
Fle: Authority of Board to
entertain appropriation
application of Upper
Colorado River Authority
Dear Sir:
The question submitted for opinion is con-
tained in your letter, which we copy in part as fol.-
lows :
‘In Attorney Oeneral’a Opinion
No. O-7338, approved August 9, 1946,
it Is held that the Upper Colorado
River Authority, a atate agency, cre-
ated by act8 of the Regular Session of
the 44th Legislature, Chapter 126, ia
not required to secure a permit from
the Board of Water Engineers to ap-
proprlate waters within Its boundaries
and that the Authority ia not subject
to payment of feea preecribed by Articles
7497 and 7532, Vernon’8 Annotated Civil
Statutes of Texas.
“Notwithrtandlng thle opinion, the
Upper Colorado River? Authority cannot
get its proposed projeata finanoed with-
out having flrrt seuured a permit from
the Board of Water Engineers protecting
ite source of water supply under the
Doctrine of Approprlatlon. Therefore,
the Authority filed its application and
was granted permit by the Board covering
lta Robert bee project on the Colorado
Hon. E. V. Spence - Page 2 - V-803
River in Coke County, and is now pre-
paring to file an application to ap-
propriate and use the waters stored in
the North Conch0 River Flood Control
Project In Tom Green County for munlci-
pal, Industrial and irrigation purposes.
"Article 7501, Vernon’s Annotated
Civil Statutes of Texas, reade a8 fol-
1OWB:
“‘Every such application shall be
accompanied by the fees hereinafter
provided, add shall not be filed
or considered until such fees are
paid. t
“In view of Artiole 7501, can the
Board of Water Engineers file and con-
elder the application of the Upper Colo-
rado River Authority for permit to ap-
propriate the waters in the North Con-
cho River Flood Control reeervolr wlth-
out It being accompanied by the feea
prescribed by Articles 7532 and 75357”
The question which you raise has been the
subject of many prior opinions by thie office, which
we briefly review ae follows:
1. Letter opinion dated June 30, 1925, by
Assletant Attorney General C. L. Stone, addressed to
the Game, Fish & Oyster Commlsslon, decided that the
Commleelon need not pay the statutory feea in order
to acquire a permit to appropriate water for the pur-
poee of maintaining a game prerrerve and fish hatchery.
The basis of the opinion Is that since game, fIeh,
water, and permlt fees are all the property of the
State, and slnoe the fee statutes do not expressly
require the oomml~slon to pay the feen, none need
be paid,
2. Letter opinton dated January 3, 1938,
by Asslntsnt Attorney Qeneral Ruaaell Rentfro, ad-
dressed to the Board of Water Engineers, Involves
the liability of the Federal Farm Security Admlnia-
tration for payment of Baid fees. The above oplnlon
of June 30, 1925, was distinguished on the ground
that the same community of interests between game.
fish, water,ard fees ‘existing there did not ,..*A.<*,
exist in the case of the Federal Earm Security AG-
Hon. E. V. Spence - Page 3 - V-803
ministration. The opinion holds that since the fees
are not taxes, 80 as to forgive payment thereof
by the Federal Government, and Article 7532 being
mandatory, your Board had no alternative but to
collect the fees prescribed by said article-~
'3. Letter opinion dated March 8,‘1938,
by Assistant Attorney General H.. L..,Wllliford,
addressed to the Brazes River Conservation and
Reclamation District, holds Baid DiBtI?i,Ct exempt
from the fees in question. It was suggested in
the letter. requesting the opinion that since the-
fees~ are paid by your Board directly Into the Gen-
eral Revenue Fund and since the net revenue of the
Brazes Diatrlct is also paid. into said fund, payl.
ment of the fees would be nothlng~ more than a
bookkeeping transaction, and thesefore need not
be pai.d. The opinion recognizes this argument
but bases its holding upon utility considerations,
stating that since “the entire enterpriee is an .
undertaking,by the State to conserve its public
waters and to utilize same for the benefit of the
State in ita entirety ,~. . . the fees are not re-~
qulred. ”
4. Letter oplnlon dated May .4, 1938, by
Assistant Attorney General H. L. Wllli~ford, ad-
dressed to Upper Red River Flood Control and Irri-
gation District holds such ,dlatrict not liable~ for
the fees. Utility considerations were again em-
ployed, it being pointed out that the Irrigation
District is a state agency exercising powers .and
privileges in furtherance of governmental pur-
pose. Xn addltlon, It was stated that one deport-
ment of government la not required to pay another
department a license or prlV.llege tax sin,ce this
would be merely paying the revenue ,of ,the State
Into the revenue of the State.
5.‘. Letter oplnlo,n dated May 13, 1939, by
Assistant Attorney General ?Ngene Tate, addressed to
Board of Water Engineera, overrules the Wllllford
opinion of May 4, 1938, and holds the Upper Red Ri-
ver Flood Control & Irrigation District lfable for
the fees. Earlier opinions were reviewed and the
Game, Fish and Oyster Commission and Srazos District
opinions approved. It is clear, however, that ?,he
Brazes opinion was not approved upon the utility
.
Hon. E. V. Spence - Page 4 -V-803
baais upon-which it naa decided but upon the basis
euggested for decision, namely, that the net revenuea
of the Brazoe Dlatrlct ultimately find their way in-
to the General Revenue a8 do the fees collected by
your Board. Baa&use the Upper Red River District’s
Act did not contain thle net revenue provlalon, It
wae held liable for the fees.
6. Opinion Uo.O-78, dated January 13,
1939, addressed to the State Parka Board, holds such
Board not liable for the fees. This opinion reviews
all prior opinions and adopts a8 lte basis the above
indicated fee theory. It 18 asserted that the Parke
Board falls within that class of governmental agency
which is not required to pay the fees since its re-
venues go into and come out of a State fund.
‘7. Opinion So.O-4304, approved Pebruary
9, 1942, addressed to the Loner Colorado River Au-
thority, holds the Authority not liable for the
feea, The basla of this opinion Is the inability
of the Authorlty to spend its fund0 for any but a
btatutory purpose. It wan decided that the Author,ity
acquires no right through such a permit, its right,to
appropriate being oonferred by Its hot, in consequence
of whioh payment of the fee in order to ueoure the
permit would be use of Its fundr for a non-statutory
purpose. The earlier oplnlonn on the subjeot were
not disouased. Neither the Upper nor Lower Colorado
hot8 aontain a provision whereby net revenuea go into
the Qeneral Fund.
8.Opinion No.O-7330, approved Awuat 9,
1946, addreseed to the Upper Colorado River Authority,
reaohes the same rerult and for the name rea.aon an
that set forth in Opinion No.O-4304, Irupra.
Artiole 7532, V.C.B., aeta up the various
fee8 in question, -The opening rentenoe of said artlole
provider that “The Board ahall oharge and oolleot for
the benefit of the State the fees hereinafter pro-
vided. , . .‘I The fee8 referred to under thlrr lan-
uage are of three typer, vie., filing fees,p;mgdlng
f ee8 and fees for maklng oertlfied copies. m
ample - a filing fee la required for eaoh presentation,
application for permit, petition for formation of a
district, applioatlun for approval of bond IafJue, ap-
plioatlon for adjustment or fixing of rates, and appli-
cation for extension of time. A recording fee 18 re-
Hon. E. V. Spence - Page 5 - v-803
quired for the filing of any .instrumeBt which is
recorded In, the office of the Board: A ~fee is also
provided for certification by the Board of any ‘in.-
strument or map dealred to be certified. In addi-
tion to the above fees, Article 753'2pr~ovides for a
use fee, also to be collected for the,benefitof
the State, such fees being required for the us,e of
water for Irrigation, for hydraul.i,c power, for parks,
pleasure.,, resorts and game preserves and th,e amoun.ts
in which these fees are payable are based upon the
volume of the proposed power or water consumption.
In conclusion, Article 7532 provides that “the fees
paid upon application for a permit other thanthe
filing fee herein provided,,shall be held~ by the
Board until said application is passed upon and If
same is not granted, such fees shall be returned to
the applicant therefor. . . .”
Article 7533, V. C. S., provides that the
fees Andy charges collected by the Board of Water
EnglneerB,Bhall be’ immediately deposited in the State
Treasury to the credit of the General Revenue Pund.
Article 7535, V. C. S., merely allows an
installment method of payment when the fees exceed
the Bum of $l,OOO.OO, and has ‘no real bearing on the
subject involved herein.
Where this office has held that a particu-
lar State agency need not pay the fees, this Is
necessarily also a holding that, In drawing the sta-
tutory provisions dealing with feea, the Legislature
intended In the first place to exempt such~ agencies.
It conslatently follows therefore that the Legis-
lature did not Intend for Article ~7501 to have a
mandatory effect so as to requlre,ln these excep-
tional cases the collection by ,you of the fe,Fo;f;+$
to your taking action on the application.
words, Article 7501 is not mandatory as to those
agencies which are not required to pay fees.
Generally, thls,anBwepB your question. How-
ever, in order to fully reply, It is necessary to
solve certain problema raiBed by the above opinions
of this offlce~.
Excluding Opinion No. O-4304 dealing with
LCRA and Opinion Ro.O-7338 dealing with UCRA, the
ultimate conclusion of the above opinions Is that the
Hon. E. V. Spence - Page 6 - V-803
fees are not payable In two Instances: (1) If
the receipts of an agency go into some State fund
and, because the feea go Into a State fund, the
agency la exempt; (2) Where the subject matter
under the control of the agency la State property,
such as fish, the water required for the protec-
tion thereof being also State property, no fee
is required. Up to the time of Opiniona O-4304
and o-7338, the foregoing were the principal, if
not only, two bares upon which exemption could be
allowed, Although we have excepted these opinions,
actually they form no basis upon which a prospec-
tive exemption can be allowed. The holding of
theae opinions is merely that the Districts require
no permit, obtain no right under It, and, being
able to spend thelr funds only in furtherance of
the statutory purposes for which they were created,
are legally unable ‘to pay the feea.
It appears from the statement of facts
contained In your letter that In order to finance
its North Conoho River Flood Control Project, It
la neoeaaary for UCRA to acquire the usual permit
forming the basis of an approprlatlve water right.
It la evident that UCRA requires for a ;;ryhrectl-
oal reason a permit In thlr lnatanoe,
Dlatrlota require a permit, it la no longer an ana-
wer to the question of payment of fees to say that
;;oauae they do not require it they cannot pay for
.
An examlnatlon of the Acto of Upper and
Lower Colorado River Authorities will show that
thalr aota are nearly l4entloal. See LCRA, Aota
1934, 4 C.9. oh.71 UCRA, Aota 1935, o ;Edi and
8mendmentai [both Aota are oarrled in %
followln Artiole 8197f). With one minor*e;oeptlon,
Section Is of both Aota contains this Identical pro-
vision (from UCRAla Aot)r
"~Seo.8. The Board shall establish
and oolleot rate8 an4 other ohargerr for
the sale or uae of water, water oonneotlona,
power, eleotrlo energy or other services
sold, furnished, or supplied by the Dlatrlct,
whioh fee8 and charges shall be reasonable
and nondlaorlmlnatory and sufflolent to
praduoe revenuea adequate, in addltlon to
funds received from tax diversion;
,
Hon. 6. V. Spence - Page 7 -v-803
‘l(a) to pay all expenses necessary
to the operation and maintenance of the
propert?es and faclllties of the District;
“l(b) to pay the Interest on and
principal of all bond? Issued under this
Act when and aa the same shall become
due and payable;
“l(c) to pay all sinking fund and/or
reserve fund payments agreed to be made
In respect of any such bonds, and payable
out of such revenuea, when and as the
same shall become due and payable; and
’ 1(d) to fulfill the terms of any
agreements made with the holders of such
bonds and/or with any person in their
behalf,
"'Out of the revenues which may be
received in excess of those required for
the pur oBes specified In subparagraphs
(a) (bP (c) and (d) above, the Board
may’ln iis discretion establish a reason-
able depreciation and emergency fund, or
retire (by purchase and cancellation or
redemption) bonds issued under this Act,
or apply the same to any corporate purpose.
“‘It la the Intention of this Act
that the rates and charges of the District
shall not be In excess of what may be
necessary to fulfill the obligations im-
posed upon It by this Act. , : .I”
The same degree of slmllarlty existing be-
tween the Colorado Acts does not exist between them
and the Brazos River Reclamation and Conservation
District ‘8 Act. For the~most part, these differences
lie In language employed rather than in substance.
Substantially, and eepeclally as regards district
objectives and functione, the Acts are the same.
With respect to revenues, the Brazos Act (Acts 1935,
ch 368 sec.6 copied V.C.S. following
~~~l%~‘&&+) p&Ides 4s follows:
“lSec.6. It Is contemplated by this
Act that the Brazos River Conservation and
.
Hon. E, V. gpence - Page 8 - v-803
Reclamation Dletrlct will apply for and
receive the cooperation of the United
States of America in alleviating the
public calamity herein declared, and
that beneficial usea may be found for
the flood waters impounded, which are
hereby deolared incidental to the purpose
OS removing said public calamity, and that
revenue0 will be derived from euch lncj-
dental benefits; all of which, to ether
with the funda hereby donated and 7 or
granted shall be used during the, time
and for the purposes herein specified, to
the end that such publlo calamity may be
averted, Until all obligatione herein au-
thorized have been fully discharged, the
tax money hereby donated and/or granted to
the District, together with the net reve-
nues as herein defined accruing to the
District from any other oourceB whateoever
shall be used exclualvely for the purpoae
of diachargrng aaid obligations and for
the proper operation and maintenanoe of
the l.mprovemente proposed. to be oonetruct-
cd; but after all of such obligations have
been paid in full, then the revenuee ac-
cruing to the District rrom all aourcea
whatsoever, shall be ured by the Dietrlct;
%irst, to pay the rearonable oost ot ool-
leoting suoh revenuesi second, for the coat
of the operation, maintenanoe, depre-
oietlon, replaoement and betterment of the
propertler aoquired and oontrolled by the
Dsstrioti third, for the oompletlon of
the neoesoary unit0 of the coordinated
oonneoted aystem by water oonservation
that will prevent the pub110 oalamity de-
clared to exlsti and the balanoe of such
revenues ahall be paid annually, not later
than Wlroh 18t of eaoh year, to the Treas-
urer of the State of Texas and by him
plaoed in a Oeneral Revenue Fund.
“The term ‘net revenue’ as ueed in
this Act shall be construed to mean the
revenuea of the Dlstrlot, from whatsoever
aouroe derived remaining after the pay-
ment 0r all oosts 0r oolleotion, all coat0
of operation and maintenance, depreoiatlon,
Ron. E. V. Spence - Page 9 - v-803
replacement and betterment of the prop-
erties owned and/or acquired and/or
controlled by the Dlatrlct, and the es-
tablishment and the maintenance of an
adequate depreciation~and emergency
fund sufficient to construct, replace
and/or repair works, and/or properties
when and If necessary.”
Instead of llmltlng net revenue to opera-
tional coat and providing that net revenue over and
above these costs may be devoted in furtherance of
statutory purpose, as was done in the Colorado Acts,
the Legislature has made provlalon in the Brazos
Act for turning net revenue to the Qeneral Fund.
This difference In method of diaposlng of net reve-
nue should create no dfatinctlon, elnce all three
Districts are conservation and reclamation districts
created pursuant to Section 59, Article XVI of the
Constitution; and under no circumstances would they
be authorized to produce a profit over and above
conetitutlonal and statutory coats. As a practical
matter, of course, year to year revenues might not
exactly equal such costs and as to any net revenues
80 produced some provision wa8 necessary. In pro-
viding on the one hand that theae net revenues be
put back to corporate purpose and, on the other,
that they be put In the Qeneral Fund should not
create a distinction which can ‘have any material
bearing on the fee question here involved.
The Colbrado and Brazos District8 were cre-
ated pursuant to the ooneervation amendment to the
Constitution, Sec. 59, Art. XVI. A casual reading of
the Acts reveals that the Districts were intended to
acoompllsh the same pub110 purpose. This elmllarltg
has been recognized by our Supreme Court. See Brazos
River Conservation dc Reclamation District v. Mccraw,
126 Tex. 506, 91 S.W.2d 665, 672; and Lower Colorado
River Authority v. Mocraw, 125 Tex. 268, 83 S.W.2d 629.
In v5ew of this slmllarlty and because of
the absence of any subntantlal difference of result in
the handling of net revenuea, ab that difference re-
lates to the fee question, we are of the opinion that
the came exemption accorded the Brazos District should
be accorded the Colorado Districts. Believing this
to be sufficient reason for exem tlon, we withdraw
Opinion O-4304 and Opinion O-733 8 and substitute ln-
- . ,..
Hon. E. V. Spence - Page 10 - V-803
stead this oplnlon. A copy of this opinion has been
furnished the Upper and Lower Colorado River Authorl-
ties to apprise them of this action.
As Indicated earlier, Article 7501 1s not
mandatory as to those governmental agencies found
to be exempt from the payment of fees. Such Article
Is not mandatory as to the Upper Colorado River Au-
thority and you may rile and consider Its appllca-
tlon although not accompanied by the fees provided
by Article 7532.
The Board of Water Engineers
may file and consider an approprla-
tion application filed by Upper Colo-
rado River Authority even though such
application 1s no,t accompanied by the
feea prescribed b$z rtlole 7532,V.C.S.
Opinion8 O-4304 an’8 O-7338 by prevlous
administration wlthdrpwn.
Yours very truly
ATTORNEYOENERU OF TEXAS
I BY H. D. Prueti,.Jr.
.:, Asslstant
HDP:bt
.:. .