OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Honorable W. Lee O*Daniel
@overnor oi Texas
Austin, Texas
Deer Qovernor OlDanlelt Opinion
No. O-8313
Ret Whether or not the Qulf
Coast Water Company ia a
utility oompany "02 any
kind or charaoterwhatsoever*
within the manin& of Seotlon
,/' 3, Aots 1934, 4Srd Leg., 4th
,/ 0. S., Ch. 7, page Z3.
We reaeived ~your’ist+m dated June 15, 1940, requwt-
ompany was lnoorporetedin 1931
er to the publio for frrigation,
The Company apparent-
8 of Art1016 1308, Re-
elaum* in its oherter
go in eald article. It
authority uuder it8
which has been deolarad
Se0 Gulf States Utllitlss 00..
rror Refucred).
e been informed that the Gulf Oaaat Water Uom-
l.of Its water from the OoLorado RIveri that
the ooroganyhas approximatelyninety (90) oontraote for the
furnishing Or water to rios famere for irrigationpurpo444;
that the oorapanyfurnished water yaerly to irrigatr approximate-
ly thirty thousand (30,000) aores of land; that the aoazpanyowns
pumping plants, oanelr, laterale,ditohes, eto., used in furnlsh-
Ronoreble I?,lea O*Denlel,paga 8
fog water to Its ouetomere and that the company doer not own
eny lntereat in the land farmed to rlae.
Wa deem it neceeeary to quote e part of section 3,
botcr1934, 43ra Leg., 4th Oalled 866dlion, Oh. 7, at pccge33
alnoe your puery arises by 7irtua of the provleione of eala
Aat. Said aeotlon reefla,in par6, as follower
*That no gereon shall ho eligible for suoh
appointment (to the boera of Qireators OS the Iawer
Colorado River Authority) if he haa, during the pre-
cadlna three yearr berore his enrointmantbeen (IDI-
ployeb:by en eleotrio pewer and-light company, gar
Berore determiningwhether the dulf Ooaet water Company
is a uttlltp oompanywlthln the meaning of the Aoh oreatlng tha
l.ower Colorado River Authority, it 18 proper to ooneider the erl-
dent intent of the legislature in eneating the6 per6 of the above
mentioned AoQ.
An inepeotion0r sallate Bill le?.8, Aete 43rd Leg.,
4th C. 8.. ch. 9, page 19, reveals that paver has been conferred
upon the Lower Colorado River Authority, eating threugh it8 alr-
eotore, to control, store, pre6brve, uee, dietributeand sell the
weterm of the Colorado River, 60 develop, generate, dietribute
and eel1 water power and sleatrloal enorgy, to oonstruct,mein-
taln, u8e ana operate tsoilitien,and meny ether poware toe nu-
meroue to mention here.
The legislatureintended thaf the afreotore of the
Lower Colorado Rirer Authority should be persons who would aot
for the bent intereetsof the.State. It there?ore sought to end
did disqualifythose persons from being appointed to the Board of
Direotors of the Lower Colorado River Authority whho,at the time
of egpointzent,had been employedby an utility oompsnywithin
three (3) yeere preaedingthe date od e appolntmen6. This safe-
guard waarenaoted to insure as far (18possible thet 6he affairs
of the l,owerColorado River Authoritywould be oarrlsd on to the
t
510
Reuoxable 1. Lea OvDanlel, page 3
best Interestsor the State rather than for the Interest of
private lndlvlduale.
In this aouuectlan,It has been aalled to our atten-
tlon that the Gulf Coast Water Corcpanyhas entered Into a aon-
traat with the Rorrd 0r Dlreators 0r the Lower Colorado River
Authority for the purahase or water. It 1s r4aUlIy seen that
it a alreator, Officer or other employee or the Gull boast Water
Wapany 18 eligible for the appOintdcent la question, he rr,lght
roll be mom InterestedIn seelug that the water oompany bene-
fited rather than in protectInS the best interest8 or the Stste.
Xn Title Xo. 188, Revised Clvll Lftatutee,
we flhd the
followl~ articles whlah we believe to be pertinent to the ques-
tlon herein involved. They are a8 followst
*Artlalr 7466. Public rights
=!fheaonservatlonand develnpmentor alt or
the natural resourae8 or thla State, 1ncIkQlngthe
aontrol. etorlm. 9reaervatlonand dletributlonof
Its stoim and rid water8, the waters 0r Its rivers
and streams ior irrigation,power and all other use-
?tulpurposes~ the reuu2m6ffonana Irrigation0r it8
aria, semi-aridand other lauds needing irrigation;
the realarcatlon and drainage of its overflowedlands,
and other lands needing drainage; the aonservatlon
and deveIapuent~.of Its forest, water and hgd?o-aleatrla
power! the navlgatlon of its inland aad aoastal waters,
ana tha preservationand oonservatlohoilall snah 1)1-
tural r46ources or the State dre each and all hersb
dealared DubHa right4 and dufi~;s.~Iunaerscorlngo&a)
7467. Property of the State
"Jirtlolo
*The watera Or the ordlasry flbw ana underflow
and tlaes of,every ilowing river or netural stream,
of all lakes, bays or am.6 or tFisGull of Kexlco.
and the eta&, fiood or rain watare or every rivb or
natural stream. eanvon. ravine. ao~r4ssloa or watar-
shed, within the StkePot 'Paxa;,ai?4h&by &cl&d
and the right t the
~roarlatldnin zhe
manner and ior-the us& and piwp%ee-hereinafter pro-
vlaea, and icaybe taken or diverted from its natural
channel r0x any 0r the purpo64s expreesed la this
chapter. Wen an appllaatlon16 aadr ror approprla-
c
Honorable W. L. OrDaniel, ~680 4
tion af suah water for mining purpoaea, the owner of
the land through which the water flows and whlah 28 to
be arpropristedahell here the prior right to agpropri-
ate dlamo,ana ehall be permitted to extrolse suah right,
although nuah owner mey not hsts mde appl2oatlonprior
to such eppliaationby another, and suah owner ahall have
only ten days aftor the notice of applicationto appro-
priate muoh water In whlcahto exeraiss his prior right
to appropriate,whiah he shall do by written application
filed with the Board of Water Xn&mers within suah
time.*
"Artiale 7858. Possessory tight
~till,ptrsana who owa or h0ia a passes6cry risht
or title to land adJoining cr aont2@ous to any dem,
re84rvoir, aanal, dltah, rlume or let4s%l, oonstruatoa
and maintained under the provisiona ot this ahapter,
and who shall have esaured B ri&t to the ~4% of water
in mild aand dltoh, iluin6,ldtcral, ~4%~0lf, aam
or lake, shali be entitled to be supplied iram suah
aanal, dltah, flume, lateral.,dam, nwrvolr or lake
with nater ror irrl@tlon of suah Xand, and for mining,
tilling, manufaoturlng, aevslopment0r power, ana
etoakralslng,In accordanctwl%h the tsrmr of hir or
their oontract."
"Artlale 7656. Failure to fasrqeupon pria*~
*ff the person, essoaletlon0r persona, or oor-
port&ion owning or controllingrush wetek, and the
person who own8 or hold8 a porssaaory rl&ht or tlfla
to land aajofnlng or .co;lt2g~?us to any eanrrl,ditah,
rliie or lateral, lake or remxvolr, aonstruat4dor
maintained unQ,erthe provl62onsof'this ahapter, fall
to aerse upon a price for a permanent~viater right, or
for the ~4 or rent@1 of the neeeasary water to lrrlgato
the land or such person, or for mining, milling, m4nu-
taoturing,the aevslogmentof power, or stook raising,
wch person, assoaiationof pereon8, 03 aorporatlon
#hall, nsver8helesa+If h4, they or it, h4v4 or aontral
any water not aontraatedto othrrs, ttmnish the neoes-
sary water to euah pareon to irrigate his lads or
ror mining, milling, manufcaatuing,the development
or power or atook ralalnq, at aueh prices as aball be
reasonableand .just, and without d2aarlsinaflon.~”
Honorable2. lee O'Daniel, page 5
WArticle 7565. Ford to fix rct68
"The said Ecoardshall have Rower and eidhcrity,
and it ~&till?e its duty to fix reasonablerates for
the furniSbiIl& 0r water for the puryoaes or any SW-
pose msntioned in this chapter."
Urticle 7370. Rules and regulctiansmate and
published
TWery p6rSon, aasooiation0r persone, oorporatlon,
or irrigationdistrict, coneervlngor 8uyFlyIngwater
for any of the purpoaea authorized by this chapter;
shall make and pu'bliahreeeonablerules and ngulatlonr
relating to the method and manner of sqgly, u6e en4
dietributionof rater, and prescribingthe time and
manner of making eppllaationfor the une of water and
payment therefor.W
*Article 7883. Additional right or way obtained
*Any person, asoooiatlon0r pereons, aorpcration,
irrigbtlm or water improvementdistrlot, or any oity
or town, may ale0 obtain the right 0r way over privatr
lend8 and ale0 the lonae tar pumping plants, intakes,
beadgates and atorace re8ervcslr8, by oondemnetlon,by
causing the darr%iges for any Drivets property appTopried.ed
by any euoh person, aoeooirtion0r persone, oorpor2tioq
water improvementor irrigation district or city or town,
to be aasesscd end paid for as provided.bythe Statutes
0r thic Stctc and ae prcvided in Title 5Z 0r this Aot
relating to 1E. minent Domain* provided, however, that
when the power granted by this section is eought to be
exeroiaedby any person or aasoolaticnof persons, but
net including irrigationoorporatlona,diatrfcte, cities
or towns, he or they shall first make appliceEtion to the
Doz~rdci :vaterHnginsers for suoh condemnationand said
Board shall make due inveatigotion entl if it deems ad-
visable ahall give notioe to the party ownihg the land
8oU@t to be oondemned, end after hearing, may institute
such oondsnn!Jtion prooeedingsIn the name of the State
d
OL Texes ror the use and benefit of said person or per-
sons and eL1 others aimllwly aitunted, the coats of
said cult and condamnationto be paid by the person or
persons at whooseinstance the same la Institutedin pro-
portion to the benefit8 reoeived by each a6 fixad by
eaid board and to be paid before use is mrd
Honorable E. Lee C'Daniel,Rags 6
of Water Rnginvieraand ii euoh appllotiticnis granted
shall pay lees and clxrges 68 may be fixed by the
Bocrd."
The ?asr6 of Water Engineer8 is vested with broad pow-
ers in regulating the use o? water over whloh It has regulatory
ocntrol. Reoause the Gulf Coast Water Company takes all of its
weter out of the Colorado River and rdsllait to rioe farmers
for t!lerurpoae of irrigating rios land, the raid oompmny is
subject to regulationby the Roerd of Watsr Engineers ae pro-
vided in Title 128, Revised Civil Statutes. Artio1e 7555, 8upra,
provides that the furnisher of water must supply water to *all
persons who own or bold a possesscry right or title to land ad-
joining or oontiguouato any den, rcwervclr,tanal, ditch, flume
or letcrel*when they shall have asoured a rl ht to the use OS
the water. \:eare lnforrced that some ninety 790) persona have
secured the right to receive the water from the Gulf Coast Wa-
ter Company.
Artioies 7556 and 7557, provide, thst water must be
supplied at suoh prices as shall be rsaeoneblsandwlthout die-
or#dntition. Artiole 755.5$ivrs the Roard ot Water Engineers
power end authority to fix reasonablerntes lor the use of the
water. Article 7570 reqtirae the furnisher of water to make and
publish reasnncblerules and regulationsrslatiq to the manner
and x&hod of supply, usa and distribution,and preeorlblng
the time and manner OS making applloatlanfor the use of water
and ya~ymenttherefor,
krtiole 9883 grants irrigationoonpaniesth,sright
of eminent doma:n. To make oertein that irrigationocn5p4aie4
had the right to condemn land under Artlols 7583, the 44th
Xegislature,Reguler Eession, 1935, enaotsd Senate Bill Roe.
155, Ch. 48, page 126, clarifying aaid article. The emergency
oleuse of said Aot reads aa follows:
"b00. 2. The Sect thet under the oodlfioation
of 1925 the oodiilsrs, or else the printers, left a
question unCer the new laws of 1925 as to the power4
9f irrigationcorpora,tions to oondtvmnlend, whioh
power has a,lwaysbeen expressly reoogninedin Texas,
and it is necessary to clear up the question and it
is vital to the agriculturaldevelopmentof this Stats,
oreates an emargenoy and on imperativepublic neoeselty
513
Honorable W. Leo O*Daniel,page 7
that the ConstitutionalRule requiringbills to be
read on three several days la each House be surpended,
and the name is hereby suspended,and that thlrrAot
take effeot and be in foroe from and after its passage,
and it is 80 eneoted.n
In the oase of Colorado Canal Co., vs. KoFarland and
5outhwel1,94 8. W. 400, the Court of Civil ~ppealr went LIOfar
aI to sag that the possessionof the right of anbent domain
flxad the status of an Irrigationoompany as a quart publfa
corporationregardlees of whether it exerolnesthe power or not.
Wr. Justice Dibrall, speaking for the Supreme Court
of Texas in the oase of Raywood Rice, Canal and YillSng Co., vs.
V, F. Erp.and W. E. @right, 105 Texae 161, said:
*The granting of the power of eminent domain
imposes a public service in return. No authority
under our law exists ror conferringthe power at
eminent domain for private use. The moment suoh
p-or is granted the grantee beoomm quasi publio
in ohsraoter and while hi8 or Its funotlona are ex-
erolaed for prorlt they must be exeroieed in the in-
terent of the publio upon reasonableterme and without
dlaerlm,fnation.* e en
We quote from the oaee oi Amerioan Rio Wands Land and
Irrigation Co., vs. Mercedes Plantation Ce., 155 8. W. 886, (re-
r023d ani3 atrimed 208 6. w. 9041, as followa:
*Appellantoorporatlonwae organlsedand ohartsr-
sd under aeotion 11 o. El, p. 23, ot the dot8 of 1895
(R. 5. ~1911,art. !&02 at seq.), and follows the language
ot that aot In stating its purposes and powers. From
these powers grow, by operation of law, ita duties, which
cannot be #hanged or leeesnsd by Its intentions, In
Borden t. Rio8 & Irrigation Co., 981Tex. 404, %b 3. #.
11, 107 Am. St. Rep. 640, the Supreme Court of this state
held that euoh a oharter create8 a quasi publio oorpora-
tioa whiah is oharged with duties to the publio aoamienau-
rate with the powers candprivilegesoonferred upon it
by law. The Leglslsturein the above sot has not very
olearly doiined the rights of the publio nor the duties
of the eorporatlon, but a aartful rtudy of the langur,go
of the aot in the light of the well-eetablisbedprinoi-
pies OS law makes clam the meaning. As aptly raid by
the learned Judge who wrote the opinion in the Borden
c
DonorableW. I,eeO'Daniel,page 8
Caee the powers of the corporationare oonferred to
enae*ie It to approprlntewater and to convey it 'to all
persons entitled to the 8me$* to *all persons who OWA
or hold a poeeeseory right or title to land adjoining
or con"uiguous to any canal,* etc., aAd *bho shall h:ive
aacured a right to the use of water * * * in aooordance
with the terms of their oontraot.' In case-of a short-
age of water, a plan for prorating the supply is Fm-
vlded, and the sale of a permanentweter ri&t is made
an easement upon the land which will ycos with the title,
eto. It is further provided that in case no ecntreoi can
be agreed upon between the conamer and ttreIrrigation
company, the conauxer shnll neverthelessbe entitled to
water upon rez.scnable terms. Such lmgusge, aided by
the rule ot law that only puhlio or quasi puhllo aor-
porations are endowed with the power of eainent dozmln,
oan only bo understoodto mean that out of the grant of
power to the oor?oretlonahall grow, ipso faoto, the
right of the property owner to receive, upon reasonable
texvca,a fair proportion of the water taken from the
water ceurse and conducted through its oanals, and that
the power of the corporetionto contract for the aupplp
of water ia limited to such subjects a8 do not oonfllct
with the righte of the parties ae rlxed by the law.
In the Eorden Case the court, upon t,hla subject, aaid:
*The power to oontrtot,here given to the owmr of the
plant, oannot, if the business is to he regarded as
affected with a publia interest, be reaognized a8 ab-
solute and LIAoOAtrolled.Comon carriers aAd othera
engaged in publio oallings h:ve the power to Cantreat,
but it cexmot he 80 employed as to absolve them from
their duties to the puhllo or to deprive other8 of
their rights. Right8 hre evidentlysecured by this
statute to those 80 eitubted 38 to be able to avail
themselves of the water provfded for, and those rights
it is the duty of the owners of the contemplatedbusl-
ne38 to rospeot; ami the power to contract, under the
well-recngnizedprinciplea applicableto those oherged
with auah duties, mu& be exercised in subordinationto
suoh duties aAd rights. Reasonable contracts are what
this statute means, and not contrecteemployed as
evasions of duty.' 98 Tex. 511, 86 8. ?i. 15, 107 Am.
St. Rep. 640.”
See 8 a. 1. R. 968, 13 k. I. R, I.?27and 44 Tex. Jur.
339-369 for a full dlsousslon and oit&tioA of authOritio8oonoern-
ing the question of an irrigationcompany being a utility oom-
.
5513
Ronorable W. Lee O*Danial,pi-ee9
g-4.
Fran the above oiteb authorities,It ie apperent
that an irrigationoompany pamesses many of the attributes
oommon to the more generallyknowi utflity oompanies. Further,
it seems to ua that there ere a6 many reeson~~,it not more, for
alequalifyinga director, of’ffoeror employee of an Irrigation
oom~enp than there would be OS disqualifyinge direator, of-
fioer or employs of a gas or telephens oomgany. Certainly,
from e persoAa1 6teAdpoint,it would seem that e person in-
terested in e water oompeny is in a muoh better poaltlon to
profit from the appointmentin question than a person lnterest-
ed in a gas or telephoneoompanl.
For the reason* herein ststed~,ve are of the
opinion that the Gulf aoast Water Company 18 a utility oom-
pany rlthln the meaning of 8eotion 3, Aata 1934, &Ml Leg.,
4th a. a., ah. 7, p. es. It follewr that a director, of-
ifaer or other employee of said oompany is lnelig~blsto
be appointed to the Emord of Direotora of the Lower aoloredo
River Authority a8 provided in maid Aat.
Tows very truly
ATTORNRT QEW?AL OF T!XXAS
Leo 8hoptaw
LS:ZF
OPlNlON
GOMMI’lTEE: \