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;
p. 1707
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
p.1710
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
p. 1711
Untitled Texas Attorney General Opinion
Combined Opinion