Untitled Texas Attorney General Opinion ( 1986 )

Honorable Tom Craddick Opinion No. JM-596
Chairman
Committee on Natural Resources Re: Whether nonprofit water supply
Texas Rouse of Representatives corporations are subject to the
P. 0. Box 2910 Open Meetings and Open Records
Austin, Texas 78769 Acts
Dear Representative Craddick:
You inquire whether nonprofit water supply corporations are
re‘quiredto comply with the Texas Open Records Act, article 6252-17a,
V.T.C.S., and the Texas Open Meetings Act, article 6252-17, V.T.C.S.
Nonprofit water supply corporations may receive state financial
assistance under legislation implementing the Texas water development
plan. See Tex. Const. art. III, 5549-d -- 49-f, proposed by H.J.R. 6,
69th Lec(1985); see also Water Code, chs. 15, 16, 17. Those that
receive financial assistance from the state are required by sections
15.006, 16.002, and 17.002 of the Water Code to comply with the Open
Records and Open Meetings Acts.
You express concern that other nonprofit water SUPPlY
corporations which do not receive assistance from the state deny
access to their books and records to interested persons. You also
inquire whether nonprofit water supply corporations which do not
receive such assistance must comply with the Open Meetings and Open
Records Act. You specifically ask:
Are nonprofit water supply corporations by law,
whether statutory or otherwise, required to comply
with the open meetings and open record laws of our
state in circumstances other than those presented
in the aforementioned sections 15.006, 16.002 and
17.002? If affirmative, what are those circum-
stances?
Article 1434a, V.T.C.S., authorizes the establishment of corporations
to furnish a water supply, sewer service, or both, to tons, cities,
private corporations, individuals, and military camps and bases.
V.T.C.S. art. 1434a, 81; Attorney General Opinion M-1242 (1972).
Three or more persons may form such a cdrporation and shall apply to
the secretary of state for a charter in the manner provided by law for
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Honorable Tom Craddick - Page 2 (m-596)
private corporations. Id. 53(a). Water supply corporations created
under article 1434a, V.-.S., are nonprofit corporations. Attorney
General Opinions M-840 (1971); O-3433 11941); see Parks v. Elliott;
465 S.W.2d 434 (Tex. Civ. APP. - Houston t14th DG.1 1971. writ refrd
n.r.e.). They are public``utilities which are required- to hold a
certificate of convenience and necessity under article VII of the
Public Utility Regulatory Act, article 1446~. V.T.C.S., although they
are not subject to the rate-making provisions of that act. V.T.C.S.
art. 1446c, §3(c); §§49-62.
A nonprofit water supply corporation that is not subject to
sections 15.006, 16.002 or 17.002 of the Water Code must fall within
the definition of "governmental body" found in the Open Records Act in
order to be subject to the access and disclosure provisions of that
statute. "Governmental body" is defined by the Open Records Act as
follows:
(A) any board, commission, department, com-
mittee, institution, agency, or office within the
executive or legislative branch of the state
government, or which is created by either the
executive or legislative branch of the state
government, and which is under the direction of
one or more elected or appointed members;
(B) the commissioners court of each county and
the city council or governing body of each city in
the state;
(0 every deliberative body having rulemaking
or quasi-judicial power and classified as a
department, agency, or political subdivision of a
county or city;
(D) the board of trustees of every school
district, and every county board of school
trustees and county board of education;
(E) the governing board of every special
district;
(F) the part, section, or portion of every
organization, corporation, commission, committee,
institution, or agency which is supported in whole
or in part by public funds, or which expends
public funds. Public funds as used herein shall
mean funds of the State of Texas or any govern-
mental subdivision thereof;
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Honorable Tom Craddick - Page 3 ~(JM-596)
,(G) the Judiciary is not inclu'dedwithin this
definition.
V.T.C.S. art. 6252-17a, §2.
A nonprofit water SUPP~V corporation is not a oolitical sub-
division. 'Tarrant County -h!a;erSupply Corporation v.' Hurst-Euless-
Bedford Independent School District, 391 S.W.2d 162 (Tex. Civ. App. -
Fort Worth 1965, writ ref'd n.r.e.1; Attorney General Opinion M-1070
(1972). Even though a city may contract with a water supply corpora-
tion to receive services, it may not delegate any of its sovereign
powers to the corporation. Attorney General Opinion M-1070 (1972).
A water supply corporation is not an entity within the executive
or legislative branch of government, and thus does not fall within the
definition of governmental body stated in section 2(1)(A) of the Open
Records Act. Since it is not a political subdivision and may not
exercise delegated governmental powers, a nonprofit water supply
corporation is not a governmental body within subsections 2(1)(B)
through 2(1)(F) of the Open Records Act. See also Open Records
Decision Nos. 343, 302 (1982); 228 (1979); compare Open Records
Decision No. 343 with No. 228. - Cf. Attorney General Opinion M-1070
(1972).
The Open Meetings Act applies to meetings of governmental bodies.
V.T.C.S. art. 6252-17, 52(a). Therefore, to be subject to the Open
Meetings Act, an entity as an initial matter must be a governmental
body as that term is defined in the Act:
(cl 'Governmental body' means any board, com-
mission, department, committee, or agency within
the executive or legislative department of the
state, which is under the direction of one or more
elected or appointed members; and every Commis-
sioners Court and city council in the state, and
every deliberative body having rule-making or
quasi-judicial power and classified as a depart-
ment , age*cy, or political subdivision of a county
or city; and the board of trustees of every school
district, and every county board of school
trustees and county board of education; and the
governing board of every special district
heretofore or hereafter created by law.
V.T.C.S. art. 6252-17, §l(c). Our discussion of the meaning of
"governmental body" in the Open Records Act demonstrates that an
article 1434a corporation is not "within the executive or legislative
department of the state" and that it is not any of the political
subdivisions or other local entities enumerated in the definition of
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Honorable Tom Craddick - Page 4 (m-596)
"governmental body." See Tarrant County Water Supply Corporation V.
Hurst-Euless-Bedford Independent School District, m; Attorney
General Opinion M-1070 (1972). The Open Meetings Act does not include
any prbvision comparable to the definition of "governmental body"
found in section 2(1)(F) of the Open Records Act, which refers to
corporations supported in whole or in part by public funds. We
conclude that a nonprofit water supply corporation need not comply
with the Open Meetings Act unless it is required to do so by sections
15.006, 16.002, or 17.002 of the Water Code. See generally Perlongo
V. Iron River Cooperative TV Antenna Corporation, 332 N.W.2d 502
(Mich. App. 1983) (state Freedom of Information Act and Open Meetings
Act did not apply to nonstock, nonprofit cable TV corporation).
The Texas Non-Profit Corporation Act, article 1396, §§l.Ol-11.01,
V.T.C.S., however, provides access to certain kinds of information
held by a nonprofit corporation. See V.T.C.S. arts. 1396-2.23,
1396-2.23A. The Texas Non-Profit Corporation Act provides in article
1396-2.01, subdivision B, that its provisions shall not apply to any
corporation
[ilf any one or more of its purposes for the
conduct of its affairs in this State is to engage
in water or sewer service and it has heretofore or
is hereafter incorporated under . . . Article
1434(a), Revised Civil Statutes of Texas, 1925.
V.T.C.S. art. 1396-2.01, subdiv. B(5).
Section 2.01, subdivision B(5). was included in the original
Non-Profit Corporation Act, which was enacted in 1959. Acts 1959,
56th Leg., ch. 162, art. 2.01, at 286. A 1961 amendment added the
following provision:
G. This Act shall not apply to those corpora-
tions excepted under Article 2.01 B, Subsections
(3). (4). and (5) of this Act; provided however,
that if any of said excepted domestic corporations
were heretofore or are hereafter organized not for
profit under special statutes which contain no
provisions in regard to some of the matters
provided for in this Act . . . then the provisions
of this Act shall apply to the extent that they
are not inconsistent with the provisions of such
special statutes.
V.T.C.S. art. 1396-10.04, subdiv. G; Acts 1961, 57th Leg., ch. 3C2. at
653. The emergency clause of the bill which added subsection 10.04,
subdivision G, to article 1396 provides as follows:
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Honorable Tom Craddick - Page 5 ~(JM-596)
[T]he fact that some types of non-profit corpora-
tions are organized in this State under laws
specifically applicable to them, which laws do not
provide for many matters contained in the Texas
Non-Profit Corporation Act, create[s] an emergency
and an imperative public necessity. . . .
Acts 1961, 57th Leg., ch. 302, 93, at 653. The emergent:r clause in a
statute may be considered in ascertaining legislative intent, even if
it cannot be given effect as such. Grayburg Oil Co. V. Giles, 186
S.W.Zd 680 (Tex. 1945); Popham v. Patterson, 51 S.W.2d 680 (Tex.
1932). Section 10.04, subdivision G, modifies the section 2.01.
subdivision B, exemption for nonprofit water supply corporations from
the provisions of article 1396. The quoted emergency clause
demonstrates that the provisions of the Texas Non-Profit Corporation
Act are to supplement the provisions of specific incorporation
statutes like article 1434a, V.T.C.S.
Attorney General Opinion M-840 (1971) also concluded that article
1434a. V.T.C.S., should be supplemented by the provisions of article
1396, V.T.C.S. It held that article 1396-10.04, subdivision G.
V.T.C.S., requires the articles of incorporation of a nonprofit water
supply corporation to state "that the corporation is a non-profit
corporation" in compliance with article 1396-3.02. subdivision A(2),
V.T.C.S.
The Texas Non-Profit Corporation Act includes the following
requirements for access to certain records of corporations subject to
its provisions:
A. Each corporation shall keep correct and
complete books and records of account and shall
keep minutes of the proceedings of its members,
board of directors, and committees having any
authority of the board of directors and shall keep
at its registered office or principal office in
this State a record of the names and addresses of
its members entitled to vote.
B. All books and records of a corporation may
be inspected by any member, or his agent or
attorney, for any proper purpose at any reasonable
time.
V.T.C.S. art. 1396-2.23.
A. A corporation shall maintain current true
and accurate financial records with full and
correct entries made with respect to all financial
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Honorable Tom Craddick - Page 6 (m-596)
transactions of the corporation, including all
income and expenditures, in accordance with
generally accepted accounting practices.
B. Based on these records, the board of
directors or trustees shall annually prepare or
approve a report of the financial activity of
the corporation for the preceding year. The
report must conform to accounting standards as
promulgated by the American Institute of Certified
Public,Accountants and must include a statement of
support, revenue, and expenses and changes in fund
balances, a statement of functional expenses, and
balance sheets for all funds.
C. All records, books, and annual reports of
the financial activity of the corporation shall be
kept at the registered office or principal office
of the corporation in this state for at least
three years after the closing of each fiscal year
and shall be available to the public for inspec-
tion and copying there during normal business
hours. The corporation may charge for the
reasonable expense of preparing a copy of a record
or report.
D. A corporation that fails to maintain
financial records, prepare an annual report, or
make a financial record or annual report available
to the public in the manner prescribed by this
article is guilty of a Class B misdemeanor.
E. This article does not apply to: [exemp-
tions not relevant]. (Emphasis added).
V.T.C.S. art. 1396-2.23A.
Article 1434a. V.T.C.S., includes no provision for record-keeping
by nonprofit water supply corporations or for inspection of corporate
records by corporation members or the general public. Accordingly,
section 10.04. subdivision G, of article 1396, V.T.C.S.. requires that
sections 2.23 and 2.23A of article 1396, V.T.C.S.. apply to nonprofit
water supply corporations. The inspection rights described in these
sections apply to all such water supply corporations, in addition to
any inspection rights under the Open Records Act which may apply to
particular nonprofit water supply corporations.
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Honorable Tom Craddick - Page 7 (X4-596)
SUMMARY
Sections 15.006. 16.002, and 17.002 of the
Water Code require a nonprofit water supply
corporation organized under article 1434a.
V.T.C.S.. to comply with the Texas Open Records
Act, article 6252-17a. V.T.C.S., and the Texas
Open Meetings Act, article 6252-17, V.T.C.S., if
it receives state financial assistance. Nonprofit
water supply corporations which are not subject to
these Water Code provisions are not required by
any other law to comply with the Open Meetings Act
or the Open Records Act. All nonprofit water
supply corporations organized pursuant to article
1434a. V.T.C.S., are subject to articles
1396-2.23, and 1396-2.23A. V.T.C.S., relating to
the inspection of certain records of nonprofit
corporations.
C
JIM MATTOX
Attorney General of Texas
JACK HIGHTOWER
First Assistant Attorney General
MARY KELLER
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Susan L. Garrison
Assistant Attorney General
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