Where do funds left over from a USDA agriculture inspection agreement have to go in Texas?

Plain-English summary

The Commissioner of Agriculture asked whether a budget rider could direct what happens to a pot of money and some property that had landed back in his department's lap. For years, the Texas Department of Agriculture (TDA) and the U.S. Department of Agriculture (USDA) ran a joint produce-inspection operation called the Texas Federal Inspection Service, or Texas-Federal, under a cooperative agreement that took effect in December 1981. The agreement ended on May 9, 1991. Under its own terms, if no successor inspection service was set up within a year, whatever funds and property Texas-Federal still held would revert to the state department. A year passed with no successor, so the leftover money and property reverted to the TDA.

A rider in the state budget (rider no. 26 to the TDA's appropriation) then laid out detailed instructions: deposit all the money Texas-Federal held on May 9, 1991 into the General Revenue Fund by September 1, 1991, notify the Governor and Lieutenant Governor of the amount, deliver a property inventory to the Governor's office and the state purchasing agency, and transfer title to the property by November 1, 1991. The Commissioner wanted to know if that rider was valid.

The Attorney General concluded the rider mostly just repeated what other law already required, and was invalid wherever it went beyond that. The controlling general statute is Government Code section 404.093, which requires any money received by a state agency to be deposited into the state treasury. There are some exceptions to that rule, but none applied here. The statement in the cooperative agreement that the funds revert to the TDA did not change the outcome; the transfer from Texas-Federal to the TDA is simply a step before the TDA deposits the money in the treasury, not an alternative to it. As for the physical property, surplus personal property is controlled by the General Services Commission under the surplus-property law, and the TDA had no separate authority to dispose of assets on its own.

The opinion then explained the limits on appropriations riders. A rider can detail or restrict how appropriated money is used, but it cannot impose requirements that conflict with other law, and it cannot impose affirmative requirements where there is no general law on the subject. Measured against that, rider no. 26 was mere surplusage to the extent it matched existing law and invalid to the extent it conflicted. So the bottom line came from the general statutes, not the rider: the reverted money must go into the state treasury under section 404.093, and the surplus property is subject to the General Services Commission. Finally, the Commissioner's letter suggested federal law required the money be spent on inspection, so the TDA should keep it rather than send it to the treasury. The opinion was not persuaded that federal law said any such thing, but even if it did, the answer would not change: a federal spending restriction would follow the money into the treasury and bind the Legislature when it appropriated those funds; it would not let the TDA hold the money outside the treasury.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The state treasury and surplus-property statutes have been amended and recodified since 1992 (the state purchasing and general services functions and the surplus-property law in former V.T.C.S. art. 601b were later moved into the Government Code), so confirm current law before relying on anything described here.

Background and statutory framework

The Commissioner asked about rider no. 26 to the TDA's current appropriation. General Appropriations Act, Acts 1991, 72d Leg., 1st C.S., ch. 19. That rider, titled "Contribution to General Revenue Fund," recited that, in accordance with the cooperative agreement between USDA and the TDA dated December 1981, all funds held by the Texas Federal Inspection Service on May 9, 1991 were to be deposited in the General Revenue Fund on September 1, 1991 with notification of the amount to the Governor and Lieutenant Governor, and that an inventory of all property was to be delivered to the Governor's office and the Executive Director of the State Purchasing and General Services Agency on September 1, 1991, with transfer of title by November 1, 1991. The cooperative agreement, regarding the inspection of agricultural products, took effect December 1, 1981 and terminated May 9, 1991; the rider deals with funds that, under the agreement, reverted to the TDA in May 1991.

Cooperative agreements between USDA and the TDA are authorized by state and federal law. The federal Agricultural Marketing Act of 1946, 7 U.S.C. §§ 1621-1627, authorizes the Secretary of Agriculture to prescribe rules regarding the inspection of agricultural products, 7 U.S.C. § 1622(h), and under section 1624 to enter into agreements with states and state agencies to carry out the Act. Chapter 91 of the Agriculture Code governs the grading, packing, and inspection of fruits and vegetables other than potatoes, and authorizes the department to enter cooperative agreements with USDA (or with a Texas firm, corporation, or association organized for the purpose) that may provide for the certification of grades of fruits and vegetables. Agric. Code § 91.005(a).

Under the agreement, the TDA's only fee responsibility was to deposit specified fees in the state treasury, Cooperative Agreement part II(B)(4), and those fees were not at issue. Texas-Federal, by contrast, was assigned to collect shipping-point inspection fees imposed under federal marketing agreements or orders (fees to be reasonable and adequate to cover the cost of services unless subsidized by state appropriations, and used only for the services under the agreement), id. part II(G)(2); to establish a fund for shipping-point inspection fees in a depository protected by federal and state banking laws and keep an accounting of receipts and disbursements, id. part II(G)(4); and to make no payment from those funds except for carrying out the inspection provisions and by vouchers jointly approved by the Commissioner of Agriculture and the Federal Supervisor or their designees. The agreement also addressed certain "receiving market inspection" fees without addressing their disposition, and provided for USDA to reimburse Texas-Federal for certain expenditures. On termination, the agreement provided that all remaining funds or property held by Texas-Federal, after payment of proper charges, would be transferred to any succeeding inspection service agreed upon by cooperative agreement between the state and federal agencies, and that if no agreement was reached within one year of termination, all such funds or property would revert to the state agency for its use or disposition. Because more than a year passed with no succeeding service agreed upon, the remaining funds and property reverted to the TDA.

The rider set out detailed instructions for disposing of that money and property, but other law governs. Any money received by a state agency is to be deposited into the state treasury. Gov't Code § 404.093. Although there are several exceptions to that rule, none applied to these funds. The cooperative agreement's statement that the funds revert to the TDA did not change this; the statutory requirement that the TDA deposit the money in the treasury is not inconsistent with the contractual provision that the funds pass from Texas-Federal to the TDA, because the transfer to the TDA is preliminary to the TDA's deposit of the funds in the treasury. See Attorney General Opinion JM-772 (1987) (considering whether terms of a federal grant can increase the governor's authority under state law). The disposition of surplus personal property is under the control of the General Services Commission in accordance with article 9 of article 601b, V.T.C.S., and the TDA has no authority to dispose of assets otherwise.

Appropriations act riders may detail or restrict the use of funds appropriated in the act. Attorney General Opinions JM-860 (1988); MW-498 (1982); V-1254 (1951) at 8. They may not, however, impose requirements that are inconsistent with other law, Attorney General Opinion M-1199 (1972), nor impose affirmative requirements where there is no general law on the subject, Attorney General Opinions JM-167 (1984); MW-585 (1982); MW-104 (1979); MW-51 (1979) at 5. To the extent the rider is consistent with other law, it is mere surplusage; to the extent it is inconsistent, it is invalid. The disposition of the reverted money is governed by section 404.093 and the money must be placed in the state treasury; the disposition of any surplus personal property is subject to the control of the General Services Commission.

The Commissioner's letter suggested federal law requires the money be used for inspection purposes and that the TDA therefore may not transfer the property to the treasury despite section 404.093. The opinion found that interpretation not obvious from the federal statutes or the agreement, but observed that even if federal law required the funds be used for a particular purpose, it would not follow that the TDA must retain them; rather, that requirement would attach to the funds in the state treasury, and the Legislature would be bound by any such requirement in appropriating the funds.

Common questions

What happened to the money when the federal-state inspection agreement ended?
It reverted to the Texas Department of Agriculture. The opinion explained that, because no successor inspection service was arranged within a year of the agreement's 1991 termination, the funds and property Texas-Federal held passed to the TDA under the agreement's own terms.

Can a budget rider tell an agency to keep or specially handle that money?
Only within limits. The opinion said a rider can detail or restrict how appropriated money is used, but cannot conflict with other law or add requirements where no general law exists, so rider no. 26 was surplusage where it matched the law and invalid where it conflicted.

Why couldn't the agency just keep the inspection funds?
Because Government Code section 404.093 requires money received by a state agency to be deposited in the state treasury, and no exception applied. The reversion to the department was just a step before that deposit, not a way around it.

What about the physical property and equipment?
Surplus personal property is controlled by the General Services Commission under the surplus-property law. The opinion concluded the TDA had no independent authority to dispose of the assets.

Citations

• General Appropriations Act, Acts 1991, 72d Leg., 1st C.S., ch. 19, art. I, § 1 (rider no. 26)
• Agricultural Marketing Act of 1946, 7 U.S.C. §§ 1621-1627, 1622(h), 1624
• Agriculture Code ch. 91, § 91.005(a)
• Gov't Code § 404.093
• V.T.C.S. art. 601b, art. 9
• Attorney General Opinions JM-772, JM-860, JM-167, M-1199, MW-585, MW-498, MW-104, MW-51, V-1254

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0145
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0145.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

July 24, 1992

Honorable Rick Perry
Commissioner
Texas Department of Agriculture
P. O. Box 12847
Austin, Texas 78711

Opinion No. DM-145

Re: Interpretation of appropriations act rider regarding funds held by the Texas Federal Inspection Service (RQ-180)

Dear Commissioner Perry:

You ask about the validity of an appropriations act rider regarding certain funds now held by the Texas Department of Agriculture (hereinafter TDA). Specifically, you ask about rider no. 26 to the department's current appropriation. General Appropriations Act, Acts 1991, 72d Leg., 1st C.S., ch. 19, art. I, § 1, at 378. That rider provides as follows:

  CONTRIBUTION TO GENERAL REVENUE FUND. In accordance with the Cooperative Agreement between the United States Department of Agriculture and TDA, Section II(D)(3), dated December 1981, all funds held by the Texas Federal Inspection Service on May 9, 1991 are to be deposited in the General Revenue Fund on September 1, 1991 and notification of the exact amount shall be sent to the Governor and Lt. Governor. An inventory of all property shall be delivered to the Office of the Governor and the Executive Director of the State Purchasing and General Services Agency or its successor agency on September 1, 1991, with transfer of title of that property to be accomplished by November 1, 1991.

The rider refers to a cooperative agreement regarding the inspection of agricultural products entered into by TDA and the United States Department of Agriculture (hereinafter USDA), which took effect on December 1, 1981, and terminated on May 9, 1991. The rider deals with funds that, under the terms of the cooperative agreement, reverted to the TDA in May 1991.

Cooperative agreements between the USDA and the TDA are authorized by both state and federal law. The federal Agricultural Marketing Act of 1946, 7 U.S.C. §§ 1621-1627, authorizes the Secretary of Agriculture to prescribe rules regarding the inspection of agricultural products. 7 U.S.C. § 1622(h). Under section 1624, the secretary is authorized to enter into agreements with various entities, including states and state agencies, for carrying out its authority under the Agricultural Marketing Act. Chapter 91 of the Agriculture Code governs the grading, packing, and inspection of fruits and vegetables, other than potatoes. Under that chapter the department has authority to enter into cooperative agreements regarding the inspection of fruits and vegetables:

  The department may enter into cooperative agreements with the United States Department of Agriculture, or with any Texas firm, corporation, or association that is organized for that purpose, or both. An agreement may provide for the certification of grades of fruits and vegetables, other than potatoes, under this chapter.

Agric. Code § 91.005(a).

The provisions of the agreement relevant for purposes of your question are those regarding the collection and disposition of fees. The only responsibility assigned to the TDA in regard to the collection or disposition of fees is that the TDA is required to deposit specified fees in the state treasury. Cooperative Agreement part II(B)(4). Those fees are not at issue here. The agreement assigned a number of tasks regarding the collection and disposition of fees to Texas-Federal, including the responsibility to

  [c]ollect such shipping point inspection fees as may be imposed upon growers, shippers, processors or packers bound under a Federal Marketing Agreement or Marketing Order in force within this State or such other shipping point inspection fees as may be called for by the terms of this Agreement. Fees shall be reasonable and adequate to cover the costs of the services performed unless subsidized by State appropriations. Fees collected for inspections shall be used only for conducting the services under this Agreement.

Id. part II(G)(2). Texas-Federal was also assigned the responsibility of establishing a fund for shipping point inspection fees in a depository protected by federal and state banking laws and the responsibility of keeping an accounting of all receipts and disbursements. Id. part II(G)(4). No payment was to be made from those funds "except for the purposes of carrying out the inspection provisions of [the] Agreement and by vouchers jointly approved and countersigned by the Commissioner of Agriculture and by the Federal Supervisor or their respective designees." Id. part II(G)(3). The cooperative agreement also contained a provision regarding Texas-Federal's collection of fees for certain "receiving market inspections" but did not address the disposition of those fees. Id. part II(D)(1)(d). Another part of the agreement provided for the USDA to reimburse Texas-Federal for certain expenditures. The rider in question has to do with the disposition of funds held by Texas-Federal after the termination of the cooperative agreement. The agreement provided that in the case of termination

  all remaining funds or property held by Texas-Federal, after payment of all proper charges, will be transferred to any succeeding inspection service which is agreed upon by Cooperative Agreement between the State and Federal Agencies. If no agreement is reached within one year following the date of termination all such funds or property will revert to the State Agency for its use or disposition.

Id. part II(G)(18). Because more than a year has passed since the cooperative agreement was terminated and because no succeeding inspection service was agreed upon during that year, the remaining funds and property held by Texas-Federal reverted to the TDA.

The rider sets out detailed instructions for the disposition of that money and property. There is, however, other law that governs the disposition of the property. Any money received by a state agency is to be deposited into the state treasury. Gov't Code § 404.093. Although there are several exceptions to this rule, see id., there are no exceptions applicable to the funds at issue here. The statement in the cooperative agreement that the funds revert to the TDA does not affect this outcome. The statutory requirement that TDA deposit the funds in the state treasury is not inconsistent with the contractual provision that the funds go from Texas-Federal to the TDA. The transfer from Texas-Federal to the TDA is preliminary to the TDA's deposit of the funds in the state treasury. See generally Attorney General Opinion JM-772 (1987) (considering whether terms of federal grant can increase authority of governor under state law). The disposition of surplus personal property is under the control of the General Services Commission in accordance with the terms of article 9 of article 601b, V.T.C.S. The TDA has no authority to dispose of assets otherwise.

Appropriations act riders may detail or restrict the use of funds appropriated in the act. Attorney General Opinions JM-860 (1988); MW-498 (1982); V-1254 (1951) at 8. They may not, however, impose requirements that are inconsistent with other law. Attorney General Opinion M-1199 (1972). Nor may they impose affirmative requirements where there is no general law on the subject. Attorney General Opinions JM-167 (1984); MW-585 (1982); MW-104 (1979); MW-51 (1979) at 5. To the extent, then, that the rider in question is consistent with other law, it is mere surplusage. To the extent that it is inconsistent, it is invalid. The disposition of the money that has reverted to the TDA is governed by section 404.093 of the Government Code and the money must therefore be placed in the state treasury. The disposition of any surplus personal property is subject to the control of the General Services Commission.

Your letter suggests that federal law requires that the money in question be used for inspection purposes and that therefore the TDA may not transfer the property to the state treasury, despite the requirements of section 404.093 of the Government Code. Although that interpretation of the federal law is not obvious either from the relevant federal statutes or from the cooperative agreement, it would not in any case follow from such an interpretation that the TDA must retain the funds. If federal law requires that the funds be used for a particular purpose, that requirement would attach to the funds in the state treasury, and the legislature would be bound by any such requirement in appropriating the funds.

                               SUMMARY

      Money that reverted to the Texas Department of Agriculture under a cooperative agreement with the United States Department of Agriculture is to be placed in the state treasury in accordance with section 404.093 of the Government Code. Surplus property that reverted to the Texas Department of Agriculture is subject to the control of the General Services Commission.

                                            DAN MORALES
                                            Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General