Can the Texas Public Utility Commission apply for and spend federal grant money?

Plain-English summary

The Chair of the Public Utility Commission asked whether the commission could apply for, receive, and spend federal grant money, including a grant to buy a Geographic Information System that would let it map and analyze utility data by region. Two laws were in tension. The Public Utility Regulatory Act gave the commission broad power to do what was necessary and convenient to regulate utilities, but the state appropriations act limited how any state agency could handle federal funds.

The office concluded that the commission did have authority under the Regulatory Act (article 1446c, V.T.C.S.) to seek federal grants that helped it carry out its statutory duties. The catch was on the spending side. Federal grant money, like other money state agencies take in, has to be deposited in the state treasury, and the Texas Constitution lets money leave the treasury only through a legislative appropriation. The 1993 appropriations act did appropriate federal funds to agencies, but only through one of the specific spending items (the act called them "strategies") already listed in that agency's appropriation, and only for a purpose the appropriation authorized. The office read the commission's existing strategies as broad enough to cover the mapping system, so the grant could be deposited to and spent from one of those items.

Currency note

This opinion was issued in 1994. 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The Public Utility Regulatory Act discussed here, article 1446c, V.T.C.S., was later repealed and recodified into the Texas Utilities Code, so the section numbers cited here no longer match current law. The appropriations rider construed here came from the 1993 general appropriations act for a single biennium; every later legislature has passed its own appropriations act with its own federal-funds terms. Read this page for how the office reconciled an agency's grant authority with the appropriations process in 1994, not for the current rules on federal funds.

What the opinion meant for those who asked

For the Public Utility Commission: The opinion concluded the commission had authority under the Public Utility Regulatory Act to apply for federal grants that were necessary and convenient to its regulatory work. It could spend a grant only through a spending item (strategy) already listed in its appropriation, but the office found the commission's existing strategies, including assessing electricity supply and demand and maintaining construction databases, were broad enough to cover the geographic mapping system.

For other state agencies seeking federal money: The office treated the spending analysis as general. An agency (other than an institution or agency of higher education) could deposit and spend federal grant funds only through a specific program or strategy already listed in its appropriation, and only for a purpose the appropriation authorized.

Common questions

Could a Texas state agency apply for and spend a federal grant?
Under this opinion, yes, where the agency had statutory authority for the underlying activity and its appropriation already listed a spending item that covered the grant's purpose.

Why couldn't the agency just spend the federal money directly?
Because the Texas Constitution lets money in the state treasury be withdrawn only by legislative appropriation. Federal grant funds are deposited in the treasury, so they could be spent only through the terms the appropriations act set.

Did the agency's appropriation have to name a program as "federally funded"?
No. The office read "the specific program identified" in the rider to mean any item or strategy listed in the agency's appropriation, not only one labeled as paid for with federal funds.

Background and statutory framework

The Public Utility Regulatory Act, V.T.C.S. article 1446c, created the Public Utility Commission and gave it general power to regulate and supervise every public utility within its jurisdiction, and to do all things, whether specifically designated in the act or implied, necessary and convenient to the exercise of that power (§ 16(a)). The act also directed the commission to employ a director of research, to develop a long-term statewide electrical energy forecast, and to review utilities' forecasts of load and resources (§§ 8(b)(5), 16(b), (e)), and it told courts to construe the act liberally to promote effective and efficient utility regulation (§ 89). From that authority the office concluded the commission could seek federal grants that assisted its statutory duties.

The spending question turned on the appropriations process. Federal grant funds, like other agency receipts, must be deposited in the state treasury (Gov't Code § 404.094), and under article VIII, section 6 of the Texas Constitution money may be drawn from the treasury only by appropriation. A general appropriations act states items of appropriation and may carry riders that limit how appropriated funds are used (Tex. Const. art. III, § 35). The 1993 act's federal-funds rider (Acts 1993, 73d Leg., ch. 1051, art. V, § 22) appropriated federal funds to the agencies authorized to use them, but required that the funds be deposited to and spent from a specific program identified in the agency's appropriation, and barred spending federal funds for functions the legislature had not reviewed and authorized. Reading "specific program" as the items of appropriation (the "strategies") and "identified" as "set out" or "listed," the office held the commission could route the grant through any of its existing strategies broad enough to cover the purpose. The comptroller's authority to accept federal money for an agency not otherwise restricted (Gov't Code § 403.012) reinforced that conclusion. Because the commission's first reading of the rider failed, the office did not reach its remaining contingent questions.

Citations

Statutory and constitutional provisions discussed:

• V.T.C.S. art. 1446c (Public Utility Regulatory Act; §§ 8(b)(5), 16(a), 16(b), (e), 89)
• Gov't Code § 403.012 (comptroller may accept federal money for a state agency not otherwise restricted)
• Gov't Code § 404.094 (deposit of agency funds in the state treasury)
• Tex. Const. art. VIII, § 6 (withdrawal from the treasury only by appropriation)
• Tex. Const. art. III, § 35 (content of a general appropriations act)
• Tex. Const. art. XVI, § 69 (riders requiring prior approval or emergency transfer of appropriated funds)
• Acts 1993, 73d Leg., ch. 1051, art. V, § 22 (general appropriations act; federal-funds rider)

Case discussed:

• Moore v. Sheppard, 192 S.W.2d 559, 561 (Tex. 1946)

Prior Attorney General opinions referenced: JM-772 (1987), V-1254 (1951), DM-116 (1992), H-550 (1975), JM-916 (1988).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0288
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1994/dm0288.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

April 11, 1994

Mr. Robert W. Gee
Chair
Public Utility Commission of Texas
7800 Shoal Creek Boulevard
Austin, Texas 78757

Opinion No. DM-288

Re: Authority of the Public Utility Commission of Texas to apply for, receive, and expend federal funds, and related questions (RQ-664)

Dear Mr. Gee:

You have requested advice about the authority of the Public Utility Commission of Texas to receive federal funds. You write that you are aware of several federal grants that the commission could use to acquire, analyze, and use significant new information. You ask:

Considering Chapter V, § 22, of the Appropriations Act . . . and the Public Utility Regulatory Act . . . , may the . . . [commission] directly or indirectly apply for, receive, and/or expend federal funds?

You refer to federal grants for the purpose of acquiring, analyzing, and using significant new information. Among other projects, you are interested in obtaining a federal grant to purchase a Geographic Information System, which relates data base information to the map. This system would enable the commission to compile and analyze utility information according to geographic regions. We believe article 1446c, V.T.C.S., the Public Utility Regulatory Act, authorizes the commission to seek federal grants to assist in carrying out its statutory duties.

The commission has statutory authority to acquire and analyze utility information, as well as other related kinds of information. See V.T.C.S. art. 1446c, §§ 8(b)(5) (requiring commission to employ director of research experienced in analysis of industry, economics, energy, fuel, and other related matters), 16(b) (requiring commission to develop long-term statewide electrical energy forecast), (e) (requiring commission to review and evaluate electric utilities' forecast of load and resources). The commission has

the general power to regulate and supervise the business of every public utility within its jurisdiction and to do all things, whether specifically designated in this Act or implied herein, necessary and convenient to the exercise of this power and jurisdiction.

Id. § 16(a). Moreover, the Public Utility Regulatory Act is to be "construed liberally to promote the effectiveness and efficiency of regulation of public utilities. . . ." Id. § 89.

We believe that the commission has authority to apply for federal grants when "necessary and convenient to the exercise" of its general power to regulate public utilities. In our opinion, the commission is authorized to seek and receive a federal grant to purchase the Geographical Information Service you described, assuming that the conditions attached to the particular grant are conditions that the commission may accept. See also Gov't Code, § 403.012 (comptroller may accept federal money for a state agency not otherwise restricted by statute, rider, or special provision in the general appropriations act). Whether the commission has statutory authority to apply for grants for other purposes must be determined on a case-by-case basis. In general, if the commission has statutory authority to receive an appropriation for a particular service or item, we believe it may also seek federal funding for that service or item.

You are concerned, however, that article V, section 22 of the current general appropriations act bars the appropriation to the commission of federal funds received during the current biennium. Federal grant funds, like other funds received by state agencies, must be deposited in the state treasury. Gov't Code § 404.094; Attorney General Opinion JM-772 (1987). Once funds are in the treasury, they may be withdrawn only by appropriation by the legislature. Tex. Const. art. VIII, § 6. The general appropriations act may include items of appropriation, which state the amount and purpose of funds allocated to state agencies, and riders that detail, limit, or restrict the use of funds appropriated by the act.[1] Tex. Const. art. III, § 35; Attorney General Opinion V-1254 (1951); see also Moore v. Sheppard, 192 S.W.2d 559, 561 (Tex. 1946); Attorney General Opinion DM-116 (1992) (general legislation may not be enacted in a general appropriations bill). Article V, section 22 of the general appropriations act appropriates federal funds received during the current biennium to the agencies authorized to use them, subject to stated limitations. See Attorney General Opinions JM-772 (1987) at 7-8; H-550 (1975) at 3-4. It states in part:

All funds received from the United States government by state agencies and institutions named in this Act are hereby appropriated to such agencies for the purposes for which the federal grant, allocation, aid, payment or reimbursement was made subject to the following:

a. Except for institutions and agencies of higher education, federal funds including unexpended balances shall be deposited to and expended from the specific program identified under each agency's appropriation bill pattern.

Except for institutions and agencies of higher education, no federal funds may be expended for strategies or functions other than those which have been reviewed by the Seventy-third Legislature and authorized by specific language in this Act or encompassed by an agency's budget structure as established by this Act.

Acts 1993, 73d Leg., ch. 1051, art. V, § 22, at 5351.[2] You read the first sentence in paragraph a. of this rider as allowing the commission to use federal funds only if its appropriation specifically identifies a program as funded by federal funds. Since the appropriation to the Public Utility Commission does not identify any program as being funded by federal funds, you are concerned that any federal funds granted to the commission during this biennium would not be appropriated to it. See Acts 1993, 73d Leg., ch. 1051, art. I, at 4854-61.

The first sentence in paragraph a. does not expressly state that federal funds may only be deposited to a program specifically identified as a recipient of federal funds, but states that federal funds are to be deposited to "the specific program identified" under the agency's appropriation bill pattern. We read "specific program" as referring to the items of appropriation in each agency's appropriation. The current appropriations act refers to the items of appropriation as "strategies." Moreover, in this context, the word "identified" means "set out" or "listed" in the agency's appropriation. Thus, federal funds granted to an agency may only be deposited to and spent from one of the specific programs, or strategies, listed in its appropriation. If the commission's appropriation includes an item that may be spent for a computerized mapping system, federal funding for that purpose may be deposited to that item.

The second sentence in paragraph a. prohibits the expenditure of federal funds for programs other than those reviewed by the 73d legislature and authorized by the specific language of the general appropriations act or by the agency's budget structure. See generally Attorney General Opinion JM-772 (1987) (construing second paragraph of virtually identical provision in 1986-1987 appropriations act). Both sentences of paragraph a. have a similar effect: a state agency, except for an agency or institution of higher education, may spend federal funds for the purpose for which they were granted only if the agency's appropriation authorizes expenditures for that purpose.

The appropriation to the Public Utility Commission appropriates funds for various strategies that appear broad enough to encompass an expenditure for the Geographical Information Service. For example, the commission receives funds to

Assess the demand and current supply of electricity and determine the need for additional resources. . . .

Process and analyze filings to change boundaries . . . .

Examine and review all construction reports filed by electric utilities for new transmission lines and power plants. . . . Maintain database of telecommunications construction information.

Acts 1993, 73d Leg., ch. 1051, art. I, at 4856, 4857 (strategies B.1.1., B.2.1., and C.1.1.). In our opinion, these specific appropriation items are broad enough to encompass an expenditure for a Geographical Information System, and there may be other items in the commission's budget that could also be spent for this purpose. Federal grant funds received for this purpose during the current biennium may be deposited to and expended from one of these accounts or another account that would permit the expenditure of state-generated funds for that purpose. See generally Attorney General Opinion JM-916 (1988).

Your other questions are contingent on a contrary reading of section 22. Accordingly, we need not answer them.

SUMMARY

The Public Utility Commission has authority under V.T.C.S. article 1446c to apply for federal grants necessary and convenient to the exercise of its general power to regulate public utilities. Federal grant funds are placed in the state treasury, and chapter V, section 22 of the current general appropriations act appropriates them to the agencies for the purposes for which the federal grant was made, subject to stated conditions. Among other conditions, section 22 provides that federal funds granted to an agency, other than an agency or institution of higher education, may only be deposited to and spent from one of the specific programs listed in the agency's appropriation. If an item of appropriation in the commission's appropriation could be spent for the purposes for which the federal grant was received, the federal grant funds may be deposited to and spent from that item.

DAN MORALES
Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

DREW DURHAM
Deputy Assistant Attorney General for Criminal Justice

WILL PRYOR
Special Counsel

RENEA HICKS
State Solicitor

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General

[1] In addition, article XVI, section 69 of the Texas Constitution now authorizes the legislature to require, by rider in the general appropriations act or by separate statute, the prior approval of an expenditure or the emergency transfer of any funds appropriated to agencies of state government.

[2] Article V, section 22 of the current general appropriations act also includes other provisions that are not relevant to your question.