Could the Lake Charles port fund a private cooperative's factory feasibility study?

Plain-English summary

The Lake Charles Harbor & Terminal District was asked to give $150,000 toward a private sugar-cane cooperative's study of a proposed processing factory. The Attorney General concluded that the port was constitutionally prohibited from funding this study. The opinion found no legal obligation or authorization for the port to provide a feasibility study for the cooperative, even if the factory might aid economic development near the port.

The opinion recognized that the port's statute allowed it to encourage enterprises with an economic impact in its area. It read that authority alongside Louisiana's constitutional restriction on giving public funds or property to private parties. Relying on a Louisiana Supreme Court decision, it said that a public purpose alone did not permit a political subdivision to give away value when it was under no legal obligation to do so.

Currency note

This opinion was issued in 2002. 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.

Common questions

Could the port pay for the cooperative's factory feasibility study?
No. The AG said the proposed grant was constitutionally prohibited under the public-funds analysis in the opinion.

Did possible economic development make the grant lawful?
No. The opinion acknowledged possible benefits but found that the port's limited economic-development authority did not authorize this financial assistance.

Would calling the payment a cooperative endeavor change the result?
The opinion said the constitutional permission for cooperative endeavors did not create an exception to the prohibition against giving away public assets solely for a public purpose.

Background and statutory framework

The opinion discussed La. Const. Art. VII, Sec. 14(A), (B), and (C) on public funds and cooperative endeavors. It quoted the port's authority in La. R.S. 34:203(C) to encourage enterprises that could have an economic impact in its area. It also quoted the Louisiana Supreme Court's City of Port Allen decision on public bodies giving up value without a legal obligation. The answer concerned this requested cooperative study grant, not every type of port economic-development spending.

Citations and references

• La. R.S. 34:203(C) (port economic-development authority quoted in the opinion)
• La. Const. Art. VII, Sec. 14 (public-funds limits analyzed in the opinion)
• City of Port Allen v, Louisiana Municipal Risk Agency, 439 So.2d 399 (La. 1983) (as printed in the extract)

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/02-0150

Original opinion text

DEPARTMENT OF JUSTICE
One American Place
301 Ma~n Street, Suite 600
CIVIL DIVISION
P.O. Box 94005
BATON ROUGE
TEL. (225) 342-7013
FAX. (225) 342-2090
RICHARD P. IEYOUB
70804-9005
ATTORNEY GENERAL

APR 2 5 2002
Opinion No. 02-0150

90-1 PORT COMMISSIONS
90-A-2 PUBLIC FUNDS & CONTRACTS - Loan,
Pledge or Grants
Mr. Michael K. Does
Lake Charles Harbor & Terminal District Port is not authorized to conduct or provide funding for
P. O. Box 3753
feasibility studies for the benefit of private entities,
even though the endeavors of the private entities in Lake Charles, Louisiana 70602 question may ultimately facilitate economic development in the areas served by and surrounding
Dear Mr. Dees: the Port.

On behalf of the Board of Directors of the Lake Charles Harbor & Terminal District (the "Port"), you have requested an opinion of this office regarding a request made by the Lake Charles Sugar Cane Cooperative, Inc. ("LCSCC") to the Port for a grant in the amount of $150,000. Apparently, the LCSCC has requested that the Port provide partial funding for a feasibility study regarding the economic impact, in the Lake Charles area, of a new sugar cane and sweet sorghum processing factory to be located in Jeff Davis Parish, and which will process cane and sorghum grown in both Jeff Davis and Calcasieu Parishes.

In accordance with the legal analysis set forth below, we agree with the conclusion reached in your memorandum to the Port’s Board, dated January 8, 2002 and submitted to us along with your opinion request. Respectfully, we are compelled to advise the Port that in the opinion of this office the Port is constitutionally prohibited from providing funding for the feasibility study in question.

We note, as you did, that the Port’s inquiry must be examined in light of La. Const. Art.
VII, Sec. 14(A), which prohibits the state and its political subdivisions from loaning, pledging or donating public funds, assets or property to persons, associations or corporations, public or private. Although La. Const. Art. VII, Sec. 14(B) creates certain exceptions to the general prohibition of Art. VII, Sec. 14(A), the Port’s contemplated assistance to the LCSCC is not among those exceptions.

Pursuant to La. Const. Art. VII, Sec. 14(C), the state and its political subdivisions may engage in cooperative endeavors for public purposes. However, these constitutional provisions must be scrutinized in light of the decision of the Louisiana Supreme Court in City of Port Allen v, Louisiana Municipal Risk Agency, 439 So.2d 399 (La. 1983).
Therein, the Supreme Court ruled that La. Const. Art. VII, Sec. 14(A) "...is violated whenever the state or a political subdivision seeks to give up something of value when it

Page 2

Opinion Number 02-0150
Mr. Michael K. Dees
Lake Charles Harbor & Terminal District
Page -2-

is under no legal obligation to do so." The Court went on to state that the constitutional authorization for cooperative endeavors, contained in Art. VII, Sec. 14(C), does not provide an exception to the prohibition contained in Sec. 14(A):

"There is no indication that [Sec. 14(C)] is meant to be an exception to the rule of Sec. 14(A)...Thus, even if political subdivisions cooperate for a public purpose, they still may not give away their assets to other political subdivisions, the United States government or public or private associations or corporations merely for a ’public purpose’."

We have examined the Port’s legal authority, particularly as set forth in La. R.S. 34:201, et seq. In particular, we note the Port’s authority, at La. R.S. 34:203(C), to "...induce and encourage the location of enterprises which would have economic impact upon the area served by it...". In our opinion, however, when read in pail materia with La. Const. Art VII, Sec. 14, these statutes do not authorize the Port to provide the financial assistance requested. As your memorandum recognized, the Port’s statutory directives provide it with certain limited economic development authority. However, this office is unaware of any legal obligation imposed upon, or authorization granted to the Port, to conduct or provide funding for feasibility studies for the benefit of private entities, even though the endeavors of the private entities in question may ultimately facilitate economic development in the areas served by and surrounding the Port.

We trust the foregoing to be of assistance. If we can be of assistance in other areas of the law, please do not hesitate to contact us.

Yours very truly,

RICHARD P. IEYOUB
Attorney General

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