Does the State of Oklahoma own the Grand River Dam Authority's assets, and what would happen to the proceeds if the Legislature ordered GRDA to sell?

Plain-English summary

The Legislative Office of Fiscal Transparency asked two questions about the Grand River Dam Authority (GRDA), the state-created hydroelectric utility that operates the Pensacola, Markham Ferry, and other dams on the Grand River and serves wholesale electric customers in eastern Oklahoma:

1. Does the State of Oklahoma own GRDA's assets? Yes.
2. If the Legislature ordered GRDA to sell its assets, how would the proceeds be distributed? Bondholders and contractual customers first; remaining proceeds available for other public purposes.

The state-ownership analysis rests on two pillars. First, GRDA's enabling statute (82 O.S. § 861) explicitly defines GRDA as a "governmental agency of the State of Oklahoma, body politic and corporate, with powers of government." Second, GRDA's funds are statutorily designated as public funds under § 861A. The Oklahoma Supreme Court, in IBEW Local 976 v. GRDA (1956), already held that "the State of Oklahoma is the owner of and is operating the Grand River Dam Authority."

On the disposition question, the AG identifies two constitutional limits on the Legislature's freedom to redirect proceeds:

• Contracts clause (Okla. Const. art. II, § 15): the Legislature cannot pass legislation impairing contracts, including the State's own contracts. Bond agreements between GRDA and bondholders incorporate the law in effect at issuance (Mullins, 1950; Wickham, 1941). The Legislature has pledged in § 868 not to impair bondholders' rights "until the bonds are fully met and discharged."
• Customer contracts. GRDA's wholesale supply contracts with municipalities are also constitutionally protected against legislative impairment. The Legislature cannot order asset sales in a way that would force GRDA to default on those contracts.

So the Legislature can order a sale, but it must:

1. Permit GRDA to use sale proceeds to satisfy bond obligations under § 869(A).
2. Permit GRDA to satisfy contractual obligations to municipal customers.
3. Only then can the Legislature redirect remaining proceeds to "public purposes" (which the Supreme Court has equated with "government purposes," State ex rel. Lacy v. Jackson, 1983).

What this means for you

If you are a GRDA bondholder

Your contract is constitutionally protected. The Legislature cannot order GRDA to default. Even if a future Legislature directs GRDA to liquidate or dispose of assets, your security interests under the bond documents must be honored first. The opinion does not interpret specific bond pledges (a fact-intensive question outside the AG's authority), but it confirms the statutory floor at § 868: bondholder rights remain intact until bonds are "fully met and discharged."

If you are a GRDA wholesale customer (a municipal utility)

Your supply contract is also constitutionally protected. A legislative directive to sell GRDA assets cannot force GRDA to break its contractual commitments to you. If you are concerned about a pending legislative proposal, the contracts clause is a defense. Your municipality's general counsel should review your specific contract terms.

If you are a GRDA Board member or executive

You retain the operational discretion to manage GRDA assets within the statutory framework, including selling property "not necessary to the carrying on of the business" (§ 862(9)) and refunding bonds (§ 873). A legislative directive to sell does not transfer operational authority to the Legislature; you continue to administer the sale, allocate proceeds to debt and contracts first, and account to the State for remaining proceeds.

If you are an Oklahoma legislator considering GRDA reform

The opinion gives you significant authority but flags two constitutional guardrails:

1. Don't draft a sell-down statute that would force a default. Section 868 and Article II, § 15 protect bondholders. Build in language that preserves bond payments.
2. Don't draft language that breaks customer supply contracts. Plan a sale or transfer structure that lets a buyer assume the existing supply commitments, or compensate customers for any change.

Once those guardrails are respected, the Legislature has plenary authority over GRDA. You can amend the enabling statute, redefine GRDA's mission, restructure its board, or wind it down.

If you are a citizen interested in GRDA's future

GRDA's assets are state assets, held in trust for public purposes. Decisions about its future rest with the Legislature. Bondholders and customers come first; remaining proceeds become public funds available for legislative appropriation.

If you are a public finance attorney

For new GRDA bond issuances, the constitutional protection of the contract may give you arguments to push for tighter pledges and broader security. For existing issuances, the AG opinion confirms that statutory amendments cannot retroactively impair the deal.

Common questions

Q: What is the Grand River Dam Authority?
A: A state-created public power authority established by the Legislature in 1935 (82 O.S. § 861). GRDA controls the waters of the Grand River, generates and sells hydroelectric power, and supplies wholesale electricity to municipal utilities and other customers.

Q: How is GRDA different from a private utility?
A: GRDA is statutorily a "governmental agency of the State of Oklahoma" with "powers of government." Its funds are public funds. It is subject to public-records, purchasing, personnel, and competitive-bidding laws. Real property transactions after November 1, 2006 are subject to Title 61.

Q: Has anyone ever proposed selling GRDA?
A: This opinion was prepared at the request of the Legislative Office of Fiscal Transparency, suggesting at least preliminary legislative interest in the question. The opinion does not endorse or oppose a sale; it answers the legal questions about who owns the assets and how proceeds would be distributed.

Q: What happens to GRDA's debts if it is sold?
A: They must be satisfied or discharged first. The Constitution prohibits impairment of contracts, and § 868 specifically pledges bondholder protection until full discharge.

Q: What about GRDA's wholesale customers?
A: Their contracts are also protected against legislative impairment. A sale plan must accommodate ongoing customer obligations, either by having a buyer assume them or by compensating customers for changes.

Q: Can the Legislature use GRDA's annual revenues for other state purposes?
A: Outside the scope of this opinion, but the same logic applies. GRDA's bond pledges and customer contracts have priority. After those obligations are satisfied, surpluses are public funds the Legislature can appropriate. § 869(A) restricts the sources GRDA may use for indebtedness, but state law generally treats accumulated GRDA reserves as public money under § 861A.

Q: Is GRDA's land state property?
A: GRDA holds title in its own name as a state agency, but the State is the beneficial owner. The state-ownership conclusion in IBEW Local 976 covers GRDA's assets generally.

Q: Could a constitutional amendment change this?
A: Yes. The Legislature could refer a constitutional amendment to voters that, for example, exempts a GRDA reorganization from the contracts clause. But absent that, the contracts clause limits what statute alone can do.

Background and statutory framework

GRDA was created during the New Deal era to harness the Grand River for irrigation, hydroelectric generation, and conservation. The 1935 enabling act (now codified primarily at 82 O.S. §§ 861 et seq.) gave GRDA broad powers to control river waters, issue revenue bonds, generate and sell electricity, and acquire property necessary for its mission. The Legislature has amended the enabling act many times to expand or refine GRDA's powers, but the core characterization as a state governmental agency has been constant since 1935.

Several statutes in Title 82 establish GRDA's legal status:

• § 861 declares GRDA a "governmental agency of the State of Oklahoma."
• § 861A clarifies that GRDA is subject to general state laws and that its funds are public funds.
• § 862 lists GRDA's powers (sell property, contract, exercise eminent domain, etc.).
• §§ 868 and 869 govern revenue, bond obligations, and the sources of payment for GRDA debt.
• § 873 authorizes refunding bonds.

The Oklahoma Supreme Court has addressed GRDA's status repeatedly:

• Sheldon v. GRDA (1938) held that GRDA conducts a state function.
• Wickham v. GRDA (1941) held that bond obligations to the federal government could not be impaired by a later constitutional amendment.
• IBEW Local 976 v. GRDA (1956) held the State owns and operates GRDA.

The contracts-clause analysis (Article II, § 15) imports federal contracts-clause doctrine into state law. Oklahoma courts have applied it broadly to protect bond obligations and other government contracts. Mullins (1950) is the leading Oklahoma authority that the laws in effect at bond issuance "become a part and are read into the contract." That reading protects bondholders against subsequent legislative impairment.

The opinion frames public ownership as a baseline that imposes both rights and duties. The State owns GRDA, but the State (through the Legislature) cannot use that ownership to break GRDA's contracts. Public ownership coexists with constitutional limits on legislative action.

Citations and references

Statutes and Constitution:
- 82 O.S. § 861 (GRDA creation)
- 82 O.S. § 861A (Public funds, applicable laws)
- 82 O.S. § 868 (Revenue, bondholder pledge)
- 82 O.S. § 869 (Bond payment sources)
- Okla. Const. art. II, § 15 (Contracts clause)

Cases:
- Sheldon v. Grand River Dam Auth., 1938 OK 76, 76 P.2d 355 (GRDA conducts state function)
- International Bhd. of Elec. Workers v. GRDA, 1956 OK 24, 292 P.2d 1018 (State owns GRDA)
- Wickham v. GRDA, 1941 OK 346, 118 P.2d 640 (constitutional amendment cannot impair federal bond obligations)
- Fortinberry Co. v. Blundell, 1952 OK 80, 242 P.2d 427 (contracts clause applies when State is a party)
- Board of Cnty. Comm'rs v. Mullins, 1950 OK 95, 217 P.2d 835 (laws at issuance become part of bond contract)
- State ex rel. Lacy v. Jackson, 1983 OK 122, 682 P.2d 218 ("public purpose" = "government purpose")

Source

• Landing page: https://oklahoma.gov/oag/opinions/ag-opinions/2023/ag-opinion-2023-8.html
• Original PDF: https://oklahoma.gov/content/dam/ok/en/oag/opinions/ag-opinions/2023/ag_opinion_2023-8_z-2.pdf

Original opinion text

GENTNER DRUMMOND
ATTORNEY GENERAL
ATTORNEY GENERAL OPINION
2023-8

Mike Jackson, Executive Director
Legislative Office of Fiscal Transparency
2300 N. Lincoln Blvd, Room 107
Oklahoma City, OK 73105

May 25, 2023

Dear Executive Director Jackson,

This office has received your request for an official Attorney General Opinion in which you ask, in effect, the following questions:

1. Does the State of Oklahoma own the Grand River Dam Authority's assets?
2. If the Legislature directed Grand River Dam Authority to sell assets, how would the sale proceeds be distributed?

I. SUMMARY

Because the Grand River Dam Authority ("GRDA") is a governmental agency and created by statute, the State of Oklahoma owns its assets. Moreover, GRDA's funds are public funds. Upon a sale of the GRDA's assets, the Oklahoma Legislature must first satisfy all debts and obligations. Only after debts and obligations are satisfied or discharged may the Oklahoma Legislature appropriate the remaining proceeds as with any other public funds.

II. BACKGROUND

In 1935, the Oklahoma Legislature created the GRDA for "control[ing], storing, preserv[ing], and distribut[ing] . . . waters of the Grand River and its tributaries, for irrigation, power and other useful purposes;" "conserv[ing] and develop[ing] . . . forests, minerals, land, water and other resources;" and "conserv[ing] and develop[ing] hydroelectric power and other electrical energy[.]" From its inception, the Legislature described GRDA as a "governmental agency of the State of Oklahoma, body politic and corporate, with powers of government . . . ."

The Legislature granted several powers, rights, and privileges to the GRDA, including the ability to sell "any property of any kind, real, personal or mixed, or any interest therein, which shall not be necessary to the carrying on of the business of the [GRDA]." GRDA is statutorily authorized to "make contracts and to execute instruments necessary, incidental or convenient to the exercise of the powers, rights, privileges and functions conferred upon it by the [GRDA] Act."

In support of GRDA's statutory charge, state law mandates the GRDA Board to "produce revenue adequate . . . to fulfill the terms of any agreements made with the holders of such bonds and/or with any person in their behalf[.]" GRDA's enabling statute also empowers GRDA to fund and refund obligations by issuing new revenue bonds, using proceeds of new revenue bond sales, or exchanging new revenue bonds.

III. DISCUSSION

A. The State of Oklahoma owns GRDA assets.

The State of Oklahoma owns GRDA assets for two reasons. First, as stated above, GRDA's enabling statute defines GRDA as a government agency, and that has been the case since its establishment in 1935. Second, GRDA funds are public funds.

The Oklahoma Supreme Court has determined that the State owns GRDA. In International Bhd. of Elec. Workers, Local Union 976 v. Grand River Dam Auth., the Court, relying on its holding in Sheldon v. Grand River Dam Authority, 1938 OK 76, 76 P.2d 355, held:

Since the Authority is engaged in "public purposes", and having determined in Sheldon v. Grand River Dam Authority, supra, that the Authority is "conducting a state function, which could have been accomplished by an existing state board or office", we conclude that the State of Oklahoma is the owner of and is operating the Grand River Dam Authority.

1956 OK 24, ¶ 9, 292 P.2d 1018, 1020.

Title 82, section 861A of the Oklahoma Statutes provides that GRDA "is subject to the laws of the state as they apply to state agencies except as specifically exempted by statute." As such, GRDA must comply with provisions in title 61 of the Oklahoma Statutes, which govern real property transactions; the Central Purchasing Act; the Oklahoma Personnel Act; article I of the Administrative Procedures Act; and the Public Competitive Bidding Act of 1974.

Along with being a governmental agency, GRDA's funds are statutorily designated as public funds. Title 82, section 861A of the Oklahoma Statutes states that "[a]ll funds generated, received and expended by [GRDA] are public funds[.]" Put simply, GRDA's funds are the State's funds and thus must be handled in accordance with state law.

B. Following a legislative directive to sell GRDA assets, GRDA must first satisfy or discharge any debts or obligations prior to the Legislature utilizing any remaining proceeds for public purposes.

GRDA is a creature of statute, meaning the Legislature may amend GRDA's powers and duties through the normal legislative process. Article 5, section 1 of the Oklahoma Constitution vests "[t]he [l]egislative authority of the State" in the Legislature, subject to the people's reserved powers. Consequently, the Legislature may, in its sound discretion, direct GRDA to sell or otherwise dispose of some or all of its assets.

However, state law and obligations assumed by GRDA necessitate proper distribution of any proceeds from the sale or disposition of GRDA assets. Specifically, the Constitution prohibits the Legislature from interfering with contracts. OKLA. CONST. art. II, § 15 ("No . . . law impairing the obligation of contracts, shall ever be passed."). This precludes the Legislature from directly or indirectly requiring GRDA to default on or otherwise breach its bond obligations.

The Mullins Court stated:

The general rule is that the laws in effect pursuant to which bonds were voted become a part and are read into the contract between the State or municipality, as the case may be, and the bondholders, and that the legislature may not later enact any legislation which would impair the obligation of such contract.

Since 1935, the Legislature has pledged to not in any way impair the rights or remedies of the holders of the bonds until the bonds are "fully met and discharged." Thus, any legislation that would cause GRDA to violate its obligations to bond holders or that may impair bond holders' rights or remedies would likely be found unconstitutional.

Finally, as a wholesaler of electrical power to certain Oklahoma municipalities, the Legislature must be mindful of GRDA's customers when crafting its directive to sell or dispose of GRDA assets. No legislation should impair the contracts that GRDA has in place with its customers. Consequently, the Legislature must permit GRDA to satisfy or discharge its bond obligations and contractual obligations to customers before redirecting the remaining proceeds to other public purposes.

It is, therefore, the official Opinion of the Attorney General that:

1. The State of Oklahoma owns the Grand River Dam Authority and its assets.

2. Prior to the Oklahoma Legislature expending remaining proceeds for public purposes, GRDA must first satisfy or discharge its outstanding debts and obligations.

GENTNER DRUMMOND
ATTORNEY GENERAL OF OKLAHOMA

EMILY ISBILL
ASSISTANT ATTORNEY GENERAL