Does the Texas ban on hiring former water-board members apply to a board created before the law passed?

Plain-English summary

In 2001, the Legislature added section 402.909 to the Local Government Code. It says a municipality that creates a board to manage a city-owned water, wastewater, storm water, or drainage utility may not employ or contract with a person who served on that board within the previous two years, a revolving-door rule meant to curb conflicts of interest. A state senator asked whether that rule applied to the San Antonio Water System, whose board of trustees the city created by ordinance in 1992, and, if so, two follow-up questions about whether SAWS could contract with a former board member or a law firm that had just hired him.

The Attorney General concluded the rule did not apply to SAWS. The key word was "creates." Section 402.909(a) says it "applies to a municipality that creates a board of trustees." The Code Construction Act provides that words in the present tense include the future tense, but it does not stretch the present tense to cover the past or perfect tense. Had the Legislature wanted the rule to reach boards already in existence, the opinion observed, it could have written "has created or shall create," or used a continuing verb like "operates." Because statutes are presumed to operate prospectively unless they are expressly made retroactive, and section 402.909 was not, the opinion read it to apply only to a board a city creates on or after the statute's June 17, 2001 effective date. The 1992 SAWS board fell outside that reach.

The opinion was careful about the constitutional point. The ban on retroactive laws in article I, section 16 of the Texas Constitution only forbids statutes that disturb vested, substantive rights, and applying this conflict rule to a board created in 1992 would not have impaired any such right. So the Legislature constitutionally could have made the rule reach older boards. The reason it did not reach SAWS was not constitutional prohibition but interpretation: the Legislature simply did not say in plain language that the rule was retroactive, and the legislative history of Senate Bill 1444 said nothing to the contrary. Because section 402.909 did not apply to SAWS, the opinion did not answer the two follow-up questions.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

The San Antonio Water System (what the opinion held): The opinion held that section 402.909's two-year bar on employing or contracting with former board members did not apply to the SAWS board, because the board was created in 1992 and the statute operated prospectively only. The opinion did not decide whether contracting with the former member or his law firm would be permissible under any other rule, because that question was not reached.

Municipal water and wastewater boards created in 2001 or later (what the opinion held for them): The opinion held that section 402.909's bar applied to boards a city creates on or after the statute's effective date. By implication, those newer boards are the ones the revolving-door rule reaches.

The Legislature (what the opinion noted): The opinion noted that the Legislature could constitutionally have applied the rule to boards created before 2001 without disturbing vested rights, but would have had to say so expressly, because of the presumption that statutes operate prospectively.

Common questions

Did the new conflict-of-interest rule apply to the San Antonio Water System?
No. The opinion concluded section 402.909 was prospective only and did not reach the SAWS board, which the city created in 1992.

Why did the word "creates" matter so much?
The opinion read "creates" as present and future tense, not past tense. Under the Code Construction Act, present-tense words include the future tense but not the past, and statutes are presumed prospective unless expressly made retroactive.

Could the Legislature have applied the rule to older boards?
Yes. The opinion explained that applying the rule to a board created in 1992 would not have disturbed vested rights, so it would not have violated the constitutional ban on retroactive laws. The Legislature just did not write the statute that way.

Did the opinion decide whether SAWS could hire the former member's law firm?
No. Because section 402.909 did not apply, the opinion did not reach the follow-up questions about contracting with the former member or his firm.

Background and statutory framework

Section 402.909 of the Local Government Code, "Prohibited Employment of or Contracting With Former Trustee or Board Member," applies to a municipality that creates a board of trustees or other board to manage a city-owned water, wastewater, storm water, or drainage utility system, and bars the city or board from employing or contracting with someone who was a board member before the second anniversary of leaving the board. Tex. Loc. Gov't Code Ann. § 402.909(a), (b) (Vernon Supp. 2002). The City of San Antonio combined three water functions into SAWS and established its board by ordinance in 1992. The board member at issue was appointed in 1998, resigned effective April 18, 2001, and on June 18, 2001 began work at a law firm interested in SAWS legal work.

The construction turned on the present-tense verb. Section 311.012(a) of the Government Code, part of the Code Construction Act, provides that words in the present tense include the future tense, but does not extend the present to the past or perfect tense. Tex. Gov't Code Ann. § 311.012(a). Words and phrases are read in context and construed according to grammar and common usage. Id. § 311.011(a). The opinion contrasted "creates" (a one-time event) with "operates" (an ongoing activity), citing the Oxford English Dictionary. Senate Bill 1444, which enacted section 402.909, took effect June 17, 2001 after passing both houses by more than a two-thirds vote under article III, section 39 of the Texas Constitution. Act of May 26, 2001, 77th Leg., R.S., ch. 1423, §§ 38, 43, 2001 Tex. Gen. Laws 5069; Tex. S.B. 1444, 77th Leg., R.S. (2001).

On retroactivity, the opinion explained that article I, section 16 of the Texas Constitution forbids only statutes that disturb vested, substantive rights. Ibarra v. State, 11 S.W.3d 189, 192 (Tex. Crim. App. 1999); McCain v. Yost, 284 S.W.2d 898 (Tex. 1955); Southwestern Bell Tel. Co. v. Pub. Util. Comm'n, 615 S.W.2d 947, 956 (Tex. Civ. App.-Austin 1981, writ ref'd n.r.e.). Section 311.022 of the Government Code declares that a statute is presumed prospective unless expressly made retrospective, and Texas courts apply a statute retroactively only when fair implication shows the Legislature meant it to reach past and future transactions. Tex. Gov't Code Ann. § 311.022; Reames v. Police Officers' Pension Bd., 928 S.W.2d 628, 631 (Tex. App.-Houston [14th Dist.] 1996, no writ); Houston Indep. Sch. Dist. v. Houston Chronicle Publishing Co., 798 S.W.2d 580, 585 (Tex. App.-Houston [1st Dist.] 1990, writ denied); State v. Humble Oil & Refining Co., 141 Tex. 40, 169 S.W.2d 707, 708-09 (1943). Any doubt is resolved against retrospective operation. Ex parte Abell, 613 S.W.2d 255, 258 (Tex. 1981). Because the Legislature did not expressly make section 402.909 retroactive and the legislative history of Senate Bill 1444 said nothing to the contrary, the opinion held the section applies prospectively only.

Citations

Statutes:

• Tex. Loc. Gov't Code Ann. § 402.909
• Tex. Gov't Code Ann. § 311.011(a); § 311.012(a); § 311.022
• Tex. Const. art. I, § 16; art. III, § 39
• Act of May 26, 2001, 77th Leg., R.S., ch. 1423, §§ 38, 43, 2001 Tex. Gen. Laws 5069
• Tex. S.B. 1444, 77th Leg., R.S. (2001)

Cases:

• Ibarra v. State, 11 S.W.3d 189 (Tex. Crim. App. 1999)
• McCain v. Yost, 284 S.W.2d 898 (Tex. 1955)
• Southwestern Bell Tel. Co. v. Pub. Util. Comm'n, 615 S.W.2d 947 (Tex. Civ. App.-Austin 1981, writ ref'd n.r.e.)
• Reames v. Police Officers' Pension Bd., 928 S.W.2d 628 (Tex. App.-Houston [14th Dist.] 1996, no writ)
• Houston Indep. Sch. Dist. v. Houston Chronicle Publishing Co., 798 S.W.2d 580 (Tex. App.-Houston [1st Dist.] 1990, writ denied)
• State v. Humble Oil & Refining Co., 141 Tex. 40, 169 S.W.2d 707 (1943)
• Ex parte Abell, 613 S.W.2d 255 (Tex. 1981)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0509
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2002/jc0509.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
JOHN CORNYN

May 29, 2002

The Honorable J. E. "Buster" Brown Opinion No. JC-0509
Chair, Committee on Natural Resources
Texas State Senate Re: Whether section 402.909 of the Local
P.O. Box 12068 Government Code is applicable to the San
Austin, Texas 78711-2068 Antonio Water System, and related questions
(RQ-0489-JC)

Dear Senator Brown:

You have requested our opinion regarding the proper construction of a statute, enacted by the Seventy-seventh Legislature as section 402.909 of the Local Government Code, that places certain restrictions upon a municipal water system's authority to contract with former members of the board of the water system. Specifically, you ask whether the statute applies to the San Antonio Water System (SAWS), which was established in 1992. If the statute is applicable to SAWS, you ask two other questions about the authority of SAWS to contract with a former board member, or a law firm that employs him, under particular circumstances. For the reasons set forth below, we conclude that section 402.909 has no application to SAWS.

You indicate that in 1992 the City of San Antonio adopted an ordinance that "combined three water-related functions owned and operated by the city into a single system, the San Antonio Water System (SAWS), and established a board of trustees to manage the system." The city council appointed a certain member to the board in September 1998. That member resigned effective April 18, 2001. See Request Letter, supra note 1, at 1. You state that, "[u]nder applicable city ordinance and SAWS bylaws, no holding over applies to resigning board members and a vacancy is created on the effective date of a member's resignation, in this case, on April 18, 2001." Id. In any event, on May 17, 2001, the city council appointed another individual to fill the vacancy created by the resignation. See id. "On June 18, 2001, the former board member began employment with a law firm which is interested in being considered to perform legal services for SAWS." Id. at 2.

Section 402.909 of the Local Government Code is entitled, "Prohibited Employment of or Contracting With Former Trustee or Board Member" and provides:

(a) This section applies to a municipality that creates a board of trustees or other board to manage and control a water, wastewater, storm water, or drainage utility system that the municipality owns.

(b) The municipality or a board of trustees or other board described by Subsection (a) may not employ or contract with an individual who was a member of the board before the second anniversary of the date the individual ceased to be a member of the board.

Tex. Loc. Gov't Code Ann. § 402.909 (Vernon Supp. 2002) (emphasis added).

Subsection (a) of section 402.909 specifically declares that it "applies to a municipality that creates a board of trustees." (emphasis added). Section 311.012(a) of the Government Code, which is part of the Code Construction Act, provides that "[w]ords in the present tense include the future tense." This rule of construction does not indicate, however, that the present tense includes the past tense or the perfect tense. Tex. Gov't Code Ann. § 311.012(a) (Vernon 1998). Had it intended that meaning, the legislature might easily have used the term "has created or shall create" instead of the single verb "creates." The legislature might also have chosen to use the verb "operates." "Operates" implies an ongoing activity. See X Oxford English Dictionary 847 (2d ed. 1989) ("Operate" means "[t]o be in working, exercise force or influence, produce an effect, act, work."). "Creates," on the other hand, suggests a one-time event. See III Oxford English Dictionary 1134 (2d ed. 1989) ("Creates" means "[t]o bring into being, cause to exist; esp. to produce where nothing was before . . . ."). Section 311.011(a) of the Government Code provides that "[w]ords and phrases shall be read in context and construed according to the rules of grammar and common usage." Id. § 311.011(a). Consequently, subsection (a) of section 402.909 would seem on its face to apply only to a municipality that creates the relevant board of trustees on or after the effective date of the statute. Section 43 of Senate Bill 1444, which enacted section 402.909 of the Local Government Code, provides:

SECTION 43. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2001.

The bill did in fact pass both houses of the legislature with a greater than two-third's majority, and as a result, became effective on June 17, 2001. See Act of May 26, 2001, 77th Leg., R.S., ch. 1423, §§ 38, 43, 2001 Tex. Gen. Laws 5069, 5078, 5080.

Although retroactive laws are prohibited by article I, section 16 of the Texas Constitution, this provision "operates only to prohibit the application of statutes which disturb vested, substantive rights." Ibarra v. State, 11 S.W.3d 189, 192 (Tex. Crim. App. 1999). See McCain v. Yost, 284 S.W.2d 898 (Tex. 1955); Southwestern Bell Tel. Co. v. Pub. Util. Comm'n, 615 S.W.2d 947, 956 (Tex. Civ. App.-Austin 1981, writ ref'd n.r.e.). In our view, there can be no doubt that the legislature could have made section 402.909(a) applicable to a board created in 1992. Application of the statute to boards created before 2001 would not have impaired vested or substantive rights. But the legislature did not explicitly opt to apply the statute in a retroactive manner.

Section 311.022 of the Government Code declares: "A statute is presumed to be prospective in its application unless expressly made retrospective." Tex. Gov't Code Ann. § 311.022 (Vernon 1998). As the court stated in Reames v. Police Officers' Pension Bd., 928 S.W.2d 628 (Tex. App.-Houston [14th Dist.] 1996, no writ):

In Texas, "[a] statute is presumed to be prospective in its operation unless expressly made retrospective." Texas law strongly militates against the retroactive application of laws. Houston Indep. Sch. Dist. v. Houston Chronicle Publishing Co., 798 S.W.2d 580, 585 (Tex. App.-Houston [1st Dist.] 1990, writ denied). Texas courts apply statutes retroactively only if "it appears by fair implication from language used that it was the intention of the Legislature to make it applicable to both past and future transactions." State v. Humble Oil & Refining Co., 141 Tex. 40, 169 S.W.2d 707, 708-09 (1943).

Id. at 631 (citation omitted). Furthermore, "[t]he general rule is that there exists a presumption that an act is intended to operate prospectively and not retroactively. If there is any doubt, the intention will be resolved against retrospective operation of a statute." Ex parte Abell, 613 S.W.2d 255, 258 (Tex. 1981). Although there can be no doubt that the legislature could, without violating article I, section 16 of the Texas Constitution, have applied section 402.909 to boards created before the effective date of the statute, the fact remains that the legislature did not in plain language explicitly do so. Because it must be presumed that a statute is to operate prospectively only, we believe it follows that section 402.909 ought to be deemed to operate prospectively only. As a result, section 402.909 of the Local Government Code is not applicable to the board of trustees of the San Antonio Water System.

Nothing in the legislative history suggests a contrary construction. This statute was originally proposed in the House of Representatives as one of a group of floor amendments to Senate Bill 1444, a bill "relating to the general powers and authority of water districts." Tex. S.B. 1444, 77th Leg., R.S. (2001). Amendment three, which became section 402.909, was offered by Representative Robert Puente and was adopted without objection in the House. See H.J. of Tex., 77th Leg., R.S. 3170 (2001). The Senate refused to concur in the House amendments and requested a conference committee. See S.J. of Tex., 77th Leg., R.S. 2506 (2001). The conference committee report on Senate Bill 1444, including the amendment under consideration here, described therein as section 38 of the bill, was adopted by both houses on May 26, 2001. Senate Bill 1444 became effective on June 17, 2001. On June 19, 2001, the Senate Research Center filed its bill analysis of the enrolled version of Senate Bill 1444. The bill analysis contains an almost verbatim summary of section 38, but offers no additional comment. See Senate Comm. on Natural Resources, Bill Analysis, Tex. S.B. 1444, 77th Leg., R.S. (2001).

Because we conclude that section 402.909 is not applicable to the board created on behalf of the San Antonio Water System, we need not address your second and third questions.

                                   SUMMARY

Section 402.909 of the Local Government Code, which places certain restrictions upon a municipal water system's authority to contract with former members of the board of the water system, is prospective in its application and therefore does not apply to the San Antonio Water System created in 1992.

                                        JOHN CORNYN
                                        Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable J. E. "Buster" Brown, Texas State Senator, to Honorable John Cornyn, Texas Attorney General, at 1 (Jan. 3, 2002) (on file with Opinion Committee) [hereinafter Request Letter].