*1 THE ATIWBRNEY GENERAL OF %-EXAS

Mr; Eugene Russell Opinion No. M- 1242 County Attorney

Bumet County Re: Whether a water supply'cor- Burnet, Texas 78611 poration, created under

Article 1434a, Vernon's Civil Statutes, establishes a "drinking water supply for public use" within the mean- ing of Article 4477-1, Ver- non's Civil Statutes, so as to make its subject to Health Dear Mr. Russell: Department standards.

Your recent letter requested the opinion of this office upon the following question:

"Is a water supply corporation, set up under Article 1434a and supplying water for its own only, a 'person ~. . . corpor- ation . . . etc.' establishina a 'drinkina water supply ~. . . for public use'.-. . within <he language of A 4477-l Sec. 12 and 13, so as to make it subject to Health Department standards or size of pipe, specifically?"

Section 12(a) of Article 4471-1, Vernon's Civil Statutes, provides asfollows:

"Every person, firm, corporation, public or private, contemplating'the establishment of any drinking water supply or sewage disposal system for public use shall, previous to con- struction thereof, submit completed plans and specifications therefor to the State Department of Health and the said Department shall approve same: provided said plans conform to the water safety and streams pollution laws of this state.

The said watersupply or sewage disposal system shall be established only after approval has been given by the State Department of Health." *2 Mr. Eugene Russell, page 2

Section 13 describes various precautionary steps that must be taken to protect the quality of a public water supply.

We understand your query to be whether a water supply corporation organized under authority of Article 1434a, Vernon's Civil Statutes, is furnishing water for "public use" within the sense the term as used in Article 4477-1, Section 12(a), so as to bring the corporation's system under the jurisdiction of the State Department of Health. Your inquiry indicates that the corporation supplies water only to its own members.

We are of the opinion that the answer to your inquiry is properly in the affirmative, and that the corporation falls under the jurisdiction of the State Department of Health as provided in Article 4477-l.

Article 1434a reads as follows:

"Section 1. On and after the passage of this Act, three or more persons who are citizens of the State of Texas, may form a corporation

for the purpose of furnishing a water supply or sewer service, or both, to towns, cities, private corporations, individuals, and military camps and bases! and may provide in the charter of such cor- poration that no dividends shall ever be paid upon the stock and that all profits arising from the operation of such business shall be annually paid out to cities, towns, corporations, and other

persons who have during the past year transacted business with such corporation, in direct pro- portion to the amount of business so transacted II . . . (Emphasis added)

Our opinion is that the system described in your request is a system for public use. The system is available to all members of the corporation and it does not matter whether there are few or many members, so long as the water is available to all. Corporations contemplated under Article 1434a are quasi-public corporations, with a limited power of eminent domain, to operate on a non-profit basis, and are distinguishable from purely private corporations operating for private gain and with no responsibility to serve the public. See Atty.Gen.Op. No. O-3433 (1941). Such corporations are recognized in law as "public service corporations", which differ from private corporations and are subject to regulation and control by the state in matters as to which ordinary private corporations have freedom

Mr. Eugene Russell, page- 3 :. i

of contract. 14 Tex.Jur.2d 120-121, Corporations, Section 8, and cases there cited. In any event, Section 12(a) of Article applies 4477-l

regardless of whether the ownership is in .a "person, firm, cor- poration, public or private."

In view of the foregoing, we have, no doubt that ~the Legislature intended that water supplied by such a corporation is for public use and Section 12(a) of Article 4477-1, being a remedial statute to carry out the police power of the state in the field of public health, must be given a broad comprehensive construction to cover any individual or corporation whose water and sewage system to use by members of the public. is subject 53 Tex.Jur.Zd 303-304, Statutes, Sec. 197.

Statutory health regulations in behalf of the public are subject to the test that the interests of the public generally, as distinguished from those of a particular class, require such state regulation, and that the means are reasonably necessary for the accomplishment of the purpose and not unduly oppressive on individuals. 39 Am.Jur. ,356, Health, Sec. 20.

SUMMARY A corporation organized under Article 1434a, Vernon's Civil Statutes, to supply water to its provides water for "public use" within the meaning of that term as used in Article 4477-1, Section 12(a), V.C.S., and is subject to the juris- diction of the State Department of Health as pro- vided in Article 4477-l. V.C.S.

Prepared by James S. Swearingen "

Assistant Attorney General

Mr. Eugene Russell, page 4

APPROVED: ':

OPINION COMMITTEE

Kerns Tayldr, Chairman

W. E. Allen, Co-Chairman

Bob Gauss

Lynn Taylor

Linward Shivers

Harriet Burke

SAMUEL D. MCDANIEL

Staff Legal Assistant

ALFRED WALKER

Executive Assistant

NOLA WHITE

First Assistant