Untitled Texas Attorney General Opinion ( 2003 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
March 27,2003
The Honorable Susan Combs, Commissioner Opinion No. GA-0049
Texas Department of Agriculture
P.O. Box 12847 Re: Whether the Texas Corn Producers
Austin, Texas 78711 Board may collect an assessment on corn
ensilage (RQ-06 19-JC)
Dear Commissioner Combs:
You ask about the authority of the Texas Corn Producers Board (“the Board”) to collect an
assessment on corn ensilage.’
The Board is an agricultural commodity producers board governed by chapter 41 of the
Agriculture Code. Under chapter 41, a nonprofit organization representing producers of an
agricultural commodity may petition the Commissioner of Agriculture (“the Commissioner”) “for
certification as the organization authorized to conduct an assessment referendum and an election of
a commodity producers board.” TEX. AGRIC. CODE ANN. 3 41.01 l(a) (Vernon 1995).* If, on the
basis of testimony presented at the public hearing, the Commissioner determines that the
organization is representative of producers of the agricultural commodity and that the petition
conforms to chapter 4 1, the Commissioner shall certify that the organization is representative of the
producers of the commodity and is authorized to conduct the assessment referendum and board
election. See id. 5 41.012(b).
Chapter 4 1 provides that the organization may conduct a referendum of the producers of the
agricultural commodity on the proposition of whether the producers shall levy an assessment on
themselves “to finance programs of research, disease and insect control, predator control, education,
and promotion designed to encourage the production, marketing, and use of the commodity” and may
conduct an election of members to a commodity producers board for the commodity. Id. fj 41.02 1.
‘Letter from Honorable Susan Combs, Commissioner, Texas Department of Agriculture, to Honorable John
Cornyn, Texas Attorney General (Sept. 30, 2002) (on file with Opinion Committee) [hereinafter Request Letter].
*See also TEX. AGRIC. CODE ANN. $ 41.002( 1) (V ernon 1995) (“‘Agricultural commodity’ means an
agricultural, horticultural, viticultural, or vegetable product, bees and honey, planting seed, rice, livestock or livestock
product, or poultry or poultry product, produced in this state, either in its natural state or as processed by the producer.
The term does not include flax or cattle.“), (6) (“‘Producer’ means a person engaged in the business of producing or
causing to be produced for commercial purposes an agricultural commodity. The term includes the owner of a farm on
which the commodity is produced and the owner’s tenant or sharecropper.“).
The Honorable Susan Combs - Page 2 (GA-0049)
A board is established if the Commissioner “finds that two-thirds or more of those voting in the
election voted in favor of the referendum proposition or that those voting in favor of the proposition
produced at least 50 percent of the volume of production of the commodity during the relevant
production period,” id. § 41.031 (standards for certification), and “certifies adoption of [the]
referendum proposition.” Id. 8 4 1.05 1.
Significantly, article XVI, section 68 of the Texas Constitution, which authorizes the
legislature to provide for agricultural commodity assessments such as the one at issue here, requires
these referenda. See TEX. CONST. art. XVI, 9 68 (“The legislature may provide for the advancement
of food and fiber in this state by providing representative associations of agricultural producers with
authority to collect such refundable assessments on their product sales as may be approved by
referenda of producers. All revenue collected shall be used solely to finance programs of marketing,
promotion, research, and education relating to that commodity.“). Prior to the adoption of article
XVI, section 68, the Texas Supreme Court had held that an assessment collected by an agricultural
commodity producers board under the statutory predecessor to chapter 41 of the Agriculture Code
constituted an occupation tax on an agricultural pursuit in violation of article VIII, section 1 of the
Texas Constitution. See Conlen Grain and Mercantile, Inc. v. Tex. Grain Sorghum Producers Bd.,
5 19 S.W.2d 620 (Tex. 1975). For this reason, an assessment must be adopted under and in
conformance with article XVI, section 68 in order to pass constitutional muster.
Subchapter D of chapter 41 establishes the powers and duties of an agricultural commodity
producers board. A board “is a state agency” for many purposes,3 and it may adopt rules consistent
with the purposes of chapter 41. See TEX. AGRIC. CODE ANN. 8 41.058(b) (Vernon 1995). Under
section 41.058(d), a board “shall set the rate of the assessment,” but the “rate may not exceed the
maximum established in the election authorizing the assessment or a subsequent election establishing
a maximum rate.” Id. 9 41.058(d). Section 41.084 authorizes a board, at any board election, to
submit to the voters a proposition to increase the maximum rate of assessment. See id. 8 41.084
(“The proposition is approved and the new maximum rate is in effect if two-thirds or more of those
voting vote in favor of the proposition or if those voting in favor of the proposition produced at least
50 percent of the volume of production of the commodity during the relevant production period.“).
Generally, agricultural commodity producers do not pay the assessments directly, but rather the
processors4 of the commodity deduct assessments from the purchase price of the commodity and
remit them to the board. See id. 5 41.08 1.
You inform us that the Board was established pursuant to a referendum of corn producers in
1980. Pursuant to the referendum, the corn producers approved a proposition “to assess themselves
‘See id. 5 41.052(a) (Vernon Supp. 2003) (board is state agency for indemnification purposes and is exempt
from taxation to same extent as other state agencies), (b) (board is governmental unit for purposes of section 101 .OOl,
Civil Practice and Remedies Code and chapters 551 and 552, Government Code).
4See id. 3 41.002(5) (Vernon 1995) (“‘Processor’ means a person within this state who: (A) is a purchaser,
warehouseman, processor, or other commercial handler of an agricultural commodity; (B) processes planting seeds; or
(C) is the mortgagee of an agricultural commodity if the mortgage did not cover the commodity in its state as a growing
crop and if the mortgage was executed at a time when the commodity was ready for marketing.“).
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not to exceed l% cent per bushel to be collected at the point of first sale, to finance programs of
research, development, marketing and use of Texas corn.” See Request Letter, supra note 1
(Attachment, Exhibit I). The 1980 referendum was limited to seven counties. See id. In 1990, the
Board held a second referendum that extended its jurisdiction to all Texas counties, but that did not
change the terms of the assessment. See id. (Attachment, Exhibit II).
You also inform us that since its inception in 1980, the Board has assessed dry kernel corn
but has not assessed corn ensilage, which you describe as a substance that “includes kernels of corn
as an ingredient, but also includes other substances, such as corn plant parts, whatever else is picked
up in the field, and water.” Id. at 2. Dry kernel corn is sold by the pound or bushel whereas corn
ensilage “is sold as a wet substance by the ton.” See id. The dry kernel corn assessment is coliected
at the warehouse or elevator, where it is sold. “[Elnsilage is generally sold directly from the farm
to dairies and other cattle-feeding operations.” Id.
The Board would like to begin collecting an assessment on corn ensilage without holding a
referendum to approve the assessment. See id. at 1. Accordingly, you ask “( 1) whether or not ‘corn
ensilage’ may be included in the definition of ‘corn’ for purposes of implementing the current . . .
producer assessment on corn; and (2) whether such an assessment on ‘corn ensilage’ may be
collected without conducting another grower referendum seeking grower approval of the
assessment.” Id.
We construe a referendum proposition in light of the intent of the voters who approved it.
The constitution requires that the assessment must be approved by a referendum of corn producers,
as does chapter 41 of the Agriculture Code. See TEX. CONST. art. XVI, 5 68 (authorizing
assessments “as may be approved by referenda of producers”); TEX. AGFUC. CODE ANN.
$5 41.058(d), 41.084 (Vernon 1995). The constitutional and statutory “conditions and safeguards
surrounding the tax voted at the time of the election thereon became a part of the very election
itself.” San Saba County v. MeCraw, 108 S.W.2d 200,203 (Tex. 1937) (citation omitted). ‘A tax
or bond proposition and constitutional and statutory conditions and safeguards are a contract with
the voters, and any attempt to substantially alter the rights and expectations of the voters will be
treated as a violation of the constitutional provision authorizing the tax and of article I, section 16
of the Texas Constitution, which prohibits laws impairing the obligation of contracts. See id. ; see
also Troy Dodson Constr. Co. v. McClelland, 993 F.2d 1211, 1216 (5th Cir. 1993) (where the
electorate has approved the issuance ofbonds, bond proceeds may be expended only for the purposes
for which the bonds were approved); Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960)
(same); Tex. Att’y Gen. Op. No. JC-0494 (2002) at 1 (“When the law requires that voters approve
a tax, proceeds of the tax may only be used for the purposes approved by the voters.“).
The Board was established twenty-three years ago to collect an assessment on corn to finance
corn research and marketing. See Request Letter, supra note 1 (Attachment, Exhibit I). The Board
has assessed only dry kernel corn for the last twenty-three years. See id. at 2. The fact that the Board
has never assessed corn ensilage and has only recently begun to explore the possibility indicates that
the voters who approved the 1980 and 1990 referenda did not consider corn ensilage “corn” within
the scope of the referenda. Further supporting this conclusion is that the proposition approved by
The Honorable Susan Combs - Page 4 (GA-0049)
the corn producers provides for an assessment “not to exceed % centper bushel.” Id. (Attachment,
Exhibit I) (emphasis added). As you have noted, corn ensilage contains materials other than corn
kernels, including corn plant parts and water, and is not measured by the bushel, but rather by the
ton. See id. at 2. As a result, corn ensilage is outside the scope of the proposition.
Because corn ensilage is not “corn” within the meaning of the referenda, the collection of an
assessment on corn ensilage would “exceed the maximum [rate of assessment] established in the
election authorizing the assessment,” in violation of section 41.058(d). See TEX.AGRIC.CODEANN.
8 41.058(d) (V emon 1995) (“The board shall set the rate of the assessment. The rate may not exceed
the maximum established in the election authorizing the assessment or a subsequent election
establishing a maximum rate.“). Accordingly, the Board may not collect an assessment on corn
ensilage unless the state’s corn producers approve such an assessment in a referendum held under
section 41.084. See id. 8 41.084 (authorizing board, at any board election, to submit to the voters
a proposition to increase the maximum rate of assessment).
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SUMMARY
Corn ensilage is not “corn” for purposes of the 1980 and 1990
referenda authorizing the Texas Corn Producers Board to collect an
assessment on corn. The Board may not collect an assessment on
“corn ensilage” unless the corn producers of the state approve such an
assessment in an election held under section 4 1.084 of the Agriculture
Code.
Very truly yours,
BARRY R. MCBEE
First Assistant Attorney General
DON R. WTLLETT
Deputy Attorney General - General Counsel
NANCY S. FULLER
Chair, Opinion Committee
Mary R. Crouter
Assistant Attorney General, Opinion Committee