Can a Texas home rule city enforce its energy conservation code on customers outside city limits that it supplies with electricity?

Texas AG Opinion JM-562: City Electric System Rules

Plain-English summary

A state senator asked whether a home rule city can enforce its energy conservation code outside city limits, in the area where the city sells electricity. The city had adopted the code under the building-code power in article 1175 and suggested that statute, or article 1108, let it enforce the code wherever it provides electric service. The AG gave a split answer. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Inside its limits a home rule city has plenary power, but to act outside its boundaries it needs a grant of authority from the legislature. The building-code statute, article 1175, section 35, says nothing about applying outside the city, so it does not reach the extraterritorial service area. Article 1108, which lets a city own and operate utility systems inside and outside its limits, is different. It lets the city regulate and control its electric system to protect the city's interest, set terms and conditions of service, and prescribe rules about electrical appliances. The AG read that as implied authority to enact and enforce reasonable regulations protecting the city's electrical distribution system, both inside and outside its boundaries, in the areas it serves. But article 1108 does not stretch to a comprehensive energy conservation building code. So the city can impose reasonable, system-protecting rules on its outside-the-limits electric customers, not a full conservation code. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Currency note

This opinion was issued in 1986. 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

Can the city enforce its whole energy conservation building code on customers outside city limits?

No. The AG concluded that article 1108 does not authorize a comprehensive energy conservation building code outside the city, and the building-code statute, article 1175, section 35, does not apply beyond the city's boundaries. The city's extraterritorial authority here is narrower. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

What can the city actually require of its out-of-town electric customers?

Reasonable regulations that protect its electrical distribution system. Article 1108 lets a city control its electric system to protect the city's interest, set service terms, and prescribe rules about electrical appliances, so the AG found implied authority for system-protecting rules in the served area. Any such regulation has to be reasonable. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Why does a city need special authority to regulate outside its limits at all?

Because a home rule city's broad, plenary power stops at its boundaries. Inside the city you look for limits on its power; outside, the city must point to an express or implied grant of authority from the legislature. Article 1108 supplies that grant for protecting the utility system, while the building-code statute does not. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

How does water-service case law support regulating electricity this way?

The AG relied on a case upholding a city's conditions on extending water service outside its limits, including a fixture requirement meant to protect the water mains and preserve pressure and supply. That reasoning shows article 1108 covers conserving and protecting the system's resources, and the AG applied the same logic to electricity. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Background and statutory framework

Home rule cities draw their power from article XI, section 5 of the Texas Constitution, and within their limits that power is plenary, as Lower Colorado River Authority v. City of San Marcos explains. To act outside their boundaries, though, they need an express or implied legislative grant, a point the AG drew from City of Austin v. Jamail; article 1175, section 35 authorizes an energy conservation building code but is silent about extraterritorial effect, so it does not apply outside the city. Article 1108 authorizes a city to own and operate water, sewer, gas, and electric systems inside or outside its limits, to regulate and control them to protect the city's interest, to set the terms and conditions of outside service, and to prescribe rules about appliances. Courts have confirmed article 1108 lets home rule cities provide retail electric service beyond their boundaries, including City of Lubbock v. South Plains Electric Cooperative, Inc. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

For whether that authority includes system-protecting regulation, the AG relied on Port Arthur Housing Company v. City of Port Arthur, which upheld reasonable conditions (including a fixture requirement to protect the water mains and preserve pressure and supply) on extending water service outside a city under article 1108. Reasoning that the statute encompasses conserving and protecting the system's resources, the AG concluded a city has implied authority to enforce reasonable regulations protecting its electrical distribution system inside and outside its boundaries in the served area, while stressing the regulations must be reasonable and that article 1108 does not authorize a comprehensive conservation building code. The opinion expressly left aside problems that arise when the outside-boundaries service falls within another municipality, citing State ex rel. Richmond Plaza Civic Association v. City of Houston and City of New Braunfels v. City of San Antonio. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Citations and references

The opinion cited the following authorities. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Statutes and constitutional provisions:

• V.T.C.S. art. 1108 (city ownership and operation of utility systems inside or outside limits; §§ 1-4)
• V.T.C.S. art. 1175, § 35 (energy conservation standards in the building code)
• Tex. Const. art. XI, § 5 (home rule authority)

Cases:

• Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641 (Tex. 1975)
• City of Austin v. Jamail, 662 S.W.2d 779 (Tex. App. - Austin 1983, writ dism'd)
• City of Lubbock v. South Plains Electric Cooperative, Inc., 593 S.W.2d 138 (Tex. Civ. App. - Amarillo 1979, writ ref'd n.r.e.)
• Port Arthur Housing Company v. City of Port Arthur, 181 S.W.2d 1017 (Tex. Civ. App. - Beaumont 1944, writ ref'd w.o.m.)
• State ex rel. Richmond Plaza Civic Association v. City of Houston, 270 S.W.2d 235 (Tex. Civ. App. - Galveston 1954, writ ref'd n.r.e.)
• City of New Braunfels v. City of San Antonio, 212 S.W.2d 817 (Tex. Civ. App. - Austin 1948, writ ref'd n.r.e.)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0562
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0562.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

October 16, 1986

Honorable H. Tati Santiesteban
Chairman
Natural Resource Committee
Texas State Senate
P. O. Box 12068
Austin, Texas 78711

Opinion No. JM-562

Re: Applicability of an energy conservation code to areas which are provided electric utility service by a city but are outside its corporate boundaries

Dear Senator Santiesteban:

You ask whether a home rule city may enforce its energy conservation code outside its boundaries but within its certified electric service area. You inform us that a home rule city adopted an energy conservation code pursuant to section 35 of article 1175, V.T.C.S. You suggest that this statute or article 1108, V.T.C.S., authorizes a home rule city to enforce its conservation code within the areas to which the city provides electric service.

Home rule cities derive their power directly from article XI, section 5, of the Texas Constitution. Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641, 643 (Tex. 1975). Because a home rule city's powers within their boundaries are plenary, it is necessary to look for express or implied limits on those powers rather than for grants of power. See Id. To exercise powers outside its boundaries, however, a home rule city must have an express or implied grant of power from the legislature. City of Austin v. Jamail, 662 S.W.2d 779, 782 (Tex. App. - Austin 1983, writ dism'd); Attorney General Opinion JM-226 (1984). You suggest that articles 1175 and 1108 contain the necessary authority for the contemplated action.

Article 1175 enumerates some of the powers of home rule cities. Section 35 of article 1175 provides:

A home-rule city may require all buildings to be constructed in accordance with energy conservation standards included in the building code. If any.

This provision fails to specify that it applies outside the boundaries of a home rule city.

Article 1108 provides:

Any town or city in this State which has or may be chartered or organized under the general laws of Texas, or by special Act or charter, and which owns or operates waterworks, sewers, gas or electric lights, shall have the power and right:

1. To own land for such purposes within or without the limits of such town or city.

2. To purchase, construct and operate water, sewer and gas and electric light systems inside or outside of such towns or city limits, and regulate and control same in a manner to protect the interest of such town or city.

3. To extend the lines of such systems outside of the limits of such towns or cities and to sell water, sewer, gas, and electric light and power privileges or service to any person or corporation outside of the limits of such towns or cities, or permit them to connect therewith under contract with such town or city under such terms and conditions as may appear to be for the best interest of such town or city; provided that no electric lines shall, for the purposes stated in this section, be extended into the corporate limits of another incorporated town or city.

4. To prescribe the kind of water or gas mains or sewer pipes and electric appliances within or beyond the limits of such town or city and to inspect the same and require them to be kept in good order and condition at all times and to make such rules and regulations and prescribe penalties concerning same, as shall be necessary and proper. (Emphasis added).

Article 1108 applies to home rule cities and authorizes them to provide retail electric services to areas beyond their corporate boundaries. City of Lubbock v. South Plains Electric Cooperative, Inc., 593 S.W.2d 138, 142 (Tex. Civ. App. - Amarillo 1979, writ ref'd n.r.e.); Attorney General Opinion M-1136 (1972).

The dispositive question in the case at hand is whether article 1108 contains sufficient implied authority for a city to enact and enforce an energy conservation code in connection with the city's extension of service outside its boundaries. Section 2 of article 1108 authorizes a city to "regulate and control [its electric system] in a manner to protect the interests of such city or town." Section 3 allows the city to extend service "under such terms and conditions as may appear to be for the best interest of such town or city. . . ." Section 4 authorizes the city to prescribe the kind of "electric appliances" used and "to inspect the same and require them to be kept in good order and condition at all times and to make such rules and regulations and prescribe penalties concerning same, as shall be necessary and proper." Energy conservation is logically in the "best interest" of a city that provides electric service.

The court in Port Arthur Housing Company v. City of Port Arthur, 181 S.W.2d 1017 (Tex. Civ. App. - Beaumont 1944, writ ref'd w.o.m.), dealt with an extension of water service outside of the city's boundaries pursuant to article 1108. A city ordinance required the payment of an inspection fee, an inspection, and the installation of a drum trap under all bathtubs as a condition to receipt of water service. Stating that any such regulation must be, above all, reasonable, the court upheld all three requirements. 181 S.W.2d at 1019-20. The court upheld the drum trap requirement because the court found the reasons for the requirement reasonable. The rationale behind the requirement was twofold: (1) to protect the city's water mains from contamination, and (2) to preserve the system's water pressure and supply. 181 S.W.2d at 1020. Thus, the court's reasoning enforces the idea that article 1108 encompasses the conservation of resources.

Similar considerations apply to the use of electricity. Accordingly, article 1108 provides the implied authority for a city to enact and enforce provisions designed to protect its electrical distribution system both inside and outside of its boundaries in the areas to which the city provides electric service. As indicated in the Port Arthur case, regulations under article 1108 must be reasonable. Article 1108 does not, however, contemplate a comprehensive energy conservation building code. This opinion is not intended to address any particular home rule city's energy conservation regulations. Nor does it address problems arising when an out of boundaries extension of service falls within another municipality. See generally Port Arthur Housing Co. v. City of Port Arthur, supra; State ex rel. Richmond Plaza Civic Association v. City of Houston, 270 S.W.2d 235 (Tex. Civ. App. - Galveston 1954, writ ref'd n.r.e.); City of New Braunfels v. City of San Antonio, 212 S.W.2d 817 (Tex. Civ. App. - Austin 1948, writ ref'd n.r.e.).

SUMMARY

Article 1108, V.T.C.S., authorizes a home rule city which operates its own electric service company to enact and enforce reasonable regulations which protect the city's electrical distribution system inside its boundaries and outside its boundaries in the areas to which it provides electric service.

Very truly yours,

Jim Mattox
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jennifer Riggs
Assistant Attorney General