Untitled Texas Attorney General Opinion

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

December 17, 2013

The Honorable John J. Carona Opinion No. GA-1031
Chair, Committee on Business and
Commerce Re: Whether the Austin City Council may
Texas State Senate transfer governance of Austin Energy to a
Post Office Box 12068 board of directors (RQ-1132-GA)
Austin, Texas 78711

Dear Senator Carona:

You ask three questions about the Austin City Council's authority to adopt an ordinance
regarding the governance of its municipally owned electric utility. 1 You tell us that the City of
Austin's ("City") electric utility, Austin Energy ("Utility"), is governed by the Austin City
Council. See Request Letter at 1. You indicate that questions exist regarding the City's
authority to transition the Utility's governance to an independent board of directors, the
fundamental question being whether the City has authority to change the governance structure of
the Utility absent a city charter amendment election. See id. at 2--4. You express concern that a
charter amendment election would exclude those Utility customers who are not City residents
from having input in the matter. See id. at 3 (stating that "approximately 15 percent of Austin
Energy's customers ... are located outside of the municipal boundaries and, therefore, cannot
vote in city elections" and noting the Utility's provision of utility service to the numerous State
of Texas facilities located within the City). In these circumstances, you ask:

1) Does Local Government Code, Section 552.122 allow the
Austin City Council, by ordinance, to transition to a board of
director governance, distinct from the Austin City Council, and to
allow out-of-city customer representation on the board?

2) Do any provisions of the Austin City Charter, including but not
limited to those related to purchasing, personnel matters, or
finance, pose a limitation on the powers or responsibilities that

1
See Letter from Honorable John J. Carona, Chair, Comm. on Bus. & Commerce, to Honorable Greg
Abbott, Tex. Att'y Gen. at 4 (June 24, 2013), http://www.texasattomeygeneral.gov/opin ("Request Letter").
TheHonorableJohnJ.Carona- Page 2 (GA-1031)

may be delegated to a board of directors that includes out-of-city
customer representation established by an ordinance adopted by
the Austin City Council?

3) If the city charter does present limitations to the powers that
might be delegated to a board of directors, does state law provide
an option for amending the city charter with respect to the
oversight or operation of Austin Energy that would allow all
customers to have a voice in the election?

ld at 4.

In connection with your first question, you raise section 552.122 of the Local
Government Code. See id at 3. Section 552.122 is contained in subchapter G of chapter 552,
which applies to municipal electric utility systems that have certain outstanding debt obligations.
See TEX. Loc. Gov'T CoDE ANN. §§ 552.121 (West Supp. 2012) (setting forth requirements for
applicability of subchapter G), 552.121-.124 (subchapter G). Section 552.122 provides that "[a]
municipality by ordinance may transfer management and control of the municipality's electric
utility system to a board of trustees appointed by the municipality's governing body." ld
§ 552.122(a) (emphasis added). By its plain language, section 552.122 authorizes a municipality
to transfer management and control of its electric utility to a board oftrustees. See Tex. W Oaks
Hasp., L.P. v. Williams, 371 S.W.3d 171, 177 (Tex. 2012) (stating that the aim of statutory
construction is to determine legislative intent, which is best ascertained by the "plain and
common meaning of the statute's words"). Section 552.122 does not require a charter
amendment for a city to change its utility's governance structure and instead expressly permits
the municipality to do so by ordinance. TEX. Loc. Gov'T CODE ANN.§ 552.122(a) (West Supp.
2012); cf id § 552.121 (recognizing governance change can be made by ordinance or charter
election). The only express requirement section 552.122 imposes is that the ordinance shall
prescribe "(1) the number of members; and (2) the qualifications for appointment to the board."
Id § 552.122(b); cf id § 552.142(b)-(c) (imposing numerous other requirements regarding the
transfer of management and control of a municipally owned water utility). Section 552.122
contains no additional requirements regarding the composition of the board. Further, it contains
no language prohibiting a municipality from establishing board member qualifications that allow
for representation by out-of-city utility customers. Thus, assuming the City satisfies the
applicability provisions in section 552,121, section 552.122 authorizes the City to adopt an
ordinance providing for a board of trustees to manage and control the Utility and to establish the
board member qualifications, which could include out-of-city representation.

You next ask whether any provision of the City's charter limits the powers and
responsibilities that may be delegated by ordinance to a board that includes out-of-city customer
representatives. See Request Letter at 4. You do not suggest a particular charter provision or
specific limitation for us to examine in relation to your question. We decline the invitation to
exhaustively examine every provision of the city charter, but we find no immediately apparent
provision that prohibits the City from delegating management and control of its Utility to an
appointed board that includes out-of-city representatives. Whether any particular charter
provision impacts the City's authority to "transfer management and control of the municipality's
TheHonorableJohnJ.Carona- Page 3 (GA-1031)

electric utility system to a board of trustees" that is independent will ultimately depend on an
analysis of the charter provisions at issue. TEX. Loc. Gov'T CoDE ANN.§ 552.122 (West Supp.
2012). Questions regarding construction of a city charter are outside the purview of an attorney
general opinion. See Tex. Att'y Gen. Op. No. GA-0356 (2005) at 2 (stating that this office does
not construe city charters).

Of course, a home-rule city may not adopt an ordinance or charter provision that is
"inconsistent with the Constitution of this State, or [with] the general laws enacted by the
Legislature of this State." TEX. CONST. art. XI, § 5. A charter provision that conflicts with a
state statute is unenforceable. See In re Sanchez, 81 S.W.3d 794, 796 (Tex. 2002). A court will
not hold a general law and a municipal ordinance or charter provision "repugnant to each other if
any other reasonable construction leaving both in effect can be reached." Dallas Merch 's &
Concessionaire's Ass 'n v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993). Section 552.122
authorizes a transfer to a board of trustees of the "management and control" of the utility. TEX.
Loc. Gov'T CODE ANN. § 552.122(a) (West Supp. 2012). In considering a predecessor statute,
this office defined "management and control" to mean "governing, supervising, directing and
conducting the affairs of the utility system." Tex. Att'y Gen. Op. No. DM-444 (1997) at 3. To
the extent a charter provision is construed by the City to serve as a limitation on a board of
trustees' ability to govern, supervise, direct and conduct the affairs of the Utility, a court could
conclude that the charter provision is unenforceable as inconsistent with section 552.122.
Whether any particular provision in the City's charter impermissibly conflicts with section
552.122 is not a question we address here.

Finally, you ask whether state law provides an option for amending the City charter to
allow all Utility customers to vote in the charter-amendment election. See Request Letter at 4.
Article XI, section 5 of the Texas Constitution provides that home-rule cities "may, by a majority
vote of the qualified voters of said city, at an election held for that purpose, adopt or amend their
charters." TEX. CONST. art. XI,§ 5 (emphasis added). Section 9.005 ofthe Local Government
Code provides that "a proposed amendment to a municipality's charter is adopted if it is
approved by a majority of the qualified voters of the municipality who vote at an election held
for that purpose." TEX. Loc. Gov'T CoDE ANN. § 9.005(a) (West 2008) (emphasis added); City
of Socorro v. US. Fireworks of Am., Inc., 842 S.W.2d 779, 781 (Tex. App.-El Paso 1992, writ
denied) (recognizing Legislature's adoption of chapter 9 of the Local Government Code in
implementing article XI, section 5). Under this authority, only qualified voters of the City may
vote in an election to amend the City's charter.
The Honorable John J. Carona - Page 4 (GA-1031)

SUMMARY

A city to which chapter 552 ofthe Local Government Code
applies has express authority under section 552.122 to adopt an
ordinance providing for a board of trustees to manage and control
its municipally owned electric utility and to establish the b ard
member qualifications which can include out-of-city
representation.

Whether any particular city charter provision limits such a
board's independent exercise of its delegated powers and
responsibilities is not a question that can be resolved in an attorney
general opinion.

Under article XI, section 5 of the Texas Constitution, only
qualified voters of the City of Austin may vote in an election to
amend the Austin city charter.

Very truly yours,

Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee