Untitled Texas Attorney General Opinion ( 2005 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
August 26,2005
Mr. John D. White Opinion No. GA-0352
Chairman, Board of Regents
The Texas A&M University System Re: Whether the Interlocal Cooperation Act,
Post Office Box C-l Government Code chapter 791, permits a state
College Station, Texas 77844-902 1 agency governing body to delegate authority to
approve an interlocal contract (RQ-032 1-GA)
Dear Mr. White:
The Texas A&M University System (“TAMUS”) asks whether the Interlocal Cooperation
Act, Government Code chapter 79 1,’permits a state agency governing body to delegate authority to
approve an interlocal contract2
We understand that the Texas Engineering Experiment Station (“TEES”), a component of
TAMUS was involved in contract negotiations with a municipally owned utility. See Request
Letter, supra note 2, at 1. The parties intended to enter into an interlocal contract under chapter 79 1
of the Government Code, which authorizes a local government to contract with another local
government or a state agency. See Act of May 17, 2005, 79th Leg., R.S., H.B. 1562, 5 1 (to be
codified at TEX. GOV’T CODE ANN. 5 79 1.O11 (a)) (effective immediately) (,‘A local government may
contract or agree with another local government. . . to perform governmental functions and services
in accordance with this chapter.“)4; TEX. GOV’T CODE ANN. 4 79 1.Ol l(b) (Vernon 2004) (“A party
‘See TEX. GOV’T CODE ANN. 5 791.002 (Vernon 2004) (“This chapter may be cited as the Interlocal
Cooperation Act.“).
‘See Letter fromMr. Delmar L. Cain, General Counsel, The Texas A&M University System to Honorable Greg
Abbott, Texas Attorney General (Feb. 22,2005) (on file with Opinion Committee, also available at http://www.oag
.state.tx.us) [hereinafter Request Letter].
3See TEX. EDUC. CODE ANN. 3 88.500 (Vernon 2002) (“The Texas Engineering Experiment Station is a part
of The Texas A&M University System under the management and control of the board of regents of The Texas A&M
University System.“).
4Subsection (a) was amended by the Seventy-ninth Legislature to read:
(a) A local g overnment may contract or agree with another local
government or a federallv recognized Indian tribe, as listed bv the United States
(continued.. .)
Mr. John D. White - Page 2 (GA-0352)
to an interlocal contract may contract with a: (1) state agency, as that term is defined by Section 77 1.
002; or (2) similar agency of another state.“); see also Act of May 25’2005, 79th Leg., R.S., H.B.
3384’5 1 (to be codified at TEX. GOV’T CODE ANN. 4 791.003(4)) (effective immediately) (defining
the term “local government” to include a municipality or other political subdivision of this state);
TEX. GOV’T CODE ANN. 8 791.003(5) (Vernon 2004) (defining the term “political subdivision” to
include “any corporate and political entity organized under state law”). Under chapter 79 1, the term
“state agency” includes “a state university or college, a junior college district, or any service or part
of a state institution of higher education.” Act ofMay20,2005,79thLeg., R.S.,H.B. 1331’4 1 (to
be codified at TEX. GOV’T CODE ANN. 9 77 1.002(l)(B)) (effective immediately); TEX. GOV’T CODE
ANN. 9 791.01 l(b) (Vernon 2004).
During the negotiations, a dispute arose regarding section 79 1.O11 (d)( 1) of the Government
Code. See Request Letter, supra note 2, at 1. Section 791 .Ol l(d) delineates certain requirements
for an interlocal contract:
(d) An interlocal contract must:
(1) be authorized by the governing body of each party to the
contract unless a party to the contract is a municipally owned electric
utility, in which event the goveming body may establish procedures
for entering into interlocal contracts that do not exceed $100,000
without requiring the approval of the governing body;
(2) state the purpose, terms, rights, and duties of the
contracting parties; and
(3) specify that each party paying for the performance of
governmental functions or services must make those payments from
current revenues available to the paying party.
TEX. GOV’T CODEANN. 6 791 .Ol l(d) (Vernon 2004). The municipally owned utility cited section
79 1 .O11 (d)( 1) and claimed that the interlocal contract would not be valid without the TAMUS Board
of Regents’ express approval. See Request Letter, supra note 2, at 1. TEES, however, “maintained
that express approval of the proposed interlocal contract was not required because the Board of
Regents had delegated such authority to TEES as reflected in TAMUS’ Policies and Regulations.”
Id.
secretarv of the interior under 25 U.S.C. Section 479a-1, whose reservation is
located within the boundaries of this state to perform governmental functions and
services in accordance with this chapter.
Act ofMay 17,2005,79th Leg., R.S., H.B. 1562,s 1 (to be codifiedat TEX. GOV’TCODEANN. $791.01 l(a)) (effective
immediately) (amendment underlined). The amendment to the statute does not affect the conclusion of this opinion.
Mr. John D. White - Page 3 (GA-0352)
As a result of the dispute, TAMUS asks two questions regarding how section 791 .Ol 1(d)( 1)
should be interpreted. Id. at 1’3. These questions appear to assume that TEES has no contracting
authority independent of the TAMUS Board of Regents. However, section 88.501(c) of the
Education Code expressly authorizes the TEES to enter into contracts. See TEX. EDUC.CODEANN.
$88.501(c) (V emon 2002) (“In order to carry out its purposes, the agency may enter into contracts
and agreements with other entities.“). TAMUS has not briefed whether section 88.501(c) grants
TEES independent contracting authority or whether its contracting authority is subject to the
TAMUS Board of Regents’ authorization and control. See id. $ 88.500 (“The Texas Engineering
Experiment Station is a part of The Texas A&M University System under the management and
control of the board of regents of The Texas A&M University System.“). TAMUS’ questions focus
on the Interlocal Cooperation Act’s proper interpretation, and we will address its meaning in general
terms and not with respect to the particular situation involving TEES.
Before reaching the specific questions about section 791 .Ol 1(d)( 1) of the Government Code,
however, we note that TAMUS’ query asks us to consider the relationship between the statute’s first
clause, which pertains to parties to interlocal contracts generally, and its remaining language, which
pertains to municipally owned electric utilities. Section 79 1.O11 (d)( 1) provides in its first clause that
an interlocal contract must “be authorized by the governing body of each party to the contract.” TEX.
GOV’T CODEANN. $ 791 .Ol l(d)( 1) (V emon 2004). The remaining language permits municipally
owned electric utilities’ governing bodies to “establish procedures for entering into interlocal
contracts that do not exceed $100,000 without requiring the approval of the governing body.” Id.
(emphasis added). TAMUS’ query suggests that the express authority given to municipally owned
electric utilities’ governing bodies to establish such procedures could “mean that other governmental
entities may not establish similar procedures.” Request Letter, supra note 2, at 3.
In construing section 79 1.Ol 1(d)(l), we must give effect to the legislature’s intent. See TEX.
GOV’T CODEANN. $3 3 11.021, .023 (Vernon 2005); Albertson ‘s, Inc. v. Sinclair, 984 S.W.2d 958,
960 (Tex. 1999); Mitchell Energy Corp. v. Ashworth, 943 S.W.2d 436,438 (Tex. 1997). To do so,
we must construe it according to its plain language, see In re Canales, 52 S.W.3d 698, 702 (Tex.
2001); RepublicBankDallas, N.A. v. Interkal, Inc., 691 S.W.2d605,607-08 (Tex. 1985),considering
it in the broader context of section 79 1.Ol 1 and chapter 791 as a whole, see Helena Chem. Co. v.
Wilkins, 47 S.W.3d 486,493 (Tex. 2001) (“[WI e must always consider the statute as a whole rather
than its isolated provisions. We should not give one provision a meaning out of harmony or
inconsistent with other provisions, although it might be susceptible to such a construction standing
alone.“) (citations omitted); see also TEX. GOV’T CODEANN. 5 3 11 .O11 (a) (Vernon 2005) (words
and phrases to be read in context). Words and phrases must be construed according to their common
meanings, see TEX. GOV’T CODEANN. $ 3 11 .Ol 1(a) (Vernon 2005)’ though “[wlords and phrases
that have acquired a technical or particular meaning, whether by legislative definition or otherwise,
shall be construed accordingly,” id. 5 3 11 .O11(b).
We do not believe that the special provision for municipally owned electric utilities
necessarily precludes all other governing bodies from adopting procedures delegating contracting
authority. First, the plain language does not require that conclusion. The special provision for
municipally owned electric utilities uses the terrn “approval,” whereas the first clause uses the term
Mr. John D. White - Page 4 (GA-0352)
“authorized.” Id. 6 79 1 .Ol 1(d)( 1) (V emon 2004) (providing that an interlocal contract must (1) “be
authorized by the governing body of each party to the contract” (2) “unless a party to the contract
is a municipally owned electric utility, in which event the governing body may establish procedures
for entering into [certain] interlocal contracts . . . without requiring the approval of the governing
body”) (emphasis added). The Interlocal Cooperation Act does not define either term, nor has a
court or this office construed section 791 .Ol l(d)( 1). According to its common meaning, the term
“authorize” means “[ t]o give legal authority” or “[ t]o formally approve.” BLACK’S LAWDICTIONARY
129 (7th ed. 1999). Thus, the term “authorize” incorporates but is not limited to “formally approve.”
In using the broad term “authorized” in section 791 .Ol l(d)( 1)‘s first clause, the legislature did not
necessarily require that each contract be formally approved by the contracting entity’s governing
body.
Moreover, viewing section 79 1.O11(d)( 1) in its statutory context, we note that section
79 1.Ol 1(d)‘s overall purpose is not to govern how entities authorize contracts but rather to establish
the basic requisites for an interlocal contract. See TEX. GOV’T CODE ANN. 8 791 .Ol l(d) (Vernon
2004). And the Interlocal Cooperation Act’s purpose is not to govern individual entities’ internal
operations but rather “to increase the efficiency and effectiveness of local governments by
authorizing them to contract, to the greatest possible extent, with one another and with agencies of
the state.” Id. Ej79 1.OOl.
Finally, the legislative history does not support the conclusion that the first clause’s meaning
was narrowed by the special provision for municipally owned electric utilities, which was added
later. The Interlocal Cooperation Act has required that a contract be “authorized” by each
contracting entity’s governing body since its 1971 enactment. See Act of May 20, 1971,62d Leg.,
R.S., ch. 5 13, 4 4(b), 1971 Tex. Gen. Laws 175 1, 175 l-52 (enacting the statutory predecessor to
Government Code chapter 791, article 4413(32c) of the Revised Civil Statutes). The legislature
added the special provision for municipally owned electric utilities in 1999 in Senate Bill 7, a
lengthy, detailed provision that deregulated the electric utility industry. See Act of May 27, 1999,
76th Leg., R.S., ch. 405, 5 47, 1999 Tex. Gen. Laws 2543, 2620. Senate Bill 7 included several
provisions that were clearly intended to permit municipally owned electric utilities, which are subject
to special rules as public entities, to compete in a deregulated environment? The amendment to
section 79 1.O11 (d)( 1) appears to be one such amendment. Because Senate Bill 7 was a deregulation
measure that did not focus on interlocal contracting, we do not believe that the legislature’s adding
the special provision for municipally owned electric utilities in section 79 1.Ol 1(d)( 1) modified the
first clause’s meaning. See TEX. GOV’T CODEANN. 6 3 11.023 (Vernon 2005) (“In construing a
‘See, e.g., Act of May 27, 1999,76th Leg., R.S., ch. 405, $39, 1999 Tex. Gen. Laws 2543,2558-2614 (adding
chapter 40 to the Utilities Code to describe how a municipally owned utility may participate in retail competition), id.
$j 45, at 2617-18 (amending chapter 55 1 of the Government Code, the Open Meetings Act, to permit a public power
utility’s governing body to meet in closed session to deliberate regarding certain competitive matters), id. 9 46, at 2618-
20 (amending chapter 552 of the Government Code, the Public Information Act, to provide an exception to required
public disclosure for a public power utility’s information and records related to certain competitive matters), id. f~48,
at 2620 (amending Government Code chapter 2256, the Public Funds Investment Act, to authorize a municipality that
owns a municipal electric utility to make certain investments).
Mr. John D. White - Page 5 (GA-0352)
statute, . . . a court may consider among other matters the: (1) object sought to be attained; (2)
circumstances under which the statute was enacted; [and] (3) legislative history.“).6
TAMUS asks two specific questions about section 79 1.Ol 1(d)( 1):
(1) For purposes of Government Code Section 79 1.Ol l(d)(l),
may an agency’s governing body delegate authority, within
the agency, to approve an interlocal contract?
. (2) Is a municipally owned utility subject to a different standard
for purposes of Government Code Section 79 1.Ol 1(d)(l)?
Request Letter, supra note 2, at 1.
The initial question involves section 791 .Ol 1(d)( 1)‘s first clause, which provides that an
interlocal contract must “be authorized by the governing body of each party to the contract.” TEX.
GOV’TCODEANN. 9 791.011(d)(l) (V emon 2004) (emphasis added). As we have noted, the term
“authorize” is a broad term that means either “[t]o give legal authority” or “[t]o formally approve.”
BLACK'SLAW DICTIONARY 129 (7th ed. 1999). Given this broad meaning, we do not construe the
first clause of section 791 .Ol l(d)( 1) to prohibit or permit delegation. Rather, we construe it to
require that a governing body authorize an interlocal contract according to the law applicable to its
contracting authority generally. Thus, to determine whether a state agency’s governing body may
delegate authority to approve an interlocal contract, one must examine the statutes governing the
particular agency’s contracting authority.7
‘Similarly, one might argue that the latter part of the second clause, “’m which event the governing body may
establish procedures for entering into interlocal contracts that do not exceed $100,000 without requiring the approval
of the governing body,” governs all parties to an interlocal contract to which a municipally owned electric utility is a
party, because the term “governing body” is not expressly restricted to the governing body of a municipally owned
electric utility. See TEX. GOV’T CODEANN. 5 79 1.O1 l(d)( 1) (V emon 2004) (emphasis added). Given this legislative
history, however, it appears that the legislature intended the special provision for municipally owned electric utilities to
govern only municipally owned electric utilities’ contracting authority and did not intend to address contracting authority
of other entities that may be parties to interlocal contracts with municipally owned electric utilities. But we need not
resolve that issue in this opinion, given that our construction of the first clause resolves TAMUS’ query about the
TAMUS Board of Regents’ authority to delegate approval of an interlocal contract.
‘For example, a number of statutes require university boards of regents to approve contracts unless the board
has adopted contracting authority rules. See, e.g., TEX. EDUC.CODEANN. $6 65.34 (Vernon 2002) (“A contract must
be approved by the [University of Texas System Board of Regents] or otherwise entered into in accordance with rules
of the board relating to contracting authority.“), 105.108(a) (“Except as provided by Subsection (b), a contract with the
system must be approved by the [University of North Texas System Board of Regents] .“), (b) (“The board by rule may
delegate to a representative of the board or an employee of the system the authority to negotiate, execute, and approve
a contract with the system.“), (c) (“A contract that is not approved in accordance with this section is void.“), 111.34 (“All
contracts of the university shall be approved by a majority of the [University of Houston Board of Regents]. However,
the board is authorized to adopt reasonable rules that delegate to the president or his authorized representatives the
authority to negotiate, approve, and execute contracts.“).
Mr. John D. White - Page 6 (GA-0352)
TAMUS asks in particular whether the TAMUS Board of Regents may delegate the authority
to approve an interlocal contract. See Request Letter, supra note 2, at 1. The government of the
TAMUS “is vested in a board of nine regents appointed by the governor with the advice and consent
of the senate.” TEX. EDUC. CODE ANN. 5 85.11 (Vernon 2002); see also id. 8 85.01(2) (“‘Board’
means the board of regents of The Texas A & M University System.“). No statute expressly governs
the TAMUS Board of Regents’ authority with respect to TAMUS contracts.8 However, the Board
of Regents has express rulemaking authority, see id. 5 85.21, and is required to appoint a chief
executive officer of the university system, see id. 8 85.17(b). Significantly, the Board of Regents
is expressly authorized to delegate authority to the chief executive officer, who is authorized to
delegate his or her authority with the Board of Regents’ approval:
The chief executive officer is responsible to the board for the
general management and success of the university system, and the
board may delegate authority, establish guidelines, and cooperate with
the executive officer to carry out that responsibility. The chief
executive officer may delegate his authority if approved by the board.
Id. $ 85.17(d). No statute precludes the TAMUS Board of Regents or the chief executive officer
from delegating contracting authority. TAMUS informs us that the Board of Regents has adopted
several rules authorizing university officials to enter into contracts without formal Board of Regents
approval. See Request Letter, supra note 2, at 2 (citing TAMUS Policy 25.07 and TAMUS
Regulation 25.07.01).
We conclude based on these express statutory provisions that the TAMUS Board of Regents
is authorized to adopt rules delegating authority to approve an inter-local contract. Moreover, given
this statutory and regulatory framework, a TAMUS interlocal contract entered into as authorized by
such Board of Regents rules is “authorized” by the TAMUS Board of Regents for purposes of
section 79 1.O11 (d)( 1) of the Government Code.
TAMUS next asks whether section 79 1.Ol l(d)( 1) establishes “a different standard” for a
municipally owned electric utility with respect to delegating interlocal contracting authority. See
Request Letter, supra note 2, at 1. As we have explained, to determine how a governing body must
authorize an interlocal contract as required by the first clause in section 79 1 .O11 (d)(l), one must look
to the law governing the particular entity’s contracting authority. However, it is clear that the
legislature intended section 79 1.O11(d)( 1) itself to specifically govern authorization for municipally
owned electric utilities’ interlocal contracts. According to its plain terms, section 791 .Ol 1(d)(l), in
authorizing the governing body of a municipally owned electric utility to establish procedures for
entering into interlocal contracts that do not exceed $100,000 without requiring the approval of the
governing body, necessarily permits delegation of such authority. And, by clear implication, section
79 1.O11 (d)( 1) indicates that a municipally owned electric utility’s governing body must approve and
may not delegate approval of interlocal contracts that exceed $100,000.
*CompareT~~. EDUC.CODEANN. ch. 85 (Vernon2002 & Supp. 2004-05), andAct ofMay25,2005,79thL+eg.,
R.S., S.B. 1883,s 1 (to be codified at TEX. EDUC. CODEANN. $85.25), with TEX. EDUC. CODE ANN. $9 65.34,105.108,
111.34 (Vernon 2002), supra note 7.
Mr. John D. White - Page 7 (GA-0352)
SUMMARY
Section 791 ,011 (d)( 1) of the Government Code provides in
its first clause that an interlocal contract must “be authorized by
the governing body of each party to the contract.” TEX. GOV’T CODE
ANN. 5 791.01 l(d)(l) (V emon 2004) (emphasis added). This
provision requires that the governing body authorize an interlocal
contract according to the same statutes and procedures applicable to
its contracting authority generally, To determine whether an entity’s
governing body may delegate authority to approve an interlocal
contract, one must examine the statutes governing the particular
entity’s contracting authority. The Texas A&M University Board of
Regents is authorized by statute to adopt rules delegating authority to
approve an interlocal contract.
The remaining language of section 79 1.Ol l(d)(l), in
authorizing the governing body of a municipally owned electric utility
to establish procedures for entering into interlocal contracts that do
not exceed $100,000 without requiring the approval of the governing
body, see id., necessarily permits delegation of such authority. And,
by clear implication, this language indicates that a municipally owned
electric utility’s governing body must approve and may not delegate
approval of interlocal contracts that exceed $100,000.
BARRY R. MCBEE
First Assistant Attorney General
NANCY S. FULLER
Chair, Opinion Committee
Mary R. Crouter
Assistant Attorney General, Opinion Committee