Over the years, the State of Texas and Texas businesses have clashed with counties, home-rule cities, and other municipalities over local regulations aimed at a broad range of business activities, including bans on hydraulic fracking,¹ pipeline construction,² single-use plastic grocery bags,³ and the location of wind generation and electric transmission facilities.⁴ 

In response, both the Legislature and the Attorney General’s Office have recently articulated, via legislation and opinion respectively, that such regulations are preempted by state law and therefore likely invalid and unenforceable. 

In May 2023 the Legislature passed H.B. 2127—the Texas Regulatory Consistency Act (the “Act”)—a broad-based attempt to preempt local regulation of Texas businesses.⁵ In August 2023, the Attorney General’s Office responded to a request for guidance from a northeast Texas county regarding the enforceability of a proposed county-wide moratorium on commercial solar projects, opining that a court would likely find such regulation invalid and unenforceable.⁶

Legislature Passes the Texas Regulatory Consistency Act

In May 2023, the Legislature passed the Act with the express “purpose . . . to provide statewide consistency by returning sovereign regulatory powers to the state where those powers belong in accordance with Section 5, Article XI, Texas Constitution.”  In the Act, the Legislature made the following findings:

(1) the state has historically been the exclusive regulator of many aspects of commerce and trade in this state;

(2) in recent years, several local jurisdictions have sought to establish their own regulations of commerce that are different than the state’s regulations; and

(3) the local regulations have led to a patchwork of regulations that apply inconsistently across this state.

In Section 2 of the Act, to achieve “statewide consistency,” the Legislature added broad preemption language to multiple, but not all, statutory codes. Under the Act, the preemption language below is added to the Agriculture,⁷ Business and Commerce,⁸ Finance,⁹ Insurance,¹⁰ Labor,¹¹ Natural Resources,¹² Occupations,¹³ and Property Codes.¹⁴

PREEMPTION.  Unless expressly authorized by another statute, a municipality or county may not adopt, enforce, or maintain an ordinance, order, or rule regulating conduct in a field of regulation that is occupied by a provision of this code.  An ordinance, order, or rule that violates this section is void, unenforceable, and inconsistent with this code

For enforcement purposes, the Act codifies a private cause of action for “[a]ny person who has sustained an injury in fact, actual or threatened, from a municipal or county ordinance, order, or rule adopted or enforced by a municipality or county in violation of” the Act and further providing that “a trade association representing the person has standing to bring and may bring an action against the municipality or county.”¹⁵ The Act waives governmental immunity for such a claim, and a party asserting such a claim may (i) obtain declaratory and injunctive relief and (ii) recover its attorneys’ fees and costs.¹⁶ However, a municipality or county may recover its attorneys’ fees and costs if the claim is frivolous.¹⁷

Although the Act does not add the broad preemption language above to all Codes—omitting, for example, the Transportation, Utilities, and Water Codes—the Act does add to the Local Government Code a new Section 51.002 entitled “Ordinance or Rules Inconsistent with State Law Prohibited.” This new provision allows a municipality to “adopt, enforce, or maintain an ordinance or rule only if the ordinance or rule is consistent with the laws of this state.”¹⁸ While it references “a municipality,” the new provision is silent as to counties, and it is in a part of the code applicable to municipalities, not counties.  The Act does not add a similar provision addressing counties, which is notable, because the preemption provisions added to each of the specific codes apply to both municipalities and counties. Time will tell whether this was an oversight that the Legislature may eventually correct or an intentional decision not to add a similar provision to the portion of the code applicable to counties.

In the bill analysis, supporters of the Act stated that the new preemption law will “provide regulatory consistency and promote prosperity in Texas by preempting local government regulation in areas already regulated by the state.”¹⁹ Supporters further stated that the current “lack of consistency is especially burdensome for businesses that operate in multiple jurisdictions and must navigate compliance with potentially contradictory regulatory schemes.”²⁰

Critics of the Act contend that the Act undermines a “long-standing tradition of local control and home-rule in Texas,”²¹ which allows local governments to enact regulations tailored to their specific and diverse local needs. Critics argue that the Act is unconstitutionally vague and will generate confusion and costly litigation. Instead of clarity for Texas businesses, critics further argue that local governments and Texas businesses cannot know what local regulations are preempted by the Act because it is too broad.

Major Texas Cities Challenge the Constitutionality of The Act

On June 14, 2023, Governor Greg Abbott signed the Act into law, and it became effective on September 1, 2023.  Before the Act became effective, the City of Houston sued the State of Texas in Travis County, seeking a declaratory judgment that the Act is unconstitutional, void, and unenforceable for various reasons.²² The Cities of San Antonio and El Paso intervened, seeking similar declaratory judgments challenging the constitutionality of the Act.²³

The cities argue that the Act is at odds with Texas caselaw, which generally provides that the Legislature may preempt local laws by statute only where the “intent to impose the limitation” appears with “unmistakable clarity.”²⁴ The cities emphasize that the “mere entry of the state into a field of legislation . . . does not automatically preempt that field from city regulation.”²⁵ According to the cities, the Act upends well-settled caselaw by attempting to broadly preempt various fields, and, in effect, inhibits their ability to meet the needs of their specific communities. In addition, because of the new private cause of action noted above, the City of Houston alleged that it “will have to defend against a likely barrage of lawsuits brought by trade associations or individuals essentially to deregulate their industries or businesses at the local level.”

On August 30, 2023, Travis County District Judge Maya Guerra Gamble signed an order declaring that the Act “in its entirety is unconstitutional.”²⁶ The State of Texas filed a notice of appeal the same day, and the appeal will be taken to the Third Court of Appeals in Austin, Texas.  Notably, the cities did not request—and the trial court did not grant—any injunctive relief. Accordingly, the Act will remain in effect pending the appeal. And, as a result, municipalities and counties will have to comply with the statute while the constitutional challenge works its way through the courts, and Texas businesses can sue them if they do not comply with it.

Texas Attorney General Provides Guidance on Local Solar Moratorium

In February 2023, the County Attorney for Franklin County, in northeast Texas about 100 miles east of Dallas, requested an opinion from the Texas Attorney General regarding the enforceability of a proposed county-wide moratorium²⁷ on commercial solar projects and the authority of the Franklin County Commissioners Court to issue such a moratorium.²⁸

Relying on certain provisions of the Texas Transportation Code²⁹ which empower commissioners courts throughout the state to make certain rules and regulations related to roads and transportation, the proposed moratorium, as submitted to the Texas Attorney General, prohibited:

a. Any person, organization, or entity from starting or engaging in the construction or operation of a commercial solar facility or testing for the suitability of sites for a commercial utility scale solar facility; and

b. Any officer, employee, office, administrative board or agency of the county from accepting, processing, denying or in any other way acting upon any application or request for any type of license, road permit, or approval related to a commercial solar facility.³⁰

In its August 2023 response, the Attorney General’s Office stated that a court would likely find Franklin County’s proposed moratorium invalid and unenforceable based on the Franklin County Commissioners Court’s lack of authority under Texas law.³¹ The reasoning provided by the Office of the Attorney General is summarized below:

Lack of Specific Authority: Under Texas law, the authority vested in commissioners courts is limited to that which is expressly granted by state law or necessarily implied from express powers. There is no statute specifically authorizing a commissioners court to impose a moratorium on the construction of a solar facility.³²

Lack of Authority Under the Transportation Code: In the language of the proposed moratorium, Franklin County bases its authority to impose the moratorium on certain provisions of the Texas Transportation Code.  While the Texas Transportation Code vests considerable authority in the commissioners courts of the state to regulate for the control, construction, maintenance and traffic of public roads, the moratorium reaches activity other than activity related to public roads and is thus invalid.³³

Lack of Authority Under the Health and Safety Code: In addition to considering the commissioners court’s authority pursuant to Texas Transportation Code statutes which are specifically cited in the moratorium, the Attorney General’s Office also considered a commissioners court’s possible authority under the Texas Health and Safety Code’s Section 121.003 which provides that “the commissioners court of a county may enforce any law that is reasonably necessary to protect the public health.”³⁴ In interpreting the term “enforce” Texas courts limit it to mean executing or effectuating an existing law, meaning that the language of Section 121.003 of the Texas Health and Safety Code does not empower a commissioners court to enact or create new laws. Therefore, because the proposed moratorium seeks to create new law rather than enforce a specific pre-exiting law, it is beyond the scope of the commissioners court’s authority and therefore invalid.³⁵

While the response from the Attorney General’s Office suggests that the specific Franklin County moratorium would be unlikely to be successful if challenged, it did not shut the door on moratoriums on solar development generally, noting that its response did not consider a county’s authority to impose a moratorium under its “other regulatory powers.” Franklin County’s proposed moratorium highlights strategies that are unlikely to be successful, but other counties throughout the state seeking to limit the development and construction of utility-scale solar facilities now have the knowledge and opportunity to attempt to craft county rules and regulations that may be more likely to prevail, if and when challenged.  

Despite some remaining uncertainties regarding the scope of the Act, the Attorney General Opinion, and pending legal challenges to the Act, the two in combination have—at least for the moment—tilted the playing field in favor of state preemption of local regulation.

---

¹ Malewitz, Jim, First Lawsuit Filed Over Denton’s New Fracking Ban, The Texas Tribune (November 5, 2014) https://www.texastribune.org/2014/11/05/denton-fracking-ban-sees-first-lawsuit/.

² Woellwarth, Lydia, Baker Botts secures dismissal of $2B pipeline lawsuit, World Pipelines (June 27, 2019) https://www.worldpipelines.com/project-news/27062019/baker-botts-secures-dismissal-of-pipeline-lawsuit/#:~:text=A%20Travis%20County%20district%20court%20this%20week%20dismissed,a%20US%242%20billion%2C%20430%20mile%20natural%20gas%20pipeline.

³ City of Laredo v. Laredo Merchants Ass’n, 550 S.W.3d 586 (Tex. 2018).

⁴ Appeal of Brazos Electric Power Cooperative, Inc. and Denton County Electric Cooperative, Inc. d/b/a Conserv Electric Form an Ordinance of the Colony, Texas, in the Alternative, Application for a Declaratory Order, PUC Docket No. 45175, Joint Applicants’ Proposed Findings of Fact, Conclusions of Law, and Ordering Paragraphs (October 21, 2016).

⁵ Tex. H.B. 2127, 88th Leg., R.S. (2023). [hereinafter, “The Act”].

⁶ Texas AG Provides Guidance on Local Efforts to Curb Solar Development, Baker Botts: Thought Leadership (August 21, 2023) https://www.bakerbotts.com/thought-leadership/publications/2023/august/texas-ag-provides-guidance-on-possible-solar-development-moratoriums.

⁷ The Act, Section 5, codified at TEX. AGRIC. CODE § 1.004.

⁸ The Act, Section 6, codified at TEX. BUS. & COMM. CODE § 1.109.

⁹ The Act, Section 8, codified at TEX. FIN. CODE § 1.004.

¹⁰ The Act, Section 9, codified at TEX. INSUR. CODE § 30.005.

¹¹ The Act, Section 10, codified at TEX. LAB. CODE § 1.005.

¹² The Act, Section 13, codified at TEX. NAT. RES. CODE § 1.003.

¹³ The Act, Section 14, codified at TEX. OCCUP. CODE § 1.004.

¹⁴ The Act, Section 15, codified at TEX. PROP. CODE § 1.004.

¹⁵ The Act, Section 7, codified at Tex. Civ. Prac. & Rem. Code § 102A.002.

¹⁶ Id., codified at Tex. Civ. Prac. & Rem. Code § 102A.003.

¹⁷Id.

¹⁸ The Act, Section 11, codified at TEX. LOC. GOV’T CODE § 51.002.

¹⁹ Bill Analysis, Tex. H.B. 2127, 88th Leg., R.S. (2023).

²⁰ Id.

²¹ Id.

²² The City of Houston, The City of San Antonio, and The City of El Paso v. Texas, No. 03-23-00531-CV (345th District Court) (August 30, 2023) (available at: https://mcusercontent.com/bbc8dea1a49ed98f626812405/files/d63760e6-7fba-907a-ba74-65e6fd3655f5/COH_Original_Petition_Challenging_HB_2127.pdf).

²³ Id. (available at: https://s3.documentcloud.org/documents/23932491/travis-county-court-judgment-in-hb-2127-lawsuit.pdf).

²⁴ City of Laredo v. Laredo Merchants Ass’n, 550 S.W.3d at 593.

²⁵ Id. (quoting City of Brookside Village v. Comeau, 633 S.W.2d 790, 796 (Tex. 1982)).

²⁶ The City of Houston, The City of San Antonio, and The City of El Paso v. Texas, No. 03-23-00531-CV (available at: https://s3.documentcloud.org/documents/23932491/travis-county-court-judgment-in-hb-2127-lawsuit.pdf).

²⁷ Letter and Attachment from honorable Landon Ramsay, Franklin Cnty. Att’y, to Off. of the Att’y Gen. at 1-2 (February 21, 2023), https://texasattorneygeneral.gov/sites/default/files/request-files/request/2023/RQ0500KP.pdf (“Request Letter” and “Attachment,” respectively).

²⁸ The Office of the Attorney General of Texas, Opinion No. AC-003 (August 16, 2023) https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2023/ac-0003.pdf

²⁹ TEX. TRANSP. CODE §§ 251.003, 251.016, 251.151, 251.152, and 251.153

³⁰ The Office of the Attorney General of Texas, Opinion No. AC-003 at 6.

³¹ Id. at 1-2.

³² Id. at 2.

³³Id. at 3-4.

³⁴ Id. at 4, citing TEX. HEALTH & SAFETY CODE § 121.003(a).

³⁵Id. at 4-5.

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.