The Empire Strikes Back: Cities Sue to Reclaim Undemocratic Power Over ETJs

As discussed in prior blog posts (here and here), the Texas Legislature passed Senate Bill 2038 (SB 2038) in May 2023. This new law gives property owners the power to get their land out of a city’s extraterritorial jurisdiction (ETJ) and escape the nonrepresentative regulation of land in an ETJ. Before SB 2038, cities could regulate land in their ETJs even though ETJ residents could not vote in city elections—and Texas law provided no path for landowners to escape this undemocratic state of affairs.  

ETJ landowners can now choose to stay or go. 

Unhappy with the new law, the City of Grand Prairie (supported by other cities and the Texas Municipal League) has asked the courts to take away that choice, arguing that SB 2038 is unconstitutional and otherwise illegal. 

Pre-SB 2038 Landscape 

Grand Prairie’s lawsuit—filed in Travis County District Court on October 25—is the latest salvo in a decades-long struggle between Texas cities, which seek to expand their tax bases, and the Texas Legislature, which seeks to protect property rights and curb abusive annexation and regulation by cities. 

This back-and-forth struggle first came to a head in 1963, when the Texas Legislature began requiring cities to provide newly annexed land with the same level of municipal services that they provided elsewhere.  

But city officials, facing unprecedented population growth and wanting more power for themselves, employed novel ways for their cities to annex more land, increase their tax bases, and take away property rights through regulation. 

In the 1980s, 1990s, and early 2000s, the Legislature responded to new types of municipal abuses by enacting more reforms to protect landowners. But, with each reform, cities looked for new ways to skirt the law. 

In 2019, the Legislature seemingly gave firm control back to landowners by requiring cities to obtain landowner consent for most annexations.  

Cities then shifted tactics by exerting more control over land in their ETJs—a perimeter zone just outside city limits. Directly violating state law, some cities began killing land deals by telling landowners and developers that they could not develop land in ETJs for certain high-value uses. Unable to annex new land, cities instead pressured landowners to consent to annexation or development agreements in exchange for the cities’ dropping objections to land development and particular land uses, which was a power that cities never properly had under state law. 

Landowners and their allies asked the Legislature to intervene. The Legislature responded to the cities’ rampant abuses of ETJ power by enacting SB 2038. 

 The Cities’ Lawsuit 

It’s no surprise that cities have challenged SB 2038. 

The empire always strikes back. 

The Texas Municipal League—using the City of Grand Prairie (the City) as its plaintiff—advances three main arguments: 

City’s argument #1: SB 2038 is an unconstitutional “private delegation of legislative authority” because it gives individual landowners the power to decide whether to remove their land from the ETJ.  

Answers: 

• ETJs are a creation of the Legislature. Cities have no constitutional right to have an ETJ. As such, the Legislature has ample power to define what ETJs are, what land is in them, what land can get out, and the processes for getting in and out. The Legislature could get rid of the whole concept if it wanted to, so it would be strange to suppose that the Legislature lacks the power to give landowners a path for removing land from an ETJ. To paraphrase scripture: The Legislature giveth; the Legislature taketh away. 

•  Under state law, landowners regularly use petition processes to get their land out of a city. And we’re not talking just ETJs here; we mean people can use petitions to get out of a city itself. These petition processes include, for example, situations where a city doesn’t provide full municipal services to the land. So Grand Prairie’s argument is radical. It’s not just an attack on one law. Instead, it effectively asks the courts to invalidate all petition processes giving landowners power to follow a legislatively prescribed path to get their land out of city control.  

• SB 2038 fixed the real constitutional issue here—whereas the City’s argument, if accepted, would compound constitutional concerns. Before the new law, there was a serious problem: ETJ landowners and their land could be regulated by cities even though the landowners could not vote in city elections. This was regulation without representation. Now, landowners can choose to get out of that undemocratic situation. In response, the cities are doubling down on their authoritarian instincts. According to the cities, it’s not enough that ETJ landowners can’t vote for the people who regulate them; the City’s argument goes a step further and says that the landowners’ state representatives are powerless to fix that problem, too. The City’s argument is about the most undemocratic position one can imagine. 

City’s argument #2: SB 2038 conflicts with §42.023 of the Local Government Code, which provides that a city’s ETJ generally may not be reduced without the governing body’s consent by ordinance or resolution. 

Answers: 

• Section 42.023 provides a general rule that reductions to a city’s ETJ must be done with the consent of city council through a resolution or ordinance. But the Local Government Code then provides multiple specific provisions obligating a city to release a petitioner’s land from the ETJ. See, for example, §42.025 (municipality “shall release” eligible property); §42.0251 (municipality “shall release” area involving a gated community as long as the petition is signed by at least 80% of the owners of the area). 

•  The Legislature simply followed this same tried-and-true approach when it enacted SB 2038. See, for example, §42.105(c) (municipality “shall immediately release” the area covered by a petition); §42.155 (municipality “shall immediately release” the area subject to a successful election).  

• These examples—each ordering that cities “shall release” covered areas from their ETJs—would make no sense if a city council could simply withhold its consent and thereby nullify the Legislature’s mandates.   

• Thus, there are at least two answers to the City’s argument about §42.023’s consent requirement. First, specific requirements ordering a city to release land from an ETJ through a petition process—as in §42.025, §42.0251, and SB 2038 itself—prevail over §42.023’s general rule. Second, courts could harmonize § 42.023’s consent requirement with the Legislature’s mandatory-release requirements as follows: when a petition or election has satisfied statutory requirements, the law imposes an obligation on cities to issue an ordinance or resolution consenting to the release.  

City’s argument #3: SB 2038’s petition mechanism, which mandates the release of an area if the petition is signed by more than 50% of the area’s registered voters, is unconstitutional. The concern is about non-petitioner landowners (49% or fewer) in the area who might not get notice of the petition and an opportunity to be heard before their land is released from the ETJ.  

Answers: 

• This is really an argument that a minority, non-petitioner landowner should make. Courts will ask whether cities have standing to raise the argument at all.   

• We’ve never seen a situation where a petitioner seeks to have someone else’s property removed from an ETJ. In practice, petitioners apply to have their own land released, not someone else’s.  

• If the minority-landowner situation ever happened in reality, there’s an easy solution. Those landowners could ask cities to let them back into the ETJ. And cities—which love having more power, especially over constituents they don’t have to answer to—will let them back in. 

What to do now? 

As predicted and predicted again, Texas cities are determined to reassert control over ETJ areas.  

If you own property in an ETJ, it’s time to act. Decide whether removing your land from your ETJ is the best option for you. If it is, talk to a lawyer about getting out—now, before it’s too late.  

Cobb & Johns are Special Forces for Complex Property and Government Disputes.