Senate Bill 2038 was passed as amended on May 5, 2023. On October 25, 2023, the City of Grand Prairie filed suit against the State of Texas for declaratory relief from SB 2038. Their allegation is SB 2038 represents an unconstitutional delegation of legislative authority to private parties. The issue at hand is regulatory oversight over Extra-Territorial Jurisdiction.
In 1963, the Texas Legislature passed the Municipal Annexation Act. It created the Extra-Territorial Jurisdiction (ETJ). An ETJ is a buffer area that exists adjacent to, but outside of, a city’s boundaries. The Municipal Annexation Act gave every municipality the ability to create an ETJ. The municipalities, themselves, are given regulatory authority over the ETJ’s. They can extend anywhere from a half mile (population less than 5,000) to 5 miles (population more than 100,000). Since their inception in 1963, ETJ’s have been controversial due to their involuntary nature. The idea was for municipalities to identify, support, and encourage areas of future growth and service. Rural landowners outside of municipalities have routinely stood in opposition to ETJ’s and have championed efforts to have them changed legislatively.
Senate Bill 2038 was filed on March 3, 2023, with the intent to provide an option to those landowners. Under SB 2038, a resident of an ETJ with a population of less than 200 may file a petition with the municipality to be released from the ETJ. Additionally, the owner(s) of the majority of value of an ETJ may file a petition with the municipality to be released from the ETJ. In order to be approved, the petition must be signed by more than 50% of the registered voters of the ETJ, or by the owners of more than 50% of the collective property value of the ETJ, according to tax records. Senate Bill 2038 was passed as amended on May 5, 2023, and became state law on September 1, 2023.
As one can imagine, most cities in Texas almost immediately began receiving petitions for release from ETJ status. The City of Grand Prairie reported four individual petitions to be released from ETJ status at the date of their filing (October 25, 2023). According to the City of Grand Prairie, “SB 2038, effective September 1, 2023, allows individuals to “opt out” of a city’s ETJ with no notice to nearby property owners, no oversight by any branch of government, and without the required legislative consent of the governing body. Put simply, SB 2038 is an unconstitutional delegation of legislative authority to private parties and must be found unconstitutional.” The City of Grand Prairie continues, “SB 2038 provides absolutely no mechanism for the 49 percent of registered voters or owners of a “minority in value” to receive advance notice that their property is being included in an ETJ release petition or a meaningful opportunity to be heard prior to the purportedly automatic removal of their property from a city’s ETJ and object to their release.”
One of the most interested parties in this development has been builders/developers. As SB 2038 began to take shape, a number of developers, particularly in south Texas, were preparing to act on releasing themselves from ETJ’s, and thus, municipal oversight. The City of Grand Prairie has requested judgment of SB 2038’s unconstitutionality. That request is pending. The regulatory power struggle between municipalities and landowners will continue as this litigation plays out.
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