ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

January 30,2007 

The Honorable Dennis Bonnen 

Chair, Committee on Environmental Regulation 

Texas House of Representatives 

Austin, Texas 78768-2910 

Opinion No. GA-0506 

Re: Whether a city may operate a commercial 

compostimulch business that sells its products 

outside the city’s limits (RQ-050%GA) 

Dear Representative Bonnen: 

You ask whether a city may operate a commercial compost/mulch business and sell its 

products outside ‘the city’s limits.’ You state that certain cities produce, market, and sell 

compostimulch products in direct competition with private businesses that produce and sell similar 

products. See Request Letter, supra note 1, at 1. You do not object to the cities producing 

compost/mulch and providing such products “to homeowners in their communities free of any 

charge, or using compost/mulch in their city parks and common areas.” Id. at 2. In your view here, 

“[t]he cities, however, should not be permitted to compete with private enterprises in the State of 

Texas nor in any way supply landscape contractors or sell bagged products to nurseries.” Id. 

As we understand it, in connection with the management and processing of municipal solid 

waste and wastewater, Texas cities such as Plano, Denton, Brenham, and Texarkana engage in 

“cornposting”’ of the solid waste and sludge’ and sell the resulting products such as compost, soil, 

and mulch to the public inside and outside their respective city limits4 Prior to these composting 

‘See Letter fkom Honorable Dennis Bonnen, Chair, Committee on Environmental Regulation, Texas House of 

Representatives, to Honorable Greg Abbott, Attorney General of Texas, at 2 (July 12,2006) (on file with the Opinion 

Committee, also available af http://w.oag.state.tx.us) [hereinafter Request Letter]. 

‘“Cornposting” is “the controlled biological decomposition of organic solid waste under aerobic conditions.” 

TEX. HEALTH & SAFETY CODE ANN. 5 361.003(6) (Vernon 2001); see also id. 5 361.421(2) (similarly defming 

,composting). “‘Compost is the disinfected and stabilized product of the decomposition process that is used or sdld for 

use as a soil amendment, artificial top soil, growing medium amendment, or other similar uses.” Id. $ 361.421(l). 

‘“‘Sludge’ means solid, semisolid, or liquid waste generated from a municipal, commercial, or industrial 

wastewater treatment plant, water supply treatment plant, or air pollution control facility, excluding the treated effluent 

from a wastewater treatment plant.” Id. 5 361.003(33). 

%%e Letter from A. Vance Kemler, Director, Solid Waste Services, City ofDenton, to Nancy S. Fuller, Chair, 

Opinion Committee, Office ofthe Attorney General of Texas, at 2 (Aug. 3 I, 2006) [h ereinafter Denton Briefl; see also 

(continued...) 
The Honorable Dennis Bonnen - Page 2 (GA-0506) 

programs, the cities buried the solid waste and sludge in landfills. See Denton Brief, supra note 4, 

at 2; Austin Brief, supra note 4, at 1. The revenues generated from these sales are used to fund the 

cost of the composting programs. See Denton Brief, supra note 4, at 7; Plan0 Brief, supra note 4, 

at 2; Brenham Brief, supra note 4, at 2. Based on your question and letter, we do not understand you 

to question the cities’ authority to engage in composting or to distribute compost products to the city 

residents. See Request Letter, supra note 1, at l-2. Rather you question only the cities’ authority 

to sell the compost products outside their city limits. See id. at 2. 

The cities you ask about are home-rule cities that derive their powers from article XI, section 

5 of the Texas Constitution.’ See TEX. CONST. art. XI, 5 5; Quick v. City ofAustin, 7 S.W.?d 109, 

122 (Tex. 1999); Lower Cola. Riv. Auth. v. City ofSan Marcos, 523 S.W.2d 641,643 (Tex. 1975). 

A home-rule city has “all the powers of the state not inconsistent with the Constitution, the general 

laws, or the city’s charter.‘? Proctor v. Andrews, 972 S.W.2d 729, 733 (Tex. 1998) (citing TEX. 

CONST. art. XI, 5 5). “[I]t is necessary to look to the acts of the legislature not for grants of power 

to such cities but only for limitations on their powers.” Lower Cola. Riv. Auth., 523 S.W.2d at 643. 

The Legislature may circumscribe a home-rule city’s broad power, but only if it does’ so with 

“unmistakable clarity.” Id. at 645. Accordingly, to answer your specific question, we first consider 

whether the sale of compost products comports with state law and next consider whether the 

Legislature has, with unmistakable clarity, limited a home-rule city’s authority to sell compost 

products outside the city limits. We assume, for purposes of this analysis, that the sale is consistent 

with the cities’ respective charters. See, e.g., Tex. Att’y Gen. Op. Nos. JC-0142 (1999) at 4 

(assuming for the purposes of such an analysis, that the city ordinance at issue was authorized by the 

city charter); JM-846 (1988) at 1 (“As a matter of policy, this off&does not interpret city charter 

provisions. .“). 

You do not reference and we have not found a state or federal constitutional provision that 

on its face is contravened by a city’s sale of compost products outside the city limits or by a city 

acting as a “market participant.” See Request Letter, supra note 1, at 2. The Commerce Clause to 

the United States Constitution, article I, section 8, clause 3, does not restrain a city from acting as 

a market participant. See, e.g., White v. Muss. Council of Constr. Employers, 460 U.S. 204,208 

(1983) (“[Wlhen a state or local government enters the market as a participant it is not subject to the 

‘(...continued) 

Letter from Thomas H. Muehlenbeck, City Manager, City of Plano, to Nancy S. Fuller, Chair, Opinion Committee, 

Office of the Attorney General of Texas, at 1 (Aug. 4,2006) [hereinafter Plano Brief]; Letter 6om David Allan Smith, 

City Attorney, City of Austin, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Aug. 3 1,2006) [hereinafter 

Austin Brief]; Letter from Gary L. Bovey, City Attorney, City of Bra&am, to Nancy S. Fuller, Chair, Opinion 

Committee, Office of the Attorney General of Texas, at 2 (Aug. 3 1, 2006) [hereinafter Brenham Brief]; Letter from 

Wiley Stem, III, Assistant City Manager, City of Waco, to Nancy S. Fuller, Chair, Opinion Committee, Office of the 

Attorney General of Texas, at 1-2 (Sept. 5, 2006) [hereinafter Waco Briefl; Letter from Adam S. Block, Texas 

Municipal League, to Nancy S. Fuller, Chair, Opinion Committee, Oftice of the Attorney General of Texas, at 1 (Aug. 

25, 2006) (all briefs on tile with the Opinion Committee). 

‘See http://www.municode.com/resources/online%2OLibra~.asp (city charters for Plano, Denton and 

Texarkana); http://www.ci.brenham.tx.us/CHOOO-~-PART~I~SPECIAL~CHARTER.pdf (Brenham) (websites last 

visited Jan. 12,2007). 
The Honorable Dennis Bonnen - Page 3 (GA-0506) 

restraints of the Commerce Clause.“); Reeves, Inc. v. Stake, 447 U.S. 429, 437 (1980) (“[T]he 

Commerce Clause responds principally to state taxes and regulatory measures impeding free private 

trade in the national.marketplace. There is no indication of a constitutional plan to limit the ability 

of the States themselves to operate freely in the free market.“) (citations omitted); U.S. CONST. art. 

I, !$ 8, cl. 3. 

Nor have we found any state statutes contravened, as a matter of law, by a city’s sale of 

compost products outside its city limits. Maximizing the sale of compost, in fact, would appear to 

be consistent with state laws generally encouraging reduction “to the maximum extent that is 

technologically and economically feasible” of municipal solid waste through “reuse or r&cycling” 

and of municipal sludge through “marketing and distribution of sludge and sludge products,” TEX. 

HEALTH&SAFETY CODEANN. 5 361.022(a), (b)(2), (c)(3) (V emon2001)(PublicPolicyConcerning 

Municipal Solid Waste and Sludge); see also id. § 363.002 (stating that it is the state’s policy to 

encourage reduction in solid waste and the proper management of solid waste, including its disposal 

and processing to extract usable materials); 30 TEX. ADMIN. CODE 5 332.2( 16) (2006) (Tex. Comm’n 

on Environmental Quality, Cornposting) (“Distribute--To sell, offer for sale, expose for sale . .“). 

And such activity would appear to be consistent with state law spetiifically encouraging cornposting 

and reuse of cornposting products. See TEX. HEALTH & SAFETY CODE ANN. 5 361.428(am) 

Vernon Supp. 2006); see also Schulman v. City of Houston, 406 S.W.2d 219, 222 (Tex. Civ. 

App.-Tyler 1966, writ ref d n.r.el) (stating that a home-rule city’s garbage compost plant is “for the 

public purpose of disposing of garbage and for the welfare of the community” and is “a lawful 

‘business andan operation not subject to abatement”). Texas Health and Safety Code section 361.428 

directs the Texas Commission on Environmental Quality (the “Commission”) to provide incentives 

for cornposting programs capable of reducing municipal solid waste streams that would be disposed 

in landfills and to adopt rules for permitting compost facilities. See TEX. HEALTH & SAFETY CODE 

ANN. 5 361.428(a)-(b) (Vernon Supp. 2006). Pursuant to this authority, the Commission has 

adopted rules governing the operation of cornposting facilities, including facilities operated by cities. 

See 30 TEX. ADMIN. COOS 5 332.3 (2006) (applicability); id. 5 332.2(38) (defining operator of 

facility), (42) (defining permit), (43) (defining person).6 Neither the state law provisions nor the 

Commission rules limit the sale or distribution of compost products to particular geographical areas. 

Finally, you do not reference and we have not found any statutory provisions whereby the 

Legislature has with unmistakable clarity limited a home-rule City’s authority to sell compost 

products. A letter submitted to this office suggests that chapter 756, subchapter G, Health and Safety 

Code limits a city’s authority to sell compost products outside its city limits.7 Section 756.101 

authorizes a city to “provide landscaping services, including tree-trimming, tree disposal, and 

‘See also Waco Brief, supra note 4, at 1 (“[Waco] is in the process of obtaining the necessary authorization 

from the [Commission] to produce compost .“); ,Letter from Thomas H. Muehlenbeck, City Manager, City of 

Piano, to Ms. Nancy Fuller, Chair, Opinion Committee, Office of the Attorney General of Texas, at 2 (Sept. 5,2006) 

(on file with the Opinion Committee) (“All compost facilities must comply with state regulations. The City ofPIano is 

listed with [the Commission] as a Notifications Operation.“). 

‘See Letter from Honorable Vicki Truitt, Texas House of Representatives, to Nancy S. Fuller, Chair, Opinion 

Committee, Oftice ofthe Attorney General ofTexas, at I (July 25,2006) (on file with the Opinion Committee). 
The Honorable Dennis Bonnen - Page 4 (GA-0506) 

recycling services” to persons inside and outside the corporate limits of the city “only if the 

governing body of the municipality makes written findings as required by Section 756.102.” TEX. 

HEALTH & SAFETY CODE ANN. § 756.101 (Vernon Supp. 2006). Section 756.102 requires the city 

to (1) identify the problem raising the need for providing the landscaping services; (2) identify the 

public health, safety, or welfare concern; (3) describe previous actions taken to address the problem; 

and (4) specify a definite time period necessary to address the problem. Id. 5 756.102. Subchapter 

G, by its terms, addresses landscaping services rather than cornposting of municipal waste and the 

sale of compost products. See id. $5 756.101-,102; see also SENATE COMM. ON NATCJRAL 

RESOURCES,BILLANALYSIS,T~~. S.B. 585,78thLeg., R.S. (2003) (enrolledversion) (“Thisbillalso 

authorizes certain landscaping services under certain conditions.“). It does not evidence with 

unmistakable clarity the Legislature’s intent to prohibit or limit a home-rule city’s authority to sell 

compost products outside the city limits. 

Your letter suggests that because the production and sale of compost products may be a 

proprietary rather than a governmental function, the cities may not sell the products to persons 

outside the city limits. See Request Letter, supva note 1, at l-2. The proprietary-governmental 

distinction has generally been used to determine a city’s immunity from suit for tortious conduct. 

Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex. 2006); see also TEX. CONST. art. XI, 5 13 

(authorizing the Legislature to define and reclassify for all purposes municipal functions that are to 

be consider&d governmental and those that are proprietary); TEX. CIV. PRAC. &REM. CODE ANN. 

5s 101 .OOl-,109 (Vernon 2005 & Supp. 2006) (Texas Tort Claims Act). The distinction may also 

be relevant to a city’s contractual liability. See Tex. Att’y Gen. Op. No. JC-0154 (1999) at 2-3 

(discussing estoppel against a city acting in its proprietary capacity as distinguished from its 

governmental capacity). In addition, it may be relevant under federal law with respect to the 

application of economic regulation under the Commerce Clause. See Jefferson County Pharm. 

Ass’n, Inc. v. Abbott Labs., 460 U.S. 150, 154 n.6 (1983) (“It is too late in the day to suggest that 

Congress cannot regulate States under its Commerce Clause powers when they are engaged in 

proprietary activities.“). But whether the cotipost activity is a proprietary or governmental function 

would appear to be irrelevant to a city’s authority to sell compost products outside the city limits and 

is not a distinction that makes a difference here. 

Lastly, your letter generally suggests that cities are not permitted to compete with private 

enterprises. See Request Letter, supra note 1, at 1-2. But you do not cite and we have not found any 

authority that as a matter of law prohibits cities from competing with private enterprises. 

Because a home-rule city’s sale of compost products to persons outside the city limits does 

not generally appear to contravene constitutional or statutory law, and because the Legislature has 

not with unmistakable clarity forbidden a home-rule city to sell compost products outside its city 

limits, we conclude that a home-rule city may sell compost products outside its city limits. 
The Honorable Dennis Bonnen - Page 5 (GA-0506) 

SUMMARY 

Because a home-rule city’s sale of compost products to 

persons outside the city limits does not generally appear to contravene 

constitutional or statutory law, and because the Legislature has not 

with unmistakable clarity forbidden a home-rule city to sell compost 

products outside its city limits, a home-rule city may sell compost 

products outside its city limits. 

KENT C. SULLIVAN 

First Assistant Attorney General 

ELLEN L. WITT 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

Sheela Rai 

Assistant Attorney General, Opinion Committee