 ’ OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS

   JOHN     CORNYN




                                               April 22,2002



Mr. Felipe Alanis                                    Opinion No. JC-0492
Commissioner of Education
Texas Education Agency                               Re: Whether, with respect to a contract valued at
170 1 North Congress Avenue                          $25,000 or more in the aggregate for a twelve-month
Austin, Texas 78701-1494                             period, a school district may participate in a
                                                     registered political subdivision corporation created
                                                     under section 304.001 of the Local Government
                                                     Code, and related questions (RQ-0453-JC)


Dear Mr. Alanis:

          Section 44.03 1 of the Education Code provides an exclusive list of methods by which a
school district may enter a contract valued at $25,000 or more in the aggregate for a twelve-month
period. See TEX. EDUC. CODE ANN. 5 44.03 l(a) (V emon Supp. 2002). Section 304.001 of the Local
Government Code authorizes political subdivisions generally to aggregate to “form a political
subdivision corporation . . . to act as an agent to negotiate the purchase of’ or to purchase electricity.
TEX. Lot. GOV’T CODE ANN. 9 304.001(b), (d) (V emon Supp. 2002). With respect to a contract
valued at $25,000 or more in the aggregate for a twelve-month period, your predecessor asked
whether a school district may authorize a registered political subdivision corporation, on behalf of
the school district, to “negotiate . . . and enter into a contract for electricity or other utility services.“’
Chapter 304 of the Local Government Code does not expressly include school districts in its
definition of “political subdivision.”        See id. $ 304.001(a). Moreover, section 44.031 of the
Education Code does not list a method that would encompass the negotiation or purchase of
electricity using a political subdivision corporation formed under section 304.001 of the Local
Government Code. See TEX. EDUC. CODE ANN. 8 44.03 1(a) (Vernon Supp. 2002). We accordingly
conclude that with respect to a contract valued at $25,000 or more in the aggregate for a twelve-
month period, a school district may not participate in a political subdivision corporation.

         Your predecessor also asked, as we understand it and again with respect to contracts valued
at $25,000 or more in the aggregate for a twelve-month period, whether a political subdivision
corporation in which a school district is participating must comply with the contracting methods set



         ‘Letter from Mr. Jim Nelson, Commissioner, Texas Education Agency, to Honorable John Comyn, Texas
Attorney General, at 1 (Oct. 9,200l) (on file with Opinion Committee) [hereinafter Request Letter].
Mr. Felipe Alanis   - Page 2                     (JC-0492)




forth in section 44.031 of the Education Code when it acts as the school district’s agent. See id.;
Request Letter, supra note 1, at 1. We do not address this question, having concluded that a school
district may not participate in a political subdivision corporation.

        Your predecessor    specifically   asked two questions:

                     1. May the board of trustees of a school district authorize a
                registered political subdivision aggregator under Section 39.3545,
                Texas Utility Code, to negotiate on its behalf and enter into a contract
                for electricity or other utility services?    Please comment on the
                applicability, if any, of Attorney General Opinions DM- 14 (199 1) and
                JC-205 (2000).

                     2. If your answer to question 1 is “yes,” must the registered
                political subdivision aggregator acting on behalf of the school district
                comply with the minimum purchasing requirements under Subchapter
                B, Chapter 44, Texas Education Code?

Request Letter, supra note 1, at 1.

         Because the first question explicitly cites two of this office’s previous opinions that pertain
to the delegation of a school district’s purchasing authority, we assume that the inquiry is whether
a school district may delegate authority to negotiate or purchase electricity to a political subdivision
corporation. Attorney General Opinion DM-14 concludes that a public school board is not statuto-
rily authorized to delegate to a food service management company the purchase of food products and
supplies because the purchase necessitates the exercise of “significant discretion . . . in all phases of
the competitive bidding process.” Tex. Att’y Gen. Op. No. DM-14 (1991) at 4. Attorney General
Opinion JC-0205 concludes that under section 44.03 1 of the Education Code a junior college district
has no authority to delegate the purchase of insurance to a designated broker of record. See Tex.
Att’y Gen. Op. No. JC-0205 (2000) at 1. “[U]se of a designated broker of record is not authorized
by section[] 44.03 1.” 1d. at 6. Before we focus on the delegation issue we presume has been raised,
we will summarize pertinent portions of chapter 44 of the Education Code, which governs certain
school district contracts, and chapter 304 of the Local Government Code, which governs political
subdivision corporations.

        Section 44.031 of the Education Code generally requires a school district to make each
contract “valued at $25,000 or more in the aggregate for” a twelve-month period using the method
“that provides the best value for the district.” TEX. EDUC. CODEANN. 8 44.03 1(a) (Vernon Supp.
2002). A school district may select from nine listed methods:

                    Except as provided by this subchapter, all school district
                contracts, except contracts for the purchase ofproduce or vehicle fuel,
Mr. Felipe Alanis   - Page 3                        (JC-0492)




                valued at $25,000 or more in the aggregate for each 12-month period
                shall be made by the method, of the following methods, that provides
                the best value for the district:

                    (1) competitive      bidding;

                    (2) competitive      sealed proposals;

                    (3) a request     for proposals,     for services   other than construction
                    services;

                    (4) a catalogue purchase . . . ;

                    (5) an interlocal contract;

                    (6) a design/build     contract;

                    (7) a contract to construct, rehabilitate, alter, or repair facilities that
                    involves using a construction manager;

                    (8) a job order contract for the minor                construction,   repair,
                    rehabilitation, or alteration of a facility; or

                    (9) the reverse auction procedure        ....

Id.; see Tex. Att’y Gen. Op. No. JC-0037 (1999) at 3 (stating that under section 44.03 1, school
district “first must evaluate which of the . . . listed purchasing methods will provide the best value”
and then “adhere to the procedures applicable to that purchasing method.“). “To the extent of any
conflict,” chapter 44, subchapter B of the Education Code, of which section 44.031 is a part,
“prevails over any other law relating to the purchasing of goods and services except a law relating
to contracting with historically underutilized businesses.” TEX. EDUC. CODE ANN. 8 44.031(e)
(Vernon Supp. 2002). A school district board of trustees may delegate its authority “under this
subchapter regarding an action authorized or required by this subchapter to be taken by a school
district to a designated person, representative, or committee,” but the board may not delegate
authority to take an action that “this subchapter” authorizes or requires the board of trustees to take.
Id. fj 44.0312.

         We consider here only school district contracts valued at $25,000 or more in the aggregate
for a twelve-month period. Chapter 44, subchapter B of the Education Code pertains only to school
district contracts valued at more than $10,000. See id. 54 44.03 1, .033. Section 44.03 1 applies to
contracts “valued at $25,000 or more in the aggregate for [a twelve]-month period.” Id. 8 44.03 1(a).
Section 44.033 applies to the purchase of “personal property . . . if the value of the items is at least
Mr. Felipe Alanis    - Page 4                  (JC-0492)




$10,000 but less than $25,000, in the aggregate, for a [twelve]-month period.” Id. 8 44.033(a).
Because the purchase of electricity is not personal property, we do not consider section 44.033 of
the Education Code. See id. 9 44.033(a); see also Tex. Att’y Gen. Op. No. DM-347 (1995) at 5
(discussing meaning of “personal property”).

         Section 304.00 1(b) of the Local Government Code permits political subdivisions     to aggregate
to negotiate the purchase of or to purchase electricity:

                         A political subdivision may join with another political
                subdivision    or subdivisions     to form a political subdivision
                corporation or corporations to act as an agent to negotiate the
                purchase of electricity, or likewise aid or act on behalf of the political
                subdivisions for which the corporation is created, with respect to their
                own electricity use for their respective public facilities.

TEX. Lot.   GOV’T CODE ANN. 5 304.001(b) (Vernon Supp. 2002). Section 304.001(d)             authorizes a
political subdivision corporation to “negotiate on behalf of its incorporating political subdivisions
for the purchase of electricity, make contracts for the purchase of electricity, purchase electricity,
and take any other action necessary to purchase electricity for use in the public facilities of the
political subdivision or subdivisions represented by the political subdivision corporation.”           Id.
8 304.001(d). For the purposes of subsection (d), “‘electricity’ means electric energy, capacity,
energy services, ancillary services, or other electric services for retail or wholesale consumption by
the political subdivisions.” Id. Section 304.00 1 specifically defines the term “political subdivision”
to mean “a county, municipality, hospital district, or any other political subdivision receiving electric
service from an entity that has implemented customer choice, as defined in Section 3 1.002, Utilities
Code.” Id. fj 304.001 (a); see also TEX.UTIL. CODEANN. 9 3 l-002(4) (Vernon Supp. 2002) (defining
“customer choice” as retail customer’s freedom to purchase electric services, “either individually or
through voluntary aggregation with other retail customers, from the provider or providers of the
customer’s choice and to choose among various fuel types, energy efficiency programs, and
renewable power suppliers.“). Finally, section 304.001 permits a political subdivision corporation
to recover expenses by charging the incorporating political subdivisions dues or “an aggregation fee
charged per kilowatt hour, or a combination of’ dues and an aggregation fee. TEX. LOC. GOV’T
CODE ANN. 8 304.001(e) (Vernon Supp. 2002).

         A political subdivision corporation formed under section 304.001 of the Local Government
Code is a “political subdivision aggregator” that must register with the Public Utility Commission
of Texas under section 39.3545 of the Utilities Code before it may provide “aggregation services in
the state.” TEX. UTIL. CODE ANN. 5 39.3545(a) (Vernon Supp. 2002); see also id. 5 11.003(4)
(defining “Commission”).       The section defines the terrn “political subdivision aggregator”:

                       In this section, “political subdivision aggregator” means a
                person or political subdivision corporation authorized by two or more
Mr. Felipe Alanis   - Page 5                   (JC-0492)




               political subdivision governing bodies to join the bodies into a single
               purchasing unit or multiple purchasing units to negotiate the purchase
               of electricity from retail electric providers for the facilities of the
               aggregated political subdivisions or aggregation by a person or
               political subdivision under Chapter 304, Local Government Code.

Id. 9 39.3545(b); see also TEX.LOC. GOV’T CODEANN. 5 304.002(a) (Vernon Supp. 2002) (relating
to powers of “political subdivision   aggregator”).

          The first question explicitly cites section 39.3545 ofthe Texas Utility Code, but chapter 304
of the Local Government Code appears more relevant to this issue. See Request Letter, supra note
1, at 1; see also TEX. UTIL. CODE ANN. 5 39.3545 (Vernon Supp. 2002). While section 39.3545 of
the Utility Code only requires a political subdivision aggregator to register with the Public Utility
Commission of Texas before it attempts to provide aggregation services, see TEX. UTIL. CODE ANN.
5 39.3545(a) (V emon Supp. 2002), the formation of a political subdivision aggregator, or “political
subdivision corporation,” as it is also called, is governed by chapter 304 of the Local Government
Code, see TEX. Lot. GOV’T CODE ANN. $9 304.001-.002 (Vernon Supp. 2002).

         We conclude, for several reasons, that a school district may not participate in a political
subdivision corporation created under section 304.001 of the Local Government Code if the value
of the electricity to be purchased is estimated to be $25,000 or more in the aggregate for a twelve-
month period.

         First, section 44.03 1 of the Education Code does not expressly include participation by a
school district in a political subdivision corporation as an available purchasing method. In previous
opinions, this office has explained that section 44.031 of the Education Code, which was first
adopted in 1995, establishes an exclusive “list of permissible purchasing methods for contracts over
a certain aggregate yearly value.” Tex. Att’y Gen. Op. No. JC-0205 (2000) at 6; see Act of
May 27,1995,74th Leg., R.S., ch. 260,§ I,1995 Tex. Gen. Laws 2207,2425-26. Attorney General
Opinion JC-0205 opines that a school district may not procure insurance using a designated broker
of record because it is not a purchasing method that section 44.03 1 lists. See Tex. Att’y Gen. Op.
No. JC-0205 (2000) at 6.

         Second, a school district’s participation in a political subdivision corporation does not fit
within any of the nine types of contracts expressly listed in section 44.031. Attorney General
Opinion JC-0037 concludes that a school district may purchase goods using a cooperative
purchasing program under chapter 27 1, subchapter F of the Local Government Code, if purchases
made thereby represent the best value, despite the fact that a cooperative purchasing program is not
included in section 44.03 l’s list of permissible purchasing methods. See Tex. Att’y Gen. Op. No.
JC-0037 (1999) at 8. According to the opinion, an agreement to participate in a local cooperative
purchasing program under chapter 271, subchapter F of the Local Government Code is a kind of
interlocal contract, which is explicitly listed as a permissible purchasing method in section
Mr. Felipe Alanis   - Page 6                   (JC-0492)




44.03 l(a)(5). See Tex. Att’y Gen. Op. No. JC-0037 (1999) at 9. Moreover, as we explain infra, the
statute providing for cooperative purchasing programs expressly includes school districts in its list
of local governments that may participate. See TEX.LOC. GOV’T CODEANN. 5 271.101(2) (Vernon
1999).

         Participating in a political subdivision corporation organized under section 304.001 of the
Local Government Code, by contrast, does not involve an interlocal contract as permitted by section
44.03 1(a)(5) of the Education Code. Of the nine permissible purchasing methods listed in section
44.03 1, the only possible option we see is the interlocal contract listed in subsection (a)(5). See TEX.
EDUC. CODE ANN. 8 44.03 l(a)(5) (V emon Supp. 2002). We presume for the purpose of this opinion
that forming a political subdivision corporation involves the use of contracts between the
participating political subdivisions to, for example, establish dues or fees assessed for the purchase
of electricity. See TEX. LOC. GOV’T CODE ANN. 8 304.001(e) (Vernon Supp. 2002) (permitting
political subdivision corporation to assess dues, aggregation fees, or both). Nevertheless, section
44,031(a)(5) refers only to interlocal cooperation contracts entered under chapter 791 of the
Government Code. See Tex. Att’y Gen. Op. No. DM-418 (1996) at 2-3 n.2 (defining “interlocal
contract” in section 44.03 1 of the Education Code as one formed consistently with chapter 791 of
the Government Code); see also TEX. GOV’T CODE ANN. 9 791.003(2) (Vernon Supp. 2002)
(defining “interlocal contract” as “contract or agreement made under this chapter”). Under chapter
79 1, an interlocal cooperation contract may be only a contract between local governments to perform
a governmental function or service that “each party to the contract is authorized to perform
individually.”     Id. tj 791 .Ol l(c)(2); see also id. 8 791 .Ol l(a). Because a school district is not
individually authorized to perform the services of a political subdivision corporation, it does not
appear that a contract entered in the formation of a political subdivision corporation under section
304.001 of the Local Government Code is an interlocal contract permitted by chapter 791 of the
Government Code.

          Third, in our opinion, a school district may not use a purchasing method provided by a statute
outside of the Education Code that is not expressly listed or included within those methods listed in
section 44.03 1 unless the statute explicitly permits school districts to do so. Section 44.03 1 provides
an exclusive list of “permissible purchasing methods for contracts over a certain aggregate yearly
value.” Tex. Att’y Gen. Op. No. JC-0205 (2000) at 6. Section 44.03 1(e) further directs that chapter
44, subchapter B of that code “prevails over any other law relating to the purchasing of goods and
services” to the extent of any conflict. TEX. EDUC. CODEANN. 9 44.03 1(e) (Vernon Supp. 2002).
For example, although a cooperative purchasing program created under chapter 271, subchapter F
of the Local Government Code is not expressly included in section 44.031’s list of permissible
purchasing methods, see Tex. Att’y Gen. Op. No. JC-0037 (1999) at 8, section 27 1.101 specifically
lists a school district as a type of local government that may participate. See TEX.LOC. GOV’T CODE
ANN. 4 271.101(2) (Vernon 1999). Section 27 1.102 of the Local Government Code authorizes a
“local government [to] participate in a cooperative purchasing program with another local
government or a local cooperative organization.” Id. 8 27 1.102(a). Section 271.101(2) specifically
defines the term “local government” to include a “school district.” Id. 8 271.101(2). In addition,
Mr. Felipe Alanis    - Page 7                   (JC-0492)




the cooperative-purchasing-program      statute expressly provides that “[a] local government that
purchases goods or services” through a cooperative purchasing program “satisfies any state law
requiring the local government to seek competitive bids for the purchase of the goods or services.”
Id. 9 271.102(c).    Thus, as Attorney General Opinion JC-0037 concludes, a school district may
participate in a cooperative purchasing program. See Tex. Att’y Gen. Op. No. JC-0037 (1999) at 9;
see also TEX. EDUC. CODE ANN. 8 44.03 1(a)(5) (Vernon Supp. 2002).

         Chapter 304 of the Local Government Code, on the other hand, does not expressly include
a school district in the definition of “political subdivisions” that are authorized to participate in a
political subdivision corporation, as we believe it must do to overcome section 44.031 of the
Education Code: “In this chapter, ‘political subdivision’ means a county, municipality, hospital
district, or any other political subdivision receiving electric service from an entity that has
implemented customer choice . . . .” See TEX. Lot. GOV’T CODE ANN. 8 304.001(a) (Vernon Supp.
2002). Thus, with respect to a contract valued at $25,000 or more in the aggregate for a twelve-
month period, a school district must comply with section 44.031 of the Education Code in the
absence of express inclusion within the definition of “political subdivision.”

         It has been suggested that section 304.00 1 of the Local Government Code, as a more specific,
recent enactment, prevails as an exception to section 44.031 .2 Where a general provision and
specific provision conflict irreconcilably, the specific provision “prevails as an exception to the
general provision, unless the general provision” was enacted later “and the manifest intent is that the
general provision prevail.” TEX. GOV’T CODE ANN. 5 3 11.026 (Vernon 1998). Initially, we do not
necessarily agree that section 304.001 is more specific than section 44.031. Certainly, section
304.00 1 relates more specifically to the purchase of electricity, but it relates generally to all political
subdivisions.    See TEX. LOC. GOV’T CODE ANN. $304.001(b) (Vernon Supp. 2002). By contrast,
section 44.031 relates more specifically to the contracts of school districts, although it applies
generally to all of a school district’s contracts that meet the value prerequisite. See TEX.EDUC. CODE
ANN. tj 44.03 1(a) (V emon Supp. 2002). More importantly, given that section 44.03 1(e) expressly
provides that section 44.03 1 prevails over any other law relating to contracts valued at more than
$25,000 in the aggregate for a twelve-month period, we believe that any exception to section 44.03 1
must be express. As we have shown, section 304.001 of the Local Government Code does not
expressly provide an exception to section 44.03 1 of the Education Code.

          Finally, because a school district lacks express authority to participate in a political
subdivision corporation with respect to a contract valued at $25,000 or more in the aggregate for a
twelve-month period, it may not delegate any authority to such a corporation under section 44.03 12
of the Education Code. See TEX. EDUC. CODEANN. 3 44.03 12(a) (Vernon Supp. 2002). A school
district’s board of trustees may delegate only that authority that a school district is required or
authorized to exercise. See id.



         2See Memorandum from Ray Martinez, Cantey & Hanger, Roan & Autrey, L.L.P., representing Texas CUC
Aggregation Project, Inc., to Don Lee, at 4 (July 24,200l) (on file with Opinion Committee).
Mr. Felipe Alanis - Page 8                  (JC-0492)




         Given our conclusion that section 44.03 1 of the Education Code does not permit a school
district to participate in a political subdivision corporation formed under section 304.001 of the
Local Government Code, we do not consider the second question: whether the political subdivision
corporation must comply with “the minimum purchasing requirements” under chapter 44, subchapter
B of the Education Code. See Request Letter, supra note 1, at 1.
Mr. Felipe Alanis   - Page 9                (JC-0492)




                                      SUMMARY

                        With respect to a contract valued at $25,000 or more in the
               aggregate for a twelve-month period, a school district may not
               participate in a political subdivision corporation established under
               section 304.001 of the Local Government Code. See TEX. EDUC.
               CODE ANN. 0 44.031(a) (V emon Supp. 2002); TEX. Lot. GOV’T
               CODE ANN. 5 304.001(b), (d) (Vernon Supp. 2002).




                                                      CORNYN
                                             Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee
