I have an update on this situation:
They told me that they have a right to give me a warning/ticket not for tags or registration or it being in plan sight.
As do most jurisdictions.
They told me the EPA and Health laws gives them a right on non-functional cars.
The loop hoop: I ask them what makes it a non-functional cars. Not running, no inspection, no registration, on blocks, taken apart, missing engine or tranny. The cop was cool enough to tell me if I have at least one of the tags, he can't touch my car. I was also told my neighbor ratted me out. Most of these types of issues are complaint driven. Remember this is in Texas. I don't know about other states. The EPA and Health laws.