Untitled Texas Attorney General Opinion ( 1988 )

TEE ATTORNEY'GENERAL
OF TEXAS
October 24, 1988
Honorable Bob Bullock Opinion No. JR-971
Comptroller of Public Accounts
L.B.J. State Office Building Re: Authority of the Racing
Austin, Texas 78774 Commission regarding the
classification of a racing
facility (RQ-15.67)
Dear Mr. Bullock:
You ask three questions concerning the authority of the
Texas Racing Commission to license horse racing tracks in
Texas. The Texas Racing Act, V.T.C.S. articles 179e through
179e-4, creates three classifications for horse racing
tracks, class 1, class 2, and class 3. V.T.C.S. art. 179e,
5 6.02. You advise us that the commission is considering
proposals to limit the number of class 2 and class 3
licenses it will issue, to deny pari-mutuel wagering
privileges to certain class 2 or class 3 racetracks, and to
create a licensing category for horse racing tracks without
wagering privileges. You ask whether the commission has the
authority to take such actions.
We begin by reviewing several established principles
concerning the power of administrative agencies. An admin-
istrative agency is a creature of statute and has no inher-
ent authority. SeXtOn v. Mount Olivet Cemeterv Association,
720 S.W.2d 129 (Tex. App. - Austin 1986, writ ref'd n.r.e.).
It may exercise only those powers granted by statute
together with those necessarily implied from such statutory
authority. See Citv of Shenn n Public Utilitv Commission
of Texas, 643 S.W.2d 681 ($exy' 1983); Attorney General
Opinion JM-903 (1988). An agency may not improvise upon its
express powers so as to confer upon itself indirectly a
power the legislature has not granted it expressly or by
implication. Sexton v. Mount Olivet Cemetery Association,
suvra . The power to grant, refuse, revoke, or cancel
licenses regulating businesses and occupations is subject to
these limitations. See Stauffer v. Citv of San Antonio, 344
S.W.Zd 158 (Tex. 1961).
p. 4941
Honorable Bob Bullock - Page 2 (JM-971)
Your first question is whether the commission may place
a numerical limit on the number of horse racing licenses
issued for class 2 and class 3 tracks. Section 6.02 of
article 179e provides:
(a) Horse-racing tracks are classified as
class 1 racetracks, class 2 racetracks, and
class 3 racetracks.
(b) A class 1 racetrack is a racetrack on
which racing is conducted for a minimum of 45
days in a calendar year, the number of days
and the actual dates to be determined by the
commission under Article 8 of this Act. A
class 1 racetrack may operate only in a
county with a population of not less than
750,000, according to the most recent federal
census, or in a county adjacent to a county
with such a population. pot more than four
class 1 racetracks mav be licensed and
overated in this stat e.
(c) A class 2 racetrack is a racetrack on
which racing is conducted for a number of
days not to exceed 44 days in a calendar year
except as otherwise provided by this section.
. . . The commission may permit an
association that holds a class 2 racetrack
license and that is located in a national
historic district to conduct horse races for
more than 44 days in a calendar year.
(d) A class 3 racetrack is a racetrack
operated by a county or a nonprofit fair
under Article 12 of this Act. An association
that holds a class 3 racetrack license and
that conducted horse races in I.986 may
conduct races for a number of days not to
exceed 16 days in a calendar year on the
dates selected by the association. (Emphasis
added.)
Sections 6.04(d) and 6.14(b) both provide that the
commission shall not issue licenses for more than three
greyhound racetracks in the state.
Those provisions make clear that when the legislature
intends to place numerical limitations on the issuance of
racetrack licenses, it does so expressly. Therefore, the -\
statute must be construed as containing no implied numerical
P. 4942
Honorable Bob Bullock - Page 3 (JM-971)
limitations on class 2 and class 3 racetrack licenses. &g
Attorney General Opinion JM-206 (1984).
The racing commission argues, however, that various
provisions of the Texas Racing Act grant the commission the
discretion to impose reasonable ceilings on the number. of
class 2 and class 3 licenses it issues. Section 6.04(a) of
the act states in part that the commission "may issue a
racetrack license to a qualified person if it finds that the
conduct of race meetings at the proposed track and location
will be in the public interest." Section 6.06(a) provides
in part that the commission may refuse to issue a racetrack
license if, after notice and hearing, it has reasonable
grounds to believe and finds that, among other things, "the
apppicant is engaged in activities or practices that the
commission finds are detrimental to the best interests of
the public and the sport of greyhound racing or horse
racing.". V.T.C.S. art. 179e, 5 6.06(a)(16). Article 179e-3
provides the following:
The appropriate section of the commission
shall require a complete personal, financial,
and business background check of the appli-
,I cant for a racetrack license, the partners,
stockholders, concessionaires, management
personnel, management firms, and creditors
and shall refuse to issue or renew a license
or approve a concession or management con-
tract if, in the sole discretion of that
section of the commission, the background
checks reveal anything which might be detri-
mental to the public interest or the racing
industry.
Those provisions, however, are addressed to the denial of
individual applications, which must be done
case-by-case basis. They give the commission no autE:ritG
to set numerical limits on the number of licenses issued for
a particular class of racetrack. Accordingly, we conclude
that the Texas Racing Commission has no authority to place
limits on the number of class 2 or class 3 racetrack licens-
es it will issue.
You next ask whether the commission may grant a class 2
or class 3 racetrack license but deny pari-mutuel wagering
privileges to an association operating a racetrack in a
jurisdiction where the voters have approved pari-mutuel
wagering on horse racing by local option election. We
conclude that the commission has no such authority.
p. 4943
Honorable Bob Bullock - Page 4 (JM-971)
Section 3.02 of the Texas Racing Act describes the
scope of the commission's power to regulate horse and
greyhound racing under the act:
In accordance with Section 3.01 of this
Act, the commission shall regulate and
supervise every race meeting involving
wagering on the result of greyhound or horse
racing. All persons and things relating to
the operation of those meetings are subject
to regulation and supervision. The commis-
sion shall adopt rules for conducting racing
involving wagering and shall adopt other
rules to administer this Act that are consis-
tent with this Act.
V.T.C.S. art. 179e, S 3.02. Section 1.03(25) defines
"racetrack" to mean "a facility that is licensed under this
Act for the conduct of pari-mutuel wagering on greyhound
racing or horse racing." An "association" is '*a person
licensed under this Act to conduct a horse race meeting or a
greyhound race meeting with pari-mutuel wagering." Id.
5 1.03(2). Thus, when subsections (c) and (d) of section
.6.02 speak of "associations" licensed to conduct horse races
on class 2 or class 3 "racetracks," such licensees are by
definition authorized to conduct horse races with
pari-mutuel wagering privileges. See also id. 55 6.01 (a
person may not conduct race meetings with wagering on the
results without a racetrack license): 6.08 (a horse racing
association shall make certain deductions from each
pari-mutuel pool); 11.01 (pari-mutuel wagering may be
conducted only by an association within its enclosure);
16.01(a) (commission shall not issue racetrack license until
voters have approved legalization of pari-mutuel wagering on
horse or greyhound races in the county at local option
election). The commission therefore may not issue class 2
or class 3 racetrack licenses that deny the holders of those
licenses the privilege of conducting races with pari-mutuel
wagering on the outcome of the races. Bexar County Bail
Bond Board v. Deckard, 604 S.W.Zd 214 (Tex. Civ. App. - San
Antonio 1980, no writ).
Your third question is whether the commission may
create a new licensing category for racetracks without
pari-mutuel privileges. "Licensing" is the issuance of a
permit confirming the licensee's right to do that which
would otherwise be unlawful. &iDsev v. Texas DeDartment of
r;l:h; 727 S.W.2d 61 (Tex. App. - Austin 1987, writ ref'd
. . . . The Texas Racing Act does not make it unlawful for
persons to conduct horse races without pari-mutuel wagering
P. 4944
:
Honorable Bob Bullock - Page 5 (JM-971)
,,-
on the results, and it is readily acknowledged that the act
does not expressly grant the commission the power to require
such persons to obtain a license from the commission.
However, it is suggested that V.T.C..S. article 179e-4
implicitly supplies such authority:
Any provision in this Act to the contrary
notwithstanding, the Texas Racing Commission
shall regulate all aspects of greyhound
racing and horse racing in this state,
whether not that racing involves
pari-mutueyrwagering.
This provision plainly extends the commission's power
to peculate horse racing to include racetracks on which
races are conducted without pari-mutuel wagering. The power
to regulate a business, however, does not embrace the power
to require licenses from persons subject to regulation
unless the legislature so provides. State Board of
Morticians v. Corteq 333 S.W.2d 839 (Tex. 1960). Your
third question, thereiore, is answered in the negative.
SUMMARY
The Texas Racing Commission is not
authorized to set arbitrary limits on the
number of class 2 or class 3 racetrack
licenses that may be issued in this state.
The commission is not authorized to grant a
class 2 racetrack license with the condition
that the license holder shall not conduct
horse races with pari-mutuel wagering on the
results. The commission is not authorized to
license racetracks that do not conduct horse
races with pari-mutuel wagering on the
results of the races.
JIM MATTOX
Attorney General of Texas
MARYEELLER
First Assistant Attorney General
LCU'MCCREARY
,-, Executive Assistant Attorney General
P. 4945
Honorable Bob Bullock - Page 6 (JM-971)
JUDGE ZOLLIE STEWLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Steve Aragon
Assistant Attorney General
P. 4946