Is it constitutional for Texas to exempt real estate brokers in smaller counties from continuing education?

Texas AG Opinion DM-0042: Whether a Geography-Based Realtor CE Exemption Is Constitutional Is a Fact Question for the Courts

Plain-English summary

A 1991 amendment to the Real Estate License Act added a continuing-education exemption with a geographic line. The Real Estate Commission was to identify each broker licensed for ten years or more whose principal place of business, as of June 1, 1991, was in a county with a 1980 census population of 225,000 or less, and notify those brokers that they could opt out of continuing education for license renewal by paying a fee of up to $100. A House committee member asked whether an exemption from a professional licensing requirement based on geographic location is permissible, and whether it is legal to give consumers in some areas less protection than others based on location. The Attorney General read these as questions about the federal and state equal protection clauses and the state constitution's ban on local or special laws.

The Attorney General did not decide whether the exemption is valid. On the federal equal protection question, the opinion explained that classifications regulating occupations get only rational-basis review, under which courts rarely strike a statute down, and that on the face of the statute it could not say the geographic classifications ran afoul of the federal equal protection clause. It added that fully resolving the issue would require findings of fact, which an attorney general opinion cannot make. On the Texas equal-rights provision (article I, section 3) and the local-or-special-laws ban (article III, section 56), the opinion noted older Texas cases striking down occupational regulations classified solely by locale, but explained those cases either rested on other grounds or were materially different, that a modern court would likely apply a federal-style analysis, and most importantly that those cases were decided in court proceedings where evidence could be taken. Because the office cannot take evidence or find facts, it concluded that only a court could determine the validity of the geographic classifications. In short, the AG declined to resolve the constitutional questions, holding they turn on facts that cannot be settled in an attorney general opinion.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The Real Estate License Act (then V.T.C.S. article 6573a) has since been recodified into chapter 1101 of the Occupations Code, and the continuing-education provisions have been amended. Verify current law before relying on any specific rule or citation mentioned here.

Common questions

Did the Attorney General say the geographic exemption was legal or illegal?
Neither. The opinion declined to decide, concluding that whether the classification violates federal or state equal protection or the ban on local or special laws involves questions of fact that an attorney general opinion cannot resolve. Only a court could decide.

Why couldn't the Attorney General just answer the question?
Because the constitutional tests, especially under the Texas provisions, depend on factual findings about the real estate industry and the reasonableness of the geographic line. The office cannot take evidence or make findings of fact, so it left the merits to a court.

What did the opinion say about the federal equal protection standard?
It explained that occupational classifications get rational-basis review, under which statutes are usually upheld, and that on its face the geographic classification could not be called unconstitutional, though a full resolution would still require fact findings.

What were the older Texas cases about?
They struck down occupational regulations that classified solely by locale, but the opinion distinguished them as resting on other grounds or arising in different situations, and noted they came from proceedings where courts could take evidence.

Background and statutory framework

The exemption was added by Acts 1991, 72d Leg., ch. 553, amending section 7A of the Real Estate License Act, V.T.C.S. article 6573a. Section 7A(a) sets continuing-education requirements for renewing broker and salesperson licenses; new subsection (e) directed the Real Estate Commission to identify and notify qualifying brokers (licensed ten years or more, principal place of business on June 1, 1991 in a county of 225,000 or fewer people by the 1980 census), and new subsection (f) let those brokers opt out by notifying the commission in writing in October 1991 and paying a fee up to $100. The legislator framed the issue under U.S. Constitution amendment XIV and Texas Constitution article I, section 3 (equal rights), article III, section 1, and article III, section 56 (local and special laws). On federal review the opinion cited Pollard v. Cockrell for the rational-basis test, City of Cleburne v. Cleburne Living Center for its statement, Clements v. Fashing for the conceivable-basis formulation, and Korematsu v. United States and Shapiro v. Thompson as examples of suspect classifications and fundamental rights. On state review it cited Texas Optometry Bd. v. Lee Vision Center for the parity of the Texas and federal provisions, and older cases including Linen Serv. Corp. v. City of Abilene and Jackson v. State that struck down locale-based occupational regulations, while noting these required fact findings only a court can make. It cited prior Attorney General Opinions JM-1267 (1990) and JM-455 (1986).

Citations

Constitutional and statutory provisions:

• Real Estate License Act, V.T.C.S. article 6573a, section 7A, including subsections (a), (e), (f) (continuing education; geographic opt-out)
• Acts 1991, 72d Leg., ch. 553 (the amendment)
• U.S. Constitution amendment XIV (equal protection)
• Texas Constitution article I, section 3, and article III, section 1 (equal rights); article III, section 56 (local and special laws)

Cases:

• Pollard v. Cockrell, 578 F.2d 1002, 1012-13 (5th Cir. 1978)
• City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 440 (1985)
• Clements v. Fashing, 457 U.S. 957, 963 (1982)
• Korematsu v. United States, 323 U.S. 214 (1944)
• Shapiro v. Thompson, 394 U.S. 618 (1969)
• Texas Optometry Bd. v. Lee Vision Center, Inc., 515 S.W.2d 380 (Tex. Civ. App.-Eastland 1974, writ ref'd n.r.e.)
• Linen Serv. Corp. v. City of Abilene, 169 S.W.2d 497 (Tex. Civ. App.-Eastland 1943, writ ref'd)
• Jackson v. State, 117 S.W. 818 (Tex. Crim. App. 1908)

Prior Attorney General opinions referenced: JM-1267 (1990), JM-455 (1986).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0042
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1991/dm0042.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

September 16, 1991

Honorable Eddie Cavazos
House Committee on Insurance
Texas House of Representatives
P.O. Box 2910
Austin, Texas 78769

Opinion No. DM-42

Re: Validity of statute releasing real estate brokers in certain geographic areas from continuing education requirements (RQ-112)

Dear Representative Cavazos:

You ask about the validity of a 1991 amendment to section 7A of the Real Estate License Act, article 6573a, V.T.C.S. Acts 1991, 72d Leg., ch. 553, § 1.041, at 1910. Subsection (a) of section 7A provides for continuing education requirements for the renewal of real estate brokers' and real estate salesmen's licenses. The amendment in question added a new subsection (e) directing the Real Estate Commission, on or before September 25, 1991, to identify each real estate broker licensed under the act for ten years or more, and having on June 1, 1991, his principal place of business in a county with a 1980 census population of 225,000 or less, and to notify him that he may opt out of the continuing education requirements of the act in the manner provided for in subsection (f). New subsection (f) permits a real estate broker so identified and notified to opt out of the continuing education requirements for renewing his license if, after October 1, 1991, and on or before October 31, 1991, the broker notifies the commission in writing that he is opting out and pays a fee to cover administrative costs in an amount to be determined by the commission but not to exceed $100.

You ask specifically 1) whether such an exemption from a professional licensing requirement based on geographic locale is permissible, and 2) whether it is legal to deny certain consumers the same protection accorded other consumers based on geographical location. We understand your questions to be whether the geographical classifications of the exemption in question are valid under the equal protection provisions of the federal and state constitutions and under the state constitution's prohibitions regarding local and special laws. See U.S. Const. amend. XIV; Tex. Const. art. I, § 3, art. III, § 56. We limit our consideration here to those specific constitutional issues.

Federal equal protection challenges to statutory classifications made in regulating occupational pursuits are ordinarily reviewed under the so-called "rational basis" test. Pollard v. Cockrell, 578 F.2d 1002, 1012-13 (5th Cir. 1978).

The general rule is that legislation is presumed to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest,

Cf. City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 440 (1985).

In contrast to the "strict scrutiny" applied to statutory classifications burdening "suspect classifications" or "fundamental rights," judicial review under the rational basis test has, as a rule, upheld statutory classifications. The plurality opinion of the United States Supreme Court in Clements v. Fashing, 457 U.S. 957 (1982) stated that unless a state statute burdens a "suspect classification" or a "fundamental right," classifications made by the statute "are set aside only if they are based solely on reasons totally unrelated to the pursuit of the State's goals and only if no grounds can be conceived to justify them." 457 U.S. at 963; see also L. TRIBE, AMERICAN CONSTITUTIONAL LAW § 16-3 (1978) ("The Conceivable Basis Test").

It is not apparent that a "suspect classification" or "fundamental right" is burdened by the geographical classifications made by the continuing education exemption here. See, e.g., Korematsu v. United States, 323 U.S. 214 (1944) (race, ancestry as "suspect" criteria); Shapiro v. Thompson, 394 U.S. 618 (1969) (right to interstate travel as "fundamental"). Although the numerous letters and briefs we have received in connection with your request have raised substantial concerns as to the "rational basis" for the statutory classifications in question, in view of the rather minimal level of scrutiny it appears a court would apply under federal equal protection standards we cannot say that the geographical classifications in the new continuing education exemption on their face run afoul of the federal equal protection clause. We think that resolution of this constitutional issue would require findings of fact, which we would be unable to make in an attorney general opinion. See, e.g., Attorney General Opinion JM-1267 (1990). Only a court with its powers to take evidence on the relevant aspects of the real estate industry in Texas, and the reasonableness in that context of the exemptions in question, could make such a determination.

Texas' constitutional counterpart of the federal equal protection clause, found in article III, section 1, provides that "[a]ll free men, when they form a social compact, have equal rights." Modern Texas courts have generally held that no greater protection is afforded thereby than under the federal provision. See Texas Optometry Bd. v. Lee Vision Center, Inc., 515 S.W.2d 380 (Tex. Civ. App.-Eastland 1974, writ ref'd n.r.e.); Attorney General Opinion JM-455 (1986) (and authorities cited therein).

We do find several earlier Texas cases which announce that statutory occupational regulations that classify solely on the basis of locale contravene article III, section 1. See Ex parte [name garbled in scan], 109 S.W.2d 476 (Tex. Crim. App. 1937) (municipal ordinance imposing license "fee" only on merchants engaged in business less than a year); Ex parte [name garbled in scan], 78 S.W.2d 610 (Tex. Crim. App. 1934), and Linen Serv. Corp. v. City of Abilene, 169 S.W.2d 497 (Tex. Civ. App.-Eastland 1943, writ ref'd) (municipal ordinances requiring license fee for businesses located outside municipality but doing business in municipality); Jackson v. State, 117 S.W. 818 (Tex. Crim. App. 1908) (statute exempting barbers in, inter alia, towns of 1,000 population or less from license tax). We note first that these earlier opinions either included other grounds for their holdings or were directed to situations significantly different from the one here. (Jackson also struck down any license tax on barbers as violative of article VIII, section 1; the other cases cited involved exclusionary municipal ordinances.) More importantly, we believe a modern court would apply a different equal protection analysis, patterned on the contemporary federal approach, from that applied in these older cases. But again, and most significantly, while the above-mentioned opinions emanated from court proceedings in which evidence could be taken and findings of facts made as to the reasonableness of the provisions under attack, we cannot so take evidence or find facts in an attorney general opinion. Only a court could determine the validity, vel non, under article I, section 3, of the geographical classifications in question here.

Similarly, the resolution of whether the geographical classifications are viable under the prohibition on "local or special laws" in article III, section 56, of the state constitution would require findings of fact on such matters as the numbers of brokers having their designated principal places of business in locales falling within and without the population bracket created for purposes of the exemption and the problems experienced with brokers' competence in such locales. Such findings could only be made by a court. See, e.g., Ex parte Spring, 586 S.W.2d 482 (Tex. Crim. App. 1978).

SUMMARY

Whether the use of geographical classifications in the exemption for certain real estate brokers in section 7A, subsections (e) and (f), of the Real Estate License Act, from the continuing education requirements for license renewal violates federal or state constitutional equal protection requirements or the state constitutional prohibition on local or special laws involves questions of fact that cannot be resolved in an attorney general opinion.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY (Ret.)
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by William Walker
Assistant Attorney General