Does a nonprofit like AARP need a state license to run a paid driver safety course in Texas?

Texas AG Opinion JM-1272: Does a Nonprofit Need a License to Run a Paid Driver Safety Course?

Plain-English summary

The American Association of Retired Persons (AARP) offered a driver safety course to members and others over 50, charging $8, with the payoff being ticket dismissal and insurance discounts. AARP argued it should be exempt from Texas's driver-training school licensing law because it is a nonprofit, it charges only a nominal fee to cover costs, and its instructors are unpaid volunteers reimbursed only for mileage, copying, phone calls, and a small meal allowance. The Commissioner of Education asked the Attorney General whether AARP could run these courses without complying with article 4413(29c), V.T.C.S., the statute governing commercial driver-training schools and instructors.

The Attorney General said no, the licensing law applies. The statute defines a "commercial driver-training school" as any enterprise conducted by an individual, association, partnership, or corporation that educates or trains people to operate motor vehicles for "a consideration or tuition." AARP charges $8 for the course, and that fee is a consideration. Whether the organization actually turns a profit on the fee is irrelevant, because the statute has no exemption for entities that break even or lose money. The only exemptions are for training done by colleges, universities, high schools, and junior high schools as part of their normal programs. So AARP had to obtain a certificate of approval under the Texas Proprietary School Act.

AARP had leaned on history: even though a 1970 Attorney General opinion (Opinion M-682) had said that nonprofit driver-training programs charging only a nominal fee were still subject to licensing, the Department of Public Safety, which regulated these schools before the Texas Education Agency took over in 1989, had not required AARP or its instructors to be licensed. The Attorney General was not moved. An agency's past practice can help interpret an ambiguous statute, but it does not control when it conflicts with the statute's plain words, and a clearly wrong agency reading carries no weight, especially when it runs contrary to an Attorney General opinion the agency had already been given.

On the second question, the Attorney General held that an instructor who teaches a student who has paid for the training is teaching "for hire or for tuition" and needs an instructor's license. The phrase could arguably be read to turn on whether the instructor is paid, but the better reading, given the statute's consumer-protection purpose, is that it turns on whether the student paid. Letting a school that must be licensed staff its courses with unlicensed instructors would defeat the point of guaranteeing paying students a certain standard of training. (The opinion also noted that AARP's instructors were not truly uncompensated anyway, since they received a meal allowance.)

Currency note

This opinion was issued in 1990 and construes article 4413(29c), V.T.C.S., a since-repealed civil-statutes article whose driver-education licensing scheme has been recodified and amended over the following decades. Treat this page as historical context, not current legal advice. Anyone running or teaching a driver safety course in Texas should check the current Education Code and Texas Department of Licensing and Regulation rules before relying on this analysis.

Who this opinion affected (as of 1990)

AARP and similar nonprofit course providers: The opinion told them that charging any fee for a driver safety course brought them within the licensing law, regardless of nonprofit status, so they needed a certificate of approval to operate.

Volunteer instructors: The opinion meant that teaching a student who paid for the course triggered the instructor-licensing requirement, even for an unsalaried volunteer.

The Texas Education Agency: As the new regulator of driver-training schools after the 1989 transfer from the Department of Public Safety, the agency got confirmation that it could apply the licensing requirement to nonprofit providers, notwithstanding the prior agency's contrary practice.

Consumers taking the courses: The opinion reinforced that people paying for driver instruction were entitled to the standard of training the licensing scheme was designed to guarantee.

Common questions

Does a nonprofit have to be licensed to run a paid driver safety course?
Yes. The opinion concluded that any enterprise charging "a consideration or tuition" for driver instruction is a commercial driver-training school under article 4413(29c), and there is no exemption for nonprofits or for organizations that only break even.

Does it matter that the fee was only $8 and just covered costs?
No. The Attorney General said whether the provider makes a profit on the fee is irrelevant; the fact that it charges a fee at all brings it within the statute.

The Department of Public Safety never made AARP get a license. Doesn't that count?
Not enough to create an exemption. An agency's past interpretation can help with an ambiguous statute, but it will not be followed when it contradicts the plain words of the statute, and here it also conflicted with a prior Attorney General opinion given to that agency.

Does an unpaid volunteer instructor need a license?
Yes, if the student paid for the training. The opinion read "for hire or for tuition" to focus on whether the student paid, so a volunteer teaching a paying student is subject to the instructor-licensing requirement.

Who was exempt from this licensing scheme?
The statute exempted driver training conducted by colleges, universities, high schools, and junior high schools for their students as part of the institution's normal program.

Background and statutory framework

Article 4413(29c), V.T.C.S., regulated commercial driver-training schools and driver-training instructors. Section 2 barred any person, firm, association, partnership, or corporation from operating a commercial driver-training school without a certificate of approval under the Texas Proprietary School Act (Education Code chapter 32), except for training conducted by colleges, universities, high schools, and junior high schools as part of their normal programs. Section 1(a) defined a "commercial driver-training school" as any enterprise conducted by an individual, association, partnership, or corporation for the education and training of persons to operate or drive motor vehicles for "a consideration or tuition." Before September 1, 1989, the Department of Public Safety regulated these schools; the Texas Education Agency became the regulator after that date, with section 16 providing that references to the department are references to the agency (see Acts 1989, 71st Leg., ch. 813, § 4.30, at 3709).

AARP charged $8 for its driver safety course and argued for exempt status on the grounds that it is a nonprofit, charges only a nominal fee, and uses volunteer instructors. The Attorney General rejected those arguments, reaffirming Attorney General Opinion M-682 (1970), which had held that nonprofit driver-training programs charging a nominal fee were still subject to licensing. Because Government Code section 312.002(a) requires that statutory words be given their ordinary meaning, the $8 charge was "a consideration or tuition" regardless of whether AARP profited, and the statute contained no nonprofit exemption. The prior regulatory practice of the Department of Public Safety did not create an exemption, because an agency interpretation is not followed when it is contrary to the plain words of the statute (Brown Express, Inc. v. Railroad Commission, 415 S.W.2d 394, 397 (Tex. 1967); Citizens National Bank of Paris, Ill. v. Calvert, 527 S.W.2d 175 (Tex. 1975); Commissioner of Insurance v. Allstate Insurance Co., 579 S.W.2d 553, 557 (Tex. Civ. App. - Austin 1979, writ ref'd n.r.e.)), and a clearly erroneous agency construction carries no weight (Texas & New Orleans Railroad Co. v. Thompson, 284 S.W.2d 402 (Tex. Civ. App. - Austin 1955, writ ref'd n.r.e.)), particularly where it conflicts with an Attorney General opinion issued to the agency.

On the instructor question, section 5 prohibited any person from teaching or giving driver training "for hire or for tuition" without a driver-training instructor license, except for instructors in college, university, high school, and junior high school programs for regularly enrolled students. Reading the ambiguous phrase "for hire or for tuition" in light of the statute's consumer-protection purpose, the Attorney General concluded that an instructor who teaches a student who has paid for driver training teaches "for hire or for tuition" and must be licensed, since allowing a school that must be licensed to use unlicensed instructors would defeat the guarantee of a standard of training for paying students.

Citations

Statutory authorities:

• V.T.C.S. art. 4413(29c), § 1(a) (definition of commercial driver-training school); § 2 (certificate of approval requirement and school exemptions); § 5 (driver-training instructor licensing); § 16 (transfer of regulatory authority to the Texas Education Agency)
• Education Code ch. 32 (Texas Proprietary School Act)
• Government Code § 312.002(a) (ordinary meaning of statutory words)
• Acts 1989, 71st Leg., ch. 813, § 4.30, at 3709 (transition of regulatory authority)

Cases:

• Brown Express, Inc. v. Railroad Commission, 415 S.W.2d 394 (Tex. 1967)
• Citizens National Bank of Paris, Ill. v. Calvert, 527 S.W.2d 175 (Tex. 1975)
• Commissioner of Insurance v. Allstate Insurance Co., 579 S.W.2d 553 (Tex. Civ. App. - Austin 1979, writ ref'd n.r.e.)
• Texas & New Orleans Railroad Co. v. Thompson, 284 S.W.2d 402 (Tex. Civ. App. - Austin 1955, writ ref'd n.r.e.)

Prior Attorney General opinion referenced:

• Attorney General Opinion M-682 (1970) (nonprofit driver-training programs charging a nominal fee are subject to licensing)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1272
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1990/jm1272.pdf

Original opinion text

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

December 21, 1990

Dr. W. N. Kirby
Commissioner of Education
Texas Education Agency
1701 North Congress Ave.
Austin, Texas 78701-1494

Opinion No. JM-1272

Re: Meaning of "commercial driver-training school" and "driver-training instructor" under article 4413(29c), V.T.C.S. (RQ-2148)

Dear Dr. Kirby:

You have requested our opinion as to whether the American Association of Retired Persons [hereafter AARP] may offer driver safety courses without complying with the requirements of article 4413(29c), V.T.C.S. Section 2 of that statute provides:

No person, firm, association, partnership or corporation shall operate a commercial driver-training school unless a certificate of approval for the commercial driver-training school has been secured under the Texas Proprietary School Act (Chapter 32, Education Code), provided that training or classes conducted by colleges, universities, high schools, and junior high schools for students as part of the normal program for such institutions shall be exempt.

"Commercial driver-training school" or "school" is defined in section 1(a) as

any enterprise conducted by an individual, association, partnership, or corporation, for the education and training of persons, either practically or theoretically, or both, to operate or drive motor vehicles and for which consideration or tuition is charged for such services. (Emphasis added).

Before September 1, 1989, the Department of Public Safety regulated the licensing of commercial driver-training schools and instructors. Since that date, the Texas Education Agency has been the regulating agency, and section 16 provides that any reference in the statute "to the Department is a reference to the agency."[Footnote 1]

You indicate that the AARP offers a driver safety course to its members and to other persons over the age of 50, at a charge of $8.00, for the purpose of ticket dismissal and insurance discounts. When the Department of Public Safety was the regulating agency, it did not require the AARP or its instructors to obtain a license. The department did so despite a 1970 attorney general opinion addressed to the department stating that driver-training programs conducted by non-profit organizations were subject to the licensing requirement even if the organization charged only a nominal fee. Attorney General Opinion M-682 (1970).

The AARP contends that it should retain its exempt status because 1) it is a non-profit organization; 2) it charges no "tuition" but only a nominal fee to cover course costs; and 3) its instructors teach on a non-salaried volunteer basis, are reimbursed only for the expenses of mileage, photocopying and telephone calls, and receive a meal allowance of $5.00 for each of the two days of instruction.

Those arguments were rejected in Attorney General Opinion M-682, and we affirm the conclusions of that opinion. The definition of "commercial driver-training school," supra, is applicable to any entity that charges "a consideration or tuition" for its services. Section 312.002(a) of the Government Code declares that words in a statute "shall be given their ordinary meaning." Whether AARP makes a profit on its $8.00 fee is irrelevant for purposes of whether that charge is deemed "consideration or tuition." The fact remains that the AARP imposes the charge, and the statute contains no exemption for entities that do not make a profit on the instructional enterprise.

Nor does the construction formerly placed on article 4413(29c) by the Department of Public Safety act to exempt the AARP from its scope. Although a departmental interpretation of a statute may be useful when the statute is ambiguous, the interpretation will not be followed when it is contrary to the plain words of the statute. Brown Express, Inc. v. Railroad Commission, 415 S.W.2d 394, 397 (Tex. 1967); Citizens National Bank of Paris, Ill. v. Calvert, 527 S.W.2d 175 (Tex. 1975); see also Commissioner of Insurance v. Allstate Insurance Co., 579 S.W.2d 553, 557 (Tex. Civ. App. - Austin 1979, writ ref'd n.r.e.). A clearly erroneous statutory construction by an administrative agency carries no weight. Texas & New Orleans Railroad Co. v. Thompson, 284 S.W.2d 402 (Tex. Civ. App. - Austin 1955, writ ref'd n.r.e.). This is particularly true when the agency interpretation was contrary to an attorney general opinion issued to that agency. We conclude that the AARP is not exempt from the definition of "commercial driver-training school" in section 1(a) and thus must comply with the requirements of section 2 in order to operate such a school.

You also ask whether an AARP instructor, under the circumstances described, is subject to the licensing requirement set out in section 5 of article 4413(29c):

No person shall teach or give driver-training for hire or for tuition either as an individual or in a commercial driver-training school, or any phase of driver-training or education after January 1, 1968, unless a license as a driver-training instructor or supervisory driver-training instructor has been secured from the Department, provided that instructors in classes conducted by colleges, universities, high schools, and junior high schools for regularly enrolled students as a part of the normal program for such institutions shall be exempt.

We understand you to ask about a situation in which an individual pays to receive driver training but the individual who provides the instruction receives no compensation.[Footnote 2] Your question is whether the instructor in that situation teaches "for hire or for tuition."

In that context, the language "for hire or for tuition" is susceptible to two interpretations. One is that an individual who receives no compensation is not teaching for hire or for tuition. The other interpretation is that as long as the person receiving instruction has paid for that instruction, the teacher is teaching for hire or tuition. The latter interpretation, we think, better serves the purpose of article 4413(29c).

We think the legislature intended article 4413(29c) to protect consumers. The act contemplates that a consumer who pays for driver training will receive a certain standard of training. Allowing schools that must be licensed to use unlicensed instructors contravenes that purpose. We conclude, therefore, that an instructor who teaches driver training to a person who has paid to receive driver training teaches "for hire or for tuition" and is subject to licensing under section 5 of article 4413(29c).

SUMMARY

A private, non-profit organization that charges an $8.00 fee for driver safety instruction, and an instructor therefor, fall within the ambit of "commercial driver-training school" and "driver-training instructor" and thus must comply with the requirements of article 4413(29c), V.T.C.S., which regulates such operations.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Rick Gilpin and Sarah Woelk
Assistant Attorneys General

Footnote 1: In order to effect the transfer of regulatory authority, section 4.30 of the 1989 amendatory act provides: "The provider of a driver safety course approved by the Department of Public Safety may not continue the course after October 1, 1989, unless the provider files on or before that date an application for a certificate of approval under Chapter 32, Education Code. If the provider files an application on or before that date, the provider may continue the course during the period that the application is pending." Acts 1989, 71st Leg., ch. 813, § 4.30, at 3709.

Footnote 2: On the facts you present, the AARP instructors are not uncompensated since they receive a meal allowance.