## THE ATTORNEY GENERAL OF 9?ExKAs

AUWIXN. TRXAH W37'11

March 1,1973

Honorable David Finney Chairman, StateAffairs Committee House of Representatives Austin, Texas 78711 Opinion No. II-15
Rc: Questions concerning constitutionalityof portions of H. B. No. 1, a Bill regulating the activities of certain State officers and State employees, etc.
Dear RepresentativeFinney:
At the direction of the StateAffairs Committee of the House of Representativesyou have furnishedus with a copy of Committee Amendment No. 1 to II. B. 1, often referred to as "The Ethics Bill", with the request thatwe examine its provisions, generally, for constitutionalquestions and, particularly,with reference to several specific questions you have asked. The Bill declares it to be the policy of this State that no legislator,elected or appointed state officer, or state employee "shallhave any interest, financialor otherwise! direct or indirect, or engage in any business transaction or professional activity or incur any obligation of any nature,which is in substantial conflict with the proper discharge of his duties to the public interest," and is designed to implement that policy. Its purpose is "to strengthen the faith and confidence of the people of Texas in their state government"by assuring that public business is being honestly and ethically conducted, a legitimate reason for the exercise of the police power. Legislative .effortsin that direction, however, must comport with the State and Federal Constitutions. To be valid, a law such as this must not violate the separation of powers principle; it must be reasonable and fair in its application in order to satisfy due process, privacy and equal protection righte; its penal provisions must not be vague; and it must not otherwise conflictwith

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Honorable David Finney, page 2 (H-15)

constitutionalprovisions.
A separate right of privacy has recentlybeen given formal recognition in Texas, described as the richt to be free from (1)

s suffering, shame or humiliation to a oerson of ordinarv sensibilities. Billings v.Atkinson, 1G Tex.Sup.Ct.Jourl81, J'an.27, 1973. Also see-~~-v7i------~.S. tion deci&~~%~----' 93 S.Ct. 705 (1973),theAborA Cali%rnia eth& law requiring financialdisclosurewas invalidatedby the Supreme Court of that State because it infringed too greatly upon such rights. Sea v. Young, City of Carmel-by-the- --- -.-----------

-----. -. -. -. -. _ _. _. _ __ 466 P.2d 225 (Cal.,1970).
It is our opinion that the public does have a legitimate interest in the current financial condiET?&' and recent financial history of those of its servantswho are in positions of authority where the temptation to improperly exercise public discretion for private gain may coincidewith the opportunity to do so, and that public inquiriesmay be searching in their scope so long as they are reasonably related to a purpose such as this bill implements. See Stein v. Hewlett, 289 D.D.2d 409 (Ill.,1972); Cf. New York Tirne??z,-'ii-;-%lEi%, 376 U.S. 254, 11 L.Ed.Zd tla-71~~aT,-------. 686, 84 --------. s.Ct.

On January 6, 1972, this office issued Opinion M-1039 declaring House Bill 203 (Acts1971, 62nd Leg., ch. 962,pp. 2906-12), amendingArticle 6252-9,V.T.C.S., (andsimilar in some respects to the bill consideredhere) to be unconstitutional. At that time, the Stein case -dpIi'ion

riiz~,! had not been decided. Gn.the privacy issue, principally on the 1970 decision of the California Supreme Court in City-of Carmel-by-the-Seav. Young, In the light of the .SEzxn ?%ss------- ----- v--v. ,we nowTGll~V&~f~e Cannel-----TSea opinion overbalanced the scales in favor of nrivate aii?i that a different shift in the balance will bk foundby-the. Texas Supreme Court and the United States Supreme Court when such questions reach them. If certain corrections are made, it is our opinion that the Bill couldmeet all the constitutional tests and, if enacted,be held valid.
I. zsaration of Powers Generally ------------------.------ . The separation of governmentalpowers found inArticle 2,

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Honorable David Finney, page 3 (H-15)
Sec. 1 of the Constitution of Texas is designed to protect freedom and to prevent excesses. It was not intended to make effective action impossible, and a constitutionalproblem arises only when one branch of the government interfereswith the functioningof another branch in a field constitutionallycommitted to it. State Board of Insurancev. -m-e-.
--.--.--.-

--.. ---------- Bet:?.,308 S.W.Zd 846 (Tex.1958).
In determiningwhether an exercise of power by one branch is an unauthorized invasion of the jurisdictionof another, the constitutional relationshipof the various departmentsmust be considered. The authorityof the State Legislature is plenary, limited only by express or implied restrictions contained in or necessarily arising from the Constitution itself. Government Services --w-m -----. InsuranceUnderwritersv. Jones, 368 S.W.Zd 5667Tex. I%Jl. The ----- ------ exercise%! sovernmen~>ii~~~itv over the svstem established for the administrationof oublic affairs throuahoirt the state is a legislativematter [Perkinsv,>ate, 367 S.W.2d 140 (Tex.1463)1, as is the declaratioii?Z-EiZlicpolicy. The proposed actwould apply alike to employees and officers of the state,with certain exceptionsmentioned hereafter. It has three separate spheres of operation: (1)itrequires financial disclosures; (2)itestablishesdirectory standards of conduct and creates The State Ethics Commission to investigate reported deviations from those standards: and (3)itdefines certain types of conduct as crimes subject to criminal penalties. We do not think theproposed actwould unconstitutionallyburden the executive or judicialdepartments in its general application.
In setting standardswith which all persons entrustedwith public responsibilitymust comply, the Legislature does not encroach upon the constitutionalprerogatives of the other branches of the government; it acts in their aid, as well as its own, to promote public confidence in the integrity of all branches of the government.
So long as the Legislature does not interferewith the discharge by the other branches of their constitutional duties, no constitutionalproblem results. State Board of Insurance v. Betts, supra. Requiring ethical iiiii?~~e~~~~ed of ~~l-&ther public servants can be no-unwarrantedburd&. -Norcan requiring disclosure of relevant financialmatters be condemned out of hand. And, it has always been a legislative function to define crimes and set punishments.

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The Bill does not purport to vary the constitutionalqualification for any office or position or to provide for the removal of officers or employeeswho fail to meet its standards, though a failure to complymay have other serious consequences. In the abstract, it creates no impediment to the proper functioningof any department of government; it does not on its face and, so far as we can see, will not in its operation,violate the separation of powers clause.
II. Application to Judges - _-_-----___---__-. The Bill does not, in our opinion, conflictwith Article 5, Section l-a of the Constitutionwhich creates the Judicial QualificationsCommission. Primarily, that Section establishes a retirement system for judges, and provides for censure, involuntary retirement or removal from office for certain types of wilful or persistent conduct, or for disability. It does not define any conduct as criminal. Nor does it provide anypunishment. The Constitutional Section contains no provision for disclosure of relevant information to the public. To the contrary,papers filedwith the Judicial QualificationsCommission and its proceedings are required to be held in confidence. Section l-a of Article 5 of the Constitution cannot be understood as withdrawing from the Legislature all power to regulate the conduct of judges. If that were the case, penal laws applying to the conduct of judicial officerswould be void as to them (forexample, seeArticles 159, 160, 184, 185, 196, and 197,Vernon's Texas Penal Code); and the Section would violate the Equal Protectionprovision of the Federal Constitution, inasmuch as itwould insulate judges from the criminal sanctions towhich other similarly situatedpersons are subject, and would seriously impair the system of checks and balances as applied to the limitationof judicialpower. 40 Tex. Cf. Ku_echler v. Wright, 600 (1874);Ferguson v. Maddox, 263 S.W. 88%-(r&%?~~~~~ --

-- m-m-v. Subsection (13)of Section l-a of Article 5 expresslyprovides that the Section shall not be exclusive in its operation. ExaG. v. State _-___.-

v.' n.r.e.7. 457 S.W.Zd 72 (Tex.Civ.App.,Eastland, 1970,writ reE
Parenthetically,we note that Section 2(2)(B)of the Bill, if read literally,would make its provisions applicable to elected judgesbut not to judges appointed to electivepositions, as, for example, to fill an unexpired term. This might pose a "classification"problem if left unaltered.

p.66Honorable David Finney,page 5 (H-15)

It is our opinion that no conflict exists and that the Legislaturemay make the provisions of the Bill applicable to Judges.
III. The Disclosure Provisions --_------- -------. The disclosureprovisions of Section 4 of the Bill have "classification"problems which, if left uncorrected,would also affect its constitutionality,we believe. The Texas Supreme Court has reiterated the strong presumption that the Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience,and that its discriminations are based on adequate grounds. It is not the function of the Courts to judge thewisdom of a legislative enactment. The necessity or reasonablenessof particular regulations imposed under the police power is a matter addressed to the legislativedepartmentwhose determination in the exercise of a sound discretion is conclusive upon the Courts. Legislative enactmentswill not be held unconstitutional and invalid unless it is absolutelynecessary to so hold. Texas State Board of Barber Examiners v: Beaumont-Barber

-----_- --

454-S.W.Zd-7987~~~~~~--However;-l~~~l;iiive sometimes constitute improper exercises of police power and, when they do, theywill be declared unconstitutional. Lone Star Gas Co. v. Kelly, 165 S.W.Zd 446 (Tex.,1942). -----_.---.------------ To be valid, a classificationshould be reasonable for the purpose of the legislation,. should be based upon proper and justifiable distinctions (consideringthe purpose of the law), should not be clearly arbitrary, should not be a subterfuge to shield one class and unduly burden another, and should not be a cover to oppress a class unlawfully in its administration. ergo v. B orgo, 402 S.W.Zd 143 (Tex.1966); Buchanan v. State, 480 S.W:ZssaT -+- Tex;. Crim. 1972);McDonaldv. Boa~-~~'-iion-~~~issioners of Chicagg., 394 U.S. 802,-~~E~-~~a~,-T~~~~~~~-7m-7T~~~~;------------ Faced with a "classification"problem in Reed v. Reed, 404 U.S. 71, 92 S.Ct. 251, 30 L.Ed.Zd 225 (1971),The S~p~~-~~ii% of the United States, in a unanimous opinion by Chief Justice Burger, said:

"In applying that clause [theEqual Protection Clause], this Court has consistently recognized that the FourteenthAmendment does not deny to States the power to treat different classes of persons in different ways . . . .The Equal

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Ronorable David Finney,page 6 (H-15)

Protection Clause of that amendment does however, deny to States the power to legjslate that different treatmentbe accorded to persons placed by a statute into different classes on the basis of criteriawholly unrelated to the objective of that statute. A classificationmust be reasonablenot arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstancedshallbe treated alike.' Royster Guano Co.

-.---- ~~5~~~-%:Ld. 989, 990,

. . . (404U.S. at 75-6). Aside from State officers, the classes recognizedby theproposed Bill in its disclosureprovisions are (1)employees earning state salaries of $15,000.00or more, than that amount. and (2)those earning less The formermust disclose; the latter need not. The declaredpurpose of the legislation is to further a policy that no state officer or employee engage in any transactionor incur any obligation in substantial conflictwith the proper discharge of his duties in the public interest. Certainly there is reason f?3?aZ?iGi%i~-that state employees commanding salaries above some certain high levelwill be engaged in the discharge of important duties in the public interest and ought to be subject to public examination,but it cannot be said with the same certainty that those receivinga salary below that figurehave a lesser degree of public responsibilitywhich does not require surveillance. When the State commands disclosureby some, but not all, and makes a crime of the failure to disclose, its lines of demarcationmust meet FourteenthAmendment tests. Further, its invasionsof privacy must not go so far as to leave unbalanced the individual and public rights.
A classificationof those required to disclose,based solely on salary level, proposed. is unreasonable for the purpose of the legislation

We believe the Supreme Court of Texas would overturn invasions of the right to privacy if the selection of thosewhose privacy is to be invaded is not based upon the relation of their functionand authority vis a vis the proper discharge of public business and the exercise-d-<Gernmental power. While this does not mean the Legislaturemust become submerged in details, these general principals and guidelinesmust form the basis for the classification. The classificationmay be broad but it must not

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Honorable David Finney,page 7 (H-15)

be arbitrarily selective on a basis unrelated to the achievement of its purpose, and it must not be so vague as to leave its applicability to persons, or to groups of persons, in substantialdoubt. The classificationof "disclosable" interests can also involve FourteenthAmendment considerations. Section 5 requiresdisclosure of some classes of property but not of others. Those discriminations are easier to justify in FourteenthAmendment terms than the salary distinction in the classificationof regulatedpersons. All persons required to disclosemust disclose informationdetermined by the Legislature to be important for the public to know. The choice of reportable informationbelongs to the Legislature and will not be questioned by the courts so long as it is not patently arbitrary or capricious. That the Bill may offer opportunities for the deception of the public by thosewho would appear to be open and frankwhile legally concealing important interests is a matter for legislative,not judicial, correction. A weak or easily evaded act may neverthelessbe constitutional. Upon a different matter, classification of interests in property to require the disclosure of property "held"during a certain period, in our view, is no more violative of constitutionalrights than the compelled-disclosureof property "acquired"or "sold" during thatperiod. Each may have relevance to the likelihoodof a person being influenced in his official decisions by considerations of private economic advantage to himself or his privi&. served in the Stein case vant andwhat ijnmot? ,supra., who is to saywhat will As obprove releIV. The CriminalAsEcts of Section 6 ----------- -------. The proposed Bill may not be altogether free from constitutional objection in the prohibitory aspects of Section 6. Subsections (a), (b), (cl! (d)and (e)may need attention. A statutemust not expose a potential act or to risk or detrimentwithout giving fairwarning of the nature of the proscribed conduct. A required course of conduct must not be stated in terms that oresent a substantial risk of miscalculation by those whose acts'are to be regulated. Texas Lizr Control Board v. Attic Club, 457 S.W.Zd 41 (Tex.,19rr--- ----------------
Except as modified by Art. 7, V.T.P.C., the rule is thatpenal provisionsmust be strictly construed. Strict constructionof the provisions of Section 6 could result in some of them being declared invalid or inoperative.

p.69HonorableDavid Finney, page 8 (H-15)

Also, though the "salary"mechanism is not used, Section 6 of the Bill, adopting the definitions of Section 2, has its own acute "classificationof persons" alike to all State employees. problem because it does not apply We doubt that anyone can legitimately be exempted from actingwith integritywhen othersmust do so or face criminalpunishment.
V. The Section 7 Standards of Conduct ---.---.------------I-------~-----I Section 7 of the Bill concerns standards of conductprescribed for all state officers and state employees coveredby theAct. As written, the provisions of the Section are only directory. NO sanctions are imposed if they are violated. They are intended to furnish a salutory guide for official conduct and to furnish criteriawhich may be used for disciplinarypurposes. However, a deviation from one or more of the standards is not a deviation from binding law, unless some~ other provision of lawmakes it so. VI. The State Ethics Commission --------------------. The Bill calls for the creation of the State Ethics Commission, the twelve members of which are to be appointedby various state officers. The appointivepower is usually attached to the executive department, [Walkerv. Baker, 196 S.W.2d 324 (Tex.1946)],but Article 4, Se~~~?i-~-~?-~&' Constitution of Texas provides that vacancies in State offices, except legislativeoffices,will be filled by the Governor unless otherwiseprovided bx law. Clearly, -i----r--- ---- ---. the Legislature is constitutionallyautho?lza-%z- otherwise" properly attach such power and, if it does, no unconstitutional encroachment results. A judicial office is not involved, (see Article 5, Section 2, Constitution of Texas) nor is the discharge of any constitutionalduty impaired thereby. Cf. State ex rel Peden v. Valentine, 198 S.W. 1006 (Tex.Civ.App.,Fc-&rth,-I?f17, ~~rii-~~~,r7-~nrouse BillNo. 537, 256 S.W. 573 (Tex.1923). In our opinion,

'---~~~-~~~ssT~~-~~nternplated is a "Board"within the meaning of Article 16, Section 30a of the Texas Constitution permitting staggered six years term.
Some of the powers given the Commission call for close examination, The power to issue advisory opinions [Section10(c)]may conflictwith the power invested in the Attorney General by Article 4, Section 22 of the Constitution. A similarprovision was ruled invalid in Stein v. Howlett

---------

-----.' 289N.E.2d 409 (Ill.1972). Section 11 of the Bill gives the Commission the power to subpoena witnesses and the production of pertinent books, accounts,

p.70.

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Honorable David Finney,page 9 (H-15) records and documents. Subsection (d)of Section 11 commands district courts, at the applicationof the Commission and without notice or hearing, to issue a judicial summons to a recalcitrantwitness to appear and give whatever evidence is required by the Commission. ae~~~~~a;--.

----- If thewitness still fails to give the evidence the Court is required to examine him and punish him for contempt if the Court finds that he did refuse ijixhoutreasonable cause or legal excuse to be examined;--' or answer relevant questions, or producepertinent records or documents. The procedure could violate the due process clauses of the Texas and Federal Constitutions by making the reluctantwitness hazard the deprivation of his libertywithout an opportunity to first obtain a judicial declaration of his rights.
In the same vein, the absence of provision for judicial review has constitutional connotations. While the Commission has no power to exact civil or criminalpenalties,or even to prefer charges, its fact-findingand reporting functionsenable it to destroy reputations. Article 1 Section 13 of the Texas Constitution guarantees that ".
. . every person, for an injury done him in his

. . . reputation, shallhave remedy by due course of law." The Supreme Court of Texas recognizes an inherent right of appeal from administrative actionwhere constitutionalor property riahts are affected. Houston v. Blackbird, 394 S.W.2d 159 -(Tex:1965); Board of --------, Fireme~~s-~~~~~~~-~~~e~nt Fund Trustees of Texa&s v:, -.---- --- - &xlton., 3% S.W.ld~~~~~~-~~~~~F;r,--~~~~~~-~y-very well be ai&il%le anyway,but the Bill does not assure it.
VII. Penalties -----.--- Section 18 apparently relates to the "confidential'part of Section 6(a) as well as Section 17. As a result, Section 18 and Section 19(b) assess different punishments for the same indiscretion, though Section 18 has a wider application. Convictions under neither Section 18 nor Section 20 require a criminal intent. Under Section 18 disclosures to persons honestly believed authorized to receive the informationwill still earn the penalty. Under Section 20(a) the falsity of an allegation is reason enough forpunishment, under its terms,no matter what be the bona fides of the public concernwhich prompted it. To that extent, Section 20(a) constitutes a forbidden abridgmentof the First Amendment to the Constitution of the United States, and cannot stand. New York Times Co. v. Sullivan, ---.-------- 376 U.S. 254, 11 L.Hd.Zd 686, 84 S.i%:-~~~-7~g~~:---' Moreover, the remainderof Subsection (a)of Section 20 conflicts in its punishmentprovisionwith the Penal Ccode. See Articles 1269,

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Honorable David Finney, page 10 (H-15)

1270, and 1275, subdivision 5, V.T.P.C. Subsection (b)of Section 20 subjects complainants to civil penalties even when their allegationsare true, if they are shown to have acted with mala fides. Short of a security danger or the impairmentof the discharge of constitutionalduties,we do not believe the First Amendmentwill permit any governmentalrepression, direct or indirect,of truthfulpolitical informationof----.--. fered by private citizens,no matter what motivates its rcvelation. Also seeArticle 1 Section 8, Texas Constitution.
VIII. _I_njunction

_---_-. The provisions of Section 21 permittingprivate citizens to initiate injunction or mandamus proceedings to enforce the proposed Act do not purport to deprive elected officers of any constitutional authority,and interpreted in that light,we believe the provision to be valid. s_ence v.._F_enchler, 180 S.W. 597 ----I. (Tex.1915); Scott v. Board of Adjustment, 405 S.W.Zd 55 (Tex. 1966). _-_-_---~-~~~~_----------__

IX. Severability __._._.__-

---- We think the three spheres of the Bill's operation (disclosure; standards and Ethics Commission; crimes andpunishments)while concerning only one subject, are so distinct and independent in nature that any invalidity in one of them need not affect the validity of the others, except insofar as the Ethics Commission is designated the safekeeperof disclosure statements.
X. SpecificQuestionsAnswered

_ _,__.__

-_----_----.-

------. We believe that the foregoingdiscussion answers each of your questions. However, for ease of reference,we restate the questions and our opinion as follows: Question: “Does the public disclosure of financial activity and sZi-iii'?gquirred

by Sections 4 and 5 of H. B. No. 1, violate a constitutionallyprotected right of privacy or any other constitutionallyprotected right as to either:

(1)any one or more classes of persons required to file the statement;or

(2) any one or more items or categories of financial interest or activity required to be disclosed and specificallyas to

p.72Honorable David Finney,page 11 (H-15)

the provisions in Section 5(a)(2), (3)and (5)in that these sections require the disclosure of certain interests that are held, acquired or sold during the reportingperiod?"
Answer: We answer "yes" as respects the classificationof persons, _.-.-. -ii-.-. and no" as respects disclosable interests and activities. Question: "Does Section 2(2)(d) of II.B. No. 1 conflictwith Ar%~cl~-5 Section l-a(6) of the Texas Constitution by the omission of certain judges?"
Answer: NO. Section 2 of the Bill, in defining "State officer" iii%i&s elected officerswhich, in turn, includes,under Section 2(2)(D) judges of certain enumerated state courts, but does not include county and municipal judges, or judges appointed to office, all of whom are listed in subsection (6)Aof Section l-a of Article 5, of the Constitution as being subject to removal formisconduct. There is no conflictbecause the Bill does not effect removal, but there is a classificationproblem in impliedly exempting aEp_ointees to elective offices fromprovisions applicable to persok elected to such positions. Question: "Do Sections 6 and 7 of the H. B. No. 1 conflictwith 

### E~~~l~T, Section l-a(6) of the Texas Constitutionwherein the Constitution states that standards of ethics are to be measured by a 'wilfuland persistent conduct' standard?"
Answer: No. --.--.-. Question: --.-.-.-- -. "DO the provisions for prohibited acts and the statement O? standards in Section 6 and 7 of H. B. No. 1 and the standards stated in Article 5, Sec. 1-a(6)A of the Texas Constitution impose upon judges greater standards and punishments than those applicable to other state officials?"
Answer: No. ----.--.-. Question: "Wae the constitutionalgrant of powers to the Judicial ~iiiillIiE5kions

[Commission]concerning the ethics of judges [a]grant which can be added to or changed by the Legislature?"
Answer: No. But it concerns only retirement removal and official -_.-._.--- censure. The Legislature could not add to the constitutionalgrounds for removal of a judge.

p.73Honorable David Finney, page 12 (H-15)

Question: --.-. - .-.-.--. "With respect to the judges, does the establishmentof a State Ethics Commission and the provisions concerning itspowers and procedures conflictwith the provisions of Article 5, l-a, Sets. (2)through (9)and Sec. (11)of the Texas Constitution which creates the Judicial Qualifications Commission and states its powers and procedures?"
Answer: NO. -------.. Question: "Does the subjection of judges to the jurisdictionof both-x%-State Ethics Commission and the Judicial Qualifications Commission,without subjecting other officials to both powers, violate the equal protectionprovisions of the U. S. Constitution?"
Answer: No. -----.-. Question: ---. p-GGhment, "DoesSection 19-b of H. B. No. 1 which imposes felony

when consideredwith Article 5, Section l-a(5), (6) and (9)of the Texas Constitutionwhich imposes on judges sanctions and punishment of enforced retirement, censure or removal from office, violate the equal protectionprovision of the U. S. Constitution?"
Answer: No. _.-_--.-. Question: "DoesH. B. No. ~--I-. ---. -,. 1 conflictwith the grant of powers over 3udges to the Judicial QualificationsCommission?"
Answer: No. --.-----.
6 UMMARY

So long as the classificationof person and subjects covered is not unreasonable, the Legislaturehas the power to (1)requireby ethics legislation that classes of state officers and employees in places of authority disclose information concerning relevant aspects of their financial life; (2)toprovide criminal sanctions for specific unethical conduct (so long as the prohibited conduct is describedwith sufficient definition);and (3)toestablish an Ethics Commission for investigating complaints of unethical conduct on the part of such state officers or employees, formaking findingson those complaints,and for supervising the disclosureprovisions.

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ilonorable David Finney, page 13 (H-15)

The fact thatpersons subject to the Ethics legislationmay also be subject to other rules of law governing their ethical conduct, does not alone render the proposed legislationunconstitutional. Very truly yours,

JOHN L. HILL c Attorney General of Texas

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