Court Opinion

ID: 4130000
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:59:01.352496+00
Date Added: 2024-06-11T14:31:23.273393
License: Public Domain

@ffice of the !ZIttornep@enera
                                      %btateof Qexae
DAN MORALES                           November 17,1992
 ATTORNEY
      GENERAL

     Honorable Bill G. Garter             Opinion No. DM-182
     chairman
     Public Safety Committee              Re: Whether Tax Code sections 154.101(h)
     Texas House of Representatives       and 155041(h), establishing the Tax Code as
     P. 0. Box 2910                       the exclusive authority for the issuance of
     Austin, Texas 787682910              permits for engaging in business as a retailer
                                          of cigarettes and other tobacco products,
                                          preempt provisions of a city ordinance
                                          Licensingtobacco product retailers (RQ-300)

     Dear Representative Garter:

            You have requested an opinion from this office as to whether sections
    154.101(h) and 155041(h) of the Texas Tax Code, establishing that permits for
    engaging in business as a distributor, wholesaler, bonded agent, or retailer of
    cigarettes and other tobacco products shah be governed exclusively by the Tax
    Code, preempt a home-rule city ordinance establishing a licensing scheme for
    tobacco products retailers.

            Chapters 154 and 155 of the Tax Code levy a tax on the sale of cigarettes and
    other tobacco products, and establish a system for the administration, collection,
    and enforcement of the tax. A crucial mechanism for the enforcement of this tax is
    the requirement that all distributors, wholesalers, bonded agents and retailers of
    cigarettes and other tobacco products have a permit, issued by the state treasurer, to
    engage in business in their respective capacities. See Tax Code B 154.101(a). The
    treasurer may deny a permit application upon finding that the applicant’s business
    premises are not adequate to protect the tobacco products or revenue stamps, that
    the applicant ‘has not been truthful in the permit application, or that the applicant
    has previously violated provisions of the chapters. Id $# 154.107, 155.0481.
    Suspension or revocation of a permit may occur if the treasurer Snds that the permit
    holder violated provisions of the relevant Tax Code chapters or an administrative

                                        p. 957
Honorable Bill G. Carter - Page 2 W-182)

rule promulgated under them. Id 00 154.114, 155.059. Recently, the legislature
amended chapters 154 and 155 to provide the following:

           Permits for engaging in business as a distriiutor, wholesaler,
           bonded agent, or retailer shaU be govemed er&siv& by the
           pmvisiom ofthi cd?.

Tax Code 90 154.101(h), 155.041(h) (emphasis added); Acts 1991.72d Leg., ch. 409,
00 17.48 (e& June 7, KM).’

       The City of Arlington has enacted Grdinancc No. 91-15, codified as the Code
of the City of Arkgto~ “Health” Chapter, Article XI (effective August 1,199l).
The ordinance is intended “to protect the health, safety, and welfare of persons
under the age of eightaan (18) from the health risks caused by tha usa of tobacco
pmdMtS.l     CODE OF THE CITY OF hLU’IGTON,      “Health” chapter, art x& 0 11.02
(1991). To accomplish this goal, the ordinance requires tobacco products retailers
to obtain a “tobacco dealer’s license” from the city. As you state in your briec the
licensing provisions allow the city “to prevent a retailer, by license suspansion or
revocation, from selling tobacco products after one or more instances of tobacco
sales to minors.” Once the administrator of the licensing program revokes a license
held by a retailer, that retailer must remove all tobacco products from the place of
business. Id 0 11.15(C). Failure to comply with this or other provisions of the
ordinance is punishable by a fine not to exceed S2CKtO.Id 80 11.15(D), (E),
11.16(A).

                                    p.   958
Honorable Bill G. Carter - Page 3     0X4-182)

        The City of Arlington is a home-rule city. The Texas Constitution grants
such cities all the power of self-government not qprt&y denied them by the
legislature. Tex.Cons~ar~XI,~5;CiryofLMusv.DuUurMemha~~~&
ConcessioMins Ash, 823 S.W.2d 347 (Tex, App.-Dallas 1991, writ granted). The
Texas Constitution prohibits a home-rule city from enforcing any legislation
inconsistent with state laws or the state constitutior~ Tex. Const. art. XI, 0 5. The
Texas Supreme Court has instructed that, in determining whether an ordinance is
fatally inconsistent with state law on the same subject matter, courts must seek to
construe the two in a way that will leave both in effect, if possible. Ci@ of
Richoniron v. RespondIt? Dog Owen of Tacu, 794 S.W.2d 17 (Tex 1990).
Moreover, it is well established that “legislative intent to limit the broad powers of
home-rule cities must appear with mmdstakable clarity.” Cify OfDrJIpr, 823 S.W.2d
at 353 (citing Gxpur Christi v. CiAnentul Bur Sys, 445 S.W.2d 12,17 (T&x. Civ.
App.-Austin 1%9), writ refd nxc. per curimn,453 S.W.2d 470 (‘Rx. 1970)).

        The plain language of the relevant Tax Code provisions clearly demonstrates
the legislature’s intent to prohibit local governments, including home-rule cities,
from using a licensing system to regulate tobacco sales. As noted above, the Tax
Code provides that “b]ermits for engaging in [tobacco sales] shaIl be govemed
allusively @ the provisionr of this code.” Tax Code $0 154.101(h), 155.041(h)
(emphasis added). In addition, legislative history reveals that the legislature
intended to exclude local governments from the regulation of the tobacco industry
by permits. Senator Tee1 Bivins, in introducing sections 154.101(h) and 155.041(h)
before the Senate State Affairs Committee, testified as follows:

         This amendment makes it clear that it is only the Treasurer’s
         office who is to administer these permits and that local
         govermnents are not to be involved in this permitting process.

Hearings on S.B. 689 Before the Senate State Affairs Comm, 72d Leg. (Apr. 8,
1991) (statement of Senator Tee1 Bivins) (tapes available from Senate Staff
Services). It has been suggested that the Tax Code provisions and the city ordinance
can be harmonized because although both the statute and the ordinance require a
retailer to obtain a document before selling tobacco products, the two permitting
processes address distinct governmental concerns - ic, revenue collection in the
case of the Tax Code provisions, and health regulation in the case of the city
ordinance.     We believe, however, that the legislature, in enacting sections
W.lOl@) and 155.041(h) of the Tax Code, intended to vest the state treasurer with
the sole power to determine which businesses are entitled to permits to sell tobacco

                                    p. 959
Honorable Bill G. Carter - Page 4     (m-182)

products because a dual permit system would confuse and interfere with the tax
collection process. Thus, regardless of the city ordinanc& regulatory purpose, we
believe its permitting scheme is preempted by the Tax Code.

                                   SUMMARY

             A home-rule city ordhancc, which establishes a licensing
         system for the retail sale of cigarettes and other tobacco
         produe is preempted by sections W.lOl(h) and 155.041(h) of
         the Tax Code, which provides that permits to engage in business
         as a retailer of cigarettes and other tobacco products shaIl be
         governed exclusively by the Tax Code.

                                                DAN      MORALES
                                                Attorney deneral of Texas

WILL PRYOR
First Assistant Attorney General

MARYKJXLJZR
Deputy Assistant Attorney General

RENEAHICKS
Speclal Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Mary R Croutar
Assistant Attorney General

                                     p. 960