    .




                                        The Attorney                      General          of Texas
JIM MAlTOX                                                        hgcat      28,   1985
4ttorney General


Su~rrmr Court BulldIng                 Mr. Bob E. Bradley                                       opinion     No.    m-340
P. 0. aor 12549                        Executive   Director
4urtin. l-x. 70711.2546                Texas State    Board of                                  Re:     Whether the State Board of
51214752501
                                          Public   Accountancy                                  Public    Accountancy     may require
Telex 9101674-1367
                                       1033 La Posada.      Suite         340                   ;tg:;nt6        for    licensing       to
Tdeco~ier      51214750266
                                       Austin,   Texas      78751                                            character      reference6
                                                                                                 from Texas residents
714 J4ckx.n.     Sulie   700
Dallas. TX. 752024506
                                       Dear   Mr.    Bradley:
2141742.6944

                                              On behalf     of the Stste Board of Public Accountancy,                      you question
4824 Alberta Ave.. Suite         160    the constitutionali~r          of the board’6         Substantive       Rule 511.21    in light
El Paso. TX. 799052793                 of    the   Supreme      Court’s      recent     decisiou       in    Supreme     Court   of    New
9156333464                             Rampshire v. Piper,          mm-  U.S.    -,     105    S.Ct.    1272   (1985).     Pou also    ask
                                       whether    the PLper ca!w applies            to section       12 of the Public       Accountancy
h.    has.    sw   700
                                       tact of 1979.      article     41a-1,    V.T.C.S.        Both provisions        deal vith    state
Hw,,cm,    TX. 77002~3111               residency     issue6      relevant      to    certification        as    a certified      public
71312235666                             accountant     in Texas.

                                              The primary     p~,oviaion      in  queation     is    an administrative                rule
606 Broadway.      Suits 312
                                       enacted    pursuant     to    the    board’s     authority       to    promulgate             rules
 Lubbock. TX.     79401.3479
 606!747.5238                          necessary   to effect     the Public      Accountancy     Act.     V.T.C.S.   art.           41a-1.
                                       %6(a).    The rule   is related      to the requirement        that a certified              public
                                       accountant   In Texas     s,hall he a person      of “good moral character.”                     -Id.
 4309 N. Tenth.    Suite     8
                                       512(b).    Substantive     Rule   511.21   provides,     in part,     that
 McAllen. TX.     76501.1665
 5W662.4547
                                                       [a]11    appXcation6          for    certification        by examina-
                                                       tion    shall     be made on forms              prescribed       by the
 200 Main Plaza. Suite 4W                              board    and ahall       also     be in compliance          vith    board
 San Antonio. TX. 762052797
                                                       rules    and law.         Each applicant          must alao        submit
 512l2254191
                                                       authentlcsted           copies       of      transcripts         ahcwlng
                                                       compliance:     with     the applicable          educettoa      require-
                                                       ments.       I:a,ch applicant           shall      eubmit     with     his
                                                       initial     allplication,       and a6 instructed          thereafter,
                                                       references,      from three       certified      public    accountants
                                                       or other       substantial         and reprerentative           business
                                                       or profea~s:lonal        individuals        residing     in Texan who
                                                       can     atteet        to    applicant’s           moral      cheracter.
                                                        (Emphasis     added).

                                        9 Tex.      Reg.   5293    (l!M4).




                                                                                   p.   1589
Hr. Bob B. Bradloy         - Paso 2       W-348)                                                          .




     Sectlun  12 of the Public    1u:countancy                 Act   provider,    in    part,  that
the board shall  grant the certlficato     of               a certified      public     accountant
tb any person vho. among other thlngr,

              is a citizen       of the Mired        Statea or vho. if not a
              cltixen,      has lived      io the State      of Texas for the
              90 day6       imediately        preceding     the date     of    rub-
              mittins      to the boar’1 the initial            epplicati(    m to
              take     the    kitten       cxamititioti~    Gnductld       by-
              board for the purporlr of granting              a certificate      of
               ‘Certtfied       Public     Accounkant’     or, bar maintained
              permiment       legal     realdence      in Texas    for    the   six
              months      immediately       jkreceding     the   date    of    sub-
              mieaion.      . . .      (gmph~asi6 added).



       The    Unfted     States     Supreue      Court’6     decision      in   Supreme     Court    of
Nev Hampshire           V.    Piper,    swra,        prompted       your   request        about      the
con6titutionality             of    the ?i~idency            requirementa         in     these       two
provisions.         In Piper,     the Suylreme Court struck            doun a rule of the Nev
Iiampehire       Supreme Court vhich            excluded      nonresidents       from the        state
bar.      The Court held          that    the PrivIlegea          and Immunities           Clause     of
article       IV,   section      2 of tbe United           States     Constitution         forbid6      a
state     from discriminating          agaf:nst    citizens      from other      statea      in favor
of    it6     OM    citizens.        Article      IV,    section      2 of    the      Constitution
provide6       that    the “citizens        of each state          shall  be entitled          to all
Privileges        and Immunities        of Citizens         in the several           6tate.s.”       The
 clause      requires      analyria      o!i whether        a particular          activity        is    a
“privilege”        under the clause,           vhether     there     is a SUbStantial           raaeon
 for   discriminatory         treatment      Iof nonreSidentS,         and whether        the degree
 or mathod of discrimination              bears     a close     relationship       to it8      reason.
 105 S.Ct.      at 1278-79.

        The Privileges      and Ipmur~ities  Clause    applies    only vith   respect    to
 “privileges”      bearing    upon the vitality       of the nation       as an entity.
 The instant      ca6e    involves  the practice       of public     accountancy.      For
 purposes     of the Privileges        .rnd Iaunitirs       Clause.    thir   profession
 deserve8     no less    protection   t.han that   granted     to the practice     of lav
 in Piper     or to th; rhrimp-fkhing        at i;sue     in Toomer v. Witsell,         334
 U.S.    385 (1948).

         The board’s     Substantlvc!    Rule    511.21    requires       that     all   appllca-
 tions    for certification       by r~aminetlon        shall    include       references       from
 individual6      vho reside       in Texan.       Although      this     rule     on Its       face
 applies      to both    residents    and nonreeldent6,            it   is     plain    that      its
 burden     falls   won    nonreeldtmts.        In our oulnlon.           the United         States
 Supreme Court iill         not igame      the obvioua       -effect-   of such a restric-
 tion.      For example,      in Austin     v.   Rev Rampshire,          420 U.S.       656.      659
  (1975).     the  Court    atruc~&vn          a commuter’6         income      tax    under      the




                                            p.   1590
‘-.v.r. Bob C. Bradley       -   Page   3,    gJn-348)       _




 Privileges     aad Ismunitids    Clsuse   because  of the ovecvhetlng                            fsct
 that, in prscticc,    the   tax f4:l.l lxcluolvely  oa nonresidents.                        We   take
 notice    of the fact that similr~r considerations    apply here.

         Accordingly , we concluile              that     Substantive       Rule    511.21      cannot
  stand     under    the     Privileges       and Imunities            Clause     of article        IV.
  section     2 unless     the board cm demonstrate              that there is a substantial
  reason     for   the difference          lo trestment        and that       the discrimination
  practiced      against      nonresidwts         bears    a substantial          relationship        to
  that reason.        You have suboftted           non reasons     supporting      the requirement
  that    character     references       be furnished       by Texas residents.            Ue cannot
  consider,      in    the     abstract,      whet    possible       justifications         might    be
  submitted.        You do not        ask --     snd    thus   we    do  uot    predict     --   how    a
  court would respond           to s due process         or equal protection          clsim    against
  the rule in question.             See gwerally         Schware v. Board of Bar Examiners
  of New Mexico,          353 U.S.        232   (1957);     l4emorial      Hospital     v.    Marlcops
  County,     415 U.S.      250 (1974).

          You also mention         section      12 of the Public         Accountancy     Act of 1979
  In light      of Supreme Court of-New               Rampshire     v. Piper,       &.         Section
   12 requires       that    persons      vho are not citizens             of the United         States
   live    1; Texas for 50 days-or             ,maintain permanent         legal    residence     for 6
  months immediately           preceding      the date they submit their application                   to
   take the board’s        vritten     exsninstion.          The issues      involved     in Piper    do
   not reach      this    restriction        OD foreign       nationals       because    Piper    dealt
   only with the Privileges             and Immunities         Clause     of srtlcle      IV, section
   2, which      expressly       applies     only     to persons      who are “citizens”           of s
   state.     See In re Johnson’s            E:state,
                                             VP           73  P.   424,    426   (Cal.    1903).     You
   do not     ask    about     and we therefore            do not     address      the validity        of
    section    12 under other         prov::sions       of the United        States    Constitution.
   See generally       Toll    v. Morenc,, 458 U.S.           1 (1982)      (state    may not impose
   burdens     on lavfullv         sdmittctl      aliens     which    are not       contemplated       by
 * Congress);      Plper    v.- Do?,     457 U.S.      202 (1982)       (Equal Protection        Clause
    extends   to ;                 s rege.Idless       of citizenship);         see also     Examining
   Board of Engine&s,         Architects,        and Surveyors       v. Plores     de Otero,   426
   U.S.   572, 602-605 (1976); De?anas               v. Bica,    424 U.S.     351 (1976);    Zn re
   Griffiths;      413   U.S.    717 y?I73);          Attorney    General      Opinions    JMz
   JM-267,    JW241     (1984);     cf.     Suffling      v.  Bondurant,      339 F. Supp.     257
   (D.c.N.M.     1972)   (6 monthz&dency                requirement     prior    to admission    to
   bar    provided     constitutionr,‘LIy         retisonable     time    for    examination     of
   character     and fitness),        aff’d
                                      --        sub nom. Rose v.          Bondurant.     409 U.S.
   1020 (1972).




                      The    Texas   Bosrd    of Public     Accountancy’s   Sub-
                  stantive      Rule    511.21,     requiring    applicants    to
                  furnish     character    references    from Texas residents.
                                                                    __
                  cannot     stand   under    the Privileges     mu Inmmltles




                                                p.   1591
Mr.   Bob C.    Brsdley      -   Paga        b     (Jkl-348)




               Clause       of     article         1:V.     leetion    2 of     the  United
               States       Constitution             unless      the board      can  demn-
               strate       that       there        LIB a      lubetantlal      reason for
               diecriminating    against     nonresidents     by                  requiring
               that   character   refe:rences     be furnished                    by Texer
               residents     and that the      discrimination                     prreticed
               bears a substantial      wlationship      to that                  reason.




                                                                     JIU      MATTOX
                                                                     Attorney  General   of   Texas

 TOM GRER'N
 First Assistant          Attorney        General

 DAVID R.      RICRARDS
 Executive      Assistsnt          Attorney        General

 ROBERT GRAY
 Special Assistant           Attorney            Ger.eral

 RICR GILPIN
 Chairman, Opinion           Committee

 Prepared      by Jennifer   Riggs
 Assistant      Attorney   General

 APPROVED:
 OPINION COMMITTEE

  Rick  Gilpin,   Chairwm
  Tony Guilloxy
  Jim Moellinger
  Jennifer   Riggs
  Nancy Sutton
  Sarah Uoelk




                                                                p.    1592
