                  TEE    ATTORNEY'GENERAL
                            OF TEXAS

                                 October    24,   1988




Honorable   Bob Bullock                    Opinion   No.   JR-971
Comptroller   of Public Accounts
L.B.J. State Office Building               Re: Authority    of the Racing
Austin, Texas     78774                    Commission     regarding    the
                                           classification     of a  racing
                                           facility    (RQ-15.67)

Dear   Mr.   Bullock:

      You ask three questions       concerning   the authority     of the
Texas Racing Commission       to license horse       racing tracks       in
Texas.    The Texas Racing Act, V.T.C.S.        articles    179e through
179e-4,    creates    three   classifications       for    horse   racing
tracks, class 1, class 2, and class 3. V.T.C.S.              art.    179e,
5 6.02.    You   advise us that      the commission     is   considering
proposals   to   limit   the    number    of class    2 and      class    3
licenses    it will     issue,    to   deny    pari-mutuel       wagering
privileges   to certain class 2 or class 3 racetracks,            and   to
create a licensing     category   for horse racing tracks         without
wagering   privileges.     You ask whether the commission         has the
authority   to take such actions.

        We begin    by reviewing      several established       principles
concerning     the power of administrative        agencies.     An   admin-
istrative     agency is a creature of statute and has no             inher-
ent authority.        SeXtOn   v. Mount Olivet Cemeterv Association,
720 S.W.2d 129 (Tex. App. - Austin 1986, writ ref'd n.r.e.).
It may       exercise     only   those   powers    granted    by    statute
together with those necessarily           implied from such      statutory
authority.      See Citv of Shenn n          Public Utilitv Commission
of Texas,      643    S.W.2d    681 ($exy' 1983);      Attorney     General
Opinion JM-903       (1988).    An agency may not improvise        upon its
express powers        so as    to confer    upon itself     indirectly      a
power the legislature          has not   granted it     expressly    or   by
implication.       Sexton v.     Mount Olivet Cemetery       Association,
suvra . The       power    to   grant,   refuse,    revoke,     or   cancel
licenses regulating        businesses   and occupations     is subject to
these limitations.         See Stauffer v. Citv of San Antonio,          344
S.W.Zd 158 (Tex. 1961).




                                  p. 4941
Honorable     Bob Bullock    - Page    2   (JM-971)




      Your first question   is whether the commission   may place
a numerical  limit   on the   number of    horse racing  licenses
issued for   class 2 and class      3 tracks.    Section 6.02   of
article 179e provides:

                (a) Horse-racing      tracks   are classified     as
            class 1 racetracks,        class   2 racetracks,     and
            class 3 racetracks.

                (b) A class 1 racetrack    is a racetrack        on
            which racing is conducted     for a minimum of 45
            days in a calendar     year, the number of        days
            and the actual dates to be determined         by    the
            commission   under Article    8 of    this Act.       A
            class 1 racetrack      may   operate    only     in   a
            county with    a population    of not     less    than
            750,000, according    to the most recent federal
            census, or in a county adjacent to a county
            with such a population.       pot more than       four
            class    1 racetracks    mav   be    licensed       and
            overated   in this stat e.

                (c) A class 2 racetrack       is a racetrack  on
            which racing     is conducted      for a  number  of
            days not to exceed 44 days in a calendar year
            except as otherwise      provided by this section.
            . .    .     The    commission      may  permit   an
            association    that   holds a class 2 racetrack
            license and     that is     located in   a national
            historic   district to conduct horse races       for
            more than 44 days in a calendar year.

                (d) A   class 3 racetrack    is    a racetrack
            operated by     a county or    a nonprofit       fair
            under Article 12 of this Act.       An association
            that holds a     class 3 racetrack     license    and
            that   conducted    horse  races    in    I.986   may
            conduct races     for a number of      days not    to
            exceed 16 days in       a calendar year      on   the
            dates selected by the association.         (Emphasis
            added.)

Sections      6.04(d)    and    6.14(b)    both      provide     that     the
commission     shall   not issue     licenses      for more     than    three
greyhound     racetracks    in the state.

      Those provisions    make clear    that when the    legislature
intends to place     numerical   limitations   on  the issuance     of
racetrack  licenses,   it   does so    expressly.   Therefore,    the           -\
statute must be construed      as containing   no implied numerical




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     Honorable     Bob Bullock   - Page   3   (JM-971)




     limitations   on class 2 and class 3 racetrack          licenses.     &g
     Attorney  General Opinion JM-206   (1984).

           The racing     commission    argues, however,      that    various
     provisions   of the Texas Racing Act grant the commission             the
     discretion   to impose     reasonable   ceilings on     the number. of
     class 2 and class 3 licenses it issues.           Section 6.04(a)       of
     the act    states in part that        the commission     "may issue      a
     racetrack   license to a qualified      person if it finds that the
     conduct of race meetings       at the proposed track and        location
     will be in the     public interest."       Section 6.06(a)      provides
     in part that the commission       may refuse to issue a       racetrack
     license if,     after notice     and   hearing,   it has     reasonable
     grounds to believe and finds that, among other things,               "the
     apppicant   is   engaged in     activities   or   practices   that    the
     commission    finds are    detrimental   to the    best interests       of
     the public     and   the   sport of    greyhound    racing    or    horse
     racing.".   V.T.C.S.   art. 179e, 5 6.06(a)(16).        Article    179e-3
     provides   the following:

                     The appropriate    section of the     commission
                 shall require a complete personal,        financial,
                 and business background       check of the     appli-
,I               cant for a    racetrack    license, the    partners,
                 stockholders,      concessionaires,       management
                 personnel,   management     firms,   and   creditors
                 and shall refuse to issue or renew a          license
                 or approve    a concession      or management    con-
                 tract if,    in   the sole    discretion    of   that
                 section of    the   commission,     the   background
                 checks reveal anything which might be          detri-
                 mental to the public       interest or the     racing
                 industry.

     Those provisions,   however,    are addressed   to   the denial     of
     individual   applications,      which    must   be    done
     case-by-case  basis.    They give    the commission   no   autE:ritG
     to set numerical   limits on the number of licenses       issued for
     a particular  class of    racetrack.    Accordingly,   we   conclude
     that the Texas Racing Commission       has no authority    to   place
     limits on the number of class 2 or class 3 racetrack          licens-
     es it will issue.

           You next ask whether the commission        may grant a class 2
     or class 3 racetrack       license but deny pari-mutuel        wagering
     privileges    to   an association    operating     a racetrack     in   a
     jurisdiction     where  the   voters   have    approved    pari-mutuel
     wagering   on    horse  racing    by local   option     election.     We
     conclude that the commission       has no such authority.




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 Honorable     Bob   Bullock   - Page   4    (JM-971)




       Section 3.02     of the  Texas   Racing Act    describes            the
 scope of    the   commission's   power   to   regulate    horse           and
 greyhound   racing under the act:

                 In accordance     with Section      3.01 of    this
             Act,   the   commission       shall   regulate       and
             supervise    every     race     meeting      involving
             wagering   on the result of greyhound        or   horse
             racing.    All persons     and things relating        to
             the operation    of   those meetings     are    subject
             to regulation    and   supervision.      The    commis-
             sion shall adopt rules for conducting            racing
             involving    wagering     and   shall    adopt    other
             rules to administer     this Act that are consis-
             tent with this Act.

 V.T.C.S.    art.    179e,    S 3.02.      Section     1.03(25)      defines
 "racetrack"    to mean "a facility that is licensed under               this
 Act for    the conduct      of pari-mutuel      wagering    on    greyhound
 racing or    horse racing."        An    "association"     is    '*a person
 licensed under this Act to conduct a horse race meeting                 or a
 greyhound   race    meeting    with    pari-mutuel      wagering."        Id.
 5 1.03(2).     Thus, when     subsections     (c) and     (d) of     section
.6.02 speak of "associations"         licensed to conduct horse races
 on class 2 or      class 3 "racetracks,"        such licensees      are    by
 definition     authorized      to     conduct      horse      races     with
 pari-mutuel    wagering   privileges.       See also     id. 55 6.01        (a
 person may not      conduct race meetings        with wagering      on    the
 results without a racetrack          license):    6.08 (a horse       racing
 association     shall     make    certain      deductions      from     each
 pari-mutuel     pool);    11.01     (pari-mutuel     wagering      may     be
 conducted   only    by   an association      within     its    enclosure);
 16.01(a)   (commission    shall not issue racetrack         license until
 voters have approved      legalization     of pari-mutuel      wagering    on
 horse or    greyhound     races in the        county at     local     option
 election).     The commission     therefore     may not issue class          2
 or class 3 racetrack      licenses that deny the holders of those
 licenses the privilege       of conducting     races with      pari-mutuel
 wagering   on the    outcome of      the races.      Bexar County       Bail
 Bond Board v. Deckard,       604 S.W.Zd 214 (Tex. Civ. App. - San
 Antonio   1980, no writ).

       Your third    question    is whether     the   commission     may
 create a new      licensing   category    for   racetracks     without
 pari-mutuel   privileges.    "Licensing"     is the   issuance of      a
 permit confirming      the licensee's    right   to do    that   which
 would otherwise    be unlawful.    &iDsev v. Texas DeDartment        of
 r;l:h;    727 S.W.2d 61 (Tex.     App. - Austin 1987, writ       ref'd
   . . . . The Texas Racing Act does not make it unlawful            for
 persons to conduct horse races without pari-mutuel           wagering




                                   P. 4944
 :
      Honorable     Bob   Bullock   - Page   5     (JM-971)



,,-


      on the results,     and it is readily acknowledged     that the   act
      does not expressly     grant the commission    the power to require
      such persons    to    obtain    a license    from  the   commission.
      However,   it    is   suggested   that   V.T.C..S.  article    179e-4
      implicitly   supplies such authority:

                      Any provision    in this Act to the      contrary
                  notwithstanding,    the Texas Racing       Commission
                  shall   regulate    all   aspects     of    greyhound
                  racing   and   horse    racing    in   this     state,
                  whether           not    that     racing     involves
                  pari-mutueyrwagering.

            This provision      plainly     extends the commission's       power
      to peculate      horse racing      to    include racetracks      on  which
      races are conducted       without pari-mutuel       wagering.    The power
      to regulate a business,        however, does not embrace the         power
      to require     licenses      from    persons    subject    to  regulation
      unless    the    legislature      so     provides.     State   Board     of
      Morticians    v.   Corteq     333    S.W.2d    839 (Tex.    1960).    Your
      third question,      thereiore,    is answered     in the negative.

                                       SUMMARY

                        The    Texas    Racing    Commission     is     not
                  authorized    to   set    arbitrary   limits    on   the
                  number    of   class    2 or     class    3 racetrack
                  licenses that may       be issued     in this     state.
                  The commission      is not   authorized    to grant     a
                  class 2 racetrack      license with the       condition
                  that the     license    holder shall      not   conduct
                  horse races with pari-mutuel         wagering   on   the
                  results.     The commission     is not authorized      to
                  license racetracks      that do not conduct        horse
                  races    with    pari-mutuel      wagering     on    the
                  results of the races.




                                                       JIM      MATTOX
                                                       Attorney  General   of Texas

      MARYEELLER
      First Assistant       Attorney    General

      LCU'MCCREARY
,-,   Executive   Assistant      Attorney    General




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Honorable   Bob   Bullock   - Page   6      (JM-971)




JUDGE ZOLLIE STEWLEY
Special Assistant  Attorney       General

RICK GILPIN
Chairman,  Opinion    Committee

Prepared by Steve Aragon
Assistant Attorney General




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