   OPPlCE   OF THE   ATTORNEY   GENERAL   STATE   OF TEXAS

   JOHN CORNYN




                                                  March 11, 1999



The Honorable Judith Zaftirini                          Opinion No. JC-0021
Chair, Human Services Committee
Texas State Senate                                      Re:      Whether certain provisions of the Texas
P.O. Box 12068                                          Controlled Substances Act, TEX. HEALTH&SAFETY
Austin, Texas 78711                                     CODE ANN. ch. 481 (Vernon 1992 & Supp. 1999),
                                                        that authorize warrantless administrative     searches
                                                        violate article I, section 9 of the Texas Constitution
                                                        (RQ-1198)


Dear Senator Zaffrini:

         You ask whether certain provisions of the Texas Controlled Substances Act, TEX. HEALTH
& SAFETY CODE ANN. ch. 481 (Vernon 1992 & Supp. 1999) (the “Act”), that authorize warrantless
administrative searches violate article I, section 9 of the Texas Constitution. You are particularly
interested in Health and Safety Code sections 48 1.078(e) and 48 1.08 l(e), two provisions enacted in
the last legislative session’ that condition the issuance of certain permits on the applicant’s written
consent to warrantless searches.          Applying the judicial standard developed to review the
constitutionality ofwarrantless administrative searches in the context ofclosely regulated industries,
we conclude that neither provision is unconstitutional on its face.

         Health and Safety Code sections 481.078(e) and 481.081(e) require persons who obtain
permits to transfer “chemicalprecursors”  or “chemical laboratory apparatus” to consent to the search
of chemical precursors or chemica1 laboratory apparatus and, in addition, “any controlled premises,
record,     or other item governed by [Health and Safety Code chapter 4811 in the care, custody, or
control of the person.” See id. $5 481.078(e), .081(e) (Vernon Supp. 1999). The term “controlled
premises” encompasses both any place where records required under chapter 481 are kept and any
place where a person is permitted to possess a controlled substance, chemical precursor, or chemical
laboratory apparatus under chapter 48 1. Id. 5 48 1.002(4).

         A chemical precursor is a substance that may be used illicitly to manufacture a controlled
substance or controlled-substance  analogue. See id. 5 481.077(a), (b). Section 48 1.077 of the Act
requires a person who sells or transfers certain listed “precursor substances” to keep records of
transactions. Id. 5 481.077(k). Section 481.078 requires a person to obtain a chemical precursor
transfer permit from the Department of Public Safety (“DPS”) in order to transfer or receive


        ‘SeeAct of May 23, 1997,75th      Leg., RX, ch. 745, $5 l&20,1997   Tex Gen. Laws 2411,2435-36.2437.
The Honorable     Judith Zaffirini    - Page 2     (JC-0021)




precursor substances.  You ask about the constitutionality        of subsection     (e) of section 481.078,
which provides as follows:

                  The director [of DPS]’ may not issue a permit under this section unless
             the person applying for the permit delivers to the director a written consent
             to inspect signed by the person that grants to the director the right to inspect
             any controlled premises, record, chemical precursor, or other item governed
             by this chapter in the care, custody, or control of the person. After the
             director receives the consent, the director may inspect any controlled
             premises, record, chemical precursor, or other item to which the consent
             applies.

Id. 4 481.078(e) (footnote added). Subsection (f) of section 48 1.078 provides that DPS “may adopt
rules to establish security controls and provide for the inspection of a place, entity, or item to which
a chemical precursor transfer permit applies.” Id. 5 481.078(t).

        The Act defines “chemical laboratory apparatus” as any item of equipment designed to
manufacture a controlled substance or controlled-substance     analogue. Id. § 481.080(a). A person
who transfers chemical laboratory apparatus must keep certain records and obtain a transfer permit
from DPS. Id. $3 481.080(b)-(m), .081(a) (Vernon 1992 & Supp. 1999). Subsection(e) of section
48 1.081 is almost identical to subsection (e) of section 481.078, providing:

                  The director may not issue a permit under this section unless the person
              applying for the permit delivers to the director a written consent to inspect
              signed by the person that grants to the director the right to inspect any
              controlled premises, record, chemical laboratory apparatus, or other item
              governed by this chapter in the care, custody, or control of the person. After
              the director receives the consent, the director may inspect any controlled
              premises, record, chemical laboratory apparatus, or other item to which the
              consent applies.

Zd. 5 481.081(e) (Vernon Supp. 1999). And, like subsection (f) of section 481.078, subsection (f)
of section 481.081 provides that DPS “may by rule establish security controls and provide for the
inspection of a place, entity, or item to which a chemical laboratory apparatus transfer permit
applies.” Id. 5 481.081(f).




          ‘See TEX. HEALTH & SAFETY CODE ANN. 5 481.002(11)    (Vernon   Supp. 1999) (defming   term “director”   to
 mean director of DPS OI hisiher designee).
The Honorable    Judith Zaffirini   - Page 3        (JC-0021)




         You ask whether these provisions violate article I, section 9 of the Texas Constitution,   which
prohibits warrantless searches:

                The people shall be secure in their persons, houses, papers and
            possessions, from all unreasonable seizures or searches, and no warrant to
            search any place, or to seize any person or thing, shall issue without
            describing them as near as may be, nor without probable cause, supported by
            oath or affirmation.

TEX. CONST. art. I, 5 9. The Texas Court of Criminal Appeals does not distinguish between the
Fourth Amendment        to the United States Constitution   and article I, section 9 of the Texas
Constitution for purposes of analyzing the constitutionality    of statutes authorizing wsrrantless
administrative searches, and applies United States Supreme Court precedent in this area. See
Santikos V. State, 836 S.W.2d 631,632 n.1 (Tex. Crim. App. 1992). The Supreme Court has held
that warrantless inspections of commercial premises in “closely regulated” industries may be valid
exceptions to the Fourth Amendment warrant requirement.        A “closely regulated” industry is an
industry subject to pervasive government regulation, such as the liquor, firearms, pawnshop, or
salvage parts industries.    See generally New York v. Burger, 482 U.S. 691, 699-708 (1987). A
participant in a closely regulated industry has a diminished expectation of privacy with respect to
commercial property employed in the industry. See id. at 699.

          In analyzing the constitutionality of warrantless administrative searches in the context of
closely regulated industries, the Texas Court of Criminal Appeals applies a three-part test first
articulated by the Supreme Court in New York v. Burger, 482 U.S. 691. The Court of Criminal
Appeals has summarized that test as follows:

            First, there must be a substantial government interest that informs the
            regulatory scheme pursuant to which the inspection or warrantless search is
            made. Second, the warrantless inspection must be necessary to further the
            regulatory     scheme.    Third, the statutory provision must provide “a
            constitutionally adequate substitute for a warrant” so as to limit properly the
            discretion of the officers performing the inspection.       In defining how to
            restrict constitutionally the discretion of the inspectors, the Supreme Court
            stated that the statute must carefully limit the inspection “in time, place, and
            scope.”

Santikos, 836 S.W.2d at 633 (citations omitted).

         Applying the Burger test here, we conclude that the pharmaceutical        industry is closely
regulated and that persons who transfer chemical precursors and chemical laboratory apparatus are
participants in aclosely regulated industry. A number of federal and state courts have concluded that
The Honorable      Judith Zaffirini      - Page 4           (JC-0021)




the pharmaceutical industry is a closely regulated industry. r “There is no doubt that the states have
just as great an interest in regulating the pharmaceutical industry and controlling the illicit use of
 drugs as the federal government has in regulating the liquor and firearms industry.” Poindexter Y.
 State, 545 S.W.2d 798, 800 (Tex. Crim. App. 1977). In addition, we have little doubt that a
 substantial government interest informs the Act’s regulatory scheme and that the warrantless
 inspections authorized by the provisions at issue are necessary to further that regulatory scheme.4
 Whether sections 481.078(e) and 481.081(e) satisfy the third part of the Burger test-that a statute
 provide a constitutionally adequate substitute for a warrant by limiting the time, place and scope of
 inspections-is a somewhat closer question. As explained below, however, given more recent Texas
 Court of Criminal Appeals cases in this area we have little doubt that the answer is yes.

         In two cases predating Burger, the Texas Court of Criminal Appeals applied similar criteria
to strike down a Parks and Wildlife Code provision authorizing warrantless administrative searches.
See Baggett v. State, 722 S.W.2d 700,702 (Tex. Crim. App. 1987); Nelsoney v. State, 711 S.W.2d
636,638 (Tex. Crim. App. 1986). That statute, Parks and Wildlife Code section 47.037, provided
that “[n]o person may refuse to allow an employee [of the Texas Parks and Wildlife Department]
to inspect aquatic products handled by or in the possession of any commercial fisherman, wholesale
fish dealer, or retail fish dealer at any time or in anyplace.” Act of May 30, 1975, 64th Leg., R.S.,
ch. 545,s 1,1975 Tex. Gen. Laws 1405,1508 (emphasis added) (amended 1987) (current version
at TEX. PARKS & WILD. CODE ANN. 5 47.037 (Vernon 1991)). The court held in both cases that the
statute violated state and federal guarantees against unreasonable searches on its face because it did
not limit the type of building to be inspected or place any limit on the time of inspections.      See
Baggett, 722 S.W.2d at 702; Nelsoney, 711 S.W.2d at 638.

        By contrast, in a more recent, post-Burger case, the court addressed the constitutionality of
Alcoholic Beverage Code section 101.04, which provided that by accepting a license or permit, the
holder consents that the Alcoholic Beverage Commission or peace officer “may enter the licensed
premises at any time to conduct an investigation or inspect the premises for the purpose of
performing any duty imposed by this code.” TEX. ALCO. BEV. CODE ANN. 4 101.04 (Vernon 1995).
Unlike the Parks and Wildlife Code provision, the court concluded that this statute provided an
adequate substitute for a warrant because


          ‘See, e.g., United States v. Acklen, 690 F.2d 70, 75 (6th Cir. 1982); United States Y. Jamieson-McKames
Phnrms., Inc., 651 F.2d 532, 537 (8th Cir. 1981); UnitedStates v. Schiffinn,      572 F.2d 1137, 1142 (5th Cit. 1978);
UnitedStates a rel. Terraciano v. Montanye, 493 F.2d 682,684 (2d Cit. 1974); UnitedStates v. Montrom, 345 F. Supp.
1337,134O (E.D. Pa. 1972), affdwithout      opinion, 480 F.2d 918 (3d Cir. 1973); Commonwealth Y. Lipomi, 432 N.E.2d
86.93 (Mass. 1982); Hosto v. Brickell, 577 S.W.Zd 401 (Ark. 1979); People v. Curco Drugs, inc., 350 N.Y.S.Zd 74
(Crim. Ct. N.Y. 1973).

           ‘The ultimate resolution of these issues would require tindings of fact and is beyond the purview of this office.
 Cf: Tex. Att’y Gen. Op. Nos. DM-484 (1998) at 1 (concluding that whether statute served legitimate state interest and
 was rationally related to that interest for Equal Protection Clause purposes involved fact questions and was beyond
 purview of attorney general opinion), DM-367 (1998) at 2 (concluding that because questions of fact were integral to
 determining whetherstatuteservedcompelling        stateinterest andwas narrowlytailoredtoachievethat    interest, thisoftice
 could not resolve whether stahlte violated First Amendment in attorney general opinion).
The Honorable   Judith Zaffirini   - Page 5        (JC-0021)




            [it] grants to police officers, and other state agents, authority to enter a
            licensed premises at any time and to conduct an investigation or inspect the
            premises for performing any duty imposed under the code. . . In accordance
            with the third criteria enunciated in Burger [I, the T.A.B.C. limits the scope
            of warrantless inspections to the performance of any duty imposed by the
            code. The duties of the code are detecting code violations; violations are
            statutorily defined.

McDonald    v. State, 778 S.W.2d 88,90-91     (Tex. Crim. App. 1989).

         Significantly, the Texas Court of Criminal Appeals’ most recent case in this area, Santikos
v. State, 836 S.W.2d 631, also upheld a warrantless administrative search conducted under section
101.04 ofthe Alcoholic Beverage Code. In that case, the appellant, anight club owner, asserted that
the statute was facially unconstitutional because it authorized searches of licensed premises at any
time and thus failed to limit inspections as required by Burger. After announcing that a facial
challenge to a statute may only succeed if the challenger establishes that “no set of circumstances
exists under which the statute will be valid,” id. at 633, the court noted that the inspection at issue
had been conducted during the club’s regular business hours and concluded that “despite the ‘at any
time’ language in Section 101.04 the inspectors in appellant’s case did not arbitrarily and
indiscriminately    use Section 101.04 to inspect or search the club without a warrant,” id. at 634.

          With these cases as backdrop, we now apply the third Burger criterion to the statutes at issue.
Again, in the words of the Texas Court of Criminal Appeals in Santikos, Burger requires that “the
statutory provision must provide ‘a constitutionally adequate substitute for a warrant’ so as to limit
properly the discretion of the officers performing the inspection.       In defining how to restrict
constitutionally   the discretion of the inspectors, the Supreme Court stated that the statute must
carefully limit the inspection ‘in time, place, and scope.“’ Id. at 633 (citations omitted). Under
Santikos, however, such a statute is not unconstitutional on its face unless “no set of circumstances
exists under which the statute will be valid.” Id. Although the scope of the inspections permitted
by sections 48 1.078(e) and 481.08 l(e) is broader than the scope of the inspections permitted by
Alcoholic Beverage Code section 101.104, it is difficult to imagine that a challenger could establish
that “no set of circumstances exists” under which these statutes will be valid.

        Again, section 48 1.078(e) provides that after the director receives written consent from the
chemical-precursor   transfer permittee, “the director may inspect any controlled premises, record,
chemical precursor, or other item to which the consent applies.” TEX. HEALTH & SAFETY CODE
ANN. 5 481.078(e) (Vernon Supp. 1999). Similarly, section 481.081(e) provides that after the
director receives written consent from the chemical apparatus transfer permittee, “the director may
inspect any controlled premises, record, chemical laboratory apparatus, or other item to which the
consent applies.” Id. § 481.081(e). In contrast to section 101.04 of the Alcoholic Beverage Code,
sections 48 1.078(e) and 48 1.08 l(e) permit inspections not just at licensed premises but at any place
where chemical precursors, chemical laboratory apparatus, or related records may be located. See
The Honorable   Judith Zaftirini   - Page 6       (JC-0021)




id. $5 481.078(e), .081(e); see also id. 8 481.002(4) (definition of “controlled premises”). Nor do
these provisions limit the time or scope of inspections.      And, unlike Alcoholic Beverage Code
section 101.04, these provisions do not limit the scope of inspections to DPS enforcement duties
under the Act. Although DPS is authorized to adopt rules regarding these inspections, see id. f$j
481.078(f), .081(f), and thus has the authority to limit its officers’ discretion by rule, we are not
aware that it has done so. After Santikos, however, a facial challenge to these provisions is unlikely
to succeed in state court because there are many conceivable sets of circumstances under which
searches conducted pursuant to these statutes will be valid. A defendant will succeed in challenging
the constitutionality of a search only if he or she can demonstrate that the particular search was
conducted “arbitrarily and indiscriminately.”     See Santikos, 836 S.W.2d at 634. Of course, this
office cannot predict how a court would resolve a constitutional challenge to any particular
inspection conducted under the authority of these provisions.

         In sum, in light of Santikos, we doubt that a Texas court would invalidate either section
48 1.078(e) or section 48 1.081(e) on its face under article I, section 9 of the Texas Constitution for
failing to provide an adequate substitute for a search warrant. Rather, we believe that a Texas court
would probably examine the reasonableness of the inspection at issue in the particular challenge.
Still, the legislature might consider amending sections 481.078(e) and 481.081(e) to reduce the
likelihood of a successful challenge (and unreasonable searches) by limiting the time, place and
scope of inspections.    We do not address the constitutionality     of these statutes under the Fourth
Amendment to the United States Constitution nor do we speculate on how a federal court might
resolve a facial challenge to these statutes.
The Honorable   Judith Zaffkini   - Page 7       (JC-0021)




                                       SUMMARY

                Neither section 481.078(e) nor section 481.081(e) of the Health and
           Safety Code on its face violates article I, section 9 ofthe Texas Constitution.
           A Texas court would examine the reasonableness of the inspection at issue
           in the particular challenge and determine if these statutes as applied mn afoul
           of article I, section 9 of the Texas Constitution.




                                               Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK RENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

 Prepared by Mary R. Crouter
 Assistant Attorney General
