Can a Maryland town charge every business and profession a local license fee even if the state already licenses them?

Plain-English summary

The Town Attorney for Elkton asked the Attorney General how far the town's authority reached to license and charge fees to businesses and professions operating within town limits, apparently with an eye toward a broad, town-wide licensing ordinance. The opinion answered that a municipality's licensing power, while real, is not unlimited: it can only be exercised to the extent the state has not already occupied the field through statewide regulation, and to the extent the municipal rule does not directly conflict with state law.

Working through the constitutional and statutory framework, the opinion explained that municipalities get their basic ordinance-making power from Article 23A, §2 of the Maryland Code, implementing Article XI-E of the Constitution, but that power is capped by the requirement that municipal ordinances not conflict with public general or public local law. For businesses already licensed by the state under Article 56, a town generally cannot charge its own fee or require its own permit, except where necessary for public health, safety, or morals regulation, and even then only reasonable fees tied to actual regulatory costs, not revenue-raising, are allowed. Layered on top of that, the state's own comprehensive regulation of certain trades and professions can preempt local licensing entirely, and even where a town has some concurrent authority to regulate, an ordinance that permits what state law prohibits, or prohibits what state law allows, is invalid. The upshot, the opinion concluded, is that a single blanket ordinance licensing every business in town would likely be struck down as applied to many businesses already covered by state law, so Elkton would need to evaluate each business or profession's licensing status individually.

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The opinion applied Article 23A, §2 and §2(32)-(33), Article 56, §12, and Article XI-E of the Maryland Constitution as they stood in 1982, along with Maryland case law on preemption and conflict current at that time. Maryland's municipal and licensing code articles have since been substantially recodified. Anyone researching a current municipal business-licensing question in Maryland should verify the current statutory text and case law rather than relying on this opinion's 1982 analysis of preemption in specific industries.

Common questions

If a town already has general power to license businesses, why can't it just require every business to get a town license?
The opinion explained that having general licensing power under Article 23A, §2 does not override the separate limitation that municipal ordinances cannot conflict with public general or public local law. Where the state has already comprehensively regulated a trade or profession, such as dentistry, medicine, dairy operations, or plumbing in the cases the opinion cited, a town's parallel licensing scheme for that same business is likely to be found preempted, so a one-size-fits-all town ordinance would be vulnerable no matter how broad the town's general authority looks on paper.

Can a town at least charge a fee to businesses the state already licenses, just to cover its own administrative costs?
Only in limited circumstances, according to the opinion. Article 56, §12 lets a town require its own permit for a state-licensed business only "where necessary for regulatory purposes in the interest of the public health, safety or morals," and any fee has to be a reasonable one tied to actual regulatory costs rather than a revenue-raising charge dressed up as a license fee.

What is the difference between a town ordinance being "preempted" and being in "conflict" with state law?
The opinion treated these as related but distinct problems. Preemption happens when the state has occupied a field of regulation so thoroughly, expressly or by clear implication, that no room is left for local rules on the same subject. Conflict is narrower: it happens when a town ordinance prohibits something state law affirmatively permits, or permits something state law prohibits, even in an area where some local regulation might otherwise be allowed alongside state law.

Does this mean Elkton can never license any local businesses?
No. The opinion recognized that municipalities and the state can regulate the same general subject concurrently in many cases, so long as the local rule does not conflict with or get preempted by state law. The opinion's recommendation was to evaluate businesses and professions on a case-by-case basis rather than adopt one blanket ordinance covering all of them.

Background and statutory framework

The Town Attorney for Elkton, in Cecil County, asked the Attorney General to assess the scope of the town's authority to license and impose fees on businesses and professions operating within its corporate limits, evidently in connection with a proposed town-wide licensing ordinance. The opinion organized its answer around two questions: first, whether the town had sufficient enabling authority under existing public general and public local law to enact licensing regulations at all, and second, whether existing state legislation already occupying the field of licensing would preempt or conflict with a municipal licensing scheme.

On the enabling-authority question, the opinion traced municipal ordinance power to Article XI-E of the Maryland Constitution, which lets a municipality amend or repeal its own charter or local laws but subjects all such charter provisions to applicable laws enacted by the General Assembly, and to Article 23A, §2 of the Maryland Code, which gives municipalities general power to pass ordinances "not contrary to the public general or public local laws" for purposes such as good government, public safety, and the health and convenience of residents. The opinion noted that Article 56, §12 specifically restricts a municipality's ability to charge businesses already subject to state licensure under Article 56, permitting a municipal permit requirement only "where necessary for regulatory purposes in the interest of the public health, safety or morals," and discussed a Court of Appeals decision holding that a flat municipal rental-license fee violated Article XI-E, §5's cap on new municipal taxes and fees, a ruling that prompted the General Assembly to enact Article 23A, §2(32) and (33) as emergency legislation restoring municipalities' authority to collect reasonable fees connected to licensing authority granted elsewhere by law. The opinion stressed that these subsections are not an independent grant of licensing power. They only authorize fee collection tied to licensing authority that already exists, and any fee must be reasonably related to actual regulatory costs rather than functioning as a revenue-raising tax.

On the preemption and conflict question, the opinion explained that Maryland courts recognize both express and implied preemption, where a comprehensive statewide regulatory scheme, such as those covering dentists, physicians, dairymen, or plumbers in the cases cited, occupies a field so fully that local legislation on the same subject cannot stand, and also recognize a concurrent-power doctrine under which a municipality may add regulation that supplements rather than conflicts with state law on the same general subject. Separately from preemption, the opinion described a conflict doctrine under which a municipal ordinance is invalid if it prohibits what state law expressly permits or permits what state law prohibits, citing a case in which a town's ban on all fortunetelling was struck down because a county licensing statute affirmatively authorized fortunetelling by license, and a case applying the same "irreconcilable conflict" test to invalidate part of a municipal bail-bond licensing ordinance that duplicated topics already covered by state insurance law, while upholding the ordinance as to bail bondsmen the state did not separately regulate.

Applying this framework to Elkton's situation, the opinion concluded that where a municipality is authorized to license or regulate a particular business, it may charge reasonable fees under Article 23A, §2(32) and (33), but where a business is already licensed by the state under Article 56, the municipality may generally only require a permit if necessary for health, safety, or morals regulation. Because Elkton's proposed ordinance would have applied indiscriminately to all businesses and professions in town, many of which are already regulated under existing statewide law, the opinion advised that such a blanket approach would likely be held invalid as to many of those businesses, and that the town should instead evaluate the licensing status of each business or profession individually.

Citations

Statutes:

• Md. Const. art. XI-E, §3
• Md. Const. art. XI-E, §6
• Md. Const. art. XI-E, §5
• Article 23A, §2 of the Maryland Code
• Article 56, §12 of the Maryland Code
• Article 23A, §2(32) and (33)
• Article 81

Cases:

• Commissioners of Cambridge v. Cambridge Water Co., 99 Md. 501 (1904)
• Town of Forest Heights v. Tillie Frank, 291 Md. 331 (1981)
• Campbell v. City of Annapolis, 289 Md. 300, 311 (1981)
• Vansant, Comptroller v. The Harlem Stage Company of Baltimore City, 59 Md. 330, 335 (1882)
• McCarthy v. Board of Education of Anne Arundel County, 280 Md. 634 (1977)
• County Council for Montgomery County v. Montgomery Ass'n, Inc., 274 Md. 52 (1975)
• State v. Knowles, 90 Md. 646 (1900)
• Aitchison v. State, 204 Md. 538 (1953)
• Scholle v. State, 90 Md. 729 (1900)
• State v. Broadbelt, 89 Md. 565 (1899)
• Singer v. State, 72 Md. 464 (1890)
• Billig v. State of Maryland, 157 Md. 185, 191-93 (1929)
• American Nat'l Bldg. and Loan Ass'n v. Mayor and City Council, 245 Md. 23 (1966)
• Mayor and City Council of Baltimore v. Sitnick, 254 Md. 303, 311, 315-19 (1969)
• City of Baltimore v. Stuyvesant Insurance Company, 226 Md. 379 (1960)
• Eastern Tar Products Corp. v. State Tax Commission, 176 Md. 290, 297 (1939)
• McBriety v. Baltimore City, 219 Md. 223, 233 (1958)
• Town of Bladensburg v. Berg, 216 Md. 292, 296-99 (1958)
• Rossberg v. State, 111 Md. 394, 416 (1909)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1982/Volume67_1982.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Local Government—Municipalities—Licensing and Regulation—Fees—Businesses and Professions—Preemption—Conflict—Scope of Municipal Authority to License and Impose Fees Upon Businesses and Professions

November 9, 1982

Edward D. E. Rollins, Jr., Esq.
Town Attorney,
Town of Elkton

You have requested our opinion on the scope of municipal authority to license and impose fees upon businesses and professions operating within the corporate boundaries of the Town of Elkton.

As explained more fully below, it is our opinion that, even to the extent that a municipal corporation may have general authority to license and otherwise regulate various businesses and professions, it may only exercise that authority to the extent that such regulation is not preempted by or in conflict with public general or public local laws. A blanket municipal ordinance, such as that contemplated by the Town of Elkton, would be problematic because of existing legislation that already applies to and regulates many of the same businesses and professions. Accordingly, the decision to license a given business or profession is best made on a case-by-case basis.

In order to answer your query fully, it is appropriate to consider the following issues:

(1) Whether, under existing public general and public local laws, the Town of Elkton has sufficient enabling authority to enact licensing regulations; and

(2) Whether preexisting legislative action in the area of licensing preempts or creates unavoidable conflict with municipal regulation of businesses and professions operating within corporate boundaries.

I
Municipal Enabling Authority

According to Article XI-E, §3 of the Maryland Constitution, each municipal corporation in Maryland is vested with "the power and authority . . . to amend or repeal an existing charter or local laws relating to the incorporation, organization, government, or affairs of said municipal corporation heretofore enacted by the General Assembly of Maryland". Article XI-E §6, in turn, imposes the condition that "[a]ll charter provisions, or amendments thereto, adopted under the provisions of this Article, shall be subject to all applicable laws enacted by the General Assembly".

These clauses of the Maryland Constitution are implemented by Article 23A, §2 of the Maryland Code, which begins with the following:

"The legislative body of every incorporated municipality in this State, except Baltimore City, by whatever name known, shall have general power to pass such ordinances not contrary to the public general or public local laws and the Constitution of Maryland as they may deem necessary in order to assure the good government of the municipality, to protect and preserve the municipality's rights, property, and privileges, to preserve peace and good order, to secure persons and property from danger and destruction, and to protect the health, comfort and convenience of the citizens of the municipality." (Emphasis added.)

When Article 23A, §2 is read in conjunction with Article XI-E of the Maryland Constitution, it is clear that, despite the delegation of legislative authority, municipal corporations may not exercise power in a fashion that is: (i) inconsistent with any applicable public general or public local law enacted by the General Assembly, see Commissioners of Cambridge v. Cambridge Water Co., 99 Md. 501 (1904); or (ii) inconsistent with any applicable countywide law enacted by a charter county, see Town of Forest Heights v. Tillie Frank, 291 Md. 331 (1981).1

The ability of a municipal corporation to regulate businesses or professions is expressly circumscribed, at least in part, by the provisions of Article 56, §12 of the Maryland Code. In pertinent part, §12 prohibits a municipal corporation from requiring any business or occupation already subject to State licensure under Article 56 to pay fees or obtain permits in order to transact business within corporate boundaries, except "where necessary for regulatory purposes in the interest of the public health, safety or morals".2

The clause last quoted seems to affirmatively authorize municipal corporations to require additional, municipal permits "where necessary" to promote the public interest. Nevertheless, the Maryland Court of Appeals has suggested that this clause may be merely an exception, not an affirmative grant of authority. Campbell v. City of Annapolis, 289 Md. 300, 311 (1981). In Campbell, the Court held that a $10 license fee imposed by a municipal corporation on residential rental dwellings contravened Article XI-E, §5 of the Maryland Constitution.3 Refuting the City's attempt to justify its license fee under this particular clause of Article 56, §12, the Court stated, first, that the language of the clause was but "an exception to a particular prohibition" and "not an affirmative grant of power"; and, second, that, even if viewed as a grant of authority, "the statutory language itself would indicate that it is merely a power to license and not to collect fees". 289 Md. at 311.

In 1981, the General Assembly enacted Article 23A, §2(32) and (33) as an emergency response to the Court's decision in Campbell.

Through this enactment, the General Assembly sought to restore to municipal corporations the broad authority "heretofore thought to exist" to levy fees and charges in connection with the exercise of their lawful powers. See Bill Review Letter (Senate Bill 751) from Stephen H. Sachs, Attorney General, to Harry Hughes, Governor (May 14, 1981).4 Subsections (32) and (33) thus may be considered enabling legislation that confers authority on a municipal corporation to collect "reasonable" fees and charges from businesses and occupations, but only, in the words of the statute itself, with respect to "franchises, licenses, or permits [otherwise] authorized by law to be granted by a municipal corporation", i.e., only to the extent that the municipal corporation is "exercis[ing] the licensing authority [elsewhere] granted in Article 56 and other provisions of law".

In this context, we note that there is a distinction between licensing fees based on regulatory costs and those imposed for revenue-raising purposes. This distinction is particularly relevant when Article 23A, §2(32) is used in conjunction with the exception contained in Article 56, §12, with regard to entities otherwise licensed under Article 56. Under Article 56, §12, a key restraint upon a municipal corporation's ability to impose permit requirements is the caveat that such requirements may be imposed only "where necessary for regulatory purposes in the interest of the public health, safety or morals".

Authority delegated to a municipal corporation to "regulate" or to "license and regulate" under its police powers does not include the authority to impose a license tax or fee to raise revenue that bears no reasonable relation to the expense of regulation, i.e., that is not reasonably related to the "costs attendant upon the expense, trouble and labor of licensing and supervising". Vansant, Comptroller v. The Harlem Stage Company of Baltimore City, 59 Md. 330, 335 (1882). The court in Vansant upheld an ordinance imposing license fees on certain commercial vehicles, but cautioned that whenever a license fee exacted as a police regulation incidentally benefits the public treasury:

"[T]he Court must see . . . that the requirement of fees for the exercise of privileges is a reasonable exercise of power of legislation granted the corporation. If under the guise of licensing and regulating, the municipal corporation should attempt to raise revenue, or clearly violate the rule requiring a reasonable exercise of its powers, the Courts will declare such ordinance unlawful and void." Id. (Emphasis in original.)

That Article 23A, §2(33) authorizes only the collection of "reasonable permit fees and charges" also underscores the need for restraint in the exercise of municipal licensing authority.

II
Preemption/Conflict

Furthermore, as we noted earlier, municipal ordinances passed pursuant to the general powers granted by Article 23A must be harmonized with existing public general and public local law. Absent an express delegation to a municipal corporation of specific authority to regulate or license a particular activity, one must assess the proposed municipal regulation in light of the judicial doctrines of preemption and conflict. Local laws may not be given effect if they are preempted by or in conflict with public general or public local law.

A. Preemption

In general, preemption occurs either when the General Assembly has expressly stated its intent to occupy exclusively a specific field of legislation or when a court is able to infer, from a patterned approach to the subject, an implied intent on the part of the legislature to occupy exclusively the field. See McCarthy v. Board of Education of Anne Arundel County, 280 Md. 634 (1977); County Council for Montgomery County v. Montgomery Ass'n, Inc., 274 Md. 52 (1975); 65 Opinions of the Attorney General 136 (1980). When State law contains extensive provisions that comprehensively regulate a given field or profession, preemption of comparable local legislation will likely occur. The effect of such preemption is to preclude local legislation in that field, even though it may otherwise be within the political subdivision's general legislative powers. 63 Opinions of the Attorney General 377, 392 (1978).

Maryland courts have examined the nature of statewide legislation regulating various trades and professions on several different occasions, including State v. Knowles, 90 Md. 646 (1900) (dentists); Aitchison v. State, 204 Md. 538 (1953) and Scholle v. State, 90 Md. 729 (1900) (physicians); State v. Broadbelt, 89 Md. 565 (1899) (dairymen); Singer v. State, 72 Md. 464 (1890) (plumbers).

Given judicial recognition of the General Assembly's authority to enact statutes that regulate the conduct of businesses and professions affecting the public health and welfare, the courts may well find such statewide legislation to be preemptive of local legislation, at least where a comprehensive statutory scheme is apparent.

B. Concurrent Powers

In contrast to the doctrine of legislative preemption, there exists the concurrent or supplemental power theory. Under this latter theory, both the General Assembly (or, in its stead, a charter county) and a municipal corporation may legislate, without conflict, on the same subject. Billig v. State of Maryland, 157 Md. 185, 191-93 (1929). See also American Nat'l Bldg. and Loan Ass'n v. Mayor and City Council, 245 Md. 23 (1966).

Thus, for example, even though the State has enacted a public general law governing a particular business or occupation, that does not necessarily prohibit a political subdivision from enacting additional regulations that further that public general law's function. Mayor and City Council of Baltimore v. Sitnick, 254 Md. 303, 311, 315-19 (1969). See also City of Baltimore v. Stuyvesant Insurance Company, 226 Md. 379 (1960). As a general rule of judicial construction, where such municipal ordinances are enacted pursuant to competent authority, "they should be upheld by every reasonable intendment, and reasonable doubts as to the validity of an ordinance should be resolved in its favor". Eastern Tar Products Corp. v. State Tax Commission, 176 Md. 290, 297 (1939). See also McBriety v. Baltimore City, 219 Md. 223, 233 (1958); Town of Bladensburg v. Berg, 216 Md. 292, 296-99 (1958).

Nevertheless, as discussed below, concurrent municipal authority must be exercised with care so as not to conflict with or unduly impinge upon existing public general or public local law.

C. Conflicts

Despite concurrent municipal authority, a municipal corporation may not legislate in a fashion that conflicts with public general or public local law.

Irreconcilable conflict will result when a county or municipal corporation purports to prohibit that which State law expressly permits, or purports to permit that which State law prohibits; in such cases, the local law is invalid. Mayor and City Council of Baltimore v. Sitnick, 254 Md. 303, 317 (1969); Rossberg v. State, 111 Md. 394, 416 (1909).

The same rule applies as to potential conflict between municipal ordinances and legislation enacted by a charter county. For example, in Town of Forest Heights v. Tillie Frank, 291 Md. 331 (1981), the Maryland Court of Appeals invalidated a municipal ordinance that prohibited all fortunetelling within town limits. After examining the language of a county licensing statute that entitled an individual to practice fortunetelling at a designated location on completion of the application, the Court stated: "[A] county license provides affirmative authorization to tell fortunes. It is in direct conflict with the prohibition on fortunetelling contained in the municipal ordinances at issue here." 291 Md. at 338. The Court further observed: "[M]atters that may be popularly viewed as 'local' are actually controlled by public general laws enacted by the General Assembly. . . . Many 'local' licenses fall within this category." 291 Md. at 345.5

In City of Baltimore v. Stuyvesant Insurance Company, 226 Md. 379 (1960), the "irreconcilable conflict" test was applied to bail bond licensing legislation. The municipal ordinance was invalidated to the extent that it regulated topics already covered by State insurance laws in Article 48A. However, to the extent that the State did not license or regulate particular classes of bail bondsmen by public general law, the municipal ordinance was held to be a valid exercise of police power by the Mayor and City Council.

III
Conclusion

In summary, where a municipal corporation is authorized by public general or public local law to license or regulate a particular business or profession, the municipal corporation may impose reasonable fees and charges under the authority granted by Article 23A, §2(32) and (33).6 Where the business or occupation is already licensed by the State under Article 56, then, absent express authority to the contrary, the municipality may only require a permit "where necessary for regulatory purposes in the interest of the public health, safety or morals".

Furthermore, a municipal corporation may not legislate in an area that has been expressly or implicitly preempted by the State legislature, whether the business or profession is regulated under Article 56 or elsewhere. Finally, even absent preemption, a municipal corporation may not use its licensing authority to permit that which State law prohibits or to prohibit that which State law expressly permits.

In closing, then, even assuming that the Town has general power to enact reasonable licensing requirements, we fear that the indiscriminate application of a blanket ordinance requiring the licensure of all businesses and professions in the Town would likely be held invalid as applied to many of those businesses and professions, given existing Statewide law already regulating the very same activities.7

Stephen H. Sachs, Attorney General
Avery Aisenstark, Chief Counsel,
Opinions and Advice
Lynette M. Phillips, Staff Attorney

Editor's Note: The preceding Opinion was originally written as a letter of advice. Because of the general guidance provided, however, it is published here in a slightly revised format.

1 We recognize, of course, that Cecil County, in which the Town of Elkton is located, is a commissioner county, not a home rule charter county. Whether and to what extent an ordinance enacted by county commissioners affects municipal legislative authority has not yet been similarly addressed by the Maryland Court of Appeals.

2 Article 56, §12 states:

"Except as otherwise expressly provided in this article, no county, city or other political subdivision of this State shall require any person, firm or corporation to obtain a permit or license to transact in such county, city or other political subdivision, any business or occupation for which it or he is required to obtain a State license under the provisions of this article, nor shall any county, city or other political subdivision of this State levy any occupational tax or fee upon such person, firm or corporation for transacting any such business or engaging in any such occupation for which such State license is required. Notwithstanding the provisions of this section, any county, city or other political subdivision of this State may require permits or licenses to be obtained where necessary for regulatory purposes in the interest of the public health, safety or morals. The provisions of this section shall not be deemed to be repealed by any local act hereafter passed unless expressly referred to and expressly repealed in terms. Provided, however, that the provisions of this section shall not apply to Prince George's County, Baltimore City or Worcester County."

3 In pertinent part, Article XI-E, §5 of the Maryland Constitution provides as follows:

"No . . . municipal corporation shall levy any type of tax, license fee, franchise tax or fee which was not in effect in such municipal corporation on January 1, 1954, unless it shall receive the express authorization of the General Assembly for such purpose, by a general law which in its terms and its effect applies alike to all municipal corporations in one or more of the classes provided for in Section 2 of this Article."

4 Article 23A, §2(32) and (33) provides:

"In addition to, but not in substitution of, the powers which have been, or may hereafter be, granted to it, [the] legislative body [of every incorporated municipality in this State] also shall have the following express ordinance-making powers:

(32) To exercise the licensing authority granted in Article 56 and other provisions of law.

(33) Subject to the limitations imposed by the provisions of Article 81, to establish and collect reasonable fees and charges:

(i) For the franchises, licenses, or permits authorized by law to be granted by a municipal corporation; or

(ii) Associated with the exercise of any governmental or proprietary function authorized by law to be exercised by a municipal corporation."

5 In its footnote, the Court detailed the nature of the General Assembly's control over certain licensees, such as traders of all types, private detectives, employment agencies, restaurants, plumbers, storage warehouses, and so on. That the Maryland Court of Appeals has found such licensing activity to be significantly "controlled" by existing public general law indicates a potential for conflict to the extent that municipal law requires additional pre-operative payments from State-licensed enterprises. See also 63 Opinions of the Attorney General 377, 388 (1978).

6 In this regard, we again emphasize that Article 23A is not itself an independent grant of licensing/regulatory powers: It merely authorizes a municipal corporation to impose fees and charges in connection with the exercise of licensing authority that elsewhere has been granted to it by law.

7 If you should have questions as to the status of current State regulation of a particular business or occupation, counsel at the appropriate State agency will be happy to assist you.