Was it constitutional for Maryland to give a big property tax break to an all-male country club like Burning Tree?

Plain-English summary

A Maryland state senator asked the Attorney General to examine the constitutionality of Maryland's country club property tax preference law, Article 81, §19(e) of the Maryland Code, as applied to single-sex country clubs. Since 1965, the law let country clubs enter agreements with the state to be taxed on their value as open, undeveloped recreational land rather than on their full development value, deferring a much larger tax bill unless the club later changed uses. A 1974 amendment added a general ban on race, sex, and other membership discrimination for clubs receiving the preference, but included an exception: a club could keep the tax break while completely excluding one sex, if the Attorney General determined the club's primary purpose was to serve that sex. In 1978, Burning Tree Country Club in Montgomery County, an all-male club, was found to qualify for that exception and became the only club ever to use it. The opinion concluded that the state's role in this scheme, requiring the Attorney General to affirmatively certify a club's sex-exclusive purpose before it could keep a substantial tax advantage, supplied enough "state action" to make the club's discriminatory membership policy a violation of Maryland's Equal Rights Amendment. The opinion also found it likely, though less certain, that the arrangement violated the state constitution's "public purpose" limit on taxation and its equal protection guarantee. Because striking down only the exemption, and not the entire 1974 antidiscrimination law, was consistent with Maryland's severability rules, the opinion concluded the rest of the statute's discrimination ban should remain in force. Rather than simply instructing state agencies to stop enforcing the exemption, the Attorney General announced an intention to seek a court declaration that the provision was unconstitutional, given the club's reliance on the 1978 determination and the need for a prompt, definitive resolution.

Currency note

This opinion was issued in 1983. 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.

An editor's note appended to the opinion reports that the Court of Appeals later held the Attorney General lacked authority to bring the declaratory judgment action described in the opinion (State v. Burning Tree Club, 301 Md. 9 (1984)), but that private plaintiffs separately challenged the exemption, and the Circuit Court for Montgomery County held the provision unconstitutional in Bainum v. State of Maryland, with an appeal pending at the time the note was published. This page does not track the outcome of that appeal or any later statutory changes; verify the current status of Article 81, §19(e) (or its successor provisions) before relying on this opinion for present-day tax or discrimination questions.

Common questions

Why did an all-male country club's tax break raise an Equal Rights Amendment problem in Maryland?
Because the club's exemption from the antidiscrimination requirement was not a purely private choice; it existed only because the state's own Attorney General was legally required to certify that the club's "primary purpose" was to exclude one sex before the club could keep the tax preference. The opinion concluded that this affirmative state certification, tied to a substantial tax benefit, supplied the "state action" needed to bring the club's exclusionary practices within reach of the ERA, which by its terms applies only to discrimination "under the law."

How much money was actually at stake for a club like Burning Tree?
A significant amount. The opinion gave a concrete 1981 example: Burning Tree's country-club-use assessment valued the property at $1,027,570, versus $11,467,500 under a "highest and best use" valuation, resulting in a tax bill of $25,696.17 instead of $156,008.92, a savings of $130,312.75 for that single year.

If the exemption for single-sex clubs was unconstitutional, did the whole antidiscrimination law fall too?
No, according to the opinion. Applying Maryland's severability rules, the opinion concluded that only the single-sex exemption within §19(e)(4) should be struck, leaving the broader ban on race, sex, and other discrimination by tax-preferred country clubs intact, in part because the 1974 legislation was originally introduced without that exception and did not depend on it to function.

Did the Attorney General order the club to stop discriminating right away?
No. Rather than directing a state agency to stop enforcing the exemption, as the office had done in some past cases, the opinion explained that because the burden here would fall on a private club relying on a prior 1978 government determination, and because a contract-impairment issue was implicated, the Attorney General intended to resolve the question through a court declaratory judgment action rather than unilateral enforcement action.

Background and statutory framework

Maryland's country club tax preference, enacted in 1965 as Article 81, §19(e), let the State Department of Assessments and Taxation enter agreements with country clubs to defer the difference between a "country club use" property tax assessment and a "highest and best use" assessment, so long as the land remained in country club use; if a club changed uses, sold to a noncomplying buyer, or otherwise failed the statutory definition, up to ten years of deferred taxes became due (§19(e)(1)-(3), (5), (7)-(9), (14)). The opinion characterized this as more than an ordinary tax exemption, reasoning that it created a contractual obligation protected by the Contract Clause of the U.S. Constitution that the state could not unilaterally impair (citing Kimball-Tyler v. Baltimore City). A 1974 amendment (Chapter 870, Laws of Maryland 1974) added §19(e)(4)'s general ban on discrimination by clubs receiving the preference, enforced through an Attorney General investigation, hearing, and cease-and-desist process, but exempted clubs whose facilities were "operated with the primary purpose, as determined by the Attorney General, to serve or benefit members of a particular sex." In 1978, a prior Attorney General determined that Burning Tree Country Club, which excluded women from its clubhouse entirely except to buy Christmas gifts in the pro shop, qualified for that exemption.

Applying Maryland's Equal Rights Amendment (Article 46 of the Declaration of Rights), which the opinion read as reaching only governmental conduct or private conduct affected by "state action," the opinion worked through the U.S. Supreme Court's then-recent trilogy of state action cases (Lugar v. Edmondson Oil Co., Rendell-Baker v. Kohn, and Blum v. Yaretsky) and concluded that §19(e)(4) satisfied multiple independent tests for state action: the exemption was a privilege created directly by state law and triggered by a state officer's affirmative finding; the state provided "significant encouragement" to discriminate by rewarding total exclusion with a tax benefit and freedom from scrutiny; the tax scheme performed a traditionally governmental land-use "public function" akin to zoning; a "close nexus" existed because the tax benefit was conditioned on state-certified discrimination; and a "symbiotic relationship" existed because the state's open-space policy goal was achieved, in the case of a single-sex club, only because of the club's exclusionary practices. The opinion also found the arrangement raised serious, though less certain, doubts under Article 15 of the Declaration of Rights (the requirement that taxation serve a "public purpose," citing Wilson v. Board of County Commissioners and Baltimore City v. Starr Church, and drawing on the U.S. Supreme Court's Bob Jones University v. United States) and under Article 24's equal protection guarantee, applying rational-basis review (citing Attorney General v. Waldron) and finding it hard to justify rewarding the clubs that discriminated most completely while regulating those that discriminated least. On severability, the opinion concluded Maryland's presumption favoring severance (citing O. C. Taxpayers v. Ocean City and Article 1, §23 of the Maryland Code) supported striking only the single-sex exemption and leaving the rest of the 1974 antidiscrimination law in force.

Citations

Statutes:

• Md. Code Art. 81, §19(e), including subsections (1), (2), (3), (4), (5), (7), (8), (9), and (14) (country club tax preference and antidiscrimination exemption)
• Md. Declaration of Rights, Article 46 (Equal Rights Amendment)
• Md. Declaration of Rights, Article 15 (taxation and spending for public purpose)
• Md. Declaration of Rights, Article 24 (equal protection / due process)
• Md. Code Art. 49B, §5(b) (public accommodations exemption for uniquely private, single-sex facilities)
• Md. Code Art. 1, §23 (severability presumption)
• Chapter 399, Laws of Maryland 1965 (original country club tax preference)
• Chapter 870, Laws of Maryland 1974 (added the antidiscrimination ban and single-sex exemption)
• U.S. Const. amend. XIV (Equal Protection Clause)
• U.S. Constitution, Contract Clause

Cases:

• Kimball-Tyler v. Baltimore City, 214 Md. 86, 97 (1957)
• Sharrock v. Dell Buick-Cadillac, Inc., 45 N.Y.2d 152, 160 (1978)
• Writers Guild of America, West, Inc. v. FCC, 423 F.Supp. 1064, 1135-36 (C.D. Cal. 1976)
• Naranjo v. Alverno College, 487 F.Supp. 635, 637 (E.D. Wis. 1980)
• Statom v. Board of Commissioners, 233 Md. 57 (1963)
• Golden v. Biscayne Bay Yacht Club, 530 F.2d 16 (5th Cir. 1976), cert. denied, 429 U.S. 872 (1976)
• Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922 (1982)
• Rendell-Baker v. Kohn, 457 U.S. 830 (1982)
• Blum v. Yaretsky, 457 U.S. 991 (1982)
• Walz v. Tax Commission of City of New York, 397 U.S. 664, 691 (1970)
• Pitts v. Dept. of Revenue, State of Wisconsin, 333 F.Supp. 662 (E.D. Wis. 1971)
• McGlotten v. Connally, 338 F.Supp. 448 (D. D.C. 1972)
• Falkenstein v. Dept. of Revenue, State of Oregon, 350 F.Supp. 887 (D. Ore. 1972), appeal dismissed for lack of jurisdiction, 409 U.S. 1099 (1973)
• Cornelius v. Benevolent Protective Order of Elks, 382 F.Supp. 1182, 1187 (D. Conn. 1974)
• Brunson v. Rutherford Lodge No. 547, B. & P.O. of Elks, 319 A.2d 80 (N.J. Super. 1974)
• Eaton v. Grubbs, 329 F.2d 710, 713 (4th Cir. 1964)
• Bob Jones University v. United States, 461 U.S. 574 (1983)
• Rand v. Rand, 280 Md. 508 (1977)
• Rostker v. Goldberg, 453 U.S. 57 (1981)
• Kirchberg v. Feenstra, 450 U.S. 455, 461 (1981)
• Personnel Administrator of Mass. v. Feeny, 442 U.S. 256, 273 (1979)
• Wengler v. Druggists Mutual Insurance Co., 446 U.S. 142, 150 (1980)
• Wilson v. Board of County Commissioners, 273 Md. 30 (1974)
• Baltimore City v. Starr Church, 106 Md. 281 (1907)
• Frostburg v. Jenkins, 215 Md. 9, 14 (1957)
• Snowden v. Anne Arundel County, 295 Md. 429 (1983)
• Wells v. Hyattsville, 77 Md. 125, 138 (1893)
• Marchant v. Mayor and City Council of Baltimore, 146 Md. 513, 521 (1924)
• Lerch v. Maryland Port Authority, 240 Md. 438, 450 (1965)
• Lodge #817, Order of Elks v. Supervisor, 292 Md. 533 (1982)
• Daniel Loughran Co. v. Lord Baltimore Candy Co., 178 Md. 38, 45 (1940)
• Sports Daily v. Public Service Commission, 179 Md. 355, 358 (1941)
• Attorney General v. Waldron, 289 Md. 683 (1981)
• Wheeler v. State, 281 Md. 593 (1977)
• Davidson v. Miller, 276 Md. 54 (1975)
• Bruce v. Director, Chesapeake Bay Affairs, 261 Md. 585 (1971)
• O. C. Taxpayers v. Ocean City, 280 Md. 585, 600 (1977)
• Shell Oil Co. v. Supervisors, 276 Md. 36, 49 (1975)
• Cities Service Co. v. Governor, 290 Md. 553, 576 (1981)
• State v. Schuller, 280 Md. 305 (1977)
• Barnes v. Pinkney, 236 Md. 564 (1964)
• First Continental Savings & Loan Ass'n v. Director, 229 Md. 293 (1962)
• State v. Burning Tree Club, 301 Md. 9 (1984) (editor's note, post-dates the opinion)

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/1983/Volume68_1983.pdf

Original opinion text

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

Constitutional Law, Equal Rights Amendment, Equal Protection, Taxing for "Public Purpose", Assessments and Taxation, Country Club Preference, "State Action", Statutes, Severability, Property Tax Preference for Single-Sex Country Clubs is Unconstitutional.

August 3, 1983

The Honorable Stewart Bainum, Jr.
Senate of Maryland

You have requested our opinion on the constitutionality of a portion of Article 81, §19(e) of the Maryland Code, which authorizes a preferential property tax assessment for country clubs under certain conditions. Your question particularly concerns those provisions of §19(e)(4) that impose a prohibition against sex discrimination by all country clubs receiving this preferential assessment, except those clubs "whose facilities are operated with the primary purpose, as determined by the Attorney General, to serve or benefit members of a particular sex".

In addressing your question, we have considered in detail the following specific issues:

1. Is there sufficient "state action" present in §19(e)(4) so that the State's Equal Rights Amendment, Article 46 of the Declaration of Rights, is violated by the exclusionary membership and guest policies of a single-sex country club that receives the property tax preference?

2. Does authorization of a tax benefit for a single-sex country club violate the requirement of Article 15 of the Declaration of Rights that the State may tax and spend only for a "public purpose"?

3. Does §19(e)(4) violate Article 24 of the Declaration of Rights by invidiously or irrationally discriminating between two classes of country clubs, i.e., between (i) single-sex clubs, which are permitted to discriminate on the basis of sex, and (ii) all other clubs, which are prohibited from discriminating on the basis of sex?

The central issue is not whether a single-sex country club in Maryland may continue to close its doors to one sex. The issue is whether Maryland's country club tax preference scheme unconstitutionally involves the State in subsidizing sex discrimination.

For the reasons given below, we think that it does. It is our opinion that implementation of §19(e)(4) does involve "state action" and, as a consequence, the exclusionary practices of single-sex country clubs receiving tax benefits under §19(e) violate Article 46 of the Declaration of Rights, the Equal Rights Amendment. Although less certain, this authorization of a tax benefit for a single-sex country club might well also violate Articles 15 and 24 of the Declaration of Rights.

I
The Statute: Its History and Operation

A. Overview of Statute

The General Assembly enacted the country club tax preference, Article 81, §19(e), as an emergency measure in 1965. See Chapter 399, Laws of Maryland 1965 (effective April 8, 1965). The Preamble to the 1965 Act declares:

"[I]t [is] in the general public interest that [country club] uses should be encouraged in order to provide open spaces and provide recreational facilities and to prevent the forced conversion of such country clubs to more intensive or different uses as a result of economic pressures caused by the assessment of country club land and improvements at a rate or level incompatible with the practical use of such property for country clubs."

The mechanics of the tax preference have changed very little since 1965. The State Department of Assessments and Taxation is authorized to make "uniform agreements" with country clubs "relative to the assessment and taxation of lands actively devoted to use as a country club". §19(e)(1). The initial period to be covered by such an agreement is at the option of the club, but may not be less than 10 years. §19(e)(5). Should the State or the club desire to continue the arrangement, extensions may be agreed to for additional 5-year increments. §19(e)(14). Without an extension, the agreement expires.

If a club enters into an agreement, its land is assessed for purposes of current property tax liability on the basis of its use as a country club and not "as if subdivided or used for any other purpose". §19(e)(2). At the same time, the property also is assessed on the basis of its highest and best use, i.e., as if subdivided or more intensely developed. §19(e)(3). However, taxes attributable to the greater assessment are deferred and do not become payable unless the property ceases to be used as a country club, is conveyed to a new owner unwilling to abide by the agreement, or fails to meet the statutory definition of "country club". §19(e)(7), (8), and (9). If any of these events occurs, a club will be liable for up to 10 years of deferred taxes. §19(e)(7).

An analysis of these provisions indicates that the §19(e) tax preference, quite unlike the typical tax exemption [cf. Kimball-Tyler v. Baltimore City, 214 Md. 86, 97 (1957)], constitutes a surrender of a portion of the State's taxing power and, under the Contract Clause of the United States Constitution, which prohibits the states from "impairing the obligation of contracts", creates a contractual obligation that the State is not free to impair at will. See Opinion No. 79-074 (December 14, 1979) (unpublished).

B. The Discrimination Ban

When it was first enacted in 1965, §19(e) contained no ban against discrimination by any of the country clubs receiving the tax preference. Those restrictions were only added to §19(e)(4) some 9 years later, by Chapter 870, Laws of Maryland 1974.

As introduced, the 1974 legislation would have absolutely prohibited all clubs that receive the tax preference from discriminating in membership or guest privileges on the basis of race, color, creed, national origin, or sex. To enforce this antidiscrimination requirement, the statute charges the Attorney General with determining whether a club is engaging in any prohibited discrimination. In connection with a discrimination investigation, the Attorney General is authorized to go to court for issuance of a subpoena for club records. Before the Attorney General may make a determination that a club has engaged in discriminatory practices, the Attorney General must afford a hearing to the club. If a "pattern of discrimination" is then determined to exist, the Attorney General must try to resolve the matter by consent agreement. If the club violates that consent agreement or refuses to enter into a consent agreement, the Attorney General must then issue a cease and desist order. Only if that cease and desist order has been violated is the club's preferential assessment placed in jeopardy: upon violation of the order, the tax advantage will be withdrawn until the Attorney General determines that the club is again in compliance with the law.

Before passage of the 1974 legislation, an amendment to the bill was adopted, adding the following exemption for single-sex clubs:

"The provisions of this [sub]section with respect to discrimination in sex shall not apply to any club whose facilities are operated with the primary purpose, as determined by the Attorney General, to serve or benefit members of a particular sex . . . ."

Thus, as finally enacted, the Attorney General was given somewhat anomalous duties. In most cases, the Attorney General is called upon to investigate and determine whether discrimination exists, so as to trigger the statute's antidiscrimination enforcement scheme. In the case of single-sex clubs, however, the converse is true: the Attorney General is called upon to investigate and determine whether discrimination exists to such a degree, i.e., whether the "primary purpose" of the club is to serve members of a particular sex, as to justify an outright exemption from this antidiscrimination enforcement scheme. In most cases, then, the Attorney General is required to investigate prohibited discriminatory practices, for the purpose of taking punitive action; in the case of single-sex country clubs, however, the Attorney General is asked to certify that the club's "primary purpose" is, in effect, a discriminatory one, for the purpose of authorizing a continued tax preference.

C. Prior Implementation of Exemption

In February of 1978, the then Attorney General reached just such a conclusion in an investigation of Burning Tree Country Club in Montgomery County. As a result of that investigation, he concluded that Burning Tree, a single-sex country club, "complied" with the statutory exemption. (To date, Burning Tree is the only single-sex country club in Maryland that has qualified for a tax preference under the exemption.)

His findings stressed that women were not allowed to enter or use clubhouse facilities, described by Burning Tree as being devoted solely to golf and "its attendant pastimes", and that no other events, to which women might be expected to be invited, were ever held at the club. See Determination Letter from Jon F. Oster, Deputy Attorney General, to M. Everett Parkinson, President of Burning Tree Country Club (February 15, 1978).1 In concluding that this single-sex club "complied" with the statutory exemption, the former Attorney General adopted the club's position that "[t]he only way the club could be 'operated' to serve both sexes would be by building a substantial addition to the clubhouse which would have the effect of requiring major changes in the location of the first tee, the ninth tee and the eighteenth green". Id.

1 An exception to the no-women rule permitted wives to purchase Christmas gifts for their husbands from the club's pro shop.

II
State Action under the Equal Rights Amendment

A. Introduction

Maryland's Equal Rights Amendment ("ERA") was adopted in 1972 as Article 46 of the Declaration of Rights. It provides that: "Equality of rights under the law shall not be abridged or denied because of sex." This Office has consistently viewed the words "under the law" as indicating that the constitutional prohibition applies only to (i) governmental entities and (ii) private organizations affected by "state action". See 68 Opinions of the Attorney General 164, 165 (1983); 65 Opinions of the Attorney General 103, 103 (1980); 63 Opinions of the Attorney General 246, 250 (1978).

Clearly a single-sex country club receiving a tax preference under §19(e) is not a governmental entity. However, we believe it to be equally clear that, under §19(e), such an entity is affected by "state action".2

2 On at least two prior occasions, this Office reserved decision on whether state action would be found in the discrimination practices of a tax exempt private club. See 63 Opinions of the Attorney General 246 (1978); 56 Opinions of the Attorney General 468 (1971).

B. Elements of State Action

There are probably as many approaches to defining "state action" as there are cases and litigants in this evolving area of constitutional law. For example, the courts of some states, in enforcing state constitutional provisions, have felt free to find "state action" more readily than the Supreme Court has done in treating cases arising under the Fourteenth Amendment to the United States Constitution. See, e.g., Sharrock v. Dell Buick-Cadillac, Inc., 45 N.Y.2d 152, 160 (1978).3 Other courts have suggested that the test for finding "state action" may vary, depending on the circumstances. For example, a court might be more inclined to find state action in situations involving race or sex discrimination than in those involving some other constitutional violation. See, e.g., Writers Guild of America, West, Inc., v. FCC, 423 F.Supp. 1064, 1135-36 (C.D. Cal. 1976). Similarly, a court might be more likely to find state action in disputes where governmental agencies or officials have themselves been sued than in those where only private parties are involved. See, e.g., Naranjo v. Alverno College, 487 F.Supp. 635, 637 (E.D. Wis. 1980).

We need not here consider how a Maryland court might respond to suggestions that a more lenient test be applied to the ERA. In our view, even if the court were to apply the more recent, relatively stringent Fourteenth Amendment "state action" tests of the Supreme Court, it would find state action in §19(e)(4).

3 Indeed, even in applying the Fourteenth Amendment, the leading Maryland case on "state action" similarly seems to be more willing to find state action than have the federal courts. Compare Statom v. Board of Commissioners, 233 Md. 57 (1963) (furnishing free use of public school buildings to segregated boys' club violates Fourteenth Amendment) with Golden v. Biscayne Bay Yacht Club, 530 F.2d 16 (5th Cir. 1976), cert. denied, 429 U.S. 872 (1976) (preferential city lease with discriminatory yacht club not sufficient "state action").

In a trio of cases decided in June of 1982, the Supreme Court attempted to clarify its past, often conflicting precedents on state action and to formulate a new set of rules to guide that judicial inquiry. See Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922 (1982); Rendell-Baker v. Kohn, 457 U.S. 830 (1982); Blum v. Yaretsky, 457 U.S. 991 (1982).

In Lugar v. Edmondson Oil, the majority opinion distilled the entire "state action" analysis into two distinct inquiries:

1. Whether the alleged constitutional deprivation was caused by the exercise of some right or privilege created by the state, by a rule of conduct imposed by the state, or by a person for whom the state is responsible; and

2. Whether the party charged with the deprivation is a person who may be fairly said to be a "state actor". 457 U.S. at 938.

The first inquiry is relatively straightforward. The second inquiry, in contrast, is ordinarily the more difficult and complex one, because mere action by a private party pursuant to a statute is not, without "something more", sufficient to characterize that party as a "state actor". 457 U.S. at 940.

In its trio of "state action" cases, the Supreme Court clarified the tests for finding this "something more". For example, the Court held that a state financial subsidy to a private entity does not, of itself, make the decisions of that entity "state action". Rendell-Baker v. Kohn, 457 U.S. at 841. Similarly, the Court said that mere state regulation of a private entity does not, of itself, supply that "something more" needed for "state action". Blum v. Yaretsky, 457 U.S. at 1005.

However, the Court also said that any one of the following tests, standing alone, does give rise to "state action":

1. A state can be held responsible for a private decision when it has exercised "coercive power" or has provided such "significant encouragement", either overt or covert, that the choice must in law be deemed to be that of the state. Blum v. Yaretsky, 457 U.S. at 1005.

2. State action can exist when a private party performs a "public function" that has traditionally been the exclusive prerogative of the state. 457 U.S. at 1012-13.

3. Extensive and detailed state regulation of a private entity can amount to state action if there is a sufficiently "close nexus" between the state and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the state itself. 457 U.S. at 1006.

4. A "symbiotic relationship" between the state and a private entity can constitute state action when the state profits from the discriminatory conduct. Rendell-Baker v. Kohn, 457 U.S. at 843-44.4

4 The first three of these "tests" have been denominated, respectively, the "state compulsion" or "state encouragement" test, the "public function" test, and the "nexus" test. See Lugar v. Edmondson Oil, 457 U.S. at 940. The fourth, the "symbiotic relationship" analysis, has been said to be one branch of the "nexus" test. Id. It is clear that only one of these tests need be satisfied for state action to be found. Id.

C. Application

In our view, each of the applicable inquiries and tests is satisfied when applied to §19(e)(4).

First, the source of the country club tax preference is state law. Moreover, it is state law that, while generally imposing a ban against sex discrimination for clubs receiving the preference, nevertheless exempts a club from that ban if the State, acting through the Attorney General, makes an affirmative determination that the club operates with the primary purpose of denying its facilities entirely to members of one sex. Thus, the "privilege" both to fully discriminate against members of one sex and, at the same time, to receive a substantial tax benefit5 is "created by" state statute. And because this privilege is triggered by a finding that state authorities are required by law to make, a tax-supported club that discriminates against members of one sex becomes "a person for whom the State is responsible". Lugar v. Edmondson Oil, 457 U.S. at 938.

5 For example, in 1981, the Burning Tree Country Club was given a preferential assessment that was based on a "country club use" value of $1,027,570 rather than on the property's "highest and best use" value of $11,467,500. Under a "highest and best use" valuation, Burning Tree would have been required to pay the State a tax of $156,008.92. As a result of the "country club use" valuation, however, it paid only $25,696.17, a net tax savings, for but one year, of $130,312.75.

Second, although the State might not be "coercing" clubs into sex discrimination, it is certainly providing "significant encouragement" to that end. Clubs that are willing to close their facilities entirely to members of one sex receive both a tax advantage and freedom from governmental scrutiny of their membership and guest practices. In contrast, clubs not willing to make such a total commitment to sex discrimination are subject to the ban and, on violation of that ban, to loss of their tax advantage.

And this tax advantage is not a typical tax exemption involving "mere passive state involvement". Cf. Walz v. Tax Commission of City of New York, 397 U.S. 664, 691 (1970).6 Under §19(e), a qualifying country club receives more than a mere tax

6 We recognize, as we must, that the recent Supreme Court "state action" decisions, e.g., Blum v. Yaretsky, 457 U.S. 991 (1982), appear to undercut the vitality of older, lower court cases that have struck down or questioned as unconstitutional the grant of a tax exemption to racially discriminatory private or social clubs on the basis of a very limited "state action" inquiry. See Pitts v. Dept. of Revenue, State of Wisconsin, 333 F.Supp. 662 (E.D. Wis. 1971); McGlotten v. Connally, 338 F.Supp. 448 (D. D.C. 1972); Falkenstein v. Dept. of Revenue, State of Oregon, 350 F.Supp. 887 (D. Ore. 1972), appeal dismissed for lack of jurisdiction, 409 U.S. 1099 (1973); Cornelius v. Benevolent Protective Order of Elks, 382 F.Supp. 1182, 1187 (D. Conn. 1974); Brunson v. Rutherford Lodge No. 547, B. & P. O. of Elks, 319 A.2d 80 (N.J. Super. Ct. 1974). See also Opinion of the Attorney General for State Tax Commission, State of Idaho (Feb. 13, 1973). But see Eaton v. Grubbs, 329 F.2d 710, 713 (4th Cir. 1964) (a tax exemption by itself may not impose upon the recipient the restrictions of the Fourteenth Amendment, but may attain significance when viewed in combination with other attendant state involvement).

We do note, however, that in Bob Jones University v. United States, 461 U.S. 574, [103 S.Ct. 2017, 2032] n. 24 (1983), the Supreme Court did reserve for decision the issue of whether the denial of tax exempt status to racially discriminatory schools was required by the equal protection component of the Fifth Amendment. Because we find "state action" in so many other features of §19(e), we need not decide whether the conferral of a tax preference, by itself, to a sexually discriminatory private club constitutes "state action" under the ERA.

advantage. It benefits from the State's constitutionally-enforceable obligation not to substantially and without justification impair its agreement to confer that tax advantage; as such, it receives a surrender of a portion of the State's sovereign power to tax. See Opinion No. 79-074 (December 14, 1979) (unpublished). Cf. Kimball-Tyler v. Baltimore City, 214 Md. 86, 97 (1957). Even the General Assembly could not, without justification, abrogate such agreements. This is no ordinary tax break. It is the State putting its entire weight behind the purposes and policies of, and the terms and conditions set forth in, §19(e).

Third, as the Preamble to the 1965 Act makes clear, the country club tax preference seeks to impose a "public function", namely, land use control, on the recipients of the tax preference. This function, which is akin to the zoning power, has traditionally and exclusively been associated with the powers and prerogatives of government.

Fourth, we think it obvious that a "close nexus" exists between the regulatory activities of the State and the sexually discriminatory practices of a single-sex country club. This is so because the single-sex country club can obtain its tax advantage only upon a State determination that it is in fact discriminating to the fullest extent possible. When a state statute that promotes a state program of open space preservation also provides a special exemption from a state tax on the very condition that certain discriminatory practices have been certified to by the state's attorney general, it is the State that is acting. That the statutory scheme commands the Attorney General to identify and endorse discriminatory practices which the State constitution expressly forbids to the State itself, and that the State fisc is employed to underwrite these practices,7 are ironies that only serve to highlight the State's pervasive participation in these practices.

Finally, as the former Attorney General's determination in the Burning Tree Country Club investigation indicates, §19(e)(4) fosters a "symbiotic relationship" between the single-sex club and the State. Maryland "profits" not only from the

7 See note 5 above.

open space for which it bargained but, uniquely in the case of a single-sex club, it might well obtain its full share of that open space only because the club discriminates against one sex or another. For example, as expressed in the 1978 Determination Letter to Burning Tree Country Club, "[t]he only way th[at] club could be 'operated' to serve both sexes" would be by cutting into the club's open space.8

D. Conclusion

Under Maryland's Equal Rights Amendment, once state action is found to exist, no justification is sufficiently compelling to sanction sex discrimination. See Rand v. Rand, 280 Md. 508 (1977).9

On the basis of the various factors described above, we have no doubt that state action exists here: A single-sex country club receiving a tax preference under Article 81, §19(e) violates the ERA when it excludes the opposite sex as members and guests; and the State violates the ERA when, pursuant to that same state statute, it encourages, endorses, and benefits from such discrimination.10

8 See text accompanying note 1 above.

9 We have recognized an exception to the ERA where state classifications are premised on a characteristic unique to one sex. See, e.g., 65 Opinions of the Attorney General 108 (1980). See also Article 49B, §5(b), which exempts from the State Public Accommodations Law those facilities "which are uniquely private and personal in nature, designed to accommodate only a particular sex". We do not believe that golf and "its attendant pastimes" (see text accompanying note 1 above) fit that description.

10 You have also asked whether §19(e)(4), as applied to the discriminatory practices of a single-sex country club, violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Unlike the Maryland ERA, the Fourteenth Amendment will permit sex discrimination under certain circumstances. Cf. Rostker v. Goldberg, 453 U.S. 57 (1981) (upholding male-only draft registration). However, a party seeking to uphold a statute or practice classifying individuals on the basis of sex and challenged under the Fourteenth Amendment must carry the burden of showing an "exceedingly persuasive justification" for the classification. Kirchberg v. Feenstra, 450 U.S. 455, 461 (1981) (quoting Personnel Administrator of Mass. v. Feeny, 442 U.S. 256, 273 (1979)). That burden is met only by showing that the classification serves "important governmental objectives and that the discriminatory means employed" are "substantially related to the achievement of those objectives". Wengler v. Druggists Mutual Insurance Co., 446 U.S. 142, 150 (1980). In light of this standard, a single-sex country club receiving a tax preference under §19(e) could be expected to argue that it is serving an important governmental purpose by preserving open space and that the "discriminatory means" it employs, i.e., the exclusion of one sex, is "substantially related" to the goal of maintaining the open space because building locker rooms and rest rooms for members of the opposite sex would diminish the club's open space. See 1978 Determination Letter to Burning Tree Country Club, cited at text accompanying note 1 above. Without for a moment accepting the validity of such a justification, we do note that it involves the kind of factual question that a court, rather than an Attorney General's Opinion, is designed to resolve. For this reason, and because of our conclusion that the practices of single-sex clubs under §19(e)(4) already violate the State ERA, we refrain from expressing any view on the federal constitutional issues.

III
Public Purpose and Article 15 of the Declaration of Rights

Your second inquiry focuses on the long-standing Maryland constitutional prohibition against taxing and spending for anything but a public purpose, see Wilson v. Board of County Commissioners, 273 Md. 30 (1974), and the similar prohibition against conferring a tax exemption for other than a public purpose, see Baltimore City v. Starr Church, 106 Md. 281 (1907).

At one time, it was thought that such a prohibition was contained in the Due Process Clause of the Fourteenth Amendment and the corresponding provisions of the Maryland Constitution. See Frostburg v. Jenkins, 215 Md. 9, 14 (1957); 61 Opinions of the Attorney General 497, 498 (1976). It is now clear, however, that the prohibition is firmly rooted in Article 15 of the Declaration of Rights, which provides that all taxes levied by the State shall be "for the support of the general State Government" and that taxes are to be imposed "with a political view for the good government and benefit of the community". See Snowden v. Anne Arundel County, 295 Md. 429 (1983).

The purpose of superimposing such a constitutional requirement on the granting of tax exemptions is to ensure that a tax exemption is "made in the advancement of the interests of the whole people", 71 Am.Jur.2d State and Local Taxation §307 (1973), and to prevent "the burden of supporting the government from falling upon some individuals to the exclusion or exemption of others", Wells v. Hyattsville, 77 Md. 125, 138 (1893).

This constitutional doctrine, however, does not preclude the State from exempting persons from taxes when "State policy and considerations beneficial to the public justify it". Baltimore City v. Starr Church, 106 Md. 281, 285 (1907). Moreover, as the Court of Appeals has indicated: "What is a public purpose for which public funds may be expended is not a matter of exact definition; it is almost entirely a matter of general acceptance." Frostburg v. Jenkins, 215 Md. 9, 16 (1957). Indeed, the line of demarcation "is not immutable or incapable of adjustment to changing social and economic conditions that are properly of public and governmental concern". Id.

An exercise even more difficult than marking the ever shifting boundaries of the "public purpose" doctrine is trying to determine whether a tax exemption serves a "public purpose" when that exemption advances one governmental objective while, at the same time, contravening some other public policy. In Marchant v. Mayor and City Council of Baltimore, 146 Md. 513, 521 (1924), the Court of Appeals said that "[t]he public character of the use to which [certain] harbor structures are devoted is not affected by the fact that they may not all be made available for the indiscriminate use of the public". See also Lerch v. Maryland Port Authority, 240 Md. 438, 450 (1965). And, in Frostburg v. Jenkins, 215 Md. 9, 17 (1957), the Court said that whether private benefits outweigh public benefits "seems to us to be primarily a legislative rather than a judicial problem".11

Nonetheless, in Wilson v. Board of County Comm'rs, 273 Md. 30, 51-52 (1974), the Court took upon itself to consider the question of whether a subsequent "private purpose" undermined the public purpose otherwise served by the enactment in question. And, in Lodge #817, Order of Elks v. Supervisor, 292 Md. 533 (1982), the Court held that, as a matter of statutory construction, a fraternal organization was not entitled to

11 The Frostburg decision also noted that "[t]he fact that incidental benefits are passed on to [a private corporation] is not fatal, if there are substantial public benefits to support the action taken." 215 Md. at 17. Nevertheless, "[i]t is also recognized that, with due regard to the legislative prerogative, the courts have a duty to determine whether the particular use is within the scope of the constitutional powers." 215 Md. at 16.

a tax exemption for a golf course used only by its members. In so doing, the Court said:

"Undoubtedly, as to those members of the Lodge who use the golf course, its purpose is a benevolent one. But the benevolence does not flow to the general public which is prohibited from using the facility. In a nutshell, the golf course is not used, exclusively, primarily or otherwise, for benevolent purposes in the public interest within the contemplation of §9(e) [of Article 81] . . . . To afford a tax exemption to the Lodge's golf course in the circumstances of this case would be to require the taxpayers of this State to subsidize private recreational activities in which they are forbidden to participate." 292 Md. at 539.12

Finally, the effect of the Supreme Court's decision in Bob Jones University v. United States, 461 U.S. 574 (1983), cannot be ignored. The Court there held that, as a matter of statutory construction, a racially discriminatory private educational institution was not entitled to a federal income tax exemption and, to qualify for an income tax exemption, a private organization "must demonstrably serve and be in harmony with the public interest. The institution's purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred." 461 U.S. at [103 S.Ct. at 2029].13

In essence, your inquiry comes down to whether the Court of Appeals, in making the necessary constitutional inquiry under Article 15 of the Declaration of Rights, would adopt as a guide the Bob Jones formulation of the "public purpose" test, as there fashioned in the dual context of federal income tax law

12 The Order of Elks opinion relied, inter alia, upon Brunson v. Rutherford Lodge No. 547, B. & P.O. of Elks, 319 A.2d 80 (N.J. Super. 1974), which struck down a tax exemption for a segregated club on constitutional grounds. See note 6 above.

13 In an attempt to limit the far reaching impact of the Court's decision, the majority emphasized that a tax benefit was to be denied only where there was "no doubt" that the organization's activities violated fundamental public policy. 461 U.S. at [103 S.Ct. at 2032].

and the common law concept of charity.14 All we can say for certain is that there is dicta in Maryland cases that can be read either way. But, if the Bob Jones test were engrafted onto the Maryland constitutional doctrine that requires a public purpose for the exercise of the taxing and spending powers, we have no doubt that tax support for a single-sex country club, at least where, as here, its discriminatory practices are supported by state action, would offend Article 15 of the Declaration of Rights.15

Until the Maryland courts provide further guidance as to the appropriate test to be applied, we can only state that a serious question exists as to the constitutionality of §19(e)(4) under Article 15 of the Declaration of Rights.

IV
Equal Protection and Article 24 of the Declaration of Rights

Implied in Article 24 of the Declaration of Rights is an equal protection guarantee similar to that found in the Fifth and Fourteenth Amendments to the United States Constitution.16

14 Clearly, §19(e) was designed to serve an important public purpose: the preservation of open space. However, if the Bob Jones rationale were extended to Article 15, this would not conclude the inquiry, no more than did the assertion by the racially discriminatory school in Bob Jones that it served an educational purpose. In our view, if Bob Jones governed the Article 15 "public purpose" test, the public policy embodied in the ERA, which "was intended to, and did, drastically alter traditional views of the validity of sex-based classifications", Rand v. Rand, 280 Md. 508, 516 (1977), would be violated by the exclusionary policies of a tax-supported single-sex country club.

15 At this time, we express no view on whether a state tax exemption or tax advantage that does not contain the particular "state action" features manifested in §19(e)(4) would violate Article 15 if conferred upon a private club that discriminates on the basis of sex or race.

16 Article 24 provides: "That no man ought to be taken or imprisoned or disseized of his freehold, liberties or privileges, or outlawed, or exiled, or, in any manner, destroyed, or deprived of his life, liberty or property, but by the judgment of his peers, or by the Law of the land."

Its purposes are to "protect[] the individual from unwarranted, unfair, burdensome, discriminatory, and arbitrary legislation", Daniel Loughran Co. v. Lord Baltimore Candy Co., 178 Md. 38, 45 (1940), and to prevent public authorities from administering the law "with an evil eye and an unequal hand", Sports Daily v. Public Service Commission, 179 Md. 355, 358 (1941).

The Court of Appeals has fashioned a three-prong test for gauging the constitutionality of State classifications that are challenged as violative of equal protection:

1. When a statute creates a distinction based upon "suspect" criteria (such as race) or infringes upon a fundamental right, the statute is examined with "strict scrutiny" and its discriminations must be justified by a "compelling state interest".

2. When a statute impacts upon "sensitive" or "quasi-suspect" criteria (such as illegitimacy), affects important personal interests, works a significant interference with liberty, or denies a benefit vital to the individual, the statute receives "heightened scrutiny" and its classifications must be justified by a "fair and substantial relation" to the statute's objectives.

3. Remaining statutory classifications, including those affecting economic regulation, are presumed constitutional and will not be invalidated unless wholly lacking a "rational basis".

See Attorney General v. Waldron, 289 Md. 683, 703-17 (1981).

In our view, the statutory classification created by §19(e)(4) must be measured by the last, most lenient, of these categories of equal protection review, permitting invalidation of the classification only if it lacks a "rational basis": The classification drawn by §19(e)(4) distinguishes between two types of country clubs, subjecting them to differing regulatory and economic burdens. Such a classification (unlike the exclusionary practices of any one club) is not of itself a distinction based on sex or any other "suspect" or "quasi-suspect" criterion. And those clubs that are prohibited by the State from discriminating on the basis of sex cannot be said to have some "fundamental" or "important personal" right to be free to discriminate. Hence, §19(e)(4) would not be subject to "strict" or "heightened scrutiny" but, rather, to "rational basis" review.

This standard of review, although in many respects deferential to legislative enactments, is by no means toothless. And the Court of Appeals, much more than the Supreme Court, has been willing to invalidate State statutes on equal protection grounds for lack of a rational basis. See, e.g., Attorney General v. Waldron, 289 Md. 683 (1981); Wheeler v. State, 281 Md. 593 (1977); Davidson v. Miller, 276 Md. 54 (1975); Bruce v. Director, Chesapeake Bay Affairs, 261 Md. 585 (1971).

In the case of §19(e)(4), even given the presumption of constitutionality to be accorded the statute, we are unable to say with any conviction that the Court of Appeals would uphold it. Section 19(e)(4) draws what appears to be a jarring distinction between two types of country clubs receiving the tax preference: (i) those that operate their facilities with the primary purpose of serving or benefiting members of a particular sex, but are not subject to any prohibition against sex discrimination; and (ii) those that open their facilities to members of both sexes, and are subject to the prohibition against sex discrimination.

As we have noted earlier, the language of §19(e)(4) does not suggest that this differing treatment of clubs is somehow rooted in considerations of personal privacy unique to a single-sex club.17 Nor would the deliberate lack in such clubs of adequate facilities, such as ladies' restrooms, furnish a rational basis: Otherwise, any club receiving a tax preference could escape the ban against sex discrimination simply by shutting down a restroom and converting its facilities to the use of a single sex.

In our view, it is difficult to conceive of a rational basis for a statutory classification that (i) scrutinizes those least likely to discriminate on the basis of sex, but (ii) immunizes and rewards those who engage in the most extreme form of such discrimination. For this reason, we believe it quite possible that the classification created by §19(e)(4) would be found by the courts to be without a rational basis and, therefore, violative of equal protection.

17 See note 9 above.

V
Severability

If a portion of §19(e)(4) is unconstitutional, the question naturally arises as to whether the exemption for single-sex country clubs can be severed from the remainder of the statute or whether the entire 1974 Act (Chapter 870, Laws of Maryland 1974), which added the basic, underlying ban against discrimination, must also fall. The ease with which that question can be answered depends upon which theory a court employs to strike down the questioned provision or practices.

Clearly, if only a discriminatory practice of a single-sex club is enjoined, the statute itself would not fall. Moreover, if a court were to find that the State's subsidy of private discrimination violated the "public purpose" requirement of Article 15 of the Declaration of Rights, we think it extremely unlikely that the court would throw out the entire antidiscrimination scheme to vindicate such a principle. Thus, the question of severability would really arise only if the single-sex club exemption in §19(e)(4) were successfully challenged as violative, on its face, of Article 24 or Article 46 of the Declaration of Rights.

In Maryland, there is a presumption that the General Assembly intends its enactments to be severed if possible. O. C. Taxpayers v. Ocean City, 280 Md. 585, 600 (1977). See also Article 1, §23 of the Maryland Code. When the dominant purpose of an enactment may largely be carried out notwithstanding the statute's partial invalidity, courts will generally hold the valid portions to be severable and enforceable. Shell Oil Co. v. Supervisors, 276 Md. 36, 49 (1975).

If these were the only principles governing our inquiry, there would be no doubt that the remainder of §19(e)(4), including its general ban against sex discrimination, would be permitted to stand. Clearly, the remaining provisions of §19(e)(4) can be given independent effect. And the fact that the 1974 Act was introduced without the questionable exception reinforces a conclusion that the offending provision is not essential to the successful operation of the legislation. See C. Sands, Sutherland Statutory Construction §44.13 (1973).

There is, however, another principle governing the law of severability that gives us pause. That is, if a statute contains both a general provision and an invalid exception (and if the legislature has not indicated otherwise), courts may refuse to sever the invalid exception when the remaining general provisions would impose a duty, sanction, or substantial hardship on the otherwise excepted class. See Cities Service Co. v. Governor, 290 Md. 553, 576 (1981); State v. Schuller, 280 Md. 305 (1977).

For a variety of reasons, however, we conclude that this principle of nonseverability does not warrant destruction of the entire 1974 Act:

First, despite the addition of the questioned exception to §19(e)(4), we do not believe that the General Assembly intended that all tax-supported country clubs subject to a measure of government regulation were to have a carte blanche to invidiously discriminate. This is particularly so where the antidiscrimination provisions of §19(e)(4) were enacted only 15 months after the ratification of the State ERA and at a time when a sizeable number of courts had concluded that tax support for discrimination was unconstitutional.18

Second, in resolving severability issues arising from a statute containing a discriminatory underinclusion, courts have often extended the coverage of the statute to the formerly exempted class, particularly where the legislation is especially important and the exempted class is narrow, a situation that clearly exists here. See Note: Extension versus Invalidation of Underinclusive Statutes: A Remedial Alternative, 12 Col. J. of L. and Soc. Prob. 115 (1975).

Finally, compliance with the sex discrimination ban contained in §19(e)(4) might not even be, in a legal sense at least, properly characterized as a "burden" for single-sex country clubs. Because of the many elements of state action present in §19(e), all country clubs receiving a tax preference under that section, including single-sex clubs, may already be subject to a constitutional duty, under the ERA, not to discriminate on the basis of sex.

For all of these reasons, it is our opinion that, if the exemption for single-sex country clubs were stricken, only that provi-

18 See cases cited in note 6 above.

sion would be severed and the balance of §19(e)(4) would remain in effect.

VI
Conclusion

In summary, it is our opinion that Article 81, §19(e)(4), as applied to single-sex country clubs, violates Article 46 of the Declaration of Rights, the Equal Rights Amendment. Although less certain, this exemption for single-sex country clubs might well also violate Articles 15 and 24 of the Declaration of Rights.

As you know, our opinion alone does not render the exemption inoperative or suspend its effectiveness. See Barnes v. Pinkney, 236 Md. 564 (1964); First Continental Savings & Loan Ass'n v. Director, 229 Md. 293 (1962). On various occasions, when we have concluded that a statutory provision is unconstitutional, we nevertheless have considered it appropriate to advise affected State agencies not to implement or enforce the provision in question. For a number of reasons, we think a different approach is warranted here:

First, the burden of change stemming from our opinion here would fall not, as is usually the case, upon a State agency, but upon a private entity, the club that is a recipient of the tax preference.

Second, as constitutionally offensive as the practices of such a club may be, the club does have an existing contractual agreement with the State, an agreement that is bound up in the constitutional prohibition against the impairment of contracts.19 Moreover, the only single-sex club now receiving a property tax preference under §19(e)(4) has been relying upon a 1978 determination of the Attorney General with respect to its discriminatory practices and its entitlement to the tax preference.

19 See discussion in the last paragraph of Part I A above.

Third, as long as the exemption for single-sex clubs remains in §19(e)(4), the elaborate administrative machinery for enforcing the discrimination ban virtually ensures that an unnecessarily long time period will elapse before the State would be in a position to remedy the club's discriminatory practices or withdraw its tax preference.20

Accordingly, given the club's reliance on this Office's 1978 determination of its entitlement to the tax preference, coupled with the need to resolve the issues raised here in a definitive and prompt fashion, and because the discriminatory practices fostered by §19(e)(4) should not be allowed to continue, we have concluded that it would be appropriate in this instance to bring a declaratory judgment action, seeking a declaration by the courts that the exemption in Article 81, §19(e)(4) is, as we have concluded, unconstitutional.

Stephen H. Sachs, Attorney General
Robert A. Zarnoch, Assistant Attorney General
Avery Aisenstark, Chief Counsel, Opinions and Advice

20 See discussion in the second paragraph of Part I B above.

Editor's Note: Since the issuance of this Opinion, the Court of Appeals held that the Attorney General lacked authority to bring a declaratory judgment action challenging the portion of Article 81, §19(e)(4) that provided a tax exemption for single-sex country clubs. State v. Burning Tree Club, 301 Md. 9 (1984). However, the constitutionality of the provision was also challenged by private plaintiffs; in that action, the Circuit Court for Montgomery County held the provision to be unconstitutional. Stewart Bainum, et al. v. State of Maryland, et al., Circuit Court for Montgomery County, Equity No. 85-397; appeal pending, Court of Appeals of Maryland, September Term 1984, No. 119.