January 3, 2006
Dear Madam:
You have the following question: Can a municipality adopt residency requirements for
the issuance of beer or alcoholic beverage sales permits?
Before the Christmas holiday, I pointed out to you a recent U.S. Supreme Court case that
addresses residency requirements in a different, but probably still pertinent, context: Heald v.
Engler, as I recall.
With respect to beer, Tennessee Code Annotated, ' 57-5-106(a) provides that:
All incorporated cities, towns and Class B counties in the state of
Tennessee are authorized to pass proper ordinances for the storage,
sale, manufacture and/or distribution of beer within the corporate
limits of the cities and town....and to prove a board of persons
before whom such application shall be made, but the power of such
towns and Class B counties to issue licenses shall in no event be
greater than the power herein granted to counties, but cities, towns
and Class B counties may impose additional restrictions, fixing
zones and territories and provide hours of opening and closing and
such other rules and regulations as will promote public health,
morals and safety as they may by ordinance provide. The
ordinance power granted to a municipality by this subsection does
not permit a municipality to establish residency requirements for
its applicants.
With respect to package sales of alcoholic beverages, Tennessee Code Annotated, ' 57-3204 (a)(2) provides that:
A retail license under this section may be issued to individuals who
are residents of the state of Tennessee and either have been bona
fide resident of the state for at least two (2) years next preceding or
who have at any time been residents of the state of Tennessee for at
least ten (10) consecutive years.
However, Tennessee Code Annotated, ' 57-3-208 authorizes municipalities to issue what is
commonly called a “certificate of moral character.” Subsection 8 [I cannot get my computer to
correct this.] provides that:
January 3, 2006
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A local jurisdiction may impose reasonable residency requirements
on any applicant. However, if a local jurisdiction does impose
such residence requirements, such local jurisdiction shall not be
authorized to impose any residency requirement on any applicant
who has been continuously licensed pursuant to ' 57-3-204 for
seven (7) consecutive years.
As far as I can determine, there are no residency requirements contained in the statutes
regulating the on-premises sale of alcoholic beverages in Tennessee Code Annotated, title 57,
chapter 4, or anywhere else in Tennessee’s statutes..
There appear to be no Tennessee cases on the question of what residency requirements
are “reasonable” under Tennessee Code Annotated, ' 57-3-208. Generally, the courts in other
jurisdictions have roughly treated residency requirements, relying on the “dormant” Commerce
Clause of the U.S. Constitution to hold unconstitutional residency requirements they see as
economic protectionism. Although it involved a state rather than a municipal residency
requirement, one of the best cases for analyzing the question of whether a particular residency
requirement, state or local, is based on economic protectionism appears to be Dickerson v.
Bailey, 87 F.Supp.2d 691 (S.D. Texas 2000). Also see Indiana ex rel. Indiana Alcoholic
Beverage Commission, 662 N.E.2d 950 (Ind. App. 1996). Those cases also discuss at length the
standard of review for residency requirements.
Coolman v. Robinson, 452 F.Supp. 1324 (N.D. Indiana, South Bend Div. 1978), upheld a
state residency requirement of five years for applicants for alcoholic beverage permits. However,
that case reflected a challenge to a limitation on the right to travel under the Fourteenth
Amendment to the U.S. Constitution. Dickerson v. Bailey, above, distinguishes that case,
reasoning that it would not survive a Commerce Clause challenge today.
A case that discusses residency requirements generally, and specifically as to private
employment agency license requirements is Smith v. Paulk, 705 F.2d 1279 (10th Cir. 1983).
Take a look at that stuff and see if it gets you where you want to go, or forces you to go
where you do not want to go. Let me know.
Sincerely,
Sidney D. Hemsley
January 3, 2006
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Senior Law Consultant
SDH/