MUNICIPAL REGULATION OF
ALCOHOLIC BEVERAGES*
(*or “No, Mr. Mayor, we really can’t stop that
keg party by rezoning the property!”)
Presented by:
Kevin B. Laughlin
Nichols, Jackson, Dillard, Hager & Smith, L.L.P.
Dallas, Texas
Texas APA Conference 2009
Texas Chapter of the American Planning Association
El Paso, Texas
February 4-7, 2009
BEFORE THE TEXAS ALCOHOLIC
BEVERAGE CODE:
THE TEXAS LIQUOR CONTROL ACT
Prior to September 1, 1977, alcoholic beverages
were regulated by the Texas Liquor Control Act.
Several courts held under Liquor Control Act that
cities were not pre-empted from enforcing their zoning
ordinances that placed certain restrictions on sale of
alcoholic beverages.
City of Clute v Linscomb, 446 S.W.2d 377
(Tex.Civ.App.--Houston [1st Dist] 1969, no writ)
The Court held:
The zoning laws of the State had no relation to the regulation of
liquor businesses
The Liquor Control Act was not intended as limitation of the police
powers of cities granted under the Home-Rule Amendment to the
State Constitution
City’s ordinance was not dependent on the state statute for its
validity, since the statute stated that all incorporated cities and towns
were authorized to designate certain zones in their jurisdiction
where the sale of beer could be prohibited
Nothing in Liquor Control Act which took away from the City the right
to zone areas for liquor sales.
T&R Associates, Inc. v City of Amarillo, 688 S.W.2d 622
(Tex. App.--Amarillo 1985, writ ref’d, n.r.e.)
City denied an SUP to sell alcoholic beverages without food sales. In
ruling for the City, without addressing anything on pre-emption, the
Court held:
The denial of a specific use permit for the location of an alcoholic
beverage establishment was a proper exercise of the City’s police
power
It is well established that the regulation of the sale of alcoholic
beverages through zoning ordinances is a proper exercise of a
City’s police power.
The issuance of a specific use permit constitutes an amendment to
the zoning ordinance and such action is presumed valid absent a
clear abuse of discretion.
The granting of a specific use permit was discretionary, and the
denial of the specific use permit for an alcoholic beverage
establishment was within the City’s powers and discretion.
Louder v Texas Control Board, 214 S.W.2d 336
(Tex.Civ.App.--Beaumont 1948, writ ref’d n.r.e.)
City relied upon a general comprehensive zoning ordinance which prohibited the
sale of beer in a commercial zoning district. The Court determined….
the Liquor Control Act was manifestly one of restriction, not one of
enlargement of the sale of intoxicating liquors.
the Act was in no way intended as a limitation of the City’s police
powers granted to it under the home-rule amendments of the
Constitution.
Court stated that to construe the state statutes limiting the powers of
the City in zoning ordinances affecting the sale of liquor, would be,
as far as liquor zoning was concerned, to repeal many other
provisions of the statute giving broad governing powers to home-rule
cities.
Texas Alcoholic Beverage Code
Effective September 1, 1977
Non-substantive codification of Texas
Liquor Control Act
As enacted, contained Section 1.06
Tex. Alco. Bev .Code §1.06
Sec. 1.06. CODE EXCLUSIVELY GOVERNS.
Unless otherwise specifically provided by the
terms of this code, the manufacture, sale,
distribution, transportation, and possession of
alcoholic beverages shall be governed exclusively
by the provisions of this code.
Courts still hold no
pre-emption !
(but just wait)
Young, Wilkerson & Roberts v City of Abilene,704 S.W.2d 380
(Tex. App.- Eastland 1985, writ ref’d n.r.e.)
In the face of a direct argument regarding pre-emption, the Court held:
The cases holding that the old Liquor Control Act did not pre-empt city
authority to control locations of alcoholic beverage sales through zoning were
still good law.
A zoning ordinance requiring structures with on-premise
consumption of alcohol be located at least three hundred (300) feet
from any lot in a residential district, did not conflict with the Tex. Alco.
Bev. Code regulations governing the sale of alcoholic beverages near
schools, churches or hospitals because…
The ordinance imposed restrictions which applied to any lot in
addition to the state restrictions applicable to churches, public schools
and public hospitals
Abilene Oil Distributors v City of Abilene, 712 S.W.2d 644
(Tex.App.--Eastland 1986, writ ref’d n.r.e.)
City zoning ordinance required permittees to be further
from schools than the 300 feet set out in Tex. Alco. Bev.
Code §109.33.
Court affirmed judgment upholding the ordinance.
Court stated that despite the fact that the City system of
measurement required a liquor store to be farther away
from a public school than was required by state law, the
ordinance was still valid even if inconsistent with the
Code if the ordinance imposed higher standards.
Now, to quote one of my favorite commentators,
“And now, the rest of the story…”
Paul Harvey
Tex. Alco. Bev. Code §109.57
• Sec. 109.57. APPLICATION OF CODE; OTHER JURISDICTIONS.
• (a) Except as is expressly authorized by this code, a regulation,
charter, or ordinance promulgated by a governmental entity of this
state may not impose stricter standards on premises or businesses
required to have a license or permit under this code than are
imposed on similar premises or businesses that are not required to
have such a license or permit.
• (b) It is the intent of the legislature that this code shall exclusively
govern the regulation of alcoholic beverages in this state, and that
except as permitted by this code, a governmental entity of this state
may not discriminate against a business holding a license or permit
under this code.
Tex. Alco. Bev. Code §109.57
•
(c) Neither this section nor Section 1.06 of this code affects the validity or
invalidity of a zoning regulation that was formally enacted before June 11,
1987, and that is otherwise valid, or any amendment to such a regulation
enacted after June 11, 1987, if the amendment lessens the restrictions on
the licensee or permittee or does not impose additional restrictions on the
licensee or permittee. For purposes of this subsection, "zoning regulation"
means any charter provision, rule, regulation, or other enactment governing
the location and use of buildings, other structures, and land.
•
(d) This section does not affect the authority of a governmental entity to
regulate, in a manner as otherwise permitted by law, the location of:
(1) a massage parlor, nude modeling studio, or other sexually
oriented business; or
(2) an establishment that derives 75 percent or more of the
establishment's gross revenue from the on-premise sale of alcoholic
beverages.
Tex. Alco. Bev. Code §109.57
(e) A municipality located in a county that has a population of 2.2
million or more and that is adjacent to a county with a population of
more than 400,000 or a municipality located in a county with a
population of 400,000 or more and that is adjacent to a county with a
population of 2.2 million or more may regulate, in a manner not
otherwise prohibited by law, the location of an establishment issued
a permit under Chapter 32 or 33 if:
(1)
the establishment derives 35 percent or more of the
establishment's gross revenue from the on-premises sale or
service of alcoholic beverages and the premises of the
establishment are located in a dry area; and
(2) the permit is not issued to a fraternal or veterans organization
or the holder of a food and beverage certificate.
TEXAS LEGISLATURE TO CITIES…..
CAN YOU HEAR
US NOW?
So what did the courts have to say
to all of this?
Courtney v. City of Sherman, 792 S.W. 2d 135 (Tex. App. Dallas 1990, writ denied.)
•City of Sherman had pre-1987 zoning ordinance that
was amended twice post-1987 that required private
clubs to have gross receipts for food service equal to or
greater than sales of alcoholic beverages.
•Alcoholic Beverage Code only required that food
service be “adequate” for members and guests.
Courtney v. City of Sherman, 792 S.W. 2d 135
(Tex. App. - Dallas 1990, writ den’d.)
Under §109.57, trial court invalidated the two
post-1987 amendments, but upheld the pre1987 amendment based on Sec. 109.57(c)
Court of Appeals said “no” to the original
ordinance as well as the two amendments,
holding that even the original ordinance was
invalid because it went beyond the scope of
regulation allowed under the zoning authority
granted to cities in Chapter 211 of the Texas
Local Government Code and, thus, invalid under
TABC Sec. 1.06.
Courtney v. City of Sherman, 792 S.W. 2d 135
(Tex. App. - Dallas 1990, writ den’d.)
The Court went on to say:
In our view, the legislature has attempted to preempt
the field concerning private club regulation. The City's
ordinance, which imposes upon the private club the
requirement that it procure as much or more revenues
from the sale of food as it does from the service of
alcohol, is in direct conflict with the Code. By zoning
ordinance, the City has attempted to make more onerous
the requirements of operating a private club than
required under the Code. If the ordinance were allowed
to stand, the result would be to make illegal that which is
legal under the laws of the State of Texas.
Courtney, 792 S.W.2d at 137-138.
BUT ALL IS NOT LOST!!!
West End Pink, Ltd. v. City of Irving, 22 S.W.3d 5
(Tex. App. – Dallas, 1999, pet. den’d.)
Restaurant serving alcohol for on-premise
consumption subject to zoning that required food
sales receipts to be equal to or greater than 60%
of gross sales.
Ordinance was adopted by city in 1981.
Annual inspection found restaurant food sales
not as required under zoning ordinance.
City revoked certificate of occupancy following
show cause hearing.
West End Pink, Ltd. v. City of Irving, 22 S.W.3d 5
(Tex. App. – Dallas, 1999, pet. den’d.)
Plaintiff challenged City’s ordinance arguing
pre-emption under Sec. 1.06 and Sec. 109.57.
Court agreed in general with plaintiff BUT…
Held that Validation Statutes passed by Texas
Legislature in 1985, 1987, 1989, cured any
invalidity and allowed ordinance to survive.
Keys to Victory in West End Pink, Ltd.
1.
The ordinance was a pre-June 1987 ordinance that
had not been amended.
2.
Section 109.57 generally exempts pre-June 1987
ordinances from the pre-emption issue.
3.
Because legislature could have passed the law in the
first instance to adopt such an ordinance, it had legal
authority to validate the ordinance.
4.
Subsequent validation statutes were written to
expressly exclude from coverage ordinances that
would conflict with TABC §1.06 and §109.57.
Aero Meridian Associates DP, d/b/a Morton Plaza, v.
City of Denison, Texas, 2007 WL 2900536 (E.D. Tex.).
• Recent case involving pre-1987 SUP ordinance.
• Plaintiff was denied an SUP for private club in
dry area after city council applied the standards
contained in its ordinance.
• Court relied largely on West Texas Pink, Ltd.,
and the keys to victory, i.e was only enforcing
standards existing in a pre-June 1987 ordinance
that had not been amended and had been
validated by the Texas Legislature.
Caution about Aero Meridian
The case is an unreported federal district court
opinion that was not appealed to the Fifth
Circuit.
BUT
The court’s opinion has a good discussion
about the preemption of pre-1987 zoning
ordinances that might be helpful when trying to
enforce your SUP process relating to alcoholic
beverage sale locations.
SO WHAT IS THE MORAL OF
THIS STORY SO FAR?
1.
Unless the Alcoholic Beverage Code specifically allows
local regulation, new ordinances attempting to regulate
alcoholic beverages are highly suspect and likely
invalid.
2.
Ordinances adopted prior to June 1987 have a higher
likelihood of being enforceable if they were not in
conflict with the old Liquor Control Act or the Alcoholic
Beverage Code as found by prior case law.
3.
Amendments to Pre-June 1987 zoning ordinances are
suspect and will likely be reviewed by the court as a
new Post-June 1987 ordinance.
AND NOW YOU KNOW THE
REST OF THE STORY.
GOOD DAY!
So what about some
specific do’s and
don’ts?
Some Thou Shalt Nots….
Some Pre-TABC Cases and Attorney General Opinions:
City may not adopt ordinance requiring licensee to obtain a local
beer sales license. Munoz v. City of San Antonio, 318 S.W. 2d 741
(Tex. Civ. App. – San Antonio, 1959, writ dism’d)
City cannot prescribe lesser penalty for violating prohibited acts
under the Code than what the Code proscribes. Op. Tex. Atty. Gen.
C-754 (1966)
Ordinance requiring closing of package stores on certain holidays in
which Liquor Control Act allowed sales and to close at 8:00 p.m. on
days where the Act allowed operations until 9:00 p.m. held invalid.
Royer v. Ritter, 531 S.W. 2d 448 (Tex. Civ. App. – Beaumont 1975,
writ ref. n.r.e.)
EVEN MORE THOU SHALT NOTS…
Municipality may not adopt an ordinance prohibiting the possession of open
container of alcoholic beverage in motor vehicles. Op. Tex. Atty. Gen. JM112 (1983)
Rejecting the argument that the Code does not regulate “consumption” by
holding that “consumption” necessarily requires “possession” and that the
local regulation of “possession” of an alcoholic beverage is pre-empted, the
Attorney General held that a municipality may not adopt an ordinance
prohibiting the consumption of alcoholic beverages by people operating
motor vehicles. Op. Tex. Atty. Gen. JM-619 (1987)
An ordinance prohibiting consumption of alcoholic beverages on certain
public sidewalks would be preempted if enacted. Tex. Atty. Gen. Letter
Opinion LO-88-46 (1988) (citing Op. Tex. Atty. Gen. JM-112 and JM-619)
An ordinance prohibiting people under the age of 21 from entering a place
that sells alcoholic beverages unless accompanied by a parent or adult
guardian would be pre-empted. Tex. Atty. Gen. Letter Opinion LO-88-56
(1988) (citing Op. Tex. Atty. Gen. JM-112 and JM-619)
AND EVEN MORE THOU SHALT NOTS…
Because it had the effect of prohibiting the sale of alcoholic beverages in nonresidential areas…which is preempted, city ordinances prohibiting sale of alcoholic
beverages within 300 feet of residentially-zoned areas are pre-empted. Dallas
Merchants and Concessionaires Assoc. et al v. City of Dallas, 852 S.W. 2d 489 (Tex.
1993)
An ordinance adopted as a health regulation with the goal of inhibiting the spread of
the HIV virus requiring business that sells alcoholic beverages for on-premises
consumption to make condoms available for sale at the counter or restroom vending
machines pre-empted because it would impose stricter standards on licensed
establishments than on similar business that do not sell alcoholic beverages. Op.
Tex. Atty. Gen. DM-229 (1993)[This is a post- Dallas Merchants and Concessionaires
Assoc. opinion.]
Without expressing an opinion on the validity of any such ordinance under Federal
constitutional issues, city is not preempted from adopting an ordinance banning the
sale of all beverages in glass containers, but cannot single out in such an ordinance
the sale of alcoholic beverages. Op. Tex. Atty. Gen. GA-0110 (2003)
Even though the Texas Alcoholic Beverage Code does not specifically regulate “bring
your own bottle” (BYOB) establishments, because the Code preempts the regulation
of possession and consumption of alcoholic beverages, a city cannot adopt an
ordinance regulating possession or consumption of an alcoholic beverage in an
establishment operating on a BYOB-basis. Op. Tex. Atty. Gen. GA-0561 (2007)
With all that cities can’t
regulate,
what CAN they regulate?
Thou Mayest….
A city may prohibit the sale of liquor in its residential areas through
its charter. Tex. Alco. Bev. Code § 109.31.
“Liquor” is defined as “... any alcoholic beverage containing alcohol
in excess of four percent by weight, unless otherwise indicated.”
A city may prohibit the sale of beer in residential areas by charter or
ordinance. Tex. Alco. Bev. Code Ann. § 109.32. A city may also
regulate the sale of beer in other areas and prescribe the hours in
which it may be sold.
A municipality may regulate the sale of wine for off-premises
consumption pursuant to Tex. Alco. Bev. Code §26.04, which states:
[t]he restrictions in [the Texas Alcoholic Beverage Code] relating
to beer as to the application of local restrictions ... apply to the
sale of alcoholic beverages by a wine and beer retailer’s offpremise permittee.
THOU ALSO MAYEST…
A city may seek from the TABC an order prohibiting open containers or the public
consumption of alcoholic beverages in central business districts; provided,
however, the Commission’s order cannot prohibit possession or consumption in a
motor vehicle, a building not owned by the city, a residential structure, or a
licensed premises located in the central business district. Tex. Alco. Bev. Code
§109.35;
Pursuant to Tex. Alco. Bev. Code §109.36(b), a city may adopt regulations
prohibiting the possession of an open container or the consumption of an
alcoholic beverage on a public street, public alley, or public sidewalk within 1000
feet of the property line of a homeless shelter or substance abuse treatment
center that is not located in a central business district.
[1] "Homeless shelter" means a supervised publicly or privately operated shelter or other
facility that is designed to provide temporary living accommodations to individuals who lack
a fixed regular and adequate residence. Tex. Alco. Bev. Code §109.36(a)(2).
[2] "Central business district" means a compact and contiguous geographical area of a
municipality used for commercial purposes that has historically been the primary location in
the municipality where business has been transacted. Tex. Alco. Bev. Code §109.36(a)(1).
Thou Definitely Mayest…
A city may continue to regulate the location of massage parlors,
nude modeling studios, and other sexually oriented businesses.
Tex. Alco. Bev. Code §109.57(d)(1).
Furthermore, because the Code regulates only the manufacture,
sale, distribution, transportation, and manufacture of alcoholic
beverages, it does not preempt a city’s power to regulate secondary
activities occurring on the premises by zoning ordinances, such as
regulating sexually oriented businesses. MJR’s Fare of Dallas, Inc.
v. City of Dallas, 792 S.W.2d 569, 576 (Tex. App. – Dallas 1990, writ
denied); Robinson v. City of Longview, 936 S.W.2d 413 (Tex. App.Tyler 1996, no writ); Hang On, Inc. v. City of Arlington, 65 F.3d 1248
(5th Cir. 1995).
A city may regulate the location of establishments that derive
seventy-five percent (75%) or more of their gross revenue from onpremise sale of alcoholic beverages.
Tex. Alco. Bev. Code
§109.57(d)(2)
Distance Regulations
The Alcohol Beverage Code expressly allows cities to adopt
regulations regarding sales near:
Schools,
Churches,
and
Public
Hospitals (Tex. Alco. Bev. Code §109.33)
Daycare and Childcare Facilities (Tex.
Alco. Bev. Code §109.331)
Schools, Churches, and Public Hospitals
Tex. Alco. Bev. Code §109.33
Some definitions first, or not………..
TABC does not define what constitutes a “public school.” The most recent
Attorney General Letter Opinion summarizes on the subject opines that “an
institution is a ‘public school’ for purposes of Section 109.33(a)(1) of the
TABC if it is supported, in whole or in part, by public funds.” Tex. Atty. Gen.
LO-96-134 (1996).
A “private school” is defined by the Code as a private school, including a
parochial school, that (1) offers a course of instruction for students in one or
more grades from kindergarten through grade 12 and (2) has more than 100
students enrolled and attending courses at a single location. Tex. Alco. Bev.
Code §109.33(i)
The TABC does not define “public” hospital either. Absent a statutory
definition, must look to the common meaning of the word or phrase. A
“public” hospital is commonly understood to be a hospital that is supported
by public funds and would be consistent with the definition of “public
school.”
Where’s the front door?
Stubbs v. Liquor Control Board, 166 S.W.2d 178
(Tex. Civ. App. – Dallas, 1942, writ ref. want merit)
Licensee attempted to argue that the main exterior door
leading to the worship center, which was located around
the corner and more than 300 feet from the front door of
the store, was the only front door.
Door to the church Sunday School building was almost
directly across the street and within 300 feet of store
front door.
Court held that the correct measurement was to the door
to the church’s Sunday School building entrance.
“Any door leading into the church or saloon is a front
door; in other words, it is held that a church or saloon
may have several front doors and may face upon two or
more streets.” Stubbs, 166 S.W.2d at 180
So what are the
restricted distances?
TABC Sec. 109.33(a): A city or county may adopt an ordinance
or order, respectively, prohibiting the sale of all alcoholic
beverages within:
three
hundred (300) feet of a church, public or private
school, or public hospital, with a couple of exceptions;
subject to certain exceptions in the statute, one thousand
(1,000) feet of a public school if the commissioners court or
the governing body receives a request for the board of
trustees of a school district under Section 38.007 of the
Election Code (which is limited to school districts the
majority of which are located in cities with a population of
900,000 or more);
subject to certain exceptions in the statute, one thousand
(1,000) feet of a private school if the county commissioners
court or city council receive a request from the governing
body of the private school
So how are the distances
measured?
Churches and Public Hospitals
The first sentence of Tex. Alco. Bev. Code
§109.33(b) reads as follows:
(b) The measurement of the distance
between the place of business where
alcoholic beverages are sold and the
church or public hospital shall be along the
property lines of the street fronts and from
front door to front door, and in direct line
across intersections.
Robinson v City of Dallas, 198 S.W.2d 821
(Tex. Civ. App.-Austin 1946 writ ref.)
At issue:
1. Whether or not to measure from the front
door of the package store or the closest
exterior door of the store, and
2. Whether or not to take the measurements
all the way to the corner of the property
before crossing the street to reach the
door.
Court holds
“red line wins.”
Ezell v. Tex. Alcohol Bev. Comm’n 528 S.W.2d 888
(Tex. Civ. App. –Ft. Worth 1975, no writ)
Following Robinson, court followed the blue line.
Distance from
Public or Private Schools
(b)….The measurement of the distance between the place
of business where alcoholic beverages are sold and the
public or private school shall be:
(1)
in a direct line from the property line of the public or
private school to the property line of the place of business, and
in a direct line across intersections; or
(2)
if the permit or license holder is located on or above
the fifth story of a multistory building, in a direct line from the
property line of the public or private school to the property line of
the place of business, in a direct line across intersections, and
vertically up the building at the property line to the base of the
floor on which the permit or license holder is located.
Distance from
Public or Private Schools
Note 1: No “door” element in measuring the
distance from a school…. measurements will go
from closest property line to closest property
line.
Note 2: Additional measurement up the side of
the building applies ONLY when the license
holder is on 5th floor or higher. If the license
holder is on Floor 4 or lower, the measurement
is still only property line to property line.
And now, the exceptions…
Private and public schools to which the 1000 foot rule generally applies,
1000 foot restriction will not apply to:
a holder of a retail on-premises consumption permit or license if less than
50 percent of the gross receipts for the premises is from the sale or service
of alcoholic beverages;
a holder of a retail off-premises consumption permit or license if less than
50 percent of the gross receipts for the premises, excluding the sale of
items subject to the motor fuels tax, is from the sale or service of alcoholic
beverages;
a holder of a wholesaler’s, distributor’s, brewer’s, distiller’s and rectifier’s,
winery, wine bottler's or manufacturer's permit or license, or any other
license or permit held by a wholesaler or manufacturer as those words are
ordinarily used and understood in Chapter 102 of the Code.
More exceptions…
As to private (but not public) schools to which the 1000
foot rule applies, the restriction does not apply to:
the holder of a temporary and special wine and beer
retailer’s permit (Chapter 27), caterer’s permit (Chapter
31), or temporary license for the sale of beer at picnics,
celebrations, or similar events (Chapter 72) who is
operating on the premises of a private school; or
the holder of a license or permit for a package store that
is located within 1,000 feet of a private school.
One more exception…
As to private (not public) schools, even the 300
foot restriction will not be applied to any
establishment that holds a food and beverage
certificate, which can include:
Restaurant with Wine and Beer Retailer’s
Permit
Mixed Beverage Permit
Childcare Facilities and
Day Care Centers
City can adopt ordinance to apply 300 distance restriction from
childcare facilities and day care centers (as defined in the Tex. Human
Res. Code), but, rule only applies to the holder of any of the following
who do NOT hold a food and beverage certificate:
Wine and Beer Retailer’s Permit under Chapter 25
Mixed Beverage Permit under Chapter 28
Private Club Registration Permit under Chapter 32
Retail Dealer’s On Premise License under Chapter 69
Brewpub License under Chapter 74
Thus, this restriction will not apply to establishments with
sales for off-premise consumption Wine and Beer
Retailer’s Off-Premise Permit.
IN CONCLUSION……
In the current economy, with property
values dropping and people buying less,
city officials are going to be looking for
ways to increase revenues from other
sources.
Likewise,
food
service
establishments will also being looking for
ways to attract customers.
Kevin B. Laughlin
Nichols, Jackson, Dillard, Hager & Smith, L.L.P.
1800 Lincoln Plaza
500 North Akard
Dallas, Texas 75201
(214) 965-9900
(214) 965-0100
E-Mail: klaughlin@njdhs.com
Firm E-Mail: njdhs@njdhs.com
URL: www.njdhs.com