The Perils of Preemption:
Federal/State/Local Authority to Regulate Retail
Alcohol Availability and Impose Alcohol Taxes/Fees
James F. Mosher, JD
Alcohol Policy Consultations
July 24, 2012
Workshop Presentation at CADCA’s 11th Mid-Year Training Institute,
Nashville, TN, July 22-26, 2012
Preemption: Which Level of
Government Gets to Decide?
A legal term for describing the extent to
which the a higher level of government
limits the authority of subordinate
governmental bodies.
Resources will be posted on:
www.alcoholpolicyconsultations.com
Small Group Discussion
Brainstorm two lists of preemption
policies/decisions/proposals that either
(1) enhance or (2) are detrimental to:
public health;
public safety; or
social justice.
Federal Preemption:
Limits Found in the U.S. Constitution
Tenth Amendment
“The powers not delegated to the United
States by the Constitution, nor prohibited by it
to the States, are reserved to the States
respectively, or to the people.”
Federal Preemption:
Limits Found in the U.S. Constitution
21st Amendment
“The transportation or importation into any
state, territory or possession of the United
States for delivery or use therein of
intoxicating liquors, in violation of the laws
thereof, is prohibited.
Evolution of Federal Courts’
Interpretation of the 21st Amendment
Phase 1
1936-1964
• States have
virtually
unlimited
power to
regulate the
alcohol trade
Phase 2
1964-1980
• States must
adhere to
certain
interstate
commerce
clause
requirements
Phase 3
1980-present
• States have
burden to
justify
restraints on
interstate
commerce
clause
requirements
Concurrent sales
of alcohol and gasoline
A case study in
the power, and
peril, of State
preemption
“Express” and “Implied”
(“conflict”, “obstacle”, “field”)
Preemption
A legal doctrine or a court’s smokescreen?
Bar closing time
case study
Alcohol Outlet Density:
Community Guide Summary of the Research
“[T]he Task Force found sufficient evidence …to
recommend limiting alcohol outlet density through
the use of regulatory authority (e.g., licensing and
zoning) as a means of reducing or controlling
excessive alcohol consumption and related
harms.”
Guide to Community Preventive Services, Centers for Disease Control and Prevention, 2009.
Key Dimensions of Retail Alcohol
Outlet Regulation
 Issuance
of new retail licenses (outlet
density)
 Regulation of existing retail outlets
(problem outlets)
Can Local Zoning Powers Escape
the State Preemption Doctrine?
California State Constitution:*
“The State of California … shall have the
exclusive right and power to license and
regulate the … sale … of alcoholic
beverages within the State.”
*Cal. Constitution Art. 20 §22
Levels of State Preemption
Exclusive or
near exclusive
State authority
STATE
AUTHORITY
State licensing;
local zoning &
police powers
High State
Preemption
LOCAL
AUTHORITY
Joint State and
local licensing
Local licensing,
minimum State
standards
Low State
Preemption
State Delegation of Authority
California Statutory Provision:*
“No retail license shall be issued … where
the [issuance of the license] is contrary to
a valid zoning ordinance of any county or
city.”
*Cal. Bus. & Prof. Code § 23790
The “Deemed Approved” Strategy
The Essence of Local Zoning
“The essence of zoning lies in metropolitan
and regional planning; it is the use and
treatment of public and private land … in the
interest of the community as a whole. The
factors and reasons [for] metropolitan zoning
are entirely different from those which control
the regulation of the [production, distribution,
sale and] consumption of liquor.”*
*Floresta Inc. v. City Council, 190 Cal. App.2d 599, 605 (1961).
North Carolina Case Study
“Except as provided in this Chapter, local
ordinances establishing different rules [than
those imposed by the State] on the
manufacture, sale, purchase, transportation,
possession, consumption, or other use of
alcoholic beverages, or requiring additional
permits or fees, are prohibited.” *
*N.C.G.S.A. § 18B-100.
North Carolina Case Study, cont.
“[T]he governing board of a city or county
may refuse to [renew] a [beer or wine] license
if it finds that the applicant committed any act
or permitted any activity in the preceding year
that would be grounds for suspension or
revocation of his [state] permit.”*
N.C.G.S.A. § 105-113.71
Protecting Local Powers
Statutory language included in the California “Lee
Law,” which imposes various public health and safety
requirements on alcohol retailers:
“The standards set forth in this section are
state standards that do not preclude the
adoption and implementation of more
stringent local regulations that are otherwise
authorized by law.”
Key Preemption Research Findings:
Alcohol Outlet Regulation
1. States vary widely in extent of State
preemption.
2. States assign differing levels of preemption
for differing aspects of alcohol retail control.
3. Courts play a critical role in defining the
extent of State preemption, and their
holdings are inconsistent and unpredictable.
Key Preemption Research Findings:
Alcohol Outlet Regulation (cont.)
4. State preemption is a significant barrier to
implementing effective alcohol outlet
regulation.
5. The threat of preemption-based legal
challenges by industry groups undermines
the development of local alcohol outlet
regulation.
Key Preemption Research Findings:
Alcohol Outlet Regulation (cont.)
6. Important new local land use powers can
be developed even in states with broad
state preemption.
7. Legal technical assistance is critical for
local campaigns where state preemption
may be an issue.
Alcohol Taxes: Community Guide
Summary of the Research
“The Task force on Community Preventive
Services recommends increasing the unit price of
alcohol by raising taxes based on strong evidence
of effectiveness for reducing excessive alcohol
consumption and related harms. Public health
effects are expected to be proportional to the
size of the tax increase.”
CDC Task Force on Community Preventive Services 2010
State Preemption: Alcohol Taxes & Fees
States fall into four preemption categories:
1. Localities have broad authority
2. Some but not all localities have broad authority
3. Localities have authority but within strict state
limits
4. Localities have no authority
Chicago Alcohol Taxes
Beer: $.04/gallon
 Alcohol other than beer:

Up to 14%: $.36/gallon

14-20%: $.89/gallon

20%+: $2.68/gallon

Ventura, California Alcohol Impact Fees
$250 - $1,400 per alcohol outlet
 Fee rate based on type of business, sales
volume, hours of sale
 Funds collected used to monitor and
enforce local ordinance

Key Preemption Research
Findings: Alcohol Taxes/Fees
1. Preemption is more likely as to alcohol
taxes/fees than retail alcohol outlet
regulation.
2. Alcohol taxes are more likely to be
preempted than fees.
3. Local governments in many states are not
fully exercising their authority to impose
alcohol taxes/fees.
Key Preemption Research Findings:
Alcohol Taxes/Fees (cont.)
4. Alcohol impact fees may provide a
mechanism for local governments to cover
some of the costs associated with alcohol
sales.
5. Preemption legislative proposals should be
anticipated when localities expand use of
local taxing/fee setting authority.
State Preemption: Recommendations
for Community Coalitions


Recruit attorneys familiar with local land use
law.
 Assist in determining extent of local control
 Provide legal memoranda defending local
proposals
Urge State Health Departments and other
statewide groups to conduct legal research
on the topic.
Recommendations for Community
Coalitions (cont.)



Work to expand/protect local authority.
Oppose state legislative proposals that limit
local control – beware of the “poison pill.”
Demand language in state bills that
explicitly protects local authority.
Resources will be posted on:
www.alcoholpolicyconsultations.com