Untitled Texas Attorney General Opinion

Office of tly Bttornep @merat
%tate of Z!kxae
DAN MORALES April 14,1994
ATmRNEY
GENERAL
Honorable O.H. “Ike” Harris Opiion No. DM-289
Chair
Committee on State A&in3 Re: Whether a Cii of Dallas ordinance
Texas State Senate regulating establishments that sell alcoholic
P.O. Box 12068 beverages fhlls within section 109.57(d)(2)
Austin,Texas 78711 of the Alcoholic Beverage Code (RQ-630)

You ask whether a City of Dallas ordinance regulating establishments that sell
alcoholic beverages is preempted by state law. The City of Dallas (“Dallas” or the “city”)
is a home-rule city. The Texas Constitution grants such cities all the power of self-
govemment not expre&v denied the-m by the legislature. Tex. Const. art. XI, $5; DallaLF
Merchant’s & Concessionaire’s A&J v. City of Dalkq 852 S.W.2d 489, 490-91 (Tex.
1993). The Texas Constitution prohibits a home-rule city, however, from enforcing any
legislation inconsistent with state laws or the state constitution. Tex. Const. art. XI, 8 5;
DalIas Merchant’s, 852 S.W.2d at 491 (citing Ci@ of Brook&e Village v. Comeau, 633
S.W.2d 790,7% (Tcx. 1982), cerf. denied, 459 U.S. 1087 (1982)). The Texas Supreme
Court has instructed that, in determiniq whether an ordinance is fatally inconsistent with
state law on the same subject matter, courts must seek to construe the two in a way that
will leave both in effect, if possible. C@vof Richudum v. Responsible Dog Owners, 794
S.W.2d 17. 19 (Tex. 1990). “frlhe mere fact that the legislature has enacted a law
addressing a subject does not mean the complete subject matter is completely preempted.”
Id. Moremq it is well established that “if the Legislature chooses to preempt a subject
mattes usually encompassed by the broad powers of a home-rule city, it must do so with
unmistakable clarity.” DuIku Merchant’s, 852 S.W.2d at 491 (citing Ci@ of Sweetwater
v. Geron, 380 S.W.2d 550,552 (Tex. 1964)).

The Alcoholic Beverage Code (the “code”) contains a preemption provision,
section 109.57.’ which provides in pertinent part:

(a) Except as is expressly authorized by this code, a regulation,
charter, or ordinance promulgated by a governmental entity of this

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Honorable O.H. “Ike” Harris - Page 2 (DM-289)

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.
@) 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 govemmemal entity of
this state may not di&minate against a business holding a license or
permit under this code.

Alto. Bev. Code 8 109.57(a), (b). Subsection (d) of section 199.57 sets forth exceptions
to the genersl preemptive effect of section 109:57, providii in pe&tent part:

(d) This section does not alfbct the authority of a governmental
entity to regulate, in a manner as otherwise permitted by law, the
location of
. . .

(2) an establishment that derives 75 percent or more of the
establishment’s gross revenue gem the on-premise sole of alcoholic
Lxverages.

Id. 0 109.57(d) (emphasis added). The specitic question before us is whether the
ordinance thlls within the exception set forth in section 109.57(d)(2).

In Dallas Merchant’s, the Texas Supreme Court struck down a Dallas ordiice
that dispersed the location of alcohol-related businesses, on the grounds that it was
preempted by section 199.57 of the code. In that opinion, the court stated, “The
Legislature’s intent is clearly expressed in section 109.57@) of the [code]-the regulation
of alcoholic beverages is exclusively governed by the provisions of the [code] unless
otherwise provided. . . Section 109.57 clearly preempts an ordinance of a home-rule city
that regulates where alcoholic beverages are sold under most circumstan ces.” 852 S.W.2d
at 491-92 (citation and footnotes omitted). The court also noted that section 109.57(a)
provides that an ordinance may not impose stricter standards on alcohol related businesses
than on non-alcohol related businesses:
For example, under section 109.57(a), an ordinance requiring all
businesses with the same kind of premises to have a fire extinguisher
on their premises would not violate section 109.57(a). On the other
hand, an ordinance requiring an alcohol related business to have two
tire extinguishers and only requir[i] a non-alcohol related business
with the same kind of premises to have one tire extinguisher would
violate section 109.57(a).

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Honorable O.H. “Ike” Harris - Page 3 (DM-289)

Id. at 492 n.5; see also Attorney General Opiion DM-229 (1993). The court expressed
no opinion regarding the scope or applicability of section 109.57(d). 852 S.W.2d at 492
n.4.

You explain that in the wake of the Texas Supreme Court’s decision in D&z
Merchant’s, the city has gone back to the drawing board and has adopted a new ordinance
on this subject. See Dallas, Tex., Ordiiw 21,735 (June 23, 1993). The new ordinance
purports to regulate establishments that derive 75 percent or more of their gross revenue
from the sale of alcoholic beverages on the premises. For example, the ordinance defines
one regulated category of establishment, the “beverage store,” as an establishment “for the
retaii sale of sofi drinks, beer, wine, or liquor that is not to ix wnsumed on the premises
that derives 75 percent or more of its gross revenue on an annual basis &om the on-
premise sale of alcoholic beverages, as defined by the [code].” Id. 3 5 (amending Dallas,
Ten.. Code 3 514.211(10)); see also id. $26 (amending Dallas, Tex., Code
3 51A-4.210@)(17)) (similady defining the term “liquor store”). Apparently, the city’s
position is that this ordinance is permitted by section 109.57(d)(2) as a regulation of the
location of “establishment[s] that deriven 75 percent or more of the[i] gross revenue
from the on-premise sale of alcoholic beverages.” Alw. Bev. Code 8 109,57(d)(2)
(e-mphasis added).

The validity of the Dallas ordinance turns upon the merming of the term “on-
premise sale” in section 109.57(d)(2) of the code. You contend that this term is intended
to allow governmental entities to regulate establishments that derive 75 percent or more or
their gross revenue from the sale of alcoholic beverages for on-premise cansumptio~~.The
city, on the other hand, appears to construe this term to allow govemmemal entities to
regulate establishments that derive 75 percent or more of their gross revenue 6om the sale
of alcoholic beverages on the premises regardless of theplace of can.wmptian.

The relevant language in section 109,57(d)(2) was added by the 70th Legislature in
wnferenw wmmittec. Acts 1987,7Oth Leg., ch. 303, 5 8 (etf. June 11, 1987). We have
not been able to locate any wntemporaneous legislative history. Therefore, we construe
the meaning of the term “on-premise sale” by examining the use of the same or similar
language in the code. The terms “on-premise” and “off-premise” in the code are generally
asociated with the site of wnsumption rather than the site of sale. For example, the term
“off-premise permit” generally refers to a permit to sell alcoholic beverages for off-
premises consumption, and the term “on-premise permit” generally refers to a permit to
sell alcoholic beverages for on-premises consumption. See, e.g., Alw. Bev. Code
@ 11.49(d), 22.01, 26.01, 71.01, 71.03. In addition, these words are o&n paired with
theword “consumption.” See, e.g., id. $3 11.391(s), 11.49(e), 24.01,26.01,32.01.

We have found only one other use of the term “on-premise sale” in the code. It
appears in newly enacted section 52.03 relating to package store tasting permits, which
provides as follows:
The wmmission or the administrator may only issue a package
store tasting permit to a holder of a package store permit. For the

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Honorable O.H. “Ike” Harris - Page 4 (DM-289)

purposes of this code and any other law of the state or political
subdivision of the state, a package store tasting permit may not be
considered a permit authorizing the sale of alcoholic beverages for
on-premise consumption. Since no chsrge may be made for a
sample tasted an the premises of a package store, none of a package
store’s revenue may be deemed to be reveme from the on-premise
sale of alcoholicbeverages.

Acts 1993, 73d Leg., ch. 934, 5 49 (enacting Alcoholic Beverage Code, section 52.03)
(emphasis added). The term “on-premise sale” in this provision obviously refers to sale for
on-premise consumption. Although a legislative interpretation contained in an act passed
by a subsequent legislature is not wntrolling, it may be very signilicant and is entitled to
substantial weight. Stephens Cow@ v. Hejizer, 16 S.W.2d 804 (Tex. 1929).2

Based on our examination of the code, we conclude that the term “on-premise
sale” means the sale of alcoholic beverages for on-premise wnsumption. Because the
term “on-premise sale” in section 109.57(d)(2) means the sale of alcoholic beverages for
on-premise wnsumption, rather than the sale of alcoholic beverages on the premises,
section 109.57(d)(2) does not exempt the ordinance from the general preemptive effect of
section 109.57, except to the extent the ordinance regulates the location of establishments
that derive 75 percent or more of their gross revenue from the sale of alcoholic beverages
for on-premise consumption. We express no opinion regarding whether the ordinance
may be expressly permitted by some other provision of the code. See Alw. Bev. Code
8 lW.%), @).

~city,inebridsubmi~totbis~~placcsgrcatcmphasisonthcfactthatlegislationwas
lotroduadintbe72dLcgislshrntoamadgdion1.04dthccodctodcfincthetam=on-pnmisesale”
as “a ask for on-pmoiac ccnmqtb” See C.S.S.B. 3, Acts 1991, 726 Leg, 2d C.S. 5 4 at 3. The
pmpostdlcgirletionstatcdthatulis -twastok”a-chllngcmsdconlytoclarify
mdretlecttbeiotcntoftltelegihme.” Id. 55. RepnacntativcWiititbdmthislanpqeonthc
Iloose floor. See Lkbate oo S.B. 3 on the Floor oftbe Senate, 726 Leg. l-2 (AuS. 22.1991) #mascript
avdabkfbmSematestaffSuvices). Wecloootbcliavctbstthislegislativchistotyisdispositive. See
Ci(v oflngksick v. Johnson, 537 S.W.2d 145 (Te.x Civ. App.-1976, no tit) (rejection of an amedment
&csnotamuclcwsb&onddatute). Wehavere&wedthctramcriptcfthsle8i&tiwhmrin8andit
isMtappslantoost&ttbcfsc2thatthisproposed ammdmeottothcco&wasmtadoptalindicateatbat
tklC~intcadcdtOtaLcSpositiOOCOlUMytOtbCproposedcuaudmnt espciellygiVUlWtllC
ppOSCd~~iIUUMkdtOk~aDO-Clarification.

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Honorable O.H. “Ike” Harris - Page 5 (DM-289)

SUMMARY

The term “on-premise sale” in section 109.57(d)(2) of the
Alcoholic Beverage Code means the sale of alcoholic beverages for
on-premise consumption, rather than the sale of alcoholic beverages
on the premises. Therefore, section 109.57(d)(2) does not exempt
the Cii of Dalias ordinance from the general preemptive effect of
section 109.57, except to the extent the ordinance regulates the
location of establishments that derive 75 percent or more of their
gross revenue from the sale of alcoholic beverages for on-premise
consumption.

DAN MORALES
Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

DREW T. DURHAM
Deputy Assistant Attorney General for Criminal Justice

WILL PRYOR
special cotmsel

RBNBA HICKS
State Solicitor

SARAH J. SHIRLEY
Chair, Opiion Committee

Prepared by Mary R. Grouter
Assistant Attorney General

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