DAN MORALES 

ATmRNEY GENERAL 

Office of tly Bttornep @merat 

%tate of Z!kxae 

April 14,1994 

Honorable O.H. “Ike” Harris 

Chair 

Committee on State A&in3 

Texas State Senate 

P.O. Box 12068 

Austin,Texas 78711 

Opiion No. DM-289 

Re: Whether a Cii of Dallas ordinance 

regulating establishments that sell alcoholic 

beverages fhlls within section 109.57(d)(2) 

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 selfgovemment 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@v of 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 

UdCSSotbenuiscspccificallypmvidcdbytbCtamrOfthiScode,th 

msnnfscnne, ssle, disniioo, transporlatio~ sod poscsion of alcoholic 

bcvaagasbsllbcgovuDcdexclosivelybytkprovisioclsofthiraJ&. 

Ako.Bw.bdc~1.06. wedoMtrddrcsstbisprmidon 

p. 1538 
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). 

P. 1539 
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 onpremise 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 “onpremise 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 the place 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 offpremises 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 

0. 1540 
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 alcoholic beverages. 

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. 

p. 1541 
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 

p. 1542