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) ofthe 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 ofDallas (“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-mbythe legislature. Tex. Const. art. XI, $5; DallaLF Merchant’s & Concessionaire’sA&J v. City ofDalkq 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, 85; DalIasMerchant’s, 852 S.W.2d at 491 (citing Ci@ofBrook&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, ifpossible. C@v ofRichudumv.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 iswell established that “ifthe 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@ ofSweetwater 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 inpertinent 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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state may not impose stricter standards on premises or businesses required to have a license or permit under this code than are imposed on similarpremises 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 inpe&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 ofthe 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 thllswithin the exception setforth 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 109.57clearly preempts an ordinance ofa home-rule city that regulates where alcoholic beverages are soldunder most circumstances.” 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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Id. at492 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 anew 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 ofestablishment, 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. 35 (amendingDallas, Ten.. Code 3 514.211(10)); see also id. $26 (amending Dallas, Tex., Code 351A-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-mphasisadded).
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 ofalcoholic beverages for on-premisecansumptio~~.The city, on the other hand, appears to construe this term to allow govemmemal entities to regulate establishments that derive 75percent or more oftheir gross revenue 6om the sale ofalcoholic beverages on the premises regardless ofthe place ofcan.wmptian.
The relevant language in section 109,57(d)(2) was added bythe 70th Legislature in wnferenw wmmittec. Acts 1987,7Oth Leg., ch. 303, 58 (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 ofwnsumption 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 asfollows:

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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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 tastedanthepremises ofapackage store, none ofapackage store’s revenue may be deemed to be reveme from the on-premise sale ofalcoholic

beverages. Acts 1993, 73d Leg., ch. 934, 549 (enacting Alcoholic Beverage Code, section 52.03) (emphasis added). The term “on-premise sale”inthis provision obviously refers to salefor 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. StephensCow@ v.Hejizer, 16S.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 thatderive 75 percent or more oftheir 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 “aask for on-pmoiac ccnmqtb” See C.S.S.B. 3, Acts 1991, 726 Leg, 2d C.S. 54 at 3. The pmpostdlcgirletionstatcdthatulis -twastok”a-chllngcmsdconlytoclarify mdretlecttbeiotcntoftltelegihme.” Id. 55. RepnacntativcWiititbdmthislanpqeonthc Iloose floor. See Lkbateoo 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) (rejectionofan amedment &csnotamuclcwsb&onddatute). Wehavere&wedthctramcriptcfthsle8i&tiwhmrin8andit isMtappslantoost&ttbcfsc2thatthisproposed ammdmeottothcco&wasmtadoptalindicateatbat tklC~intcadcdtOtaLcSpositiOOCOlUMytOtbCproposedcuaudmnt espciellygiVUlWtllC ppOSCd~~iIUUMkdtOk~aDO-Clarification.

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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 ofTexas
JORGE VEGA First Assistant Attorney General
DREW T.DURHAM Deputy Assistant Attorney General for Criminal Justice
WILL PRYOR special cotmsel
RBNBAHICKS State Solicitor
SARAH J. SHIRLEY Chair, Opiion Committee Prepared byMary R. Grouter Assistant Attorney General

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