Lippitt O’Keefe Gornbein
3/23/2017 11:08 AM
A little-noticed move in February by the Liquor Control Commission to eliminate the so-called half-mile rule that prohibits retailers selling liquor from obtaining a permit to do so unless they are located at least a half-mile from a similarly permitted retailer has prompted a lawsuit charging the action could decimate existing businesses.
The Associated Food and Petroleum Dealers filed a lawsuit Wednesday in the Court of Claims asserting that the Liquor Control Commission violated the Administrative Procedures Act when it took just five weeks from the time it submitted draft rules to the Office of Regulatory Reinvention rescinding the half-mile requirement until filing the rule as complete with the Department of State.
The rule (ORR #2017-005) takes effect Thursday. Usually, it takes months, sometimes years, for a rule to move through the process, which generally involves a substantial public comment period.
In its lawsuit, the Associated Food and Petroleum Dealers said it was not claiming the mere rescinding of the rule violated the law. The problem was the process the Liquor Control Commission used to move it through the process so quickly, the lawsuit says.
The group asked the court to place a temporary restraining order and preliminary injunction on the rescinding of the rule.
"This case seeks a ruling that the MLCC and ORR must follow the notice, publication and public comment provisions of the (Administrative Procedures Act) to properly rescind the rule," the lawsuit states.
The consequences of the action would be severe, the Associated Food and Petroleum Dealers argued.
"The half-mile rule provides current licensees security to operate under a strict regulatory scheme and much-regulated market," the lawsuit says. "The sudden and swift abolishment of this long-standing rule - accomplished in direct violation of the APA ... now allows a new licensee to literally set up shop next door to an existing licensee."
Officials with the Liquor Control Commission declined to comment about the reason for rescinding the half-mile rule because of the lawsuit.
The lawsuit, and sources following the issue, said the commission is using a section of law allowing it to bypass the usual rule-making procedures by claiming it is rescinding a rule in conflict with existing law. The lawsuit contends the commission has no grounds to invoke this exception.
Those tracking the issue said Liquor Control has seen the half-mile rule as questionable. Other licensees, such as restaurants or retailers selling only beer and wine, are not subject to the same restrictions. The permit allowing retail liquor sales allows those retailers to sell liquor, beer and wine.
Without a temporary restraining order and preliminary injunction, existing businesses could suffer irreparable harm, the lawsuit charges.
"Thousands of retailers who have invested their life savings into their businesses and have lived and abided under (the half-mile rule) will risk losing their livelihood for which no amount of damages could compensate," the lawsuit says. "Hundreds of new applicants will receive licenses and immediately jeopardize, annul and nullify the value and benefit that existing licensees have enjoyed."