A multi-state trade association representing retailers successfully – albeit possibly temporarily – stopped the rescission of a state rule that prohibits liquor stores from operating within a half mile from one another
On January 24th, Judge Stephen Borrello issued an order staying rescission of Michigan’s longstanding “half-mile” rule pending any future court order.
The request came through a Court of Claims filing by the Associated Food & Petroleum Dealers (AFPD), who argued the Michigan Liquor Control Commission’s (MLCC) September vote to lift the 40-year rule despite pending legislation, (SB 501) because MLCC reasoning “is the very epitome of capriciousness.”
“We think we are on solid legal ground,” AFPD attorney Daniel J. McCarthy said Tuesday. “It’s one of those things where the system is not broke. It’s been working for 40 years. It should continue to work for another 40 years.
“There’s no rhyme or reasons for why it’s suddenly being rescinded despite thousands of license holders who have built their livelihood on it,” he added. “It presents a fundamental fairness issue.”
Borrello is expected to hear legal arguments or hold a hearing on the matter in March or April.
According to the 125-page filing, the three-member MLCC attempted to rescind the half-mile rule without notice or public comment in late 2016 through early 2017, but they held public hearings after AFPD sued.
The court filing alleges the public’s concerns, however, “fell on deaf ears.”
The MLCC eventually voted to lift the rule – action that was to take effect January 23rd – following a contentious public comment period where some business owners argued they built or bought their businesses with the expectation other liquor stores could not open within a half-mile. They argued that because Michigan sets minimum liquor prices their ability to compete is already limited.
McCarthy said the MLCC hasn’t articulated reasons why the rule needs to be rescinded, but it had stated in an April 11, 2017 meeting merely that “the rule needs to be rescinded for numerous reasons.”
The commission argued the rule is “protectionist” and anti-competitive.
However, the 2013 commission members defended the half-mile rule, noting it wasn’t discriminatory and treated “all similarly situated licensees and applicants the same.”
The Legislature responded in June with the introduction of Click to add MIRS Bill Hound SB 0501, which codifies the half-mile rule. It passed the Senate 27 to 9 in December, hours after furious liquor store owners flooded a legislative hearing at the Capitol.
The House version was referred to the Committee on Regulatory Reform on December 6th.
McCarthy said he’s been told the house bill has “significant public support” and it is believed the legislation will be signed into law.
AFPD represents thousands of retailers in Michigan, Ohio and surrounding states, according to its website, which notes members include independent supermarkets, convenience stores, petroleum retailers, service stations and specialty food markets.