Commonwealth Journal

August 15, 2013

Courts to clarify liquor store quotas

Somerset refiles case against ABC

by Chris Harris
Commonwealth Journal

Somerset —

The issue of Somerset’s liquor store quota is back in the courts, only the latest twist in an ongoing saga that’s being played out on both the local and state levels.
According to a statement released from Mayor Eddie Girdler’s office Tuesday, the City of Somerset has re-filed legal action concerning the issuance of retail package liquor licenses by the Kentucky Department of Alcoholic Beverage Control (ABC).
While it seems like an aggressive move, that may not entirely be the case.
“We’re just asking the judge to clarify the law,” said Somerset Mayor Eddie Girdler. “Nobody knows what it is, whether us or ABC.
“They (ABC) contend that regardless of local ordinance, regardless of what any city passes, they have complete jurisdiction to do what they want,” he added. “We’re not seeking anything other than for the judge to clarify that is the law. ... Through this whole process, because there are so many cities they’re dealing with, we just feel they need to clarify exactly how to you get a license and who gets them.”
City ABC Administrator Nick Bradley confirmed that the newest lawsuit had a lot to do with simply figuring things out after they were muddled by a recent meeting with a state legislature committee.
“Really, it’s all about laws and regulations, getting those set and clarifying exacts the ins and outs of how this works,” said Bradley. “(It’s about) holding people accountable for making sure laws are followed, and making sure we’re doing the same.”
In early July, the Administrative Regulations Review Subcommittee — on which Somerset’s own State Rep. Tommy Turner sits — voted to find ABC’s regulations deficient.
This was after the ABC had agreed to grant the city five additional liquor store licenses — considered “quota” licenses, the number of which available to a city is chosen by the ABC, as well as the recipients of said licenses.
The city had fought to get more than the five liquor licenses, up to the point of filing a complaint in Pulaski Circuit Court in late January, claiming that that the initial decision by ABC to grant only five licenses — and award them to two pharmacy chains and three retailers that the city considered smaller than what they were expecting — was “arbitrary and capricious.”
The city contended that the state had failed to follow Kentucky statutes in the application of the city’s ordinance, and that the existing quota system had no current regulations to limit the numbers beyond the guidelines of county population. The ABC had used Somerset’s population to arrive at the figure of five, based on a calculation of one liquor store for ever 2,300 residents. If they had gone by county population, Somerset could have qualified for over 25 such licenses, which allow for the operation of retail stores that sell distilled spirits and wine, rather than just beer.
In the six months to follow, the Somerset and state ABC hammered out a deal that would compromise: five new liquor licenses for Somerset, which — the city hoped — might allow for high-volume retailers with loads of investment money to get a license and positively impact the city’s tax revenue.
That deal was on the table when the meeting with the review subcommittee took place. After they ruled the ABC’s regulations deficient — in an effort, Girdler believed, to prevent Somerset specifically from getting more competition for existing stores — that left the state in an interesting position. Girdler contended that rules would default back to the pre-existing ones that based liquor license quotas on county population, rather than that of the city.
“ABC has admitted that there is no current quota system for cities like Somerset, except for using the county population totals,” reads the city’s statement. “The lawsuit seeks to determine what statutes and regulations to apply in the issuance of quota licenses since no rules exist.”
A call was placed by the Commonwealth Journal to the state ABC offices for comment, but was not returned by presstime.
The statement from Girdler’s office noted that the city withdrew the original suit with the understand that the ABC would add more licenses, as the state organization went through the administrative process to approve these five new licenses and held a public hearing in which no one object.
“However, from that point, ABC has decided to again re-do the quota system and failed to complete the process,” the statement read.
“The City of Somerset contends that four of the five applicants approved by ABC would not have city licenses today except for the agreement to correct the errors made by ABC,” it continued. “To correct the errors made by ABC, the City decided to issue the licenses only under the understanding that ABC would use their discretionary authority to comply with City Ordinance.”
The decision by the subcommittee sent the issue to Gov. Steve Beshear to be resolved. Beshear can still implement the regulation, which could then only be overturned by a vote of the full General Assembly when it convenes.