Michigan liquor store location rule prompts legal fight

Jonathan Oosting
Detroit News Lansing Bureau

Lansing – A trade group representing Michigan retailers is fighting the state’s “lightning-fast” decision to lift a longstanding liquor license proximity rule, arguing the move could hurt member sales and lead to street corners lined with liquor stores.

The Michigan Liquor Control Commission on Thursday officially lifted a 1979 rule that generally prohibited liquor retailers from operating within a half-mile of each other.

But Associated Food and Petroleum Dealers, a nonprofit group representing both big grocers and small store owners, is suing the state in an attempt to keep the rule in place.

The regulation has offered licensed alcohol retailers “security from an already-saturated market” and “protected communities from having liquor retailers on every busy corner in the state,” according to a complaint filed Wednesday in the Michigan Court of Claims.

The suit alleges the Liquor Control Commission violated Michigan law by rescinding the half-mile rule without a public hearing.

Many administrative rules go through a lengthy vetting process that includes a public comment period, but the Liquor Control Commission requested an expedited path that is allowed for rules that are “obsolete and superseded” by a state law.

“As a government body, this is more in turn with what a dictatorship would do, not a democracy,” said Auday Arabo, president and chief executive of the Associated Food and Petroleum Dealers.

Liquor Control Commission spokesman Michael Loepp declined comment Friday, citing the ongoing litigation.

In its earlier request to rescind the rule, the commission argued it was superseded by a 2016 law that allowed beer and wine sales at gas stations. That law reiterated other requirements for granting a designated distributor liquor license: a population-based quota, or a waiver if there are no other stores within two miles.

The half-mile rule “discriminates against an otherwise qualified applicant based solely on the distance requirement from an existing licensee,” the Liquor Control Commission said.

But the lawsuit filed this week argues the alleged conflict between the location rule and new law is “demonstrably false” and faulty.

The commission “deliberately, arbitrarily and capriciously” violated state law to rescind the rule without a public hearing, the suit argues. As a result, existing license holders were denied the opportunity to weigh in.

“We just really want an open hearing like they do for all other rule-making processes,” Arabo said. “We’re confident that if we have the hearing, like we should have had on such a volatile issue, that hundreds if not thousands of retailers and community members would voice their concern on why the half-mile rule is needed.”

Court of Claims Judge Mark Boonstra this week denied the association’s request for an immediate restraining order to block the state from lifting the rule, but he ordered the state to respond to the lawsuit within seven days.