Adoption of Tobacco Products Retail License

February 27, 2001

City Manager c/o Business License Office
99 W. 10th Ave.
Eugene, OR 97401

By Overnight Delivery
Re: Comments on Administrative Order No. 53-01-03
Proposing the Adoption of Tobacco Products Retail License Administrative Rule R-3.515

Dear City Manager:

The Oregon Neighborhood Store Association ("ONSA") is commenting on this order on behalf of its members in the city of Eugene, and its more than 300 members throughout the state. ONSA is a non-profit organization of neighborhood grocery/convenience stores in Oregon, and this letter is written on ONSA's behalf.

Initially ONSA would like to point out that the civil penalty formula proposed as part of the rule is not "similar to the intent of the OLCC's Responsible Vendor Program." ONSA is quite familiar with the Responsible Vendor Program, because ONSA worked closely with the OLCC in creation of the program. OLCC's program has very significant differences from Eugene's proposed rule. The OLCC Responsible Vendor Program requires a retailer to comply with certain steps in order to be a participant in the program. The OLCC program also provides that a retailer can lose its status as a responsible vendor if it fails to comply with the rules; however as long as a retailer is in the program then its license will not be revoked. This is a critical difference between penalties imposed by the OLCC on a responsible vendor and penalties imposed on a vendor not participating in the program. In contrast, Eugene's proposed rule does not give a retailer similar protection against license revocation. Eugene's program is simply a sliding scale of penalties that depends upon the nature of the infraction.

In addition, ONSA objects to the rule for the following reasons.

1. The requirements for a license application are arbitrary and capricious. There is no specific deliniation of what is required in the license application and apparently the City is given the unrestricted discretion to require an applicant to submit any and all information specified by the staff. (See R-3.515-B Section 2.4)

2. The rule also establishes arbitrary and capricious requirements for displays of tobacco products. Again the rule gives the staff unrestricted discretion to require any changes to the displays that the staff deems appropriate. (See R-3.515-C Section 1)

3. The rule requires the retailer to notify the City of all changes in owners, managers, or other persons authorized to act on behalf of the licensee. (See R-3.515 -C Section 7) As drafted this rule would require every store to notify the City every time an employee is hired or fired. This is a totally unworkable and unnecessary system.

4. R-3.515-G is an unconstitutional taking of private property without due process and without just compensation. The City cannot unilaterally impose an indemnity obligation on retailers of tobacco any more than they could impose a similar obligation on retailers of any other product.

5. The City lacked the authority to adopt the ordinance and accordingly the rule adopted pursuant to the ordinance is void.

6. The ordinance and rule create a tax. A tax requires voter approval. Consequently the rule and ordinance cannot be effective without voter approval.

7. The ordinance and rule are an unreasonable restriction of Interstate Commerce and therefore violate the United States Constitution.

8. The ordinance and rule create a taking of private property without due process and without just compensation.

9. The ordinance violates the equal protection clause of the United States Constitution and Section 1 Article 20 of the Oregon State Constitution.

The rule should be redrafted so that it complies with the City Council's expressed intent of actually creating a responsible vendor program. The rule should also be revised so that it limits the staff's discretion in requiring information on an application and limits staff control of displays. Section 7 of R-3.515 should be deleted. The rules should also be revised so that they are in compliance with the state and federal constitution and the City Charter.

Michael J. Lilly
As Attorney for the Oregon Neighborhood Store Association