Schwartz v. Wash. Cty.

550 P.3d 20

332 Or.App. 342

Jordan SCHWARTZ, an Individual; Jonathan Moran, an Individual; Serenity Vapors, LLC, a Domestic Limited Liability Company; Torched Illusions, LLC, a Domestic Limited Liability Company; Belal Yahya, an Individual; and Hookah Cafe, LLC, dba King’s Hookah Lounge, a Domestic Limited Liability Company, Plaintiffs-Respondents,

v.WASHINGTON COUNTY, a Political Subdivision of the State of Oregon, Defendant-Appellant.

A179834

Court of Appeals of Oregon.

Argued and Submitted March 28, 2024

May 1, 2024

Washington County Circuit Court, 22CV04836; Andrew Erwin, Judge.

John Mansfield argued the cause and filed the brief for appellant.

Tony L. Aiello, Jr., argued the cause for respondents. Also on the brief was Tyler Smith & Associates, P.C.

Ellen F. Rosenblum, Attorney General, Benjamin Gutman, Solicitor General, and Philip Thoennes, Assistant Attorney General, filed the brief amicus curiae for State of Oregon.

Steven C. Berman, Lydia Anderson-Dana, Stoll Stoll Berne Lokting & Shlachter P.C., and Dennis A. Henigan filed the brief amici curiae for African American Tobacco Control Leadership Council, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association, American Medical Association, Campaign for Tobacco-Free Kids, Cascade AIDS Project, Kaiser Permanente, Oregon Coalition of Local Health Officials, Oregon Medical Association, Oregon Pediatric Society, Parents Against Vaping e-cigarettes, Truth Initiative, and Upstream Public Health.

Before Tookey, Presiding Judge, Egan, Judge, and DeVore, Senior Judge.

TOOKEY, P. J.

₃₄₄Defenclant Washington County appeals a judgment permanently enjoining it from enforcing Washington County Ordinance (WCO) 878, which bans the sale and distribution of flavored tobacco and flavored synthetic nicotine products in Washington County. The trial court enjoined WCO 878 be cause it concluded that WCO 878 is preempted by Oregon’s statewide scheme for tobacco retail licensure (TRL), ORS 431A.190 to 431A.220.¹ On appeal, in its sole assignment of error, defendant contends that the trial court erred in ruling that WCO 878 is preempted by Oregon’s scheme for TRL.²

We conclude that WCO 878 is not preempted by Oregon’s scheme for TRL, Therefore, we reverse and remand.

I. BACKGROUND

Prior to turning to a description of this litigation and an explanation of why Oregon's scheme for TRL does not preempt WCO 878, we provide an overview of that scheme, Washington County’s authority as a "home rule" county, and WCO 878.

A. Senate Bill 587 (2021) and TRL in Oregon

In 2021, the Legislative Assembly passed Senate Bill (SB) 587, which, for the first time, created a statewide scheme for TRL in Oregon. Oregon’s scheme for TRL is codified at ORS 431A.190 to 431A.220.

₃₄₅The purpose of SB 587 was "to improve enforcement of local ordinances and rules, state laws and rules and federal laws and regulations that govern the retail sale of tobacco products³ and inhalant delivery systems."⁴ ORS 431A.192. It aimed to do so by requiring a license or other authorization for a retailer to sell tobacco products and inhalant delivery systems. See Audio Recording, Senate Committee on Health Care, SB 587, Mar. 1, 2021, at 00:04:50 (comments of Rep. Kathleen Taylor), https://olis.oregonlegislatu re.gov (accessed Mar. 3, 2024) (explaining that "[w]ithout requiring a [tobacco retailer] to obtain a license, * * * enforcement of our existing laws is difficult").

At the time that SB 587 was enacted, Oregon was in the minority of states that did not require tobacco retailers to hold a license to sell tobacco products, and tobacco was ₃₄₆the only age-restricted product in Oregon that a retailer did not need a license to sell.

Testimony, Senate Committee on Health Care, SB 587, Mar. 1, 2021 (statement of Rachel Banks, Public Health Director, Oregon Health Authority);⁵ Audio Recording, Senate Committee on Health Care, SB 587, Mar. 1, 2021, at 00:04:15 (comments of Rep. Kathleen Taylor), https://olis.oregonlegislatu re.gov (accessed Mar. 3, 2024).

Nevertheless, several political subdivisions in Oregon had enacted ordinances requiring retailers to hold a license or other authorization issued by the political subdivision in order to sell tobacco products, although Washington County did not have such a licensure or authorization scheme in place. See, e.g., Testimony, Senate Committee on Health Care, SB 587, Mar. 1, 2021 (statement of Rachel Banks) (noting that "[c]ounties such as Multnomah, Clatsop and Klamath are enforcing strong tobacco retail licenses"). The result was that a "patchwork approach of local licensing programs" was starting to develop throughout Oregon. See Testimony, Senate Committee on Health Care, SB 587, Mar. 1, 2021 (statement of Shawn Miller, Northwest Grocery Association) (explaining that the Northwest Grocery Association supported SB 587 because it "has always been concerned with a patchwork approach of local licensing programs and would rather have a coordinated state-wide approach versus additional Counties adopting their own programs").

During the discussions on SB 587, an issue arose regarding what to do about the TRL programs in those political subdivisions that already had their own TRL programs if the state was to begin issuing its own licenses for retail sales under SB 587. Senator Tim Knopp explained that some of the local TRL programs may "go further than" the state TRL scheme likely would and recognized that some ₃₄₇of the political subdivisions with existing TRL programs "would want to keep those [TRL programs] in place." Audio Recording, Senate Committee on Health Care, SB 587, Mar. 10, 2021, at 00:45:00 (comments of Sen. Tim Knopp), https://olis.oregonlegis-lature.gov (accessed Mar. 13, 2024). For that reason, the legislature did not want to "preempt[ ]" those existing local programs, and it also did not want to require a retailer licensed to sell in a particular jurisdiction under a local TRL program also to be required to obtain a state-issued license. E.g., id.; Audio Recording, Senate Committee on Health Care, SB 587, Mar. 17, 2021, at 00:05:20 (comments of Rep. Kathleen Taylor), https://olis.oregonlegislature.gov (accessed Mar. 13, 2024) (explaining that it was "not the intent of the bill to stack multiple licenses on retailers").

The result of those discussions was the licensure scheme that was enacted by the legislature and codified at ORS 431A.194, ORS 431A.220, ORS 431A.198, and ORS 431A.218, which, as explained below, includes provisions that permit cities and local public health authorities to continue their licensing programs if those programs were in place on or before January 1, 2021, and, in those jurisdictions, allows retailers to sell tobacco products without a state-issued license if they have a license or other authorization issued by the jurisdiction.

ORS 431A.194 prohibits the retail sale of a tobacco product or an inhalant delivery system from any premises that is not licensed under either ORS 431A.198 or ORS 431A.220, providing:

"A person may not make a retail sale of a tobacco product or an inhalant delivery system at or from a premises located in this state unless the person sells the tobacco product or inhalant delivery system at or from a premises licensed or otherwise authorized under ORS 431A.198 or 431A.220."

ORS 431A.220 provides that cities and local public health authorities that had a TRL program for sales of tobacco products and inhalant delivery systems prior to January 1, 2021, may continue to run and enforce those TRL programs:

₃₄₈"A city or local public health authority that, on or before January 1, 2021, and pursuant to an ordinance adopted by the governing body of the city or local public health authority, enforced standards described in ORS 431A.218 (2)(a) and required that a person that makes retail sales of tobacco products or inhalant delivery systems in an area subject to the jurisdiction of the city or local public health authority hold a license or other authorization issued by the city or local public health authority may continue to enforce the standards and require the license or other authorization on and after January 1, 2022."

However, ORS 431A.218(7) prohibits cities or local public health authorities from requiring "a person that makes retail sales of tobacco products or inhalant delivery systems to hold a license or other authorization issued by the city or local public health authority in addition to [a] license issued" by the state under ORS 431A.198, "except as provided by ORS 431A.220"—that is, unless the local licensure or authorization program was in place on or before January 1, 2021.

Finally, ORS 431A.198 provides for retail licenses for tobacco sales issued by the Department. of Revenue (DOR). It requires the DOR to issue a license when certain circumstances are met, but also provides that the DOR cannot require a retailer to have a DOR-issued license to sell tobacco products or inhalant delivery systems when the retailer has a license or other authorization issued by a city or local public health authority pursuant to ORS 431A.220:

"(1) Except as provided in subsection (8) of this section, the Department of Revenue shall issue licenses to, and annually renew licenses for, a person that makes retail sales of tobacco products or inhalant delivery systems at qualified premises.

"(2) To be qualified for licensure under this section, a premises:

"(a) Must be a premises that is fixed and permanent;

"(b) May not be located in an area that is zoned exclusively for residential use; and

"(c) Must meet any qualification for engaging in the retail sale of tobacco products and inhalant delivery ₃₄₉systems enacted as an ordinance by the governing body of a local public health authority under ORS 431A.218, provided that the department has knowledge of the qualification pursuant to an agreement entered into under ORS 431A.212.

"* * * * *

"(8) The department may not require a person that makes...