When a city council approves a 3.2 low-point beer license application, can the city's residents petition to refer that action to a public vote, or is the council's decision final and not subject to referendum?
Plain-English summary
A South Dakota city council voted to approve a 3.2 low-point beer license. Some residents wanted to know whether they could petition for a public vote to overturn the council's decision through the referendum process. AG Janklow had earlier issued Memorandum Opinion 76-87 about the procedure for handling beer license applications. Mr. Jones now asked the follow-up: was the council's approval itself referable?
Janklow's answer was yes. The analysis rested on three pieces.
First, the South Dakota Constitution at Article III, § 1 reserves to the people the right to require that any law passed by the legislature be submitted to a vote of the electors. The same provision expressly extends this referendum power to municipalities. Certain limited categories of legislation are not subject to referendum (laws necessary for immediate preservation of public peace, health, or safety; laws supporting state government; etc.), but these exceptions are narrow.
Second, SDCL chapter 9-20 and SDCL 9-19-13 implement the constitutional referendum power at the municipal level. SDCL 9-19-13 says that every resolution or ordinance passed by the governing body takes effect on the 20th day after publication, unless suspended by referendum, except for the same narrow categories of public-peace-and-safety, election-administration, improvement-hearing, bidding, and similar matters that the constitution exempts. A beer license approval does not fit any of those exceptions.
Third, the 1913 State ex rel. Wagner v. Summers case held that the action of a city governing body in granting a liquor license is itself the kind of discretionary legislative act subject to referendum. The court distinguished between legislative acts (making new law, exercising discretion) and ministerial acts (mechanically executing existing law). Granting a liquor license required discretionary judgment, so it qualified as legislative.
The McAthie v. Frieberg decision supported the same line by holding that the approval or disapproval of a liquor license application is not ministerial but discretionary. In re Doerr was a related case.
So when a council approved a 3.2 beer license, that approval was a resolution or ordinance subject to the 20-day referendum window under SDCL 9-19-13. Residents could petition for a public vote during that window. To the extent a 1943-44 AG opinion suggested otherwise, Janklow expressly superseded it.
Janklow flagged a practical complication. The Department of Revenue actually issues the license under SDCL 35-2-2 after the city council's action. If the city approved the license and the council's action got referred for a public vote, but the Department of Revenue had already issued the license before learning of the referendum, confusion would result. Janklow noted that the Department had rulemaking authority and could adopt procedural rules to manage this timing.
Currency note
This opinion was issued during AG William Janklow's tenure (1975-1979). Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. SDCL chapters 9-19, 9-20, and 35-2 have been amended multiple times since the 1970s. Modern questions about referendum of municipal liquor license decisions, the timing of Department of Revenue license issuance versus city referendum windows, and the legislative-versus-administrative distinction should be verified against current statute and current South Dakota Supreme Court case law before reliance.
What the opinion meant at the time
For city councils issuing 3.2 beer licenses, the immediate consequence was that residents had a 20-day window after publication to petition for referendum. Councils could not treat license decisions as immune from public review.
For liquor license applicants, the opinion was a reminder that approval by the council was not necessarily the final word. Even after a positive council vote, the application could be referred to a public vote and overturned. Business plans built around a 3.2 beer license needed to factor in that referendum window.
For citizen groups opposing particular license grants, the opinion confirmed they had an active referendum tool. They did not have to wait for ordinary elections or rely on indirect political pressure.
For the Department of Revenue, the opinion noted but did not resolve the timing puzzle: when should the Department actually issue the license? Issuing immediately after city approval risked making a license live before the referendum window closed. Janklow suggested administrative rulemaking as the cleanup mechanism.
Common questions
Q: What is a 3.2 low-point beer license?
A: 3.2 beer is malt beverage with a low alcohol content (3.2% by weight, roughly 4% by volume). In 1970s South Dakota, this was a separate licensing category from full-strength beer and from liquor. Some retailers and restaurants licensed under the 3.2 category had different rules and restrictions than full-liquor establishments.
Q: What's the legislative-versus-administrative test for referendum?
A: Borrowed from McQuillin's Municipal Corporations: the question is whether the city action makes new law (legislative, discretionary, subject to referendum) or merely executes existing law (administrative, ministerial, not subject to referendum). Granting a license is discretionary because the council exercises judgment about whether the application meets the standards.
Q: What were the referendum exceptions?
A: Article III, § 1 and SDCL 9-19-13 exempt from referendum (1) laws necessary for the immediate preservation of public peace, health, or safety; (2) laws for support of the municipal government; (3) resolutions or ordinances that provide for an election; (4) resolutions or ordinances that order a hearing on an improvement or assessment; (5) resolutions or ordinances that call for bids. None of these covered beer license approvals.
Q: How many signatures did a referendum petition need?
A: That was set by SDCL chapter 9-20 and is not discussed in this opinion. The threshold typically was a percentage of the city's registered voters within the 20-day window. Modern users should check current SDCL 9-20 for current thresholds.
Q: What if the Department of Revenue issued the license before the referendum?
A: This was the practical problem Janklow flagged. He left the resolution to Department rulemaking. A common-sense solution would be for the Department to wait until the referendum window expires (or until any filed referendum is resolved) before issuing the license, but that was a procedural choice for the Department.
Q: Did Janklow's opinion supersede a 1943-44 AGR opinion?
A: Yes, expressly. Janklow noted: "To the extent that this opinion conflicts with the opinion at 1943-44 AGR 197, the latter is superseded."
Background and statutory framework
The South Dakota Constitution's broad referendum power was a Progressive-era reform that put direct democracy tools in the hands of the electorate. The expansion to municipalities was part of the same constitutional tradition. SDCL chapter 9-20 implements the municipal referendum process.
The legislative-versus-administrative test for referendum eligibility came from case law and from treatises like McQuillin's Municipal Corporations. Courts in many states applied the same distinction. South Dakota's Wagner v. Summers applied the test specifically to liquor license decisions and concluded they were legislative.
The supersession of the 1943-44 AGR opinion is a useful reminder that AG opinions are not static. Subsequent AG opinions can revise or overrule earlier ones, especially when the earlier opinion conflicts with controlling case law. The 1943-44 opinion apparently took a different view (perhaps that license decisions were administrative). Janklow's reading aligned with the South Dakota Supreme Court's Wagner and McAthie decisions, which controlled.
The Department of Revenue's role at SDCL 35-2-2 (ultimately issuing the license after city approval) is the kind of administrative layered-on-discretionary structure that requires procedural coordination. The opinion's reference to Department rulemaking authority is a soft signal that the agency should adopt procedures to avoid the issue-then-referendum sequencing problem.
Citations and references
Statutes and constitutional provisions:
- S.D. Const. Art. III, § 1 (legislative referendum power; applies to municipalities)
- SDCL ch. 9-20 (municipal referendum procedures)
- SDCL 9-19-13 (ordinances and resolutions effective date and referendum)
- SDCL 35-2-1.2 (municipal action on liquor license applications)
- SDCL 35-2-2 (Department of Revenue issues licenses)
Cases:
- State ex rel. Wagner v. Summers, 144 N.W. 730 (S.D.)
- McAthie v. Frieberg, 280 N.W. 871 (S.D.)
- In re Doerr, 150 N.W. 625 (S.D.)
Treatises:
- McQuillin, Municipal Corporations, Vol. 5, § 16.55 (legislative-versus-administrative referendum test)
Superseded opinion:
- 1943-44 AGR 197 (expressly superseded by this opinion)
Source
Original opinion text
Action of municipal governing body on low-point beer application is referable
Dear Mr. Jones:
In Memorandum Opinion 76-87, I gave my opinion as to the proper procedure for a municipality to follow on an application for a 3.2 beer license. You have also requested an opinion as to whether the action of the governing body on such application is referable.
In my opinion the answer to your question is YES. Article III, section 1, of the South Dakota Constitution provides in part:
Section 1. The legislative power of the state shall be vested in a Legislature which shall consist of a senate and house of representatives, except that the people expressly reserve to themselves the right to propose measures, which measures the Legislature shall enact and submit to a vote of the electors of the state, and also the right to require that any laws which the Legislature may have enacted shall be submitted to a vote of the electors of the state before going into effect, except such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions: . . . . This section shall apply to municipalities.
The Legislature has implemented this constitutional provision, with regard to municipalities, in SDCL 9-20. The specific statutes refer to both ordinances and resolutions when prescribing the procedure for referendum. SDCL 9-19-13 also provides:
. . . Except such resolutions or ordinances as may be necessary for the immediate preservation of the public peace, health, or safety, or support of the municipal government and its existing public institutions, or which provide for an election or for hearing on an improvement or assessment or which call for bids, which take effect upon the passage and publication thereof, every resolution or ordinance passed by the governing body shall take effect on the twentieth day after its publication unless suspended by operation of a referendum.
The South Dakota Supreme Court in State ex rel. Wagner v. Summers, 144 N.W. 730, has interpreted the above provisions as applying to the action of a governing body in passing a resolution granting a liquor permit.
The Court reached this conclusion based largely on the fact that the approval of a liquor license does not fall within the exceptions in the South Dakota Constitution and SDCL 9-19-13.
Case law in other jurisdictions has uniformly held that referendum is restricted to legislative matters as opposed to those involving only administrative acts. Stated another way, the test is whether the action is to make new laws (i.e., discretionary acts) or merely to execute or implement existing law (i.e., ministerial acts). McQuillin, MUNICIPAL CORPORATIONS, Vol. 5, § 16.55.
In McAthie v. Frieberg, 280 N.W. 871, the South Dakota Supreme Court dismissed a mandamus action against a municipal governing body to compel issuance of a liquor license, stating that the approval or disapproval of a liquor license application is not a ministerial act but an act involving discretion. (See also In re Doerr, 150 N.W. 625.) Although the McAthie case did not address the referendum issue, it is supportive of and consistent with the decision in Summers. Therefore, in my opinion, the present state of the law is such that the official action of a municipal sovereign body, pursuant to SDCL 35-2-1.2, on a liquor license application is subject to referendum. To the extent that this opinion conflicts with the opinion at 1943-44 AGR 197, the latter is superseded.
I realize that such a result is not without its practical problems, since the Department of Revenue must ultimately issue the license (SDCL 35-2-2), and confusion could result if the action approving an application were referred and the Department was not informed prior to issuing the license. However, the Department is vested with rule-making authority and can adopt procedural rules dealing with such problems.
Respectfully submitted,
William J. Janklow
Attorney General
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