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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6381 August 18, 1986 INTOXICATING LIQUORS: Modification of vendor's existing draught beer system at expense of manufacturer or wholesaler of beer The Liquor Control Commission may not permit a manufacturer or seller of beer to install or revise a draught beer system of a licensed vendor at the expense of the manufacturer or wholesaler and the order of the Liquor Control Commission authorizing such an installation or revision is invalid. Honorable Curtis Hertel State Representative The Capitol Lansing, Michigan You have requested my opinion as follows: "Does the Liquor Control Commission have the authority to issue an order authorizing a manufacturer of beer to install or revise equipment at the expense of the manufacturer upon the premises of the vendor? If the Commission does not have such authority, what is the effect of its order permitting such revision or installation?" Your inquiry arises out of an order issued by the Liquor Control Commission on December 18, 1985 concerning the Adolf Coors Company. The first paragraph of that order set forth the following background information: "In November, 1985, representatives of the Adolf Coors Company met with members of the Commission and Commission staff regarding the introduction of Coors Draught Beer into this state. Based upon representation by Coors officials that Coors Draught Beer is brewed and packaged at a higher elevation than other beer and contains higher CO2 levels and pressure than other beers, and the fact that it would be impossible to train an adequate number of independent draught beer system installers the proper modification procedures within the Coors introductory period, the Commission considered certain acceptable conversion procedures which would allow for the timely introduction of Coors draught beer in mid-January, 1986, while protecting the integrity of competing draught beers which would be dispensed on the same system...." Based upon these considerations, the Commission ordered that the Adolf Coors Company, or a Coors wholesaler, could make a one time only modification of a retailers existing draught beer system to convert the existing system from another brand to the Coors brand. The authorized modifications essentially consisted of installing an in-line pressure reduction device known as a "keg saver" and increasing the length of the existing beer line by up to two feet. The order specifically provided that the "keg saver" device and the additional line would continue to be owned by Coors and would not become the property of the retailer. The approval for these conversions by the Coors Company was to remain in effect for a period of only approximately 4 months. After that time, any additional modifications as a result of a conversion to, or from the Coors brand, would have to be borne by the retail licensee. Although the Commission subsequently withdrew its December 18, 1985 order, it remains appropriate to address your questions in order to clarify the Commission's authority to make such orders in the future. In MCL 436.30; MSA 18.1001, the Legislature has provided in pertinent part, that: "a manufacturer, warehouseman, wholesaler, outstate seller of beer, outstate seller of wine, or vendor of spirits shall not aid or assist any other vendor by gift, loan of money or property of any description, or other valuable thing, or by the giving of premiums or rebates, and a vendor shall not accept the same." MCL 436.7; MSA 18.977, authorizes the Liquor Control Commission to "adopt rules and regulations governing the carrying out of this act and the duties and responsibilities of licensees in the proper conduct and management of their licensed places." Acting pursuant to this statutory authority, the Commission has promulgated 1980 AACS, R 436.1045, which provides in pertinent part: "(1) Dispensing equipment, furniture, or fixtures shall not be sold, given, or otherwise furnished to a retail licensee by a manufacturer, an outstate seller of beer or wine, or a wholesaler, except upon written order of the commission ... "(2) Dispensing equipment or components thereof, furniture, or fixtures shall not be purchased, received, or otherwise accepted by a retail licensee from a manufacturer, an outstate seller of beer or wine, or a wholesaler, except upon written order of the commission...." The Liquor Control Commission order which is the subject of your inquiry purports to authorize a beer manufacturer to install beer dispensing equipment or components on the premises of a retailer. Although the equipment so installed would remain the property of the manufacturer and not of the retailer, the installation of such equipment by the beer manufacturer clearly constitutes aid or assistance to the retailer by means of a loan of property within the meaning of MCL 436.30; MSA 18.1001 and is, therefore, contrary to law. It is elementary that an administrative agency may not, through the adoption of a rule or entry of an order either extend the scope of, or grant exemptions to, a statute. Rather, such administrative determinations must be construed in connection with the statute itself and, where there is conflict, it is the statute which governs. Michigan Sportservice, Inc v Commissioner of the Department of Revenue, 319 Mich 561; 30 NW2d 281 (1948). Further, where an order or determination of an administrative body is contrary to law, it is subject to being reversed on judicial review. Gilliam v Chrysler Corp, 72 Mich App 538; 250 NW2d 123 (1976). The order of the commission, in authorizing an outstate seller of beer to aid or assist a vendor, is contrary to the statute and is invalid. It is my opinion, therefore, that MCL 436.30; MSA 18.1001, prohibits a manufacturer or wholesaler of beer from aiding or assisting a beer retailer by installing or modifying dispensing equipment on a loan basis at the expense of the manufacturer, on the premises of the retail vendor, and that the order of the Liquor Control Commission authorizing such installation or modification of equipment is invalid. Frank J. Kelley Attorney General
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