Opinion #6463

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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. 6463

September 3, 1987

AGRICULTURE, DEPARTMENT OF:

Regulation of certain food service establishment activities in retail food stores by agreement with Director of Department of Public Health

PUBLIC HEALTH, DEPARTMENT OF:

Agreement of Director for regulation by Department of Agriculture of certain food service establishment activities in retail food stores

Regulation of certain food service establishment activities in retail food stores

WORDS AND PHRASES:

"Incidental"

"Individual portions"

A retail food store licensed by the Department of Agriculture which prepares on the premises and sells for immediate consumption prepackaged food in individual portions consisting of enough food or a helping of food to feed one person must also be licensed by the Department of Public Health as to such food service establishment activity.

A retail food store licensed by the Department of Agriculture which prepares food items such as sandwiches for immediate sale per the individual customer's order for consumption off the premises must also be licensed by the Department of Public Health in order to engage in such food service establishment activity.

A retail food store licensed by the Department of Agriculture which prepares on the premises and displays bulk food items such as potato salad, chicken, and ribs in delicatessen counters and sells portions of such items in a quantity to feed one person, or enough of one kind of food for a helping for one person must be licensed by the Department of Public Health in order to engage in such food service establishment activity.

The Legislature has empowered the Director of the Department of Public Health and the Director of the Department of Agriculture to enter into an agreement that licensing and regulation of such food service establishment activities of the retail food store be conducted by the Department of Agriculture.

Honorable Doug Cruce

Honorable Richard D. Fessler

Honorable Rudy J. Nichols

State Senators

Honorable Jerry C. Bartnik

Honorable Gregory Gruse

Honorable David M. Gubow

Honorable Charlie J. Harrison, Jr.

Honorable Shirley Johnson

State Representatives

The Capitol

Lansing, Michigan 48913

You have requested my opinion on three questions relating to the regulation of retail food stores that also prepare and sell portions of food for immediate off-site consumption. Your questions may be stated as follows:

1. Must a retail food store which prepares, on the premises, items such as sandwiches and potato salad and wraps or packages them as individual portions for future sale be licensed by the Michigan Department of Public Health as a food service establishment?

2. Must a retail food store which prepares items such as sandwiches for immediate sale, per the individual customer's order, for consumption off the premises be licensed by the Michigan Department of Public Health?

3. Must a retail food store which prepares and displays bulk items such as potato salad, chicken, or ribs in deli counters be licensed by the Michigan Department of Public Health as a food service establishment when it sells individual portions of such bulk items?

Because your questions are related and subject to the same underlying analysis, they will be considered together.

1978 PA 328, MCL 289.801 et seq; MSA 12.895(1) et seq, is known as the Food Processing Act of 1977.

The Food Processing Act of 1977, Sec. 3, provides that the Department of Agriculture shall license persons engaged in the "processing, packing, repacking, canning, preserving, freezing, fabricating, storing, selling, or the offering for sale of food." (Emphasis added.) Pursuant to the Food Processing Act of 1977, Sec. 15, the Department of Agriculture has promulgated rules for the regulation of retail food stores. 1980 AACS, R 285.557.1 et seq. Thus, retail food stores are subject to licensure and regulation by the Department of Agriculture.

1978 PA 368, MCL 333.1101 et seq; MSA 14.15(1101) et seq, is known as the Public Health Code.

The Public Health Code, Sec. 12904, provides for the licensure by the Department of Public Health of persons operating food service establishments. The Legislature has defined the term "food service establishment" in the Public Health Code, Sec. 12901(1)(a), to mean "a fixed or mobile restaurant, coffee shop, cafeteria, short order cafe, luncheonette, grill, tearoom, sandwich shop, soda fountain, tavern, bar, cocktail lounge, nightclub, drive-in, industrial feeding establishment, private organization serving the public, rental hall, catering kitchen, delicatessen, theater, commissary, or similar place in which food or drink is prepared for direct consumption through service on the premises or elsewhere, and any other eating or drinking establishment or operation where food is served or provided for the public."

OAG, 1981-1982, No 5873, p 108, 113 (April 15, 1981), concluded that a convenience store selling packaged foods and also prepared foods for immediate consumption off the premises is subject to licensure by the Department of Agriculture for its activities relating to the sale of processed foods, and licensure by the Department of Public Health as a food service establishment for its activities relating to the sale of prepared foods. The opinion noted that the respective activities are separate and distinct "so that no dual inspection of the same activity exists."

The Legislature addressed the question of "dual regulation" of retail food stores engaging in certain food service establishment activities by enacting 1984 PA 200 to amend the Food Processing Act of 1977, Secs. 2 and 7, and 1984 PA 199 to amend the Public Health Code, Sec. 12901 and to add Sec. 12916.

The Food Processing Act of 1977, Sec. 2, was amended by 1984 PA 200 to add a subsection (f) to define "grocery items" to mean "prepackaged foods that are offered for sale for other than immediate consumption. Grocery items does not include comminuted meats." Of greater significance, Sec. 7 was amended, in pertinent part, to add subsections (g) and (i) to provide:

"The following persons, establishments, and organizations are exempt from the requirement to obtain a license under this act:

"(g) Delicatessens that are licensed and inspected food service establishments under the public health code, Act No. 368 of the Public Acts of 1978, specializing in the preparation of sandwiches and other food for immediate consumption and that offer for sale grocery items incidental to the volume of business of the delicatessen. If a delicatessen is exempt from licensing under this section and offers for sale grocery items in a volume greater than incidental to the business of the delicatessen, the delicatessen shall notify the local health department having jurisdiction over the delicatessen 30 days before the proposed change in sale of grocery items. The local health department having jurisdiction over the delicatessen shall notify the department of agriculture within 10 days after receiving the notice of the proposed change in sale of grocery items.

"(i) An establishment otherwise within the scope of this act that is licensed and inspected by the department of public health, if the manner of licensing and inspection is mutually agreed upon by the director and the director of the department of public health or their designated representatives."

It is noted that the Food Processing Act of 1977, Sec. 7, was last amended, but not in pertinent part, by 1986 PA 131.

1984 PA 199 amended the Public Health Code, Sec. 12901, to rewrite the exemptions from the definition of "food service establishment," in pertinent part, as follows:

"(1) As used in this part:

"(a) 'Food service establishment' means a ... delicatessen ... or similar place in which food or drink is prepared for direct consumption through services on the premises or elsewhere,.... Food service establishment does not apply to any of the following:

"....

"(vi) A food establishment that is licensed and inspected under the food processing act of 1977, ... even if the food establishment sells for consumption off the premises, in a volume incidental to the total volume of the food establishment, any of the following:

(A) Prepackaged food that is offered for sale in individual portions that do not require preparation in the food establishment except for temperature modification. As used in this subparagraph, 'prepackaged food' means food that is prepared and packaged either at a facility inspected and approved by the United States department of agriculture or a facility that is licensed as a food processor under the food processing act of 1977,....

(B) Food that is prepared at the food establishment, displayed in bulk form for sale, and sold in quantities other than individual portions.

....

(F) Other foods as determined by the director or his or her representative, in conjunction with the director of the department of agriculture or his or her representative."

"....

"(viii) An establishment otherwise within the scope of this act which is licensed and inspected by the department of agriculture, if the manner of licensing and inspection is mutually agreed upon by the director and the director of the department of agriculture or their designated representatives."

It is noted that the Public Health Code, Sec. 12901, was amended, but not in pertinent part, by 1985 PA 29.

Both the Food Processing Act of 1977, Sec. 7, as amended by 1984 PA 200, and the Public Health Code, Sec. 12901(1)(a), as amended by 1984 PA 199, purport to exclude dual regulation by the Department of Agriculture and the Department of Public Health of retail food stores engaging in certain food service establishment activities and of food service establishments engaging in certain retail food store activities. Each adopts a volume of sales test in such activities "incidental" to the total volume of sales of the retail food store or the food service establishment in order to fix the responsibility of regulation by either the Department of Agriculture or the Department of Public Health.

Each also contains a provision that if certain activities of a retail food store come within the scope of both the Food Processing Act of 1977 and the Public Health Code, the Directors of the Departments of Agriculture and Public Health may agree to licensure and regulation by one department only.

The term "incidental" in the Food Processing Act of 1977, Sec. 7(g), and in the Public Health Code, Sec. 12901(a)(vi), is not defined by the Legislature and is unclear in its meaning. Further, it is to be observed that the exclusionary test employed in the Public Health Code, Sec. 12901(a)(vi)(B), includes an element of food prepared at a food establishment, displayed in bulk form, and sold in quantities "other than individual portions." The Legislature has not defined the term "individual portions." The term is ambiguous and requires interpretation.

If the language of a statute is clear and unambiguous, the legislative intent must be determined accordingly and further interpretation is unwarranted. City of Livonia v. Dep't of Social Services, 423 Mich 466, 487; 378 NW2d 402 (1985). Where the language of a statute, however, is ambiguous, a court may determine the legislative intent by reviewing the legislative history of the statute. Legislative analyses may also be consulted. Luttrell v Dep't of Corrections, 421 Mich 93, 103; 365 NW2d 74 (1984), reh den, 422 Mich 1201 (1985).

1984 PA 200 and 1984 PA 199 were not only enacted by the same legislature, but went into effect the same day. Because each relates to licensure and regulation of retail food stores, they must be construed together to ascertain the legislative intent. Van Antwerp v State, 334 Mich 593, 605; 55 NW2d 108 (1952).

The legislative history of amendatory 1984 PA 199 (HB 4312) and 1984 PA 200 (HB 4313) is instructive.

House Legislative Analysis, HB 4312 and HB 4313, February 9, 1984, identified the apparent problem and described the content of the bills:

"THE APPARENT PROBLEM:

"Retail food outlets are regulated by two different departments of state government, Agriculture and Public Health, operating under separate statutes. Broadly speaking, the agriculture department is responsible for policing grocery store operations while the Department of Public Health has responsibility for restaurants; the obvious distinction is between establishments that sell foods that people take home and prepare and establishments that prepare foods for customers to eat on the premises or fairly soon after leaving the premises. Increasingly, the distinction between the two kinds of retail food outlets is becoming blurred. Many supermarkets have extensive delicatessen departments and convenience stores routinely sell ready-to-eat fast foods in addition to traditional grocery items. Establishments in this definitional grey area often find themselves subject to dual regulation; they are regulated as food establishments by the Department of Agriculture and as food service establishments by local health departments. [Local health departments are responsible for enforcing the food service sanitation provisions of the Public Health Code in cooperation with the state public health department.] Businesses complain that this dual regulation, with dual inspection and fees, is burdensome and unnecessary and amounts to a wasteful duplication of services...."

"THE CONTENT OF THE BILLS:

"House Bill 4312 would amend the Public Health Code to remove certain kinds of retail food businesses from under its food service sanitation provisions. House Bill 4313 would remove certain retail food businesses from the jurisdiction of the Food Processing Act of 1977.

"Generally speaking, the two bills would have the combined effect of placing retail food businesses into a single category of establishment so that each business would be regulated either as a food establishment by the Department of Agriculture or as a food service establishment by the Department of Public Health (and local health departments) as long as the business retained its original emphasis and kept its other food-selling activities incidental to its total volume of business. (Presumably, food businesses would continue to fall under the jurisdiction of both acts if they engaged in a substantial amount of both kinds of food retailing.)

"House Bill 4312

"The following businesses would be removed from under the definition of 'food service establishment' in the Public Health Code:

". Any establishment licensed and inspected by the Department of Agriculture under the Food Processing Act of 1977, even if the establishment sold for off-premises consumption in a volume incidental to its total volume any of the following:

. pre-packaged food offered for sale in individual portions requiring no preparation other than 'temperature modification';

. food prepared at the food establishment, displayed in bulk form for sale, and sold in quantities other than individual portions;

....

. other foods as determined by the directors of the departments of Public Health and Agriculture.

"....

". An establishment otherwise within the scope of the health code that is licensed and inspected by the Department of Agriculture if the manner of licensing and inspection is mutually agreed upon by the directors of Agriculture and Public Health.

"The Department of Agriculture would be required to notify the appropriate local health department if a business exempt from licensing began to offer for sale food other than that permitted to be sold by the bill.

"House Bill 4313

"The following businesses would be exempt from the Food Processing Act's licensure requirements:

"....

". Delicatessens licensed and inspected as food service establishments under the Public Health Code that specialize in the preparation of sandwiches and other food for immediate consumption and that offer for sale grocery items incidental to the volume of their total business. The local health department involved would have to notify the Department of Agriculture if a delicatessen began to sell grocery items in a volume greater than incidental to its total volume.

"....

". An establishment otherwise within the scope of the Food Processing Act that is licensed and regulated by the Department of Public Health if the manner of licensing and inspection is mutually agreed upon by the directors of the departments of Agriculture and Public Health." (Emphasis in original.)

A study of the legislative history of 1984 PA 199 (HB 4312) indicates that as originally introduced, HB 4312 purported to amend the Public Health Code, Sec. 12901(a), by providing that the definition of "food service establishment" does not apply to the following:

"(vi) A DELICATESSEN SECTION LOCATED WITHIN A FOOD ESTABLISHMENT THAT IS LICENSED AND INSPECTED UNDER ACT NO. 328 OF THE PUBLIC ACTS OF 1978, EVEN IF THE DELICATESSEN PROVIDES LIMITED FOOD SERVICE INCIDENTAL TO THE VOLUME OF BUSINESS OF THE DELICATESSEN."

The House adopted on second reading a Substitute for HB 4312 (H-1), which, in pertinent part, provides:

"(vi) A FOOD ESTABLISHMENT THAT IS LICENSED AND INSPECTED UNDER THE FOOD PROCESSING ACT OF 1977, ACT NO. 328 OF THE PUBLIC ACTS OF 1978, EVEN IF THE FOOD ESTABLISHMENT SELLS FOR CONSUMPTION OFF THE PREMISES, IN A VOLUME INCIDENTAL TO THE TOTAL VOLUME OF THE FOOD ESTABLISHMENT, ANY OF THE FOLLOWING:

"(A) PREPACKAGED FOOD THAT IS OFFERED FOR SALE IN INDIVIDUAL PORTIONS THAT DO NOT REQUIRE PREPARATION IN THE FOOD ESTABLISHMENT EXCEPT FOR TEMPERATURE MODIFICATION. AS USED IN THIS SUBPARAGRAPH, 'PREPACKAGED FOOD' MEANS FOOD THAT IS PREPARED AND PACKAGED EITHER AT A FACILITY INSPECTED AND APPROVED BY THE UNITED STATES DEPARTMENT OF AGRICULTURE OR A FACILITY THAT IS LICENSED AS A FOOD PROCESSOR UNDER THE FOOD PROCESSING ACT OF 1977, ACT NO. 328 OF THE PUBLIC ACTS OF 1978.

"(B) FOOD THAT IS PREPARED AT THE FOOD ESTABLISHMENT, DISPLAYED IN BULK FORM FOR SALE, AND SOLD IN QUANTITIES OTHER THAN INDIVIDUAL PORTIONS."

1984 Journal of the House 227 and 2847-2849. HB 4312 was passed by the House without further change. 1984 Journal of the House 238-239. The Senate passed HB 4312 without amendment. 1984 Journal of the Senate, 1460, 1510-1511.

Had the Legislature enacted HB 4312 as originally introduced, a retail food store with a delicatessen department licensed by the Department of Agriculture would be exempt from licensure and regulation of its delicatessen department as a food service establishment by the Department of Public Health if the volume of business of the delicatessen was incidental to the total business of the retail food store. The Legislature, however, chose to enact House Substitute (H-1) to HB 4312 to permit the exemption, subject to the incidental volume test, only if (1) the food prepared in the retail food store and displayed in bulk form for sale is sold in quantities other than individual portions, or (2) the food sold in individual portions is prepared and prepackaged outside the retail food store. 1984 Journal of the House 227 and 2847-2849.

For purposes of the exemption from Department of Public Health regulation and inspection of retail food stores selling prepackaged food in individual portions, it is noted that the preparation and prepackaging of the food in individual portions must be accomplished in a facility inspected and approved by the United States Department of Agriculture or in a facility licensed as a food processor under the Food Processing Act of 1977. A retail food store licensed by the Department of Agriculture would meet the latter definition. However, meaning and effect must be given to the change made by the Legislature in House Substitute (H-1) to HB 4312 that the prepackaged food does "not require preparation in the food establishment except for temperature modification." (Emphasis added.) 1984 Journal of the House 227 and 2849. If the result borders on the absurd, it is within the province of the Legislature to make the necessary statutory change by enactment of appropriate legislation.

Since the Legislature has not defined the term "individual portions," these words are to be given their ordinary and customary meaning. Baker v General Motors Corp, 409 Mich 639, 665; 297 NW2d 387 (1980). Resort may be had to dictionary definitions. State v Levenburg, 406 Mich 455, 465; 280 NW2d 810 (1979).

Webster's Third New International Dictionary,

Unabridged Edition (1964), defines the term "individual" as "intended for one person <served the pudding in ____ portion>: ...." This same work defines "portion" as "enough food to serve one person at one meal or enough of one kind for a helping <individual ____s of meat were precisely weighed out in the restaurant kitchen>."

Under the ordinary and customary meaning of these words, an individual portion of food prepared in a retail food store and displayed in bulk form for sale would be enough food or helping of food to serve one person at one meal.

The Legislature has not defined the term "incidential." Research reveals at least three cases defining that term in the context of a federal statute imposing a federal excise tax on admissions to places of entertainment and containing an exemption for ballrooms, cabarets, or other similar places where the serving or selling of food, refreshments or merchandise is merely "incidental." The court in Kantor v US, 154 F Supp 58, 62 (ND Tex, 1956), reviewed the dictionary meanings of the term "incidental," quoted the definition of the term as set out in 42 CJS, p 520 as "[a]n adjective which has reference to something which is subordinate to, ... [and] incident to the main purpose of the main business" and concluded that "incidental" referred only to minor matters from which the collections are small or insignificant. Under this definition, 40% of the gross revenue from concessions or refreshments was held to be substantial in amount and may not be considered incidental. In Landau v Riddell, 255 F2d 252 (CA 9, 1958), the court declined to hold that revenues from the sale of food and beverages representing 47% of the total receipts of the taxpayer's ballroom business were incidental so as to exempt the taxpayer from the tax. Receipts for sale of food and merchandise totalling 50% of the gross receipts were held to be more than incidental in Billen v US, 174 F Supp 41 (WD Okla, 1959), aff'd 273 F2d 667 (CA 10, 1960).

While none of these decisions state what percentage of total receipts would be considered "incidental," the definition of the court in Kantor v US, supra, that "incidental" refers to that which is subordinate to the main purpose of the business in which activity the collections are small, is helpful in the analysis.

Gross receipts from a delicatessen department of a retail food store licensed and regulated by the Department of Agriculture for the sale of (1) prepackaged food prepared off the premises and offered for sale in individual portions, and/or (2) food prepared on the premises, displayed in bulk form for sale and sold in quantities other than a portion consisting of enough food or one helping of food to serve one person at a meal, must be subordinate to the main purpose of the retail food store in that the receipts from such sales must be small in amount in relation to total gross receipts of the retail food store. A reasonable rule of thumb to follow reflective of the legislative intent would be that the total receipts from such sales not exceed 10% of the gross receipts of the retail food store. Total gross receipts in excess of that amount from such activity or activities would represent substantial sales subjecting the retail food store to dual regulation by the Department of Agriculture and the Department of Public Health.

In that event, dual regulation may be avoided by agreement of the directors of the two departments or their designated representatives that a retail food store engaging in the sale of food prepackaged off the premises and sold in individual portions and/or food prepared on the premises, displayed in bulk form and sold in other than individual portions be licensed and regulated by the Department of Agriculture as authorized by the Public Health Code, Sec. 19101(1)(a)(vi)(A), (B) and (viii).

The Public Health Code, Sec. 12901, as amended by 1984 PA 199, contains no exemption from licensure and regulation by the Department of Public Health of retail food stores licensed by the Department of Agriculture that (1) prepare on the premises food such as sandwiches or potato salad and package them in portions sufficient to feed one person or as one helping of a food for one person for immediate consumption off the premises, or that (2) prepare items such as sandwiches for immediate sale per the individual customer's order for consumption off the premises, or that (3) prepare, display and sell from bulk items such as potato salad, chicken or ribs in deli counters, portions thereof in quantity to serve one person at a meal or as a helping of a food for one person, regardless of the quantity of total sales thereof in relation to the gross total sales of the retail food store. Thus, the retail food store which engages in such food service activities must also be licensed and regulated as to such activities by the Department of Public Health. The Directors of the Department of Public Health and the Department of Agriculture, or their representatives, however, may mutually agree to regulation of such food service activities of the retail food store by the Department of Agriculture only, as authorized by the Public Health Code, Sec. 12901(1)(a)(viii).

If a retail food store licensed by the Department of Agriculture has a delicatessen department selling both food prepared and prepackaged off the retail store premises and sold in individual portions; and food prepared on the premises, displayed in bulk form for sale, and sold in quantities other than portions consisting of enough food or one helping of food to serve one person at a meal, the total sales from both activities must not exceed 10% of the gross receipts of the retail food store in order to constitute an "incidental" food service establishment activity.

In the event total gross receipts from such food service establishment activities represent more than 10% of the total gross receipts of the retail food store, subjecting the food service establishment activities to licensure and inspection by the Department of Public Health, the Legislature has empowered the directors of the two departments to agree that licensure and inspection of such activities will continue with the Department of Agriculture.

It is my opinion, in answer to your first question, that a retail food store licensed by the Department of Agriculture which prepares on the premises and sells for immediate consumption prepackaged food consisting of enough food to serve one person or a helping of food to serve one person must also be licensed by the Department of Public Health as to such food service establishment activity. It is my further opinion that the Director of the Department of Agriculture and the Director of the Department of Public Health may agree that the Department of Agriculture only shall license and inspect such activity.

It is my opinion, in answer to your second question, that such a retail food store which prepares items such as sandwiches for immediate sale per the individual customer's order for consumption off the premises must also be licensed by the Department of Public Health in order to engage in such food service establishment activity, unless the Directors of the Department of Public Health and the Department of Agriculture mutually agree that such food service activity of the retail food store will be licensed and inspected by the Department of Agriculture only.

It is my opinion, in answer to your third question, that such a retail food store which prepares and displays bulk food items such as potato salad, chicken, or ribs in deli counters and sells portions of such items in a quantity to serve one person at a meal or enough of one kind of food for a helping for one person must be licensed by the Department of Public Health, unless the Directors of the Department of Public Health and the Department of Agriculture mutually agree that such food service activity of the retail food store shall be licensed and inspected by the Department of Agriculture only.

Frank J. Kelley

Attorney General

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