STATE OF IOWA BEFORE THE DEPARTMENT OF COMMERCE ALCOHOLIC BEVERAGES DIVISION

STATE OF IOWA BEFORE THE DEPARTMENT OF COMMERCE ALCOHOLIC BEVERAGES DIVISION IN RE: ) ) Case No. 17ABD013 Backpocket Brewing Company ) ABD Docket No. A-2017-00040 d/b/a Backpocket Brewing ) 15981 Willow Avenue ) Cresco, Iowa 52136 ) PROPOSED DECISION ) Beer Permit BB_V_73215 ) On or about May 31, 2017, Backpocket Brewing Company, d/b/a Backpocket Brewing, Beer Permit BB_V_73215 (Applicant), filed an application for a 5-Day Beer Permit with Outdoor Service Area for the premises located at 15981 Willow Avenue in Cresco, Iowa. On June 19, 2017, the Howard County Board of Supervisors (Local Authority) denied the application. The licensee filed a timely Notice of Appeal with the Iowa Department of Commerce, Alcoholic Beverages Division (Division) on June 22, 2017. A telephone hearing was held on July 3, 2017 before the undersigned administrative law judge. Howard County Attorney Kevin Schoeberl appeared for the Howard County Board of Supervisors. Jacob Simmons, an owner and employee of Backpocket Brewing Company, appeared for the Applicant. THE RECORD The record includes the Electronic Permit Application; the June 22, 2017 letter from the Division Notifying the Applicant of the Denial and of its Appeal Rights; the Notice of Appeal; the Notice of Telephone Hearing; the testimony of Howard County Auditor Julie Chapman, Howard County Supervisor Patrick Murray, Howard County Sheriff Morris (Mike) Miner, Chelsea Helmly, and Jacob Simmons; and Local Authority Exhibit 1.

Page 2 FINDINGS OF FACT The Des Moines Register's Annual Great Bike Ride Across Iowa (RAGBRAI ) arrives in Howard County, Iowa on July 27, 2017 and departs Howard County on July 28, 2017. RAGBRAI is expected to draw approximately 20,000 bike riders and other persons to Howard County. On July 27, 2017, the RAGBRAI participants will ride 12 miles north on Willow Avenue (County Road V58) from the incorporated city of Provitin to the incorporated city of Cresco. Cresco will be the overnight stop for RAGBRAI. (Testimony of Chapman, Murray, Miner; Local Authority Exhibit 1) At its regularly scheduled meeting on June 19, 2017 at approximately 11:00 a.m., the Howard County Board of Supervisors approved and enacted Resolution No. 1038-2017, which is entitled A resolution relating to RAGBRAI Activities and pertaining to the official RAGBRAI Route within Howard County, Iowa. The resolution is effective only on July 27, 2017 and July 28, 2017. The resolution states that the passage of approximately 20,000 persons through Howard County will create public safety, public health, and other related concerns. The resolution applies only to unincorporated Howard County and does not apply to liquor or beer sales in the incorporated cities of Protivin and Cresco. (Local Authority Exhibit 1; Chapman, Murray testimony) Resolution No. 1038-2017 provides, in relevant part: SECTION 8-Outdoor Entertainment & Beverage Gardens No outdoor entertainment shall be held on July 27, 2017 or July 28, 2017 in Howard County, Iowa. An outdoor beverage garden with sales of alcoholic beverages shall not be permitted unless the following is in place: A permanent outdoor beverage garden is part of the Vendor s typical business operation on or before June 1, 2017. The Vendor has applied for an outdoor beverage garden on or before June 1, 2017. Temporary outdoor beverage gardens will only be allowed as an extension of an existing licensed business on private

Page 3 property owned by that business, not including sidewalks, and subject to a fee of $400 (see Section 3). The Cresco RAGBRAI Committee shall be exempt from the requirements of this section. Section 17 of Resolution 1038-2017 states: This resolution shall be in effect from and after its approval as provided by law. (Local Authority Exhibit 1, sections 8, 17; Chapman testimony) Howard County Supervisor Patrick Murray and Howard County Sheriff Morris (Mike) Miner testified concerning the reasons for the enactment of Resolution 1038-2017. They cited to safety concerns and to the county s desire to keep RAGBRAI participants moving on Willow Avenue and to discourage partying along the way so that the riders will arrive in Cresco before dark. Sheriff Miner expressed these concerns to the Board of Supervisors during their discussion of the proposed resolution on June 19, 2017. Sheriff Miner described Willow Avenue as a blacktop farm to market county road that has 3 foot shoulders. The bikers will be traveling to Cresco in the north bound lane, but the south bound lane will be open to motor vehicle traffic. (Murray, Miner testimony) Backpocket Brewing Company filed an electronic application for a Class B fiveday beer permit for the location at 15981 Willow Avenue in unincorporated Howard County. It appears that the application was signed on or about May 31, 2017 by Jim Simmons, who is listed as a 10.19% owner of the business. A Dram Shop Liability Certificate with Outdoor Service Endorsement was issued for the proposed premises on June 14, 2017, with a policy effective date of July 26-July 30, 2017. (Electronic Application) Jacob Simmons owns less than 10% of Backpocket Brewing Company. He is the company s Brewmaster and he is also in charge of all of its RAGBRAI operations. According to Jacob Simmons, Backpocket Brewing has operated outdoor beer gardens on RAGBRAI routes for the past several years, and it has been successful in obtaining dozens of 5-day beer permits for that purpose. (Simmons testimony; Electronic Application) Backpocket s Beer Permit application was placed on the Howard County Board of Supervisor s agenda for June 19, 2017, and it was considered by the Supervisors in the afternoon at approximately 1:00 p.m. This was after Resolution 1038-2017 had already been approved. The Board of Supervisors

Page 4 denied Backpocket s application and cited two grounds for the denial: 1) the application lacked required supporting documentation; and 2) Resolution 1038-2017. This was the only RAGBRAI related application for a beer garden that was received by the Howard County Board of Supervisors. (Electronic Application; Chapman, Murray testimony) At the hearing, Sheriff Miner raised an additional safety concern that he had for the location selected by Backpocket Brewing at 15981 Willow Avenue. The bike riders would have had to cross oncoming traffic in order to enter the beer garden and again when they exited the beer garden to continue the ride into Cresco. (Miner testimony) There is no dispute that Backpocket Brewing Company s application was incomplete when it was reviewed by the Howard County Board of Supervisors on June 19, 2017. The application was missing the Property Usage and Release Agreement or lease showing that the property owner had authorized Backpocket Brewing Company s use of the property at 15981 Willow Avenue. The application was also missing the map or sketch showing the location of the beer garden and its restrooms as well as a notarized signature page. The Board of Supervisors adjourned at around 1:45 or 2:00 p.m. on June 19, 2017. At 2:39 p.m. that same day, Backpocket Brewing submitted the missing documentation by email to the Howard County Auditor. (Chapman, Helmly testimony) Chelsea Helmly is the Events Coordinator at Backpocket Brewing, and she was responsible for submitting 14 beer permit applications on behalf of Backpocket for this year s RAGBRAI course. Ms. Helmly called the Howard County Auditor s office on June 21, 2017 after receiving notice that the Board of Supervisors had denied their application for 15981 Willow Avenue. It was Ms. Helmly s recollection that she was told that the Board would meet again on July 3, 2017 and that Backpocket s now complete application could be placed back on the Board s agenda for that meeting. Howard County Auditor Julie Chapman does not recall receiving a specific request to put the application back on the Board s agenda, and she testified that the Board s next scheduled meeting was on July 5 and not July 3, 2017. The parties to the appeal agreed that even if the complete application went back before the Board of Supervisors it would still be denied based on Resolution 1038-2017. (Helmly, Simmons, Chapman testimony) On June 22, 2107, Backpocket Brewing Company filed a timely appeal of the application denial. In the written appeal, Jacob Simmons stated that:

Page 5 the initial reason for the denial was the shortage of paperwork; Backpocket supplied the missing paperwork but have been told that the application would be denied anyway; they have since learned that the county passed an ordinance prohibiting all beer gardens with the stated exemption of the RAGBRAI Committee; the result is to limit the sale of alcohol to a single county approved vendor and violates our rights to establish our business; Backpocket has successfully operated dozens of virtually identical spots without incident and sees no reason for the denial of the license. Jacob Simmons reiterated these points in his testimony at hearing. Backpocket Brewing has been operating beer gardens on RAGBRAI for the last several years, and it typically operates two beer garden stops per day along the route. Mr. Simmons characterizes their beer gardens as low-key, lawful businesses. Backpocket Brewing communicates with the Iowa State Patrol (ISP) before selecting its RAGBRAI sites. Last year, ISP asked Backpocket to avoid sites on corners, and they complied. This year, Backpocket Brewing met with representatives of the ISP and the Iowa Alcoholic Beverages Division and heard no safety concerns about its proposed locations. Backpocket Brewing is compliant when ISP officers stop by to ask them to direct the riders to leave the beer garden and to move on to complete the day s route. (Notice of Appeal; Simmons testimony) CONCLUSIONS OF LAW Iowa Code chapter 123 is the Iowa Alcoholic Beverages Control Act. It is an exercise of the police power of the state, for the protection of the welfare, health, peace, morals, and safety of the people of this state, and all of its provisions shall be liberally construed for the accomplishment of that purpose. 1 Liquor license and beer permit applications are initially reviewed by the appropriate local authority. If the proposed premises is located outside the corporate limits of a city, the county board of supervisors is the designated local authority. 2 A local authority shall either approve or disapprove the issuance of a liquor control license, retail wine permit, or retail beer permit, shall endorse its 1 Iowa Code section 123.1(2017). 2 Iowa Code section 123.32(1)(2017).

Page 6 approval or disapproval on the application, and shall forward the application with the necessary fee and bond, if required, to the division. There is no limit upon the number of liquor control licenses, retail wine permits, or retail beer permits which may be approved for issuance by local authorities. 3 An applicant for a beer permit must submit an application that provides all of the required information. 4 The applicant must identify the location of the premises where the applicant intends to operate and the name of the owner of the premises. If the applicant is not the owner, the applicant must provide documentation to show that it is the actual lessee of the premises. 5 The place must be described by a sketch of the premise showing the boundaries of the proposed place, the locations of selling and serving areas within the confines of the place, and distances between selling/serving areas. 6 The place must satisfy the health, safety, fire and seating requirements of the division, local authorities and the Iowa department of agriculture and land stewardship. 7 Local authorities are authorized to adopt ordinances or regulations for the location of the premises of retail wine or beer and liquor control licensed establishments within their jurisdiction. 8 The Iowa Alcoholic Beverages Control Act also allows a local authority to define, by motion, the licensed premises which shall be used by holders of liquor control licenses, beer permits, and wine permits at festivals, fairs, or celebrations which are sponsored or authorized by the local authority. The licensed premises defined by motion of the local authority shall be used by the holders of five-day or fourteen-day class B, class C, special class C, or class D liquor control licenses, or five-day or fourteen-day class C native wine or class B beer permits only. 9 No liquor license shall be issued for premises that do not conform to all applicable laws, ordinances, resolutions, and health and fire regulations. 10 An applicant for a liquor control license, wine permit, or beer permit may appeal the local authority's disapproval of an application for a license or permit to the 3 Iowa Code section 123.32(2)(2017). 4 Iowa Code sections 123.128, 123.127(2017). 5 Iowa Code section 123.128, 123.127(1)(a)(4) and (5); 185 IAC 4.4 (1). 6 185 IAC 4.4(3). 7 185 IAC 4.4(4). 8 Iowa Code section 123.39(2)(2017); 185 IAC 4.3. 9 Iowa Code section 123.32(3)(2017). 10 Iowa Code section 123.30(2)(2017) (emphasis supplied).

Page 7 Division s Administrator. In the appeal, the burden is on the applicant to demonstrate that the applicant complies with all of the requirements for holding the license or permit. 11 The preponderance of the evidence in the record supports the decision of the Howard County Board of Supervisors (local authority) to deny the application filed by Backpocket Brewing Company for a five-day Class B Beer Permit during RAGBRAI. At the time that the application came before the local authority, it did not include the required documentation to show that the applicant had a lease for the premises and it also lacked the required sketch of the proposed premises. This was one of two reasons that the application was denied. These missing items were submitted after the Board of Supervisors denied the application. The second (and now the primary) reason for the application denial was that the proposed premises does not conform to the resolution that was approved by the Howard County Board of Supervisors that limited the permissible locations for temporary beer gardens when RAGRBRAI passed through unincorporated Howard County. The resolution allows temporary outdoor beer gardens during RAGBRAI only at locations that are extensions to existing licensed businesses and that are on private property owned by that business. RAGBRAI in general, and temporary beer gardens along the RAGBRAI route in particular, present extraordinary public health and safety concerns and challenges for the host communities. The Howard County Board of Supervisors elected to address this challenge, at least in part, by adopting Resolution No. 1038-2017. Backpocket Brewing s beer permit application for the location at 15981 Willow Avenue does not comply with the resolution. The local authority had a sound legal basis for denying the application when it failed to comply with all resolutions adopted by the local authority. Backpocket Brewing suggests that the decision should be reversed because it contends that the actual motivation for Resolution 1038-2017 was economic, i.e. that it was enacted to favor local businesses over outside vendors, rather than public safety. Iowa Code section 123.32(3), which authorizes local authorities to limit the location of licensed premises for festivals, fairs, or celebrations, does not address the permissible or impermissible motives for approving a motion. Moreover, even though this resolution could also have the effect of favoring local 11 Iowa Code section 123.32(7)(2017).

Page 8 licensed businesses, there is no evidence in the record that supports Backpocket s contention that this was why the local authority approved it. Although the Resolution approved by the Howard County Board of Supervisors includes an exemption for the Cresco RAGBRAI Committee, there is no evidence in this record that the Cresco RAGBRAI Committee has plans to operate a temporary beer garden in unincorporated Howard County and the local authority has not approved any temporary beer garden along the 12 mile stretch of Willow Avenue between the towns of Protivin and Cresco. DECISION AND ORDER IT IS THEREFORE ORDERED that the decision of the Howard County Board of Supervisors denying the application for five-day Class B Beer Permit, filed by Backpocket Brewing Company, d/b/a Backpocket Brewing Company, is hereby AFFIRMED. Pursuant to the administrative rules of the division, any adversely affected party may appeal a proposed decision to the Administrator of the Alcoholic Beverages Division within thirty (30) days after issuance of the proposed decision. In addition, the Administrator may initiate review of a proposed decision on the Administrator's own motion at any time within thirty (30) days following the issuance of a proposed decision. 185 IAC 10.27(1) and (2). Requests for review shall be sent to the Administrator of the Alcoholic Beverages Division, 1918 S.E. Hulsizer, Ankeny, IA 50021. Unless otherwise ordered, each appealing party may file exceptions and briefs within thirty (30) days of the notice of appeal or order for review. Within thirty (30) days thereafter, any party may file a responsive brief. The Administrator may shorten or extend the briefing period as appropriate. The Administrator may resolve the appeal on the briefs or provide an opportunity for oral argument. 185 IAC 10.27(6). The administrator may affirm, reverse or modify the proposed decision. A party who is adversely affected by the proposed decision shall not be deemed to have exhausted administrative remedies unless the adversely affected party files a request for review of the proposed decision within the time provided and the Administrator has reviewed the proposed decision and has affirmed, reversed, or modified the proposed decision.

Page 9 Dated this 7th day of July, 2017. Margaret LaMarche Administrative Law Judge Iowa Department of Inspections and Appeals Administrative Hearings Division Wallace State Office Building-Third Floor Des Moines, Iowa 50319 cc: Jacob Simmons, Backpocket Brewing Company (by Email and by Certified Mail); Kevin Schoeberl (by Email); Julie Chapman, Howard County Auditor (by Email); Lolani Lekkas, ABD (By Email); Karen Freund, ABD (by Email); Bobby Bailey, ABD (by Email); Josh Happe, ABD (by Email); Heather Schaffer, ABD (by Email)