Maine Legislature Votes on Marijuana Bill Veto

Updating our previous post on the fate of LD 1650, Governor LePage last week vetoed the bill and set the stage for action at the State House on Monday, where the Legislature was deciding whether to override the Governor’s veto. A two-thirds vote in both the House and Senate was required to overcome a veto.

We now know the result: the veto has been sustained, with the House voting 74-62 to uphold the Governor’s action.

A vote to override the Governor’s veto would have meant that the bill, which provided a framework for implementing the legalization of recreational marijuana approved by voters last November, would have become law and provided some flexibility for municipalities to regulate recreational marijuana. Today’s vote at the Legislature, however, means that the legalization of recreational marijuana will continue to be in legal limbo for the foreseeable future.

Marijuana Bill Awaits Veto Decision

LD 1650, An Act to Amend the Marijuana Legalization Act, was passed in both the House and the Senate on October 23, 2017. Governor LePage has until November 2, 2017, to sign the bill, veto the bill or allow it to become law without his signature. The 77-page bill comprehensively rewrites the legalization bill enacted by Citizens’ Referendum now one full year ago. Legalization of marijuana has continued to be in a legal limbo. It is legal to grow and possess certain amounts of marijuana, but it is not legal to buy or sell it, even privately.

As a municipality there are reasons to be in favor of this amended law. It now contains an opt-in provision for municipalities rather than an opt-out provision. Because of this, some of the organizations backing legalization have actually opposed the bill because they argue that it is more difficult for a municipality vote to opt-in to a law than it is to opt-out. The bill also provides economic incentives to those municipalities who participate in the program and do not opt-out. The law provides for a number of different types of licensing, including retail sales, grow only and testing facilities. A licensee may hold the first two licenses, but the testing facility must be independent. If the governor does not sign the law, there will be a number of challenging legal issues arising.

The bill also sets more appropriate tax rates, limits properties to 18 plants growing, closes “gift” and “delivery” scams and allows employers to hire and fire based on adult use of legal marijuana.

Ruling Sheds Light on Meaning of “Public Employee” under Maine’s Municipal Labor Law

Maine’s Superior Court recently affirmed a decision from the Maine Labor Relations Board (MLRB) finding that two municipal supervisory employees were “public employees” with the right to collectively bargain under Maine’s Municipal Public Employees Labor Relations law (MPELR). The decision is noteworthy because it sheds light on two exceptions to the definition of “public employee” under the MPELR and, perhaps more important for municipalities, what is required for an employee to fall within those exceptions.

The issue in Town of Searsport v. State of Maine and LIUNA Laborers’ Local 327 arose from a union’s petition with the MLRB seeking to create a bargaining unit for employees in the town’s Waste Water Treatment Plant (WWTP) and Public Works Department. After the town objected to including the WWTP Superintendent and the Public Works Director in the unit, an examiner for the MLRB held an evidentiary hearing and concluded that both the Superintendent and the Public Works Director should be included in the unit and should not be excluded from coverage by the MPELR. This decision was affirmed by the full MLRB.

Affirming the MLRB’s decision on appeal, the Superior Court found that the Superintendent and Public Works Director did not fall within two exceptions to the MPELR’s definition of “public employee.” Turning to the Superintendent first, the court found this position did not fall within an exception that applies to employees who are appointed to “office” pursuant to statute, ordinance or resolution for a specified term by the executive head or body of a public employer. Although the Superintendent had been appointed to his position for a number of one-year terms by the Town Manager, the court found the meaning of “office” was ambiguous because it could refer either to a specific official position or to employment in general. The court therefore deferred to the MLRB’s interpretation of the term, which limited the exception to public employees appointed to official positions. In this case, the town had a policy that identified 24 officials over which the town had appointive authority, but neither the Superintendent nor the Public Works Director were on the list. Given the absence of evidence demonstrating that the Superintendent held an official position specifically established by statute, ordinance or resolution, the court found the position did not fall within the exception.

As for the Public Works Director, the court found this position did not fall within a second exception that applies to a “department head or division head” appointed to office pursuant to statute, ordinance or resolution for an unspecified term by the executive head or body of a public employer. Here, the court found no ambiguity in the exception, but found there was no evidence showing that the director was “properly appointed” to a department head position. The director had originally been appointed to the position of Highway Foreman, but his job title and job description were changed to Public Works Director several years later. Although the Board of Selectmen approved the change in job description, it did not take any further action to reappoint or clarify the director’s appointment from Highway Foreman to Public Works Director. As a result, regardless of whether the Public Works Director was a department head position, the court found that the director was never properly appointed to that position by the town.

For municipalities, the Superior Court’s ruling is important because it highlights the importance of procedure when appointing individuals to positions within a town. The ruling makes clear that, for an individual to fall within one of these two exceptions to the definition of “public employee,” the individual must not only be appointed to a position covered by the exceptions, the individual must also be appointed following a proper appointive process.

Let’s Talk Municipal Finance – Municipal Lease Purchase Agreements

In the last installment of Let's Talk Municipal Finance, I discussed municipalities and governmental entities that issue bonds, a form of municipal debt. An alternative to incurring municipal debt and less onerous option for a municipality that is, for example, looking to purchase a new piece of equipment, is a municipal lease purchase agreement. 

Like ordinary lease purchase agreements, municipal lease purchase agreements require payments for a set number of years to lease a piece of equipment. While some agreements are strictly lease agreements with no option to purchase, more commonly the agreements provide an option to purchase the equipment outright for a nominal price at the end of the term. While a municipality may enter into a lease purchase agreement without a vote of the residents, the allocation to pay the annual lease payments is included as a line item on the annual budget approved by the residents. In addition to the annual appropriation, the agreement must also be duly authorized by the municipality, which commonly means certain resolutions or ordinances must be adopted by the municipality’s governing body authorizing entrance into the agreement by certain officers of the municipality. 

Since payment of the lease is subject to annual appropriation in the municipal budget, municipal lease purchase agreements must contain a provision allowing for termination in the event that the residents fail to approve the appropriation for the following year’s annual principal and interest payments.  This allows the municipality to terminate the lease without penalty. Lending institutions are willing to enter into municipal lease purchase agreements because interest on the annual lease payments is tax exempt as a result of factors such as the municipality’s status as a governmental unit and the use of the equipment being purchased for a municipal or public purpose. 

Municipalities must also consider, however, that the administrative costs of issuing a municipal lease purchase agreement are often greater than those of issuing a bond, primarily because the process is less standardized. The municipality must negotiate individually with a lending institution. Further, the municipality’s legal counsel must review and draft documents and governing body authorizations that are acceptable to the municipality’s chosen lending institution and necessary to issue the opinion of legal counsel, which opines on issues such as due authorization and tax matters. For these reasons, if you are considering entering into a municipal lease purchase agreement, it is best to retain legal counsel at the very beginning of the process to ensure each of the documents and authorizations conforms to the necessary requirements.

Ethan Anderson practices with Preti Flaherty's Municipal Law and Business Law practice groups, focusing on public finance, mergers and acquisitions, and contract matters.

Maine Superior Court Weighs in on Code Enforcement Appeal

Earlier this year, Maine’s Superior Court issued a decision in Blasco v. Town of Southport that provides a useful reminder for municipalities about appeals of code enforcement actions.

The case involved an 80B appeal of a notice of violation that had been issued by the Town of Southport’s code enforcement officer. The plaintiff filed the appeal pursuant to a provision in Southport’s land use ordinance that provided that all enforcement actions taken by the CEO “may be appealed by an aggrieved party only to the Superior Court pursuant to Rule 80B of the Maine Rules of Civil Procedure.” There was no dispute among the parties that the notice of violation at issue was an enforcement action within the ambit of the ordinance.

The question for the Superior Court was whether Southport’s ordinance, which allowed CEO enforcement actions to be appealed directly to Superior Court, was consistent with Maine law. The court answered that question with an unequivocal “no.” The court pointed out that, in 2013, the Maine Legislature enacted a statutory amendment that authorized enforcement orders such as a notice of violation to be appealed, unless there is clear language in an ordinance stating that such decisions are “only advisory.” However, that statute, 30-A M.R.S.A. § 2691(4), also requires that an appeal must be taken to the Board of Appeals prior to any appeal to the Superior Court. In this case, Southport’s ordinance did not state that the CEO’s decisions were only advisory, and so, it did not necessarily preclude an appeal of the notice of violation at issue. But, because the ordinance attempted to allow for appeals of CEO decisions to be taken directly to Superior Court without first being presented to the Board of Appeals, the Superior Court found Southport’s ordinance was inconsistent with Section 2691(4) and remanded the appeal to Southport’s Board of Appeals for its consideration.

For municipalities in Maine, the Blasco decision serves as a reminder to review land use ordinance provisions concerning the appeal of code enforcement actions. Municipalities should bear in mind that, absent any language stating that certain code enforcement decisions are only advisory and not appealable, a notice of violation or similar enforcement order is normally appealable. Any appeal, however, must first be presented to the Board of Appeals before it can be appealed to the Superior Court.

Update on Marijuana Progress at the Maine Legislature

As of early June 2017, Maine’s implementation of the legalization of marijuana for adult use continues to chug along. The Maine Legislature’s Joint-Select Marijuana Legalization Implementation Committee has been meeting several times per week now for months, poring over the initiated Marijuana Legalization Act and each potential facet of the forthcoming structure it has called for.

After the MLA’s passage last November, the incoming 128th Maine Legislature submitted more than 70 marijuana-related bills pertinent to all areas of legalization and the state’s existing medical marijuana program. More than 30 of these bills have been carried over for the MLI Committee’s work later this summer, fall, and next session. However, the Committee also has the power to report out its own legislation, which it has already done, passing LD 243 (assigning licensing authority to DAFS) and a recently passed bill to mandate laboratory testing of marijuana and marijuana products and set up a licensure program for these laboratories. Both of these bills have yet to be signed by the governor and enacted into law.

In the meantime, the Committee has been engaged in in-depth discussion around everything from what cultivation, retail, enforcement, and implementation timing will look like. Amid these proceedings, the Legislature will be eager to make use of any potential revenue collected from the taxation of marijuana. Following adjournment of the First Regular Session, the Committee’s plan is to meet in July and August and report out an omnibus bill, establishing an adult use program, to a Special Session of the Legislature in the fall.

While the Legislature has been working on implementation of the Adult Use Program, the Department of Health and Human Services has been undergoing a rewrite of rules for the Maine Medical Use of Marijuana Program (MMUMP). Through this rewrite, DHHS is seeking to provide patients, caregivers, dispensaries, municipalities, and Maine citizens more clarity and guidance in the MMUMP. Participants in the MMUMP and municipalities, especially, have been seeking this guidance for quite some time, as the rules have not been amended since 2013, despite numerous statutory changes.

On June 14, DHHS held a public hearing at the Augusta Civic Center to take public comment on these rules. Fewer than 50 folks, mostly caregivers, testified at the public hearing. Most of their comments were in support of the program and in opposition to DHHS’s efforts to bring greater clarity and effective enforcement to the program. The deadline to provide written comments to DHHS is June 26.

Here is a link to further information on the rules and the rulemaking process:

http://www.maine.gov/dhhs/mecdc/rules/maine-cdc-rules.shtml

Accessory Uses and Their Pitfalls

Municipalities put a lot of thought into comprehensive plans and zoning ordinances to make sure that no uses are allowed which will cause negative impacts on a given neighborhood. However, we often see ordinances that inexplicably allow any type of use in a district as long as it is an accessory use. “Accessory uses” are usually defined as being incidental and subordinate to the principal use of the property.

A municipality will often have a table of uses in its ordinances that allows only specific types of use in a particular zone, but allows accessory uses in all zones. Let’s think for a second about what this might mean. Consider a residential zone in which a nursing home is an allowed use, but a restaurant is not an allowed use. The nursing home has a cafeteria that is open to the general public. If “accessory uses” are allowed in all zones, the nursing home now has a back-door (yet perfectly legal) way to run a restaurant without violating the ordinance. Neighbors who thought they were living in a restaurant-free zone might complain, as might would-be restaurateurs who do not have the same opportunity.

Home occupations are also frequently given broader latitude than the same type of use conducted outside the home, even though the impacts on the neighborhood might be the same. Is that auto repair shop in someone’s home garage any less noisy than a principal use of the same type that might not be allowed in the same zone?  This matters because zoning restrictions are a limitation on property rights, and there has to be a rational basis supporting all such restrictions.

What can be done? Planning boards and staff should consider carefully their definitions and ordinance provisions pertaining to accessory uses. One simple solution is to include a provision that accessory uses are only permitted to the extent they would be permitted as a principal use in the given zone. Consider also the types of uses such as hospitals, civic centers, schools, churches and other campus-type facilities that may encompass several accessory uses. It often makes sense to include the more common elements of these facilities in the definition of the primary use, rather than trying to figure out which uses are subordinate and accessory. Generally speaking, planning officials should put the same degree of thought into the impacts of these accessory activities as they do into the impacts of their principal use counterparts.