Witnesses said health inspectors asked the little girl for her permit and threatened her with a $500 fine.
When a county official heard about it, he called her to apologize.
"In these kinds of cases you have to exercise discretion and judgment, and I don't think a 7-year-old selling lemonade is the biggest public health threat that we're facing as a county," said Multnomah County Chairman Jeff Cogen.
The county said it will still make sure that food at large public events is safe, but children selling lemonade will not be an issue again.
