AB1221 RBS Public Hearing Transcript 10/11/19

STATE OF CALIFORNIA
DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

PUBLIC HEARING

IN RE: REGULATORY ACTION FOR THE RESPONSIBLE BEVERAGE
SERVICE TRAINING PROGRAM ACT OF 2017
OAL Notice File Number: Z-2019-0730-06
SACRAMENTO, CALIFORNIA
FRIDAY, OCTOBER 11, 2019

Atkinson-Baker, Inc.
(800) 288-3376
www.depo.com

REPORTED BY:
CARRIE HEWERDINE, RDR, CSR NO. 4579
FILE NO.:
AD09A55

STATE OF CALIFORNIA
DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

OAL Notice File Number: Z-2019-0730-06

Public Hearing Proceedings taken at California Department of Alcoholic Beverage Control, 3927 Lennane Drive, ABC Conference Room, Sacramento, California, commencing at 10:00 a.m., Friday, October 11, 2019, before Carrie Hewerdine, RDR, CSR No. 4579.


APPEARANCES

FOR THE DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

  • KARYN NIELSEN, Division Chief for Licensing
  • KEVIN ORTEGA, Supervising Agent
  • DAVID H. BAILEY, Deputy Division Chief
  • SARAH EASTER, Associate Governmental Program Analyst
  • ROBERT deRUYTER, Attorney III

SPEAKERS


SACRAMENTO, CALIFORNIA
FRIDAY, OCTOBER 11, 2019 AT 10:07 A.M.

MS. NIELSEN:  Okay.  We’re going to go ahead and get started.  Thank you all for coming.

Good morning.  My name is Karyn Nielsen. I’m the Division Chief for the Licensing Division here at headquarters.

To my left is David Bailey.  He’s our Deputy Division Chief for headquarters, Licensing.

And to my right is Kevin Ortega, Supervising Agent in Charge of the Responsible Beverage Service RBS Training Unit.

Also present from the Department of Alcoholic Beverage Control are Robert deRuyter, our attorney, Megan Raisis, who’s the one who checked you in at the RBS Unit, and Sarah Easter from the Regulations and Policy Unit.

So I have a script I’m going to go ahead and read on the record, and then we’ll go ahead and get started.

It is 10:08 a.m. on Friday, October 11th, 2019, and we are gathered here today at the Department of Alcoholic Beverage Control, 3927 Lennane Drive, Suite 100, Sacramento, California, to receive public comments on the proposed rule-making action by the Department of Alcoholic Beverage Control.  The regulations we are concerned with today are the proposed sections 160 through 173 titled Responsible Beverage Service Training Program.

Under the rule-making provisions of the California Administrative Procedure Act, also referred to as the APA, this is the time and place set for the presentation of statements, arguments, and contestations, orally or in writing, for or against changes in the Department of Alcoholic Beverage Control’s regulations, notice of which has previously been both published in print and on the ABC website, as well as sent by email to interested parties.

The purpose of this hearing is only to obtain public comment on the department’s proposed regulations.  The department will not respond to comments at this hearing, nor will the department engage in a discussion about regulations at this hearing, other than to seek clarification of comments presented.

The department will take all oral and written comments received at this hearing under submission to allow the department to thoroughly and thoughtfully evaluate in order the determine how the department wishes to respond.

In accordance with the APA, the department will respond to comments in writing, in the Final Statement of Reasons which will be made available to the public once it is completed.

The entire APA rule-making hearing will be recorded by a certified shorthand reporter and a digital voice recorder.  The transcript of the hearing and all exhibits and evidence presented during the hearing will be made part of the rule-making record.

If you have brought written comments with you to submit during the hearing today, please give them to our staff member, Sarah Easter.

As you entered this room you were offered the sign-in sheet to sign your name and a space to mark to indicate whether you want to stand up and make oral comments on the proposed regulations or a space to mark if you only want to attend the hearing.

If you fill out the sign-in sheet and provide your complete email address, the department will notify you if any substantive changes to these regulations are made or if there’s any new material relied upon in proposing these regulations prior to the department’s adoption of the regulations.

Any such notice will be sent, one, to everyone who submits written comments during the written comment period, including those written comments submitted today, two, to everyone who testifies today, and three, to everyone who asks for such a notification and provides a valid email address.

While no one may be excluded from participation in these proceedings for failure to identify themselves, the names and emails addresses on the attendance sheet will be used to provide these notices.  If you have not yet signed the sign-in sheet, and you wish to do so now, please raise your hand.

We will listen to oral comments in the order you sign the attendance sheet and will call each comment to the podium.  You will then have five minutes to make your statement.  After we hear from everyone who has signed in, we will hear from any latecomers or anyone else who wishes to be heard.

At this point, the rule-making record includes several items:  The notice of the proposed action, which was published in the California Regulatory Notice Register, the notice of the proposed rule-making, the text of the regulations originally noticed to the public, the initial Statement of Reasons, Standard Regulatory Impact Assessment, Fiscal Impact Statement, and the studies relied upon.

These regulations were duly noticed more than 60 days prior to today’s hearing.  Copies of the notice were emailed to interested parties and those who had requested rule-making notices regarding the Responsible Beverage Service Training Program.

The initial Statement of Reasons, originally proposed text, the documents relied upon and all other rule-making documents were made available on the department’s website.

We will now take oral comments on the proposed regulations.  In the interest of time, if you agree with the comments made by the prior speaker, simply state that fact and add any new information you feel is pertinent to the issue.

And just one — for just a little bit of housekeeping if anyone needs to use the restroom, you can go out this door, make a left and then go upstairs to the second floor.

So we are ready to get started, and all I ask is that whenever anyone is speaking, if everyone in the audience can just keep their comments, and so that we’re — we can have a professional environment for everyone to be able to voice their concerns or questions and comments.  Okay?

So we’ll go ahead and get started.

Nicole?

MS. BLOSSE:  Yes.

MS. NIELSEN:  And I’m sorry, your last name?

THE REPORTER:  Could I get a spelling on that, please.

MS. NIELSEN:  And if you could spell your first and last name for the record, that would be great.

MS. BLOSSE:  Sure.  First name’s Nicole,

N-I-C-O-L-E.  Last name is Blosse, B, as in boy,

L-O-S-S-E.

COMMENTS BY NICOLE BLOSSE

MS. BLOSSE:  Should I get started?  Okay.

Good morning.  Again, my name is Nicole Blosse.  I’m a government relations manager for the TIPS Alcohol Server Training Program.

Regarding the ABC’s proposal to administer the exams after providers train students, TIPS vehemently opposes this for the following reasons.

Of the 38 states that regulate alcohol server training, only one has this requirement.  As a result, there are lot of unintended consequences in this state, including the demise of classroom training, difficulty for the provider to integrate with state IT systems, the ABC dedicating unnecessary resources to exam fulfillment, support, and creation, and complicating an already arduous process.

It would put an undue burden on the ABC. Approved providers cannot only take on this liability, they can report completion data directly to the state in a number of different formats, as well as provide it to companies performing the training to assure their own compliance.

The vast majority of states that regulate RBS training prefer that the provider keeps their own records and/or reports completion of the data back to the state agency.

It would put an undue burden on the server.  Requiring the server to participate in an RBS session and then ask them to attend a proctored exam or go online to take the exam is a burden.

Requiring servers to first pay for the course and then pay again for the exam would cause undue hardship to the server and employer, not to mention that it would complicate an already arduous process.  The onus and liability should be on the RBS provider, period.

Implementing any sort of workflow where we provide training and the state examines students that have been trained is difficult and fraud prone. Essentially, the state either has to implement a complicated system to track whether students have  been trained, which means providers would have to send lists with sufficient correct information necessary to validate identity and training status, and the state would need to implement some sort of quality control on that data, and then figure out how to use it to provide testing services, or the state would need to trust the data provided without verifying it, which would open all sorts of fraud.

Either way, the data integration with every provider is much more costly and complex than simply requiring providers to provide complete training information for completed students.

Providing high-stakes testing online is complex and subject to all sorts the security and data management issues.  It should be performed by companies with years of experience in doing this who are familiar with complying with the GDPR, CCPA, PCI and other privacy and security requirements. Otherwise, it exposes the state to potential liability over data security, fraud and abuse.

It would not look good for any state agency to be the subject of a data breach, exposing the personal data of thousands of citizens, due to inexperience in providing these sorts of online services.

If the state enforces high standards and clear rules applied to proven providers, it puts the state in the role of a regulator and not that of a service provider, which plays to the strengths of both.  Providing services is expensive and requires specialized and dedicated staff to provide technical support, customer service, and data management, as well as management of those staff.

Thank you for the opportunity to present these comments to the board and its stakeholders.

MS. NIELSEN:  Thank you.

Okay.  Number 107, John Hinman.

COMMENTS BY JOHN HINMAN

MR. HINMAN:  Good morning.  John Hinman from Hinman & Carmichael.  We have submitted written comments, and I would ask the board to ask the department to look at those very closely.

I would endorse the comments of the last speaker for many of the same reasons.  We have three issues with the current proposal.

Issue number one is the one that was just mentioned, which is the creation of a statewide database that we don’t think the department is capable of handling and it would build the equivalent of the Department of Motor Vehicles for literally millions of Californians who are involved in serving alcoholic beverages at all levels, whether it’s in an on-premises establishment, it’s at an event, it’s at a winery, it’s at a brewery, it’s at a hotel, it’s any of the — of the thousands of licensed premises in the State of California.

The obligation to keep records is — should be on the training provider, and we’ve actually submitted a set of proposed regulations to do that.  That’s point number one.

Excuse me.  Point number two, the regulations, themselves, are more extensive than are necessary for purposes of implementing the enabling legislation and the department is essentially opening itself up to future litigation.

By virtue of the fact that they’re freezing into regulation current practices that could change.  This morning, for example, there was an article concerning identification techniques utilizing both fingerprints, retina — retina scans. And this technology is being provided — is being — is being constantly updated throughout the country in order to — in order for identification checking purposes.

The — by freezing in the regulation a current set of practices, rather than the principle that we’re going to ask for identification and train people how to do it, you’re — you’re — you’re putting yourselves in a position of having to change  the regulations every time there’s a new technical change.

For example, drunk driving, one of the purposes of this particular — of this particular initiative which, by the way, everyone agrees preventing drunk driving is exceptionally important.

This morning there’s an article literally saying that the new smart cars are developing technology right now to identify drivers that are driving under the influence and shutting it down. This goes way beyond the current technology of having to blow into something.

But the point is:  The technology continues to develop, and if you put current technology into the regulations, in other words, you’re basically regulating current technology. You’re not leaving yourself room for development.

And we think that that’s a major mistake. It’s going to create uncertainty.  It’s going to create potential litigation.  It doesn’t meet the needs of the underlying regulations, as — pardon me — the underlying statute that was adopted in the first instance, and it’s just simply a mistake.

You need to pare back the course content descriptions that you’ve built into the regulation to what was called for in the original legislation, and the department should have the ability, on an ongoing basis, to determine what is and what isn’t the proper content at a particular point in time.

This — this regulation is intended to be there for years.  Let’s build it into the future. Let’s not lock ourselves into — into current technology, and into current — into current best practices.

So, let’s see.  We covered the database, the technology, and I think that’s pretty much my time.  I would refer the rest of it to the comments that were put into the record, and I would ask the department to carefully consider the amended regulation that we provided to the department as a pattern for properly implementing this particular piece of very important legislation.

Thank you.

THE REPORTER:  Could I get the spelling of your last name?  Sorry.

MR. HINMAN:  Sure.  H-I-N-M-A-N.

HE REPORTER:  Thank you.

MR. deRUYTER:  I believe at this time we have no one else signed up to comment.  Is that correct?

MS. NIELSEN:  That’s correct.

MR. deRUYTER:  So if anybody feels they would like to comment, feel free to come forward.

Otherwise, I do want to call attention to these two binders we have here.  One is the actual written — the notice and things.  You can’t find these online, but this is our physical copy.  We also have a physical copy of every comment and not all of these are online yet.  It’s up to date at about —

MS. EASTER:  9:30.

MR. deRUYTER:  — 9:30 this morning, with all the written comments including the proposed regulations that Mr. Hinman talked about, if anybody would like to peruse those and look at them.

o other than that, we will keep the meeting open for further comment.

(Proceedings recessed from 10:22 a.m. until 10:28 a.m.)

MS. NIELSEN:  Okay.  We’re going to go back on the record.

COMMENTS BY JON PHILLIPS

MR. PHILLIPS:  All right.  Good morning.

Thank you very much for giving us an opportunity to comment.

My name is Jon Phillips, and I am the owner of Inspiration Vineyards and Winery in Sonoma County, and also the — I’m current president of Family Winemakers of California.  So I’m here really on behalf of both the small wineries in California and also my own business.

When we became aware of the — the training and the required training requirements that RBS was being — that was being initiated here in California, our initial conversations with Alcohol Beverage Control led us to the impression that it would be patterned after the current TIPS training.

And having gone through the TIPS training program, we all understood the need and also thought, okay, this will be a very good program, but the idea of how comprehensive the program would be really didn’t dawn on us, because we were kind of under the expectation that it would be patterned after TIPS.

I wanted to kind of echo the comments said from both the earlier commenters both Mr. Hinman and also the representative from TIPS.  In looking at this and looking at the comprehension — comprehensiveness of all of the requirements just within the training program, there’s a fear within the industry that to meet your required timelines, in terms of getting everyone tested out, that — that it looks almost like it won’t happen within the time frame that is set legislatively given howcomprehensive the list of training requirements are.

So I really want to echo the concern from the industry that we see ourselves being set up to fail.  We see a huge disruption to the hospitality industry, especially.  This would include small wineries, restaurants, hotels, and — and, again, small events.

We don’t see how the department will be able to both accomplish the goals set forth in legislation based on how comprehensive the training has been outlined in the current legislation or the materials that we’ve been given up to date.

So we just have a huge concern that this is going to be not as easy to implement as we thought it would be when we had our earlier conversations.

The only concern I have is economic. Based on the RBS materials that were given to us from your agency, as a small business owner, to spend $2,000 on training in the first year and $1,000 ongoing is really a significant expense, especially given how affordable RBS training or TIPS training was in the past.

So, you know, in looking at other businesses that could be spending between 10 and $5,000 a year, if you’re talking about a restaurant with a lot of servers, that could really also be a very burdensome requirement for small businesses.

So we not only have a concern about throwing the hospitality industry in disarray, in order to meet this requirement, and — and there could possibly be a huge disruption, but also the economic potential for small businesses, small family wineries.

So those are really my two largest concerns, and, again, thank you for the opportunity to present those to you.

S. NIELSEN:  Thank you.

COMMENTS BY BRUCE LUNEQUIST

MR. LUNEQUIST:  Good morning.  My name is Bruce, B-R-U-C-E, Lunequist, L-U-N-E-Q-U-I-S-T.

I’m a board member of Family Winemakers of California.  I’m also an owner of Rack & Riddle: Custom Wine Services in Healdsburg, California.

My first comment is:  I went to the original meeting that you folks had, I think, in fall of 2018, when — when this was first getting launched, and just before you went into your quiet period where you were going to start to build the initial part of the regulation.

And seeing what the product is now, as opposed to what was introduced during that meeting and what was discussed during that meeting, I have to admit to being be pretty surprised about really how comprehensive it is, but also, maybe even beyond what the original scope was, in terms of trying to comply with the legislative edict.

Certainly, nobody is going to argue that trying to comply with what the legislature wants is a simple matter.  It would — I don’t think anybody at the first meeting thought it would be.

But I also thought that most of us probably believed it was going to follow along with kind of the — what was already in place with TIPS.

And what we see now is — and at least in my mind, is something far more far reaching, far more onerous in terms of trying to comply.

And I take you back to what we, as business in California, deal with on a regular basis, and I’m going to refer back to the Private Attorney General Act of 2004, PAGA, from the labor side and relate it back to ABC.

PAGA’s intention, by the legislature, was probably well intended.  There was probably all sorts of good reasons to pass it and good reasons to think that it would be used in the right manner.

But what it’s turned into is an open opportunity for attorneys to sue businesses and to chase us with — on labor regs, and it has nothing to do with — no offense — it doesn’t have anything to do with the well being of a potential worker.  What it has to do is an opening to go ahead and use every single little reg in PAGA as a means to extract money on a termination.

I know, because we’ve been through it, ourselves, and you go back and forth, back and forth, and produce evidence about how you actually complied with the law.  Eventually, just because your own attorneys fees are piling up, you finally give up, and you make a settlement.

We’re going through the same thing right now with ADA and access for visually impaired into websites.  It’s — it’s — there’s — wineries and businesses, hospitality businesses are being carpet bombed in California right now on that very issue.

And it’s not a couple of thousand dollars of settlements.  The average settlement is probably somewhere between 8 and $12,000 per business.  That’s a lot of money, besides their attorney fees to try to deal with that.

My point here is this:  If you bake in some of the comprehensions that you’re — comprehensive things you’re trying to do with this particular reg and get beyond what we think the legislative scope was, you’re going to open the same doors that were opened with PAGA.

It’s just going to be a matter of:  Did you do this to the exact high?  Did you do this to the right thing?  Did you — did you show your I.D. the right way?  Did your server — did they — could they make a judgment between the person being impaired because of alcohol or drugs and — it’s just going to be a steppingstone for people to walk in and say — it’s not about whether or not you were responsibly serving alcohol.  It’s going to be used as a lever to go ahead and — and bring demand actions or suits against businesses who are — in good faith, are trying to comply with the law, trying to comply with the regulations.

But, in fact, you know, despite their good intentions, they’re never actually going to meet the burden of — of being 100 percent compliant, because somebody will find a way in.

So I know you have good intentions, but I would hope that you would take a step back, reexamine what has been written, and perhaps give some consideration to whether or not you’re creating unintentional loopholes that somebody can walk through and just use as a means to bring damages or suits against businesses even though in good faith they’re trying to comply with — with the rule of law.

Thank you very much.

MS. NIELSEN:  Thank you.

THE REPORTER:  And could I get a business card from you before you totally leave.  Thanks.

COMMENTS BY BARBARA SNIDER

MS. SNIDER:  Hi, I’m Barbara Snider, that’s S-N-I-D-E-R.  I’m with Hinman & Carmichael, but I’m also speaking as a small winery owner.

I — I want to agree with all of the prior comments and emphasize one, the cost.  The cost to maintain this massive database is really burdensome for very small wineries.

The complexity, when you’re a very small winery you go to big pourings, et cetera, and often you have volunteers.  The complexity of either getting the volunteers certified or getting a manager certified, the way the law is now, you can have one person overseeing the volunteers who were certified. With this new law it appears that every volunteer has to be certified.  That’s a huge administrative burden on the part of very small wineries.

As far as the complexity, you know from our comments, that we believe that the regulations right now are way too complex for the curriculum proposed and it should be simplified.

And even if you have an open book exam, it’s going to be very difficult for the average person to pass this exam.  It’s going to be difficult, then, for the hospitality area to continue to hire workers that are certified in time by January 1st, 2020 — or July.

And, also, I’m very concerned about employee privacy.  It’s a huge issue of law, and there are serious concerns requiring every server to provide detailed private information to be put into a database which, in this day and age, could easily be hacked.

The way it’s been working seems to work all right.  The trainer should have the copy of the certification, the employer can have a copy of the certification, keep it private, and produce it upon demand for an investigations or an audit.

And, finally, the comments about the

Private Attorney General [sic], as an attorney, I have been defending many companies who, both for Proposition 65 and ADA, get these notices out of the clear blue sky.  There are serial plaintiffs who will put out 20 to 50 notices at a time, and they go through.

And — and it’s a real issue, because there’s no grace period to recover from, and even though we put out notices to our clients over and over again, it’s very difficult to get everybody into compliance, and small wineries, especially, are sitting ducks for these serial plaintiffs.

So those are my comments.

MS. NIELSEN:  Thank you.

MR. deRUYTER:  We can go off the record.

(Proceedings recessed from 10:40 a.m. until 10:42 a.m.)

MS. EASTER:  We have a commenter.

MR. deRUYTER:  Oh.

COMMENTS BY JOHN HARTMAN

MR. HARTMAN:  Hello.  My name is John Hartman, J-O-H-N  H-A-R-T-M-A-N.

I’m representing the TIPS program, the TIPS training program.  I’m also a resident of Sacramento.  So it’s good to be here.

I want to talk about and expand upon the undue burden that we’re putting on — with this legislation and the regulations, the undue burden that we’re putting on hospitality workers in California.

I’ve been a technical support representative for TIPS for over eight years.  So I’ve been helping these hospitality workers with all of the data management, and other complications that go along with RBS training.

We’ve been doing this for a long time at TIPS, and we’re very experienced in anticipating and resolving the problems that arise with providing these courses and these exams.

I don’t know that the state will have the same level of experience and knowledge to anticipate and mitigate those problems that will come up.

One possibility that I can imagine is that a number of these servers and bartenders will  complete a training course with a provider, and they will assume that they’re certified and that they’re compliant.  Even though they didn’t go to a different website for the state and they did not take the exam. So there will be some number of people that fall in that — in that category.

I also think it’s very much an undue burden to have them register, pay, and obtain training through the provider, and then you’re asking them to go to a different website, register, pay another fee, as a resident I’m curious how much that fee will be.

And a number — let me say that the people that I assist and the people that will be affected by these regulations, they’re varying levels of education, they’re varying levels of literacy, varying levels of computer skills.  So requiring them to register and interface with two different websites, two different systems, some people are not going to be able to accomplish that.

And so I feel it’s an undue burden and some hospitality workers will not be able to comply due to their lack of computer skills or their lack of literacy, and I think that’s all I had.

MS. NIELSEN:  Thank you. (Proceedings recessed from 10:45 a.m. until 4:00 p.m.)

MR. ORTEGA:  It is now 4:00 o’clock p.m. Are there any new-comers who wish to comment on the proposed regulations?

Hearing no requests, I hereby close this oral hearing.

Thank you all or thank you also to those who have attended this hearing, we appreciate your assistance in developing these regulations.

(Proceedings concluded at 4:00 p.m.)

REPORTER’S CERTIFICATE

I, CARRIE HEWERDINE, RDR, California CSR No. 4579, Certified Shorthand Reporter, certify;

That the foregoing proceedings were taken before me at the time and place therein set forth;

That all proceedings, and all comments and statements made at the time of the proceedings were recorded stenographically by me and were thereafter transcribed;

That the foregoing is a true and correct transcript of my shorthand notes so taken.

I further certify that I am not a relative or employee of any attorney of the parties, nor financially interested in the action.

I declare under penalty of perjury under the laws of California that the foregoing is true and correct.

Dated this 12th day of October, 2019.

CARRIE HEWERDINE's signature

CARRIE HEWERDINE, RDR, CA CSR No. 4579

NV CCR No. 820 / AZ CSR No. 50898 / NM CCR No. 521