Comments on Administrative Emergency Decisions Pending Emergency Regulation

Comments received during the week of May 19 to May 26, 2020.

View Responses to Public Comments

Comment #1

From Walter Mirczak

While the ABC has received complaints that some ABC licensees are disregarding the laws and regulations set by the department or orders from their local officials I do not support altering the ABC’s powers or processes currently in place.

There is in place a normal license disciplinary process that allows the department to address alleged violations.

While remaining mindful of public health, we must understand restaurants and bars are clamoring alongside other businesses to resume operations as the economic toll of the coronavirus pandemic drags on.

I am confident the governor and his staff can, in collaboration with restaurant and bar owner inputs, devise a set of guidelines for alcohol services at restaurants and bars. This is not a time for using a big club when an effort toward focused discussions with ALL stakeholders would provide an acceptable compromise.

I see no need to place restaurant and bar owners in a situation like that described in the Fresno Bee. When a Fresno restaurant disobeyed public health orders, it ended up paying thousands of dollars in fines for serving dine-in customers. After a Mother’s Day arrest made in front of his eatery,restaurant owner Ammar Ibrahim payed a $5,000 fine. He wrote, “Not once did I ever state I was above the law or better than the next person. “I’m just a father and a small business owner trying to make a living for my family & give back to my community.”

ABC Response

Comments will be addressed at the end of the comment period.


Comment #2

From Sean Kiley, Hinman & Carmichael LLP

Hello,

Please see the attached comments from Hinman & Carmichael LLP.

Thanks,

Sean Kiley

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #3

From Jeff Evans, Bear River Winery

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20

The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state.

ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence of any new developments or other justifications for stripping licensees of the opportunity to defend themselves against ABC enforcement actions.

Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Can there be a broader grant of unlimited “emergency” authority then (9) of the proposed emergency regulations?

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

That list, items (1) through (8) on the notice of proposed emergency regulations are similarly flawed, unnecessary and are not emergencies.

Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how it can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs;

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs;

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that’s what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries, or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur;

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

Punish First – Ask Questions Later, and Ditch the ABC Appeals Board

The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later.

The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” The history of the corruption in the enforcement of the alcohol laws that led to the adoption of Article 20, Section 22, of the California Constitution can be found in official website for the Board of Equalization (the predecessor to the ABC).

The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.

THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES

There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and caselaw also provide for a “fair trial” and due process for licenses and their employees, including the right to notice and the opportunity to be heard at an open hearing, as well as the right to cross-examine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.)

The proposed Emergency Regulation would bypass these due process safeguards.

Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license.

Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate.

Subsections (d) and (e) state:

(d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties.

(e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective. (Emphasis added).

These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process.

Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so.

(j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located.

The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses:

When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22.

Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES

Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation.

Government Code section 11346.1(b)(2) further states:

In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency (emphasis added). 2

In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires:

(B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: …

2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added)

Any emergency regulations may be found invalid if:

(b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence.

Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary.

THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection

(a) of the Proposed Emergency Resolution: (a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10).

One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC must still: (1) present specific facts explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).)

The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.

CONCLUSION The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits.

This is not the time to do away with administrative due process in the name of expediency; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC.

We finally observe that Section 23001 of the ABC Act states:

It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #4

From Ted Lemon, Littorai Wines

Department of Alcoholic Beverage Control:

The Littorai Wines, ABC licensee 20-465103 and 02-465103 hereby adapts and endorses the entire contents of the letter sent to you by the Law firm of Hinman and Carmichael attached to this email as a comment in response to your proposed rule.

ABC Response

Comments will be addressed at the end of the comment period.

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Comment #5

From Pam Welch, Capay Valley Vineyards

We join with the Family Winemakers of California to protest the “Emergency” Rule-Making change to the process for administrative hearings re violations of the ABC Act.

These have no relationship to the current crisis and take away due process under the law.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #6

From Dan Kessler, Kessler-Haak Vineyard & Wines

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020.

Specific concerns include:

  • The proposed Emergency Regulation would bypass due process safeguards.
  • The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.
  • The ABC obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.”
  • The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.
  • The rule changes confer broad new powers on the ABC not limited to time periods when Shelter-In-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative procedure Act solely for the convenience of the ABC.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #7

From Eric Flanagan, Flanagan Wines

Dear Staff,

These “emergency” rule changes appear to have nothing at all to do with any emergency. What it looks like is the kind of thing that occurred in Nazi Germany. (I.e. an important rule change pushed through with 3 business days notice while everyone is busy dealing with a crisis). This is clearly a power grab that erodes or eliminates the rights of citizens to due process and gives absolute authority to the regulator. We have due process because sometimes accusations are false or someone working at a regulatory body is incorrect about a situation. The potential for an abuse of power by an agent of the regulator is very large under the proposed new rules.

Please keep the current due process rules in effect. The existing rules are consistent with our basic constitutional rights and should be maintained.

I agree with all the points in the letter below:

ABC Disciplinary Actions are Serious Matters; and so is the Potential for Regulatory Corruption

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Assessing penalties without due process and the right to appeal to the ABC Appeals Board leads to inconsistent treatment of licensees, favoritism, and the potential for corruption. Article 20, Section 22 of the California Constitution was passed in 1954 to address the corruption that existed on the part of many of the California liquor regulators in the period from the end of Prohibition up to that time. The Constitution created the ABC Appeals Board to oversee the affairs of the ABC. The scandals at the time were notorious and are briefly explained in the official records of the State Board of Equalization here.

The Violations the Proposed “Emergency Rules” Cover

Consider the nature of each of the nine listed categories of offenses that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how each can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs.

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs.

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that is what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises; 

Comment:  This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like.  This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location.  Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons.  The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process.  These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking; 

Comment:  There are few (if any, we know of none) reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises; 

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official; 

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence.  Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered.  This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and 

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare. 

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders.  The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list. 

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

ABC Response

Comments will be addressed at the end of the comment period.


Comment #8

From Pam Tim Bacino, Gen7Wines

I fully support the letter written from Hinman & Carmichael LLP opposing the ABC COVID Emergency Rules and eliminating due process.
I understand these times are unprecedented, but we cannot take away licensee’s rights to a fair hearing.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #9

From Scott Harvey, Scott Harvey Wines

Dear ABC and OAL;
My name is scott Harvey and I own and operate Creative Wine Concepts which produces wine in both Napa and Amador Counties. I support the Family Winemakers position listed below on the May 11, 2020 ABC “Emergency Rules” Doing Away with Licensee Rights to Due Process and Fair Hearings.

ABC Disciplinary Actions are Serious Matters; and so is the Potential for Regulatory Corruption

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Assessing penalties without due process and the right to appeal to the ABC Appeals Board leads to inconsistent treatment of licensees, favoritism, and the potential for corruption. Article 20, Section 22 of the California Constitution was passed in 1954 to address the corruption that existed on the part of many of the California liquor regulators in the period from the end of Prohibition up to that time. The Constitution created the ABC Appeals Board to oversee the affairs of the ABC. The scandals at the time were notorious and are briefly explained in the official records of the State Board of Equalization here.

The Violations the Proposed “Emergency Rules” Cover

Consider the nature of each of the nine listed categories of offenses that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how each can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs.

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs.

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that is what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few (if any, we know of none) reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

CONCLUSION – Never Let a Good Crisis Go to Waste

What is occurring here is obvious. The ABC is using the COVIS 19 crisis as an excuse to implement an agenda of permanent “emergency” orders that would abrogate licensee rights to defend themselves and their licenses in administrative proceedings.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #10

From Erin Cline, M.A.C. Wines, LLC

Dear OAL,
I writing to oppose the “Emergency Rules” Doing Away with Licensees Rights to Due Process. I agree with the comments sent to you from Hinman & Carmichael, LLP. The proposed changes will deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated. The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC. Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

I ask you to reconsider such a drastic ruling, Due Process is fundamental value that every citizen has a right to.

“No man of what state or condition he be, shall be put out of his lands or tenements nor taken, nor disinherited, nor put to death, without he be brought to answer by due process of law.”

ABC Response

Comments will be addressed at the end of the comment period.


Comment #11

From Mia Mascarin Oven

To the California ABC & the OAL Reference Attorney :

As an ABC Licensee in the state of California, I have recently heard about the proposed changes in regulations, and have great concern about it limiting the due process rights of licensees, among other issues. I urge you to reconsider this list of proposed emergency procedures, at minimum by clarifying all the vagueness and broad references therein, and at best to have a time stamp that ends this ’emergency’ procedure.

I am not sure how licensees and their operations are currently a threat to public safety. Almost all of us are simply farming and making wine while supporting the tourism industry in California.

I am attaching the comments by John Hinman which address all the issues specifically. It is a bit lengthy, about 3 pages, but I urge you to read it and consider the arguments.

Thank you for your attention to this matter, and I beg of you to reconsider the broad sweeping control that these procedures imply, and the rights of due process that it takes away from your law-abiding licensees.

-Mia Mascarin Oven

_______________________________________________________________

RE: Comments on the Department of Alcoholic Beverage Control’s Proposed Emergency Regulation Procedures for Administrative Actions Against Alcohol Licenses

Introduction – The “Emergency Regulations” Are Not Limited to Emergencies, are Not Necessary and Violate the APA and the California Constitution

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20

The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state.

ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence of any new developments or other justifications for stripping licensees of the opportunity to defend themselves against ABC enforcement actions.

Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Can there be a broader grant of unlimited “emergency” authority then (9) of the proposed emergency regulations?

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

That list, items (1) through (8) on the notice of proposed emergency regulations are similarly flawed, unnecessary and are not emergencies.

Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how it can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs;

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs;

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that’s what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries, or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;
Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 4

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.
Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 5

Punish First – Ask Questions Later, and Ditch the ABC Appeals Board

The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later.

The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” The history of the corruption in the enforcement of the alcohol laws that led to the adoption of Article 20, Section 22, of the California Constitution can be found in official website for the Board of Equalization (the predecessor to the ABC).

The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act. THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES

There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and caselaw also provide for a “fair trial” and due process for licenses and their employees, including the right to notice and the opportunity to be heard at an open hearing, as well as the right to cross-examine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.)

The proposed Emergency Regulation would bypass these due process safeguards.

Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license.

Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate.

Subsections (d) and (e) state:

1 Business & Professions Code section 24200.
Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 6

(d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties.

(e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective. (Emphasis added).

These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process.

Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so.

(j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located.

The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses:

When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22.

Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES
Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 7

Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation.

Government Code section 11346.1(b)(2) further states:

In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency (emphasis added).2

In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires:

(B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: …

2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added) Any emergency regulations may be found invalid if:

(b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence.

Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as 2 See also, California Medical Association v. Brian (1973) 30 Cal.App.3d 637, 657 (fiscal constraints on the DHCS Agency was not sufficient to create an emergency.)
Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 8

outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary.

THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES

The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection (a) of the Proposed Emergency Resolution:

(a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10).

One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC must still: (1) present specific facts explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).)

The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.

CONCLUSION

The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits.

This is not the time to do away with administrative due process in the name of expediency; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC.

Comments in Opposition to ABC’s Proposed Emergency Regulation May 18, 2020 Page 9

We finally observe that Section 23001 of the ABC Act states:

It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #12

From Ryan Friesen, Blinking Owl

Greetings and thank you for your consideration of comments on the proposed ABC Emergency Regulation Procedures for Administrative Actions.

I respectfully ask that the Office of Administrative Law and the Alcohol Beverage Control give the public an additional 30 days to review and comment on the proposed procedures. Others have outlined objections in detail here and elsewhere, but what we need is time to inform licensees and the public of the proposed changes. Despite efforts to inform them, most licensees do not know what is being proposed.

Though I fully support the ABC mission to secure public health and safety and enforce the governor’s agenda during a time of crisis, the proposed emergency actions appear to go beyond the scope of the emergency situation and infringe upon licensee rights.

Thank you for your service to our state and thank you for reviewing my and industry concerns in this matter.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #13

From Phil Maddux, Lone Buffalo Vineyards

To Whom It May Concern-

Lone Buffalo Vineyards, LLC, an ABC Type 02 and 81 Licensee, seconds, endorses and adopts the comments and arguments set forth in the attached letter from Hinman & Carmichael.  These proposed rules are outrageous and un-democratic!

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #14

From Andy Kerr, Alice’s Restaurant

To Whom this may concern;

I am a small restaurant owner in Woodside California, (Alice’s Restaurant)

I am Writing today to voice my concern about the proposed new rules governing alcohol regulations and the affects this will have on due process. I have attached a letter from Hitman & Carmichael which I support.

Please read there letter and really consider the how these proposed regulations will affect ordinary peoples ability to defend themselves against any allegation. If adopted, I believe that too much power will be concentrated in one regulatory body with much less oversight.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #15

From Rodney Schatz, Peltier Winery

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #16

From Nina Schatz, Peltier Winery

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #17

From Nina Schatz Rippy, Cliché Winery

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #18

From Teri Lawrence, Viaggio Winery.com

Please stop your power grab. There is no need for you to have emergency rules to this extent. This is nothing more than taking our rights away. Please let this response process go on for at least 30 days so we have time to consult attorneys and respond to this.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #19

From Lynda Taylor, Mt. Vernon Winery

Dear Sir:

I wish to to strongly protest the ABC “Emergency Rules”.  It takes away our right to due process. I Stand in agreement with “The Wine Makers  of California”.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #20

From Tom Hoffman, Heritage Oak Winery

Dear Dept of ABC,

On behalf of the Lodi Association of Wineries, I am attaching the signed letter shown here below regarding the five day comment period of the recently proposed emergency regulation procedures. Our association encourages the Department of ABC to extend the comment period to 30 days so that a more thorough review of the proposal may be undertaken. Thank you.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #21

From Charles Porter, United Coalition East Prevention Project

Please see the attached letter regarding the Notice of Proposed Emergency Rulemaking issued by the California Department of Alcoholic Beverage Control (ABC) on May 11, 2020, pertaining to Administrative Emergency Decisions. Let me know if there are any questions. Thank you in advance.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #22

From Leanne Davis, Via Romano Vineyards

To whom it may concern;

The “Emergency Regulations” proposal are not limited to emergencies, are not necessary and violate the APA and the California Constitution. We at Via Romano Vineyards are in opposition to the proposed “Emergency Regulation” and stand with the Family WInemakers of California. We believe this is government overreach and a strong misuse of power and control where you already have it. To be able to punish those businesses who are already trying to hang on without due process is the wrong thing to do

ABC Response

Comments will be addressed at the end of the comment period.


Comment #23

From Danny Sullivan, De Vin LLC

Please, address this potential for abuse of power, and infringement of rights.

“Late in the afternoon of May 11th the ABC released an “Emergency” Rule-Making Notice changing the process for administrative hearings to adjudicate violations of the ABC Act. The new “rules” do away with most due process protections for licensees including discovery of relevant evidence, responsive pleadings, time to prepare for hearing and mandatory live administrative hearings before license suspension or revocation being imposed. The new proposed rules also do away with the statutory right to appeal to the ABC Appeals Board and instead create a new process of appeal to the Superior Court of the county in the which the licensee is located.”

“This effort at “emergency rulemaking” is being launched with five days to respond is not necessary or proper.”

Quoted from an email from Family Winemakers of California

Thank you for defending the rights of my small family wine business!

ABC Response

Comments will be addressed at the end of the comment period.


Comment #24

From Donald LaSuer

I don’t understand, how in the world ABC raised my license fee up $130 from last year. Their boss, (gov forced-shot down my biz) for at least 2 months. Yet, they have the nerve to up my annual fee. I lose 2 months of biz and the license goes up. How do…

ABC Response

Comments will be addressed at the end of the comment period.


Comment #25

From Karen Robinson-Stark, Stark Spirits

Below is the text* of an email I sent to the ABC comment address. At the time I had no idea that the Governor was prompting the creation of these astonishing regulations. These proposed regulations give even broader unchecked power to an agency dedicated strictly to finding wrong-doing. The more regulations required for compliance, the easier it is to be found “out of compliance” and licenses revoked. This is unacceptable as it is, but these regulations sound like authorization for the Gestapo. These regulations are designed to destroy the industry without recourse.

My hearsay knowledge of what is prompting the regulations presents an incomprehensible basis for the regulations. Apparently, some counties are permitting licensed establishments to open in defiance of the Governor’s rules for curtailing the spread of Covid-19. Has anyone noticed that there are laws regarding each of the illicit behaviors enumerated in the regulations that can be enforced by the county and municipal policing agencies? If the policing agencies decline to act, that’s why we have a National Guard. “Oh, no! We can’t call out the National Guard” is very likely what the Governor thinks. Instead he wants to break the back of an industry that is a great source of income for the state because he can’t find a more effective method to force municipalities into compliance? How about the power of the purse? Any thoughts of levying fines, curtailing funding, halting access to state-provided services?

It is mindless to give greater policing power to the ABC. The alcoholic beverage industry is not the source of the problem. The current federal administration has created chaos throughout its tenure. It has now come to the point that it actively is promoting lawlessness. The rule of law is damaged to an extent unbelievable in the history of our country. The Governor has the rule of law behind him. Using regulatory methods to control an out of control situation is to perpetuate it. The “emergency” regulations are a knock on the door in the dead of night. Draw the line in the sand and back it up with accountable and publically transparent action against the actual source of the problem—non-compliance by local governments.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #26

From Kathy Spallas, Family Winemakers of CA

Thank you for the opportunity to comment on the Notice of Proposed Emergency Rulemaking published May 11, 2020.

Please find attached our letter signed by our President in response to this issue.

Please let me know if you have any questions regarding our comments.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #27

From Phil Maddux, Lone Buffalo Vineyards

Lone Buffalo Vineyards, LLC, an ABC Type 02 and 81 Licensee, seconds, endorses and adopts the comments and arguments set forth in the attached letter from Hinman & Carmichael.  These proposed rules are outrageous and un-democratic!

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #28

From Bar Owner, Pacific by NoRu

I thought I was commenting last week but let me repost.

I am very concerned as to why ABC needs to get involved in matters of “harming the public health, safety, and welfare” with regard to viruses. I would think health, safety and welfare of businesses is better handled by the city, county and or state they do business in (e.g. the health department, OSHA, etc..). I dont think ABC has the resources and or knowledge of what is or is not beneficial to the public outside of alcohol consumption. If alcohol is being purchased, consumed and or experienced in a safe and sane way then that is the extent of the ABC reach. A business being open or closed, in the context out side of alcohol concerns, should not be of concern to the ABC. Leave bars, restaurants and liquor stores open or closed status to the local, county and or state health departments and law makers…not ABC!!!! You are over reaching for control in an area you have no experience or knowledge. This country was founded on freedom, not on control!

ABC does not need to be in the local, county and or state law enforcement. If those entities want to make laws and or rules they should also have ways to enforce them. They shouldn’t be reaching out to other agencies, especially ones that have nothing to do with viruses and public well being as a whole. And your train of thought is flawed. Your scenario is not just related to alcohol establishments. What about all the retail businesses that dont sell alcohol? How would they be enforced? Is ABC going to enforce the law with them? I know everyone is scared and concerned but until the facts and statistics come out when the dust settles we should not be pushing hasty rules through. The pendulum is swinging way to far and we need to be sane and cautious in these uncertain times. Power grabs are not what we need. Logic and sanity should be top of mind right now.

Let me put it another way, a human can, right now, can get on a completely full (200+ people) 737 commercial are liner from NJ to SF and sit elbow to elbow with strangers on either side of them for 5 hours (this scenario is happening every single day, right now) but that same human when then land in SF cant go to the beach and sit down with their family even though there is no one with in 10, 20, 100 feet of them. And that same human can not go to a bar or a restaurant (implementing social distancing) for a drink or some food and a glass of wine. And these latter two scenarios are arguably unconstitutional (supreme court in WI have already deemed stay at home unconstitutional and bars are “flooded” and safe). But ABC wants the ability to come in when a restaurant/bar is not following aforementioned questionable new rules and threaten to revoke their license, even though they are follow every rule you have put forth before this started? That is a power grab. Alcohol control and enforcement has nothing to do with health issues or non health issues that impact every business, not just ones that serve alcohol.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #29

From Benny Adler, McDini’s Restaurant Corp

We have read the Departments’ Emergency proposal dated May 11, 2020. We disagree with Department’s intentions to take action in issuing emergency temp license suspensions. “Department should not have the exclusive right to temporarily suspend conditions on ABC licenses. This is equivalent to placing ALL the power within the Department’s hnds. While the intent appears logical or “timely” on the surface, there are too many variables involved that could foreseeably lead to a licensee losing privileges based upon potential “adversarial hearsay”. Example, our 47 license 47-467454 allows for live entertainment THURS-SAT until Midnight. We presently have the privilege of allowing, for example, one self accompanied singer who could perform within the venue as persons are picking up or ordering take-out food, beer or spirits, which would provide some income and prosperity, City of National City (where we are located) maintains a “questionable” superior court order prohibiting all live entertainment, however, our ABC licensing conditions actively allow for this permitted activity here that is indisputable. Were local P.D. to receive an accusation we were exhibiting our right to offer live music, they could then gather evidence and contact Department to initiate a complaint that (based upon their illogic) could include the terms “harmful to public safety and welfare within municipality” etc. which could result in an immediate suspension of our rights to sell and serve alcohol under our license privileges. While this seems completely far fetched and conspiratory, this is a potential consequence one could pay in dealing with unbridled local municipalities without conscience nor morals. The “bad” actors referred to within the proposal should NEVER HAVE BEEN ISSUED licenses to begin with. If there is solid evidence of more toxic activities occurring within license premises, those actions should be enforced by the Department, howeever, in no way should Constitutional rights be subjected to the exclusive overview of the Department, sans ABC Appeals Board overview. This is wrong. Further, the Department cannot be relied upon to act within a 100% fair and truthful manner, it has demonstrated (San Diego) to be flawed and prejudicial to the “stakeholders” despite clear ABC mandates, codes and sections. We would hope, for the sake of the law-abiding licensee’s, these emergency measures are discarded forthwith.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #30

From Richard Warren, Lawyer

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #31

From Eric Metz, Lenora Winery

My winery, Lenora Winery, strongly opposes the power grab and elimination of Due Process rights and regulations under former ABC regulations. We entirely support the attached letter and request that the ABC adopt its requests.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #32

From Stephen Updyke, Tarzana Treatment Centers

To whom it may concern,

Tarzana Treatment Centers, Inc. supports this proposed rule. Please see attached Letter of Support.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #33

From Danica Olivo, Hwy 50 Brewery, LLC

Please find letter of objection enclosed herewith.

To Whom It May Concern

I am writing to you today via email before the 5pm deadline for comments, to strongly object to the proposed rule changes as outlined in your notice dated May 15, 2020.

As a legally licensed brewery in the state of California, and a member of the California Craft Brewers’ Association, we find your proposition to be unconstitutional and a violation of our civil rights.

We also find that there are changes proposed that are of dubious legal basis and are in conflict with existing statutes from several state codes.

If these changes are made effective, expect legal consequences.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #34

From Marlow Barger, Plan B Wine Cellars

To whom it may concern: I would suggest that the ABC is venturing into law enforcement of a type not really within their mandate. While the issues the ABC is proposing to become involved with are serious indeed,  I would leave such enforcement to the appropriate agency. Law enforcement already has the ability to visit our establishments and are welcome to do so.  The ABC is underfunded and unqualified to perform law enforcement of this nature. Thank you.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #35

From Matthew Goldman

To Whom It May Concern:

In response to the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #36

From Dean Lueders, ACTlegally

I have been informed that the Department of Alcoholic Beverage Control (ABC) wishes to implement an emergency regulation that would allow it to deprive its licensees of due process.

One of the issues that causes the most concern, however, is that there is no emergency that would authorize the adoption of the regulation.  For decades ABC has utilized the procedures outlined in Business and Professions Code section 24300, subsection c, which states:

For any hearing held pursuant to this division, the department may delegate the power to hear and decide to an administrative law judge appointed by the director. Any hearing before an administrative law judge shall be pursuant to the procedures, rules, and limitations prescribed in Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

Now, ABC wishes to gut these due process protections in lieu replace the clear wording of section 24300 with an arbitrary process that does not include a right of notice or the right to be heard.

Further, the fact that there is no emergency to justify the proposed regulation is found in the Alcoholic Beverage Control Act.  Business and Professions Code section 23053.1 has been the law since March of 1984.  This section authorizes ABC to seek an injunction to prevent the very same type of harm as outlined in the proposed regulation (the only difference is section 23053.1 provides the protection of due process).  Accordingly, there is no emergency or even new facts that would justify the proposed regulation since ABC has possessed the same powers since 1984.

For your convenience, Business and Professions Code section 23053.1 states:

The director may bring an action to enjoin a violation or the threatened violation of any provision of this division, including, but not limited to, subdivision (e) of Section 24200 regarding a licensee’s failure to correct objectionable conditions following notice, or any rule promulgated pursuant to the provisions of this division. The action may be brought in the county in which the violation occurred or is threatened to occur. Any proceeding brought hereunder shall conform to the requirements of Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.

In sum, there is no emergency that would justify this power grab that would deprive thousands of ABC licensees from the protection of due process.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #37

From Jennifer Febre, MacLeod Ale Brewing Company

To Whom It May Concern;

I own and operate a small craft brewery in Van Nuys, California. We have a pizza kitchen on site. We had a thriving, energetic tasting room before the COVID-19 crisis. We truly are the hub of our community. Unless we are able to serve patrons outdoors and utilize our parking lot, we will never be able to serve the number of patrons we need to in order to survive. I implore you to allow this rule change.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #38

From Jeff Evans, Bear River Winery, LLC

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20

The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state.

ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence of any new developments or other justifications for stripping licensees of the opportunity to defend themselves against ABC enforcement actions.

Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Can there be a broader grant of unlimited “emergency” authority then (9) of the proposed emergency regulations?

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

That list, items (1) through (8) on the notice of proposed emergency regulations are similarly flawed, unnecessary and are not emergencies.

Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how it can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs;

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs;

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that’s what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries, or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

Punish First – Ask Questions Later, and Ditch the ABC Appeals Board

The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later.

The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” The history of the corruption in the enforcement of the alcohol laws that led to the adoption of Article 20, Section 22, of the California Constitution can be found in official website for the Board of Equalization (the predecessor to the ABC).

The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.

THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES

There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and caselaw also provide for a “fair trial” and due process for licenses and their employees, including the right to notice and the opportunity to be heard at an open hearing, as well as the right to cross-examine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.)

The proposed Emergency Regulation would bypass these due process safeguards.

Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license.

Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate.

Subsections (d) and (e) state:

(d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties.

(e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective. (Emphasis added).

These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process.

Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so.

(j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located.

The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses:

When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22.

Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES

Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation.

Government Code section 11346.1(b)(2) further states:

In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency (emphasis added). 2

In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires:

(B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: …

2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added)

Any emergency regulations may be found invalid if:

(b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence.

Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary.

THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection

(a) of the Proposed Emergency Resolution: (a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10).

One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC must still: (1) present specific facts explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).)

The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.

CONCLUSION The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits.

This is not the time to do away with administrative due process in the name of expediency; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC.

We finally observe that Section 23001 of the ABC Act states:

It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #39

From Preston Juarez, Acumen Law

Good evening,

I noticed there was some recent action on the above-captioned emergency regulations. Are you able to tell me whether OAL approved those and filed them with the Secretary of State?

Thank you.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #40

From Augustina Wilkins, Vina Castellano Estate Vineyard & Winery

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when ShelterIn-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20

The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state.

ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence of any new developments or other justifications for stripping licensees of the opportunity to defend themselves against ABC enforcement actions.

Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Can there be a broader grant of unlimited “emergency” authority then (9) of the proposed emergency regulations?

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

That list, items (1) through (8) on the notice of proposed emergency regulations are similarly flawed, unnecessary and are not emergencies.

Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how it can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs;

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs;

Comment:This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that’s what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries, or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

Punish First – Ask Questions Later, and Ditch the ABC Appeals Board

The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later.

The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” The history of the corruption in the enforcement of the alcohol laws that led to the adoption of Article 20, Section 22, of the California Constitution can be found in found in official website for the Board of Equalization (the predecessor to the ABC).

The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.

THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES

There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and caselaw also provide for a “fair trial” and due process for licenses and their employees, including the right to notice and the opportunity to be heard at an open hearing, as well as the right to cross-examine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.)

The proposed Emergency Regulation would bypass these due process safeguards.

Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license.

Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate.

Subsections (d) and (e) state:

(d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties.

(e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective. (Emphasis added).

These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process.

Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so.

(j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located.

The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses:

When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22.

Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES

Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation.

Government Code section 11346.1(b)(2) further states:

In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency (emphasis added). 2

In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires:

(B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: …

2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added)

Any emergency regulations may be found invalid if:

(b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence.

Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary.

THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection

(a) of the Proposed Emergency Resolution: (a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10).

One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC must still: (1) present specific facts explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).)

The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.

CONCLUSION The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits.

This is not the time to do away with administrative due process in the name of expediency; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC.

We finally observe that Section 23001 of the ABC Act states:

It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #41

From David Rossi, Fulcrum Wines

To whom it may concern,

I am writing to express my strong disagreement with the ABC’s proposed emergency powers they wish to institute.  This is clearly a case of “not letting a good crisis go to waste”.  We already have state and local health departments to regulate facilities and procedures.  This duplication of power serves no purpose and will not lead to improved public health and safety.

Many businesses have already been destroyed(like mine).  If we hope to survive it will not be a result of over-regulation by a power hungry agency. We are a responsible business and will protect our customers and employees without need of this oversight.

In a time like this we need our government helping us, not building their own castles of power.  Just an idea, how about lower fees?  Less regulation?  You know helping not hurting us.

Thanks in advance for hearing my concerns.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #42

From Dan Kessler, Kessler-Haak Vineyard & Wines

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020.

Specific concerns include:

  • The proposed Emergency Regulation would bypass due process safeguards.
  • The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.
  • The ABC obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.”
  • The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.
  • The rule changes confer broad new powers on the ABC not limited to time periods when Shelter-In-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative  procedure Act solely for the convenience of the ABC.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC.  The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #43

From Stephen Updyke, Tarzana Treatment Centers

To whom it may concern,

Tarzana Treatment Centers, Inc. supports this proposed rule.

Please see attached Letter of Support.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #44

From Drew Bessinger

Please include my letter in public comments on this item.
May 12, 2020

California Department of Alcoholic Beverage Control
3927 Lennane Drive #100
Sacramento, CA 95834

SENT AS AN ATTACHMENT TO PIO@abc.ca.gov/RPU@abc.ca.gov

RE:       Proposed Emergency Regulations

I am responding as an individual elected official to your Notice of Proposed Emergency Regulations dated May 11, 2020 sent to ABC licensees.  This letter is not sent on behalf of the City of Clovis as this issue could not be placed on the Council agenda in time for the 5 day public response period.

I have had several conversations with our local ABC about the current state of affairs for many restaurants in our city.  Many licensees, to include my son, are just hanging on financially and some are on the brink of financial failure.  I have proposed to the local ABC and State elected official that ABC should permit licensees to voluntarily “inactivate” their licenses so that they can open to serve food inside their premises.  No alcoholic beverages would be served.  The establishment would work with the County Health Officer to address any health concerns.  Hopefully this will be mute if the Governor’s order will soon permit this; however, in the event that the business made the financial decision to open (with no alcohol sales) in spite of the order, they would not be risking their ABC license.

Regarding your proposed emergency order, I find it troubling that licensees that open in violation of the Governor’s order are placed in the same category as those who deal drugs, run prostitutes or are involved in organized crime.  I think the proposed action is heavy-handed and unnecessary.  I ask that you delay this proposed emergency order until consideration is made to permit voluntarily “inactivate” licenses so businesses can survive as restaurants only.  It does our community and ABC no good to have these businesses fail; we both lose the revenue that we would receive from their lawful operation, and the people and their employees lose everything.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #45

From Sparrow Tang, Concerned Citizen

To Whom it may concern,

The proposed ABC COVID-19 rule changes are in direct violation of our civil rights and should not be adopted! They are in direct conflict of the ruling of the United States Supreme Court 71 U.S. 2 (1866). Further this is an excessive use of power by the State of California and Governor manipulating COVID-19 as an easy way to further remove our Civil Rights! These proposed rule changes are Not demonstrative of safety but of  governmental control and have zero scientific validity. The proposed rule are crafted in an extremely vague manor to allow for complete emotional based violations to occur at the discretion of the investigator.

It is time that Law makers wake up and start making intelligent decisions based on our constitutionally guaranteed rights and Not emotional fear based changes!

ABC Response

Comments will be addressed at the end of the comment period.


Comment #46

From Robert Jones, E16 Wine Company

As a concerned citizen, vineyard grower, and small business winery owner, I am very concerned that the ABC is proposing “Emergency Regulations” that impose our constitutional rights. We are in total agreement with the Family Winemakers of California also violates the APA. We are approaching our local representatives to make sure they are aware of this ABC Proposal.

VIA EMAIL AND CERTIFIED MAIL, RETURN RECEIPT REQUESTED May 19, 2020

OAL Reference Attorney
300 Capitol Mall, Suite 250 Sacramento, CA 95814
E-mail:
staff@oal.ca.gov

Department of Alcoholic Beverage Control
3927 Lennane Drive, Suite 100 Sacramento, CA 95834
E-mail: RPU@abc.ca.gov

RE: Comments on Department of ABC’s Proposed Emergency Regulation Procedures for Administrative Actions Against Alcohol Licenses

Introduction – The “Emergency Regulations” Are Not Limited to Emergencies, are Not Necessary and Violate the APA and the California Constitution

This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 11, 2020 “notice of proposed emergency rulemaking changes in the alcohol industry due to the COVID-19 pandemic and state of emergency” and the rulemaking changes announced by the ABC as effective five working days from May 11, 2020. Today is the 5th working day from the Monday May 11, 2020 release of the rulemaking changes.

The changes deny Due Process to licensees, eliminate long established protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”) and are not necessary for the purpose stated.

The rule changes confer broad new powers on the ABC not limited to time periods when Shelter- In-Place and similar emergency orders are in effect and not limited to emergency situations. There is no justification for the invocation of “emergency” powers during non-emergency conditions, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC.

Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority.

There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20

The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state. ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence of any new developments or other justifications for stripping licensees of the opportunity to defend themselves against ABC enforcement actions.

Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Can there be a broader grant of unlimited “emergency” authority then (9) of the proposed emergency regulations?

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

That list, items (1) through (8) on the notice of proposed emergency regulations are similarly flawed, unnecessary and are not emergencies.

Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how it can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs;

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs;

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that’s what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries, or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur.

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

Punish First – Ask Questions Later, and Ditch the ABC Appeals Board

The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later.

The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” The history of the corruption in the enforcement of the alcohol laws that led to the adoption of Article 20, Section 22, of the California Constitution can be found in official website for the Board of Equalization (the predecessor to the ABC).

The “emergency regulations” are an open invitation to favoritism and corruption in the enforcement of the ABC Act.

THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES

There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and caselaw also provide for a “fair trial” and due process for licenses and their employees, including the right to notice and the opportunity to be heard at an open hearing, as well as the right to cross-examine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.)

The proposed Emergency Regulation would bypass these due process safeguards.

Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license.

Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate.

Subsections (d) and (e) state:

(d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties.

(e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective.

These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process.

Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so.

(j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located.

The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses:

When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22.

Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights.

The intent is clear – the ABC does not appreciate licensees defending themselves and wants to make it difficult to do so.

THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES

Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation.

Government Code section 11346.1(b)(2) further states:

In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency.

In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires:

(B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: …

2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added)

Any emergency regulations may be found invalid if:

(b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence.

Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary.

THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES

The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection (a) of the Proposed Emergency Resolution:

(a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10).

One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC must still: (1) present specific facts explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).)

The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist.

CONCLUSION

The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits.

This is not the time to do away with administrative due process in the name of expediency; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC.

We finally observe that Section 23001 of the ABC Act states:

It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes.

Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core “economic, social, and moral” value that supports the economic, social, and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #47

From Joseph Ehrmann, ElixirSF

I am writing in objection to the ABC “Emergency Rule Making” described here and in support of the attached comments. Please do not allow the hasty and uncontrolled actions that would result in the loss of licensees’ rights as California citizens and hard-working small business people faced with enough challenges.. After almost 17 years in business I am tired of being treated like a criminal all of the time. I understand the need to prevent criminality, but actions like this are inexcusable, disrespectful and unprofessional.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #48

From Scott Harvey, Scott Harvey Wines

Dear ABC and OAL;

Scott Harvey, Scott Harvey Wines

Dear ABC and OAL;

My name is scott Harvey and I own and operate Creative Wine Concepts which produces wine in both Napa and Amador Counties. I support the Family Winemakers position listed below on the May 11, 2020 ABC “Emergency Rules” Doing Away with Licensee Rights to Due Process and Fair Hearings.

ABC Disciplinary Actions are Serious Matters; and so is the Potential for Regulatory Corruption

ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The very right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake If their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on any of the unlimited grounds listed in the proposed emergency regulations.

Assessing penalties without due process and the right to appeal to the ABC Appeals Board leads to inconsistent treatment of licensees, favoritism, and the potential for corruption. Article 20, Section 22 of the California Constitution was passed in 1954 to address the corruption that existed on the part of many of the California liquor regulators in the period from the end of Prohibition up to that time. The Constitution created the ABC Appeals Board to oversee the affairs of the ABC. The scandals at the time were notorious and are briefly explained in the official records of the State Board of Equalization here.

The Violations the Proposed “Emergency Rules” Cover

Consider the nature of each of the nine listed categories of offenses that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal), how each can be abused and the standard of proof typically required to state a violation:

(b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision:

Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others.

(1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs.

Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises.

(2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs.

Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that is what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not taking adequate steps to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises.

(3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises;

Comment: This is classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services and the like. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between venue owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees that can be sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights.

(4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking;

Comment: There are few (if any, we know of none) reported human trafficking cases at the ABC level; although if this refers to prostitution cases those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency,

(5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises;

Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee may defend him or herself at the hearing, or to arrange for the license to be transferred. In no cases could a plea of guilty to such an offense be considered an emergency.

(6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official;

Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights.

(7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; and

Comment: This refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process.

(8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare.

Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature and scope of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination.

(9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.

Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this?

CONCLUSION – Never Let a Good Crisis Go to Waste

What is occurring here is obvious. The ABC is using the COVIS 19 crisis as an excuse to implement an agenda of permanent “emergency” orders that would abrogate licensee rights to defend themselves and their licenses in administrative proceedings.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #49

From Nicholas Zanoni, Sycamore Den/Thrusters Lounge

To whom it may concern,

I have the following comments and concerns regarding the current ABC regulatory relief and guidance from Cal Dept. of Public Health as written.

MEAL REQUIREMENT WITH HOUSE MADE COCKTAILS

On-Premise Licensees are disproportionately disadvantaged by the Requirement house made cocktails must be served with food.

Licensees with on-sale privileges may sell, for off-sale consumption,  pre-mixed cocktails in manufacturer pre-packaged sealed containers without offering meals, however, pre-mixed cocktails made in-house and placed in sealed containers can only be sold in conjunction with meals.

The only distinction between a 12 oz canned cocktail (ex. Cutwater Moscow Mule) and a 12 oz mason jar cocktail (ex. Moscow Mule made in house) is that the product cost is 300-400% more to the licensee for the former.  The ABV and volume can be the same.  This arbitrary distinction and added cost further suffocates licensees already gasping for air.  Meal requirements are also particularly and disproportionately damaging to type 48 licensees, and others, unable to provide bona food. Such 48 licensees, by design, are cocktail bars, often older licensed small mom and pop neighborhood bars, that serve house made cocktails, Under this rule their previously legal primary type of product (house made cocktails) is now effectively illegal for them to sell, whereas their competitors are free to continue to do so.    Moreover,  their costs of goods sold is quadrupled (not to mention the environmental impact of increased packaging, canning, and bottling) when forced to only sell manufacturer pre-packaged cocktails in lieu of their own in-house versions.    Prior to ABC’s new regulatory relief, many 48 licensees already had (and likely paid extra for when acquiring their license) the ability (and competitive advantage) of serving beer and wine to-go.  This competitive advantage is also now gone, under the current regulatory relief.

The requirement that Meals be offered with in house cocktails to-go has limited effect in achieving the presumed Public Health and Welfare policy goals.  Public policy seeks to encourage food consumption to mitigate the effects of alcohol consumption.  However, patrons purchasing to-go pre-mixed cocktails made in-house, can and often do refuse food, even when served as a combo.  Also, continuing our example above, when faced a choice between an in-house Moscow Mule with food or a manufacturer’s Moscow Mule without food, a Patron may just choose the manufacturer’s Moscow Mule, thus evading the public policy goal while simultaneously diminishing a licensee’s badly needed profit margin.  Public policy is better served by patrons acquiring meals at food service establishments set up primarily for food service, rather than asking previously non-food serving licensees to become something they are not, especially in this climate.  When speaking with an ABC representative, I have been advised that as long as a Licensee offers food with their to-go house made cocktail, they have met their meal requirement, however doing this dance and mandating food be taken by someone who doesn’t want it, ultimately just wastes food.

TEMPORARY CATERING AUTHORIZATION UNDER ABC’S FOURTH NOTICE OF RELIEF

Licensees without kitchens will be disproportionately and irreversibly damaged by the meal requirement being a prerequisite to utilizing adjacent property under the new Temporary Catering Authorization . 

The Temporary Catering Authorization allows for on-sale consumption on adjacent property to the licensed premises, that is under the control of the licensee, and where bona fide meals are being served.  Under anticipated State guidelines to open with decreased interior capacities, 48 licensees without kitchens will have their interior capacities cut in halve if not more, with no option to expand under the Temporary Catering Authorization.  Along with traditionally being without kitchens, which would preclude them from expanding outside to adjacent areas the Temporary Catering Authorization, Type 48 licensees are most often smaller in overall square footage and smaller in capacity. Due to the requirement of social distancing,  under any foreseeable limited interior capacity, smaller 48 Licensees and others without kitchens will be the most disadvantaged and most in need of an ability to extend their premises safely to an adjacent property.

However,  larger competitors with kitchens and larger adjacent parking lots (larger. venues normally have larger parking lots) being utilized by virtue of the Temporary Catering Authorization allowing for outside expansion, could possibly see their overall capacities remain the same or enlarged, despite their interior capacity reductions.

It is also very likely that fear and uncertainty will drive patrons to avoid a venue where only indoor space is available, in preference for the multitude of competitors that will have outdoor spaces available (especially in areas of good weather such as San Diego) under the Temporary Catering Authorization.  Operating with decreased interior capacity and social distancing may be the reality for many months, even years god forbid, thus cementing the long-term disadvantage of 48 Licensees without kitchens nor expansions.   As a perhaps unintended corollary to the disproportionate damage 48 Licensee’s without kitchens will suffer under these guidelines, it is these same licensees who may be least likely to achieve PPP loan forgiveness because they cannot offer enough work for their employees, nor maintain the employee head counts required by the PPP for loan forgiveness, under their disproportionately constrained model.

The Public Health & Welfare is not promoted by excluding Licensees without kitchens from exercising the privilege of temporary expansion commensurate with their competitors.

Glaringly, under the Temporary Catering Authorization, even though food may be available at a particular venue, Patrons at such venue will be not forced to purchase or consume food. People go to 47 licensed establishments purely for libations all the time. The morphing of 47 licensed restaurants, into bar venues with some of the city’s most popular bar scenes, is a ship that sailed long ago.

There is no logical argument that patrons without food drinking in a booth in a 47 Licensed establishment are better for Public Health and Welfare than patrons without food drinking in a booth in a 48 Licensed establishment.   Given these facts, the rule that only bona fide eating establishments may expand to outdoor areas, does great damage small 48 licensees and little to ensure food consumption.

It is not reasonable to ask Licensees without Kitchens to add one.

Few would argue that a licensee (nor landlords) suffering such current economic loses have the means to design, invest, permit and install a kitchen, in this climate.   The Building department moves at pandemic speeds in the best of times.  Further, in terms of a non-kitchen licensee contracting with a third party vendor to offer food, there are a host of legal and accounting issues that arise when a licensee’s alcohol products are mixed with the third party vendors’ products on one transaction as mandated, one specifically being that 3rd parties cannot directly profit share from the sale of a licensee’s alcohol.

Bonafide Food Serving Establishments with 47 licenses are not safer than 48 licenses.

There is no logical argument that patrons drinking in a booth in a 47 Licensed establishment are safer than patrons drinking in a booth in a 48 Licensed establishment.  In fact, based on the research behind how Covid-19 spreads on surfaces, it could be argued that the increase in hand to surface contact required by the preparation and ingestion of food, along with cutlery, condiments, plates, as well as additional people such as cooks, expediters and servers all handling the end user’s product, are less safe than a simple cocktail bar without such.

I realize these are uncharted waters in uncharted times.  We are all just trying to add a little Tapatio to the sh*t taco which we have been served.  In most situations, all of the regulatory relief is just a way to slow the bleeding until full capacity and a vaccine for COVID19 is found. Whatever the relief may be, to-go privileges, or premise expansion, an equal application is needed.  Allow licensees to operate safely and responsibly and offer the same product mix they legally did pre-pandemic, without requirements that disproportionately disadvantage one group.    Though, my venues may be able to find viable work arounds, it won’t be without great additional expense our competitors will not have, and other similarly situated may not be as fortunate   If the primary goal of ABC’s regulatory relief is to maintain public health and throw licensees a lifeline,  I ask the Dept. carefully take the above factors into consideration, lest many of California’s small neighborhood cocktail bars may never resurface.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #50

From Laura Custodio, Monument Youth Drug & Alcohol Coalition

Please find attached a letter of support for the proposed emergency regulations proposed by the Department of Alcoholic Beverage Control.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #51

From Nancy Greenough, Saucelito Canyon Vineyard and Winery

To Whom it May Concern,

I strongly disagree with the proposed emergency regulations under consideration. I understand the need during the this current virus however emergency regulations should not become permanent. Under emergencies, there may be cause to forego standard procedures, however these should not become permanent. No due process, no hearing, no comments, no justice.

Thank you for your consideration

ABC Response

Comments will be addressed at the end of the comment period.


Comment #52

From Gloria Gutierrez

It’s there emergency relief for bar lounge owners we are the ones left behind with rents and utility bill and not a cent coming for us

ABC Response

Comments will be addressed at the end of the comment period.


Comment #53

From

Stephen Zolezzi, Food & Beverage Association of San Diego

To whom it may concern,

I have the following comments and concerns regarding the current ABC regulatory relief and guidance from Cal Dept. of Public Health as written.

MEAL REQUIREMENT WITH HOUSE MADE COCKTAILS

On-Premise Licensees are disproportionately disadvantaged by the Requirement house made cocktails must be served with food.

Licensees with on-sale privileges may sell, for off-sale consumption,  pre-mixed cocktails in manufacturer pre-packaged sealed containers without offering meals, however, pre-mixed cocktails made in-house and placed in sealed containers can only be sold in conjunction with meals.

The only distinction between a 12 oz canned cocktail (ex. Cutwater Moscow Mule) and a 12 oz mason jar cocktail (ex. Moscow Mule made in house) is that the product cost is 300-400% more to the licensee for the former.  The ABV and volume can be the same.  This arbitrary distinction and added cost further suffocates licensees already gasping for air.  Meal requirements are also particularly and disproportionately damaging to type 48 licensees, and others, unable to provide bona food. Such 48 licensees, by design, are cocktail bars, often older licensed small mom and pop neighborhood bars, that serve house made cocktails, Under this rule their previously legal primary type of product (house made cocktails) is now effectively illegal for them to sell, whereas their competitors are free to continue to do so.    Moreover,  their costs of goods sold is quadrupled (not to mention the environmental impact of increased packaging, canning, and bottling) when forced to only sell manufacturer pre-packaged cocktails in lieu of their own in-house versions.    Prior to ABC’s new regulatory relief, many 48 licensees already had (and likely paid extra for when acquiring their license) the ability (and competitive advantage) of serving beer and wine to-go.  This competitive advantage is also now gone, under the current regulatory relief.

The requirement that Meals be offered with in house cocktails to-go has limited effect in achieving the presumed Public Health and Welfare policy goals.  Public policy seeks to encourage food consumption to mitigate the effects of alcohol consumption.  However, patrons purchasing to-go pre-mixed cocktails made in-house, can and often do refuse food, even when served as a combo.  Also, continuing our example above, when faced a choice between an in-house Moscow Mule with food or a manufacturer’s Moscow Mule without food, a Patron may just choose the manufacturer’s Moscow Mule, thus evading the public policy goal while simultaneously diminishing a licensee’s badly needed profit margin.  Public policy is better served by patrons acquiring meals at food service establishments set up primarily for food service, rather than asking previously non-food serving licensees to become something they are not, especially in this climate.  When speaking with an ABC representative, I have been advised that as long as a Licensee offers food with their to-go house made cocktail, they have met their meal requirement, however doing this dance and mandating food be taken by someone who doesn’t want it, ultimately just wastes food.

TEMPORARY CATERING AUTHORIZATION UNDER ABC’S FOURTH NOTICE OF RELIEF

Licensees without kitchens will be disproportionately and irreversibly damaged by the meal requirement being a prerequisite to utilizing adjacent property under the new Temporary Catering Authorization . 

The Temporary Catering Authorization allows for on-sale consumption on adjacent property to the licensed premises, that is under the control of the licensee, and where bona fide meals are being served.  Under anticipated State guidelines to open with decreased interior capacities, 48 licensees without kitchens will have their interior capacities cut in halve if not more, with no option to expand under the Temporary Catering Authorization.  Along with traditionally being without kitchens, which would preclude them from expanding outside to adjacent areas the Temporary Catering Authorization, Type 48 licensees are most often smaller in overall square footage and smaller in capacity. Due to the requirement of social distancing,  under any foreseeable limited interior capacity, smaller 48 Licensees and others without kitchens will be the most disadvantaged and most in need of an ability to extend their premises safely to an adjacent property.

However,  larger competitors with kitchens and larger adjacent parking lots (larger. venues normally have larger parking lots) being utilized by virtue of the Temporary Catering Authorization allowing for outside expansion, could possibly see their overall capacities remain the same or enlarged, despite their interior capacity reductions.

It is also very likely that fear and uncertainty will drive patrons to avoid a venue where only indoor space is available, in preference for the multitude of competitors that will have outdoor spaces available (especially in areas of good weather such as San Diego) under the Temporary Catering Authorization.  Operating with decreased interior capacity and social distancing may be the reality for many months, even years god forbid, thus cementing the long-term disadvantage of 48 Licensees without kitchens nor expansions.   As a perhaps unintended corollary to the disproportionate damage 48 Licensee’s without kitchens will suffer under these guidelines, it is these same licensees who may be least likely to achieve PPP loan forgiveness because they cannot offer enough work for their employees, nor maintain the employee head counts required by the PPP for loan forgiveness, under their disproportionately constrained model.

The Public Health & Welfare is not promoted by excluding Licensees without kitchens from exercising the privilege of temporary expansion commensurate with their competitors.

Glaringly, under the Temporary Catering Authorization, even though food may be available at a particular venue, Patrons at such venue will be not forced to purchase or consume food. People go to 47 licensed establishments purely for libations all the time. The morphing of 47 licensed restaurants, into bar venues with some of the city’s most popular bar scenes, is a ship that sailed long ago. There is no logical argument that patrons without food drinking in a booth in a 47 Licensed establishment are better for Public Health and Welfare than patrons without food drinking in a booth in a 48 Licensed establishment.   Given these facts, the rule that only bona fide eating establishments may expand to outdoor areas, does great damage small 48 licensees and little to ensure food consumption.

It is not reasonable to ask Licensees without Kitchens to add one.

Few would argue that a licensee (nor landlords) suffering such current economic loses have the means to design, invest, permit and install a kitchen, in this climate.   The Building department moves at pandemic speeds in the best of times.  Further, in terms of a non-kitchen licensee contracting with a third party vendor to offer food, there are a host of legal and accounting issues that arise when a licensee’s alcohol products are mixed with the third party vendors’ products on one transaction as mandated, one specifically being that 3rd parties cannot directly profit share from the sale of a licensee’s alcohol.

Bonafide Food Serving Establishments with 47 licenses are not safer than 48 licenses.

There is no logical argument that patrons drinking in a booth in a 47 Licensed establishment are safer than patrons drinking in a booth in a 48 Licensed establishment.  In fact, based on the research behind how Covid-19 spreads on surfaces, it could be argued that the increase in hand to surface contact required by the preparation and ingestion of food, along with cutlery, condiments, plates, as well as additional people such as cooks, expediters and servers all handling the end user’s product, are less safe than a simple cocktail bar without such.

I realize these are uncharted waters in uncharted times.  We are all just trying to add a little Tapatio to the sh*t taco which we have been served.  In most situations, all of the regulatory relief is just a way to slow the bleeding until full capacity and a vaccine for COVID19 is found. Whatever the relief may be, to-go privileges, or premise expansion, an equal application is needed.  Allow licensees to operate safely and responsibly and offer the same product mix they legally did pre-pandemic, without requirements that disproportionately disadvantage one group.    Though, my venues may be able to find viable work arounds, it won’t be without great additional expense our competitors will not have, and other similarly situated may not be as fortunate   If the primary goal of ABC’s regulatory relief is to maintain public health and throw licensees a lifeline,  I ask the Dept. carefully take the above factors into consideration, lest many of California’s small neighborhood cocktail bars may never resurface.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #54

From John Minnella, J.L. Minnella and Associates

Re: Opposition to Implementation of the Administrative Emergency Decisions Emergency Regulations

Dear Madam or Sir:

I am opposed to the Emergency Decisions and Regulations proposed on May 18, 2020 by the Alcoholic Beverage Control Board as unneeded and unreasonably burdensome on small business and workers who are already suffering from the effects of being closed for business for the past months.

Businesses and workers ought to be able to return to the situation immediately preceding their forced closure of business weeks ago without further, new imposition of extra requirements, licenses and monetary expenditures to reopen. When our economy is devastated and so man unemployed, this is hardly the time to be taking advantage and imposing extra burdens and costs.

Neither is there any legitimate showing of a compelling need for these additional burdens. When other governments, including the federal government, are removing burdensome regulations, the State of California now brings this up? Obviously, the work of unnecessary inexperienced, recent law school graduates never operators of any business and now bureaucrats with a need to show how complicated they can make life for people and businesses and justify their overrated salaries.

Drop this proposal and free up California business.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #55

From Maurina Cintron, Community Member of Bellflower

To whom it may concern,

I support the “Administrative Emergency Decisions” to allow for ABC to issue immediate temporary suspensions for any alcohol outlet violating the terms of shelter-in-place. This regulatory change is good for public health and the community.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #56

From Patty Hoyt

To whom it may concern,

I support the “Administrative Emergency Decisions” to allow for ABC to issue immediate temporary suspensions for any alcohol outlet violating the terms of shelter-in-place. This regulatory change is good for public health and the community.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #57

From Ryan Allain, California Retailers Association

Hello,

Please see the California Retailers Association’s comments on the implementation of the Administrative Emergency Decisions emergency regulations. If you have any questions or the if the attachment was not received, please let me know.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #58

From Tom Wark, National Association of Wine Retailers

Please find attached, as well as inserted below in this email, comments concerning the California Alcohol Beverage Commission’s Emergency Administrative Decisions. These comments are submitted according to the terms laid out on the OAL website located here: OAL website

Please don’t hesitate to call me if you have any questions.

Comments from the
National Association of Wine Retailers
On the California Alcohol Beverage Commission’s
Proposed Administrative Emergency Decisions

May 19, 2020

The National Association of Wine Retailers (NAWR) offers the following comments in response to the Alcohol Beverage Commission’s (ABC) proposed emergency rulemaking in response to the COVID-19 pandemic and state of emergency.

The basis of NAWR’s interest in this issue derives from the fact than numerous NAWR members are based in California and are regulated under the rules of the California ABC, which the proposed emergency rulemaking will significantly alter in a highly irregular manner and in a very detrimental way for our California membership.

The primary concern with the proposed emergency rulemaking is its immediate stripping of normal, long-standing, legislatively-approved due process rights of California licensees. Justifying its emergency rulemaking, the ABC notes in its Express Finding of Emergency the following: “Many businesses and citizens have demonstrated an unwillingness to abide by the public health orders and have instead opened for business, increasing risks to the public health, safety, and welfare.”

However, of the nine circumstances cited by the ABC in its proposed regulations that would constitute “an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision”, no more than one has any relationship to the impact of the COVID-19 pandemic or to the ABC’s cited concern that “many businesses and citizens have demonstrated an unwillingness to abide by the public health orders and have instead opened for business.”

Moreover, the last of the ABC’s nine circumstances that would lead to a licensee being stripped of its legislatively-approved due process rights is so sweeping as to encompass any and all potential violations of the California Alcohol Beverage rules and regulations: “Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list.”

As an example, number six of the ABC’s nine circumstances that would result in licensees losing their legislatively-approved due process rights relates to bribing ABC agents: “The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official.” While we concur that attempted bribery of ABC agents is a very serious matter, we fail to see how such a circumstance has any relationship to the current COVID-19 pandemic, nor how it relates to the circumstance of a relatively small number of licensees violating the current emergency orders that they remain closed during the pandemic to protect the public health cited by the ABC as a justification for implementing its emergency rulemaking.

The NAWR recognizes the extraordinary circumstances created by the COVID-19 pandemic and its significant impact on public health and safety. We also recognized the challenges faced by the ABC with regard to the seemingly burdensome responsibility to follow legislatively-approved due process requirements when it comes to enforcing ABC rules and regulations.

Still, NAWR believes there is no justification for so thoroughly stripping California licensees of their due process rights as described in this emergency rulemaking. We are particularly concerned that the vast majority of circumstances described that would lead to licensees’ due process rights being stripped or altered has no relationship to the impact of the COVID-19 pandemic or the emergency orders put into place to diminish the impact of the pandemic.

We urge a rejection of the ABC’s emergency rulemaking in favor of a continuation of the well-established and proper protection of licensees’ due process rights.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #59

From Carson Fredericks, Alcohol Justice

Dear Department of Alcoholic Beverage Control,

Attached, please find a letter in support of the Emergency Administrative Rulemaking that ABC proposed last week from Alcohol Justice, the alcohol industry watchdog in San Rafael.  Please let us know if we can do anything to help facilitate using these emergency powers.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #60

From Lauren Gallegos, Wellness and Prevention Center

To whom it may concern,

I support the “Administrative Emergency Decisions” to allow for ABC to issue immediate temporary suspensions for any alcohol outlet violating the terms of shelter-in-place. This regulatory change is good for public health and the community.

The health of our community is our highest priority and we hope that the powers at be can ensure our community has every opportunity to be safe and well.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #61

From Sean Kiley, Hinman & Carmichael

Hello,

Please see the attached comments from Hinman & Carmichael.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #62

From Paddy and Barb Delepine, Bacchus Wines Made Simple

Office of Administrative Law,

We were just made aware of the Emergency Proposals the California ABC are trying to push through at this difficult time. The California ABC is proposing a change to its decision-making power that would allow it to impose fines, suspensions, and even license revocations in the event they find a licensee has committed various types of code violations during this pandemic. Currently, a licensee has the right to appeal any determination of a code violation through the ABC Appeals Board before punishment can be administered. If adopted, the proposed ABC Emergency Decision-Making Powers would end the longstanding “appeals first” process. As far as we can tell, of the nine types of code violations that would provide the ABC with this extraordinary new power, 8 of them have nothing to do with the impact of the COVID-19 pandemic. Please don’t let this happen!

Thank you for your time and consideration.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #63

From Gordon Hull, Heidrun Meadery

I have been made aware that the California Alcoholic Beverage Control has submitted proposed rules to OAL that would eliminate due process protections for ABC licensees. This scenario would be entirely unacceptable for my business and for our industry as a whole and I urge you to reject these ABC proposals.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #64

From Paddy and Barb Delepine, Bacchus Wines Made Simple

We were just made aware of the Emergency Proposals the California ABC are trying to push through at this difficult time. The California ABC is proposing a change to its decision-making power that would allow it to impose fines, suspensions, and even license revocations in the event they find a licensee has committed various types of code violations during this pandemic. Currently, a licensee has the right to appeal any determination of a code violation through the ABC Appeals Board before punishment can be administered. If adopted, the proposed ABC Emergency Decision-Making Powers would end the longstanding “appeals first” process. As far as we can tell, of the nine types of code violations that would provide the ABC with this extraordinary new power, 8 of them have nothing to do with the impact of the COVID-19 pandemic. Please don’t let this happen!

Thank you for your time and consideration.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #65

From Claudio Ponte, Wineroad, LLC

As a licensee I strongly oppose the “Emergency” Rules proposed by the ABC, an obvious power grab using the COVID crisis to declare an emergency. This elimination of due process is illegal and should not be permitted.

Our lawyers are making a complete case outlining the numerous reasons why you should reject this ABC proposal here.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #66

From Grant Boyken

I’m writing in support of the Notice of Proposed Emergency Rulemaking issued by the California Department of Alcoholic Beverage Control (ABC) on May 11, 2020, pertaining to Administrative Emergency Decisions. As I understand it, the rule allows ABC to issue an immediate temporary suspension of the license of any alcohol outlet engaging in gross violation of public health and safety. As ABC explains, this power is being wielded in direct response to alcohol licensees refusing to close or limit their businesses to prevent the spread of coronavirus. The competitive advantage gained by bad actors comes directly at the expense of owners who are cooperative with efforts to prevent COVID-related mortality. The medical community is nearly unanimous in recommending continued social distancing. A liquor licensee who breaks with shelter-in-place orders confuses the public as to the validity of the order and puts their customers and employees—as well as everyone those people come into contact with—at risk. ABC needs to be able to take immediate action to protect both the public and the economic playing field. As a concerned California citizen doing my part to shelter in place to stop the spread of COVID-19 I applaud ABC’s rulemaking and consider it to be the correct decision to ensure public health and safety, as well as ensure equity among licensees.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #67

From Mike Hixson

We totally concur with the following comments:

VIA EMAIL AND CERTIFIED MAIL, RETURN RECEIPT REQUESTED May 21, 2020 Department of Alcoholic Beverage Control 3927 Lennane Drive, Suite 100 Sacramento, CA 95834 OAL Reference Attorney and 300 Capitol Mall, Suite 250 Sacramento, CA 95814 E-mail: staff@oal.ca.gov E-mail: RPU@abc.ca.gov RE: Comments on the Department of Alcoholic Beverage Control’s Proposed Emergency Regulation Procedures for Administrative Actions Against Alcohol Licenses Introduction – The “Emergency Regulations” are Not Limited to Emergencies, are Not Necessary, Violate the APA and the California Constitution and are an Invitation to Corruption. This letter comments upon the Department of Alcoholic Beverage Control’s (the “ABC”) May 18, 2020 “notice of proposed emergency rulemaking in the alcohol industry due to the COVID-19 pandemic and state of emergency” as transmitted to the Office of Administrative Law (OAL) for adoption. The rulemaking proposals, if adopted, deny Due Process to licensees, eliminate long established procedural and substantive protections for licensees outlined in relevant and binding statutes and regulations, including the Administrative Procedures Act (“APA”). The proposals are not necessary for the purpose stated and no specific facts or substantial evidence justifying the proposals are provided by the ABC. The rule proposals confer broad new powers on the ABC not limited to time periods when Shelter-In-Place and similar state-wide or local emergency orders are in effect and not limited to legitimate emergency situations. There is no justification for the invocation of “emergency” powers during the non-emergency situations described in the proposal, and there is no justification for overriding the statutory and administrative due process protections provided to licensees by the California Constitution, the ABC Act, the Government Code and the Administrative Procedure Act solely for the convenience of the ABC. Sufficient police powers already exist to address any licensee, or any other person, willfully violating any legitimate order of a government authority. Further, the very purpose of the ABC Act, adopted as Article 20, Section 22 of the California Constitution, is thwarted by the proposed adoption of “emergency rules” specifically adopted to permit the ABC to avoid the oversight provided by the discovery, hearing and due process provisions of the Administrative Procedure Act; including oversight by the independent ABC Appeals Board. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 2 The most important original purpose of the ABC Act, and the due process provisions it provided, was to protect licensees and the general public from arbitrary and capricious agency action and exposure to acts of official corruption by those who would use the power and authority of their position to profit from the result. This is not hypothetical. The very creation of the ABC (out of the Board of Equalization) was occasioned by decades of corruption by enforcement authorities vested with power over alcohol licensees. This history is reviewed on the official state Board of Equalization history webpage. That page is attached as Exhibit A. This is not an historical problem. Exhibit B is a copy of a 2018 U.S. District Court, Central California, Grand Jury Indictment of an ABC District Administrator and a co-conspirator for bribery, extortion and kickbacks by threatening licensees with fictitious violations and the threat of filing Accusations to revoke their licenses. This scheme stretched from 2013 to 2017 and operated because the participants threatened the licensees with violations to extort money and favors while permitting unlawful activity (including prostitution) to occur. Imagine the power a rogue agent would have if the OAL approves the removal of due process protections and authorizes immediate sanctions for accused (or just investigated and threatened) licensees. The intimidation factor alone vests the individual agents with the virtual power of life and death over alcohol licensees and alcohol businesses. No law enforcement agent should have such unrestrained power and, make no mistake, the “hearing” process in the “emergency” rules is designed in such a way as to make it functionally unavailing to the normal licensee. There are No Facts or Evidence Cited by the ABC in its Notice – Much Less the “Specific Facts and Substantial Evidence” Required by Government Code Section 11460.20 The ABC has not presented facts or evidence sufficient to show an emergency exists related to ABC enforcement, nor has it demonstrated a need for the immediate adoption of the proposed regulations. The authority cited by the ABC to justify this action, Government Code section 11460.20, does not permit the adoption of these emergency regulations unless the ABC provides specific facts and substantial evidence of the necessity of the emergency regulation. The examples in subsection (b) of the proposed regulation describe nothing more than enforcement situations already commonly (and normally) addressed by the ABC in its regular day to day enforcement work across the state. This is reviewed below, example by example. The ABC’s “Factual Basis of the Emergency” is notably lacking specific facts and evidence supporting its finding of an “Emergency” with vague statements such as: Recently the Department began to receive complaints that some ABC Licensees are disregarding the laws and regulations set by the Department or orders from local officials and are thereby harming the public health, safety and welfare. … Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 3 The delays attendant to the normal administrative disciplinary process would fail to resolve the immediate threat caused by licensee violations of public health orders during the existing declared state of emergency. … [A]nd excessively high violation rates being reported. Government Code 11342.545(b)(2) expressly rejects such general statements as sufficient to support a finding of an emergency: “A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency.” The Cambridge English Dictionary defines “emergency” as: “Something dangerous or serious, such as an accident that happens suddenly or unexpectedly and needs fast action in order to avoid harmful results”. ABC’s vague statement of facts is void of any facts showing that the violation for which ABC states requires emergency action is “sudden” or “unexpected” (or even exists). The first line of enforcement to accomplish compliance with the state and local public health orders lies with local police enforcement; not with the ABC immediately suspending an ABC license. ABC enforcement agents already cooperate with local police when necessary and respond when requested to enforcement situations. There is no evidence that local police enforcement cannot immediately handle potential or actual violation of stay at home or closure for public health orders. There is simply no evidence – no studies, no articles, no actual examples- presented showing the justification for stripping licensees of the opportunity to defend themselves against ABC enforcement actions when subsection (b) enforcement offenses are purportedly encountered by ABC investigators. The ABC statements show that the only interests served by the emergency rules are “expediency,” “convenience” and “speculation.” Those interests are not adequate to demonstrate the existence of an emergency. Subsection (b) Disciplinary Action and Offenses – Why Due Process Matters ABC disciplinary actions have serious financial impacts on licensees and their employees; penalties can include fines, license suspensions, license revocations and criminal liability. The right of a licensed winery, brewery, distillery, restaurant, hotel, entertainment venue, sports stadium or other licensed business to survive is at stake if their basic right to sell alcoholic beverages is subject to being revoked at the whim of an angry neighbor, overzealous local police department or competitor filing a false or misleading claim on the unlimited grounds listed in the proposed emergency regulations. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 4 Can there be a broader grant of unlimited authority than the ninth (9th) of the proposed emergency regulations? (9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list. That list, items (1) through (8) on the notice of proposed emergency regulations, are similarly flawed, unnecessary and are not emergencies as required by Government Code 11342.545(b)(2). Of equal concern is ABC’s statement it will soon propose “how these changes will be made permanent once the COVID-19 pandemic has passed”. First, can there be any better evidence that ABC is simply using the COVID-19 “emergency” to improperly seek to increase its own regulatory power at the expense of licensees’ due process rights? Second, there does not appear to be any connection in the actual proposed rule changes to the COVID-19 emergency. The ABC’s right to seek emergency rules at all dates to September 2019 (before COVID-19) when it contemplated how it could use an emergency to increase its power. Well, luckily enough for the ABC it got the emergency it wanted to mask its agenda of doing away with pre-sanction hearing rights, due process and functional ABC Appeals Board oversight. Consider the nature of each listed offense that would be punishable almost instantly under the emergency regulation (rather than having to be proved as an offense in a hearing where there is pre-hearing discovery, witnesses are subject to cross-examination, and the Judge’s ruling is subject to correction on appeal by an appellate body that specializes in ABC regulatory law), how it can be abused and the standard of proof typically required to state a violation: (b) If occurring on a licensed premises, any adjoining property rented or leased by a licensee, or reasonably connected to the operation of a licensed business, the department has determined the following circumstances constitute an immediate threat to the public health, safety, or welfare that requires immediate administrative action through an emergency decision: Comment: what does “reasonably connected to the operation of a licensed business” mean? relationships with vendors? actions of employees? actions of service providers? There is no limit on the authority granted here to charge a licensee for responsibility of the actions of others. This is objected to as vague and unintelligible. (1) The licensee, or an employee or agent of the licensee, sells, or negotiates the sale of controlled substances or dangerous drugs; Comment: cannabis is a controlled substance. Does this mean a licensee can be shut down if someone employed by a licensee sells, or is involved in the sale of, cannabis off the licensed premises? The ABC regularly charges licensees with a violation for permitting cannabis use on licensed premises but this extends the offense to personal use and sale off the premises. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 5 (2) The licensee, or an employee or agent of the licensee, permits the sale or negotiation for the sale of controlled substances, or dangerous drugs; Comment: This is even broader than the offense in item (1). This means (under ABC decisional law) that the sale (or offer of sale, that is what “negotiation” means) happened whether the licensee knew about the sale or negotiation, or not. Not trying to prevent a violation is “permission” as far as the ABC is concerned. And, as in (1), this is not limited to activities on the licensed premises. (3) The licensee, or an employee or agent of the licensee, permits conditions to exist that create an immediate risk of violence against an employee, visitor, guest, or customer of the licensed premises; Comment: This vague and unintelligible “crime” appears to be aimed at classic “disorderly house” conduct. Loud music, unruly patrons making noise when leaving, excessive calls for police services. This authorizes immediately closing premises where the local police (or neighbors) do not like the crowd attracted to the location. Typically, excessive police call cases turn out to be clashes between restaurant, nightclub or winery owners and neighbors objecting to the entertainment being offered and the patrons attracted to that entertainment. However, accusations have also been used against activities such as unruly wedding parties and tour bus visitors to wineries, breweries or distilleries. The typical result of such actions are conditions on exercising license privileges limiting hours or operation, type of entertainment and number of permitted patrons. The nature and characteristics of these offenses are subject to much dispute between the complaining parties and the licensees and are usually sorted out in the administrative hearing process. These are not emergencies that justify license suspension without full hearing and appeal rights. And, if there is an issue that demands immediate attention local police can stop behavior immediately by issuing a disturbing the peace citation. (4) The licensee, or an employee or agent of the licensee, engages in or permits activities that directly relate to human trafficking; Comment: There are few reported human trafficking cases at the ABC level; although if this refers to prostitution cases (which often involve bribery of law enforcement officials, including ABC investigators) those need to be proved as criminal cases before being subject to liability as an ABC matter, and that is not an emergency, and this is exactly the sort of behavior that led to the Grand Jury indictment against ABC personnel in 2018 attached as Exhibit B. (5) The licensee is convicted of, or pleads guilty to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises; Comment: Conviction of a crime is grounds for suspension or revocation of an ABC license and, typically, all that is required to prove the violation is a copy of the conviction. We presume that the Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 6 reference to “danger or immediate threat” might mean conviction for a criminal offense involving assault or battery. If that occurs the ABC licensee should be entitled to defend him or herself at a hearing after full discovery. In no cases could a plea of guilty to such an offense be considered an emergency. However, this ground is so vague it is impossible to ascertain what offense might trigger it. (6) The licensee, or an employee or agent of the licensee, bribes, or attempts to bribe, a department employee or other public official; Comment: Bribery of a public official is a serious offense but what bribery is, and how it occurs, is the subject of an entire body of criminal jurisprudence. Is offering a drink to a police officer, or the local Mayor, bribery? How about a campaign contribution? The contribution might be a crime depending on the pre-existing relationship, the nature of what was offered, and the manner offered. This is not an emergency that justifies suspending due process rights and the proof required for a conviction (or a dismissal) that is difficult to obtain and subject to conflicting testimony not suited to abbreviated procedures. (7) While a license is under suspension, or while an accusation for a violation is pending against a license, a violation of the ABC Act occurring based on conduct like that which is the basis of the suspension, or pending accusation, and is likely to continue or reoccur; Comment: We think this refers to successive violations for similar conduct; for example, successive sales to minor results in increasing discipline up to an including revocation for a third offense in 36 months. This typically results in sequential discipline but never is an emergency justifying abrogation of due process rights. This may also be conduct related to promotional activity that the ABC has determined is unlawful or the continuance of tied house violations that the licensee believes is permitted and the ABC does not. Having a license suspended while such policies and alleged offenses are being challenged is a complete deprivation of due process. But what is the test for “conduct like that which is the basis of the suspension”? The same charge? This is vague and subject to conflicting interpretations. (8) The licensee or an employee or agent of the licensee acts in a manner in conflict with limits established by an order of a federal, state, or local official during a state of emergency to protect the public health, safety, and welfare. Comment: This is a policy that should be enforced by the local police and state officials charged with responsibility for enforcing COVID 19 orders. The nature, scope and interpretation of the orders are subject to much controversy throughout the state and the ABC is singularly unequipped to make such a determination. (9) Any other conduct that has a similar impact on to the public health, safety, and welfare as the foregoing list. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 7 Comment: Can there be a broader grant of unlimited authority to take whatever action that the ABC wants, without due process, than this? Punish First – Ask Questions Later, and Ditch the ABC Appeals Board The rulemaking changes do not protect licensees against charges brought improvidently or wrongfully. Rather, the approach of the Emergency regulations is “punish first” then allow a defense later, after the punishment has been served. The ABC also obviates the historic, and constitutional oversight role of the ABC Appeals Board, which exists because of excesses of ABC enforcement before the adoption of Article 20, Section 22 of the California Constitution. If the ABC wants to repeal Article 20. Section 22, do it through the legislature and a vote of the people, not through a backdoor “emergency regulation” declaring that every ABC enforcement action is an “emergency.” THE ABC’S PROPOSED EMERGENCY REGULATION OVERRIDES LONG ESTABLISHED DUE PROCESS PROCEDURES FOR LICENSEES AND OPENS THE POSSIBILITY OF ABUSE OF DISCRETION AND EVEN CORRUPTION FROM “ROGUE” AGENTS There is no question the ABC has authority to enforce ABC law and regulations. Yet statutes and case law also provide for a “fair trial” and due process for licenses and their employees, including the right to notice, the opportunity to be heard at an open hearing, and the right to crossexamine witnesses. (See e.g., Cal. Civ. Proc. Code § 1094.5; Cal. Government Code §§ 11435.05, 11425.10, 11425.30, 11425.40, 11425.50, 11425.60.) The proposed Emergency Regulation would bypass these due process safeguards and even more concerning would serve as a first step to convert these “Emergency Regulations” into a permanent erosion of due process. Under current statutory law, licensees generally are allowed a reasonable time to correct objectionable conditions before the issuance of an accusation requiring a hearing.1 The proposed Emergency Regulation would eliminate this “correction period” before requiring an immediate hearing to suspend or revoke a license. Subsections (c) through (o) eliminate all the important due process safeguard procedures in the statutes. The only reason for this is to expedite the proceedings because of some undefined “emergency” rather than requiring filing an accusation, allowing the licensee time to fully respond, holding a noticed hearing, and allowing an appeal to the ABC Appeals Board if appropriate. 1 Business & Professions Code section 24200. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 8 Subsections (d) and (e) state: (d) The department in its exclusive discretion shall consider scheduling all Hearings on Emergency Action at a time, including evening hours, and at a place convenient to all parties to the proceeding, including those witnesses required to be present, and the public affected. The hearing may be conducted as an informal hearing using electronic communication by the parties. (e) If practicable, the department shall give the licensee notice of the Hearing on Emergency Action, whether oral or written, including by telephone, facsimile transmission, or other electronic means. In giving notice, if the department uses a mailing address, phone or facsimile number, or email address which the licensee has placed on file with the department, notice is presumed to be effective. (Emphasis added). These sections effectively deny licensees the right to confront witnesses, conduct live cross-examination and (the “if practicable” language) even be present at a hearing where their right to continue in business is being adjudicated. These sections are unconscionable violations of Due Process. Subsection (j) of the proposed Emergency Regulation strips licensees of the right to appeal to the ABC Appeals Board and directs instead that the only appeal may be made to the California Superior Court; which never hears ABC cases and is singularly unprepared to do so. (j) Any emergency decision issued by the department under this section may only be reviewed by the superior court of the county where the licensed premises is located. The California Constitution created the ABC Appeals Board to facilitate appeals of ABC decisions affecting licensed businesses: When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license for the manufacture, importation, or sale of alcoholic beverages, the [Appeals] board shall review the decision subject to such limitations as may be imposed by the Legislature. CA Constitution, Article 20, section 22. Both the unreasonable shortening of time and the proposed elimination of the right to appeal a decision to the ABC Appeals Board place unacceptable financial and time burdens on licensees and substantially impinge on licensee’s due process rights. The intent is clear – the ABC wants to make it difficult for licensees to defend themselves. This proposed regulation is even more concerning given the history of agents for administrative Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 9 agencies using the power to terminate a license to their own pecuniary advantage. Due process procedures guard against such situations. THE ABC MUST DEMONSTRATE THE EXISTENCE OF AN EMERGENCY TO JUSTIFY AMENDING EXISTING DUE PROCESS STATUTES Government Code 11342.545 defines an “emergency” as a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. Under this section, to justify adoption of an emergency regulation, the ABC must present specific facts supported by substantial evidence demonstrating the existence of an emergency and the need for immediate adoption of the proposed regulation. Government Code section 11346.1(b)(2) further states: In addition, if the emergency existed and was known by the agency in sufficient time to have been addressed through nonemergency regulations, the finding of emergency shall include facts explaining the failure to address the situation through nonemergency regulations. A finding of emergency based only upon expediency, convenience, best interest, general public need, or speculation, is not adequate to demonstrate the existence of an emergency (emphasis added). 2 In addition, the ABC must identify each study or report upon which it relies to justify this radical amendment to the due process safeguards for licensees. For a finding of the existence of an emergency to justify amending the statutes, 1 CCR 50(a)(5)(B)(2) requires: (B) A statement by the submitting agency confirming that the emergency situation addressed by the regulations clearly poses such an immediate, serious harm that delaying action to allow notice and public comment would be inconsistent with the public interest. The statement shall include: … 2. Specific facts demonstrating by substantial evidence that the immediate adoption of the proposed regulation by the rulemaking agency can be reasonably expected to prevent or significantly alleviate that serious harm. (Emphasis added) Any emergency regulation may be found invalid if: (b)(1)The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute, court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is not supported by substantial evidence. 2 See also, California Medical Association v. Brian (1973) 30 Cal.App.3d 637, 657 (fiscal constraints on the DHCS Agency was not sufficient to create an emergency.) Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 10 Government Code section 11350(b)(1) (emphasis added). Here, the ABC has failed to provide sufficient evidence (indeed, any evidence) to support its finding that the proposed Emergency Regulation is reasonably necessary. It also has not shown why the enforcement procedures as outlined in the current statutes are not sufficient to maintain enforcement and why repealing the statutory due process safeguards is necessary. ABC further submits that the California Legislature has provided the agency with support last year (September 2019) with the passage of SB 788. Section 6 of the Act states: In order to ensure the Department of Alcoholic Beverage Control’s ability to take immediate action when egregious circumstances exist that pose an immediate threat to the public’s health and safety and to ensure that alcoholic beverage licensees have a right to contest the department’s action, it is necessary that this act take effect immediately. (Emphasis added) However, this provision is impermissibly vague and ambiguous. There is no provision anywhere in the statutes to define what an “egregious circumstance” is and a review of case law suggest a finding of “egregious circumstances” is made on a case-by-case analysis and at the very least is some action that “shocks the conscience”.3 Operating a business in violation of a vaguely stated or unclear public health order is not so egregious as to “shock the conscience”. Rather it should be the subject of a visit by a health officer and, if necessary, local police. THE ABC HAS NOT ESTABLISHED THE NEED FOR RULEMAKING CHANGES The ABC has provided no description of the emergency requiring the proposed amendments to the due process safeguards currently in the statutes. The only justification the ABC provides to support these proposed radical amendments to the statutes is found in subsection (a) of the Proposed Emergency Resolution: (a) The department may issue an emergency decision temporarily suspending a license, temporarily suspending specific licensed privileges, or temporarily imposing conditions on a license in situations involving an immediate threat to the public health, safety, or welfare that requires immediate action, pursuant to the provisions of Article 13 of Chapter 4.5 of the Government Code (commencing with section 11460.10). One can only assume that the ABC is attempting to use the Governor’s COVID-19 emergency declaration as the basis for justifying these proposed amendments. However, even if so, the ABC 3 “Shocks the conscience” is a generic legal phrase describing any circumstance(s) deemed outrageously wrong or unfair when measured by specific criteria. Case law often uses this term in discussing if charged behavior is “egregious” and suggests what “shocks the conscience” is determined on a case by case basis. Comments in Opposition to ABC’s Proposed Emergency Regulation May 21, 2020 Page 11 must still: (1) present specific facts and evidence explaining why this COVID-19 emergency would justify amending due process safeguards; and (2) because the emergency has existed for many weeks now, explain the department’s failure to address the situation through nonemergency regulations. (Government Code section 11346.1(b)(2).) The ABC has not provided the required written statement with specific facts to support its proposed radical amendments to the due process safeguards in the statutes. No specific facts or circumstances are provided because none exist. CONCLUSION The Proposed Emergency Regulations should not, and may not, be adopted. Should the ABC persist in attempting to obviate licensee rights to due process under the guise of addressing COVID-19 concerns just as the Governor is implementing opening protocols in various counties of the state the result will be chaos in the courts, an enormous drain on ABC and licensee resources and a plethora of lawsuits. This is not the time to do away with administrative due process in the name of expediency and for the convenience of the ABC; especially when the effort is doomed to fail and will only result in the alienation of the licensing community from the ABC. We finally observe that Section 23001 of the ABC Act states: It is hereby declared that the subject matter of this division involves in the highest degree the economic, social, and moral well-being and the safety of the State and of all its people. All provisions of this division shall be liberally construed for the accomplishment of these purposes. Licensees are people and their economic well-being is one of the core responsibilities of the ABC. The right to due process is a core value that supports the economic, social and moral well-being of the licensees of this state.

ABC Response

Comments will be addressed at the end of the comment period.


Comment #68

From Sandra Hess, Calaveras Winegrape Alliance

To whom it may concern,

I have attached a letter signed by our board president that we want to ensure is included in public comments before the May 27th deadline. We area also putting a hard copy in the mail.

Can you please confirm receipt of this email with letter attached?

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #69

From Victoria Horton, California Beer and Beverage Distributors

Please see attached comments regarding ABC Proposed Emergency Regulation, OAL File No. 2020-0518-04E.  Thank you for your consideration.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #70

From Kim Stemler, Monterey County Vintners & Growers Association

To whom it may concern,

On behalf of the vintners & winegrowers of Monterey County, we understand and appreciate that the ABC has had to be flexible and responsive in this emergency situation. We have appreciated your support and we are very concerned about several elements of these proposed emergency rules.

Our main concerns are that the new proposed rules:

  •  Are permanent and do not go away if the COVID 19 “emergency” goes away.
  • Do away with most due process protections for licensees including the discovery of relevant evidence, responsive pleadings, time to prepare for the hearing, and mandatory live administrative hearings before license suspension or revocation being imposed.
  • Do away with the statutory right to appeal to the ABC Appeals Board and instead create a new process of appeal to the Superior Court of the county in which the licensee is located.
  • Address nine categories of violations that are common violations of the ABC Act related to alleged improper conduct on licensed premises or related to activities of licensees away from licensed premises. None involve actual emergencies.

We hope you will address these issues before moving forward on this emergency legislation.

Thank you for your consideration.

  •  

ABC Response

Comments will be addressed at the end of the comment period.


Comment #71

From Brenda Villanueva, Los Angeles Drug and Alcohol Policy

To whom it may concern,

We support the “Administrative Emergency Decisions” to allow for ABC to issue immediate temporary suspensions for any alcohol outlet violating the terms of shelter-in-place. This regulatory change is good for public health and the community.

The Los Angeles Drug and Alcohol Policy Alliance is committed to protecting the health and well-being of the youth and residents we serve in the city of Los Angeles. As part of our mission, we advocate for safe and healthy communities by reducing drug and alcohol-related harm through public awareness and policy change in Los Angeles.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #72

From Tyler Blackney, Wine Institute

Dear OAL Reference Attorney and Mr. de Ruyter,

Please find attached a letter from a number of associations representing California alcohol beverage licensees requesting the Office of Administrative Law deny approval of the ABC Administrative Emergency Hearings emergency regulations on the grounds that the scope of the regulations goes far beyond the stated emergency.

If you have any questions, please do not hesitate reaching out, and I can connect you to the broader coalition. Thank you in advance for your consideration.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #73

From Manual Espinoza, Wine & Spirits Wholesalers of CA, Inc

Dear OAL and Mr. de Ruyter:  Please see comments enclosed.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #74

From Ryan Friesen, Blinking Owl

Please find attached comments on the proposed emergency regulations from the California Alcohol Beverage Control currently under review buy the Office of Administrative Law.

OAL # 2020-0518-04E

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #75

From Mike Owen, Crystal Basin Cellars

Dear Ma’ams and Sirs –

Please find my organization’s response to your request for public comments regarding ABC’s proposed Emergency Regulations.

Thanks for confirming receipt.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.


Comment #76

From Daniel Davis, Wine, Beer and Distilled Spirits Law Counsel

Attached please find my comments on the above reference proposed emergency rulemaking.

Thank you for your consideration.

ABC Response

Comments will be addressed at the end of the comment period.

The referenced attachment is not available here as it was not provided in a format that meets the WCAG 2.0 AA guidelines for accessibility. Please email RPU@abc.ca.gov to request the attachment as a PDF document. You may visit our Accessibility page for more information.