Addendum to Initial Statement of Reasons

Proposed adoption of regulations for emergency decisions for against ABC Licensees.

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Proposed adoptions to Title 4

Section 147.

Necessity

The specific purpose for each proposed modification of each modified section is as follows:

§ 147 (b)

The proposed subsection lists the circumstances that are deemed to constitute an immediate threat to public health, safety, and welfare, and that may prompt the Department to take emergency action. This language is necessary to establish specific grounds upon which the Department may act and to inform ABC licensees, their employees, their agents, and the public when an administrative emergency order is appropriate. It also states that all conduct and harm described below must occur either on the licensed premises, or in an adjoining property rented or leased by the licensee that is reasonably related to the operation of the licensed premises. This ensures conduct by a licensee, or their employee or agent, that is unrelated to the licensed premises is not used to bring an administrative emergency action. The proposed language is required by the applicable Government Code provisions and is necessary for due process to be fulfilled and to set procedural limitations upon the types of activity that the Department has deemed an immediate threat to public safety through an administrative emergency decision.

This subsection was given additional subparagraphs corresponding to circumstances that, when they exist, would authorize the Department to act that expand upon the basis for approval of the emergency regulation. While all violations of the ABC Act by licensees, their employees or agents, constitute harm to the public health, safety, and welfare as defined by the Legislature, not all of them are an immediate threat requiring emergency action. As such, the proposed evidentiary standards for administrative emergency actions are higher or are more limited in scope than the statutory standards for the Department to sustain similar accusations through its normal disciplinary process. This subsection was also modified from the approved emergency regulation for grammatical consistency and clarity.

This subsection has seen further refinement through the public comment phase to ensure it only applies to immediate threats to public health, safety, and welfare.

§ 147 (b)(1)

The proposed subparagraph establishes that when a licensee, or their employee or agent, has a pattern of conduct that includes selling or negotiating the sale, or knowingly permitting another to sell or negotiate for the sale, of controlled substances or dangerous drugs on a licensed premises, or any adjoining property rented or leased by a licensee and the circumstances are reasonably connected to the operation of a licensed business, it constitutes an immediate threat to the public health, safety, or welfare that requires immediate action. This subparagraph is necessary to allow the Department to take an administrative emergency action against a license when the licensed premises is repeatedly being used for the sale and negotiation of controlled substances or dangerous drugs. Illegal drug sales by ABC licensees or their employees or agents on, or adjacent to, a licensed premises is prohibited (see, Business and Professions Code section 24200.5) and often leads to dangerous outcomes for the public and constitutes an immediate threat to the public health, safety, and welfare.

This subsection was modified to ensure that a single and isolated sale of controlled substances or dangerous drugs does not apply, because there is no evidence of the conduct repeating and presenting an immediate threat to the public health, safety, or welfare.

§ 147 (b)(2)

The proposed subparagraph establishes that a licensee, or their employee or agent, who knowingly permits the licensed premises to be operated in a manner that constitutes a disorderly house as defined under Business and Professions Code section 25601, or a law enforcement problem constitutes an immediate threat to the public health, safety, or welfare that requires immediate action. This subparagraph is necessary to allow the Department to take an administrative emergency action against a license when the licensed premises is consistently operating a disorderly house as defined in Business and Professions Code section 25601 or is a law enforcement problem as defined in Title 2 California Code of Regulations section 147(b)(2)(A).

An ABC licensed premises, if uncontrolled or allowed to operate in a disorderly manner, can create an environment that harms the public. It is the duty of an ABC licensee, and their employees and agents, to operate the business in a lawful manner and protect persons on the licensed premises. When they do not, the Department may immediately require them to do so by administrative emergency action. The proposed regulatory standard for an administrative emergency action for a disorderly house is higher than the normal accusation standard under Business and Professions Code section 25601. The proposed standard requires that the alleged violation be done “knowingly” meaning that there has been some notice or understanding by the licensee, or their employee or agent, that the operations of the licensed premises constitutes a disorderly house or a law enforcement problem before the Department may take an administrative emergency action. The knowing element could be established by a registered accusation alleging a violation of Business and Professions Code section 25601, documented communications and interactions with the Department or other law enforcement agency personnel, or previously sustained violations for similar conduct. Once the licensee is on notice but continues to operate in the same manner in defiance of the law, the licensed premises presents an immediate threat to the public health, safety, and welfare. The proposed regulation does not affect the statutory standard for an accusation brought under Business and Professions Code section 25601 in the department’s normal accusation process.

§ 147 (b)(2)(A)

The proposed subparagraph establishes a definition for “law enforcement problem” as used in Title 2 California Code of Regulations section 147(b)(2). This definition provides that the Department must prove by a preponderance of the evidence that a local law enforcement agency is devoting more resources to the licensed premises than the average alcoholic beverage location due to the conduct, policy, or operations of the licensee, or an employee or agent of the licensee. The Dale Entertainment Case referenced in the documents relied upon is an example of how a licensee would qualify as having more law enforcement resources devoted to the licensed premises than the average alcoholic beverage location.  This definition is necessary to codify the standard of a “law enforcement problem,” for purposes of administrative emergency decisions, as outlined in many administrative decisions of both the Department and the ABC Appeals Board. For the Department to prove a licensed premises is a “law enforcement problem,” it would need to take testimony from members of the local law enforcement agency regarding how the licensed premises has more law enforcement resources being devoted to it than other similarly situated licensed locations within the jurisdictional area of that law enforcement agency. This definition also informs ABC licensees, their employees, their agents, and the public when an administrative emergency order is appropriate under Title 2 California Code of Regulations section 147(b)(2) for the licensed premises being a law enforcement problem.

This subsection was changed to provide better clarity to the Department’s intent that this was only meant to be applied to ABC Licensees when compared against similar licenses within the same area. In addition, in order for the Department to take action under Title 2 California Code of Regulations section 147(b)(2), the Licensee must be put on notice that the Department or a local law enforcement agency has deemed them a “law enforcement problem” due to the requirement that a “licensee, or an employee or agent of the licensee, knowingly permits” the conduct constituting a violation.

§ 147 (b)(6)

The proposed subparagraph establishes that a licensee, or their employee or agent, who engages in or permits activities on their licensed premises in conflict with orders to protect the public health, safety, and welfare issued by a federal, state, or local official to protect the public health, safety, and welfare during a declared state of emergency, constitutes an immediate threat to the public health, safety, or welfare. The subparagraph provides the Department the authority to suspend or modify licensed privileges when a licensee is acting in conflict with an order from a federal, state, or local official to protect the public health, safety, and welfare. States of emergency can compound harms to the public health, safety, and welfare very quickly. The Department’s normal adjudicative process is, in most circumstances, too slow to have any impact and ensure orders in a state of emergency are followed to protect the public health, safety, and welfare. This subparagraph is necessary to inform ABC licensees, their employees, their agents, and the public that these actions may allow the Department to act with an administrative emergency decision. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

This subsection was changed to ensure that a licensee is aware of the public health order they have violated, that the violation is directly related to the declared emergency, and that there is an order by a local official that directly relates to a declared state of emergency. A violation under this subsection still is required to occur on the licensed premises or on any adjoining property rented or leased by a licensee and the circumstances are directly connected to the operation of a licensed business as required by Title 2 California Code of Regulations section 147(b).

Technical, Theoretical, and Empirical Study, Report, or Similar Documents Relied Upon

In addition to the documents relied upon already published in the record, the Department makes a part of this record the following documents:

The Department’s responses to the public comments received in May 2020 during the emergency regulatory action adopting Title 2 California Code of Regulations section 147 on a temporary basis.

The Amended Notice of Approval of Emergency Regulatory Action sent by the Office of Administrative Law September 11, 2020, extending the effective date of the emergency regulatory action to March 27, 2021.

The original proposed text of Title 2 California Code of Regulations section 147 that has been approved temporarily under OAL Matter Number: 2020-518-04.