Initial Statement of Reasons

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

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Proposed Adoptions to Title 4

Sections 147.

Problem Statement and Purpose

Current law has a large bureaucratic loophole through which irresponsible ABC licensees can continue to present an immediate danger to public health, safety, and welfare during the lengthy administrative process of holding ABC licensees accountable for their violations of the ABC Act. The Department of Alcoholic Beverage Control (the Department) aims to close the loophole with this regulatory action which will authorize the Department to issue emergency decisions to protect the public health, safety, and welfare as provided under the Administrative Procedures Act (APA) without waiting for protracted litigation. Because Business and Professions Code section 23082 provides that discipline ordered by the Department is automatically stayed when an appeal to the ABC Appeals Board is filed, protracted litigation has the potential to defer decisive action from the Department for months or years, providing opportunity for licensees to continue to harm the public.

Benefits

The proposed regulation will empower the Department with the authority to act in a situation where the public’s safety is endangered and eliminates the threat of administrative provisions unintentionally keeping the public in harm’s way. The proposed regulation also establishes a procedure for notice and hearing prior to issuance of an administrative emergency decision. This ensures that ABC licensees are afforded full due process and are protected from being subject to an administrative emergency order without good cause.

Authority

Government Code sections 11460.10, et seq.

Necessity

The specific purpose for each proposed section is as follows:

§ 147 (a)

The proposed language is needed to cite the legal authority the Department has in order to issue administrative emergency decisions. The subsection also details possible penalties licensees may face if administrative emergency decisions are issued by the department under this regulation, as required under the applicable Government Code provisions. This subsection is necessary to inform ABC licensees what penalties are appropriate to be imposed by the Department in an administrative emergency order.

§ 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.

§ 147 (b)(1)

The proposed subparagraph establishes that when a licensee, or their employee or agent, who is 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 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 constitute an immediate threat to the public health, safety, and 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 below 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 and how the licensed premises has more resources being devoted to it than the average alcoholic beverage location. 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.

§ 147 (b)(3)

The proposed subparagraph establishes that a licensee, or their employee or agent, who engages in or permits activities that directly relate to human trafficking on a licensed premises, any adjoining property rented or leased by a licensee and the circumstances are reasonably connected to the operation of a licensed business, constitutes an immediate threat to the public health, safety, or welfare that requires immediate action. Solicitation of drinks, prostitution, and other similar crimes can be precursors or indicators of human trafficking. If ABC licensees are permitting activities such as these and there is evidence that the persons involved are being held against their will, being coerced, or manipulated by the ABC licensee, or their employee or agent, there is evidence of activities directly related to human trafficking. Human trafficking constitutes an immediate threat to the public and should not be associated with any ABC licensed premises. This subparagraph is necessary to inform ABC licensees, their employees, their agents, and the public that when there is substantial evidence that human trafficking is occurring at or connected with a licensed premises, an administrative emergency order is necessary.

§ 147 (b)(4)

The proposed subparagraph establishes that a licensee who is convicted of, or pleads guilty or nolo contendre to, a crime that reasonably shows the licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises constitutes an immediate threat to the public health, safety, or welfare that requires immediate action. Although the Department may take actions for any crime involving moral turpitude committed by a licensee through its normal accusation process, this subparagraph establishes that administrative emergency hearings are only appropriate for those licensees whose crimes reasonably show the licensee is a danger or immediate threat to employees, visitors, guests, or customers. ABC licensees are granted the privilege to provide alcohol to the public, often leading to impaired patrons at the licensed premises. If an ABC licensee is shown by conviction of a crime to have predatory tendencies that put employees, visitors, guests, or customers of the licensed premises at risk, the Department should immediately act to protect members of the public. This subparagraph is necessary to inform ABC licensees, their employees, their agents, and the public that a licensee who has been convicted of, or pleads guilty or nolo contendre to, a crime as specified in Title 2 California Code of Regulations section 147(b)(4)(A), an emergency order is appropriate to separate them from employees, visitors, guests, or customers of the licensed premises.

§ 147 (b)(4)(A)

The proposed subparagraph establishes a list of crimes that show a licensee is a danger or immediate threat to employees, visitors, guests, or customers of the licensed premises. This subparagraph is necessary to inform ABC licensees, their employees, their agents, and the public what crimes may establish that the licensee is a danger or immediate threat to employees, visitors, guests, or customers of a licensed premises that would allow the Department to take an administrative emergency action against their license. The crimes listed are those that are associated with the sexual violent predator standards under California law and all constitute serious offenses where a licensee should not be around vulnerable persons at a licensed premises.

§ 147 (b)(5)

The proposed subparagraph establishes that a licensee, or their employee or agent, who knowingly permits, on a regular and consistent basis, violations of law that constitute grounds for suspension or revocation of an ABC license may be subject to an administrative emergency decision. This subparagraph is necessary to inform ABC licensees, their employees, their agents, and the public that repeated knowing disregard for the law constitutes a danger to the public health, safety, and welfare, would authorize the Department to take an administrative emergency action against their license. The proposed regulatory standard for an administrative emergency decision is different from the burden of proof in the  Department’s normal accusation process because it requires that the violations be done “knowingly,” meaning that there has been some notice or understanding by the licensee, or their employee or agent, that the conduct is a violation of law that constitutes grounds for suspension or revocation of their ABC license. The knowing element may be established by a registered accusation alleging a violation of similar conduct, documented communications and interactions with the Department or other law enforcement agency, or previously sustained violations for similar conduct. In addition, this standard also requires that the knowing violations continue to occur on a regular or consistent basis at the licensed premises before an administrative emergency action is appropriate. This subparagraph articulates the rare ABC licensee, or their employee or agent, who has a complete disregard for the laws established to protect the public health, safety, and welfare. Pursuant to this subsection, the Department may take swift action by administrative emergency decision when an ABC licensee, or their employee or agent, refuses to change behaviors that continually and repeatedly pose a threat to the public health, safety, and welfare.

§ 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.

§ 147 (c) 

The proposed subsection is necessary to ensure the Department holds a hearing as outlined in the APA prior to issuing an administrative emergency decision and provide due process to ABC licensees effected by the administrative emergency decision. This section also clarifies and ensures that administrative emergency decisions are only to be temporary orders in place while the Department’s normal accusation process is pending. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (d) 

The proposed subsection is necessary to establish standard operating procedure for the Department to notify licensees of an upcoming administrative emergency decision hearing and ensure due process is followed in all hearings on administrative emergency decisions prior to the issuance of an administrative emergency decision. This subsection is also necessary to establish the normal evidentiary standard for administrative hearings, preponderance of the evidence, to be the evidentiary burden that notice occurred placed upon the Department within an administrative emergency hearing. This subsection is necessary to ensure the Department makes a good faith effort to notice all effected parties of an administrative emergency decision in order to comply and be consistent with the procedures for emergency hearings under the APA. This subsection was previously found in subsection (e); it was moved to subsection (d) to account for the notice process occurring prior to a hearing being scheduled. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (e) 

The proposed subsection establishes the Department’s ordinary course of setting a hearing on administrative emergency action as being in Sacramento, CA and during normal business hours. Since administrative emergency hearings will be held in electronic format, the location of the hearing is less important. It is anticipated that officials of the Department overseeing these hearings are in Sacramento, and the equipment for these hearings is also located in Sacramento. Since most people anticipate hearings to occur during normal business hours, it is logical to establish both of these parameters as the ordinary course for this type of hearing in compliance with the APA.  The proposed subsection also allows for parties and witnesses to participate in the hearing from anywhere through electronic means using the informal hearing standards as described in the APA. The proposed subsection also establishes that parties can request that the department change the location or time of a hearing upon a showing of good cause. Showing good cause to modify the hearing location and time is necessary to ensure that parties do not arbitrarily request change or modify an administrative emergency hearing simply in an attempt to delay the hearing and subsequent enforcement. This subsection is necessary to establish the Department’s use of discretion in scheduling a hearing on administrative emergency action and how a party may request for a change of location or time. It is also necessary to ensure requests for a change of location or time brought to the Department are handled in a consistent manner with fairness and equity. This subsection modifies the former subsection (d) to better delineate the Department’s use of its discretion in scheduling the time and location of hearings on administrative emergency actions, for grammatical consistency, and clarity.

§ 147 (f) 

The proposed subsection is necessary to require the Department to present evidence of the circumstances of the alleged violation and prove the threat of continued violations while the normal accusation process is pending pose a threat to public health, safety, and welfare at a hearing on administrative emergency action. The proposed language places the burden of proof on the Department to ensure due process rights of the ABC licensee are protected prior to any administrative emergency decision being issued. The Department is also required to recommend appropriate action as a part of their case presented at a hearing on administrative emergency action to ensure that the ABC licensee can present their case knowing what action the department seeks in an administrative emergency decision. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (g) 

The proposed subsection is necessary to provide the ABC licensee an opportunity to defend themselves and rebut evidence presented by the Department in a hearing on administrative emergency action. This subsection, coupled with the required notice in subsection (d), ensures that every administrative emergency decision will comply with the rules of fairness and uphold the standards of due process. This subsection also allows for the licensee to make a recommendation for any administrative emergency decision that will be issued. This subsection allows ABC licensees to suggest proper temporary conditions or suspensions of specific license privileges to avoid a temporary suspension, if appropriate under the circumstances. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (h) 

The proposed subsection is necessary to establish a standard of proof which the Department is required to meet in order to issue an administrative emergency decision at the conclusion of a hearing on administrative emergency action. Under the APA, the ordinary standard of proof is established as preponderance of the evidence, unless a personal right is being addressed. The ownership of an ABC license is not a personal right, and therefore the proper evidentiary burden should be established as preponderance of the evidence to be in compliance with the APA. This subsection ensures that the Department must provide sufficient evidence of the alleged violation, and that the alleged violation continues to pose a threat to the public health, safety, and welfare if the conduct is unaddressed while the Department’s normal accusation process continues. This subsection also establishes the standard of review if an ABC licensee chooses to have an administrative emergency decision reviewed by a County Superior Court of California as outlined in subsection (j). This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (i) 

The proposed subsection is necessary to define what the Department must include within an issued administrative emergency decision for it to be effective and reviewable by a County Superior Court of California and to be in compliance with the requirements of the APA. This proposed subsection also necessarily defines the effective date of an administrative emergency decision, and the way any temporary suspension imposed by an administrative emergency decision will be enforced by the Department. This section ensures all administrative emergency decisions outline the evidence necessary for the Department to determine by a preponderance of the evidence that the administrative emergency decision was warranted, and why the action taken in the administrative emergency decision appropriate. This subsection requires a written explanation of both the finding and penalty issued in an administrative emergency decision to protect the due process rights of ABC licensees and ensure that the Department does not issue administrative emergency decisions without proper evidence that is subject to review. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (j) 

The proposed subsection is necessary in order to provide a venue for appeals of the Department’s administrative emergency decisions against alcohol licenses. This subsection provides ABC licensees who are affected by an issued administrative emergency decision to seek review of the administrative emergency decision by a Superior Court in the County where the licensed premises is located without waiting for the conclusion of the Department’s normal accusation process. This ensures the implementation of an administrative emergency decision does not violate due process of the ABC licensee by ensuring review by an appropriate court. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (k) 

The proposed subsection is necessary to ensure the Department promptly initiates its normal accusation process to ensure that administrative emergency decisions with temporary orders are only in place for a short period while the matter is litigated in its normal course. This ensures the Department cannot impose an administrative emergency decision and then neglect to begin its normal accusation process as required by the APA. This subsection authorizes the Department to re-establish an administrative emergency decision utilizing this section in the event the Department is unable to initiate its normal accusation process within the time required by the APA. However, the Department must also establish good cause as to the reasons an additional administrative emergency decision was needed for the same alleged violation. The proposed subsection will maintain the integrity of the administrative emergency decision process, if the 10-day window is inadvertently violated or if circumstances change, while ensuring that the ABC licensee’s due process rights are protected from arbitrary or capricious actions by the Department.  This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (l) 

The proposed subsection is necessary to establish that the Department has the jurisdictional power to rescind an administrative emergency decision at any time. The Department may rescind an administrative emergency decision for any appropriate reason at the Department’s discretion. This will allow the Department to act if an ABC licensee’s makes a showing that the immediate threat to the public health, safety, or welfare no longer exists at the licensed premises through a change of circumstance.

§ 147 (m) 

The proposed subsection is necessary to allow any party to the proceeding to file a written motion with the Department to request a modification to an existing administrative emergency decision. The moving party is required to give proper notice of all other parties of its request, and all other parties are given 5 business days to respond to the written motion prior to the Department acting. The standard of 5 business days is necessary to allow non-moving parties an opportunity to respond, while still acknowledging that administrative emergency orders are time sensitive and any action by the Department should not be unnecessarily delayed. Upon a finding of good cause, the Department may modify an existing administrative emergency decision as requested by the moving party. This subsection allows the Department to make its decision based on the written record submitted, or to schedule an additional hearing on administrative emergency action prior to reaching a decision on the written motion as is appropriate. This Departmental discretion allows for increased efficiency in the decision process.  This subsection is necessary to allow the Department to modify an existing administrative emergency decision due to changing circumstances of the parties while the Department’s normal accusation process is pending.

§ 147 (n) 

The proposed subsection establishes that the Department shall not consider any administrative emergency decisions when contemplating penalty at the close of the Department’s normal accusation process. Since an administrative emergency decision is based on a separate proceeding with different evidentiary standards, the fairness of the penalty in the normal accusation process could be biased if this information was taken into consideration. This subsection will guard against ABC licensees being disciplined more severely, or less severely, merely because they went through the administrative emergency hearing process prior to the Department’s normal accusation process. The Department wishes to promote fairness in all its normal accusations processes and thus the initial administrative emergency process should not be considered in any penalty imposed in the normal accusation process. This subsection is also necessary to ensure that ABC licensees are given credit for any suspension previously served during a temporary suspension and are not subject to duplicative penalties at the conclusion of the Department’s normal accusation process. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (o) 

The proposed subsection is required to prevent licensees from requesting a petition for offer in compromise when the penalty imposed could apply under Business and Professions Code section 23095 due to a credit for suspension time previously imposed by an administrative emergency decision for the same violation. The petition for offer in compromise statutorily applies only to those violations that result in a fifteen-day suspension or less. With the potential for a lengthy penalty for a more serious violation being reduced to a fifteen-day suspension or less under the previous section, it is necessary to ensure all parties are aware that a petition for offer in compromise is unavailable in these circumstances. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (p) 

The proposed subsection is necessary to inform the public that interim operating permits will continue to be governed by Business and Professions Code section 24044.5(h), and that proposed regulation does not affect the Department’s statutory authority to summarily cancel or suspend an interim operating permit. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (q) 

The proposed subsection is necessary to inform the public that temporary permits will continue to be subject to Business and Professions Code section 24045.5, and that on the proposed regulation does not affect the Department’s statutory authority to summarily cancel or suspend a temporary permit. This subsection was modified from the approved emergency regulation for grammatical consistency and clarity.

§ 147 (r) 

The proposed subsection is necessary to inform the public that this section in no way changes the established authority and jurisdiction of the Alcoholic Beverage Control Appeals Board (Appeals Board) as established by law. Administrative emergency decisions have been excluded from Appeals Board jurisdiction by the Legislature. Thus, administrative emergency decisions issued pursuant to this section are not subject to either Appeals Board review or the automatic stay that is imposed when the Appeals Board reviews a decision made by the Department.

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

Articles

Crisis in Human Trafficking During the Pandemic, A Snapshot: April 2020; Polaris Project.

NBWA Launches Campaign to Combat Human Trafficking; National Beer Wholesalers of America; Issued July 29, 2020.

Senate Bill (SB) 788 Analysis

The Department proposes to use the legislatively delegated authority granted in Government code § 11460.30 in order to protect the public, keeping with the Department’s mission statement to provide the highest level of service and public safety to the people of the State through licensing, education, and enforcement. Actions that will trigger an emergency administrative decision such as selling illicit drugs, permitting violence, or activities that are directly related to human trafficking, are dichotomously opposed to preserving the welfare of the State which is why the Department required this regulatory change.

SB 788 amended Business and Professions Code sections 23080 and  23090.5 to carry out meaningful immediate action, when deemed necessary to protect the public interest of the State without having the disciplinary action automatically stayed as a result of the appeal process. This bill clarified that  emergency disciplinary actions are not appealable to the ABC Appeals Board, which would result in  an automatic stay (which allows the alleged violator to keep their business doors open and continue to potentially put the public in harm’s way). However, to ensure continued due process for licensees, emergency decisions are subject to review by the Superior Court of California. This allows licensees the due process of review but without the ability to continue to harm the public by delaying the administrative process.

If a business is operating in a fashion egregious enough to warrant an emergency administrative decision, the likelihood of the inappropriate behavior continuing is too great to allow it to continue during the automatic stay while the appeal process plays out. Bad actors are able to manipulate the system as they see the impending serious consequences for their business on the horizon. They have no reasonable incentive to correct their behavior and abide by the rules, and instead they elect to continue litigating thereby extending the appeals process and fiscally profiting for as long as they can with an absolute disregard for the law.

Department of Appeals Board Decisions 

Examples of Cases Where Administrative Emergency Actions Appropriate

Dale Entertainment LLC, dba: Parlare Euro Lounge; Reg: 17085830; File No.: 48-437564; documents an example of how dangerous the decline of a premises can be from a public safety standpoint. In this example, a two-victim shooting occur at a premises with a history of violations, pending status at the time of the shooting, and a person with business interests in the premises openly admitting to law enforcement that they are simply “trying to make it through the year”.

Nabil Ahmed Alharby, dba: Midway Market; Reg: 17086101; File No.: 21-467116; documents eight violations transpiring in only ten months, including multiple sales to minors. Blatant disregard for the law as documented here is unacceptable, and further supports the Department’s request for the ability to make meaningful emergency administrative decisions to address such violators and restore the rule of law.

Vivi Lu, Inc. dba: Fulton Food Shop; Reg: 19088468; File No.: 21-545496; details four violations that occurred in just two months. The four violations of sales to minors transpired after the premises was already disciplined with a fifteen-day suspension for a 2014 violation and had additional discipline pending against them for another 2017 violation.

Woodley Enterprises Inc dba: Club 7557; Reg: 18086345; File No.: 47-419125; details five separate violations, all sexual in nature, occurring on the same day. This premises previously had a revocation which was stayed for three years for 2013 violations, a thirty-day suspension with fifteen days stayed for 2015 violations and was facing another pending action for violations alleged to have occurred in 2016. This pattern of twenty violations, coupled with the fact that the respondent has twice before been disciplined for the same type of violations led to the Department ultimately revoking the respondent’s license.

Costanzos Genco Olive Oil Company, Inc. dba: Toby & Jacks; Reg: 18086874 (1 of 2); File No.: 48-582810; describes a situation where seventeen violations were documented in only four months. The severity of these seventeen documented violations cannot be understated, and  included illicit drugs being sold and used on premises. Such a case highlights how much of a threat to public health and safety, a premises which no longer has any incentive to abide by the law, can become. As the finding of facts illustrates, within less than four months of the initial major violation, a total of seventeen destructive acts took place, irreparably damaging the social fabric of the community.

Costanzos Genco Olive Oil Company, Inc. dba: Sidelines Sports Bar; Reg: 18086872 (2 of 2); File No.: 48-582812; this business is controlled by the same group as the previously documented case. In the same four-month period as the preceding case, the premises allegedly committed thirteen additional violations all of which were illicit drug related, and certainly contrary to public welfare and/or morals as set forth in Article XX, Section 22 of the California State Constitution and sections 24200(a) and (b) of the Business and Professions Code.

All six of the cases above highlight the need for the Department to utilize emergency administrative decision-making authority, and simultaneously demonstrate the dangers of what can happen without such authority. Public health, safety, or welfare was jeopardized in each of the cited cases and continues to be a hinderance for law enforcement.

Cases Regarding the Definition of Law Enforcement Problem

Billy T’s Olgas, Inc., dba: Rock’s Club; AB-7911, Reg: 01050925, File No: 47-32376; this appeals board decision issued June 9, 2003, examines the question of the legal standard of what constitutes a “law enforcement problem” at an ABC licensed premises.

Economic Impact Assessment/Analysis

ABC has over 93,000 licensed premises throughout the state. The number of alcohol licenses in the state has shown about a 2% yearly growth in recent years, but ABC anticipates the number of licenses to diminish due to the limiting factors of the pandemic and a loss of business in the hospitality sector in general throughout the state.

ABC’s proposed regulation lays out the procedures and policies to ensure ABC licensees are held accountable for egregious actions through administrative emergency decisions for conduct previous illegal under statute. ABC does not anticipate that the proposed regulation will change significantly the number of alcohol licensed premises in the state because it is limited to the enforcement of laws ABC licensees are already subject to. The proposed action only lays out the process by which ABC will enforce these same laws. There is no foreseeable impact on representative private persons or businesses based on the process laid out in the proposed regulation. ABC has made an initial determination that the adoption of this regulation will have negligible economic impact on the Department’s budget, which can feasibly be absorbed by the Department.

ABC’s proposed regulation is not anticipated to create or eliminate jobs or businesses beyond a negligible amount. In addition, the proposed regulation will not expand, or contract existing businesses, nor will it affect the state’s environment directly. There will be a benefit to worker safety at ABC licensed premises as they will benefit from the increased public health, safety, and welfare created for all citizens of California targeted at their place of employment.

ABC does anticipate the proposed regulations will create increased public health, safety, and welfare from a better check upon ABC licensees whose conduct falls within the egregious categories for an emergency decision to issue. It will provide clarity to both law enforcement officers, ABC licensees, and the public of the regulatory procedure for the Department to issue administrative emergency decisions while continuing to protect the due process of ABC licensees from arbitrary or capricious enforcement. This will promote more safety, as well as consistent enforcement of these laws throughout the state.

Evidence Supporting Finding of no Significant Statewide Adverse Economic Impact Directly Affecting Business

ABC has made the determination that the adoption of this regulation will have negligible economic impact on a representative private person or business . The laws that ABC seeks to enforce via the proposed regulation are laws to which persons and businesses are already subject. The proposed action only lays out the process by which ABC will investigate potential violations and enforce these same laws. There is no foreseeable impact on representative private persons or businesses based on the process laid out in the proposed regulation.

Based on the above, ABC determined that the proposed regulatory action will not have a significant statewide adverse economic impact to businesses statewide including the ability of California businesses to compete with businesses in other states.

Alternatives Considered for the Implementation of the Proposed Regulation by the Department

There is no economic impact through the proposed regulatory package, and there are no alternatives considered for their implementation.

Regulatory Mandates

This regulatory package creates no new duties or regulatory mandates for ABC licensees, local governments, or the Department.