May 10, 2004

ABC Announces Penalty Guidelines Emergency Rule and Rulemaking

Michael Brill Newman

On April 13, 2004, the ABC received approval from the Office of Administrative Law for an emergency rule providing for formal and published guidelines on penalties the ABC can assess for violations of laws and regulations committed by ABC licensees or their employees or agents. This emergency rule will likely be in effect now until the ABC adopts a permanent rule. (If the ABC elects not to complete the rulemaking process or fails to comply with rulemaking procedures, the emergency rule will lapse on August 14, 2004.)

During the emergency rule period, the ABC will conduct an administrative process for adopting a permanent rule establishing its penalty guidelines. The ABC will hold a public hearing in early June 2004 at which industry members may testify whether they believe the penalties are too harsh or unreasonable or what they think should be included in or excluded from the guidelines. In addition, during the emergency rule period, industry licensees at all levels may submit written comments to the ABC and the Office of Administrative Law on their views. After the hearing and the submission of comments, the ABC and the Office of Administrative Law will evaluate the industry’s hearing testimony and written comments and adopt a permanent rule.

Historically, the ABC has used unpublished penalty guidelines to decide the fate of industry licensees when they or their employees or agents have violated the ABC laws. The emergency rule now in effect and the permanent rule the ABC adopts will expressly define for the industry what penalties the ABC will seek to impose for such violations. Included in the proposed and emergency rule are the precise penalties ABC believes are appropriate (e.g., revocation or 5 to 45 day suspension) and what factors or circumstances, both aggravating and mitigating, ABC will use to evaluate unlawful conduct and determine an appropriate penalty.

This rulemaking process provides an important opportunity for California industry members to participate in the establishment of guidelines for how ABC will punish them for their violations in the years to come. The industry should not ignore this opportunity.

*This article was originally published in California Beverage News.

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