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WHEN IS AN ABC ADVISORY JUST ADVICE?

Posted in The Business of Wine, Uncategorized, Weekend Edition -- Wine

Alcohol Beverage Control authorities frequently provide advisory opinions on what the law or regulations provide.   These opinions give the regulated community insight into what the ABC is considering and allows the community to make compliance decisions.

Witness the case with the California ABC when it issued an advisory regarding the sale of alcohol through grocery store self checkout counters.   California grocers had allowed people to buy wine through self checkouts by using a device that  locks out alcohol purchases.  If alcohol is scanned, a clerk must check the buyer’s ID and authorize the sale.  The California ABC issued an advisory stating that it believed this lock out system was improper.  The agency interpreted the statute to require that all alcohol had to be purchased through the normal checkout line.

The California Grocers Association challenged that advisory claiming that the lock out devices met the spirit, if not the letter, of the law.  Even though the ABC advisory was not the law and there was no fine outstanding for any of its members, the CGA wanted to make it clear that its position was correct.  It sued to both void the advisory and to declare that the self-checkout scheme passes statutory muster.

Last month, the Court of Appeal, Third District determined that the ABC advisory had violated the Administrative Procedure Act.  That Act requires that regulations must be accompanied with notice and a chance for public comment.  When the ABC issued the Advisory, it was a “regulation subject to the APA because it was directed to the general class of retail off-sale liquor licensees that employ checkout stands and because its interpretation … is not essentially rote, ministerial or repetitive.”   The Court declined to give ABC any administrative deference in its interpretation, because the Advisory went beyond what was permissible to do without public comment.

However, the Court continued and AGREED with the ABCs interpretation, determining that the alcohol beverage statutes did not allow persons to use self-service checkouts.  Providing a lock out was not sufficient to pass judical scrutiny.  In essence, the Grocers Association won the battle (got the advisory set aside), but lost the war on the interpretation of the statute as applied to self-checkouts.

What does this mean for the future of ABC Advisories in California?  A couple things.  It appears that general administrative advisories that do not interpret the law are fine.   If ABC goes is a step further and enlarges, explains or formalizes the law, the ABC must accept public comment if it intends to enforce its decisions.

That does not mean the advisories will all go away if they go too far.  In fact, an advisory can set out ABC’s position, and ABC can take action related to that advisory.  However, anyone faced with an ABC action can argue that a court need not defer to the ABC.  Instead, a court can interpret the law on its own and decide the issue without giving ABC deference if the advisory is more than “rote, ministerial or repetitive.”