Monday, June 16, 2014

Legislature to DABC: Fix Your Rule or We'll Fix it For You

Posted By on June 16, 2014, 2:22 PM

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A legislative committee met to discuss the Utah Department of Alcoholic Beverage Control's new stance on granting special event permits to charitable organizations over for-profit ones, a move that could jeopardize Snowbird resort's popular Oktoberfest celebration. If the discussion were a drinking game, and legislators took a drink every time they found contradiction and confusion in the DABC's rule, it's safe to say lawmakers would have ended the meeting under the committee table.---

The confusion of the meeting and the interpretation of the code did at least lend itself to a simple recommendation from the Legislature--that the DABC fix the rule or lawmakers would change it or get rid of it entirely in the 2015 legislative session. Sen. Jim Dabakis, D-Salt Lake City had the opening shot against the DABC citing the negative headlines about quirky Utah having an “Oktoberfest without beer.”

Misleading as the headline is, since Snowbird has not been denied its single event permit and still had the option of offering 3.2 percent beer, Dabakis said the bad press was spread to 70 major media outlets and has helped again to make “Utah the laughing stock of the world.”

In defense of the decision, however, representatives of the DABC explained that they were not really embarking on a new interpretation of Utah's existing law, but simply making sure the rules were in compliance with the law.

The DABC has the ability to write rules that comply with existing law. The rule that the DABC has recently interpreted as favoring nonprofits over for-profits when it comes to approving permits for special single-events was actually implemented in 2009.

Sheila Page an Assistant Attorney General who represents the DABC, says that the single-event permits which allow for the temporary sale of high-point beer and spirits were perhaps being abused by some applicants using the temporary permits to act like bars since there was such a lack of full club licenses available.

DABC Director Sal Petilos said that while the rule was written in 2009 the previous DABC administration “may have been out of compliance” by not truly scrutinizing the permit applicants in accordance with this 2009 rule he believes favors nonprofit applicants whose single-event permits benefit the “public good.”

Dabakis, however, pointed out the vagaries in the code which as City Weekly previously wrote about also clearly sanctions the permits be granted for “social” and “business” events. This confusion in the rule was a major sticking point for lawmakers, but it also seemed to be a point of polite disagreement between DABC director Petilos as well as DABC commission member John Nielsen.

While the DABC's rule says that the director “may consider” whether or not an applicant is a for-profit or a nonprofit it doesn't explicitly favor one over the other.

“There's an over-emphasis on that distinction,” Nielsen said, “and I think its a distinction without a difference.”

While commissioner Nielsen said it was exactly that point that the DABC was going to focus on in re-writing the controversial rule, Petilos defended the rule as it has been interpreted. He also said that while the DABC is sensitive to the business community involved in alcohol sales, he defended his agency saying “It appears though that the public has a knee jerk reaction to whatever the DABC does.”

Lawmakers on the committee like House Speaker Becky Lockhart, R-Provo, suggested that as the DABC rewrite its rules, that it narrow its focus to prevent applicants from trying to use single-event permits as an end run to having a full liquor license, instead of broadly ruling against for-profit entities that want to have a special event like Snowbird's Oktoberfest.

“There are other factors that can be used to get at, what I think you're looking for, which is potential abuse of the single-event permit as opposed, to whether [applicants] are for-profit,” Lockhart said.

It was a thought echoed by Sen. Mark Madsen, R-Eagle Mountain who did not believe the intent of statute was to favor for-profit over nonprofits. Madsen, however, also pointed out that such complications are inevitable when the state tries to micromanage free enterprise. “When government undertakes to social engineer we run into problems like this,” Madsen said.

The meeting ended with the committee explaining clearly to the DABC that if it doesn't rework its rule to not be anti-business that the rule could be axed in the coming session. The DABC through commissioner Nielsen promised they would meet tomorrow to do exactly that.

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