Category Archives: OLCC

60% of Portland Licensees Sell to Minor Decoys in Recent Operation

Compliance, OLCC

The OLCC conducts minor decoy operations across the state.  Licensees are selected in two primary ways for these operations: random and targeted.

First, the OLCC selects a pool of licensees at random to be tested for compliance.  Any licensee may be selected at random at any time.

Second, the OLCC responds to citizen complaints and will conduct minor decoy operations and compliance checks for licensees that are subject to such complaints.  In addition, the OLCC typically will retest licensees that fail a minor decoy operation.  Both approaches target licensees that may be compliance risks.

The recent 60% compliance rate is well below the state wide average of 81%.  Click here for more information.

Industry Groups Considering the Privatization of the OLCC

OLCC, Privatization

Oregon grocers and convenience store owners are considering a privatization effort in response to the Commission’s announcement that it would consider applications from Oregon liquor stores to carry beer and wine.  The Commission’s decision was based in part on the success of a four store pilot program at which existing liquor stores offered beer and wine.  The Commission may also be trying to give the impression of moving forward after a challenging couple years in which controversy and turnover have marred the agency.

The Commission overseas the operation of nearly 250 privately owned liquor stores across the state.  The stores own and operate the stores, but the OLCC retains title to the distilled spirits until they are sold.  The liquor stores retain a percentage of each sale.

Any talk of privatization in Oregon sits in the shadow of Washington’s mixed results.  Sales of spirits at Oregon liquor stores near the Washington border have spiked since Washington’s privatization and Washington consumers have voiced concerns about the result.  In addition, much of the cost savings of privatization in Washington stemmed from getting state employees that worked at Washington liquor stores off the state payroll.  In Oregon, they are already are–liquor store employees are paid directly by the retail agent and operator of the store.

An privatization effort would need to be well thought out and executed to have any chance at success.  While the OLCC has had its challenges, new OLCC chairman Rob Patridge’s legislative experience and pragmatism could be just what the Commission needed.  Given this backdrop, the selection of the OLCC’s next executive director, a position vacant since Steve Pharo retired last October, could be pivotal in charting the agency’s future direction.

 

 

 

Rulemaking Regarding Prohibited Interests for OLCC Commissioners and Staff

Laws & Rules, OLCC

Commission staff are recommending changes to OAR 845-004-0001 regarding the prohibited interest set out in ORS 471.710(2) applicable to OLCC commissioners and staff.  The primary substantive change is to expressly set out the exemption for the food and beverage industry commissioner.  The other proposed changes are primarily to clarify the nature of the prohibitions, the disclosure requirements, and process for addressing such prohibited interests.

Generally speaking, the rule achieves its stated goal and ensures that the Commission and its staff will continue to safeguard the public and fulfill the Commission’s other regulatory interests without being subject inappropriate interests.

For more information about this rulemaking, click here.

Change to Age Verification Equipment Rule Effective October 1, 2013

Laws & Rules, OLCC, ,

Oregon licensees may elect to purchase age verification equipment (“AVE”) instead of receiving the standard sanction for a first or second Category III or III(a) under certain circumstances.  The licensee must purchase and use the AVE in order to qualify for the reduced sanction.  The change clarifies the definition of “equipment” and does not represent a material change in OLCC practice.

For more information about the rule change, click here.

Proposed Changes to the OLCC’s Service Permit Denial Criteria

Laws & Rules, OLCC, ,

The OLCC is in the process of clarifying and streamlining its rules that specify when the agency has a basis to deny a service permit application and when “good cause” exists for overcoming such denial criteria. The proposed changes are consistent with the OLCC’s regulatory goals and should not be unduly burdensome to future service permit applicants.

The denial criteria would be broken into three general categories:

1. Felony Convictions.
2. DUII’s and Liquor Law Violations.
3. Habit of Using to Excess.

Felony convictions that could serve as a basis for denying a service permit application include convictions involving drugs, violence, or driving while suspended. The rule is drafted broadly to include such convictions under both Oregon and non-Oregon law. The Commission would look back two years for individuals with a single felony conviction and four years for multiple felony convictions from the date that the Commission receives an application.

DUII and liquor law violations include both felony and misdemeanor convictions. The rule is drafted broadly to include convictions related to or involving alcohol generally. The Commission would deny an application if the applicant had two or more such violations provided that at least two of them occurred within four years of the date that the application was received.

The Commission will determine that the applicant has a “habit of using to excess” based on a number of factors. The Commission will deny a service permit if the applicant has two or more drug or DUII convictions, or diversions, provided that at least two of incidents occurred within five years of the date the Commission received the application and at least one occurred within the last 12 months.

“Good Cause” largely would turn on whether the applicant had a drug or alcohol addiction problem at the time of the incidents that are the basis for the denial criteria. The applicant would have the burden of establishing good cause by providing the following:

1. Evidence of drug or alcohol addiction problems;
2. Sworn statement that the applicant has not used alcohol or controlled substances in the preceding 12 months;
3. Written proof of completion of a treatment program and continuing compliance with any treatment recommendations; and
4. Evidence that the applicant is complying with any probation requirements (if applicable).

To learn more about the rule making, click here.

Next Director of the OLCC is Still Uncertain

OLCC

Uncertainty still surrounds the appointment of a new Executive Director of the OLCC. Merle Lindsey was named the Interim Executive Director of the OLCC by the Commissioners on October 25, 2012. The Commission appointed him to this position after former Executive Director Steve Pharo announced his retirement, which was in part precipitated by a public falling out with Governor Kitzhaber regarding a number of issues. The OLCC has posted the position at least twice since then, but has been unable to fill the position.

Last week, Governor Kitzhaber publicly recommended Kendall Clawson for the position. Kendall is currently the Governor’s executive appointments secretary and received a strong endorsement from the Governor. Now, less than a week later, Kendall has withdrawn her name from consideration without further explanation.

The OLCC will need to continue its search for a new executive director. This is particularly pressing after Rudy Williams retired in April of this year as the Public Safety Director, after being put on administrative leave in March 2013, and the Chair of the OLCC Commission, Cassandra Skinner, recently resigned effective June 30th.

Increase in Penalties for Certain Types of Unlawful Activity: A Recent OLCC Rule Change

Compliance, Laws & Rules, OLCC

The OLCC recently adopted amendments to OAR 845-006-0347 that increased the sanctions for certain types of unlawful activity that a licensee permits to occur on the licensed premises. Before the amendment, violations involving permitting unlawful activity on the premises were category III violations. Now, violations that involve death, serious physical injury, use or attempted use of a deadly weapon, or certain sexual offenses are category I violations. Violations that involve the use of a dangerous weapon with intent to cause death or serious physical injury are category III violations.

What does this mean to licensees? If a situation arises in which any of the types of unlawful activity described above appear imminent or are occurring, licensees should take immediate action to prevent them from occurring. Hoping that the situation will resolve itself or waiting to call the police until it’s too late can result in serious consequences. Licensees that have reason to believe that patrons may be brining weapons onto their premise may want to consider policies that ban weapons on the premises and the use of screening methods to prevent patrons from bringing them into the premises. Establishing solid house policies coupled with consistent training can help prevent problems, including those addressed by this rule.

Allowing OLCC Inspectors Access to the Premises: a Recent Rule Change

Compliance, Laws & Rules, OLCC

The OLCC recently amended OAR 845-006-0345 to set a uniform standard for when licensees must allow OLCC inspectors and police officers to enter the premises to conduct a reasonable search to ensure compliance with Oregon’s alcoholic beverage laws. In short, a licensee must allow an OLCC inspector or police officer to enter the premises if they identify themselves and desire to enter the licensed premises. If the premises is or appears to be closed, the law enforcement officer must have a reason to believe an alcoholic beverage law violation is occurring. In addition, after the law enforcement officer is on the licensed premises, the licensee must allow the officer to conduct a reasonable search before asking them to leave the premises.

A violation of these prohibitions is a category II violation. Violations are divided into five categories with a category I violation being the most serious and a category V violation being the least. The proposed penalty for a violation is based on the category of the violation and is more harsh for more serious violations. In addition, the OLCC has adopted an escalating penalty schedule in which the suggested sanction for each successive violation in the same category within a two year period is increasingly harsh. For example, the proposed penalty for a first category II violation is a 30 days suspension. The proposed penalty for a second category II violation within a two year period is cancellation. Although the penalties proposed by the penalty schedule are suggestions, the penalties imposed by the OLCC often closely track those set out in the penalty schedule.

What’s the take away here? Licensees are responsible for the acts and omissions of their employees and agents while acting on behalf of the licensee. At a minimum, licensees should discuss these prohibitions with their staff to make sure that they understand when they need to allow law enforcement officers into the licensed premises. The proposed penalty for a first violation of these prohibitions is a 30 day license suspension and could have a serious impact on the continued success and operations of a business. The best practice is to address this issue in a house alcohol service policy that is reviewed and signed by all employees.

Disclaimer. This is for information purposes only and is not intended to and does not constitute legal advise. Please contact an attorney if you have any questions or concerns.