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Finally, Due Process Comes to ABC Licensing

We applaud the City Council for its action this month enacting the “Omnibus Alcoholic Beverage Regulation Amendment Act of 2012,” brought forward by Ward 1 Councilmember Jim Graham’s Committee on Human Services, which he chairs and which has alcohol beverage control oversight jurisdiction.

As Mark Lee has written in his January 11th Washington Blade “Our Business Matters” column, “One thing is clear — the political dynamic has now changed. No longer will self-proclaimed size-shrunk gaggles of the few, purporting to represent the many, hold unbridled sway over entire neighborhoods. Their days manipulating the system to impose their own edicts while abridging fair and consistent application of citywide laws are numbered.”

Our sentiment exactly. And those days are in fact very numbered; the law will take effect before the end of the month.

One of the major reforms addressed by this legislation is a tightening up of processing times between initial filings of new and renewal applications and subsequent protest filings, hearings before the ABC Board, final rulings, and appeals, all of which will go a long way to rein in the hitherto frequent and inordinately dragged-out process.

But what we see as the most significant reform is how this legislation will bring about a reigning in of what had become over the years a hideously abused procedure that allowed a few people to force a business to do their bidding or face such delay and legal expense as to put their enterprise at risk of failure –- even before it could open for business.

We refer, of course, to the so-called “voluntary agreements” that had become a club to extract all kinds of concessions and undertakings unrelated to the sale of alcoholic beverages. As we editorialized a little over nine years ago, “[the] ABC law [must] be reformed to either do away with or substantially modify the ‘voluntary agreement’ business . . . that by the very nature by which these so-called agreements are imposed there is a complete denial of due process and equal protection accorded to the businesspeople who feel compelled to sign. That there can be provisions in the ABC law that gives rise to consistent, DC government-encouraged tearing down of the provisions of the Constitution’s Due Process and Equal Protection clauses is a travesty. This situation cries out for correction.” (See, “City’s Alcoholic Beverage Law Needs Reform,” From the Publisher’s Desk, The InTowner, November 2003;

So, finally, 10 years later the City Council has taken action

The first thing to note is that the Council has stripped away the fiction that these were in any way “voluntary” and are forthwith to be known as “Settlement Agreements” –- clearly a more accurate reflection of what the law intends of these documents.

Section 25-446.02 delineates an extensive list of what are deemed “unenforceable provisions” which are not to be presented to license applicants for acceptance. These include the following set out below.

“Restraints on the ability of an applicant or existing licensee to operate its business, including: (A) Requirements that the ANC or other community members approve future ownership changes; (B) . . . “that the ANC or other community members be notified of intent to transfer ownership; (C) Prohibitions against . . . applying for a change in license class; (D) A requirement that . . . the license class [be change] before selling the license; E) Requirements  prohibit[ing] . . . licensee[s] from applying for changes to licensed operation procedures, including applications for summer gardens, sidewalk cafes, rooftop decks, entertainment endorsements, and changes of hours: “(F) Mandates regarding specific brands of alcohol or pricing for alcohol; (G) Restrictions on the age of patrons; and (H) Requirements [mandating] . . . use a specific company for services;

Further restrictions on what kinds of demands are enforceable, demands that in the past have commonly been imposed but are now deemed no longer to be enforceable, include, among others, requirements that “the applicant or existing licensee attend ANC meetings or other community meetings; . . . (A) Provide money, special considerations, or other financial benefits to the community; (B) Join any group; or (C) Hire local individuals; and . . . Any requirement that contracts, incident logs, or similar documents, be made available to the ANC or other community groups or members.”

What the legislation has retained as legitimate matters for inclusion in these Settlement Agreements are specifically related to the business of an establishment dispensing alcoholic beverages in our urban neighborhoods, matters that directly affect neighbors such as noise, parking, litter and trash, the control of rats and other vermin. And, of course, also included as proper are matters relating to hours of operation and sales and service, number of seats, occupancy and space utilization.

There are numerous other changes and improvements for the benefit of owners and prospective owners of ABC-licensed establishments that are all to the good, including an important restriction on the ability of so-called “gangs of five” — self-appointed small groups of individuals who were able to keep license applications and cases unresolved for years as with the infamous Hank’s Oyster Bar saga about which we reported on at length. (See, “Long-Simmering Hank’s Oyster Bar Dispute Awaits ABC Board Ruling Following Recent Rehearing Mandated by DC Appeals Court,” The InTowner, July 2012, issue PDF page 1;