Administrative Process: Adjudication of Alcohol Law Violations

Enforcement is designed to increase the perceived likelihood that a violation will be detected, which is a key component of deterrence. Adjudication addresses the remaining two deterrence variables–the certainty and swiftness of a penalty being imposed and the extent of that penalty. As discussed above, the interplay between these three deterrence variables determines the effectiveness of an enforcement strategy in promoting compliance with the law (Ross, 1992). Deterrence-based penalty structures need to ensure that the costs of violating the law significantly outweigh the benefits obtained. If the penalties assessed are not sufficiently severe and are seldom imposed, then a simple cost-benefit analysis may result in a calculation that the assessed penalties are an operating cost of doing business.

Our research suggests that penalties for alcohol law violations are far from certain and, when imposed, are not severe enough to deter future violations. These findings are consistent with other studies. For example, a study of law enforcement officers’ views of the enforcement of minimum drinking age laws revealed that, for many officers, “the perception that punishment is insufficiently certain and severe appears to lead to a sense that their enforcement efforts in this area amount to a waste of time” as it relates to violations for underage alcohol possession. Officers reported that they would support increased penalties for merchants who violate the law as well (Wolfson, et al., 1995: pp. 434-435).

The certainty and swiftness of a penalty being imposed is affected by the adjudication procedures used to determine whether a violation occurred. Alcohol enforcement agencies are responsible for enforcing violations of both administrative and criminal laws. These often overlap in terms of what is prohibited, but their adjudication involves distinct procedures and agencies. Criminal laws are enacted by statute and are adjudicated through the criminal courts, while administrative laws and regulations are usually adjudicated by executive agencies under authority granted by the State legislatures. Criminal convictions are considered far more serious, as they reflect moral approbation and potentially serious restrictions on individual freedom. Convictions in criminal courts therefore involve more formal legal procedures and a heavier burden of proof than findings of a violation in administrative hearings. Administrative violations, on the other hand, usually do not carry heavy moral overtones and involve restrictions on one's ability to do business under a State or local license – through fines or suspensions/revocations of one's license. For these reasons, administrative hearings are more effective in promoting deterrence, since they usually take less time and are more likely to lead to a penalty.

In the alcohol enforcement context, the same violation may potentially lead to both a criminal and administrative action. For example, in a case where a clerk sells alcohol to a minor, the clerk may be charged criminally for making the sale, and the licensee may be charged criminally and/or administratively for the same violation. The criminal case will be transferred to the relevant district attorney's office. The administrative case will be handled by an agency assigned this responsibility, often within the same agency that is responsible for the administrative law's enforcement.

Each State has developed its own process for adjudicating administrative violation cases. These hearings are typically quasi-judicial in nature and provide licensees due process that can, ultimately, be appealed through a State’s court system. Administrative hearings may be held in front of hearing officers, administrative law judges, or an ABC Commission. In some cases, hearing findings must be appealed to another administrative level before a court appeal is allowed. Several State agencies also have the authority to review, or act as the board of appeal for local government license actions (Reitz, 1998). The States vary widely in their administrative adjudication process, and as the above discussion suggests, many have created complex procedures that hamper the agencies’ ability to impose penalties in a swift and certain manner.

Determination of Administrative Penalties
Almost every State reserves the right to fine, suspend, or revoke a license. As the most severe penalty, revocations are rare in most States and usually only occur with very serious or multiple offenses. Suspensions may also be reserved for repeat offenders and, in many States, violators may choose a set fine as an alternative to a suspension. Fines are the most common and least severe penalty. Many States have statutes and regulations that determine the maximum administrative penalty for each type of violation. Since preventing youth access to alcohol is an area of high priority for both public health and alcohol beverage control agencies, we reviewed administrative penalty guidelines for violations of State sales to minors laws. The table in Appendix C documents the wide variation in administrative penalties that can be imposed for this type of violation, both under statute and through formal and informal penalty guidelines. Highlights from the table include:

  • There is a range of allowable maximum fines for a first offense of sales to a minor from $50 up to $10,000.

  • In at least 20 States, there are no specific penalty guidelines.

  • Seven States have penalty guidelines that differ significantly, either in scope or specificity, from statutory maximum penalties.

  • Thirteen States have clearly identified and specific penalty guidelines, yet have no clearly identified maximum statutory penalty.

  • At least three States set maximums far above any penalties actually imposed.

Many States have penalty guidelines that are much lower than first offense maximums as defined by statute, and several penalty guidelines appear to allow broad latitude in deciding the exact penalty. While in most cases, the States do not, by statute or regulation, define what constitutes mitigating or aggravating circumstances, there are States that have provided a clear definition of these areas (e.g., Washington, Oregon). By providing definitions of these categories, both the licensees and the general public have a clearer understanding of the severity of the penalty imposed based on the circumstances.

There are States in which the statutes mandate revocation, but interviews reveal that, in practice, revocations infrequently occur for first or even subsequent offenses. In addition, there are States in which revocations, even for multiple violations, are not permitted by statute. In the majority of States, suspensions may be issued, but retailers are often given the option to pay a fine instead of serving the suspension. Usually these fines are much less than the revenue that would be lost through a sales suspension. The time range for a repeat offense also varies across the States. A second offense in one State may have to occur within one year of the first offense to count as a subsequent offense with an increasingly severe penalty, while a retailer in another State may have a subsequent offense count as a second violation within a time period of up to five years. Clearly, retailers benefit from having a short time period in which repeat offenses count as a subsequent violation.

Our researchers attempted to determine what penalties States impose, but found that this information was almost impossible to obtain. Some States have proactively begun to list their case dispositions on their Web sites (e.g., Colorado, Michigan, Minnesota, Missouri, Nebraska, Washington, and West virginia), but, even in these cases it was difficult for the researchers to determine the penalty imposed. In some cases, the number of days suspended was listed, but it was clear that the retailers paid a fine instead of serving the suspension. The interviews with law enforcement officials also revealed that, in many cases, the agents are not aware of the final outcomes of the cases they have submitted for adjudication. In many States, enforcement agents may be able to look up a single case and know what the case disposition was, but they can not provide summary statistics that show average number of fines, suspensions, etc., per type of violation. Thus, we are unable to provide accurate information on the status of actual penalties imposed at this time. The absence of this data is problematic as it may weaken the ability of ABCs to evaluate their adjudication processes. The most effective penalties and the circumstances under which they are strongest are unclear.

In summary, our research found that:

  1. Statutory maximum penalties bear little relationship to penalty guidelines;

  2. Penalty guidelines are broad and, in many States, lack definition of aggravating and/or mitigating circumstances;

  3. There is little relationship between penalty guidelines and penalties imposed; and

  4. Poor record keeping makes data analysis difficult.