Shortening NYSLA's Long Arm: Senate Bill 7728
/On Thursday, New York State Senator Phil Boyle introduced legislation that would limit the circumstances under which the State Liquor Authority (“NYSLA”) may penalize licensees[1] for perceived violations of other states’ laws.[2] The measure, Senate Bill 7728 (S.7728), is currently under consideration in the Committee on Investigations and Government Operations. If you are experiencing déjà vu, you are not crazy; similar legislation was introduced last year in response to the Empire Wine interstate alcohol shipment controversy.
Albany-based wine retailer Empire Wine (“Empire”) challenged NYSLA’s authority in 2014 when the licensing body tried to revoke the popular wine seller’s license for violating other states’ wine shipment laws. The long, tortuous dispute, which began as a routine administrative proceeding, made its way into state court, into the Legislature, and into the court of public opinion. Empire sued NYSLA, alleging that it had overstepped its jurisdiction, and when an Albany County Supreme Court justice dismissed the lawsuit, the retailer tried to change the law. Empire advocated for the passage of Assembly Bill 5920A (A.5920A), which would have curbed NSYLA’s jurisdiction over out-of-state activity. The bill sailed relatively smoothly through the Legislature but was vetoed by the Governor in a political anticlimax.
Like A.5920A, S.7728 is intended to clarify the basis upon which NYSLA may revoke, suspend, or cancel a license or permit for conduct that occurs outside of New York.[3] S.7728 is slightly less restrictive of NYSLA’s authority, though. In short, the bill would allow NYSLA to punish a licensee if:
- The licensee’s conduct violates a specific provision of New York’s Alcoholic Beverage Control Law;
- The licensee is found guilty of violating another state’s laws or regulations by that state and with due process;
- Another state notifies the licensee that its conduct violates that state’s law and asks the licensee to stop, but the licensee knowingly and repeatedly engages in the illegal conduct;
- The licensee has knowingly made illegal sales to minors in another state; or
- The licensee has failed to pay taxes in a state where taxes are owed.
The third, fourth, and fifth conditions did not appear in A.5920A, and the second condition has been broadened to include not just criminal convictions, but violation of any state law or regulation. These changes are likely intended to address the Governor’s concerns about “entities intent on breaking other states' laws, avoiding other states' legitimately imposed taxes and regulations, and selling to minors with impunity.”
It will be interesting to see how far S.7728 advances during this session, as well as what other legislation is introduced. The recommendations of the Governor’s Alcoholic Beverage Control Law Working Group were released last month, and the Alcoholic Beverage Control E-Commerce Task Force continues its work, so more comprehensive policy changes are on the horizon. Stay tuned for updates.
For more details on the Empire Wine saga, click the “Empire Wine” tag below.
[1] For the sake of simplicity, I am using "licensees" to refer to both license holders and permit holders.
[2] Oddly, the sponsor’s memo also indicates that the bill “establishes standards in statute for the delivery of alcoholic beverage.” Perhaps the bill will be amended at a later date to include these standards.
Source: NYSenate.gov
[3] It would do so by clarifying the definition “for cause” found in Section 118 of the Alcoholic Beverage Control (“ABC”) Law, which Empire challenged in its lawsuit as unconstitutionally vague.
