Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules l through lll, and the amendment of ARM 42.13.101 and 42.13.111 relating to alcohol server training requirements

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION AND AMENDMENT

TO: All Concerned Persons

1. On October 24, 2011, at 9:00 a.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the adoption and amendment of the above-stated rules.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., October 17, 2011, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected].

3. The department is proposing to adopt these new rules and amendments to increase the public's and licensees' understanding of the Responsible Alcohol Sales and Service Act to reflect the statutory requirements made by the 2011 Legislature in Title 16, ch. 4, part 10, MCA. The new rules outline the responsibilities of the department, licensees, and vendors provided in the Responsible Alcohol Sales and Service Act.

4. The proposed new rules do not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rules provide as follows:

NEW RULE I DEPARTMENT RESPONSIBILITIES REGARDING THE ENFORCEMENT OF MANDATORY SERVER AND SALES TRAINING PROGRAMS (1) The implementation and enforcement of the mandatory server and sales training programs within the Responsible Alcohol Sales and Service Act in Montana is under the exclusive authority and jurisdiction of the Department of Revenue.

(2) To comply with and implement the Act, the department will:

(a) develop a standard curriculum;

(b) update the curriculum on an annual basis;

(d) determine testing standards based on an objective evaluation;

(e) conduct train-the-trainer sessions for the standard curriculum or delegate such responsibility to another entity; and

(f) determine specifications for training providers.

(3) The department will:

(a) approve, regulate, and monitor training providers and their curriculum;

(b) review and approve or deny responsible alcohol sales and service training providers within 45 days of a complete application submittal;

(d) provide contact information on the department web site for all approved publicly offered training providers.

(4) The department will develop an electronic tracking system for training providers to input participants' training information.

(5) The department will not provide responsible alcohol sales and service training programs directly to retail sales employees.

(6) The department's goal is to have effective and affordable training widely available through approved training providers in order to achieve public health and safety goals with a trained workforce. Although the department cannot guarantee it will meet these goals continuously, the department will strive to accomplish them based on available resources and the economic environment.

AUTH: 16-4-1009, MCA

IMP: 16-4-1001, 16-4-1002, 16-4-1003, 16-4-1004, 16-4-1005, 16-4-1006, 16-4-1007, 16-4-1008, MCA

REASONABLE NECESSITY: New Rule I defines the scope and responsibilities of the department in regard to the Responsible Alcohol Sales and Service Act enacted by the 2011 Montana Legislature.

The adoption of New Rule I will enable the department to provide consistent, equitable, and timely treatment in the application of the Responsible Alcohol Sales and Service Act, as intended by the Legislature. New Rule I works to remove ambiguity from the process and thus benefits licensees, their employees, responsible sales and service training providers, and the public.

NEW RULE II LICENSEE RESPONSIBILITIES REGARDING THE RESPONSIBLE ALCOHOL SALES AND SERVICE ACT (1) All licensees will be required, as of January 1, 2012, to ensure that all persons who serve or sell alcoholic beverages, their immediate supervisors, and all licensees or owners of licensees who personally serve or sell alcoholic beverages on behalf of the licensee, have completed a responsible alcohol sales and service training class.

(2) Individuals trained within the three-year time period prior to January 1, 2012, by any training provider, will be in compliance with the training requirement provided that the individual has valid proof of training within that period. Such individuals must be retrained within three years from their date of training.

(3) On or after January 1, 2012, employees who do not have current valid proof of training must obtain training from a training provider preapproved by the department. Any training received from a nonapproved training provider does not satisfy the server training requirements of Title 16, ch. 4, part 10, MCA, or these rules.

(4) Employees must receive training within 60 days of hire and every three years thereafter. Licensees or owners of licenses must receive training within 60 days of department approval of their ownership interest if they personally serve alcoholic beverages, or 60 days of when they begin personally serving alcoholic beverages, and every three years thereafter.

(5) Licensees shall maintain proof of training for each employee. If, as a result of a routine check for compliance with 16-3-301, 16-6-304, or 16-6-305, MCA, and 16-4-1005, MCA, the department believes the licensee may be out of compliance, the department may make an examination of the licensee's training or employee records. After reviewing the records, if the department has reasonable cause to believe the licensee is not in compliance with Title 15, ch. 4, part 10, MCA, the department will impose a penalty as provided by law.

(6) Title 16, ch. 4, part 10, MCA, is silent as to whether the licensee or the employee is responsible for the cost of the training. This is to be determined by agreement between the licensee and employee.

AUTH: 16-4-1009, MCA

IMP: 16-3-301, 16-4-1001, 16-4-1002, 16-4-1003, 16-4-1004, 16-4-1005, 16-4-1006, 16-4-1007, 16-4-1008, 16-6-304, 16-6-305, MCA

REASONABLE NECESSITY: New Rule II provides notice to licensees that they are responsible for ensuring that every employee and the supervisor of every employee who serves or sells alcoholic beverages at their licensed premises has completed a responsible alcohol sales and service training class within 60 days of hire and as a licensee they are responsible to maintain these records. The rule also addresses responsibility for the costs associated with the training.

New Rule II establishes the status of employees with valid proof of training received prior to January 1, 2012, and clarifies that employees trained prior to that date must receive training again within three years of their training date.

New Rule II will benefit liquor licensees, their employees, responsible sales and service training providers, and the public, by making it clear who is required to be trained and who is responsible for maintaining the training certifications.

NEW RULE III TRAINING PROVIDER RESPONSIBILITIES REGARDING THE RESPONSIBLE ALCOHOL SALES AND SERVICE ACT (1) In order for a responsible alcohol sales and service training curriculum to be valid for purposes of Title 16, ch. 4, part 10, MCA, and these rules, the training provider must submit its curriculum to the department for approval. All training providers shall meet the following submittal requirements for approval. In order to have their curriculum approved, a training provider must submit:

(a) a hard copy of the curriculum and student workbook;

(b) a hard copy of the trainers' workbook or guide;

(d) a hard copy of the course exam along with the answer sheet;

(e) a hard copy of any training supplement for specific Montana state information;

(f) a hard copy of the program proof of completion document issued to participants; and

(g) a copy of all videos or other visual aids used in the training program.

(2) The department strongly encourages the use of an interactive discussion format for both classroom and online curriculums.

(3) The department encourages the use of community-based expert presenters during the training, e.g., a law enforcement officer to present information regarding false identifications, a health expert to present information pertaining to how alcohol affects the body, and an attorney to present potential liability and penalty issues.

(4) If submitting an online program, the training provider must also make the program in its online format available for the department to review.

(5) The training provider must provide the contact information to be listed on the department's web site regarding the training provider including:

(a) company name;

(b) address;

(d) e-mail; and

(e) web site addresses.

(6) In order for a responsible alcohol sales and service training curriculum to be approved by the department, the curriculum must provide at least three hours of instruction and meet course minimum standards to include the following content:

(a) the effects of alcohol on the human body, to include behavior cues and absorption rate factors;

(b) information, including but not limited to, a review of Montana alcoholic beverage laws and criminal, civil, and administrative penalties related to 16-3-301, 16-6-304, and 27-1-710, MCA;

(c) an explanation of the three types of liability, their full consequences, and the importance of not selling or serving to underage and intoxicated persons;

(d) procedures for checking identification and the acceptable forms of identification;

(e) procedures for gathering proper documentation that may affect the licensee's liability, including maintaining an incident log, training records, licensee's policies, and conditions of employment;

(f) training for handling difficult situations, such as persons who exhibit uncooperative, disruptive, or intimidating behavior;

(g) evaluation techniques regarding intoxicated persons or others who pose a potential liability, and recommend approaches for refusing sales or service;

(h) a final test that includes questions concerning alcohol and its effect on the body and behavior, recognizing and dealing with the problem drinker, Montana liquor laws, and terminating service;

(i) participants must pass the final test with a minimum score of 85 percent;

(j) the portion of the final test concerning Montana liquor laws must consist of uniform questions approved by the department; and

(k) to keep the integrity of training, the program should have different final tests that are used randomly.

(7) The curriculum must be delivered in a manner that accomplishes results based on an empirical objective evaluation and the department may periodically conduct a review of approved training to ensure it meets the minimum standards.

(8) The department will continually strive to improve the effectiveness of both the training and the testing and will consider, among other factors, the future rate of violations by servers who have undergone each type of training and testing. If the department determines that a particular training or testing method is less successful than others, the department may require improvements in the less successful training or testing methods, or choose to not continue certification of such training.

(9) Training providers must resubmit their curriculum to the department every two years for approval.

(10) Based on the criteria within this rule, training providers approved prior to its adoption must seek and obtain re-approval within 90 days of the rule's effective date. Training providers approved prior to the effective date of this rule may continue to provide training within the 90 days following the effective date while they are seeking the department's re-approval. Any previous approval by the department will otherwise expire 90 days following the adoption of this rule.

(11) Course exams must be graded by the training provider and not the individual trainer who instructed the course participants.

(12) Proof of training must be issued by the training provider and not the individual trainer who instructed the course participants.

(13) Within 30 days of each training session, training providers must:

(a) issue a certificate to each participant who successfully completed the training and passed the test that includes:

(i) full name;

(ii) date of birth; and

(iii) date of training.

(b) provide electronic notification to the department, in a format prescribed by the department, the following information for all participants:

(i) the training provider's name;

(ii) the date of training;

(iii) the type of training (i.e., online, classroom, or both);

(iv) the participant's full name;

(v) the participant's date of birth;

(vi) the last four digits of the participant's social security number (SSN) or if no SSN exists, an alternative such as a visa or passport number; and

(vii) the participant's passing or failing score.

AUTH: 16-4-1009, MCA

IMP: 16-3-301, 16-4-1001, 16-4-1002, 16-4-1003, 16-4-1004, 16-4-1005, 16-4-1006, 16-4-1007, 16-4-1008, 16-6-304, 16-6-305, MCA

REASONABLE NECESSITY: Proposed New Rule III establishes the process training providers will need to follow in order to receive department approval for their training, outlines the required content for the training, and defines the responsibilities of the training providers.

New Rule III is necessary to ensure consistent and equitable standards for all training providers, works to remove ambiguity from the training requirements, and thus benefits licensees, their employees, responsible sales and service training providers, and the public.

To effectively increase the public health and safety, the department will partner with training experts to determine the minimum standards for the training curriculum, methods of training, and testing to ensure the desired behavioral outcomes are achieved.

5. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

42.13.101 COMPLIANCE WITH LAWS AND RULES (1) and (2) remain the same.

(3) The department will impose progressive penalties for multiple violations of any laws, ordinances and rules within any three-year period unless mitigating circumstances indicate the penalty should be reduced, or aggravating circumstances indicate the penalty should be increased. Violations and progressive penalties include, but are not limited to, those listed on the following chart. Any combination of four of the violations listed below occurring within a three-year period could result in a license revocation action.

Violation

1st

Offense

2nd

Offense

3rd

Offense

4th

Offense

Sale to an

~~Minor~~ Underage Person

$250

$1000

$1500/20-day

Suspension

Revocation

Sale to an Intoxicated Persons

$250

$1000

$1500/20-day

Suspension

Revocation

Open after

Hours

$150

$600

$1000/12-day

Suspension

Revocation

Sale after

Hours

$150

$600

$1000/12-day

Suspension

Revocation

Re-pouring

$250

$1000

$1500/20-day

Suspension

Revocation

Denial of Right to Inspect

$150

$600

$1000/12-day

Suspension

Revocation

No Approval to Alter

$300

$600

$1000/12-day

Suspension

Revocation

No Management Agreement

$150

$600

$1000/12-day

Suspension

Revocation

Improper use of Catering Endorsement

$150

$600

$1000/12-day

Suspension

Revocation

Accept more than 7 Days credit

$250

$1000

$1500/20-day

Suspension

Revocation

Extend more than 7 Days Credit

$250

$1000

$1500/20-day

Suspension

Revocation

Licensee or employee without valid alcohol sales and service training certificate

Penalty for violations of this type as specified by (7) and by statute. Revocation for fourth violation.

Undisclosed Ownership Interest

Fine, Suspension or Revocation

90-Day Nonuse Without Approval

~~lapse~~ Lapse

(4) through (6) remain the same.

(7) A penalty for a licensee or licensee's employee not having a valid alcohol server training certificate shall be assessed against the licensee for whom the employee works at the time of the violation. The penalty for this violation is imposed against the licensee, and the licensee having multiple untrained employees on a particular date shall not be considered multiple violations; however, continued noncompliance on a future date may be considered as an additional violation of the server training requirement. The penalty shall be assessed in addition to any penalty for other Montana alcoholic beverage code violations such as sales to underage persons and/or sales to intoxicated persons, and the violation will be considered a separate violation by the department. Penalties for not having valid alcohol server training certificates may be taken into account based on the mitigating factors described in (8) when determining a licensee's total number of violations in a three-year period for purposes of the progressive penalty schedule in (3). However, the monetary penalty for each server training certificate violation shall be $50 for a first offense, $200 for a second offense, and $450 for a third office in a three-year period.

(a) Example: If a licensee has one previous violation for sale after hours, and later violates the training certificate provision, the licensee will be penalized $50 for the training certificate violation, although the violation will be considered a second violation on the licensee's record. Then, if the licensee commits another violation within the same three-year period (for instance, a sale to an underage person), the penalty for that violation will be a third-violation penalty.

(8) Mitigating circumstances with regard to Title 16, ch. 4, part 10, MCA, are considered as follows:

(a) The mitigating circumstances provisions of 16-4-1008, MCA, apply only to violations of Title 16, ch. 4, part 10, MCA, and not to other violations.

(b) Neither cost nor convenience of training shall be considered by the department to excuse any licensee from compliance with the requirements of Title 16, ch. 4, part 10, MCA, and these rules.

(c) Any violation of 16-4-1005, MCA, occurring prior to April 1, 2012, will not be taken into account in determining the licensee's number of violations in a three-year period.

(d) In the department's discretion, a violation of 16-4-1005, MCA, occurring on or after April 1, 2012, may not be taken into account in determining the licensee's number of violations in a three-year period if:

(i) all managers and supervisors of persons who serve or sell alcoholic beverages meet the training requirements;

(ii) the licensee demonstrates to the department's satisfaction that its business policies and practices reflect substantial compliance with the server training requirements such that it is apparent the violation was the result of an oversight or mistake; and

(iii) the licensee has committed no previous violations of 16-4-1005, MCA.

~~(7)~~(9) Mitigating circumstances in the case of sale to ~~a minor~~ an underage person could result in a reprimand for the first offense under Title 16, MCA, within the most current three-year period if the licensee has provided alcoholic beverage service training acceptable to the department to all of its employees and reinforces that training with each employee at least every two years. The licensee must demonstrate that the person who made the sale to a minor has completed alcoholic beverage service training prior to the department considering issuance of a reprimand. A written reprimand will be considered a first offense for the application of the progressive penalty schedule only if the licensee commits the same offense again within one year. The written reprimand in lieu of a violation shall be available only one time per licensee.

(8) remains the same but is renumbered (10).

~~(9)~~(11) Aggravating circumstances include, but are not limited to:

(a) no effort on the part of a licensee to prevent a violation from occurring;

(b) a licensee's failure to report a violation at the time of renewal;

(d) recurring sales to underage persons or sales to intoxicated persons;

~~(d)~~(e) a licensee's failure to timely respond to requests during the investigation of a violation; and

~~(e)~~(f) a violation's significant negative effect on the health and welfare of the community in which the licensee operates.

~~(10)~~(12) If the violation discovered is an undisclosed ownership interest, the department will consider aggravating circumstances described in ~~(9)~~(10) and mitigating circumstances such as voluntary disclosure of relevant facts in determining the appropriate penalty.

(11) remains the same, but is renumbered (13).

AUTH: 16-1-303, 16-4-1009, MCA

IMP: 16-3-301, 16-4-406, 16-4-1001, 16-4-1002, 16-4-1003, 16-4-1004, 16-4-1005, 16-4-1006, 16-4-1007, 16-4-1008, 16-6-305, 16-6-314, MCA

REASONABLE NECESSITY: The department is proposing to amend ARM 42.13.101 to reflect the passage of Title 16, ch. 4, part 10, MCA, (Senate Bill 29) by the 2011 Legislature. Title 16, ch. 4, part 10, MCA, provides for graduated penalties for licensees whose employees do not have valid alcohol server training certificates. Title 16, ch. 4, part 10, MCA, provides that the penalty may only be assessed against licensees if the licensee's failure to comply with server training requirements is discovered as a result of a compliance check. The department is proposing to amend the rule to enhance licensee's and the public's understanding of the new law, and how the penalty will be applied. This will also eliminate licensee confusion as to when a penalty may be assessed.

In addition, the department is proposing amendments to enhance the public's understanding of who will be responsible for violations of server training certification recordkeeping requirements, since the servers in the industry tend to move among licensees. This will eliminate confusion among licensees about who is responsible for maintaining certification of the licensed enterprise when there is a mobile workforce.

The terminology of "sales to minors" is being changed to "sales to underage persons" to accurately reflect that persons aged 18-20, in addition to those minors under 18, may not be provided alcoholic beverages.

With the proposed addition of new (8) to ARM 42.13.101, the department is making clear its interpretation of the plain language of Title 16, ch. 4, part 10, MCA, which provides that the mitigating circumstances described therein, apply only to server training violations and not to other violations of the Montana Alcoholic Beverage Code within the department's administrative rules.

In addition, the proposed rule describes when the violations for failure to comply with the Responsible Alcohol Sales and Service Act are included in determining the licensee's number of violations in a three-year period. Prior to April 1, 2012, a licensee will only be assessed the corresponding penalty without it being considered in the total number of violations for the licensee. Violations occurring on or after April 1, 2012, will not be included in the total number of violations in a three-year period if the licensee demonstrates all managers and supervisors of persons who serve or sell alcoholic beverages meet the training requirements, that its business policies and practices reflect substantial compliance with the server training requirements such that it is apparent the violation was the result of an oversight or mistake, and the licensee has committed no previous violations of the Act. Otherwise, the violation will be included in the total number of violations for the licensee within a three-year period. This is needed to help reconcile the penalties and mitigating circumstance language of the Responsible Alcohol Sales and Service Act with other penalties. The intent of the department is to first provide an adjustment period to April 1, 2012. After April 1, 2012, the department's intent is to ensure that licensees who demonstrate their cooperation with the Responsible Alcohol Sales and Service Act do not incur the same consequences as those who are not in compliance with the Act.

Finally, the department is proposing to amend the reference to aggravating circumstances to specifically include recurring violations of sales to underage persons and sales to intoxicated persons, to reflect the department's actual established practices. This proposal does not represent a change in policy or practice.

42.13.111 DEFINITIONS The following definitions apply to this subchapter:

(1) through (9) remain the same.

(10) "Proof of training" means a printed copy of a training certificate, wallet card, or online verification of completion of training received from the training provider.

(10) and (11) remain the same but are renumbered (11) and (12).

(13) "Training providers" means a company or organization that has a responsible alcohol sales and service training program.

AUTH: 16-1-303, 16-1-424, 16-4-1009, MCA

IMP: 16-1-424, 16-3-302, 16-3-311, 16-4-312, 16-4-404, 16-4-406, 16-4-1001, 16-4-1002, 16-4-1003, 16-4-1004, 16-4-1005, 16-4-1006, 16-4-1007, 16-4-1008, 16-6-104, MCA

REASONABLE NECESSITY: The department is proposing to amend the definitions rule, ARM 42.13.111, to enhance the public's, the licensees' and the responsible alcohol sales and service training providers' understanding of the terms that are being used in the new and amended rules in this chapter. By defining the new terms "proof of training" and "training provider," the department makes it clear what these two new terms mean, which should eliminate any potential confusion for the licensees, the trainers, and the public.

6. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected] and must be received no later than October 28, 2011.

7. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

8. An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov. Locate "Legal Resources" in the left hand column, select the "Rules" link and view the options under the "Notice of Proposed Rulemaking" heading. The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

9. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the person in 6 above or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor of Senate Bill 29, Senator Lynda Moss, was notified on July 5, 2011, and subsequently on August 23, 2011, by regular mail.

/s/ Cleo Anderson /s/ Dan R. Bucks

CLEO ANDERSON DAN R. BUCKS

Rule Reviewer Director of Revenue

Certified to Secretary of State September 12, 2011