Montana Administrative Register Notice 42-1037 No. 17   09/10/2021    
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In the matter of the amendment of ARM 42.12.208 pertaining to temporary operating authority for alcoholic beverage license applicants







TO: All Concerned Persons


1. On October 4, 2021, at 10:30 a.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment of the above-stated rule. The conference room is most readily accessed by entering through the east doors of the building.


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, please advise the department of the nature of the accommodation needed, no later than 5 p.m. on September 17, 2021. Please contact Todd Olson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or todd.olson@mt.gov.


3. The rule as proposed to be amended provides as follows, new matter underlined, deleted matter interlined:


42.12.208 TEMPORARY OPERATING AUTHORITY (1) An applicant may be granted temporary operating authority if the premises were licensed within the last 12 months, the premises were not altered from the last floor plan, and the applicant has submitted an application meeting the requirements of ARM 42.12.101. The department may grant an applicant temporary operating authority, as provided in 16-4-404, MCA, only for the transfer of ownership of a license. The applicant must submit an application meeting the requirements of ARM 42.12.101 and intend to operate the licensed business pending final approval.  The department may not grant temporary operating authority on an application for an original license or when there is a proposed change of location.

(2) and (3) remain the same.

(4) In the event liens, attachments, or judgments have attached to the license prior to September 1, 1990, the department will not grant an extension beyond the initial 45 days. Beginning September 1, 1990, new liens, new attachments, or new judgments that have attached to a license do not affect the issuance of temporary operating authority. The recorded owner of the license must resume operation of the business conducted under the license in cases where the temporary operating authority has expired and cannot be extended.

(5) and (6) remain the same.


AUTH: 16-1-303, MCA

IMP: 16-4-404, MCA


REASONABLE NECESSITY:  The department conducted a periodic legal review of ARM 42.12.208 in connection with an Alcoholic Beverage Control Division analysis of license transactions that involve the issuance of temporary operating authority for the purchaser of an alcoholic beverages license. Based on these reviews, the department finds ARM 42.12.208(1) does not conform with the rule's authorizing statute, 16-4-404, MCA, and the department proposes to amend (1) to resolve this substantial, yet unintended, disparity. The last sentence in 16-4-404(6), MCA, clearly restricts temporary operating authority to those license transactions involving an ongoing business where there has not been a change in location:


"The department may, within its discretion, permit a qualified purchaser to operate the business to be transferred pending final approval if there has not been a change in location and the application for transfer has been filed with the department."


16-4-404, MCA (emphasis added).


The department proposes to strike the current first sentence of (1) and replace it with a restatement of the pre-2014 rule text.  While the department understands this rule change may be met with disagreement, Montana law does not permit the department to maintain this rule without correction. Should the Montana Legislature deem changes to 16-4-404, MCA, and temporary operating authority advisable, the department will directly implement the enacted legislation.


The department has ceased the issuance of temporary operating authority for original license and transfer of location applications.


Lastly, the department proposes to remove the first two sentences of (4) because the provisions are obsolete. When the amendments to (4) were originally adopted in 1990 (June 28, 1990), banks and other valid lienholders did not have any statutory security interest provisions and the department was amenable to addressing security interest issues involving alcoholic beverages licenses. Since that time, 16-4-801, MCA, was enacted (in 1999, last amended in 2017) and rule provisions like those found in ARM 42.12.208(4) only confuse applicants, licensees, and secured parties, and its removal is necessary and advisable.


            4. 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: Todd Olson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail todd.olson@mt.gov and must be received no later than 5:00 p.m., October 12, 2021.


5. Todd Olson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.


6. 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 notice regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in number 4 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.


7. An electronic copy of this notice is available on the department's web site at www.mtrevenue.gov, or through the Secretary of State's web site at sosmt.gov/ARM/register.


8. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.


9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rule may significantly and directly impact small businesses. However, the potential impact to small businesses (i.e., the discontinuance of temporary operating authority for certain applicants) is fact-dependent to each license transaction and is not determinable as a whole.



/s/ Todd Olson                                              /s/ Brendan Beatty                                      

Todd Olson                                                   Brendan Beatty

Rule Reviewer                                              Director of Revenue


Certified to the Secretary of State August 31, 2021.


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