Montana Administrative Register Notice 42-1046 No. 16   08/26/2022    
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In the matter of the amendment of ARM 42.12.222 and 42.13.101 pertaining to department procedures involving penalties against alcoholic beverages licenses








TO: All Concerned Persons


1. On May 27, 2022, the Department of Revenue published MAR Notice No. 42-1046 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 788 of the 2022 Montana Administrative Register, Issue Number 10.


2. On June 22, 2022, a public hearing was held to consider the proposed amendment. The following persons were present and provided oral testimony: Shauna Helfert, Gaming Industry Association of Montana (GIA) and John Iverson, Montana Tavern Association (MTA). Jon Sonju, Hospitality and Development Association of Montana was present but did not provide any oral testimony. The GIA also provided written comments to the department which mirrored Ms. Helfert's oral testimony.


3. The department has amended ARM 42.12.222 as proposed.


4. The department has amended ARM 42.13.101 as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:


42.13.101 COMPLIANCE WITH LAWS AND RULES (1) and (2) remain as proposed.

(3) The department may use a range of progressive and proportional penalties for any combination of violations of any laws, ordinances, and rules. The progressive penalty schedule is not an exhaustive list of the grounds for administrative action. The schedule does not preclude the department's use of discretion to propose a penalty greater or less than those listed based upon aggravating or mitigating circumstances, non-exhaustive examples of which are described in (4) and (5). For purposes of determining penalties under the progressive penalty schedule, the department uses a three-year lookback. Proposed penalties are assessed based upon the date the violation occurs. For violations that occur over time, such as an undisclosed ownership interest, the violation date shall be the date the department issues its notice of proposed department action. If a violation jeopardizes health, welfare, and safety, or there is not a cure in place, tThe department may proceed to revoke or refuse to grant the renewal of a license, concession agreement, or both, only if a violation jeopardizes health, welfare, and safety, or there is not a cure in place.

Progressive Penalty Schedule




1st Violation


Up to a $250 monetary penalty



2nd Violation


Up to a $600 monetary penalty



3rd Violation


Up to a $1,000 monetary penalty, up to a 2-day suspension, or both



4th Violation


Up to a $1,500 monetary penalty, up to a 5-day suspension, or both



5th Violation


Up to a $1,500 monetary penalty, up to a 7-day suspension, or both



Subsequent Violations



In accordance with 16-4-406, MCA

(4) through (6) remain as proposed.


AUTH: 16-1-303, MCA

IMP: 16-1-302, 16-3-301, 16-4-406, 16-6-314, MCA


5. The department has thoroughly considered the comments and testimony received. A summary of the comments received, and the department's responses are as follows:


COMMENT 1: Ms. Helfert commented that the GIA thanks the department for its determination to adjust the penalty schedule to reflect the legislative intent and to simplify the rule. The GIA generally supports the overall concept of the rules and specifically supports the new penalty structure in ARM 42.13.101. The GIA appreciates the statement of reasonable necessity commentary that the department will be better able to match the penalty and fine with the severity of the violation and allow for more flexibility.


RESPONSE 1: The department thanks Ms. Helfert and the GIA for their comments, for their involvement as an alcohol coalition member, and for the valuable input provided in the development of this rulemaking.


COMMENT 2: Ms. Helfert comments that the department's last sentence amendment to ARM 42.13.101(3) misstates the legislative intent of House Bill 705 (HB 705) amendments to 16-4-406(2), MCA. Ms. Helfert contends the department is changing the focus of requirements because of wording variation in the sentence from statute. Ms. Helfert suggests that one-sale-to-minor violation could occur and the department could revoke a license despite her/the GIA's understanding - as communicated to them by the department - that is not the intention of the law or the department. Ms. Helfert requests the department remove the new sentence since it is already stated in law, or if the sentence is necessary, match the language with the law.


RESPONSE 2: The department agrees with Ms. Helfert and the GIA that 16-4-406(2)(b), MCA, clearly states that the department may " . . . proceed to revoke a license or the concession agreement of the concessionaire or both only if the violations jeopardize health, welfare, and safety or there is not a proposed cure in place." The department has revised the sentence structure upon adoption in response to the comment.

As to Ms. Helfert's comments about the department's pursuit of license revocation for a single sale-to-minor violation, the department again responds that 16-4-406(2)(b), MCA, is clear. Although the department cannot readily identify a circumstance where a single sale-to-minor violation would jeopardize health, welfare, and safety or where there is not a proposed cure in place, the Alcoholic Beverage Code provides the framework for the department to determine whether the specific facts and circumstances surrounding an alleged violation warrant a proposal to revoke a license.  Furthermore, Senate Bill 129 (2021) amendments to 16-4-406, MCA, provide additional licensee (and concessionaire) safeguards where a violation was based solely on a contrived event. The department reiterates its response that statute and the revised sentence in (3) of the rule obviates these concerns.


COMMENT 3: Ms. Helfert requests the department remove the second sentence of ARM 42.13.101(3) as unnecessary because the new penalty structure does not list each violation.


RESPONSE 3: The listing of individual violation types from ARM 42.13.101(3), became immaterial with HB 705 amendments to 16-4-406, MCA, but penalties for multiple license violations within the statutorily provided timeframe are still progressive by their nature. 

The department stated in this rulemaking that ". . . the existing progressive penalty schedule does not adequately represent the new penalty structure of 16-4-406(2), MCA," and " . . . penalties are now determined in accordance with a new progressive penalty schedule which allows the department flexibility to consider the public harm of a violation, or lack thereof." Both statements are accurate. Since the request is inconsistent with the construction of the rule, the department declines to remove the sentence or references to the progressive penalty schedule.


COMMENT 4:  Ms. Helfert and the GIA request that new (4) and (5) [sic] of ARM 42.13.101 be removed as they are already described in statute or because they are beyond the department's rulemaking authority.

Ms. Helfert also requests that the beginning of (4) is provided in 16-4-406, MCA, and should be removed from rule on the sole basis of inclusion in the rule.


RESPONSE 4: ARM 42.13.101(4) and (5) are not new rule sections.  ARM 42.13.101(4) and (5) are renumbered rule sections based on the department's amendments in this rulemaking and have remained substantively the same since 2017.  The minor amendments in (4)(c) and (f) add location manager involvement in violations and (4)(g) is statutory deference - all for the reasons stated in the proposal notice.

The department also responds to the GIA and MTA now, as it did in 2017 under MAR Notice No. 42-2-968 (see Notice of Amendment, Comment and Response No. 19)(March 24, 2017)), that 16-4-406(3) and (4), MCA, require the department to consider aggravating and mitigating circumstances and that the department may adjust penalties based upon these considerations.  The department lists additional aggravating and mitigating circumstances in administrative rule to increase transparency.  None of the recent legislative changes to 16-4-406, MCA, have altered these requirements, the statute still maintains its non-exhaustive list of aggravating and mitigating circumstances, and the department must assume that the legislative intent in 16-4-406(4), MCA, for the department's consideration of aggravating and mitigating circumstances in violation penalty matters remains unchanged.

For the same reasons provided in 2017 and in this Response, the department disagrees with Ms. Helfert's comment that the department is somehow exceeding its rulemaking authority through its inclusion of aggravating circumstances in the administrative rule because Ms. Helfert's comment is inconsistent with what is provided in 16-4-406, MCA, and is contrary to 16-1-303(1), MCA ("The department and the department of justice may make rules not inconsistent with this code necessary to efficiently administer this code").

As for Ms. Helfert's request that the beginning of ARM 42.13.101(4) be removed on the sole basis of inclusion in the rule, the department declines to fulfill the request for the reasons provided above and because the inclusion of statutory language in administrative rule is not prohibited.  Section 2-4-305, MCA, provides rules may not unnecessarily repeat statutory language. The department's inclusion and maintenance of statutory language in this rule section is necessary for transparency, context, and attribution to the underlying law.


COMMENT 5:  Ms. Helfert and the GIA provided additional comments relative to ARM 42.13.101(4) and (5), as renumbered, that are opinion, a misreading of the law and rules, or are outside the scope of this rulemaking.

Ms. Helfert commented concerns relative to ARM 42.13.101(4) and (5) on the basis of prejudice, the absence of authorizing language for aggravating circumstances in statute, and due process in violation matters between the department and a licensee.

Ms. Helfert also opined that there are, ostensibly, three types of violations:  a violation without mitigating or aggravating circumstance (a normal run of the mill violation), a violation with mitigating circumstance, and a violation with aggravating circumstance. And as written, once a violation occurs, it is automatically kicked into one of the two special circumstances:  aggravating or mitigating. Ms. Helfert continues that the legislative intent is not to have every violation be mitigating or aggravating; these are left for the extreme circumstances.


RESPONSE 5:  The department generally refers Ms. Helfert and the GIA to Response Nos. 1 through 4 as its responses to the remainder of the aggravating and mitigating circumstances comments raised even if the comments do not correspond directly to the department's proposals.

The department declines to respond in detail to Ms. Helfert's violation observations and conclusions other than her premise and conclusions are incorrect because they are not grounded in statute, rule, or case law (e.g., that violations are "automatically kicked" into the special circumstances). The Alcoholic Beverage Code and the department's rules provide the construct and substance of violations, including the legislative mandate that the department consider aggravating and mitigating circumstances.  Whether aggravating or mitigating circumstances may be applied, as authorized by the Legislature, is determined through a review of the facts surrounding the alleged violation, and is subject to due process and opportunity for a hearing under the Montana Administrative Procedure Act.


            COMMENT 6: At the June 22, 2022 public hearing, Mr. Iverson and the MTA stated on the record their support and concurrence with the testimony of Ms. Helfert on behalf of the GIA and did not provide any additional commentary.


            RESPONSE 6The department thanks Mr. Iverson and the MTA for their involvement as an alcohol coalition member, and the valuable input provided in the development of this rulemaking.

In response to Mr. Iverson's or the MTA's support of shared commentary submitted by Ms. Helfert and the GIA, as discussed above, the department refers Mr. Iverson and the MTA to Responses 1 through 5 as its required responses.



/s/ Todd Olson                                              /s/ David R. Stewart                                    

Todd Olson                                                   David R. Stewart

Rule Reviewer                                              Authorized Signor

                                                                      for the Department of Revenue


Certified to the Secretary of State August 16, 2022.


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