State legislators scrutinize Pa. liquor control board’s use of sanctions against COVID-19 rulebreakers

• By Chad Umble/LNP | LancasterOnline

In October, Mark Garber decided he had had enough. After nearly two years of appeals, he cut a $1,000 check to cover a fine for keeping his brewpub open in late December 2020 in violation of former Gov. Tom Wolf’s emergency orders meant to limit the spread of COVID-19.

“We finally bit the bullet even though we didn’t agree with it so we could just move on,” said Garber, co-owner of Big Dog Craft Brewing in Manheim Township.

With the citation cleared, Garber said he was able to complete an online renewal for the brewpub’s liquor license, something that had been held up because of the outstanding citation.

“I’m hoping they’re just going to let us alone at this point,” Garber said. “The whole thing still pisses me off. We kind of pushed back just because I didn’t think it was right what they did in the first place.”

While Big Dog Craft Brewing’s COVID-related citations have been paid, COVID-era rule breakers are continuing to face sanctions from the Pennsylvania Liquor Control Board. The three-member board that regulates alcohol sales in the state is still imposing extra requirements on bars and restaurants that violated emergency orders issued during the pandemic. In some cases, owners are required to sell their liquor licenses, effectively putting them out of business. Meanwhile, all enforcement action against restaurants that did not follow COVID rules has been dropped, with none fined or otherwise punished.

The PLCB’s continued use of penalties against liquor licensees that broke temporary rules during the pandemic has prompted some soul searching on the three-member board, which nevertheless has continued the practice, even with two new board members. In recent months, however, some state legislators have taken notice and are calling for the PLCB to change its stance.

“Our focus should be helping these business owners move forward and solving real problems, not pointing fingers and punishing families who faced impossible circumstances that were forced upon them by government officials who weren’t guided by science years ago during one of the most difficult times we’ve faced in recent memory,” state Sen. Scott Martin, a Republican from Lancaster County, told LNP | LancasterOnline.

“We should be focused on the future and not stuck in the past,” Martin said. “It would be wise for the PLCB to end this practice voluntarily without a law having to be passed, some of which are already being introduced.”

Legislators take note
During a Feb. 29 Senate Appropriations Committee budget hearing that Martin chaired, PLCB board members faced questions about their use of conditional licensing agreements against restaurants and bars for infractions during the pandemic.

A conditional licensing agreement is a settlement with a licensee that specifies the conditions that must be met for the license to be renewed. For bars with a history of disturbances, a conditional licensing agreement often mandates the addition of security guards and cameras or requires the bar to install a metal detector. In at least 11 cases of conditional licensing agreements that reference COVID restrictions, the licensee had to sell the license or it would not be renewed. The PLCB’s use of conditional licensing agreements surged for licensees with COVID violations.

“The issue arises when these locally owned establishments renew their license with the liquor control board. It was either sign a conditional licensing agreement or risk further action by the state,” state Sen. Kristin Phillips-Hill, a Republican from York County, said during the hearing. “It seems that now there is a concerted effort to go after these small businesses.”

Phillips-Hill was among the senators who subsequently circulated a memo seeking sponsors for legislation that would expunge COVID-19 related citations from the records of liquor license holders.

“Pennsylvania businesses suffered enough during COVID; continuing to punish them today or in the future isn’t in anyone’s best interest,” read the March 25 co-sponsor memo circulated for legislation that has not yet been introduced.

Since then, the PLCB has continued to use conditional license agreements to address COVID violations.

At its most recent meeting on June 5, the PLCB approved three conditional licensing agreements that referenced COVID violations, adding to the tally of 111 such agreements that have been crafted since 2022 when the practice began, an LNP | LancasterOnline analysis shows.

“COVID-related conditional licensing agreements were the fairest way to address the few licensees that violated COVID rules, versus the thousands of licensees that respected and abided by the emergency orders,” said Shawn Kelly, a spokesperson for the PLCB. “Play by the rules moving forward and your license is not in jeopardy. Continue ignoring various requirements of the Liquor Code and you’ll expose your business to additional scrutiny and examination.”

Trying to play fair
During the pandemic, Wolf issued a variety of emergency orders that were meant to limit the spread of COVID-19, including ones that required bars and restaurants to close, limited their seating capacity or forced them to make customers and employees wear masks. In December 2020, the Democrat governor imposed a two-week restaurant closure during the typically busy Christmas season.

Pandemic-era occupancy limits in Pennsylvania ended on Memorial Day 2021, followed by the lifting a month later of the mask mandate.

While the emergency orders were still in effect, the state Department of Agriculture issued a flurry of shutdown notices to restaurants that disobeyed them, notices that were routinely ignored. A state Department of Health lawsuit against 50 restaurants that disobeyed shutdown orders was dropped in May 2021, more than half a year before the PLCB began its own crackdown on COVID rulebreakers.

“It appears to me the PLCB is the only agency in PA that is still enforcing COVID at all,” said Eric Winter, a Berks County attorney who has represented nearly 100 Pennsylvania bars and restaurants that were cited for COVID violations. “The restaurants have had to serve no penalties at all. … Why are liquor licensees being treated differently? It makes no sense.”

The Bureau of Liquor Code Enforcement, an arm of the state police, enforces the state liquor code and was charged with ensuring compliance with Wolf’s pandemic orders. The BLCE, which is funded by the PLCB, issued more than 1,000 notices of violations to liquor license holders for not following pandemic-era rules.

The continued enforcement by the PLCB results from its regular review of licensees and their history of citations – including ones for COVID violations – when the board considers whether to renew a liquor license for another two-year term.

“The dilemma we found ourselves in and we’re still in to a certain extent is, ‘How is it fair to the establishments that played by the rules, shut down, did not violate, sacrificed their income, maybe their business, compared to an establishment that ignored everything and kept operating?’” PLCB Chairman Tim Holden said during the Feb. 29 budget hearing.

The PLCB’s formal objection to renewing a liquor license comes after a chain of events that begins when the BLCE issues a citation, which can be appealed to an administrative law judge who holds a formal hearing. The verdict of the administrative law judge can also be appealed to the Court of Common Pleas in the county where the licensee is located.

Once a citation is adjudicated, it is reviewed by the PLCB as part of its license renewal process. If the PLCB chooses, it can lodge an objection that leads to an ultimate settlement of the matter via a conditional licensing agreement.

Facing consequences
At a January 2022 PLCB meeting when the first conditional licensing agreements were approved for COVID violations, board member Michael Negra made a motion to approve a license renewal without conditions, even though the licensee had been cited for violating COVID rules.

“I’m conflicted in some senses because this does involve the governor’s mandate and I just want to make the point before I make that motion that I believe this business has paid their dues,” Negra said.

Negra was outvoted back then by Holden as well as board member Mary Isenhour, who said licensees should “face some consequences” for not following all the rules.

Both Negra and Isenhour have since left the board and have been replaced by Randy Vulakovich, a former police officer and state legislator who joined the board in October 2022, and Darrell Clarke, a former Philadelphia city council president whose first meeting was Feb. 14.

At the Feb. 29 budget hearing, Vulakovich said there had been some internal discussion about possibly amending conditional licensing agreements to remove references to COVID violations. Nevertheless, he said he is a fan of them, describing the agreements as a second chance.

“We want to give them another shot, so we give them a CLA and say, ‘Look, we should not renew your license. This is your warning; it should sink in and this is what you have to do,’” Vulakovich said.

Impact in Lancaster County
In Lancaster County, three liquor license holders have been subject to conditional license agreements that mentioned COVID violations. The Brass Eagle in Salisbury Township and Cocalico Tavern in East Cocalico Township were subject to conditional licensing agreements that mandated staff training.

However, the conditional licensing agreement for Country Garden 6-pack in Lancaster city required that its license be put u for sale, which is known as “offer in compromise.” The former owners of Country Garden 6-pack, which is now closed, did not respond to requests for comment.

COVID rules violations were the only ones cited in the text of the April 2022 conditional licensing agreement with Country Garden 6-pack, something which was pointed out to Shawn Kelly, the PLCB spokesperson.

The PLCB does not comment on specific cases, but in a written response to questions from LNP | LancasterOnline, Kelly said no offers in compromise were made solely on the basis of a COVID violation.

“In each of those rare (offer in compromise) cases, there were other factors at play – the license was already being transferred at the time the Board considered its renewal, there were other non-COVID violations involved, the licensee requested the (offer in compromise) etc.,” Kelly said.

While there have been instances of forced sales, the vast majority of conditional licensing agreements that cite COVID citations are much less severe. In most cases, the main requirement is that licensees go through PLCB’s Responsible Alcohol Management Program (RAMP), which reviews rules and best practices for serving alcohol.

Winter said he readily advises his clients to sign conditional licensing agreements that require RAMP certification. “There’s no downside to this. There is no admission of wrongdoing,” he said.

Another feature of most COVID-related conditional licensing agreements is a requirement that the license be sold if there is another adjudicated citation. Winter said he isn’t concerned about that clause since most of the COVID-related conditional licensing agreements expire in two years, and in normal times most licensees will go years without a single citation.

Nevertheless, Winter says the entire process is overly burdensome on licensees who were only trying to keep their businesses from going under during the pandemic.

As he has defended bars and restaurants, Winter said he hasn’t changed the legal arguments he uses during numerous hearings he has attended and briefs he has written. The copy-and-paste nature of the process is part of the reason Winter says his services have been affordable to licensees. In addition, until 2023, FreePA, a group that opposed pandemic restrictions, provided some money for legal defense. Garber, of Big Dog Craft Brewing, said it cost around $100 to have Winter appeal their citations.

“We have the PLCB spending a ton of time and money on this that does not do anything,” Winter said. “What are they trying to prove by all of this? I don’t know.”

In the fiscal year ending in June 2023, the PLCB spent $3.12 million on administrative law judges, up 9% from the previous fiscal year when it spent $2.86 million.

During testimony before the Senate Appropriations Committee in February, Holden emphasized that while the process that leads to conditional licensing agreements is meant to create some accountability for licensees, the PLCB is not actually asking for much.

“Basically, the CLA is that if you get another citation for not being a bona fide restaurant or violating emergency directives – well, we don’t believe there’s going to be any (more) emergency directives, so it’s really – and I don’t want to say insignificant – but it’s really not a very serious CLA to follow,” Holden said.

None of the conditional licensing agreements reviewed by LNP | LancasterOnline included references to not violating future emergency directives. In the written response to questions that included one about Holden’s reference to licensees obeying future emergency orders, the PLCB spokesperson did not address the discrepancy.

For his part, Winter said he would never advise a client to sign a conditional licensing agreement that promises to not violate future emergency orders. Those orders, Winter said, were the entire problem since they didn’t originate with the legislature, which he believes makes them illegal.

“In short, if the government did not like the laws that it had available to use relating to virus control, it cannot ignore those laws, it needed to work with the Pennsylvania General Assembly to change the laws. That did not occur,” Winter writes.