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AGO 1966 No. 103 - August 18, 1966
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John J. O'Connell | 1957-1968 | Attorney General of Washington


OFFICES AND OFFICERS ‑- STATE ‑- LIQUOR CONTROL BOARD ‑- AUTHORITY TO ADOPT ADMINISTRATIVE REGULATIONS ‑- GUIDELINES.

(1) The state liquor control board as an administrative agency created by the legislature may exercise only such power as is conferred upon it by the legislature.  (Opinion p. 4.)

(2) The authority of the liquor control board to adopt administrative rules and regulations which has been expressly granted by the legislature is limited to carrying out the provisions of the liquor act.  (Opinion pp. 5-9.)

(3) There are four general guidelines which have been established by the courts (Opinion pp. 8-9) against which the validity of any proposed rule or regulation of an administrative agency should be tested.  Applying these guidelines to certain regulations which the liquor control board has proposed to adopt, our opinion is as follows:    

1.         Proposed Reg. 112 (e).  The board has express authority to adopt rules governing the purchase of liquor (RCW 66.08.030 (2) (c)) and to provide for the orderly management of the state liquor business (RCW 66.08.050).  Under this authority it may adopt proposed regulation 112 (e) limiting to two (2) the number of liquor representatives a supplier may register with the board.  (Opinion pp. 9-10.)

2.         Proposed Reg. 112 (f).  The board may not adopt proposed regulation 112 (f) because the regulation would, in effect, modify RCW 66.08.075.  (Opinion pp. 10-13.)

3.         Proposed Reg. 112 (g).  The board may adopt portions of proposed regulation 112 (g) requiring the filing of the names of liquor representatives, their period of employment, and the territory, duties, responsibilities and authority of such representatives.  However if the other requirements of that proposed regulation‑-i.e., filing of a written contract with the board, disclosing the method, manner, basis, amount and time of payment of compensation, and prior approval by the board of commission payment contracts‑-are to be adopted, the board should be prepared to demonstrate that there is an evil or problem, existing or potential, which these requirements are reasonably necessary to correct.  In addition, the portion of the regulation regarding commission contracts must set forth the standards or conditions under which such contracts will be approved.  (Opinion pp. 13-17.)

4.         Proposed Reg. 112 (h).  This proposed regulation requiring the filing of information of any financial arrangements between suppliers of liquor and any person who represents such [[Orig. Op. Page 2]]supplier in any capacity in the state is beyond the power of the board without some showing of an evil or problem sought to be corrected which would justify such broad financial disclosure requirements.  (Opinion p. 17.)

5.         Proposed Reg. 113 (f).  The liquor board may not adopt proposed regulation 113 (f) which places greater restrictions upon the political activities of liquor suppliers and representatives, who are not state employees, than those imposed upon state employees covered by the state civil service act because (1) there is no specific direction by the legislature upon which the regulation can be based; and (2) the proposed regulation would appear, under recent court decisions, to impose an invalid restriction on the exercise of constitutionally guaranteed freedom of speech and association.(Opinion pp. 17-23.)

6.         Proposed Reg. 113 (g), paragraph No. 1.  If this portion of proposed regulation 113 (g) were reworded so that the coercion or attempted coercion to be prohibited by the board is that coercion based upon some threat or promise concerning the suppliers' liquor business in the state, the regulation would be valid.  (Opinion p. 23.)           

7.         Proposed Reg. 113 (g), paragraph No. 2.  The portion of proposed regulation 113 (g) requiring the filing of an itemized statement of political contributions by liquor suppliers and liquor representatives would impose a duty not imposed by the legislature upon any citizen.  The "proximate connection" between the proposed regulation and any legitimate area of inquiry by the board is most doubtful.(Opinion pp. 23-25.)

                                                              - - - - - - - - - - - - -

                                                                 August 18, 1966

Honorable Ray Olsen
State Representative, 35th District
1400 Hubbell Place, Apartment 710
Seattle, Washington

                                                                                                              Cite as:  AGO 65-66 No. 103

Dear Sir:

            By letter previously acknowledged you have requested an opinion of this office relative to the authority of the Washington state liquor control board to adopt certain proposed regulations.  These proposed regulations all deal with the general  [[Orig. Op. Page 3]] subject of "liquor representatives"‑-i.e., those representatives of liquor manufacturers, wholesalers, or distributors with whom the liquor board deals in purchasing intoxicating liquor for resale in state liquor stores.

            The proposed regulations you question will be set forth later on in this opinion accompanied, in each instance, by our expression of opinion regarding the liquor board's authority to adopt the particular proposal.  However, because certain general considerations are pertinent to an understanding of our specific remarks regarding each proposed regulation, the initial portion of this opinion will be devoted to various pertinent preliminary comments including a resume of the law governing administrative rule making.

                                                                     ANALYSIS

            I. PRELIMINARY COMMENTS.

            A.Introductory Statement.

            While you in your capacity as a state representative initiated this request for our opinion on the proposed regulations in question, the views expressed in this opinion are directed, as well, to our client, the Washington state liquor control board.1/   As you are aware, the primary purpose of this or any other official opinion of the attorney general is to provide appropriate legal advice to the various officers and agencies of state government so that the performance of their particular functions will be within the framework of their statutory authority.

            It thus follows that we will not here concern ourselves with the wisdom of any of the liquor board's proposed regulations.  The views expressed in this opinion will be directed solely to the issue of whether and to what extent the proposed regulations, if adopted by the board, would be legally defensible.

            B.General Authority of the Liquor Control Board‑-Historical Background.

            Following repeal of the Eighteenth (Prohibition) Amendment to the United States Constitution, the Washington legislature, in 1933, passed a comprehensive liquor act providing for the  [[Orig. Op. Page 4]] regulation and control of liquor traffic in our state.2/   This act was passed as an exercise of the state's "police power" to protect the public welfare, health, peace, morals and safety.  See, RCW 66.08.010, codifying § 2, chapter 62, Laws of 1933, Ex. Sess.

            In order to provide for the orderly and efficient operation of the system, the legislature vested the administration of the act in the Washington state liquor control board.  See, RCW 66.08.020.  The liquor board, consisting of three members appointed by the governor for staggered terms of nine (9) years, is an administrative agency of the state.  As such it has only those powers expressly granted to it by the legislature and those powers necessarily implied from its express powers.State ex rel. Eastvold v. Maybury, 49 Wn.2d 533, 304 P.2d 663 (1956).  Accordingly, we must look to the various statutes under which the liquor board operates in order to ascertain and give effect to the intent of the legislature regarding the board's regulatory or rule‑making authority.3/   Guinness v. State, 40 Wn.2d 677, 246 P.2d 433 (1952); Hatzenbuhler v. Harrison, 49 Wn.2d 691, 306 P.2d 745 (1957);State v. Lee, 62 Wn.2d 228, 382 P.2d 491 (1963); Alderwood Water Dist. v. Pope & Talbot, Inc., 62 Wn.2d 319, 382 P.2d 639 (1963).

            C.General Rules Relating to Administrative Rule‑Making Power of State Agencies.

            Before considering the specific rule‑making authority of the liquor board, some comment should be made regarding the nature of administrative rule making within the framework of our state government.

            Our state constitution vests legislative (law-making) power in the senate and house of representatives subject to the reserved law-making powers of the people.  See, Article II,  [[Orig. Op. Page 5]] § 1 (Amendment 7).  This power to enactpurely substantive law cannot be surrendered or delegated or performed by any other agency.  Senior Cit. L. v. Dept. of Soc. Sec., 38 Wn.2d 142, 152, 228 P.2d 478 (1951).

            The legislature may, however, under proper circumstances delegate to administrative boards (such as the liquor board) the authority to promulgate rules and regulations to carry out an express legislative purpose or to effect the operation andenforcement of a law.  Senior Cit. L. v. Dept. of Soc. Sec., supra, and cases cited therein.  Of course, such an administrative board can only act within the rule‑making power granted it by the legislature.  State v. Miles, 5 Wn.2d 322, 105 P.2d 51 (1940).  See, also,State ex rel. West v. Seattle, 50 Wn.2d 94, 97, 309 P.2d 751 (1957);The Panda v. Driscoll, 135 N.J.L. 164, 50 A.2d 630 (1947); 42 Am.Jur., Public Administrative Law, § 53 (pp. 358-360), § 99 (pp. 428-429).  In Cooper,State Administrative Law (1965), Vol. 1, page 250, et seq., the tests which are to be applied in determining the validity of administrative rules are expressed as follows:

            "(A) A Rule is Invalid if it Exceeds the Authority Conferred

            "(B) A Rule is Invalid if it Conflicts with the Governing Statute

            "(C) Rules are Void if They Extend or Modify the Statute

            "(D) Rules Having no Reasonable Relationship to Statutory Purpose Are Void

            "(E) Courts Will Set Aside Rules Deemed to be Unconstitutional or Arbitrary or Unreasonable"

            See, also, 1 Davis,Administrative Law Treatise, § 5.11 at 358; cf. § 7, chapter 234, Laws of 1959, RCW 34.04.070 (declaratory judgment on validity of administrative rules).

            D.Guidelines for Liquor Board.

            The legislature has vested the liquor board with broad rule‑making powers relative to the control of liquor traffic in  [[Orig. Op. Page 6]] this state.4/   The general rule‑making authority of the board is stated in RCW 66.08.030, which reads in part as follows:

            "(1)For the purpose of carrying into effect the provisions of this title according to their true intent or of supplying any deficiency therein, the board may make such regulations not inconsistent with the spirit of this title as are deemed necessary or advisable.  All regulations so made shall be a public record and filed in the office of the secretary of state, together with a copy of this title, shall forthwith be published in pamphlets, which pamphlets shall be distributed free at all liquor stores and as otherwise directed by the board, and thereupon shall have the same force and effect as if incorporated in this title."  (Emphasis supplied.)

            Ensuing subsections enumerate, without limiting the generality of the above‑quoted provision, twenty-six control functions which may be made the subject matter of regulations.  Expressly included therein is a grant of the power to make regulations:

            "(c) governing the purchase of liquor by the state and the furnishing of liquor  [[Orig. Op. Page 7]] to stores established under this title;5/

             The legislature, in addition to thus delegating rule‑making power to the liquor board and detailing certain specific subjects for regulation, has also delineated, by separate provision, the general powers of the board.  See, RCW 66.08.050.  That provision, after enumerating certain specific powers not here relevant,6/ provides in pertinent part:

            "The board, subject to the provisions of this title and the regulations, shall

            ". . .

            "(9) perform all other matters and things, whether similar to the foregoing or not, to carry out the provisions of this title, and shall have full power to do each and every act necessary to the conduct of its business, including all buying, selling, preparation and approval of forms, and every other function of the business whatsoever, subject only to audit by the state auditor."

            Regarding the regulatory power of the liquor board, our supreme court has made the following general observation:

            "The regulation and control of the liquor traffic is manifestly a problem of the greatest difficulty and importance, involving an immense amount of detail and including many matters which, if successful operation and control is to be established and maintained, must be left to  [[Orig. Op. Page 8]] some regulatory body other than the state legislature."  State ex rel. Thornbury v. Gregory, 191 Wash. 70, 74, 70 P.2d 788 (1937).

            Accord:  Randles v. State Liquor Control Board, 33 Wn.2d 688, 206 P.2d 1209 (1949), especially at pages 697-698 (quoting from Kelleher v. Minshull, 11 Wn.2d 380, 119 P.2d 302 (1941)):

            ". . . it is self-evident that great latitude within the rules of established law must be accorded to such a board, if the sale of intoxicating liquor is to continue under such a statute as that in force within this jurisdiction, without bringing in its train suchevils that the law will be repealed entirely.  Courts will interfere with the work of such an administrative body only when it clearly appears that it has attempted to exceed its lawful authority."  (Emphasis supplied.)State ex rel. Thornbury v. Gregory, supra, at p. 79.

            While the board's rule‑making power is broad, it is not unlimited.  It cannot be.  As noted earlier, purely substantive enactments of law must be left to the legislative body of the state as defined in Article II, § 1 (Amendment 7) of the state constitution.

            But within the framework of its legislatively-granted authority, it seems clear that the board may adopt rules and regulations which adhere to certain general guidelines which we derive from the principles recognized in the authorities cited and discussed above.  Thus, the questions to be asked in regard to any proposed regulation of the liquor board are whether the regulation,

            (1) is "necessary or advisable" to carry into effect any of the provisions of the liquor act "according to their true intent," and is consistent with the spirit of the act‑-see, RCW 66.08.030; and

            (2) has a "proximate connection" with some provision of the liquor act‑-see,State v. Miles, supra; and

            (3) relates to the regulation and control of the liquor  [[Orig. Op. Page 9]] traffic in this state or the administration and enforcement of the liquor act‑-see, RCW 66.08.050 (9),supra; and

            (4) is reasonable in scope and effect in the light of all circumstances (which include the particular factual problem giving rise to its adoption) and does not represent an arbitrary or capricious exercise of the board's powers.7/

             This listing may not contain all the "tests" to which a particular regulation may in fact be subjected if challenged in litigation.  However, we believe that general adherence to these four guidelines will render liquor board regulations "defensible"‑-under the statutory authority vested in the board by the legislature.

            II. APPLICATION OF PRELIMINARY COMMENTS TO PROPOSED REGULATIONS 112 (e) AND 112 (f) AND PORTION OF 112 (g).

            We turn now to a specific discussion of three of the proposed regulations which you have questioned.

            A.Proposed Regulation 112 (e).

            This proposed regulation provides that:

            "A supplier of liquor may have no more than two registered representatives, one of whom may be a local state representative and the other a regional representative from the home office, but it is not required that the supplier have a representative to do business in the state."

             [[Orig. Op. Page 10]]

            This proposal does not represent a change in the policy of the board.  We note that at least since July 1, 1960, it has been the policy of the liquor board to permit suppliers of intoxicating liquors to have not more than one local and/or one regional representative registered with the board.  See memoranda from the board to suppliers, dated May 16, 1960, and June 24, 1965.8/

             The liquor board, as previously stated, has been charged by law with the administration of the liquor act.  No distillery or agent thereof may make any sale of liquor within this state, except a sale to the board.  See, RCW 66.28.060.  And every order "for the purchase of liquor" must be authorized by the board‑-RCW 66.08.070 (1).  In addition, as noted above, the board is expressly empowered to make regulations "governing the purchase of liquor by the state. . . ."‑- RCW 66.08.030 (2) (c).  See, also, RCW 66.08.050,supra.

            The liquor board has over the years deemed it advisable, in the exercise of its administrative discretion, to purchase liquor from suppliers through liquor representatives.  Having made this determination, it follows that the board may, in the orderly management of the state's system, reasonably limit the number of representatives from each distillery with which it will deal‑-as proposed by regulation 112 (e),supra.  Accordingly, this proposed regulation is within the "guidelines" set forth above and hence, is in our opinion legally defensible.

            B.Proposed Regulation 112 (f).

            Proposed regulation 112 (f) reads as follows:

            "No member or employee of the Liquor Control Board, or legislator or employee of the legislature, nor the spouse of such member or employee of the Liquor Control  [[Orig. Op. Page 11]]Board, or legislator or employee of the legislature, shall serve as a liquor representative, nor shall such person be eligible for appointment as a liquor representative, or be employed by a supplier of liquor, until a period of two (2) years has elapsed following the severance of such person's membership or employment with the Liquor Control Board, or term of office as a legislator or employee of the legislature."  (Emphasis supplied.)

            In considering this regulation, initial reference must be made to RCW 66.08.075 (§ 5, chapter 217, Laws of 1937) which reads as follows:

            "No official or employee of the liquor control board of the state of Washington shall, during his term of office or employment, or for a period of two years immediately following the termination thereof, represent directly or indirectly any manufacturer or wholesaler of liquor in the sale of liquor to the board."

            This statute precludes a certain class of public employees from representing liquor manufacturers or wholesalers.  Hence the question is whether the board can, by rule, expand the membership of the class of public employees which the legislature has restricted from engaging in such employment.

            It is a well-established rule that an administrative agency may not, by means of regulation, actually modify or amend a statute.  Fisher Flouring Mills Co. v. State, 35 Wn.2d 482 213 P.2d 938 (1950).  See, also,Stokely-Van Camp v. State, 50 Wn.2d 492, 312 P.2d 816 (1957); Washington Printing and Binding Co. v. State, 192 Wash. 448, 73 P.2d 1326 (1937).  See, also, AGO 61-62 No. 138 (p. 3).

            InState v. Miles, supra, at pages 325-326, the court stated:

            "In exercising the rule‑making power, however, such administrative officers and boards must act within the limits of the power granted to them.  [Citations omitted.]  The basis for that proposition is, of course, that rules and regulations which have the  [[Orig. Op. Page 12]] effect of extending, or which conflict in any manner with, the authority-granting statute, do not represent a valid exercise of authorized power, but, on the contrary, constitute an attempt by the administrative body to legislate.  Anheuser-Busch, Inc. v. Walton, 135 Me. 57, 190 Atl. 297."  (Emphasis supplied.)

            This rule applies as well to agencies controlling and regulating intoxicating liquors, even though such agencies generally possess very broad police powers.  Hence, liquor board rules or regulations would be void to the extent that they purported to extend or modify a statute.  See,Campbell v. Galeno Chemical Co., 281 U.S. 599, 610, 50 S.Ct. 412, 74 L.Ed. 1063 (1930); Loglisci v. Liquor Control Commission, 123 Conn. 31, 37, 192 Atl. 260, 263 (1937);Roppel v. Shearer, 321 S.W. 2d 36 (Ky. 1959); 1 Cooper,State Administrative Law (1965) at p. 257.  As the California Supreme Court stated inHarris v. Alcoholic Beverage Control Appeals Board, 228 C.A. 2d 1 [[228 Cal.App. 2d 1]], 39 Cal.Rptr. 192 at 195 (1964) (where the regulation was held void on the grounds it conflicted with the alcoholic beverage control act):

            "In the absence of valid statutory authority, an administrative agency may not, under the guise of a regulation, substitute its judgment for that of the Legislature.  It may not exercise its sub‑legislative powers to modify, alter or enlarge the provisions of the legislative act which is being administered.  Administrative regulations in conflict with the Constitution or statutes are generally declared to be null or void. . . ."  (Emphasis supplied.)

            Here the legislature, by RCW 66.08.075, supra, has prohibited for a prescribed periodonly officers and employees of the liquor board from acting as liquor representatives.  Therefor, the board may not by regulation modify this statute by extending the prohibition to legislators or employees of the legislature,9/ and to their spouses.

             [[Orig. Op. Page 13]]

            Proposed regulation 112 (f), supra, further not only precludes such persons from serving, or being eligible to serve, as liquor representatives (where the statute simply precludes representation directly or indirectly), but attempts to prohibit for a given periodany employment in any capacity of such persons by suppliers.  It is clear that the liquor board cannot so extend or modify the statute.  If the law on this particular subject is to be changed, it must be by the legislature.10/   Accordingly, the liquor board in our opinion may not adopt proposed regulation 11 (f).

            C.Portion of Proposed Regulation 112 (g).

            This proposed regulation reads as follows:

            "All employment contracts of any liquor representative shall be in writing and filed with the board by the supplier of liquor prior to the performance of any duties under the contract.  The contract shall include the following:

            "(1) Names of the parties;

"(2) Period of employment;

"(3) Method, manner and basis of compensation and amount thereof and time of payment thereof; and

"(4) Territory, duties, responsibilities, and authority of liquor representative.

            "Commission payment contracts by liquor suppliers with liquor representatives are to be entered into only with written authorization from the board."  (Emphasis supplied.)

            The portions underscored pose certain problems which will be discussed later in this opinion.  However, we believe that subsections (1), (2) and (4)‑-i.e., the portions of the above‑quoted proposed regulation which are not underscored‑-  [[Orig. Op. Page 14]] list items of information which the board may legitimately secure in order to provide for the orderly administration and regulation of the state's liquor business.  Thus, a regulation requiring the filing of this information would adhere to the guidelines suggested above, and may be adopted by the board.

            We note further that some of the information sought by proposed regulation 112 (g),supra, would be provided to the board under its proposed regulations 112 (c) and 112 (d)‑-as to which you have raised no question.  In fact, existing requirements of the liquor control board, which have been in effect since at least July, 1963, call for submission to the board of much the same information.  See present Rule 112, WAC 314-44-010 (1) (Washington Administrative Code).  Furthermore, the board is permitted by existing statutory provision to inspect, [f] or the purpose of obtaining information concerning any matter relating to the administration or enforcement . . ." of the liquor act, the books and records of any manufacturer or any license holder.  See, RCW 66.08.130 (1) and (2).

            III. APPLICATION OF PRELIMINARY COMMENTS TO REMAINING PORTIONS OF 112 (g) AND TO PROPOSED REGULATIONS 112 (h), 113 (f), 113 (g) AND 113 (h).

            We believe that the remaining portions of proposed regulation 112 (g),supra,‑-i.e., the portions which we have underscored above‑-together with the several other proposed regulations which you have questioned‑-must be considered on the basis of a somewhat different approach than we have used in the preceding discussion.  Our general introductory observation is that these remaining proposed regulations, if adopted, would depend for their validity in large part upon a factual showing of some existing or potential evil or problem in the relationship between the state and the liquor industry which the liquor board is competent‑-in accordance with the guidelines established earlier in this opinion‑-to remedy or correct by regulatory enactment.

            As we noted earlier, the liquor board, as an agency created by statute, may exercise only those powers conferred upon it by the legislature.  While the legislature has vested the board with rather broad rule‑making power, the power is not and cannot be considered unlimited.  In fact, there is a  [[Orig. Op. Page 15]] limitation in the legislative grant itself.  The board is authorized only to adopt rules and regulations to carry out the provisions of the liquor act.  See, RCW 66.08.030 and RCW 66.08.050,supra.

            In determining the validity of proposed regulation 112 (e) and the portion of 112 (g) above discussed and approved, we were in a position of pointing to aparticular provision of the liquor act upon which the board obviously relies and which supports its proposed action.  Furthermore, the adherence of proposed regulation 112 (e) and the approved portion of 112 (g) to the guidelines set forth earlier in this opinion can be readily established.

            The difficulty we encounter in reviewing the remaining questioned regulations is that these proposed regulations are so broad in scope and effect as to raise a question of whether they are justifiable in terms of these guidelines.  Specifically, we are troubled by the absence of a readily-ascertainable relationship between the broad requirements of these remaining proposals and some known or demonstrable existing or potential evil within the liquor industry‑-and particularly, in the relationship between the state and that industry.

            Accordingly, we advise that as to these remaining proposed regulations, if they are to be adopted in their present form it will be necessary for the board to be prepared to demonstrate by a factual showing11/ the cause or evil, existing or potential, within the liquor industry which these particular regulations are intended to cure, and to show that the proposed regulations go no further than is reasonably necessary to correct the situation.  With this thought in mind, the remainder of this opinion will, in large part, be devoted to simply pointing out to you and to the liquor board some of the questions which may be raised, and which should be resolved before there is any final action by the board.

            A.Underscored Portions of Proposed Regulation 112 (g).

            Repeated for ease of reference, proposed regulation 112 (g) provides:

            "All employment contracts of any liquor  [[Orig. Op. Page 16]] representative shall be in writing and filed with the board by the supplier of liquor prior to the performance of any duties under the contract.  The contract shall include the following:

            "(1) Names of the parties;

"(2) Period of employment;

"(3) Method, manner and basis of compensation and amount thereof and time of payment thereof; and

"(4) Territory, duties, responsibilities, and authority of liquor representative.

            "Commission payment contracts by liquor suppliers with liquor representatives are to be entered into only with written authorization from the board."  (Emphasis supplied.)

            We have previously concluded that the portions of this regulation which arenot underscored specify legitimate items of information which may, by appropriate rule, be required.  However, whether the board has any legitimate concern in the contractual relationship between suppliers and liquor representatives ‑-which would tend to support the requirement of a written contract between the parties, its filing with the board, the disclosure of method, manner, basis, amount, and time of payment of compensation, and requiring prior approval by the board of commission payment contracts‑-can only be determined on the basis of an identification of the evil or problem existing or potential, sought to be corrected by imposition of these requirements.

            Further, while there may be some criticism of commission payment contracts under certain circumstances,12/ it should be noted that the proposed regulation does not prohibit all such contracts.  Rather, it provides that such contracts may be used if authorized by the board.  However, theconditions or standards the board will impose in approving or disapproving  [[Orig. Op. Page 17]] "commission payment contracts" are not set forth.  We believe that if this aspect of the regulation is to be adopted, the public as well as the suppliers and liquor representatives should be advised as to the basis upon which such contracts will be approved or disapproved.

            B.Proposed Regulation 112 (h).

            This proposed regulation reads as follows:

            "Any financial arrangement between suppliers of liquor andany person, partnership, association or corporation who represents such supplier of liquor inany capacity within the state of Washington shall also be in writing and filed with the board, covering the same information required by sections 1, 2 and 3 of subsection (g) above."  (Emphasis supplied.)

            The broad scope of this regulation was pointed out to the board at a preliminary hearing on the proposed regulations which was held on November 10, 1965.  In a telegram addressed to the board by Mr. Robert W. Coyne, President of the Distilled Spirits Institute, the following appears:

            "PROPOSED REGULATION 112 (H) . . . AS WRITTEN, IT WOULD INCLUDEFINANCIAL ARRANGEMENTS FAR AFIELD FROM SUPPLIER-PURCHASE [[SUPPLIER-PURCHASER]]RELATIONSHIPS SUCH AS BANKING RELATIONSHIPS, ATTORNEY-CLIENT RELATIONSHIPS, ADVERTISING ARRANGEMENTS, ASSOCIATION MEMBERSHIPS AND OTHER FINANCIAL DEALINGS WHICH MIGHT BE NEEDED OR ENJOYED BY BUSINESS INTERESTS AND WHICH DEALINGSWOULD HAVE NO OR LITTLE BEARING ON THE ISSUES AROUND WHICH THE BOARD SEEKS TO BUILD SAFEGUARDS."  (Emphasis supplied.)

            This proposed regulation is clearly unsupportable without some showing by the board of an evil or problem sought to be corrected which would justify these broad financial disclosure requirements.

            C.Proposed Regulation 113 (f).

            This proposed regulation reads as follows:

             [[Orig. Op. Page 18]]

            "No supplier of liquor or liquor representative shall use his position or influence for the purpose of interfering with an election or a nomination forany office in this state, or affecting the result thereof, or takeactive part in any political management or in political campaigns.  All such persons shall retain the right to vote as they may choose and to express their opinions on all political subjects and candidates."  (Emphasis supplied.)

            This rule is likewise extremely broad.  The restrictions contained therein reach not only into the area of partisan political activities, but also participation inany political campaign.

            Thus, the restrictions would seemingly preclude participation in campaigns for the passage of initiatives, referendums, constitutional amendments, and in local school board elections, etc.13/   This proposal is actually much broader than are the restrictions on political activities by state employees which have been imposed pursuant to the state civil service act, passed by the people in 1960, as Initiative No. 207 (chapter 1, Laws of 1961 [chapter 41.06 RCW]).14/

             [[Orig. Op. Page 19]]

            Moreover, proposed regulation 113 (f) is so sweeping in its prohibitions that a supplier or liquor representative would be precluded from seeking election to any public office, for it is evident that it would be most difficult to be elected to any office without taking "an active part" in the campaign.  See, AGO 61-62 No. 146, copy attached.  Because the right to aspire to public office and to participate in political campaigns is a valuable political right of the citizens of this state and of the United States, any attempt to place restrictions on those activities must be very carefully examined.

             [[Orig. Op. Page 20]]

            In addition to RCW 41.06.250, supra, relating to state employees, restrictions have been placed upon the political activities of other specified classes of public employees; e.g., federal employees (Hatch Political Activity Act, 5 U.S.C.A. § 118 (i), et seq.); and county sheriffs' employees (chapter 1, Laws of 1959, codified as chapter 41.14 RCW).15/   Such restrictions have been challenged on several occasions as being an unconstitutional abridgment of constitutionally-guaranteed freedom of speech,16/ and the basic political rights of a citizen.  Generally, it is to be noted that the courts have upheld theselegislatively-imposed political restrictions upon public employees, on the theory that public employment is a privilege and that some reasonable restrictions can be imposed as a condition of such employment.  For example, inCommonwealth ex rel. Rotan v. Hasskarl, 21 Pa. Dist. 119, 123 (1912), the court stated:

            ". . . The act does not impose any restriction upon the actions, political or otherwise, of the individual as such, but simply upon theemployee of themunicipality while holding office or employment thereunder.  It is simply acondition of his employment.  If he does not like or is not willing to submit to the restriction upon his personal liberty, he need not accept nor continue in the employment of the city.  If he does accept or continue in such employment, he waives his right to that freedom of action which he enjoys when otherwise employed.  'It belongs to the state, as the guardian and trustee of its people and having control of its affairs, to prescribe the conditions upon which it will permit public work to be done on its behalf or on behalf of its municipalities. . . .'"  (Emphasis theirs.)

             [[Orig. Op. Page 21]]

            However recently, in 1964, the California supreme court had occasion to rule upon a charter provision of Alameda County establishing certain prohibitions on political activity for persons employed in civil service.  This particular charter provision precluded persons from taking "any part in political management or affairs in any political campaign or election. . . ."  The court, in declaring the charter provision invalid, stated (Fort v. Civil Service Com'n of County of Alameda, 38 Cal.Rptr. 625, 627, 392 P.2d 385 (1964)):

            "The freedom of the individual to participate in political activity is a fundamental principle of a democratic society and is the premise upon which our form of government is based.  Our state Constitution declares, '[a]ll political power is inherent in the people' (Const., art. I, § 2)17/ and the First Amendment of the federal Constitution establishes the right of every citizen to engage in political expression and association.  (SeeNew York Times Company v. Sullivan (1964) 376 U.S. 254, 84 S.Ct. 710, 720-721, 11 L.Ed. 2d 686; Sweezy v. State of New Hampshire (1957) 354 U.S. 234, 250 et seq., 77 S.Ct. 1203, 1 L.Ed. 2d 1311.) . . ."

            The California court in this case cited and relied upon the United States Supreme Court's decision inSherbert v. Verner, 374 U.S. 398, 83 S.Ct. 1790, 10 L.Ed. 2d 965 (1963), and quoted therefrom as follows:

            ". . . 'It is basic that no showing merely of a rational relationship to some colorable state interest would suffice; in this highly sensitive constitutional area, "[o]nly the gravest abuses, endangering paramount interests, give occasion for permissible limitation".'"

            The California court then proceeded to consider the entire charter provision in question and concluded that it was void  [[Orig. Op. Page 22]] in its entirety because it contained both valid and invalid restrictions upon freedom of speech which could not be severed one from the other.

            Even more recently the Oregon state supreme court, in Minielly v. State, 411 P.2d 69 (1966), declared invalid certain political restrictions placed upon civil service employees.  In reaching that conclusion the court adopted the basic approach applied to the California case.  The Oregon court, after having noted and discussed a number of cases concerning First Amendment rights, concluded that it was compelled, under the modern trend of cases, to declare unconstitutional the specific statute before it.

            In these situations and those previously referred to above, there has been a decision by the appropriate lawmaking body that restrictions as to political activities should be imposed upon public employees.  As evidenced by the California and Oregon cases, even some of those legislatively-imposed restrictions have not been permitted to stand when they have been subjected to a constitutional attack.

            In the instant situation, however, we are concerned with a proposal by anadministrative body (the liquor board) acting pursuant to its general powers, and not in response to any specific direction by the legislature, to impose political restrictions not upon its own employees, but rather upon persons with whom it does business, who are not public employees at all.  If such a proposal were made by the legislature itself, we would be faced with some grave constitutional questions.  Even more do these questions concern us where, as here, the political restrictions are proposed without express statutory direction.  Accordingly, we feel constrained to conclude that proposed regulation 113 (f),supra, is of most doubtful constitutional validity on the basis of almost any conceivable state of facts.18/

             [[Orig. Op. Page 23]]

            In summary, it is our opinion that the liquor board does not possess the power to adopt proposed regulation 113 (f), first because it is without specific legislative direction to act in this important area, and secondly, because, in any event, the regulation as proposed would appear to be an invalid restriction on the exercise of constitutionally-guaranteed freedom of speech and association.

            D.Proposed Regulation 113 (g).

            This proposed regulation consists of two paragraphs, the first of which reads as follows:

            "No person shall directly or indirectly coerce, attempt to coerce or command any supplier of liquor or liquor representative to pay, lend, or contribute anything of value to any political party, committee, organization, agency, candidate or person for political purposes."

            We would place this portion of proposed regulation 113 (g) in that category of the board's proposed regulations which depend for their validity upon some factual showing of an evil, existing or potential, sought to be corrected by the regulation.  However the general subject matter of this portion of 113 (g) would appear to be within the regulatory power of the board.  Accordingly, we believe that if this proposed regulation were reworded so that the coercion or attempted coercion prohibited is that which is designed to affect (either adversely in the case of a threat, or beneficially in the case of a promise) the suppliers business relationship with the state, the regulation would be valid.  With this qualification in mind, therefore, we believe the liquor boarddoes possess the power to adopt the first paragraph of proposed regulation 113 (g).

            The second paragraph of 113 (g), as to which we conclude somewhat differently, reads as follows:

            "Every supplier of liquor and liquor representative shall on or before January 31st of each year file an itemized statement in writing, duly sworn to as to its correctness, with the board, setting forth  [[Orig. Op. Page 24]]each sum of money and thing of value, or any consideration whatever, contributed, paid or promised by him, or anyone for him, with his knowledge or acquiescense [[acquiescence]], to any political party, committee, organization, agency, candidate or person for political purposes in the state of Washington.  The statement shall set forth the date and amount of sums paid, and the persons to whom the sums were paid and the purposes for which such payments were made.  In this statement all sums or other considerations promised and not paid shall be included.  The statement, when so filed, shall immediately be subject to the inspection and examination of any person and shall be and become a part of the public records."  (Emphasis supplied.)

            This portion of 113 (g) would impose a duty which has not been imposed upon any other citizen by the legislature.19/   The portion underscored, particularly, extends the coverage of the proposed regulation into areas uncharted by the legislature.

            While the regulation as proposed relates somewhat to the liquor act, in that it applies to liquor suppliers and liquor representatives, the "proximate connection" between the proposed regulation and any legitimate area of inquiry by the board is most doubtful.

            Furthermore, in the degree to which the disclosure requirement of this portion of 113 (g) constitutes an inhibition, if not a restriction, on the political activities of suppliers and representatives‑-a matter as to which we can only speculate‑-the requirement might be subject to the same constitutional objections we have expressed earlier, in our discussion of proposed regulation 113 (f).  However, we are not prepared to state categorically that the disclosure requirement of 113 (g) is invalid, but merely advise the board that in this delicate area of constitutional  [[Orig. Op. Page 25]] freedoms, administrative actions should be carefully examined.  With this consideration in mind, we can only say that the board should be prepared to come forward with a factual showing of cause or of some existing or potential evil in the liquor industry, in order to support the second paragraph of proposed regulation 113 (g).

            We trust the foregoing sufficiently answers the questions which you have raised, and will be of some assistance to you and to the liquor control board in the exercise of its regulatory functions in regard to the subject matter at hand.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

THOMAS K. DALGLISH
Assistant Attorney General

                                                         ***   FOOTNOTES   ***

1/We are advised that the liquor board, after being informed of your request, has held in abeyance any further hearings on its proposed regulations.

2/Chapter 62, Laws of 1933, Ex. Sess.

3/In this connection we note in passing that portions of the regulations here in question are substantially similar to provisions found in Senate Bill No. 412 (§§ 2, 4, and 6), which was introduced in the 39th (1965) regular legislative session, read for the first time February 17, 1965, and referred to the committee on liquor control.  Senate Bill No. 412 did not pass.

4/The right of the state to control liquor traffic in this manner has been sustained by the court on numerous occasions.  Ajax v. Gregory, 177 Wash. 465, 32 P.2d 560 (1934); State ex rel. Thornbury v. Gregory, 191 Wash. 70, 70 P.2d 788 (1937);State ex rel. Tollefson v. Novak, 7 Wn.2d 544, 110 P.2d 636 (1941);State v. Lake City Bowlers' Club, Inc., 26 Wn.2d 292, 173 P.2d 783 (1946);Randles v. State Liquor Control Board, 33 Wn.2d 688, 206 P.2d 1209 (1949);The Derby Club, Inc. v. Becker, 41 Wn.2d 869, 252 P.2d 259 (1953);"U" Dist. Bldg. Corp. v. O'Connell, 63 Wn.2d 756, 388 P.2d 922 (1964);State ex rel. Shannon v. Sponburgh, 66 W.D. 2d 126 [[66 Wn.2d 135]], 401 P.2d 635 (1965).  See, also, 30 Am.Jur., Intoxicating Liquors, §§ 23, 24, pp. 539-542.

5/RCW 66.08.030 (2) (c).

6/Powers with regard to location and number of liquor stores, appointment of liquor vendors in towns without state liquor stores, establishment of warehouses, leasing of premises for state liquor stores, packaging of liquor, executing contracts in the name of the board, paying obligations of the board, requiring certain employees to be bonded.

7/The terms "arbitrary and capricious" are defined in In re Emp. Buffelen Lbr. & Mfg. Co., 32 Wn.2d 205, 209, 201 P.2d 194 (1948), as follows:

            "'These terms, when used in this connection, must mean wilful and unreasoning action, action without consideration and in disregard of the facts and circumstances of the case.  Action is not arbitrary or capricious when exercised honestly and upon due consideration where there is room for two opinions, however much it may be believed that an erroneous conclusion was reached.'"

8/As a general rule, administrative policy or practice is entitled to some weight in determining the validity of any given rule or regulation, inasmuch as statutes can be said to have an administrative as well as legislative history.  2 Am.Jur. 2d, Administrative Law, § 241.

9/Note, however, § 6, chapter 150, Laws of 1965, Ex. Sess., which would require any such legislator, or legislative employee, receiving compensation in excess of a specified amount by reason of outside employment, to make periodic disclosure of that fact.

10/See § 4 of the proposed Senate Bill 412 (a copy of which is attached) which, if passed, would have provided:

            "No legislator or other public official or public employee shall serve as a liquor representative."

11/This would become legally necessary if the regulations were to be challenged in litigation.

12/See, Sinnar v. LeRoy, 44 Wn.2d 728, 270 P.2d 800 (1954);York v. Gaasland Co., 41 Wn.2d 540, 250 P.2d 967 (1952); Hall v. Anderson, 18 Wn.2d 625, 140 P.2d 266 (1943);Goodier v. Hamilton, 172 Wash. 60, 19 P.2d 392 (1933).

13/See, State ex rel. Green v. City of Cleveland, Ohio, 33 N.E. 2d 35 (1940);Gremillion v. Dept. of Highways, La., 129 So.2d 805 (1961).  Cf. RCW 29.85.270 prohibiting "Allpolitical advertising, whether relating to candidates or issues, . . ." without listing the sponsor if the sponsor is other than the candidate.

14/By way of comparison, RCW 41.06.250 (§ 25, chapter 1, Laws of 1961) provides:

            "(1) Solicitation for or payment to any partisan, political organization or for any partisan, political purpose of any compulsory assessment or involuntary contribution is prohibited.  No person shall solicit on state property any contribution to be used for partisan, political purposes.

            "(2) Employees shall have the right to vote and to express their opinions on all political subjects and candidates, but shall not hold any political party office or participate in the management of a partisan, political campaign.  Nothing in this section shall prohibit a classified employee from participating fully in campaigns relating to constitutional amendments, referendums, initiatives, and issues of a similar character, and for nonpartisan offices.

            "(3) Nothing in this section shall prohibit appointment, nomination or election to part time public office in a political subdivision of the state when the holding of such office is not incompatible with, nor substantially interferes with, the discharge of official duties in state employment.

            "(4) For persons employed in state agencies the operation of which is financed in total or in part by federal grant-in-aid funds political activity will be

15/Washington also has specific statutes protecting certain municipal employees from political pressures.  In particular, city fireman, § 17, chapter 31, Laws of 1935, RCW 41.08.160; and city police by § 1 7, chapter 13, Laws of 1937, RCW 41.12.160.

16/See, in particular, the 1st Amendment to the United States Constitution.

17/Washington State Constitution has the same provision in Article I, § 1.

18/Note further in this regard, the approach taken by our state supreme court in Adams v. Hinkle, 51 Wn.2d 763, 322 P.2d 844 (1958), wherein the court declared that there is no presumption of constitutionality where a claim is made that 1st Amendment rights are abridged.

19/Cf. RCW 29.18.140 ‑ filing of expenses by candidate after primary election.

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