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An embarrassing incident near UVa gave the agency uncomfortable notoriety.
Sunday, October 20, 2013
What some regard as an intrinsic conflict lies at the heart of the state agency tasked both with generating alcohol revenues for Virginia’s budget and enforcing alcohol law and regulations.
“Regulations and enforcement nearly always take a back seat to profits,” a committee of Virginia Alcoholic Beverage Control employees concluded in a 2003 report on a potential merger of agency law enforcement with state police.
That idea, dormant over the ensuing decade, has been revived by state Sen. Creigh Deeds, D-Bath County, who has called for an independent study into the move.
In the minds of some people, the troubles described in the ABC committee report, hidden from public light until The Daily Progress obtained the 22-page document, remain. People inside the agency say morale is low, something Deeds said he also has heard, but ABC vigorously disputes such claims.
Profits continue to be a focal point. The committee cited the board chairman’s reference to a “fourth straight year” of record retail sales. Current ABC board Chairman Neal Insley proclaimed a 14th consecutive year of record sales in the agency’s most recent annual report. That 42-page document, like others before it, is dominated by sales and financial data with scant details on law enforcement.
To some, it all represents what one lawmaker feared in the wake of ABC’s formation 79 years ago: “the development of a political liquor machine.”
That was a risk widely anticipated in 1933, when the ratification of the 21st Amendment sent the issue of what to do about alcohol back to the states after 13 years that saw vast criminal networks develop around the sale of booze.
Virginia lawmakers drafted the backbone for today’s ABC with the express aim of protecting the sale of alcohol from political influence and thwarting the profit motive of liquor sales, still widely viewed at the time as an ill that kept men from working and tore families apart.
“Temperance, social betterment and respect for law should be the prime objectives of any system of liquor control. Taxes should be levied as a method of promoting social control and not primarily for raising State or local revenues,” committee members wrote in a report to the state General Assembly.
The group of legislators tasked with developing Virginia’s approach to regulating alcohol sales recommended that the state join a group of so-called “control” states that either fully or partially would control the sale and distribution of alcohol.
“Since all profits go into the public treasury, there is no incentive to stimulate sales and increase the consumption of liquor,” the committee wrote.
But money’s importance today at ABC is undeniable — the agency’s self-sufficiency, contribution to the general fund and string of sales records are constant themes among top officials. When Gov. Bob McDonnell touted privatization early in his term, many lawmakers objected over concerns the move could deal a blow to the state budget, a point Deeds concedes.
“To lose those dollars from the general fund would create a significant hole,” he said, “and that’s just unacceptable.”
An agency patchwork
No state disregards the enforcement of alcohol laws, regulation of sales or the revenue from the business of booze. But few states handle it all in the same way.
“It’s not apples to apples, it’s apples and oranges,” said Gary Robinson, a spokesman for West Virginia’s Alcohol Beverage Control Administration. “Each model, each state, it works for them, that’s it.”
A patchwork quilt of regulatory agencies sprang up following Prohibition’s repeal. The nascent institutions emerged in a climate of social upheaval and adopted different approaches to creating and enforcing alcohol laws, Robinson said.
Seventeen, or slightly more than a third, of the 50 states are what’s known as “control states,” like Virginia. Washington privatized its state-run system last year.
Although many agencies have retained their original structure, some models have evolved over time. Liquor law enforcement in Nebraska and Pennsylvania moved from state liquor boards to state police in the 1980s. Alaska legislators in 2011 voted to transfer state alcoholic beverage control from the Department of Public Safety to the Department of Commerce, Community and Economic Development.
Alaska’s ABC board by law must include two industry representatives. However, several other states, including Texas, prohibit board members from having financial connections with anyone engaged in an alcoholic beverage business.
Alcohol boards or liquor commissions oversee operations in about half of the states. In almost all cases, the practice is the same as in Virginia — governors appoint and legislatures confirm commissioners. Most receive a stipend or per diem and are compensated for travel and expenses.
None is paid higher than Virginia’s commissioners. Insley’s salary is $130,900 annually, and Commissioner Sandra Canada is paid $122,000.
Although they are tasked with overseeing a budget of $480 million, about 330 retail stores and roughly 2,500 employees — and $734 million in sales — day-to-day operations largely fall under the watch of longtime Chief Operating Officer Curtis Coleburn. Both Insley and Canada live in Hampton Roads, outside Richmond, where ABC is headquartered, an agency spokeswoman said.
The commissioners by statute are tasked with controlling the sale, transportation and delivery of alcoholic beverages; signing off on all administrative hearing decisions regarding licensed sellers of alcohol; hearing appeals of those decisions; and presiding over the appointments of employees.
Many of these actions take place at public meetings generally held once or twice a month at agency headquarters. Minutes posted to ABC’s website show that those meetings have lasted an average of 15 minutes so far this year.
Neither ABC spokespeople nor the commissioners responded to requests for more information about the board’s day-to-day responsibilities.
“The folks who are appointed have a significant amount of ability [and] discretion to affect their day-to-day operations if they choose to,” Deeds said. “If they don’t, [ABC] will operate like a machine, but they have significant discretion.”
Commissioner posts are considered plum political appointments, Deeds said.
“Both Democrats and Republicans have used the commission for years to almost reward supporters,” Deeds said. “I know those ABC jobs are some of the most sought after.”
Canada, a Virginia Beach native and GOP fundraiser, served a prior term as commissioner under former Republican Gov. Jim Gilmore, according to an official biography on ABC’s website.
Insley is a former ABC special agent and Virginia marine police officer from Poquoson, the site states. Like McDonnell, he received his law degree from Regent University School of Law. Insley went on to work as a prosecutor before becoming an attorney representing licensees in ABC cases, first as a solo practitioner and then as an associate at LeClair Ryan, according to his biography.
Representing a Richmond strip club and a Newport News nightclub, Insley was a critic of ABC and its agents before McDonnell appointed him to the chairman post in 2010.
Friction between ABC boards and the agency’s law enforcement rank-and-file has been a recurring theme over the years.
The 2003 committee report said the board’s efforts to “minimize the criminal law enforcement function … has resulted in a complete breakdown of trust among a majority of ABC special agents.”
A similar sentiment prevails today, said people inside the agency who declined to be identified for fear of jeopardizing their jobs. Insley said that group simply has it wrong.
“You have been misinformed by your anonymous sources about current conditions in the Bureau of Law Enforcement,” Insley said. “To make the assertion that a few can speak for the whole of the agency is reckless and unfair to our dedicated employees.”
The circumstances of the spring arrest of University of Virginia student Elizabeth Daly, 20, thrust ABC law enforcement uncomfortably into the unfamiliar light of public scrutiny.
After an agent mistook a crate of water for a case of beer, a half-dozen undercover agents confronted Daly and two friends in a Barracks Road Shopping Center parking lot. One agent drew a weapon on the frightened women and another tried to smash open a window in Daly’s SUV with a flashlight. Panicked, Daly fled, grazing two agents with her vehicle.
She spent a night and afternoon in jail on felony counts of assaulting law enforcement officers and eluding police. The charges were dropped, but an outcry followed when the case made headlines.
That sparked a string of questions about ABC law enforcement’s role, which the 2003 committee report described as conflicted.
Some of the trends cited in that document have persisted, with agents facing increased workloads driven by the continued rise in the number of stores and licensees.
Spending on ABC law enforcement has increased by nearly $3 million since fiscal year 2010, from $11.2 million to $14.1 million in fiscal year 2013. The agency in that time also has added its $750,000 mobile command unit, purchased with asset forfeiture funds. But the numbers of investigations and arrests over the same period have decreased, according to the agency’s annual reports.
The falloff in investigations was especially dramatic, declining from 16,379 in 2010 to 9,647 in 2012, while the number of arrests slipped 14 percent to 2,057 this fiscal year. ABC spokeswoman Rebecca Gettings said the drop in investigations was misleading, owing to a change in the way ABC tracks that information.
“Because the investigation information was captured in a different way in 2010, it is impossible to compare the activities in subsequent years and draw any meaningful conclusions,” Gettings said.
She declined to elaborate.
When The Daily Progress asked for a categorical breakdown of arrests over the past five years, ABC said the task would take 110 hours and cost the newspaper $10,567.
Insley, the chairman appointed in May 2010, said his administration has overseen a string of accomplishments, including improved strategic planning, internal training, record revenue generation, enhanced underage alcohol prevention education and more structured and focused enforcement activities.
He also touted Special Agent Mark Scott’s recent recognition as the Liquor Law Enforcement Agent of Year, awarded last month by the National Liquor Law Enforcement Association. Scott, who serves in the Roanoke region, worked with nine partner agencies last year to take down illegal moonshine operations and rescue more than 100 mistreated animals, a news release stated.
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