Attorney General's Opinion
Attorney General, Richard Blumenthal
August 14, 1992
Demetrios Louziotis, Sr.
Executive Director-Division of Special Revenue
555 Russell Road
Newington, CT 06111
Dear Mr. Louziotis:
This is in response to your recent request for an opinion on whether the Division of Special Revenue must conduct a hearing, under the provisions of the Uniform Administrative Procedure Act (UAPA), prior to revoking a lottery agent's license1 for failure to meet pre-established minimum sales levels for on-line and instant lottery ticket sales.2 Specifically, you inquire as to whether a lottery license is a "license" as that term is contemplated by the UAPA. We also understand that a question is raised as to the practical need for a hearing inasmuch as evidence of sales levels is documented and, presumably, incontestable. For the following reasons, we conclude that a lottery agent's license is a "license" as defined by the UAPA, that a lottery licensee is ordinarily entitled to a UAPA compliance meeting and hearing prior to contemplated adverse administrative action, but that such procedures may be obviated in cases of consent or default.
The UAPA applies to Division license suspension/revocation proceedings pursuant to Conn. Gen. Stat. § 12-574(i).3 Under the UAPA, a license is defined as follows:
"License" includes the whole or part of any agency permit, certificate, approval, registration, charter or similar form of permission required by law, but does not include a license required solely for revenue purposes.
Conn. Gen. Stat. 4-166(6).
Under this definition, the hallmark of a license is the fact that state agency approval is required before the activity may be lawfully conducted. See Easter House, Inc. v. Dept. of Children and Youth Services, 214 Conn. 560, 572, 573 A.2d 304 (1990); All Brand Importers, Inc. v. Dept. of Liquor Control, 213 Conn. 184, 214, 567 A.2d 1156 (1989). Also, it is clear that there are two components to this definition, one inclusive and the other exclusive.
The inclusive component of the definition requires involvement of agency approval required by law. This component is satisfied with respect to lottery licenses because state statute prohibits lottery ticket sales except by the Division or "by a licensed lottery sales agent or his designated employee." Conn. Gen. Stat. § 12-569(a).
The exclusive component does not apply. This component exempts from UAPA purview licenses "required solely for revenue purposes." Conn. Gen. Stat. § 4-166(6) (Emphasis added). This differentiation parallels the distinction in the law made by courts between licenses needed to engage in otherwise unlawful activities, which are based upon the state's police power to regulate conduct for the purpose of protecting public health, safety and welfare; and licenses which facilitate revenue collection, which are authorized as an exercise of the state's power to tax. Compare, Lublin v. Brown , 168 Conn. 212, 362 A.2d 769 (1975); Karen v. East Haddam, 146 Conn. 720, 728, 165 A.2d 921 (1959); State v. Vachon, 140 Conn. 478, 481, 101 A.2d 284 (1953); Connecticut Light & Power Co. v. Walsh, 134 Conn. 295, 309, 57 A.2d 128 (1948); Murphy v. Westport, 131 Conn. 292, 306, 40 A.2d 177 (1944), citing State v. Murphy, 90 Conn. 662, 667, 98 A. 343 (1916). The lottery license requirement here in question is clearly an exercise in police power. it authorizes activity otherwise prohibited as gambling, a criminal act. Conn. Gen. Stat. § 53-278b. The conduct of licensees is strictly regulated and supervised by the state, which dictates, inter alias, who may become a licensee, the price of the tickets, the amount of compensation allowable as a commission for sales, and the manner in which proceeds are returned to the state. See, generally, Conn. Gen. Stat. § 12-569. The Division, by relation, prescribes in detail the qualification for a license, the required methods of operation, and the grounds for revocation and suspension of the license. See, generally, Regs. Conn. State Agencies, Sec. 12-568-1 et seq. Clearly, the purpose is not solely to collect revenue.
Accordingly, we conclude that a lottery agent's license is a "license" as that term is defined in the UAPA.
The UAPA hearing requirements apply in license proceedings which qualify as a "contested case". The term "contested case" is defined in the UAPA as follows:
"Contested case" means a proceeding, including but not restricted to rate-making, price fixing and licensing, in which the legal rights, duties or privileges of a party are required by statute to be determined by an agency after an opportunity for hearing ....
Conn. Gen. Stat. § 4-166(2).
A lottery revocation or suspension proceeding involves licensing. See argument above and Conn. Gen. Stat. § 4-166(7). Additionally, state statute mandates that a hearing be conducted in accordance with the UAPA. See Conn. Gen. Stat. § 12-574(i), supra at n.3. Accordingly, a lottery license revocation/suspension proceeding constitutes a contested case subject to the UAPA hearing requirements.
Additionally, in licensing matters subject to the UAPA hearing requirements, the licensee must also be afforded an opportunity to show compliance prior to institution of such proceedings. This procedure, commonly called a compliance meeting, is required by Conn. Gen. Stat. § 4-182(c) which provides, in pertinent part, as follows:
(c) No revocation, suspension, annulment or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail to the licensee of facts or conduct which warrant the intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license.
Therefore, a lottery agent licensee is ordinarily entitled to a UAPA compliance meeting and hearing prior to contemplated adverse administrative action.4
Finally, with respect to the practical question you raise, it may well be true that the Division's evidence of insufficient sales will be documented and incontestable. However, the UAPA does not excuse any agency from the hearing requirements based upon strength of the case against the licensee. The opportunity for a compliance meeting and hearing ordinarily must be afforded. However, proceedings may be expedited in cases of consent or default pursuant to Conn. Gen. Stat. § 4-177(c) which provides:
(c) Unless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party.
Conn. Gen. Stat. § 4-177(c).
We are aware of no general rule which prohibits the applicability of this provision to the Division. Thus, the Division may resolve lottery agent license proceedings by consent or default in appropriate cases.
In sum, we conclude that a lottery agent's license is a "license" as that term is defined by the UAPA, that a lottery licensee is ordinarily entitled to a UAPA compliance meeting and hearing prior to contemplated adverse administrative action, but that such procedures may be obviated in cases of consent or default.
Very truly yours,
RICHARD BLUMENTHAL
ATTORNEY GENERAL
Robert F. Vacchelli
Assistant Attorney General
RB/RFV/td
1 We understand that, in the past, the Division has afforded hearings to lottery licensees in suspension/revocation proceedings, and that the Division continues to do so during the pendency of this opinion request.
2 Minimum sales requirements are imposed by the Division as part of the game instructions for licensees pursuant to Regs. Conn. State Agencies § 12-569-6(3), which provides:
An agent shall conduct the sale and exchange of lottery tickets pursuant to the executive director's instructions for any game. These may include but "Are not limited to restrictions is to hours of sale. the approval of the location of lottery equipment material on the premises, d the imposition of a minimum sales level.
3 Conn. Gen. Stat. § 12-574(i) provides, in pertinent part, as follows:
The executive director...or the deputy executive director or any unit head authorized by the executive director may suspend or revoke for good cause any license issued by him after hearing held in accordance with chapter 54 (UAPA).
4 Summary action, which involves emergency suspensions and post-suspension hearings, is also available under the UAPA in extraordinary cases where the public health, safety or welfare imperatively requires emergency action. Conn. Gen. Stat. § 4-182(c).