South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. James V. Poore, d/b/a J. V. Amusements, and William Scurry

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
James V. Poore, d/b/a J. V. Amusements, and William Scurry
 
DOCKET NUMBER:
97-ALJ-17-0627-CC

APPEARANCES:
Petitioner, South Carolina Department of Revenue: Carol I. McMahan, Esq.

Respondent, James V. Poore, d/b/a J. V. Amusements, and William Scurry: H. Fred Kuhn, Jr., Esq.

Parties Present: All Parties
 

ORDERS:

ORDER

I. Statement of the Case


The South Carolina Department of Revenue (DOR) seeks the imposition of a $5,000 monetary penalty on both Respondents (total penalties of $10,000) and the revocation of eight Class III machine licenses. Further, DOR seeks a six month prohibition on locating any Class III machines at the location. James V. Poore (Poore), d/b/a J. V. Amusements, and William Scurry (Scurry) oppose DOR's position and assert no penalties are due and no six month prohibition applies. The Respondents' disagreement with DOR's determination places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1997). The hearing in this matter was held February 3, 1998 at the Edgar Brown Building, Columbia, South Carolina.

Based upon the evidence and the argument presented by the parties, James V. Poore, d/b/a J.V. Amusements, and William Scurry have violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Poore is liable for a fine of $2,500, and Scurry is liable for a fine of $5,000. The licenses for the eight operational machines in the establishments on April 11, 1996 are revoked. Those machines may not obtain a license for six months from the date of this order. No prohibition, however, is placed upon the locations themselves.

II. Issues

1. Did Scurry and Poore violate the single place or premises requirement of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997)?

2. Is S.C. Code Regs. 117-190 valid in imposing a requirement that an employee be within the confines of the four walls of an interior structure before that structure constitutes a single place or premises?

3. Does the notice of violation violate due process by not reasonably apprising Scurry and Poore of their alleged wrongful conduct?

4. Have Scurry's and Poore's procedural due process rights been violated by DOR creating a delay in issuing a citation and by adding additional parties and penalties after the initial citation was issued?

5. If a revocation is imposed, is the location prohibited from using Class III machines for six months or are the machines in the location at the time of the revocation citation prohibited from being licensed for six months from the time of the revocation order?

6. If a violation of § 12-21-2804(A) and S.C. Code Regs. 117-190 occurred, who is liable for a fine and in what amount?

III. Analysis


A. Single Place or Premises: Separate Employee(1)

1. Positions of Parties

DOR asserts that the required physical presence of a separate employee in each game room was not satisfied even though two employees were in the common area. Respondents disagree and argue that no requirement exists that the employees must be physically present in the game room. Rather, the argument is that the employees need only be available for service in each game room.





2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

  1. Both Poore and Scurry hold several licenses for Class III video game machines in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina.
  2. Game room 1 is identified as Flamingo Bingo and contains a single five-player Class III machine with only three of the five slots operational.
  3. Machine license 025372 is owned by Scurry and is a license for one of the stations of the five player Class III machine in Game Room 1.
  4. The other machine licenses in Game Room 1 are owned by Poore, d/b/a J.V. Amusements.
  5. Game Room 2 is identified as Hilton Head/Daufuskie Information and holds five Class III machines.
  6. The machine licenses for the Class III machines in Game Room 2 are owned by Poore, d/b/a J.V. Amusements.
  7. On April 11, 1996, SLED Agents conducted an inspection of the video gaming businesses located at 1290 Fording Island Road, Bluffton, South Carolina.
  8. The inspection included walking into each area, listing the license numbers for machines located in the open game rooms, taking photographs of the location, examining the business licenses, retail tax licenses, and talking to an employee at the location.
  9. Of the two game rooms, both were open for business at the date and time of inspection.
  10. Of the open rooms, each contained operational Class III machines.
  11. No customers were in either of the rooms at the time of the inspection.
  12. At the time of the inspection of the two game rooms, no employee was present in either of the two rooms.
  13. The following video game machine licenses were affixed to machines located in the respective game rooms:


Flamingo Bingo

630540

025372

630539

630541

630542
Hilton Head/Daufuskie Information

034637

033157

034638

033152

034636


  1. As a result of the inspection, the SLED agents issued a citation, citing Poore with a violation of S.C. Code § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) for operation of an improper number of machines in a single place or premise without an employee present.
  2. On September 6, 1996 a Proposed Assessment was issued seeking a $5,000 fine against Poore and revocation of eight machine licenses.
  3. After further review, DOR issued a Final Determination on October 13, 1997 seeking a $5,000 fine against Poore, a $5,000 fine against Scurry, revocation of eight Class III machines, and a prohibition on the use of any Class III machines at the location for a six month period.
  4. Poore and Scurry challenged the Final Determination by seeking a hearing before the ALJD.


3. Discussion

A. Statutory and Regulatory Requirements for Single Place or Premises

For machines authorized under § 12-21-2720(A)(3), i.e., Class III machines, no person may maintain licenses or permits for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1997). While the statute does not explain what constitutes a single place or premise, a regulation does. S.C. Code Regs. 117-190.

S.C. Code Regs. 117-190 concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines and gives particular attention to exterior walls surrounding two or more video game areas. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, then each interior structure is a video game area. Under such circumstances the inquiry is whether each video game area is a single place or premises allowing five machines within each area.

The answer is reached by a facts and circumstances methodology imposed by Regs. 117-190. Under the regulation DOR "must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines." While a facts and circumstances review is normally very general, the regulation requires the existence of a minimum four facts. A failure to meet any one of the four facts results in the video poker area not being a separate place or premise. The four factors are: (1) Does each entity or business have a separate electric utility meter? (2) Does each entity or business have at least one separate employee on the premises during business hours? (3) Does each entity or business have a separate local business license where required? (4) Does each entity or business have a separate state sales tax license?

B. Law Addressing Employee On the Premises

The issue here is whether the regulatory requirement is satisfied by each entity or business having at least one separate employee on the premises during business hours. Regs. 117-190. Poore and Scurry argue no violation occurs if an employee is assigned to the room but, while no customers are present, that employee is simply away from the room in a common area. I disagree.

Certainly, a difference of opinion exists on whether the employee must be within the four walls of the area in question in order to be "on the premises." One view is that an employee is not considered to be "on the premises" when the employee is working outside the game room if the Class III video game machines are operational and accessible to customers; i.e., an employee must be present in the room (The four-walls position.) South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996). A contrary view is that the test is met even if the employee is outside the four walls so long as the employee's physical position enables the employee to observe the room and the employee is performing his job functions at the employee's location (the within-view-of-the-four-walls position). South Carolina Dep't of Revenue v. Great Games, Inc., Docket No. 96-ALJ-17-0204-CC, (January 22, 1997). In a similar vein, a view exists that an employee's absence from the room is permissible if the absence is for a short period and the absence is for a justifiable reason, e.g., personal physical need, (the short-legitimate-absence position). South Carolina Dep't of Revenue v. Ace Music Company of Spartanburg, Inc., 97-ALJ-17-0309-CC (October 19, 1997).

I agree with the four-walls position and respectfully disagree with both the within-view-of-the-four-walls position and the short-legitimate-absence position. While at first blush it may seem reasonable to provide exceptions to the four-wall rule, closer analysis dictates otherwise.

First, relying upon the rules of statutory construction to justify exceptions to the plain language is unwarranted. The language "on the premises" is not ambiguous and must be taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C. 532, 313 S.E.2d 342 (Ct. App. 1984). To employ the rules of statutory construction to find that "on the premises" allows an employee to be "away from the premises" violates the principle that the rules of statutory construction are provided to remove doubt but never to create doubt. See 73 Am. Jur. 2d Statutes § 146, citing Englewood Water Dist. v. Tate 334 So. 2d 626. (Fla. App. 1976).

Here, the language of the statute and the regulation is clear. The statute and regulation allow no more than five machines in a single place or premises. Where, as is the case in this matter, at least two interior structures exist with machines inside those structures, each interior structure is a "video game area." None of the video game areas can acquire the status of a separate single place or premises unless an employee is "on the premises during business hours." The premises, upon which the employee must be "on," is the space identified as the "video game area." An employee cannot be on the premises of an identified space if the employee is physically someplace else. Accordingly, once the employee physically leaves the space of the video game area, the employee is no longer "on the premises."

Second, a court can not seek ways to rewrite statutes or regulations. To depart from the plainly expressed meaning causes the tribunal to legislate rather than interpret since "the wisdom of legislation rests with the Legislature, and it is the province of the Courts to construe, not to make, the laws. . . ." Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d 645, 652 (1942). In short, an ALJ cannot add conditions to the "on the premises" language of the regulation in an effort to provide exceptions that seek to improve upon what the General Assembly has plainly promulgated.

Finally, the purpose of the regulation under review dictates a holding that "on the premises" means exactly what it says. The purpose of the regulation is to provide a high degree of certainty to defining a separate place or premises. The very reason for the promulgation is that no statutory definition was provided. In accordance with the purpose sought, the regulation adopts site specific criteria. Indeed, the regulation counts walls, limits openings in the walls, prevents access from one area to another, and even details that the walls must be one-hour firewalls. Given the regulations's site specific analysis, the most consistent view is that the plain language of "on the premises" limits the employee to the physical space of the four walls. On the contrary, inconsistency with the regulation results if "on the premises" requires examining whether the employee's line of sight covers more than one area or whether the reason the employee is away is a proper reason. In short, the regulation is site specific and requires that "on the premises" be within the four walls of the area under review.

C. Facts of Employee On the Premises

Here, Poore and Scurry hold several Class III licenses for video game machines and operate a video gaming business in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina. Both Poore and Scurry own licenses used by the machines located in the game rooms.

On April 11, 1996, SLED agents conducted an inspection of the video gaming businesses. The inspection included walking into each area, listing the license numbers for machines located in the open game rooms, taking photographs of the location, examining the business licenses, retail tax licenses, and utility meters for the location, and talking to an employee at the location. Of the two game rooms, while no customers were in either room, both game rooms were open on the date and time of the inspection. Of the open rooms, each had its door open and contained operational Class III machines in each room. Two employees were in the building but no employee was on the premises of either game room.

In this case, DOR bears the burden of proving that two of the rooms were without separate employees. See 29 Am. Jur. 2d Evidence § 127 (1994) (burden of proof generally rests with the party who asserts the affirmative of an issue). Under the facts of this case, DOR has meet that burden. Accordingly, neither of the two rooms constitutes a separate place or premises, and a violation of Section 12-21-2804(A) occurred on April 11, 1996 at the video gaming businesses located at 1290 Fording Island Road, Bluffton, South Carolina.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. Machines authorized under § 12-21-2720(A)(3) are termed Class III machines.

2. No person may maintain licenses or permits for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1997).

3. For purposes of Class III machines, no statutory definition exists of "single place or premise."

4. A definition of "single place or premise" is supplied by regulation. S.C. Code Ann. Regs. 117-190.

5. The regulatory definition concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines. S.C. Code Ann. Regs. 117-190.

6. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, each interior structure is a video game area. S.C. Code Ann. Regs. 117-190.

7. Deciding whether the video game area is a single place or premises requires the use of a facts and circumstances methodology since a review must consist of all the facts and circumstances to determine if "each area in reality constitutes a single place or premise for video game machines." S.C. Code Ann. Regs. 117-190.

8. The facts and circumstances review requires the existence of four minimum facts with a failure of any one of the four facts resulting in a conclusion that the video game area is not a separate place or premise. S.C. Code Ann. Regs. 117-190.

9. One of the four required facts is that the entity or business must have at least one separate employee on the premises during business hours. S.C. Code Ann. Regs. 117-190.

10. If the Class III video game machines are operational and accessible to customers, an employee is not "on the premises" unless the employee is physically present in the room identified as the video game area. South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996), aff'd Court of Common Pleas, Richland County, Civil Action No. 96-CP-40-0889 (March 21, 1997); S.C. Code Ann. Regs. 117-190.

11. An employee is not "on the premises" when the employee is outside the four walls of the video game area even when the employee's physical position enables the employee to observe the room and the employee is performing his job functions at the employee's location.

12. An employee is not "on the premises" even when the employee's absence from the room is for a short period and the absence is for a justifiable reason, e.g., personal physical needs.

13. The language "on the premises" is not ambiguous and must be taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C. 532, 313 S.E.2d 342 (Ct. App. 1984).

14. To employ the rules of statutory construction to find that "on the premises" allows an employee to be "away from the premises" violates the principle that the rules of statutory construction are provided to remove doubt never to create doubt. See 73 Am. Jur. 2d Statutes § 146, citing Englewood Water Dist. v. Tate, 334 So.2d 626. (Fla. App. 1976).

15. A court cannot seek ways to rewrite the plain language of statutes or regulations in that to depart from the plainly expressed meaning causes the tribunal to legislate rather than interpret since "the wisdom of legislation rests with the Legislature, and it is the province of the Courts to construe, not to make, the laws. . . ." Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d 645, 652 (1942).

16. The purpose of the regulation is to provide a high degree of certainty in defining a separate place or premises.

17. The view most consistent with the purpose of the regulation is applying the plain language of "on the premises" to mean that the employee must be within the physical space of the four walls constituting the video game area.

18. Poore's and Scurry's failure to have a separate employee on the premises of the video game areas identified as Flamingo Bingo and Hilton Head/Daufuskie Information at the time of the April 11, 1996 inspection violated the single place or premises provisions regulating the use of Class III machines. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

B. Single Place or Premises: Improper Regulation

1. Positions of Parties

Both Scurry and Poore argue DOR exceeded its authority in promulgating Regs. 117-190 and have added to the statutory law. Obviously, DOR asserts the regulation is proper.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

1. Both Poore and Scurry hold several licenses for Class III video game machines which are in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina, South Carolina.

2. A requirement of having an employee physically located within the confines of each game room is reasonably related to helping assure that no player exceeds the $125 pay out limitation.

3. A requirement of having an employee physically located within the confines of each game room is reasonably related to assuring that the premises do not pay out to an underage party.

3. Discussion

A. Introduction

Here, Scurry and Poore argue that the regulation is invalid. They assert the regulation is outside the scope of DOR's authority. Further, they argue the regulation amounts to an alteration to the law by adding the employee requirement when such a requirement is simply not a valid criteria for establishing whether a location is or is not a single place or premises. I disagree.

B. Applicable Law

An agency must exercise its rule-making authority within the grant of legislative power as expressed in the enabling statute and may not exceed the authority conferred by that statute. 73 C.J.S. Public Administrative Law and Procedure § 89 (1983). A regulation does not exceed the statutory authority granted in the enabling statute if the regulation is reasonably related to the purpose of the enabling legislation. Hunter & Walden Co. v. South Carolina State Licensing Board for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978). However, even when reasonably related to the purpose of the enabling legislation, a regulation is improper if it alters or adds to the terms of a statute. Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995). Thus, two areas of analysis are presented: enabling legislation and altering the statute.

1. Enabling Legislation

a. Authorization

Enabling legislation is that legislation which enables persons, corporations or agencies to do what before they could not do. Black's Law Dictionary 526 (6th ed. 1990). The term is not a term of art but is a broad based generic label addressing the granting of authority in various areas. See, e.g., Civitarese v. Middleborough, 591 N.E.2d 1091 (Mass. 1992) (while unconstitutional on other grounds, the enabling legislation sought to enable the town to control rents and evictions in mobile home parks); 58 A.L.R.4th 274 (1988) (statutes which specifically authorize local governments to impose taxes on hotel or motel room occupancy are frequently called enabling statutes). A statute that grants authority to an agency to promulgate regulations is also an enabling statute. See Edisto Aquaculture Corp. v. South Carolina Wildlife and Marine Resources Dept., 311 S.C. 37, 426 S.E.2d 753 (1993) (the former South Carolina Wildlife and Marine Resources Commission was able to publish regulations by S.C. Code Ann. § 50-16-50, which as "enabling legislation provides that '[t]he department may promulgate regulations to effectuate the provisions of this chapter.'"). In the instant case, the General Assembly provided broad enabling legislation specifically authorizing DOR to enact regulations "pertaining to the machines and persons licensed by [DOR]." S.C. Code Ann. § 12-21-2798 (Supp. 1997).

b. Purpose of Enabling Legislation

Legislation regulating machines at a single place or premises encompasses more than mere licensing. See State v. One Coin-Operated Video Game Mach., 321 S.C. 176, 467 S.E.2d 443 (1996) (while the act has no legislative intent to legalize all Class III machines, "the VGMA provides for more than licensing of video game machines."). Thus, broad authority in DOR is needed to properly regulate and license all Class III machines. See S.C. Code Ann. §§ 12-21-2776(A) and 12-21-2778 (Supp. 1997). Further, DOR is prohibited from licensing more than five machines at a single place or premises. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Thus, to properly license the machines, the statutes implicitly direct DOR to identify the criteria that constitute a "single place or premises." As such, one purpose of the enabling legislation is to enable DOR to establish criteria that identify a single place or premises. Accordingly, DOR properly chose to establish its single place or premises criteria by regulation.

c. Reasonably Related To Purpose

Since at least one purpose of the enabling statute is to empower DOR to identify criteria for a single place or premises (so as to properly license no more than five machines), the issue is whether requiring an employee on the premises is reasonably related to such a purpose. In answering the inquiry, a court will not decide if a better rule could be established but rather will decide if the rule chosen reasonably effectuates the governmental objective sought to be implemented. Liberty Homes, Inc. v. Department of Industry, Labor & Human Relations, 401 N.W.2d 805 (Wis. 1987). Further, in deciding the extent of reasonableness required, if the grant of authority is very broad, the agency has great latitude in accomplishing its task. See Hunter & Walden Co. , Inc. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978) (Board having statutory authority to issue regulations "as it shall deem best, provided they are not in conflict with the laws of the State" properly required a minimum net worth of $50,000 since the requirement was "not in conflict with any statute, but was a natural amplification of the Code Section which [required] that a financial statement be submitted."). Indeed, to find that a promulgated regulation fails to carry out the purpose of the enabling act requires a most compelling basis. See American Network, Inc. v. Washington Utilities & Transp. Comm'n, 776 P.2d 950 (Wash. 1987) (regulations will not be struck down unless compelling reasons are sufficiently present to show that the scheme is in conflict with the intent and purpose of the legislation); see South Carolina Tax Comm'n v. South Carolina Tax Bd. of Review, 305 S.C. 183, 407 S.E.2d 627 (1991) (where Tax Commission was authorized by the General Assembly to define the value of property and to assess a tax on that property, the Tax Commission did not exceed its authority even when its promulgated regulation established a minimum value for all merchant's equipment).

i. Results Vary With Factual and Legal Circumstances

In the final analysis, the decision on what is reasonable depends upon the particular facts and statutory law of each case. 2 Am. Jur. 2d. Administrative Law § 225 (1994); U.S. Outdoor Advertising, Inc. v. South Carolina Dep't of Transp., 324 S.C. 1, 481 S.E.2d 112 (1997) (Reg. 63-342(HH) proper since it is reasonably related to the purpose of the Highway Advertising Control Act and is clearly intended to further the public policy of that Act); Thorpe v. Housing Authority of City of Durham, 393 U.S. 268 (1969) ("We therefore cannot hold that the circular's requirements bear no reasonable relationship to the purposes for which HUD's rule-making power was authorized."); see Brooks v. South Carolina State Bd. of Funeral Service, 271 S.C. 457, 247 S.E.2d 820 (1978) (requirement to perform sixty funerals as part of an apprenticeship was unreasonable and therefore invalid).

ii. Factual and Legal Circumstances Here

Here, the statutory licensing scheme establishes that the criteria of having an employee on the premises is a reasonable factor. Each Class III machine must be licensed under Article 19 of Chapter 21 "before placement or operation on the premises of a licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1997). Chapter 19 requires that before the machine can be operated at a location, the location must be licensed under the sales tax provisions of Chapter 36 of Title 12, i.e., a retail license. S.C. Code Ann. § 12-21-2703 (Supp. 1997). Under the retail license provisions of Chapter 36, before engaging in business, every retailer must have a retail license for each establishment. S.C. Code Ann. § 12-26-510(A)(1) (Supp. 1997). Thus, the statutory scheme treats the licensed machines as being located on the premises of a retail operation selling to the public.

Under such a scheme, it is reasonable to require that a retail business dealing in Class III video games have an employee on the premises. By way of only one example, an obvious and entirely reasonable basis for having an employee on the premises concerns the limitation on pay outs made from a location. Each five machine location having the status of a "single place or premises" can pay out a maximum of $125 a day to a single player. S.C. Code Ann. § 12-21-2791 (Supp. 1997). A requirement of having an employee physically located within the confines of each premises is reasonably related to helping assure that no player exceeds the dollar limitation. Likewise, no one under twenty-one may receive any pay out from machines on the premises. S.C. Code Ann. § 12-21-2804(C) (Supp. 1997). Again, having an employee on the premises is reasonably related to assuring that the premises do not pay out to an underage party.(2)

2. Addition to the Statute

Certainly, an agency may not promulgate a position that materially alters or adds to the requirements of a statute. Lee v. Michigan Millers Mutual Insurance Co., 250 S.C. 462, 158 S.E.2d 774 (1968); Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995) (a statute that provided fourteen days in which to seek review could not be altered by a regulation that added a requirement imposing the use of a particular form). However, administrative agencies may be authorized "'to fill up the details' by prescribing rules and regulations for the complete operation and enforcement of the law within its expressed general purpose." Heyward v. South Carolina Tax Comm'n, 240 S.C. 347, 355, 126 S.E.2d 15, 19 (1962). In fact, in those areas where an agency is given broad power to license or permit an activity, agency regulations that define a term will be viewed as properly filling in the details where the definition is reasonable and not overly restrictive. Young v. South Carolina Dep't of Highways and Public Transp., 287 S.C. 108, 336 S.E.2d 879 (Ct. App. 1985)

Here, Scurry and Poore argue S.C. Code Ann § 12-21-2804(A) has been added to. The statute prohibits more than five Class III machines at a single place or premises but does not define the contours of a single place or premises. As previously developed in this Order, the definition of "single place or premises" in Regs. 117-190 is reasonable in requiring that an employee be present on the premises. Likewise, the definition is not overly restrictive given the fact that the regulation seeks to control and police gambling. Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993) (loss incurred by gambler in playing legalized video poker could be recovered by statute allowing recovery of gambling loss of $50 or greater); 93 C.J.S. Public Administrative Law and Procedure § 93 (1983) (review of the propriety of a regulation should consider the evil which the statute being interpreted seeks to control). Accordingly, a definition that requires an employee to be on the premises before the location achieves the status of a "single place or premises" is not an unduly restrictive regulation, is a reasonable requirement, does not add to the statute, and is one that merely "fills in the details" as required by the General Assembly.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. An agency must exercise its rule-making authority within the grant of legislative power as expressed in the enabling statute and may not exceed the authority conferred by that statute. 73 C.J.S. Public Administrative Law and Procedure § 89 (1983).

2. A regulation does exceed the statutory authority granted in the enabling statute if the regulation is reasonably related to the purpose of the enabling legislation. Hunter & Walden Co. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978).

3. Even when reasonably related to the purpose of the enabling legislation, a regulation is improper if it alters or adds to the terms of a statute. Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995).

4. Enabling legislation enables persons, corporations or agencies to do what before they could not do. Black's Law Dictionary, 526 (6th ed. 1990).

5. The term enabling legislation is not a term of art but rather is a broad based generic label addressing the granting of authority in various areas. See Civitarese v Middleborough 591 N.E.2d 1091 (Mass. 1992); 58 A.L.R.4th 274 (1988).

6. A statute that grants authority to an agency to promulgate regulations is an enabling statute. See Edisto Aquaculture Corp. v. South Carolina Wildlife and Marine Resources Dept., 311 S.C. 37, 426 S.E.2d 753 (1993).

7. The General Assembly provided broad enabling legislation authorizing DOR to enact regulations "pertaining to the machines and persons licensed by [DOR]." S.C. Code Ann. § 12-21-2798 (Supp. 1997).

8. Legislation regulating Class III machines at a single place or premises encompasses more than mere licensing. See State v. One Coin-Operated Video Game Mach., 321 S.C. 176, 467 S.E.2d 443 (1996).

9. Broad authority in DOR is needed to properly regulate as well as license all Class III machines. S.C. Code Ann. §§ 12-21-2776(A) and 12-21-2778 (Supp. 1997).

10. DOR is prohibited from licensing more than five machines at a single place or premises. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

11 The statutes implicitly direct DOR to identify the criteria that constitute a "single place or premises."

12. One purpose of the enabling legislation is to establish criteria that identify a single place or premises.

13. In deciding whether requiring an employee on the premises is reasonably related to the purpose of the enabling legislation, a court will not decide if a better rule could be established but rather will decide if the rule chosen reasonably effectuates the governmental objective sought to be implemented. Liberty Homes, Inc. v. Dep't of Industry, Labor & Human Relations, 401 N.W.2d 805 (Wis. 1987).

14. In deciding the extent of reasonableness required, if the grant of authority is very broad, the agency is entitled to great latitude in accomplishing its task. See Hunter & Walden Co. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978).

15. To find that a promulgated regulation fails to carry out the purpose of the enabling act requires presenting a most compelling basis. See American Network, Inc. v Washington Utilities & Transp. Com., 776 P.2d 950 (Wash. 1989); see South Carolina Tax Comm'n v. South Carolina Tax Bd. of Review, 305 S.C. 183, 407 S.E.2d 627 (1991).

16. The decision on what is reasonable depends upon the particular facts and statutory law of each case. 2 Am. Jur. 2d. Administrative Law § 225 (1994); U.S. Outdoor Advertising, Inc. v. South Carolina Dep't of Transp., 324 S.C. 1, 481 S.E.2d 112 (1997); Thorpe v. Housing Authority of City of Durham, 393 U.S. 268 (1969); see Brooks v. South Carolina State Bd. of Funeral Service, 271 S.C. 457, 247 S.E.2d 820 (1978).

17. Each Class III machine must be licensed under Article 19 of Chapter 21 "before placement or operation on the premises of a licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1997).

18. Chapter 19 requires that before the machine can be operated at a location, the location must be licensed under the sales tax provisions of Chapter 36 of Title 12. S.C. Code Ann. § 12-21-2703 (Supp. 1997).

19. Under the retail license provisions of Chapter 36, before engaging in business, every retailer must have a retail license for each establishment. S.C. Code Ann. § 12-26-510(A)(1) (Supp. 1997).

20. The statutory scheme treats the licensed machines as being located on the premises of a retail operation selling to the public.

21. The statutory scheme presents a reasonable basis for requiring that a retail business dealing in Class III video games have an employee on the premises.

22. Each five machine location having the status of a "single place or premises" can pay out a maximum of $125 a day to a single player. S.C. Code Ann. § 12-21-2791 (Supp. 1997).

23. No one under twenty-one may receive any pay out from machines on the premises. S.C. Code Ann. § 12-21-2804(C) (Supp. 1997).

25. Reasonableness is met without presenting an exhaustive listing of grounds for the requirement of having an employee on the premises. 73 C.J.S. Public Administrative Law and Procedure § 93 (1983).

26. No persuasive and no compelling arguments establish the regulation is unreasonable.

27. Having an employee on the premises is a reasonable criteria in defining a single place or premises.

28. Regs. 117-190 is not invalid as imposing unreasonable requirements.

29. An agency may not promulgate a position that materially alters or adds to the requirements of a statute. Lee v. Michigan Millers Mutual Ins. Co., 250 S.C. 462, 158 S.E.2d) 774 (1968), Goodman v. City of Columbia, 318 S.C. 458, 488 S.E.2d 531 (1995).

30. Administrative agencies may be authorized " 'to fill up the details' by prescribing rules and regulations for the complete operation and enforcement of the law within its expressed general purpose." Heyward v. South Carolina Tax Comm'n, 240 S.C. 347, 355, 126 S.E.2d 15, 19 (1962).

31. In those area where an agency is given broad power to license or permit an activity, agency regulations that define a term will be viewed as properly filling in the details where the definition is reasonable and not overly restrictive. Young v. South Carolina Dep't of Highways and Public Transp., 287 S.C. 108, 336 S.E.2d 879 (Ct. App. 1985).

32. The definition of "single place or premises" supplied by Regs. 117-190 is reasonable.

33. Regs. 117-190 seeks to control and police an activity which constitutes gambling. Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993).

34. A review of the propriety of a regulation should consider the evil which the statute being interpreted seeks to control. 93 C.J.S. Public Administrative Law and Procedure § 93 (1983).

35. Regs. 117-190's definition of single place or premises that requires an employee to be on the premises is not an unduly restrictive regulation, is a reasonable requirement does not add to the statute, and is one that merely "fills in the details" as required by the General Assembly.

C. Procedural Due Process: Vagueness of Charge


1. Positions of Parties

Both Scurry and Poore argue the charge of violating the single place or premises requirement is so vague as to be unintelligible and thus unconstitutional. DOR argues the requirement is understandable and is proper.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

1. Both Poore and Scurry hold several licenses for Class III video game machines which are in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina.

2. Scurry and Poore both were notified of their violations of statutory and regulatory duties.

3. The initial citation as well as the final DOR determination cite the violations as a failure to have an employee on the premises and a failure to have a retail license.

4. The statute and regulation are stated in plain language sufficient to place Scurry and Poore on notice of the duties imposed.

3. Discussion

A. Introduction

Here, Scurry and Poore argue that S.C. Code Ann. § 12-21-2804(A) and Regs. 117-190 violate due process by being so vague that they had no notice as to what conduct is forbidden. I disagree.

B. Applicable Law

As a defense for the failure to comply with an imposed duty, one who asserts vagueness or indefiniteness relies upon the "constitutional principle that procedural due process requires fair notice and proper standards for adjudication." City of Beaufort v. Baker, 315 S.C. 146, 151, 432 S.E.2d 470, 473 (1993) (quoting State v. Albert, 257 S.C. 131, 134, 184 S.E. 2d 605, 606 (1971)). Fair notice is given if the statute or regulation provides adequate warning of what is commanded or forbidden sufficient for persons of common intelligence not to have to guess as to the meaning. Village of Hoffman Estates v. Flipside, 455 U.S. 489 (1982). In deciding whether the fair notice test has been met, the inquiry must be applied in a practical manner. Toussaint v. State Bd. of Medical Examiners, 303 S.C. 316, 400 S.E.2d 488 (1991). One very practical means of determining whether fair notice has been given is to examine the statute or regulation for the presence of plain language. See Huber v. South Carolina State Bd. of Physical Therapy Examiners, 316 S.C. 24, 446 S.E.2d 433 (1994) (Huber had fair notice that training unregistered persons to perform physical therapy and then allowing them to treat patients was prohibited since the plain language of the statutes involved clearly prohibited such activities).

C. Application to Facts

In the instant case, fair notice was given to Scurry and Poore in that both were notified of the violations of the statutory and regulatory duties. Both the initial citation as well as the final DOR determination specifically cite the violations as a failure to have an employee on the premises and a failure to have a retail license.

Further, the statute and regulation are stated in plain language sufficient to place Scurry and Poore on notice of the duties imposed. In fact, the plain language addressing single place or premises in S.C. Code Ann. § 12-21-2804(A) has already been determined sufficiently clear so as to put ordinary individuals on notice of the required conduct. Reyelt v. South Carolina Tax Comm'n, C/A No. 6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct. November 15, 1993). In addition, Regs. 117-190 expresses in plain language the requirement that the employee must be "on the premises during business hours" and that "each entity or business [must] have a separate state sales tax license." Accordingly, no due process violation is shown here under an alleged lack of fair notice.

4. Conclusions of Law

I. Statement of the Case


The South Carolina Department of Revenue (DOR) seeks the imposition of a $5,000 monetary penalty on both Respondents (total penalties of $10,000) and the revocation of eight Class III machine licenses. Further, DOR seeks a six month prohibition on locating any Class III machines at the location. James V. Poore (Poore), d/b/a J. V. Amusements, and William Scurry (Scurry) oppose DOR's position and assert no penalties are due and no six month prohibition applies. The Respondents' disagreement with DOR's determination places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1997). The hearing in this matter was held February 3, 1998 at the Edgar Brown Building, Columbia, South Carolina.

Based upon the evidence and the argument presented by the parties, James V. Poore, d/b/a J.V. Amusements, and William Scurry have violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Poore is liable for a fine of $2,500, and Scurry is liable for a fine of $5,000. The licenses for the eight operational machines in the establishments on April 11, 1996 are revoked. Those machines may not obtain a license for six months from the date of this order. No prohibition, however, is placed upon the locations themselves.

II. Issues

1. Did Scurry and Poore violate the single place or premises requirement of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997)?

2. Is S.C. Code Regs. 117-190 valid in imposing a requirement that an employee be within the confines of the four walls of an interior structure before that structure constitutes a single place or premises?

3. Does the notice of violation violate due process by not reasonably apprising Scurry and Poore of their alleged wrongful conduct?

4. Have Scurry's and Poore's procedural due process rights been violated by DOR creating a delay in issuing a citation and by adding additional parties and penalties after the initial citation was issued?

5. If a revocation is imposed, is the location prohibited from using Class III machines for six months or are the machines in the location at the time of the revocation citation prohibited from being licensed for six months from the time of the revocation order?

6. If a violation of § 12-21-2804(A) and S.C. Code Regs. 117-190 occurred, who is liable for a fine and in what amount?

III. Analysis


A. Single Place or Premises: Separate Employee(1)

1. Positions of Parties

DOR asserts that the required physical presence of a separate employee in each game room was not satisfied even though two employees were in the common area. Respondents disagree and argue that no requirement exists that the employees must be physically present in the game room. Rather, the argument is that the employees need only be available for service in each game room.





2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

  1. Both Poore and Scurry hold several licenses for Class III video game machines in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina.
  2. Game room 1 is identified as Flamingo Bingo and contains a single five-player Class III machine with only three of the five slots operational.
  3. Machine license 025372 is owned by Scurry and is a license for one of the stations of the five player Class III machine in Game Room 1.
  4. The other machine licenses in Game Room 1 are owned by Poore, d/b/a J.V. Amusements.
  5. Game Room 2 is identified as Hilton Head/Daufuskie Information and holds five Class III machines.
  6. The machine licenses for the Class III machines in Game Room 2 are owned by Poore, d/b/a J.V. Amusements.
  7. On April 11, 1996, SLED Agents conducted an inspection of the video gaming businesses located at 1290 Fording Island Road, Bluffton, South Carolina.
  8. The inspection included walking into each area, listing the license numbers for machines located in the open game rooms, taking photographs of the location, examining the business licenses, retail tax licenses, and talking to an employee at the location.
  9. Of the two game rooms, both were open for business at the date and time of inspection.
  10. Of the open rooms, each contained operational Class III machines.
  11. No customers were in either of the rooms at the time of the inspection.
  12. At the time of the inspection of the two game rooms, no employee was present in either of the two rooms.
  13. The following video game machine licenses were affixed to machines located in the respective game rooms:


Flamingo Bingo

630540

025372

630539

630541

630542
Hilton Head/Daufuskie Information

034637

033157

034638

033152

034636


  1. As a result of the inspection, the SLED agents issued a citation, citing Poore with a violation of S.C. Code § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) for operation of an improper number of machines in a single place or premise without an employee present.
  2. On September 6, 1996 a Proposed Assessment was issued seeking a $5,000 fine against Poore and revocation of eight machine licenses.
  3. After further review, DOR issued a Final Determination on October 13, 1997 seeking a $5,000 fine against Poore, a $5,000 fine against Scurry, revocation of eight Class III machines, and a prohibition on the use of any Class III machines at the location for a six month period.
  4. Poore and Scurry challenged the Final Determination by seeking a hearing before the ALJD.


3. Discussion

A. Statutory and Regulatory Requirements for Single Place or Premises

For machines authorized under § 12-21-2720(A)(3), i.e., Class III machines, no person may maintain licenses or permits for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1997). While the statute does not explain what constitutes a single place or premise, a regulation does. S.C. Code Regs. 117-190.

S.C. Code Regs. 117-190 concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines and gives particular attention to exterior walls surrounding two or more video game areas. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, then each interior structure is a video game area. Under such circumstances the inquiry is whether each video game area is a single place or premises allowing five machines within each area.

The answer is reached by a facts and circumstances methodology imposed by Regs. 117-190. Under the regulation DOR "must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines." While a facts and circumstances review is normally very general, the regulation requires the existence of a minimum four facts. A failure to meet any one of the four facts results in the video poker area not being a separate place or premise. The four factors are: (1) Does each entity or business have a separate electric utility meter? (2) Does each entity or business have at least one separate employee on the premises during business hours? (3) Does each entity or business have a separate local business license where required? (4) Does each entity or business have a separate state sales tax license?

B. Law Addressing Employee On the Premises

The issue here is whether the regulatory requirement is satisfied by each entity or business having at least one separate employee on the premises during business hours. Regs. 117-190. Poore and Scurry argue no violation occurs if an employee is assigned to the room but, while no customers are present, that employee is simply away from the room in a common area. I disagree.

Certainly, a difference of opinion exists on whether the employee must be within the four walls of the area in question in order to be "on the premises." One view is that an employee is not considered to be "on the premises" when the employee is working outside the game room if the Class III video game machines are operational and accessible to customers; i.e., an employee must be present in the room (The four-walls position.) South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996). A contrary view is that the test is met even if the employee is outside the four walls so long as the employee's physical position enables the employee to observe the room and the employee is performing his job functions at the employee's location (the within-view-of-the-four-walls position). South Carolina Dep't of Revenue v. Great Games, Inc., Docket No. 96-ALJ-17-0204-CC, (January 22, 1997). In a similar vein, a view exists that an employee's absence from the room is permissible if the absence is for a short period and the absence is for a justifiable reason, e.g., personal physical need, (the short-legitimate-absence position). South Carolina Dep't of Revenue v. Ace Music Company of Spartanburg, Inc., 97-ALJ-17-0309-CC (October 19, 1997).

I agree with the four-walls position and respectfully disagree with both the within-view-of-the-four-walls position and the short-legitimate-absence position. While at first blush it may seem reasonable to provide exceptions to the four-wall rule, closer analysis dictates otherwise.

First, relying upon the rules of statutory construction to justify exceptions to the plain language is unwarranted. The language "on the premises" is not ambiguous and must be taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C. 532, 313 S.E.2d 342 (Ct. App. 1984). To employ the rules of statutory construction to find that "on the premises" allows an employee to be "away from the premises" violates the principle that the rules of statutory construction are provided to remove doubt but never to create doubt. See 73 Am. Jur. 2d Statutes § 146, citing Englewood Water Dist. v. Tate 334 So. 2d 626. (Fla. App. 1976).

Here, the language of the statute and the regulation is clear. The statute and regulation allow no more than five machines in a single place or premises. Where, as is the case in this matter, at least two interior structures exist with machines inside those structures, each interior structure is a "video game area." None of the video game areas can acquire the status of a separate single place or premises unless an employee is "on the premises during business hours." The premises, upon which the employee must be "on," is the space identified as the "video game area." An employee cannot be on the premises of an identified space if the employee is physically someplace else. Accordingly, once the employee physically leaves the space of the video game area, the employee is no longer "on the premises."

Second, a court can not seek ways to rewrite statutes or regulations. To depart from the plainly expressed meaning causes the tribunal to legislate rather than interpret since "the wisdom of legislation rests with the Legislature, and it is the province of the Courts to construe, not to make, the laws. . . ." Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d 645, 652 (1942). In short, an ALJ cannot add conditions to the "on the premises" language of the regulation in an effort to provide exceptions that seek to improve upon what the General Assembly has plainly promulgated.

Finally, the purpose of the regulation under review dictates a holding that "on the premises" means exactly what it says. The purpose of the regulation is to provide a high degree of certainty to defining a separate place or premises. The very reason for the promulgation is that no statutory definition was provided. In accordance with the purpose sought, the regulation adopts site specific criteria. Indeed, the regulation counts walls, limits openings in the walls, prevents access from one area to another, and even details that the walls must be one-hour firewalls. Given the regulations's site specific analysis, the most consistent view is that the plain language of "on the premises" limits the employee to the physical space of the four walls. On the contrary, inconsistency with the regulation results if "on the premises" requires examining whether the employee's line of sight covers more than one area or whether the reason the employee is away is a proper reason. In short, the regulation is site specific and requires that "on the premises" be within the four walls of the area under review.

C. Facts of Employee On the Premises

Here, Poore and Scurry hold several Class III licenses for video game machines and operate a video gaming business in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina. Both Poore and Scurry own licenses used by the machines located in the game rooms.

On April 11, 1996, SLED agents conducted an inspection of the video gaming businesses. The inspection included walking into each area, listing the license numbers for machines located in the open game rooms, taking photographs of the location, examining the business licenses, retail tax licenses, and utility meters for the location, and talking to an employee at the location. Of the two game rooms, while no customers were in either room, both game rooms were open on the date and time of the inspection. Of the open rooms, each had its door open and contained operational Class III machines in each room. Two employees were in the building but no employee was on the premises of either game room.

In this case, DOR bears the burden of proving that two of the rooms were without separate employees. See 29 Am. Jur. 2d Evidence § 127 (1994) (burden of proof generally rests with the party who asserts the affirmative of an issue). Under the facts of this case, DOR has meet that burden. Accordingly, neither of the two rooms constitutes a separate place or premises, and a violation of Section 12-21-2804(A) occurred on April 11, 1996 at the video gaming businesses located at 1290 Fording Island Road, Bluffton, South Carolina.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. Machines authorized under § 12-21-2720(A)(3) are termed Class III machines.

2. No person may maintain licenses or permits for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1997).

3. For purposes of Class III machines, no statutory definition exists of "single place or premise."

4. A definition of "single place or premise" is supplied by regulation. S.C. Code Ann. Regs. 117-190.

5. The regulatory definition concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines. S.C. Code Ann. Regs. 117-190.

6. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, each interior structure is a video game area. S.C. Code Ann. Regs. 117-190.

7. Deciding whether the video game area is a single place or premises requires the use of a facts and circumstances methodology since a review must consist of all the facts and circumstances to determine if "each area in reality constitutes a single place or premise for video game machines." S.C. Code Ann. Regs. 117-190.

8. The facts and circumstances review requires the existence of four minimum facts with a failure of any one of the four facts resulting in a conclusion that the video game area is not a separate place or premise. S.C. Code Ann. Regs. 117-190.

9. One of the four required facts is that the entity or business must have at least one separate employee on the premises during business hours. S.C. Code Ann. Regs. 117-190.

10. If the Class III video game machines are operational and accessible to customers, an employee is not "on the premises" unless the employee is physically present in the room identified as the video game area. South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996), aff'd Court of Common Pleas, Richland County, Civil Action No. 96-CP-40-0889 (March 21, 1997); S.C. Code Ann. Regs. 117-190.

11. An employee is not "on the premises" when the employee is outside the four walls of the video game area even when the employee's physical position enables the employee to observe the room and the employee is performing his job functions at the employee's location.

12. An employee is not "on the premises" even when the employee's absence from the room is for a short period and the absence is for a justifiable reason, e.g., personal physical needs.

13. The language "on the premises" is not ambiguous and must be taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C. 532, 313 S.E.2d 342 (Ct. App. 1984).

14. To employ the rules of statutory construction to find that "on the premises" allows an employee to be "away from the premises" violates the principle that the rules of statutory construction are provided to remove doubt never to create doubt. See 73 Am. Jur. 2d Statutes § 146, citing Englewood Water Dist. v. Tate, 334 So.2d 626. (Fla. App. 1976).

15. A court cannot seek ways to rewrite the plain language of statutes or regulations in that to depart from the plainly expressed meaning causes the tribunal to legislate rather than interpret since "the wisdom of legislation rests with the Legislature, and it is the province of the Courts to construe, not to make, the laws. . . ." Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d 645, 652 (1942).

16. The purpose of the regulation is to provide a high degree of certainty in defining a separate place or premises.

17. The view most consistent with the purpose of the regulation is applying the plain language of "on the premises" to mean that the employee must be within the physical space of the four walls constituting the video game area.

18. Poore's and Scurry's failure to have a separate employee on the premises of the video game areas identified as Flamingo Bingo and Hilton Head/Daufuskie Information at the time of the April 11, 1996 inspection violated the single place or premises provisions regulating the use of Class III machines. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

B. Single Place or Premises: Improper Regulation

1. Positions of Parties

Both Scurry and Poore argue DOR exceeded its authority in promulgating Regs. 117-190 and have added to the statutory law. Obviously, DOR asserts the regulation is proper.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

1. Both Poore and Scurry hold several licenses for Class III video game machines which are in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina, South Carolina.

2. A requirement of having an employee physically located within the confines of each game room is reasonably related to helping assure that no player exceeds the $125 pay out limitation.

3. A requirement of having an employee physically located within the confines of each game room is reasonably related to assuring that the premises do not pay out to an underage party.

3. Discussion

A. Introduction

Here, Scurry and Poore argue that the regulation is invalid. They assert the regulation is outside the scope of DOR's authority. Further, they argue the regulation amounts to an alteration to the law by adding the employee requirement when such a requirement is simply not a valid criteria for establishing whether a location is or is not a single place or premises. I disagree.

B. Applicable Law

An agency must exercise its rule-making authority within the grant of legislative power as expressed in the enabling statute and may not exceed the authority conferred by that statute. 73 C.J.S. Public Administrative Law and Procedure § 89 (1983). A regulation does not exceed the statutory authority granted in the enabling statute if the regulation is reasonably related to the purpose of the enabling legislation. Hunter & Walden Co. v. South Carolina State Licensing Board for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978). However, even when reasonably related to the purpose of the enabling legislation, a regulation is improper if it alters or adds to the terms of a statute. Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995). Thus, two areas of analysis are presented: enabling legislation and altering the statute.

1. Enabling Legislation

a. Authorization

Enabling legislation is that legislation which enables persons, corporations or agencies to do what before they could not do. Black's Law Dictionary 526 (6th ed. 1990). The term is not a term of art but is a broad based generic label addressing the granting of authority in various areas. See, e.g., Civitarese v. Middleborough, 591 N.E.2d 1091 (Mass. 1992) (while unconstitutional on other grounds, the enabling legislation sought to enable the town to control rents and evictions in mobile home parks); 58 A.L.R.4th 274 (1988) (statutes which specifically authorize local governments to impose taxes on hotel or motel room occupancy are frequently called enabling statutes). A statute that grants authority to an agency to promulgate regulations is also an enabling statute. See Edisto Aquaculture Corp. v. South Carolina Wildlife and Marine Resources Dept., 311 S.C. 37, 426 S.E.2d 753 (1993) (the former South Carolina Wildlife and Marine Resources Commission was able to publish regulations by S.C. Code Ann. § 50-16-50, which as "enabling legislation provides that '[t]he department may promulgate regulations to effectuate the provisions of this chapter.'"). In the instant case, the General Assembly provided broad enabling legislation specifically authorizing DOR to enact regulations "pertaining to the machines and persons licensed by [DOR]." S.C. Code Ann. § 12-21-2798 (Supp. 1997).

b. Purpose of Enabling Legislation

Legislation regulating machines at a single place or premises encompasses more than mere licensing. See State v. One Coin-Operated Video Game Mach., 321 S.C. 176, 467 S.E.2d 443 (1996) (while the act has no legislative intent to legalize all Class III machines, "the VGMA provides for more than licensing of video game machines."). Thus, broad authority in DOR is needed to properly regulate and license all Class III machines. See S.C. Code Ann. §§ 12-21-2776(A) and 12-21-2778 (Supp. 1997). Further, DOR is prohibited from licensing more than five machines at a single place or premises. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Thus, to properly license the machines, the statutes implicitly direct DOR to identify the criteria that constitute a "single place or premises." As such, one purpose of the enabling legislation is to enable DOR to establish criteria that identify a single place or premises. Accordingly, DOR properly chose to establish its single place or premises criteria by regulation.

c. Reasonably Related To Purpose

Since at least one purpose of the enabling statute is to empower DOR to identify criteria for a single place or premises (so as to properly license no more than five machines), the issue is whether requiring an employee on the premises is reasonably related to such a purpose. In answering the inquiry, a court will not decide if a better rule could be established but rather will decide if the rule chosen reasonably effectuates the governmental objective sought to be implemented. Liberty Homes, Inc. v. Department of Industry, Labor & Human Relations, 401 N.W.2d 805 (Wis. 1987). Further, in deciding the extent of reasonableness required, if the grant of authority is very broad, the agency has great latitude in accomplishing its task. See Hunter & Walden Co. , Inc. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978) (Board having statutory authority to issue regulations "as it shall deem best, provided they are not in conflict with the laws of the State" properly required a minimum net worth of $50,000 since the requirement was "not in conflict with any statute, but was a natural amplification of the Code Section which [required] that a financial statement be submitted."). Indeed, to find that a promulgated regulation fails to carry out the purpose of the enabling act requires a most compelling basis. See American Network, Inc. v. Washington Utilities & Transp. Comm'n, 776 P.2d 950 (Wash. 1987) (regulations will not be struck down unless compelling reasons are sufficiently present to show that the scheme is in conflict with the intent and purpose of the legislation); see South Carolina Tax Comm'n v. South Carolina Tax Bd. of Review, 305 S.C. 183, 407 S.E.2d 627 (1991) (where Tax Commission was authorized by the General Assembly to define the value of property and to assess a tax on that property, the Tax Commission did not exceed its authority even when its promulgated regulation established a minimum value for all merchant's equipment).

i. Results Vary With Factual and Legal Circumstances

In the final analysis, the decision on what is reasonable depends upon the particular facts and statutory law of each case. 2 Am. Jur. 2d. Administrative Law § 225 (1994); U.S. Outdoor Advertising, Inc. v. South Carolina Dep't of Transp., 324 S.C. 1, 481 S.E.2d 112 (1997) (Reg. 63-342(HH) proper since it is reasonably related to the purpose of the Highway Advertising Control Act and is clearly intended to further the public policy of that Act); Thorpe v. Housing Authority of City of Durham, 393 U.S. 268 (1969) ("We therefore cannot hold that the circular's requirements bear no reasonable relationship to the purposes for which HUD's rule-making power was authorized."); see Brooks v. South Carolina State Bd. of Funeral Service, 271 S.C. 457, 247 S.E.2d 820 (1978) (requirement to perform sixty funerals as part of an apprenticeship was unreasonable and therefore invalid).

ii. Factual and Legal Circumstances Here

Here, the statutory licensing scheme establishes that the criteria of having an employee on the premises is a reasonable factor. Each Class III machine must be licensed under Article 19 of Chapter 21 "before placement or operation on the premises of a licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1997). Chapter 19 requires that before the machine can be operated at a location, the location must be licensed under the sales tax provisions of Chapter 36 of Title 12, i.e., a retail license. S.C. Code Ann. § 12-21-2703 (Supp. 1997). Under the retail license provisions of Chapter 36, before engaging in business, every retailer must have a retail license for each establishment. S.C. Code Ann. § 12-26-510(A)(1) (Supp. 1997). Thus, the statutory scheme treats the licensed machines as being located on the premises of a retail operation selling to the public.

Under such a scheme, it is reasonable to require that a retail business dealing in Class III video games have an employee on the premises. By way of only one example, an obvious and entirely reasonable basis for having an employee on the premises concerns the limitation on pay outs made from a location. Each five machine location having the status of a "single place or premises" can pay out a maximum of $125 a day to a single player. S.C. Code Ann. § 12-21-2791 (Supp. 1997). A requirement of having an employee physically located within the confines of each premises is reasonably related to helping assure that no player exceeds the dollar limitation. Likewise, no one under twenty-one may receive any pay out from machines on the premises. S.C. Code Ann. § 12-21-2804(C) (Supp. 1997). Again, having an employee on the premises is reasonably related to assuring that the premises do not pay out to an underage party.(2)

2. Addition to the Statute

Certainly, an agency may not promulgate a position that materially alters or adds to the requirements of a statute. Lee v. Michigan Millers Mutual Insurance Co., 250 S.C. 462, 158 S.E.2d 774 (1968); Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995) (a statute that provided fourteen days in which to seek review could not be altered by a regulation that added a requirement imposing the use of a particular form). However, administrative agencies may be authorized "'to fill up the details' by prescribing rules and regulations for the complete operation and enforcement of the law within its expressed general purpose." Heyward v. South Carolina Tax Comm'n, 240 S.C. 347, 355, 126 S.E.2d 15, 19 (1962). In fact, in those areas where an agency is given broad power to license or permit an activity, agency regulations that define a term will be viewed as properly filling in the details where the definition is reasonable and not overly restrictive. Young v. South Carolina Dep't of Highways and Public Transp., 287 S.C. 108, 336 S.E.2d 879 (Ct. App. 1985)

Here, Scurry and Poore argue S.C. Code Ann § 12-21-2804(A) has been added to. The statute prohibits more than five Class III machines at a single place or premises but does not define the contours of a single place or premises. As previously developed in this Order, the definition of "single place or premises" in Regs. 117-190 is reasonable in requiring that an employee be present on the premises. Likewise, the definition is not overly restrictive given the fact that the regulation seeks to control and police gambling. Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993) (loss incurred by gambler in playing legalized video poker could be recovered by statute allowing recovery of gambling loss of $50 or greater); 93 C.J.S. Public Administrative Law and Procedure § 93 (1983) (review of the propriety of a regulation should consider the evil which the statute being interpreted seeks to control). Accordingly, a definition that requires an employee to be on the premises before the location achieves the status of a "single place or premises" is not an unduly restrictive regulation, is a reasonable requirement, does not add to the statute, and is one that merely "fills in the details" as required by the General Assembly.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. An agency must exercise its rule-making authority within the grant of legislative power as expressed in the enabling statute and may not exceed the authority conferred by that statute. 73 C.J.S. Public Administrative Law and Procedure § 89 (1983).

2. A regulation does exceed the statutory authority granted in the enabling statute if the regulation is reasonably related to the purpose of the enabling legislation. Hunter & Walden Co. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978).

3. Even when reasonably related to the purpose of the enabling legislation, a regulation is improper if it alters or adds to the terms of a statute. Goodman v. City of Columbia, 318 S.C. 488, 458 S.E.2d 531 (1995).

4. Enabling legislation enables persons, corporations or agencies to do what before they could not do. Black's Law Dictionary, 526 (6th ed. 1990).

5. The term enabling legislation is not a term of art but rather is a broad based generic label addressing the granting of authority in various areas. See Civitarese v Middleborough 591 N.E.2d 1091 (Mass. 1992); 58 A.L.R.4th 274 (1988).

6. A statute that grants authority to an agency to promulgate regulations is an enabling statute. See Edisto Aquaculture Corp. v. South Carolina Wildlife and Marine Resources Dept., 311 S.C. 37, 426 S.E.2d 753 (1993).

7. The General Assembly provided broad enabling legislation authorizing DOR to enact regulations "pertaining to the machines and persons licensed by [DOR]." S.C. Code Ann. § 12-21-2798 (Supp. 1997).

8. Legislation regulating Class III machines at a single place or premises encompasses more than mere licensing. See State v. One Coin-Operated Video Game Mach., 321 S.C. 176, 467 S.E.2d 443 (1996).

9. Broad authority in DOR is needed to properly regulate as well as license all Class III machines. S.C. Code Ann. §§ 12-21-2776(A) and 12-21-2778 (Supp. 1997).

10. DOR is prohibited from licensing more than five machines at a single place or premises. S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

11 The statutes implicitly direct DOR to identify the criteria that constitute a "single place or premises."

12. One purpose of the enabling legislation is to establish criteria that identify a single place or premises.

13. In deciding whether requiring an employee on the premises is reasonably related to the purpose of the enabling legislation, a court will not decide if a better rule could be established but rather will decide if the rule chosen reasonably effectuates the governmental objective sought to be implemented. Liberty Homes, Inc. v. Dep't of Industry, Labor & Human Relations, 401 N.W.2d 805 (Wis. 1987).

14. In deciding the extent of reasonableness required, if the grant of authority is very broad, the agency is entitled to great latitude in accomplishing its task. See Hunter & Walden Co. v. South Carolina State Licensing Bd. for Contractors, 272 S.C. 211, 251 S.E.2d 186 (1978).

15. To find that a promulgated regulation fails to carry out the purpose of the enabling act requires presenting a most compelling basis. See American Network, Inc. v Washington Utilities & Transp. Com., 776 P.2d 950 (Wash. 1989); see South Carolina Tax Comm'n v. South Carolina Tax Bd. of Review, 305 S.C. 183, 407 S.E.2d 627 (1991).

16. The decision on what is reasonable depends upon the particular facts and statutory law of each case. 2 Am. Jur. 2d. Administrative Law § 225 (1994); U.S. Outdoor Advertising, Inc. v. South Carolina Dep't of Transp., 324 S.C. 1, 481 S.E.2d 112 (1997); Thorpe v. Housing Authority of City of Durham, 393 U.S. 268 (1969); see Brooks v. South Carolina State Bd. of Funeral Service, 271 S.C. 457, 247 S.E.2d 820 (1978).

17. Each Class III machine must be licensed under Article 19 of Chapter 21 "before placement or operation on the premises of a licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1997).

18. Chapter 19 requires that before the machine can be operated at a location, the location must be licensed under the sales tax provisions of Chapter 36 of Title 12. S.C. Code Ann. § 12-21-2703 (Supp. 1997).

19. Under the retail license provisions of Chapter 36, before engaging in business, every retailer must have a retail license for each establishment. S.C. Code Ann. § 12-26-510(A)(1) (Supp. 1997).

20. The statutory scheme treats the licensed machines as being located on the premises of a retail operation selling to the public.

21. The statutory scheme presents a reasonable basis for requiring that a retail business dealing in Class III video games have an employee on the premises.

22. Each five machine location having the status of a "single place or premises" can pay out a maximum of $125 a day to a single player. S.C. Code Ann. § 12-21-2791 (Supp. 1997).

23. No one under twenty-one may receive any pay out from machines on the premises. S.C. Code Ann. § 12-21-2804(C) (Supp. 1997).

25. Reasonableness is met without presenting an exhaustive listing of grounds for the requirement of having an employee on the premises. 73 C.J.S. Public Administrative Law and Procedure § 93 (1983).

26. No persuasive and no compelling arguments establish the regulation is unreasonable.

27. Having an employee on the premises is a reasonable criteria in defining a single place or premises.

28. Regs. 117-190 is not invalid as imposing unreasonable requirements.

29. An agency may not promulgate a position that materially alters or adds to the requirements of a statute. Lee v. Michigan Millers Mutual Ins. Co., 250 S.C. 462, 158 S.E.2d) 774 (1968), Goodman v. City of Columbia, 318 S.C. 458, 488 S.E.2d 531 (1995).

30. Administrative agencies may be authorized " 'to fill up the details' by prescribing rules and regulations for the complete operation and enforcement of the law within its expressed general purpose." Heyward v. South Carolina Tax Comm'n, 240 S.C. 347, 355, 126 S.E.2d 15, 19 (1962).

31. In those area where an agency is given broad power to license or permit an activity, agency regulations that define a term will be viewed as properly filling in the details where the definition is reasonable and not overly restrictive. Young v. South Carolina Dep't of Highways and Public Transp., 287 S.C. 108, 336 S.E.2d 879 (Ct. App. 1985).

32. The definition of "single place or premises" supplied by Regs. 117-190 is reasonable.

33. Regs. 117-190 seeks to control and police an activity which constitutes gambling. Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993).

34. A review of the propriety of a regulation should consider the evil which the statute being interpreted seeks to control. 93 C.J.S. Public Administrative Law and Procedure § 93 (1983).

35. Regs. 117-190's definition of single place or premises that requires an employee to be on the premises is not an unduly restrictive regulation, is a reasonable requirement does not add to the statute, and is one that merely "fills in the details" as required by the General Assembly.

C. Procedural Due Process: Vagueness of Charge


1. Positions of Parties

Both Scurry and Poore argue the charge of violating the single place or premises requirement is so vague as to be unintelligible and thus unconstitutional. DOR argues the requirement is understandable and is proper.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

1. Both Poore and Scurry hold several licenses for Class III video game machines which are in use at a video gaming business known as the Flamingo in a mall-type structure containing two video gaming rooms located at 1290 Fording Island Road, Bluffton, South Carolina.

2. Scurry and Poore both were notified of their violations of statutory and regulatory duties.

3. The initial citation as well as the final DOR determination cite the violations as a failure to have an employee on the premises and a failure to have a retail license.

4. The statute and regulation are stated in plain language sufficient to place Scurry and Poore on notice of the duties imposed.

3. Discussion

A. Introduction

Here, Scurry and Poore argue that S.C. Code Ann. § 12-21-2804(A) and Regs. 117-190 violate due process by being so vague that they had no notice as to what conduct is forbidden. I disagree.

B. Applicable Law

As a defense for the failure to comply with an imposed duty, one who asserts vagueness or indefiniteness relies upon the "constitutional principle that procedural due process requires fair notice and proper standards for adjudication." City of Beaufort v. Baker, 315 S.C. 146, 151, 432 S.E.2d 470, 473 (1993) (quoting State v. Albert, 257 S.C. 131, 134, 184 S.E. 2d 605, 606 (1971)). Fair notice is given if the statute or regulation provides adequate warning of what is commanded or forbidden sufficient for persons of common intelligence not to have to guess as to the meaning. Village of Hoffman Estates v. Flipside, 455 U.S. 489 (1982). In deciding whether the fair notice test has been met, the inquiry must be applied in a practical manner. Toussaint v. State Bd. of Medical Examiners, 303 S.C. 316, 400 S.E.2d 488 (1991). One very practical means of determining whether fair notice has been given is to examine the statute or regulation for the presence of plain language. See Huber v. South Carolina State Bd. of Physical Therapy Examiners, 316 S.C. 24, 446 S.E.2d 433 (1994) (Huber had fair notice that training unregistered persons to perform physical therapy and then allowing them to treat patients was prohibited since the plain language of the statutes involved clearly prohibited such activities).

C. Application to Facts

In the instant case, fair notice was given to Scurry and Poore in that both were notified of the violations of the statutory and regulatory duties. Both the initial citation as well as the final DOR determination specifically cite the violations as a failure to have an employee on the premises and a failure to have a retail license.

Further, the statute and regulation are stated in plain language sufficient to place Scurry and Poore on notice of the duties imposed. In fact, the plain language addressing single place or premises in S.C. Code Ann. § 12-21-2804(A) has already been determined sufficiently clear so as to put ordinary individuals on notice of the required conduct. Reyelt v. South Carolina Tax Comm'n, C/A No. 6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct. November 15, 1993). In addition, Regs. 117-190 expresses in plain language the requirement that the employee must be "on the premises during business hours" and that "each entity or business [must] have a separate state sales tax license." Accordingly, no due process violation is shown here under an alleged lack of fair notice.

4. Conclusions of Law


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