Title of Regulation: 3VAC5-10. Procedural Rules for the Conduct of Hearings before the Board and its Hearing Officers (amending 3VAC5-10-220).

Statutory Authority: §§ 4.1-103 and 4.1-111 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: October 3, 2018.

Effective Date: October 22, 2018.

Agency Contact: LaTonya D. Hucks, Legal Liaison, Department of Alcoholic Beverage Control, 2901 Hermitage Road, Richmond, VA 23220, telephone (804) 213-4698, FAX (804) 213-4574, or email latonya.hucks@abc.virginia.gov.

Basis: Section 4.1-101 of the Code of Virginia establishes the Virginia Alcoholic Beverage Control Authority and the Board of Directors of the Virginia Alcoholic Beverage Control Authority.

Section 4.1-103 of the Code of Virginia enumerates the powers of the board, which include the authority to adopt regulations and to do all acts necessary or advisable to carry out the purposes of Title 4.1 of the Code of Virginia. Subdivision 7 of § 4.1-103 of the Code of Virginia permits the board to delegate or assign any duty or task to be performed by the authority to any officer or employee of the authority. Subdivision 24 of § 4.1-103 permits the board to promulgate regulations in accordance with the Administrative Process Act and § 4.1-111 of the Code of Virginia.

Section 4.1-111 A authorizes the board to adopt reasonable regulations that it deems necessary to carry out the provisions of Title 4.1 and to amend or repeal such regulations.

Purpose: The purpose of this regulatory action is to clarify that the authority has the ability, including through alternate dispute resolution options, to agree to license suspensions or revocations prior to a formal hearing and to update a citation to the Code of Virginia. The advantage to the public welfare is that the change to the regulation corrects an out-of-date reference to the Code of Virginia and ensures that the public is receiving up-to-date guidance.

Rationale for Using Fast-Track Rulemaking Process: The regulatory action updates the Code of Virginia reference and provides clarity that the authority has the ability, including through alternate dispute resolution options, to agree to license suspensions or revocations prior to a formal hearing.

Substance: The changes update a citation to the Code of Virginia, remove the requirement that license suspension or revocation be preceded by a formal hearing, and remove the language referencing an offer of settlement. The amendments also provide that any initial decision will include a summary of the informal conference.

Issues: The primary advantage to this regulatory action is that it corrects the statutory reference and provides additional clarity on the powers of the authority. There are no disadvantages to the agency or the Commonwealth. Pertinent matters to the regulated community, government officials, and the public are that the most up to date references to the Code of Virginia will be included in the regulation and there will not be any confusion to the powers of the authority as it relates to informal conferences.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Alcoholic Beverage Control Board (Board) proposes to: 1) update a citation to the Code of Virginia, 2) remove obsolete language, and 3) amend language for improved clarity.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. The regulation states that an "informal conference will be conducted when an applicant for a license or a licensee who is the subject of a disciplinary proceeding does not waive its right to such a conference." Section 220 of the regulation further describes attributes and requirements related to informal conferences.

The Board proposes amendments that would update a Code of Virginia citation, eliminate obsolete language, and change text to improve clarity. None of the proposed amendments change requirements in practice; nevertheless, the proposals would be beneficial in that they may reduce the likelihood of misunderstandings among readers of the regulation.

Businesses and Entities Affected. All 13,000+ licensees could potentially be subject to disciplinary proceedings, and thus could be affected by the proposed amendments.¹ ABC issues: licenses for manufacturers, wholesalers and shippers of alcoholic beverages; retail licenses for the sale of alcohol at restaurants, hotels, convenience stores, grocery stores, etc.; and banquet licenses to allow persons or groups to host events such as wedding receptions, tastings or fundraisers, where alcohol is served in an unlicensed location or club premise.

Localities Particularly Affected. The proposed amendments do not disproportionately affect particular localities.

Projected Impact on Employment. The proposed amendments do not affect employment.

Effects on the Use and Value of Private Property. The proposed amendments do not affect the use and value of private property.

Real Estate Development Costs. The proposed amendments do not affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The proposed amendments do not affect costs for small businesses.

Alternative Method that Minimizes Adverse Impact. The proposed amendments do not adversely affect small businesses.

Adverse Impacts:

Businesses. The proposed amendments do not adversely affect businesses.

Localities. The proposed amendments do not adversely affect localities.

Other Entities. The proposed amendments do not adversely affect other entities.

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¹Data source: Department of Alcoholic Beverage Control

Agency's Response to Economic Impact Analysis: The Virginia Alcoholic Beverage Control Authority concurs with the Department of Planning and Budget's economic impact analysis.

Summary:

The amendments (i) clarify that an agreement for license suspension or revocation may be made prior to a formal hearing, (ii) provide that any initial decision include a summary of the informal conference, and (iii) update citations to the Code of Virginia.

3VAC5-10-220. Informal conferences.

A. An informal conference will be conducted when an applicant for a license or a licensee who is the subject of a disciplinary proceeding does not waive its right to such a conference. A waiver may be verbal or in writing. Unless the parties are advised otherwise, the agency will automatically waive the informal conference when the applicant or licensee does so. When the applicant or licensee is offered an informal conference and fails to respond within 10 calendar days after the date of such offer, the informal conference will be deemed to be waived.

B. The informal conference will be conducted for the reasons set forth in § 9-6.14:11 2.2-4019 of the Code of Virginia; however, inasmuch as the Code of Virginia continues to require that license suspension or revocation be preceded by a formal hearing (see § 4.1-227 of the Code of Virginia), the. The informal conference may not be used for purposes of agreement fixing a period of suspension or license revocation, although an offer of settlement shall be received for board consideration. The informal conference will serve as a vehicle to acquaint the interested party, in a general way, with the nature of the charges or objections, the evidence in support thereof and to hear any matters relevant thereto presented by the interested parties and to explore whether (i) administrative proceedings or objections should be terminated or (ii) the case should proceed to formal hearing and stipulations can be reached. The conference will be open to the public, but participation will be limited to the interested parties, their attorneys-at-law or other qualified representatives, and designated board representatives. The conference will be held, when practical, at the county or city in which the establishment of the applicant or licensee is located. Reasonable notice of administrative charges or objections and the date, time and place of the conference shall be given to the participants. The failure of the applicant or licensee to appear at a scheduled conference will be deemed a waiver of the informal conference. The informal proceeding will not be recorded. Sworn testimony will not be taken, nor will subpoenas be issued. At the conclusion of the informal conference, the designated board representative will complete a disposition form to be included in the case file or will announce the results at the beginning of the formal hearing to be included in the record. Any initial decision will include a summary of the informal conference.