Title of Regulation: 3VAC5-70. Other Provisions (amending 3VAC5-70-210).

Statutory Authority: §§ 4.1-103 and 4.1-227 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comments: Public comments may be submitted until 5 p.m. on October 2, 2009.

Agency Contact: Jeffrey L. Painter, Chief Administrative Officer, Department of Alcoholic Beverage Control, P.O. Box 27491, Richmond, VA 23261, telephone (804) 213-4621, FAX (804) 213-4411, TTY (804) 213-4687, or email jeffrey.painter@abc.virginia.gov.

Basis: Section 4.1-227 of the Code of Virginia provides that the Alcoholic Beverage Control Board shall by regulation (i) designate the violations for which a waiver of a hearing and payment of a civil charge in lieu of suspension may be accepted for a first offense occurring within three years immediately preceding the date of the violation and (ii) provide for a reduction in the length of any suspension and a reduction in the amount of any civil penalty for any retail licensee where the licensee can demonstrate that it provided to its employees alcohol server training certified in advance by the board.

Purpose: The board has determined that this action promotes public safety and welfare by insuring that licensees who do not comply with the regulations governing the sale of alcoholic beverages are appropriately punished, while saving the agency the cost of an administrative hearing.

Substance: The intended regulatory action would amend 3VAC5-70-210 to provide for a lesser suspension period and a lesser civil penalty in lieu of suspension for licensees charged with a first violation within three years of sale of alcoholic beverages to an underage or intoxicated person or allowing consumption of alcoholic beverages by an underage or intoxicated person, if the licensee can demonstrate that it has provided the employee responsible for the violation alcohol server training certified by the board within the 12 months immediately preceding the violation. A new provision added to the section will set out the process for certification of alcohol server training courses. Additional amendments will clarify that the ability to waive a hearing and accept a penalty under this section does not apply to licensees charged with multiple violations, and deletes certain violations currently included in this section that the board feels are inappropriately listed.

Issues: The primary advantage of the proposed action to the public is that it provides mitigation of punishment for businesses who provide alcohol seller/server training to their employees. It also provides the advantage to an agency of reducing costs by allowing certain violations to be handled without the expense of a hearing. The only disadvantage to the public is that five violations currently allowed to be handled without a hearing for first-time violators will now require a hearing. There are no disadvantages to the Commonwealth.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Alcoholic Beverage Control Board (ABC) proposes to amend its Other Provisions regulations to add alternate, reduced, penalties for certain violations of ABC regulations so long as the cited licensees have provided certified alcohol server training to their employees and so long as the licensee has no substantiated violations in the preceding three years or other pending citations. ABC proposes to remove several, more serious, violations from the list of violations for which licensees can choose to forego the disciplinary hearing process and accept immediate imposition of applicable fines or suspension periods. Additionally, ABC proposes to certify private alcohol server training courses that cover the same topics as ABC's own training course.

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

Estimated Economic Impact. Current regulations allow licensees who have received citations for certain (first offense) violations from ABC, but who have not had any substantiated violations of rules in the preceding three years, to waive the normally required disciplinary hearing and either accept the prescribed suspension or pay a civil charge in lieu of suspension. Currently, amongst the violations for which licensees may choose this option are:

1. "Sale of beer, wine or mixed beverages to a person at least 18 but under 21 years of age";

2. "Allowing consumption of beer, wine or mixed beverages by a person at least 18 but under 21 years of age";

3. "Sale to an intoxicated person";

4. "Allow[ing]¹ consumption by an intoxicated person";

5. "Keeping unauthorized alcoholic beverages on the premises, on which appropriate taxes have not been paid";

6. "Allowing gambling on the premises, if licensee, agent or employee is [a] participant, but is not conducting the gambling event or operation";

7. "Allowing gambling on the premises, if licensee, agent or employee is not [a] participant nor not conducting the gambling event or operation";

8. "Failure to keep records"; and

9. "Failure to maintain mixed beverage-food ratio required by statute (not applicable if ratio falls below 30%)."

Currently, ABC's schedule of penalties allows licensees who meet the criteria for hearing waiver to accept a suspension of 25 days or pay a fine of $2,000 for violations 1 through 4 in the list above. Violations 5 through 9 currently have suspension periods of either seven or ten days OR fines of either $500 or $1,000.

ABC proposes to amend the first offense qualification criteria by requiring that licensees not have any additional pending charges. This means that licensees with multiple pending charges will not be able to waive their disciplinary hearings and accept immediate suspensions or fines. ABC reports that licensees who have multiple pending violations (even if they have not had past substantiated violations) likely have larger issues that the Board needs to address. The Board believes these issues (and these licensees) will be more appropriately handled through the hearing process. Since licensees with pending violations can operate their businesses as they normally would pending the outcomes of their disciplinary hearings, they will likely not incur any extra costs on account of the time delay explicit in this proposed change. To the extent that having these licensees go before the ABC Board helps eliminate future violations, this change will provide a benefit for the public and possibly even the licensees.

For violations 1 through 4 on the list above, ABC proposes to offer a reduced penalty for licensees who have provided certified alcohol server training to their employees in the 12 months immediately preceding the violation. Licensees who have provided this training will only be subject to a five day suspension or a $1,000 fine. ABC reports that they are proposing these reduced penalties to encourage licensees to offer training that may reduce or eliminate violations of relevant statutes and regulations.

Licensees can set up training through ABC, where they would not have to pay a fee, or purchase training through a private entity that has received ABC certification. Licensees who set up training for their employees through ABC will not incur a fee for that training; they or their employees, however, will likely incur other costs. Licensees may have to pay their employees some sort of hourly wage during the time they are completing training. If employees have to complete training on their own time without compensation, they will incur opportunity costs for their time. Licensees who choose to use certified private training services, because there is a waiting list for ABC training or because ABC training is in some other way inconvenient, will incur explicit costs for fees in addition to the other costs they would incur regardless of who provides the training. Since server training is voluntary, any licensee who chooses to provide it likely believes that the costs incurred will be outweighed by the benefits of being eligible for reduced penalties and a possible reduction in the occurrence of violations.

ABC proposes to eliminate violations 5 through 9 from the list of those for which licensees can waive disciplinary hearings and immediately serve a prescribed suspension (or choose to pay a fine, instead). ABC reports that these violations are serious enough… most of them are also criminal violations… that the disciplinary hearing process is a more appropriate way to handle them. Since licensees with pending violations can operate their businesses as they normally would pending the outcomes of their disciplinary hearings, they will likely not incur any extra costs on account of the time delay explicit in this proposed change. To the extent that having these licensees go before the ABC Board helps eliminate future violations, this change will provide a benefit for the public and possibly even the licensees.

Finally, ABC proposes to add criteria for approval of certified alcohol server/seller training courses. Applicants for approval of certification will have to complete a training data sheet, review ABC's training evaluation form (to make sure all topics are covered) and submit the training data sheet and a copy of all proposed training materials to ABC. Under these proposed regulations certified trainers will be required to maintain complete records for all training classes conducted. ABC licensees will likely benefit from this certification process as it will allow them more choices for offering training to their employees. Individuals who wish to offer this training will likely only apply for certification if they expect the benefits of doing so to outweigh any costs. ABC could likely further minimize costs for trainers by placing some sort of time limit on how long training programs must maintain records.

Businesses and Entities Affected. ABC reports that approximately 15,000 businesses in the Commonwealth are currently licensed to sell alcohol. Approximately 95% of those qualify as small businesses.

Localities Particularly Affected. No locality will be particularly affected by this proposed regulatory action.

Projected Impact on Employment. This regulatory action will likely have no impact on employment in the Commonwealth.

Effects on the Use and Value of Private Property. This regulatory action will likely have no significant effect on the use or value of private property in the Commonwealth.

Small Businesses: Costs and Other Effects. Small businesses in the Commonwealth are unlikely to incur any costs on account of this regulatory action.

Small Businesses: Alternative Method that Minimizes Adverse Impact. Small businesses in the Commonwealth are unlikely to incur any costs on account of this regulatory action.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

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¹ Bracketed language is added to make violation chart language more readable in this narrative.

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

Summary:

The purpose of this action is to carry out the mandate of Chapter 513 of the 2008 Acts of Assembly, which amends § 4.1-227 of the Code of Virginia and requires the Alcoholic Beverage Control Board to promulgate a regulation providing for a reduction in penalty in certain disciplinary actions against licensees, where the licensee can demonstrate that it has provided certified alcohol server training to its employees. The amended regulation encourages alcoholic beverage seller-server training.

3VAC5-70-210. Schedule of penalties for first-offense violations.

A. Any licensee charged with any violation of board regulations or statutes listed below, if the licensee has no other pending charges and has not had any substantiated violations of regulation or statute within the three years immediately preceding the date of the violation, may enter a written waiver of hearing and (i) accept the period of license suspension set forth below for the violation, or (ii) pay the civil charge set forth below for the violation in lieu of suspension. In the case of a violation involving the sale of beer, wine, or mixed beverages to a person at least 18 but under 21 years of age, or to an intoxicated person, or allowing consumption of such beverages by such person, any retail licensee that can demonstrate that it provided alcohol seller/server training certified in advance by the board to the employee responsible for such violation within the 12 months immediately preceding the alleged violation may accept the lesser period of license suspension or pay the lesser civil charge listed below for the violation in lieu of suspension. Any notice of hearing served on a licensee for a violation covered by this section shall contain a notice of the licensee's options under this section. Any licensee who fails to notify the board of its intent to exercise one of the options provided for under this section within 20 days after the date of mailing of the notice of hearing shall be deemed to have waived the right to exercise such options and the case shall proceed to hearing. For good cause shown, the board may, in its discretion, allow a licensee to exercise the options provided for under this section beyond the 20-day period.