Title of Regulation: 3VAC5-50. Retail Operations (amending 3VAC5-50-10, 3VAC5-50-20, 3VAC5-50-40, 3VAC5-50-60, 3VAC5-50-100, 3VAC5-50-110, 3VAC5-50-160).

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: July 19, 2013.

Agency Contact: W. Curtis Coleburn III, Chief Operating Officer, Department of Alcoholic Beverage Control, 2901 Hermitage Road, Richmond, VA 23220, telephone (804) 213-4409, FAX (804) 213-4411, TTY (804) 213-4687, or email curtis.coleburn@abc.virginia.gov.

Basis: Section 4.1-111 of the Code of Virginia authorizes the Alcoholic Beverage Control Board to promulgate reasonable regulations necessary to carry out the provisions of Title 4.1 of the Code of Virginia or the general laws of the Commonwealth. Section 4.1-103 of the Code of Virginia compels the Alcoholic Beverage Control Board to establish minimum food sale requirements for all retail licensees.

Purpose: The board wishes to clarify the types of restaurants that are eligible for a wine and beer license, as well as those restaurants that qualify for a mixed beverage license. This proposal expands current statutory provisions for licensees (ability to read, write, speak, and understand the English language) to managers. It further simplifies the regulation by describing the criminal offenses that disqualify an employee of the business rather than citing specific sections of the Code of Virginia. Finally, the proposal will expand a restaurant's ability to advertise the fact that drink specials are offered during specific times.

Alcoholic beverage regulation is essential to protect the health, safety, and welfare of citizens by encouraging temperance and maintaining an orderly market. In promulgating regulations, the board must balance the need to protect the public safety with the legitimate interests of industry participants to be free of unnecessary restrictions. Each of the proposed amendments maintains essential public safety controls, while providing more flexibility for alcoholic beverage sellers.

Substance: The proposed amendments are intended to provide the regulated industry a better understanding of the types of restaurants eligible for licensure and give further guidance concerning the responsibility of licensees in conducting and advertising happy hours. The amendments simplify the regulation by identifying the specific criminal conduct that disqualifies an individual as opposed to the section of the Code of Virginia.

Issues: This proposed action will benefit the regulated community by clarifying the types of restaurants that are eligible for a wine and beer license, as well as those restaurants that qualify for a mixed beverage license. The proposed amendments expand current statutory provisions for licensees (ability to read, write, speak, and understand the English language) to managers. The industry will benefit from expanding a restaurant's ability to advertise drink specials offered during specific times. The public will be protected by continuing the limitation of any practice associated with happy hour, such as extending the time frame beyond 9 p.m. There are no disadvantages to the public or 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 regulations to clarify existing provisions of regulation, change the dollar amount of food that must be sold at gourmet shops in order for them to be licensed by ABC and to prohibit licensees (in most cases) from allowing individuals under the age of 21 to possess alcohol on licensed premises.

Result of Analysis. Benefits likely outweigh costs for implementing these proposed changes.

Estimated Economic Impact. With this regulatory action, ABC proposes to change or move several sections of regulation so that regulatory requirements are clearer and easier to find. For example, ABC proposes to remove Code of Virginia citations for crimes that would preclude employment in a position that involves the selling or serving of alcoholic beverages and instead list the actual crimes. No affected entity is likely to incur costs on account of these regulatory changes because no new requirements are being added. Affected entities will benefit from the additional clarity these changes bring to the regulation.

Current regulations require gourmet shops that are licensed to sell alcohol to have at least $2,000 in monthly food sales. Several years ago, the General Assembly lowered the required amount for minimum monthly food sales for gourmet shops who are licensed by ABC to $1,000 per month. ABC has not enforced the $2,000 sales requirement since the General Assembly action and now seeks to amend regulations so they conform to the Code of Virginia (COV). No affected entity is likely to incur costs on account of this regulatory change because no new requirement is being added. Affected entities will benefit from the additional clarity of having the same rule in both the COV and regulations.

Current regulations prohibit licensees from selling alcohol to anyone under the age of 21 and from allowing the consumption of alcohol on their licenses premises by anyone under the age of 21. ABC proposes to also prohibit the possession of alcohol on licensed premises by individuals under the legal drinking age except when such possession is by individuals in the process of fulfilling employment duties or is at the order of a parent or a law enforcement officer. This regulatory change will likely make it easier for law enforcement officers and ABC inspectors to cite licensees who are serving underage drinkers since these entities would no longer have to catch underage drinkers in the process of actually drinking alcohol in order to issue citations. To the extent that current regulations are ambiguous about what behavior is prohibited, licensees will benefit from the additional clarity that this proposed change brings.

Businesses and Entities Affected. ABC reports that 12,000 businesses would be potentially affected by this proposed regulatory change; 70% of these entities would meet the Commonwealth's definition of small business.

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

Projected Impact on Employment. This proposed regulatory action is unlikely to have any effect on employment in the Commonwealth.

Effects on the Use and Value of Private Property. These proposed regulatory changes are unlikely to affect the use or value of private property in the Commonwealth.

Small Businesses: Costs and Other Effects. No small business is likely to incur any costs on account of this regulatory action.

Small Businesses: Alternative Method that Minimizes Adverse Impact. No small business is likely 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 14 (10). 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.

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

Summary:

The proposed amendments (i) clarify the types of restaurants that are eligible for a wine and beer license and further distinguishes restaurants that are eligible for a mixed beverage license; (ii) expand the current statutory provisions for licensees (e.g., ability to read, write, speak, and understand the English language) to managers; (iii) add language prohibiting possession of alcoholic beverages except in certain specified situations by persons to whom such alcoholic beverage may not lawfully be sold; (iv) lower the dollar amount of food that must be sold at gourmet shops in order for them to be licensed from $2,000 to $1,000; (v) describe the specific criminal conduct that disqualifies an employee of a business rather than cite specific sections of the Code of Virginia; and (vi) expand a restaurant's ability to advertise that drink specials are offered during specific times, without allowing advertising of specific special prices.

3VAC5-50-10. Restrictions upon sale, possession, and consumption of alcoholic beverages.

A. Except as may be otherwise permitted under subdivisions 1 through 5 subdivision 7 of § 4.1-200 of the Code of Virginia, no licensee shall sell any alcoholic beverage to a person whom he shall know, or have reason at the time to believe, is:

1. Under the age of 21 years;

2. Intoxicated; or

3. An interdicted person.

B. No licensee shall allow the possession or consumption of any alcoholic beverage upon his licensed premises by any person to whom such alcoholic beverage may not lawfully be sold under this section, except where possession of the alcoholic beverage by a person younger than 21 years of age is due to such person's making a delivery of alcoholic beverages in pursuance of his employment or an order of his parent, or by any state, federal, or local law-enforcement officer when possession of an alcoholic beverage is necessary in the performance of his duties.

3VAC5-50-20. Determination of legal age of purchaser.

A. In determining whether a licensee, or his employee or agent, has reason to believe that a purchaser is not of legal age, the board will consider, but is not limited to, the following factors:

1. Whether an ordinary and prudent person would have reason to doubt that the purchaser is of legal age based on the general appearance, facial characteristics, behavior and manner of the purchaser; and

2. Whether the seller demanded, was shown and acted in good faith in reliance upon bona fide evidence of legal age, as defined herein, and that evidence contained a photograph and physical description consistent with the appearance of the purchaser.

B. Such bona fide evidence of legal age shall include a valid motor vehicle driver's license issued by any state of the United States or the District of Columbia, armed forces identification card, United States passport or foreign government visa, valid special identification card issued by the Virginia Department of Motor Vehicles, or any valid identification issued by any other federal or state government agency, excluding student university and college identification cards, provided such identification shall contain a photograph and signature of the subject, with the subject's height, weight and date of birth.

C. It shall be incumbent upon the licensee, or his employee or agent, to scrutinize carefully the identification, if presented, and determine it to be authentic and in proper order. Identification which has been altered so as to be apparent to observation or has expired shall be deemed not in proper order.

3VAC5-50-40. Designated managers of licensees; appointment generally; disapproval by board; restrictions upon employment.

A. Each retail licensee, except a licensed individual who is on the premises, shall have a designated manager able to understand and communicate in the English language in a reasonably satisfactory manner present and in actual charge of the business being conducted under the license at any time the licensed establishment is kept open for business, whether or not the privileges of the license are being exercised. The name of the designated manager of every retail licensee shall be kept posted in a conspicuous place in the establishment, in letters not less than one inch in size, during the time he is in charge.

The posting of the name of a designated manager shall qualify such person to act in that capacity until disapproved by the board.

B. The board reserves the right to disapprove any person as a designated manager if it shall have reasonable cause to believe that any cause exists which would justify the board in refusing to issue such person a license, or that such person has committed any act that would justify the board in suspending or revoking a license.

Before disapproving a designated manager, the board shall accord him the same notice, opportunity to be heard, and follow the same administrative procedures accorded a licensee cited for a violation of Title 4.1 of the Code of Virginia.

C. No licensee of the board shall knowingly permit a person under 21 years of age, nor one who has been disapproved by the board within the preceding 12 months, to act as designated manager of his business.

D. Notwithstanding the provisions of § 4.1-225 (1) (i) of the Code of Virginia, the board will not take action to suspend or revoke a retail license if a licensee knowingly employs a person who has been convicted in any court of a felony or of any crime or offense involving moral turpitude, except in the following two categories:

1. The board may suspend or revoke a license if a licensee knowingly employs in the business conducted under such license, as agent, servant, or employee, in a position that is involved in the selling or serving of alcoholic beverages to customers, any person who has been convicted of a felony violation of Articles 1 (§ 18.2-248 et seq.), 1.1 (§ 18.2-265.1 et seq.), or 2 (§ 18.2-266 et seq.) of Chapter 7 of Title 18.2 the laws of the Commonwealth prohibiting the manufacture, sale, distribution, use, or possession of controlled substances, imitation controlled substances, counterfeit controlled substances, marijuana, or synthetic cannabinoids; driving under the influence of alcohol or other self-administered intoxicants; or a similar offense under the laws of any state, or the United States; or

2. The board may suspend or revoke a license if a licensee knowingly employs in the business conducted under such license, as agent, servant, or employee, in a position that is involved in the creation or maintenance of records required to be kept by the licensee under the provisions of Title 4.1 of the Code of Virginia or board regulations, or in the preparation or filing of any tax return or report required under Title 4.1 or Title 58.1 of the Code of Virginia or board regulations, any person who has been convicted of a felony violation of Articles 2 (§ 18.2-89 et seq.), 3 (§ 18.2-97.1 et seq.), 4 (§ 18.2-112.1 et seq.), or 7.1 (§ 18.2-152.2 et seq.) of Chapter 5 of Title 18.2 or Articles 1 (§ 18.2-172.2 et seq.), 3 (§ 18.2-178 et seq.), 4 (§ 18.2-182 et seq.), 5 (§ 18.2-186 et seq.), 6 (§ 18.2-194 et seq.), or 9 (§ 18.2-246.1 et seq.) of Chapter 6 of Title 18.2 the laws of the Commonwealth prohibiting robbery, burglary, larceny, embezzlement, computer crimes, forgery, false pretenses, issuing bad checks, false representations to obtain property or credit, credit card forgery or fraud, or money laundering, or a similar offense under the laws of any state, or the United States.

E. If a retail licensee wishes to employ a person whose employment would be covered by subdivisions D 1 or 2 of this section, or who has violated the laws of the Commonwealth, of any other state, or of the United States, applicable to the manufacture, transportation, possession, use or sale of alcoholic beverages, the licensee may apply to the board for approval of such employment. The board will cause the Bureau of Law Enforcement Operations to conduct an investigation into the suitability of the person for employment and recommend approval or disapproval. Before disapproving the employment of a person, the board shall accord him the same notice, opportunity to be heard, and follow the same administrative procedures accorded a licensee cited for a violation of Title 4.1 of the Code of Virginia.

3VAC5-50-60. Procedures for mixed beverage licensees generally; mixed beverage restaurant licensees; sales of spirits in closed containers.

A. No mixed beverage restaurant or carrier licensee shall:

1. Prepare, other than in frozen drink dispensers of types approved by the board drinks, or sell any mixed beverage except pursuant to a patron's order and immediately preceding delivery to him.

2. Serve as one drink the entire contents of a container of spirits in its original container for on-premises consumption except as provided by subsections C, D, and E.

3. Sell any mixed beverage to which alcohol has been added.

B. No mixed beverage restaurant licensee shall:

1. Allow to be kept upon the licensed premises any container of alcoholic beverages of a type authorized to be purchased under his license that does not bear the required mixed beverage stamp imprinted with his license number and purchase report number.

2. Use in the preparation of a mixed beverage any alcoholic beverage not purchased from the board or a wholesale wine licensee.

3. Fail to obliterate the mixed beverage stamp immediately when any container of spirits is emptied.

4. Allow any patron to possess more than two drinks of mixed beverages at any one time.

C. If a restaurant for which a mixed beverage restaurant license has been issued under § 4.1-210 of the Code of Virginia is located on the premises of a hotel or motel, whether the hotel or motel be under the same or different ownership, sales of mixed beverages, including sales of spirits packaged in original closed containers purchased from the board, as well as other alcoholic beverages, for consumption in bedrooms and private rooms of such hotel or motel, may be made by the licensee subject to the following conditions in addition to other applicable laws:

1. Spirits sold by the drink as mixed beverages or in original closed containers must have been purchased under the mixed beverage restaurant license upon purchase forms provided by the board;

2. Delivery of sales of mixed beverages and spirits in original closed containers shall be made only in the bedroom of the registered guest or to the sponsoring group in the private room of a scheduled function. This section shall not be construed to prohibit a licensee catering a scheduled private function from delivering mixed beverage drinks to guests in attendance at such function;

3. Receipts from the sale of mixed beverages and spirits sold in original closed containers, as well as other alcoholic beverages, shall be included in the gross receipts from sales of all such merchandise made by the licensee; and

4. Complete and accurate records of sales of mixed beverages and sales of spirits in original closed containers to registered guests in bedrooms and to sponsors of scheduled private functions in private rooms shall be kept separate and apart from records of all mixed beverage sales.

D. Carrier licensees may serve miniatures not in excess of two fluid ounces or 50 milliliters, in their original containers, for on-premises consumption.

E. A mixed beverage restaurant may serve as one drink the entire contents of a container of soju in its original container for on-premises consumption under the following conditions:

1. The container may be no larger than 375 milliliters.

2. Each container of soju served must be served for consumption by at least two patrons legally eligible to consume alcoholic beverages.

3VAC5-50-100. Definitions and qualifications for retail off-premises wine and beer licenses and off-premises beer licenses; exceptions; further conditions; temporary licenses.

A. Retail off-premises wine and beer licenses may be issued to persons operating the following types of establishments provided the total monthly sales and inventory (cost) of the required commodities listed in the definitions are not less than those shown:

1. "Delicatessen." An establishment which sells a variety of prepared foods or foods requiring little preparation such as cheeses, salads, cooked meats and related condiments:

Monthly sales ......................................................... $2,000

Inventory (cost) ....................................................... $2,000

2. "Drugstore." An establishment selling medicines prepared by a registered pharmacist according to prescription and other medicines and articles of home and general use;

Monthly sales .......................................................... $2,000

Inventory (cost) ....................................................... $2,000

3. "Grocery store." An establishment which sells edible items intended for human consumption, including a variety of staple foodstuffs used in the preparation of meals:

Monthly sales .......................................................... $2,000

Inventory (cost) ....................................................... $2,000

4. "Convenience grocery store." An establishment which has an enclosed room in a permanent structure where stock is displayed and offered for sale, and which sells edible items intended for human consumption, consisting of a variety of such items of the type normally sold in grocery stores:

Monthly sales .......................................................... $2,000

Inventory (cost) ....................................................... $2,000

In regard to both grocery stores and convenience grocery stores, "edible items" shall mean such items normally used in the preparation of meals, including liquids.

5. "Gourmet shop." An establishment provided with adequate shelving and storage facilities which sell products such as cheeses and gourmet foods:

Monthly sales ................................................. $2,000 $1,000

Inventory (cost) .............................................. $2,000 $1,000

B. Retail off-premises beer licenses may be issued to persons operating the following types of establishments provided the total monthly sales and inventory (cost) of the required commodities listed in the definitions are not less than those shown:

1. "Delicatessen." An establishment as defined in subsection A:

Monthly sales .......................................................... $1,000

Inventory (cost) ....................................................... $1,000

2. "Drugstore." An establishment as defined in subsection A:

Monthly sales.......................................................... $1,000

Inventory (cost) ....................................................... $1,000

3. "Grocery store." An establishment as defined in subsection A:

Monthly sales.......................................................... $1,000

Inventory (cost) ....................................................... $1,000

4. "Marina store." An establishment operated by the owner of a marina which sells food and nautical and fishing supplies:

Monthly sales.......................................................... $1,000

Inventory (cost) ....................................................... $1,000

C. The board may grant a license to an establishment not meeting the qualifying figures in subsections A and B provided it affirmatively appears that there is a substantial public demand for such an establishment and that public convenience will be promoted by the issuance of the license.

D. The board in determining the eligibility of an establishment for a license shall give consideration to, but shall not be limited to, the following:

1. The extent to which sales of required commodities are secondary or merely incidental to sales of all products sold in such establishment;

2. The extent to which a variety of edible items of the types normally found in grocery stores are sold; and

3. The extent to which such establishment is constructed, arranged or illuminated to allow reasonable observation of the age and sobriety of purchasers of alcoholic beverages.

E. Notwithstanding the above, the board may issue a temporary license for any of the above retail operations. Such licenses may be issued only after application has been filed in accordance with § 4.1-230 of the Code of Virginia and in cases where the sole objection to issuance of a license is that the establishment will not be qualified in terms of the sale of food or edible items. If a temporary license is issued, the board shall conduct an audit of the business after a reasonable period of operation not to exceed 180 days. Should the business be qualified, the license applied for may be issued. If the business is not qualified, the application will become the subject of a hearing if the applicant so desires. No further temporary license shall be issued to the applicant or to any other person with respect to that establishment for a period of one year from the expiration and, once the application becomes the subject of a hearing, no temporary license may be issued.

3VAC5-50-110. Definitions and qualifications for retail on-premises and on-premises and off-premises licenses generally; mixed beverage licensee requirements; exceptions; temporary licenses.

A. The following definitions shall apply to retail licensees with on-premises consumption privileges and mixed beverage licensees where appropriate:

1. "Bona fide, full-service restaurant" means an established place of business where meals are regularly sold to persons and that has adequate facilities and sufficient employees for cooking, preparing, and serving such meals for consumption at tables in dining areas on the premises.

2. "Counter" means a long, narrow surface with stools or chairs along one side for the patrons, behind which refreshments or meals are prepared and served.

1. "Designated area." A 3. "Designated area" means a room or an area in which a licensee may exercise the privilege of his license, the location, equipment and facilities of which room or area have been approved by the board. The facilities shall be such that patrons may purchase food prepared on the premises for consumption on the premises at substantially all times that alcoholic beverages are offered for sale therein. The seating capacity of such room or area shall be included in determining eligibility qualifications for a mixed beverage restaurant.

2. "Dining car, buffet car or club car." A vehicle operated by a common carrier of passengers by rail, in interstate or intrastate commerce and in which food and refreshments are sold.

3. "Meals." In determining what constitutes a "meal" as the term is used in this section, the board may consider the following factors, among others:

a. The assortment of foods commonly offered for sale;

b. The method and extent of preparation and service required; and

c. The extent to which the food served would be considered a principal meal of the day as distinguished from a snack.

4. "Habitual sales." In determining what constitutes "habitual sales" of specific foods, the board may consider the following factors, among others:

a. The business hours observed as compared with similar type businesses;

b. The extent to which such food or other merchandise is regularly sold; and

c. Present and anticipated sales volume in such food or other merchandise.

5. "Sale" and "sell." The definition of "sale" and "sell" as defined in 3VAC5-70-90 shall apply to this section.

4. "Dining area" means a public room or area in which meals are regularly sold at substantially all hours that alcoholic beverages are offered for sale therein.

5. "Meal" means a selection of foods for one individual, served and eaten especially at one of the customary, regular occasions for taking food during the day, such as breakfast, lunch, or dinner, that consists of at least one main dish of meat, fish, poultry, legumes, nuts, seeds, eggs, or other protein sources, accompanied by vegetable, fruit, grain, or starch products.

6. "Table" means an article of furniture supported by one or more vertical legs and having a flat horizontal surface suitable for the service of meals.

B. Wine and beer. Retail on-premises or on-premises and off-premises licenses may be granted to persons operating the following types of establishments provided that meals or other foods are regularly sold at substantially all hours that wine and beer are offered for sale and the total monthly food sales for consumption in dining areas and other designated areas on the premises are not less than those shown:

1. "Boat" (on premises only). A common carrier of passengers for which a certificate as a sight-seeing carrier by boat, or a special or charter party by boat has been issued by the State Corporation Commission, habitually serving food on the boat:

Monthly sales .........................................................$2,000

2. "Restaurant." A bona fide dining establishment habitually regularly selling meals with entrees and other foods prepared on the premises:

Monthly sales .........................................................$2,000

3. "Hotel." Any duly licensed establishment, provided with special space and accommodation, where, in consideration of payment, meals with entrees and other food prepared on the premises and lodging are habitually furnished to persons and which has four or more bedrooms:

Monthly sales .........................................................$2,000

In regard to both restaurants and hotels, at least $1,000 of the required monthly sales must be in the form of meals with entrees.

C. Beer. Retail on-premises or on-premises and off-premises licenses may be granted to persons operating the following types of establishments provided that food is regularly sold at substantially all hours that beer is offered for sale and the total monthly food sales for consumption in dining areas and other designated areas on the premises are not less than those shown:

1. "Boat" (on-premises only). See subdivision B 1:

Monthly sales .........................................................$2,000

2. "Restaurant." An establishment habitually regularly selling food prepared on the premises:

Monthly sales .........................................................$2,000

3. "Hotel." See subdivision B 3;

Monthly sales .........................................................$2,000

D. Mixed beverage licenses. The following shall apply to mixed beverage licenses where appropriate: Mixed beverage restaurant licenses may be granted to persons operating bona fide, full-service restaurants.

1. "Bona fide, full-service restaurant." An established place of business where meals with substantial entrees are habitually sold to persons and which has adequate facilities and sufficient employees for cooking, preparing and serving such meals for consumption at tables in dining areas on the premises. In determining the qualifications of such restaurant, the board may consider the assortment of entrees and other food sold. Such restaurants shall include establishments specializing in full course meals with a single substantial entree.

2. "Monetary sales requirements." The monthly sale of food prepared on the premises shall not be less than $4,000 of which at least $2,000 shall be in the form of meals with entrees.

3. "Dining area." A public room or area in which meals are regularly sold at substantially all hours that mixed beverages are offered for sale therein.

4. "Outside terraces or patios." An outside terrace or patio, the location, equipment and facilities of which have been approved by the board may be approved as a "dining area" or as a "designated area" in the discretion of the board. A location adjacent to a public sidewalk, street or alley will not be approved where direct access is permitted from such sidewalk, street or alley by more than one well-defined entrance therefrom. The seating capacity of an outside terrace or patio if used regularly by those operations which are seasonal in nature, shall be included in determining eligibility qualifications. For purposes of this subdivision, the term "seasonal operations" is defined as an establishment that voluntarily surrenders its license to the board for part of its license year.

5. "Tables and counters."

a. A "table" shall include any article of furniture, fixture or counter generally having a flat top surface supported by legs, a pedestal or a solid base, designed to accommodate the serving of food and refreshments (though such food and refreshments need not necessarily be served together), and to provide seating for customers. If any table is located between two-backed benches, commonly known as a booth, at least one end of the structure shall be open permitting an unobstructed view therein. In no event, shall the number of individual seats at free standing tables and in booths be less than the number of individual seats at counters.

b. This subdivision shall not be applicable to a room otherwise lawfully in use for private meetings and private parties limited in attendance to members and guests of a particular group.

1. Service of food in a bona fide, full-service restaurant shall consist of taking a food order at the table, and serving the food to the table on plates or appropriate dinnerware, accompanied by appropriate tableware. The board may approve the issuance of a mixed beverage restaurant license to a buffet restaurant if (i) both alcoholic and nonalcoholic beverage service is provided at the table and (ii) actual sales show that the requirements of subdivision D 2 of this section are met.

2. Monthly sales of food prepared on the premises of a mixed beverage restaurant licensee shall not be less than $4,000, of which at least $2,000 shall be in the form of meals.

3. A mixed beverage restaurant licensee must have at least as many seats at tables as at counters.

E. The board may grant a license to an establishment not meeting the qualifying figures in this section, provided the establishment otherwise is qualified under the applicable provisions of the Code of Virginia and this section, if it affirmatively appears that there is a substantial public demand for such an establishment and that the public convenience will be promoted by the issuance of the license.

F. Notwithstanding the above, the board may issue a temporary license for any of the above retail operations. Such licenses may be issued only after application has been filed in accordance with § 4.1-230 of the Code of Virginia, and in cases where the sole objection to issuance of a license is that the establishment will not be qualified in terms of the sale of food or edible items. If a temporary license is issued, the board shall conduct an audit of the business after a reasonable period of operation not to exceed 180 days. Should the business be qualified, the license applied for may be issued. If the business is not qualified, the application will become the subject of a hearing if the applicant so desires. No further temporary license shall be issued to the applicant or to any other person with respect to the establishment for a period of one year from expiration and, once the application becomes the subject of a hearing, no temporary license may be issued.

G. An outside terrace or patio, the location, equipment, and facilities of which have been approved by the board, may be approved as a "dining area" or as a "designated area" in the discretion of the board.

H. Limited mixed beverage licenses may be granted to persons operating restaurants as defined in § 4.1-100 of the Code of Virginia, provided that food is regularly sold at substantially all hours that alcoholic beverages are offered for sale, and the total monthly food sales of food cooked or prepared on the premises for consumption in dining areas and other designated areas on the premises are not less than $2,000.

3VAC5-50-160. Happy hour and related promotions; definitions; exceptions.

A. Definitions:

1. "Happy Hour." A specified period of time during which alcoholic beverages are sold at prices reduced from the customary price established by a retail licensee.

2. "Drink." Any beverage containing the amount of alcoholic beverages customarily served to a patron as a single serving by a retail licensee.

B. No retail licensee shall engage in any of the following practices:

1. Conducting a happy hour between 9 p.m. of each day and 2 a.m. of the following day;

2. Allowing a person to possess more than two drinks at any one time during a happy hour;

3. Increasing the volume of alcoholic beverages contained in a drink without increasing proportionately the customary or established retail price charged for such drink;

4. Selling two or more drinks for one price, such as "two for one" or "three for one";

5. Selling pitchers of mixed beverages;

6. Giving away drinks;

7. Selling an unlimited number of drinks for one price, such as "all you can drink for $5.00"; or

8. Advertising happy hour in the media or on the exterior anywhere other than within the interior of the licensed premises., except that a licensee may use the term "Happy Hour" or "Drink Specials" and the time period within which alcoholic beverages are being sold at reduced prices in any otherwise lawful advertisement; or

9. Establishing a customary retail price for any drink at a markup over cost significantly less than that applied to other beverages of similar type, quality, or volume.

C. This regulation shall not apply to prearranged private parties, functions, or events, not open to the public, where the guests thereof are served in a room or rooms designated and used exclusively for private parties, functions or events.