Title of Regulation: 3VAC5-70. Other Provisions (adding 3VAC5-70-95).

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 4.1-103 of the Code of Virginia authorizes the Alcoholic Beverage Control Board to promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) and § 4.1-111 of the Code of Virginia. Section 4.1-111 authorizes the board to promulgate reasonable regulations, not inconsistent with Title 4.1 of the Code of Virginia or the general laws of the Commonwealth, which it deems necessary to carry out the provisions of Title 4.1.

Section 4.1-232 C of the Code of Virginia provides that the board shall make refunds, prorated according to a schedule of its prescription, to licensees of state license taxes paid pursuant to § 4.1-231 A of the Code of Virginia if the place of business designated in the license is destroyed by an act of God, including but not limited to fire, earthquake, hurricane, storm, or similar natural disaster or phenomenon.

Purpose: The proposed regulatory action is essential to protect the welfare of citizens by providing a means to protect them from the total loss of unused license fees when natural disaster prevents them from exercising the privileges of a license.

Substance: The board adopted a proposed new section (3VAC5-70-95), which provides a schedule of the percentage of the license fee that will be refunded to a licensee whose place of business is destroyed by natural disaster. The percentage will vary depending on when in the course of the license year the destruction occurs.

Issues: The primary advantage to the public is providing some relief to businesses whose facilities are destroyed by natural disaster. The expense to the Commonwealth is expected to be minimal. There are no disadvantages to the public.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to Chapter 728 of the 2011 Acts of the Assembly, the Alcoholic Beverage Control Board (ABC) proposes to amend its regulations so businesses that are licensed by ABC may get a prorated refund of their licensure fee if the business is destroyed by an act of God.

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

Estimated Economic Impact. Until legislation was passed in 2011, ABC was not authorized to provide a refund of licensure fees for any reason. Chapter 728 changed this by authorizing ABC to set a schedule for proration of license fees "if the place of business designated in the license is destroyed by an act of God, including but not limited to fire, earthquake, hurricane, storm, or similar natural disaster or phenomenon." ABC now proposes this regulatory change to do just that. Under the proposed regulation, license fees will be refunded at a rate of 75% if a business is destroyed within the first three months of the license year; business owners will get 50% of their fee back if the business is destroyed in the second three months of the license year and will get 25% if their business is destroyed in the third three months of the license year. No license fees will be refunded if an affected business is destroyed in the final three months of the license year.

Because this regulation does not impose any additional burdens on licensees, no affected entity is likely to incur any costs on account of this proposed regulatory action. Affected business owners will benefit from being able to get a portion of their licensure fee back when their businesses are destroyed (rendering the license unusable and useless).

Businesses and Entities Affected. ABC reports that approximately 16,000 businesses would be potentially affected by this proposed regulatory change; 90% 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:

Pursuant to Chapter 728 of the 2011 Acts of Assembly, the Alcoholic Beverage Control Board proposes to amend its regulations so businesses that are licensed by the board may get a prorated refund of their licensure fee if the business is destroyed by an act of God.

3VAC5-70-95. Proration of license tax for businesses destroyed by natural disaster.

The board shall make refunds of the state license tax paid pursuant to subsection A of § 4.1-231 of the Code of Virginia to licensees whose place of business designated in the license is destroyed by an act of God, including but not limited to fire, earthquake, hurricane, storm, or similar natural disaster or phenomenon, upon the following schedule:

If the destruction takes place within the first three months of the license year, 75% of the license tax shall be refunded. If the destruction takes place within the second three months of the license year, 50% of the license tax shall be refunded. If the destruction takes place within the third three months of the license year, 25% of the license tax shall be refunded. No refund shall be issued if the destruction takes place within the last three months of the license year.