Title of Regulation: 3VAC5-20. Advertising (amending 3VAC5-20-30).

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

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: August 16, 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: Chapter 728 of the 2011 Acts of Assembly and Chapters 760 and 818 of the 2012 Acts of Assembly amended § 4.1-111 of the Code of Virginia to require that the Alcoholic Beverage Control promulgate regulations establishing reasonable time, place, and manner restrictions on outdoor advertising of alcoholic beverages. While the promulgation of regulations is mandatory, most details are discretionary, although the statute contains more specific limitations on where billboard signs advertising alcoholic beverages may be placed.

Purpose: This action carries out the mandate of Chapter 728 of the 2011 Acts of Assembly and Chapters 760 and 818 of the 2012 Acts of Assembly, which require the Alcoholic Beverage Control Board to promulgate regulations to establish reasonable time, place, and manner restrictions on outdoor advertising of alcoholic beverages The legislation specifies provisions that must be included in such regulations restricting where outdoor advertising signs may be placed.

The Alcoholic Beverage Control Board has determined that the proposed regulatory action is essential to protect the health, safety, or welfare of citizens because regulation of alcoholic beverage advertising is necessary to ensure that such advertising does not encourage over-consumption of alcoholic beverages, nor does it encourage or otherwise promote the consumption of alcoholic beverages by persons to whom alcoholic beverages may not be lawfully sold.

Substance: The proposed action amends 3VAC5-20-30 by deleting most of the existing language, which specifies certain numbers of signs, their placement, and content, for various categories of alcoholic beverage industry members. In its place would be four paragraphs that (i) prohibit the use of persons consuming alcohol, cartoon characters, or persons under the legal drinking age in outdoor alcoholic beverage advertising; (ii) prohibit alcoholic beverage advertising within 500 feet of religious institutions, schools, recreational facilities, or residences, with measurements as defined in the Code of Virginia; (iii) prohibit outdoor alcoholic beverage advertising on property zoned for agricultural use or unzoned; and (iv) require that outdoor alcoholic beverage advertising comply with Virginia Department of Transportation laws and regulations. Three other paragraphs prohibit manufacturers, importers, or wholesalers from providing outdoor advertising to retailers or engaging in cooperative advertising with retailers, and prohibit manufacturers or importers from requiring wholesalers to engage in outdoor advertising.

Issues: The primary advantage to the public and regulated businesses is the opportunity for increased sharing of information about lawful products. The amended regulation would provide fewer restrictions on commercial speech. The new provisions would be easier to comply with and to enforce. Some members of the public would find additional alcohol advertising or additional outdoor advertising of any nature to be a disadvantage, out of concern for substance abuse or esthetics. The regulatory action poses no disadvantages to the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to a consent decree between the Office of the Attorney General and the Lamar Company, LLC signed in January, 2011, as well as Chapter 728 of the 2011 Acts of the Assembly and Chapter 760 of the 2012 Acts of the Assembly, the Alcoholic Beverage Control Board (ABC) proposes to amend its advertising regulations.

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

Estimated Economic Impact. Prior to 2011, restrictions on advertising set in the Code of Virginia and in the Alcoholic Beverage Control (ABC) Board's regulations prohibited most forms of outdoor alcoholic beverage advertisement except for advertising within "stadia, coliseums or racetracks that are used primarily for professional or semiprofessional athletic or sporting events." A consent decree agreed to by both Lamar Company, LLC (a company that owns numerous outdoor advertising billboards in Virginia and other states) and the Office of the Attorney General suspended provisions of 3VAC5-20-30 and agreed that "no alcoholic beverage advertising shall depict persons consuming alcoholic beverages or use cartoon characters in any way or use persons who have not attained the minimum drinking age as models or actors" and that "(n)o outdoor alcoholic beverage advertising shall be placed within 500 feet of a church or synagogue; public, private or parochial school; college or university; or public or private playground or similar recreational facilities."

After this consent decree was entered in January, 2011, the General Assembly passed legislation that dealt with alcoholic beverage advertising in 2011 and 2012. Chapter 728 of the 2011 Acts of Assembly requires the board to promulgate regulations that establish reasonable time, place, and manner restrictions on alcoholic beverage outdoor advertising. Chapter 760 of the 2012 Acts of Assembly enacted Virginia Code § 4.1-112.2 which places specific limits on outdoor alcoholic beverage advertising (including specific measurement requirements for determining if advertising comported with the 500 foot restrictions in the consent decree), allows ABC to grant permits for variances, and requires outdoor advertising to comply with both ABC regulations and those adopted by the Commonwealth Transportation Board. This chapter also created Virginia Code § 33.1-377.1 which provides for penalties for violations of the outdoor advertising law. The 2012 changes were characterized as emergency legislation "in force from its passage," thereby making them effective on April 18, 2012.

ABC now proposes to amend its advertising regulations so that they are consistent with the consent decree as well as new legislation. The proposed regulations will prohibit advertising that "depict persons consuming alcoholic beverages, use cartoon characters in any way or use persons who have not attained the minimum drinking age as models or actors," will require that outdoor advertising comply with rules set out in Virginia Code § 4.1-112.2 (as modified by Chapter 760 of the 2012 Acts of the Assembly) and will, also pursuant to Chapter 760, prohibit outdoor advertising on property zoned exclusively for agricultural or residential uses or on unzoned property. The proposed regulations will also prohibit any advertising that would not be allowed by the Tied House regulations (3 VAC 5-30) or the Franchise Acts (§ 4.1-400 et seq. and § 4.1-500 et seq.).

Because of the consent decree mentioned above, and because of the resultant legislation, these proposed regulations are much less restrictive on alcoholic beverage advertising than were pre-2011 regulations. It does not appear that the proposed regulations add any more restrictions than are required by the Code of Virginia. ABC's licensees are likely to benefit from both a less restrictive advertising environment and from ABC's efforts to make these regulations consistent with the Code of Virginia so that inconsistencies do not cause confusion. No affected entity is likely to incur costs on account of these proposed regulations.

Businesses and Entities Affected. ABC reports that they license 16,000 alcoholic beverage manufacturers, wholesalers and retailers that will all be affected by these proposed regulations; 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:

This proposed action carries out the mandate of Chapter 728 of the 2011 Acts of Assembly and Chapters 760 and 818 of the 2012 Acts of Assembly, which require the Alcoholic Beverage Control Board to promulgate regulations establishing reasonable time, place, and manner restrictions on outdoor advertising of alcoholic beverages. The proposed amendments replace most of the existing language with four provisions that (i) prohibit the use of persons consuming alcohol, cartoon characters, or persons under the legal drinking age in outdoor alcoholic beverage advertising; (ii) prohibit alcoholic beverage advertising within 500 feet of religious institutions, schools, recreational facilities, or residences, with measurements as defined in the Code of Virginia; (iii) prohibit outdoor alcoholic beverage advertising on property zoned for agricultural or residential use or unzoned; and (iv) require that outdoor alcoholic beverage advertising comply with Virginia Department of Transportation laws and regulations. Other proposed provisions prohibit manufacturers, importers, or wholesalers from providing outdoor advertising to retailers or engaging in cooperative advertising with retailers, and prohibit manufacturers or importers from requiring wholesalers to engage in outdoor advertising.

3VAC5-20-30. Advertising; exterior.

Outdoor alcoholic beverage advertising shall comply with 3VAC5-20-10, and shall be limited to signs and is otherwise discretionary, except as follows:

1. Manufacturers and wholesalers, including wineries and farm wineries:

a. No more than one sign upon the licensed premises, no portion of which may be higher than 30 feet above ground level on a wholesaler's premises;

b. No more than two signs, which must be directional in nature, not farther than 1/2 mile from the licensed establishment limited in dimension to 64 square feet with advertising limited to brand names;

c. If the establishment is a winery also holding a retail off-premises winery license or is a farm winery, additional directional signs with advertising limited to trade names, brand names, the terms "farm winery" or "winery," and tour information, may be erected in accordance with state and local rules, regulations and ordinances; and

d. Only on vehicles and uniforms of persons employed exclusively in the business of a manufacturer or wholesaler, which shall include any antique vehicles bearing original or restored alcoholic beverage advertising used for promotional purposes. Additionally, any person whether licensed in this Commonwealth or not, may use and display antique vehicles bearing original or restored alcoholic beverage advertising.

2. Retailers, including mixed beverage licensees, other than carriers and clubs:

a. No more than two signs at the establishment and, in the case of establishments at intersections, three signs, the advertising on which, including symbols approved by the United States Department of Transportation relating to alcoholic beverages, shall be limited to 12 inches in height or width and not animated and, in the case of signs remote from the premises, subordinate to the main theme and substantially in conformance with the size and content of advertisements of other services offered at the establishment;

b. Signs may not include any reference to or depiction of "Happy Hour," or references or depictions of similar import, including references to "special" or "reduced" prices or similar terms when used as inducements to purchase or consume alcoholic beverages, except that, notwithstanding the provisions of 3VAC5-50-160 B 8, a retail licensee may post one two-dimensional sign not exceeding 17" x 22", attached to the exterior of the licensed premises, limited in content to the terms "Happy Hour" or "Drink Specials" and the time period within which alcoholic beverages are being sold at reduced prices; and

c. No advertising of alcoholic beverages may be displayed in exterior windows or within the interior of the retail establishment in such a manner that such advertising materials may be viewed from the exterior of the retail premises, except on table menus or newspaper tear sheets.

3. Manufacturers, wholesalers and retailers may engage in billboard advertising within stadia, coliseums or racetracks that are used primarily for professional or semiprofessional athletic or sporting events.

1. No outdoor alcoholic beverage advertising shall depict persons consuming alcoholic beverages, use cartoon characters in any way, or use persons who have not attained the minimum drinking age as models or actors.

2. No outdoor alcoholic beverage advertising shall be placed in violation of § 4.1-112.2 of the Code of Virginia.

3. No outdoor alcoholic beverage advertising shall be placed on property zoned exclusively for agricultural or residential uses, or on unzoned property.

4. All outdoor alcoholic beverage advertising must also comply with the provisions of Chapter 7 (§ 33.1-351 et seq.) of Title 33.1 of the Code of Virginia and the regulations of the Virginia Department of Transportation promulgated pursuant thereto.

5. No alcoholic beverage manufacturer, importer, or wholesale licensee may sell, rent, lend, buy for, or give to any retail licensee any outdoor alcoholic beverage advertising, any billboard placements for such advertising, or in any other way confer on any retail licensee anything of value that constitutes outdoor alcoholic beverage advertising.

6. No alcoholic beverage manufacturer, importer, or wholesale licensee may engage in cooperative advertising, as defined in 3VAC5-30-80, on behalf of any retail licensee.

7. No alcoholic beverage manufacturer or importer may require a wholesale licensee to place outdoor alcoholic beverage advertising or exercise control over the funds of a wholesale licensee for any purpose, including but not limited to the purchase of outdoor alcoholic beverage advertising.