Title of Regulation: 3VAC5-10. Procedural Rules for the Conduct of Hearings Before the Board and Its Hearing Officers (amending 3VAC5-10-400).

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: August 22, 2018.

Effective Date: September 10, 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: Sections 4.1-103 and 4.1-111 of the Code of Virginia enumerate the powers of the Board of Directors of the Virginia Alcoholic Beverage Control Authority, which includes the authority to adopt regulations, and to amend and repeal such regulations, and to do all acts necessary or advisable to carry out the purposes of Alcoholic Beverage Control Act (Title 4.1 of the Code of Virginia) in accordance with the Administrative Process Act.

Purpose: The purpose of this regulation change is to clarify that the Rules of the Supreme Court of Virginia relating to the general rules applicable to all proceedings, foreign attorneys, the Virginia Rules of Evidence, appeals pursuant to the Administrative Process Act, and practices and procedures in civil actions are all applicable to all proceedings under the Wine and Beer Franchise Acts. The additional rules have always been applied in practice by virtue of the Administrative Process Act, even though they were not mentioned in the regulations. The purpose of the change is to make it abundantly clear that the mentioned portions of the Rules of the Supreme Court are applicable and not just Part Four. Also since mediation will be one of the proceedings that will be subject to these rules, it is necessary to include it in the regulation. This regulation has no significant impact on the health and safety of the public; however, general public welfare is benefited when the agency and the licensees are in compliance with the prevailing laws of the Commonwealth and when all parties are well informed of the applicable laws.

Rationale for Using Fast-Track Rulemaking Process: The amendments are expected to be noncontroversial because they provide further clarification as to which Rules of the Supreme Court of Virginia apply to proceedings under the Wine and Beer Franchise Acts. The additional parts incorporated specifically in the amendment have been applied in practice; however, the regulation only cited Part Four and for the sake of clarification, the other portions are being incorporated by reference into the regulation.

Substance: The proposed regulation changes will amend the regulation to include Parts One, One A, Two, Two A, and Three of the Rules of Supreme Court of Virginia as applying to all proceedings under the Wine and Beer Franchise Acts. The additional parts mentioned specifically in the amendment have been applied in practice; however, the regulation currently only cites Part Four, and for the sake of clarification, the other portions are being added to the regulation. The amendments also add mediation as one of the proceedings subject to the aforementioned Rules of the Supreme Court of Virginia.

Issues: The primary advantage for the agency of this regulation amendment is that it clarifies that the Rules of the Supreme Court of Virginia relating to the general rules applicable to all proceedings, foreign attorneys, the Virginia Rules of Evidence, appeals pursuant to the Administrative Process Act, and practices and procedures in civil actions are all applicable to all proceedings under the Wine and Beer Franchise Acts. Advantages to the regulated community, government officials, and the public are that certain rules of the Virginia Supreme Court that were not initially applicable under the regulation will now apply and mediation is one of the proceedings subject to these rule. There are no disadvantages to the public, the agency, or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Alcoholic Beverage Control Board (Board) proposes to clarify: 1) that specific Rules of the Supreme Court of Virginia apply in all proceedings under the Wine and Beer Franchise Acts, and 2) that mediation is one of the proceedings subject to the aforementioned Rules of the Supreme Court of Virginia.

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

Estimated Economic Impact. The current regulation specifies that:

The Rules of the Supreme Court of Virginia, Part Four, shall apply in all proceedings under the Wine and Beer Franchise Acts, Chapters 4 (§ 4.1-400 et seq.) and 5 (§ 4.1-500 et seq.) of Title 4.1 of the Code of Virginia, including arbitration proceedings when necessary pursuant to §§ 4.1-409 and 4.1-508 of the Code of Virginia.

The Board proposes to amend the text to specify that Rules of the Supreme Court of Virginia, Parts One, One A, Two, Two A, Three, and Four all apply. This is a clarification that the Rules of the Supreme Court of Virginia (Rules) relating to the general rules applicable to all proceedings, foreign attorneys, the Virginia Rules of Evidence, appeals pursuant to the Administrative Process Act, and practices and procedures in civil actions are all applicable to all proceedings under the Wine and Beer Franchise Acts.

The Board also proposes to specify that mediation is subject to the Rules. This is also a clarification of current law. The proposed clarifying amendments do not change applicable requirements but are beneficial in that they may reduce potential misunderstandings.

Businesses and Entities Affected. All 13,000 plus 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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¹ Data 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) incorporate by reference Parts One, One A, Two, Two A, and Three of the Rules of Supreme Court of Virginia (Rules) as applying to all proceedings under the Wine and Beer Franchise Acts and (ii) add mediation as one of the proceedings subject to the Rules, in addition to the currently incorporated Part Four of the Rules. Currently, arbitration is the one proceeding to which the Rules apply under the Wine and Beer Franchise Acts.

3VAC5-10-400. Discovery, prehearing procedures and production at hearings; definitions.

The Rules of the Supreme Court of Virginia, Part Parts One, One A, Two, Two A, Three, and Four, shall apply in all proceedings under the Wine and Beer Franchise Acts, Chapters 4 (§ 4.1-400 et seq.) and 5 (§ 4.1-500 et seq.) of Title 4.1 of the Code of Virginia, including mediation and arbitration proceedings when necessary pursuant to §§ 4.1-409 and 4.1-508 of the Code of Virginia. Any references to a "court" contained in the rules shall be deemed to mean the hearing officer or officers of the board conducting the proceeding.

No provision of this section shall affect the practice of taking evidence at a hearing, but such practice, including that of generally taking evidence ore tenus only at hearings before hearing officers, shall continue unaffected hereby.

DOCUMENTS INCORPORATED BY REFERENCE (3VAC5-10)

Rules of the Supreme Court of Virginia, Part One: General Rules Applicable to All Proceedings

Rules of the Supreme Court of Virginia, Part One A: Foreign Attorneys

Rules of the Supreme Court of Virginia, Part Two: Virginia Rules of Evidence

Rules of the Supreme Court of Virginia, Part Two A: Appeals Pursuant to the Administrative Process Act

Rules of the Supreme Court of Virginia, Part Three: Practice and Procedures in Civil Actions

Rules of the Supreme Court of Virginia, Part Four: Pretrial Procedures, Depositions, and Production at Trial.