Title of Regulation: 3VAC5-10. Procedural Rules for the Conduct of Hearings before the Board and its Hearing Officers (amending 3VAC5-10-160).

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: October 3, 2018.

Effective Date: October 22, 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: Section 4.1-101 of the Code of Virginia establishes the Virginia Alcoholic Beverage Control Authority and the Board of Directors of the Virginia Alcoholic Beverage Control Authority.

Section 4.1-103 of the Code of Virginia enumerates the powers of the board, which include the authority to adopt regulations and to do all acts necessary or advisable to carry out the purposes of Title 4.1 of the Code of Virginia. Subdivision 7 of § 4.1-103 of the Code of Virginia permits board to delegate or assign any duty or task to be performed by the authority to any officer or employee of the authority. Subdivision 24 of § 4.1-103 permits the board to promulgate regulations in accordance with the Administrative Process Act and § 4.1-111 of the Code of Virginia.

Section 4.1-111 A provides the board with the authority to adopt reasonable regulations that it deems necessary to carry out the provisions of Title 4.1 and to amend or repeal such regulations.

Purpose: As the Department of Alcoholic Beverage Control transitions into an authority, it was necessary to make amendments to the regulations dealing with procedural rules of the conduct of hearings before the board and hearings officers to make the process more efficient and not overburden the new part-time board. Approvals that were once subject to board approval have been delegated to the chief hearing officer. Additionally, extending the time in which an offer can be submitted is an effort to decrease the number of hearings and appeals and foster more resolutions through settlement.

Rationale for Using Fast-Track Rulemaking Process: The amendments favor licensees and simplify the offer in the compromise process while extending the time that the licensee has to make an offer in compromise.

Substance: Approvals once subject to board approval have been delegated to the chief hearing officer thereby accommodating the new part-time board while not hampering the process for licensees. Also, extending the time in which offers can be made increases the likelihood that the matter will be resolved without further hearings or appeals.

Issues: The primary advantage is that the amendment will make the process for offers in compromise more efficient by allowing the board to delegate the responsibility of approving the offer instead of having to wait for board approval, which could delay the settlement as the board will meet much less frequently under the authority. There are no disadvantages to the agency or the Commonwealth. Pertinent matters to the regulated community, government officials, and the public are that offers in compromise will not always have oversight from the board; however, they will be delegated to chief hearing officer who may have more intimate knowledge of the case and the significance of the settlement terms.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Alcoholic Beverage Control Board (Board) proposes to: 1) direct that offers in compromise be addressed to the chief hearing officer, 2) no longer require Board approval for acceptance of offers in compromise, 3) remove the limit on the number of offers in compromise that licensees may make, and 4) allow licensees more time to present an offer in compromise.

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

Estimated Economic Impact. Following notice of a disciplinary proceeding, a licensee may be afforded opportunity for the submission of an offer in compromise in lieu of suspension or in addition thereto, or in lieu of revocation of his license. The current regulation specifies that such an offer be summited to the secretary of the Board and be subject to Board approval.

As of January 15, 2018, the Virginia Alcoholic Beverage Control Authority (ABCA) became successor in interest to the Department of Alcoholic Beverage Control and the Alcoholic Beverage Control Board.¹ ABCA consists of the Virginia Alcoholic Beverage Control Board of Directors (Authority Board), the Chief Executive Officer, and the agents and employees of the Authority.

Members of the Board prior to the establishment of ABCA worked full time. Positions on the Authority Board are considered part time; the Authority Board meets much less frequently than the Board has historically. Consequently, the Board proposes to amend the regulation to specify that offers in compromise be submitted to the chief hearing officer, and acceptance is not subject to Board (or Authority Board) approval. The proposal to have offers in compromise be submitted to the chief hearing officer and to allow the chief hearing officer to approve such offers without waiting for Board approval would help prevent significant delays. This would be beneficial for regulated entities and the public.

The current regulation limits licensees to two offers of compromise. The Board proposes to remove this limitation and extend the timeframe within which licensees may submit offers in compromise. Since these proposed changes are potentially beneficial for affected licenses, and do not produce significant cost for ABCA, they would likely produce a net benefit.

Businesses and Entities Affected. All 13,000+ licensees could potentially be subject to disciplinary proceedings, and thus could be affected by the proposed amendments.² ABCA 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 significantly affect employment.

Effects on the Use and Value of Private Property. The proposed amendments do not significantly 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 significantly 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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¹See Virginia Code § 4.1-101 B

²Data 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) require that offers in compromise be addressed to the chief hearing officer, (ii) remove the board approval requirement for acceptance of offers, (iii) remove the limit on the number of offers that licensees may make, and (iv) extend the time in which an offer can be made.

3VAC5-10-160. Offers in compromise.

Following notice of a disciplinary proceeding, a licensee may be afforded opportunity for the submission of an offer in compromise in lieu of suspension or in addition thereto, or in lieu of revocation of his license, where in the discretion of the board, the nature of the proceeding and the public interest permit. Such offer should be addressed to the secretary to the board chief hearing officer. Upon approval by the board, acceptance Acceptance of the offer in compromise shall constitute an admission of the alleged violation of the A.B.C. laws or regulations, and shall result in a waiver of the right to a formal hearing and the right to appeal or otherwise contest the charges. The reason for the acceptance of such an offer shall be made a part of the record of the proceeding. Unless good cause be shown, continuances for purposes of considering an offer in compromise will not be granted, nor will a decision be rendered prior to a hearing if received within three days of the scheduled hearing date, nor will more than two offers be entertained during the proceeding. Further, no offers shall be considered by the board if received more than 15 calendar days after the date of mailing of the initial decision or the proposed decision, whichever is later. An offer may be made at the appeal hearing, but none shall be considered after the conclusion of such hearing. Offers in compromise may be submitted anytime following notice of a disciplinary proceeding and before the conclusion of an appeal hearing. Any such offer may not be accepted at the informal conference and no offer shall be submitted after the conclusion of the appeal hearing. The board may waive any provision of this section for good cause shown.