Title of Regulation: 3VAC5-10. Procedural Rules for the Conduct of Hearings before the Board and its Hearing Officers (amending 3VAC5-10-290).

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 the 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 authorizes the board 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: The purpose of this action is to accommodate the new part-time board. As the Department of Alcoholic Beverage Control transitions into an authority, it was necessary to make amendments to the regulations dealing with procedural rules to make the process more efficient and not overburden the new part-time board. Previously the appeal panel consisted solely of members of the board, but with the transition to an authority and the switch from a full-time board to a part-time board, the appeal panel may consist of board members or other officers or employees. As such, the regulation needed to be changed to reflect the possibility that there may or may not be a board member on the appeal panel.

Rationale for Using Fast-Track Rulemaking Process: The amendments are expected to be noncontroversial because the licensees' responsibilities are not changed, and there is no monetary impact.

Substance: Additional evidence may be introduced at an appeal hearing upon unanimous consent of the appeal panel.

Issues: The primary advantage to the amendment is that it contemplates the possibility that an appeal panel may not consist solely of board members (a likely scenario given the new part-time board) and allows the introduction of new evidence upon the unanimous consent of the appeal panel. There are no disadvantages to the agency or the Commonwealth. The pertinent matter to the regulated community, government officials, and the public is that the introduction of additional evidence will require the consent of the appeal panel, which may or may not have board representation.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Alcoholic Beverage Control Board (Board) proposes to amend the regulation to indicate that an appeal panel will make evidentiary decisions at appeal hearings rather than a board.

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

Estimated Economic Impact. Section 290 of the regulation concerns evidence for hearings. Under current language in Section 290, the Board determines at appeal hearings whether it is necessary or desirable that additional evidence be taken. If it decides that such additional evidence should be taken, it may: 1) direct that a hearing officer fix a time and place for the taking of such evidence, and 2) upon unanimous agreement of the Board members permit the introduction of after-discovered or new evidence at the appeal hearing.

Chapters 38¹ and 730² of the 2015 Virginia Acts of Assembly eliminated, with a delayed effective date of July 1, 2018, the Board and the Department of Alcoholic Beverage Control (ABC) and replaced them with the newly created Virginia Alcoholic Beverage Control Authority. The legislation also, with the delayed effective date, created a Board of Directors of the Authority (Authority Board).

Members of the current Board work full time. Positions on the Authority Board will be considered part time, and the full Authority Board will often not be present for hearings.³ Instead, there will be an appeal panel. The appeal panel will usually include a portion of the Authority Board members, but may include non-Authority Board members as well.⁴ Consequently, the Board proposes to amend the regulation to indicate that the appeal panel will make the evidentiary decisions at the appeal hearings.

Requiring the full Authority Board to make the evidentiary decisions would likely delay the occurrence of hearings and potentially delay results. The proposal to allow the appeal panel to make these decisions is thus beneficial in that it prevents these potential delays.

Businesses and Entities Affected. All 13,000+ licensees could potentially be subject to disciplinary proceedings, and thus could be affected by the proposed amendments.⁵ 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 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. Requiring the full Authority Board to make the evidentiary decisions would likely delay the occurrence of hearings and potentially delay results. The proposed amendments eliminate these potentially delays, and consequently eliminate potential costs that the delays may create for small businesses licensed by ABC.

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.

____________________________________________

¹See http://lis.virginia.gov/cgi-bin/legp604.exe?151+ful+CHAP0038

²See http://lis.virginia.gov/cgi-bin/legp604.exe?151+ful+CHAP0730

³Source: Department of Alcoholic Beverage Control

⁴Ibid

⁵Data 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 permit the introduction of additional evidence at an appeal hearing upon unanimous consent of the appeal panel.

3VAC5-10-290. Evidence.

A. Generally. Subject to the exceptions permitted in this section, and to any stipulations agreed to by all interested parties, all evidence should be introduced at hearings before hearing officers.

B. Additional evidence. Should the board appeal panel determine at an appeal hearing, either upon motion or otherwise, that it is necessary or desirable that additional evidence be taken, the board appeal panel may:

1. Direct that a hearing officer fix a time and place for the taking of such evidence within the limits prescribed by the board and in accordance with 3VAC5-10-180; and

2. Upon unanimous agreement consent of the board members appeal panel, permit the introduction of after-discovered or new evidence at the appeal hearing.

If the initial decision indicates that the qualifications of the establishment of an applicant or licensee are such as to cast substantial doubt upon the eligibility of the place for a license, evidence may be received at the appeal hearing limited to the issue involved and to the period of time subsequent to the date of the hearing before the hearing officer.

C. Board examination Examination. Any board appeal panel member may examine a witness upon any question relevant to the matters in issue.

D. Cross-examination. The right to cross-examine and the submission of rebuttal evidence as provided in 3VAC5-10-90 shall be allowed in any appeal hearing where the introduction of additional evidence is permitted.