Title of Regulation: 3VAC5-10. Procedural Rules for the Conduct of Hearings before the Board and its Hearing Officers (amending 3VAC5-10-150).

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 17, 2018.

Effective Date: November 1, 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 states the board may 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 of the Code of Virginia provides the board with the authority to adopt reasonable regulations that it deems reasonable to carry out the provisions of Title 4.1 and to amend or repeal such regulations.

Purpose: The purpose of this regulatory 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 so as to make the process more efficient and to not overburden the new part-time board. Approvals that were once subject to board approval have been delegated to the chief hearing officer. This action does not significantly impact public health or safety; however, there is an argument to be made that the general public welfare is benefited because the new process is more efficient because the responsibility is delegated to the chief hearing officer instead of relying on the new part-time board and it also presents licensees with a process for resolving uncontested matters that is not overwhelming or intimidating.

Rationale for Using Fast-Track Rulemaking Process: The amendments are expected to be noncontroversial because they are in the licensee's favor and simplify the consent settlement process.

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.

Issues: The primary advantage of the regulatory action to the public and the agency is that it will make the process for consent settlements more efficient because it allows the board to delegate the responsibility of approving consent settlements instead of having to wait for board approval, which could delay the process as the board will meet much less frequently under the authority. There are no disadvantages to the public, the agency, or the Commonwealth. Pertinent matters to the regulated community, government officials, and the public are that consent settlements 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 permit a designee, typically the chief hearing officer, to extend offers of consent settlement without direct approval from the Board. In addition, the Board proposes to extend the time in which the licensee may return the properly executed consent settlement with payment.

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

Estimated Economic Impact. The current regulation states that "Disciplinary cases may be resolved by consent settlement if the nature of the proceeding and public interest permit. In appropriate cases, the chief hearing officer will extend an offer of consent settlement, conditioned upon approval by the board, to the licensee." As noted, Board approval is currently required for consent settlements. Such approval was feasible under the administration of a full-time Board; however, as the Department of Alcoholic Beverage Control (ABC) transitions into an Authority, the Board will operate on a part-time basis. Maintaining the requirement of Board approval for all consent settlements would become burdensome and unrealistic for a part-time Board, and would significantly impair the consent settlement process.

Consequently, the Board proposes to amend the regulation so that a designee of the Board, typically the chief hearing officer, can extend an offer of consent settlement without direct approval from the Board. This would be beneficial in that it prevents the delay of mutually agreed upon settlements from taking place.

The current regulation states that the licensee shall return the properly executed consent order along with the payment in full of any monetary penalty within 15 calendar days from the date of mailing by the board. The Board proposes to allow licensees up to 21 days, rather than 15, to return the executed consent order with payment. Since this is acceptable to the Board and gives affected individuals more time to decide and gather funds, it should produce a net benefit.

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.²

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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¹Data source: Department of Alcoholic Beverage Control

²See https://www.abc.virginia.gov/licenses/get-a-license

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) permit the chief hearing officer to extend offers of consent settlement without direct approval from the board, (ii) extend the time in which the licensee may return the properly executed consent settlement with payment, and (iii) remove the requirement that the board review or approve acceptance of consent settlement agreement.

3VAC5-10-150. Consent settlement.

A. Generally. Disciplinary cases may be resolved by consent settlement if the nature of the proceeding and public interest permit. In appropriate cases, the chief hearing officer will extend an offer of consent settlement, conditioned upon approval by the board, to the licensee. The board, or its designee, may offer to resolve disciplinary cases when the nature of the proceeding and public interest permit. In appropriate cases, the board or its designee will extend an offer for a consent settlement to the licensee.

B. Who may accept. The licensee or his attorney may accept an offer of consent settlement. If the licensee is a corporation, only an attorney or an officer, director or majority stockholder of the corporation may accept an offer of consent settlement. Settlement shall be conditioned upon approval by the board.

C. How to accept. The licensee shall return the properly executed consent order along with the payment in full of any monetary penalty within 15 no later than 21 calendar days from the date of mailing by the board. Failure to respond within the time period will result in a withdrawal of the offer by the agency and a formal hearing will be held on the date specified in the notice of hearing.

D. Effect of acceptance. Upon approval by the board, acceptance Acceptance of the consent settlement offer shall constitute an admission of the alleged violation of the A.B.C. laws or regulations, and will result in a waiver of the right to a formal hearing and the right to appeal or otherwise contest the charges. The offer of consent settlement is not negotiable; however, the licensee is not precluded from submitting an offer in compromise under 3VAC5-10-160.

E. Approval by the board. The board shall review all proposed settlements. Only after approval by the board shall a settlement be deemed final. The Board review. Prior to extending an offer of consent settlement to the licensee, the board or its designee may reject any proposed settlement which is contrary to law or policy or which, in its sole discretion, is not appropriate.

F. Record. Unaccepted offers of consent settlement will become a part of the record only after completion of the hearing process.