WSR 23-24-100

PROPOSED RULES

LIQUOR AND CANNABIS

BOARD

[Filed December 6, 2023, 10:33 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 23-15-116.

Title of Rule and Other Identifying Information: Rules to implement SSB 5448 (chapter 279, Laws of 2023), and rules to address an accepted petition for rule making on mandatory alcohol server training (MAST) 13 permits:

Hearing Location(s): On January 17, 2024, at 10:00 a.m. All public board activity will be held in a "hybrid" environment. This means that the public will have options for in-person or virtual attendance. The boardroom at the headquarters building, 1025 Union Avenue, Olympia, WA 98504, will be open for in-person attendance. The public may also log in using a computer or device, or call in using a phone, to listen to the meeting through the Microsoft Teams application. The public may provide verbal comments during the specified public comment and rules hearing segments. TVW also regularly airs these meetings. Please note that although the boardroom will be staffed during a meeting, board members and agency participants may continue to appear virtually. For more information about board meetings, please visit https://lcb.wa.gov/Boardmeetings/Board_meetings.

Date of Intended Adoption: No earlier than January 31, 2024.

Submit Written Comments to: Daniel Jacobs, Rules and Policy Coordinator, P.O. Box 43080, Olympia, WA 98504-3080, email rules@lcb.wa.gov, fax 360-704-5027, by January 10, 2024.

Assistance for Persons with Disabilities: Contact Anita Bingham, ADA coordinator, human resources, phone 360-664-1739, fax 360-664-9689, TTY 711 or 1-800-833-6388, email anita.bingham@lcb.wa.gov, by January 10, 2024.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposal reflects two separate rule-making endeavors: (1) Implementation of SSB 5448, primarily codified at RCW 66.24.710; and (2) revising rules related to MAST 13 permit holders and where they can open and pour beer and wine.

1. Adding references to RCW 66.24.710: SSB 5448 is primarily codified at RCW 66.24.710, named "Takeout or delivery." Some requirements in the rules below were put in place after the rule making done following E2SHB 1480 passed during the 2021 legislative session in the height of the COVID-19 pandemic. These requirements include requiring a purchased meal to accompany sales of alcohol sold for takeout or delivery, that delivery drivers hold certain alcohol server permits, and ID checks for customers when the alcohol is delivered, among others. Where these requirements are already in rule, a citation to RCW 66.24.710 is added to clarify that these rule requirements are also in statute. Where these requirements were not in place, the statutory language is added into the rule, with RCW 66.24.710 referenced, to clarify that these requirements are now in place.

2. Delineating takeout and delivery endorsements from other existing license privileges: Several types of liquor licensees identified in RCW 66.24.710 (1)(a) already had the ability to sell alcohol for takeout or delivery, either through off-premises endorsements that are separately available, or directly through statutory authority, and clarified in separate rules. Over the past few years, licensees have asked agency staff questions regarding the differences and different rules applicable to these licensees, depending on whether delivery or takeout is being done through the new takeout or delivery endorsement, or through the preexisting endorsement or privilege. This has caused a great deal of confusion for both licensees and agency staff. Language referring to these license types has been removed from some of the rules to help delineate the different endorsements and rules that apply to them, as well as a new rule created, WAC 314-03-600, in the form of a straightforward visual tool to answer in Yes/No form whether a meal is required or third-party delivery is allowed depending on the license type and endorsement at issue.

3. Ready to drink cocktails: Agency staff have also been frequently asked about the applicability of rules regarding the sale through delivery or takeout of "ready to drink cocktails," commonly packaged in cans, a relatively new presentation of alcohol that has become increasingly popular, and as such, increasingly inquired about to agency staff. Because these do not fit neatly into an existing rule, and to implement the takeout and delivery endorsement regarding these new drinks, explicit authorization to sell these, as well as a definition, is proposed in amended WAC 314-03-500.

4. Consolidating outside service rules: As authorized by RCW 66.24.710(7), the liquor and cannabis board (LCB) is seeking to simplify the outdoor alcohol service rules by combining what are currently two rules, WAC 314-03-200 and 314-03-205, into a single rule, amended WAC 314-03-200. WAC 314-03-205 was initially created as a temporary set of exceptions to WAC 314-03-200 following the passage of E2SHB 1480, which instructed the agency to create additional flexibility for licensees to utilize outdoor spaces for alcohol service, the idea at the time being that this would be temporary, when many state and local authorities were placing limits on the use of indoor spaces during the height of the COVID-19 pandemic. SSB 5448 made the temporary changes a permanent part of rule, and as a result, agency staff and licensees had two rules to consult regarding outdoor alcohol service. Much of the language of the two rules was identical, and to improve clarity and enable licensees and agency staff to instead consult one single rule regarding outdoor alcohol service, LCB is proposing a single amended WAC 314-03-200 that reflects the content of both rules. This necessarily involves the proposed repeal of WAC 314-03-205.

5. MAST 13 Rule Changes: During most of the COVID-19 pandemic, LCB allowed MAST 13 permit holders, employees between 18 and just under 21 years of age who can pour beer and wine at the customer's table, as well as take orders for spirits, to pour beer and wine away from the customer's table. After this allowance expired in September 2022, LCB received a petition for rule making that sought to amend WAC 314-17-015 and make this a permanent part of rule, allowing MAST 13 permit holders to pour beer and wine away from the customer's table. In January 2023, LCB accepted this petition for rule making. This rule-making project began in March 2023, and was later combined with the SSB 5448 rule making. To implement this change, the language in WAC 314-11-040 and 314-17-015 has been changed to state that MAST 13 permit holders may open and pour beer and wine without entering an age-restricted area, using language similarly used in other rules and statutes to describe the area classified by LCB as off limits to persons under the age of 21.

Reasons Supporting Proposal: The proposed rules are needed to align existing rule language with SSB 5448 (chapter 279, Laws of 2023) and implement RCW 66.24.710 as described below:

The changes to WAC 314-11-040 and 314-17-015 reflect the decision by LCB to make what was a temporary allowance during the COVID-19 pandemic a permanent part of rule, as indicated when LCB accepted a rule-making petition in January 2023.

Statutory Authority for Adoption: RCW 66.08.030, 66.20.330, 66.24.710(7).

Statute Being Implemented: RCW 66.04.010(13), 66.20.310, 66.20.320, 66.24.710.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: LCB, governmental.

Name of Agency Personnel Responsible for Drafting: Daniel Jacobs, Rules and Policy Coordinator, 1025 Union Avenue, Olympia, WA 98504, 360-480-1238; Implementation: Becky Smith, Director of Licensing, 1025 Union Avenue, Olympia, WA 98504, 360-664-1753; and Enforcement: Chandra Wax, Director of Enforcement and Education, 1025 Union Avenue, Olympia, WA 98504, 360-664-1726.

A school district fiscal impact statement is not required under RCW 28A.305.135.

A cost-benefit analysis is not required under RCW 34.05.328. The proposed amended rules do not qualify as a type of rule requiring a cost-benefit analysis under RCW 34.05.328(5). LCB is not a listed agency under RCW 34.05.328 (5)(a)(i), so the cost-benefit analysis requirements in RCW 34.05.328 are not applicable to the proposed rules unless voluntarily applied or made applicable by the joint administrative rules review committee under RCW 34.05.328 (5)(a)(ii). In this case, since most of the proposed amended rules change existing regulations in accordance with new statutory language, the agency did not decide to complete a cost-benefit analysis. Additionally, the proposed rule changes regarding the MAST 13 permits are aimed at allowing businesses to engage in a practice they were permitted to do during most of the COVID-19 pandemic, and so a de minimis amount of time is expected to be required to reacquaint staff with the new practices allowed in regulation.

This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:

Is exempt under RCW 19.85.025(3) as the rules are adopting or incorporating by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of statewide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule; and rules only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect.

Is exempt under RCW 19.85.025(3) through the exemptions in RCW 34.05.310 (4)(c) and (d).

Explanation of exemptions: Most of the proposed amended rules are exempt from the Regulatory Fairness Act's (RFA) small business economic impact statement (SBEIS) requirement under RCW 34.05.310 (4)(c) and (d) for the following reasons identified below:

The proposed amendment to WAC 314-03-035 states that on-premises beer or wine licensees must get the delivery endorsement in RCW 66.24.710 (5)(a) to deliver beer or wine, copying language from RCW 66.24.710 (5)(a) and placing it in rule. Several references to the use of third-party delivery are proposed to be removed, consistent with the framework of RCW 66.24.710. Lastly, some technical typographic changes are proposed. Because the proposed rule language is making technical changes without changing the effect of the rule and incorporating statutory provisions by reference, the proposed amendment to WAC 314-03-035 meets the requirements of RCW 34.05.310 (4)(c) and (d) and is thus exempt from RFA's SBEIS requirement.

The proposed amendment to WAC 314-03-500 replaces citations to session law with statutory citations and copies statutory language regarding the requirement for a driver delivering alcohol to have an MAST 12 permit from RCW 66.24.710 (5)(b)(i) and for certain licensees to sell an accompanying meal with the purchase of alcohol for takeout or delivery from RCW 66.24.710 (5)(b)(ii) and (c). Additionally, the proposed amendment removes references to licensees that have delivery privileges from their authorizing statutes separate from RCW 66.24.710. Also removed is a reference to kegs because the use of kegs is described in WAC 314-02-115. Because most of the proposed rule language is making technical changes without changing the effect of the rule and incorporating statutory provisions by reference, the proposed amendment to WAC 314-03-500 meets the requirements of RCW 34.05.310 (4)(c) and (d) and is thus exempt from RFA's SBEIS requirement.

There is one portion of WAC 314-03-500 regarding "ready to drink cocktails" that is not making technical changes and so is not exempt from RFA's SBEIS requirement.

The proposed amendment to WAC 314-03-505 replaces citations to session law with statutory citations and adds references to RCW 66.24.710 where the same requirements were already in place in WAC 314-03-505. Because the proposed rule language is making technical changes without changing the effect of the rule and incorporating statutory provisions by reference, the proposed amendment to WAC 314-03-505 meets the requirements of RCW 34.05.310 (4)(c) and (d) and is thus exempt from RFA's SBEIS requirement.

The proposed amendment to WAC 314-03-510 replaces citations to session law with statutory citations, replaces a definition provided in rule with a reference to one that is now in statute, and states that accompanying meals do not need to be purchased with a growler. Because the proposed rule language is making technical changes without changing the effect of the rule and incorporating statutory provisions by reference, the proposed amendment to WAC 314-03-510 meets the requirements of RCW 34.05.310 (4)(c) and (d) and is thus exempt from RFA's SBEIS requirement.

Scope of exemption for rule proposal:

Is partially exempt:

Explanation of partial exemptions:

The proposed rule does not impose more-than-minor costs on businesses. Following is a summary of the agency's analysis showing how costs were calculated. Agencies are required to consider costs imposed on business and costs associated with compliance with proposed rules. Agencies are not required under chapter 19.85 RCW to consider indirect costs not associated with compliance. Here, LCB considered potential administrative costs that a licensee may incur complying with the proposed rules.

LCB applied the North American Industry Classification System (NAICS) codes 722320 for Caterers, 722410 for Drinking Places (Alcoholic Beverages), 722511 for Full Service Restaurants and 722513 for Limited Service Restaurants. Drinking Places (Alcoholic Beverages) is described by the NAICS as follows: The industry comprised of establishments known as bars; taverns; nightclubs; or drinking places primarily engaged in preparing and serving alcohol beverages for immediate consumption. These establishments may also provide limited food service.

The industry description for this code is presented in the table below and can be accessed at https://www.census.gov/naics/.

LCB applied a default estimated compliance cost when analyzing whether the rules would have a disproportionate impact on small businesses as defined in RCW 19.85.020(3). This reflects a very generous estimated four hours of administrative time at $50 per hour, for a total of $200. The agency assumes this activity would involve reviewing the revised rules and explaining the changes to employees.

As the table demonstrates, the estimated cost of compliance does not exceed the thresholds for any of the license types. Therefore, implementation of these rules is not anticipated to result in more-than-minor costs on businesses as defined in RCW 19.85.020(2).

ESD - Washington state employment security department.

DOR - Washington state department of revenue.

A copy of the detailed cost calculations may be obtained by contacting Daniel Jacobs, Rules and Policy Coordinator, P.O. Box 43080, Olympia, WA 98504-3080, phone 360-480-1238, fax 360-704-5027, email rules@lcb.wa.gov.

December 6, 2023

David Postman

Chair

OTS-4973.2

OTS-4974.3

The following section of the Washington Administrative Code is repealed:

OTS-4975.4

OTS-5097.3

OTS-5069.2

OTS-4976.3

OTS-4977.3