WSR 99-06-097

PROPOSED RULES

LIQUOR CONTROL BOARD


[ Filed March 3, 1999, 10:12 a.m. ]

Supplemental Notice to WSR 98-24-128.

Preproposal statement of inquiry was filed as WSR 98-01-068.

Title of Rule: WAC 314-12-210 Chronic public inebriation (CPI) and alcohol impact areas--Definitions--Purpose, 314-12-215 Alcohol impact areas--Definitions--Guidelines, 314-12-220 General review, and 314-12-225 Severability.

Purpose: The purpose of the proposed rules is to provide a framework under which the board, in partnership with local government subdivisions, can take action to mitigate any negative impacts on a community's livability that result from the presence of chronic public inebriation or illegal activity associated with alcohol sales and consumption.

Statutory Authority for Adoption: RCW 66.08.030.

Statute Being Implemented: RCW 66.24.010.

Summary: The proposed rules establish an expanded local review process for liquor license applications and renewals inside an alcohol impact area; and allow the board, in specific circumstances, to restrict the off-premises sale of certain alcohol products in an alcohol impact area.

Name of Agency Personnel Responsible for Drafting: Bill Daley, P.O. Box 43075, Olympia, WA 98504-3075, (360) 664-9802; Implementation: David Goyette, P.O. Box 43075, Olympia, WA 98504-3075, (360) 753-2724; and Enforcement: Gary Gilbert, P.O. Box 43075, Olympia, WA 98504-3075, (360) 753-6270.

Name of Proponent: Washington State Liquor Control Board, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: Per chapter 66.08 RCW, part of the board's responsibility to protect the welfare, health, peace, and safety of the people of the state is to ensure that liquor licensees conduct their business in a lawful manner, and that the presence of a licensee's alcohol sales does not unreasonably disturb the health, peace, and safety of the surrounding community.

Therefore, the purpose of these rules concerning alcohol impact areas is to provide a framework under which the board, in partnership with local government subdivisions, can take action to mitigate any negative impacts on a community's livability that result from the presence of chronic public inebriation or illegal activity associated with alcohol sales and consumption.

The proposed rules establish an expanded local review process for liquor license applications and renewals inside an alcohol impact area (AIA); and allow the board, in specific circumstances, to restrict the off-premises sale of certain alcohol products within an AIA.

Proposal does not change existing rules.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement

This small business economic impact statement, created in compliance with chapter 19.85 RCW, pertains to the Liquor Control Board's proposal to add new sections to chapter 314-12 WAC regarding alcohol impact areas.

If you have any questions regarding this statement, please contact Teresa Berntsen, Rules Coordinator, at (360) 568-1641 or by e-mail at teb@liq.wa.gov.

Background: The Liquor Control Board is proposing to add several new rules within chapter 314-12 WAC, regarding "alcohol impact areas." If an alcohol impact area was implemented, the board could potentially restrict the sale of certain alcohol products for off-premises consumption.

In December of 1997 the board adopted guiding principles concerning chronic public inebriation, neighborhood livability, and cooperation with local jurisdictions and communities regarding alcohol related issues. In February, March, and April of 1998, the board held preliminary public hearings throughout the state concerning these issues. Specifically, the board asked for input on the following questions:

1. Should special alcohol impact areas be created?

2. What rules should the board make concerning the impact that liquor licensed premises have on surrounding neighborhoods?

3. Should certain alcohol products be limited in an effort to lessen the impact of chronic public inebriation and illegal activity associated with alcohol sales and consumption?

Based on testimony received during the hearings and subsequent input, in November of 1998 the board drafted preliminary language for these rules. Further feedback was solicited from business owners, trade associations, government officials, alcohol treatment and prevention groups, community groups, and citizens via meetings and written correspondence. The rules were subsequently redrafted several times, and in December of 1998 the board approved the filing of language and held three additional public hearings throughout the state in January of 1999.

As a result of input received during and after the hearings in January, the board again redrafted the language for these rules. This amended proposed language will be the subject of further stakeholder involvement and public hearings (see section titled "Public Hearings.")

Summary of Proposed Rules: The purpose of the proposed rules is to provide a framework under which the board, in partnership with local government, can take action to mitigate any negative impacts on a community's livability that result from the presence of chronic public inebriation or illegal activity associated with alcohol sales and consumption. The proposed rules would:

Allow the board to recognize a geographic area within a city or town as an "alcohol impact area." This area would be designated by local government ordinance as being adversely affected by chronic public inebriation or illegal activity associated with alcohol sales or consumption.
Establish an expanded local government review process for liquor license applications and renewals inside an alcohol impact area.
Allow the board, in specific circumstances, to restrict the off-premises sale of certain alcohol products for businesses within a recognized alcohol impact area.
Impact of Proposed Rules on Businesses: Alcohol impact areas could potentially affect any business in Washington that holds a liquor license to sell beer and/or wine for off-premises consumption. If an alcohol impact area was implemented, the local government subdivision could potentially request that licensees in the alcohol impact area be restricted from selling certain alcohol products for off-premises consumption.

The board sought to analyze if licensees could experience increased costs and/or a decrease in revenue by not selling certain alcohol products as outlined in the proposed rules. A program has been implemented in the city of Seattle called the "Good Neighbor Agreement Demonstration Project." Under this project, businesses within a certain area of Seattle signed a voluntary agreement to not sell certain high-alcohol, low-cost products. Because these licensees were voluntarily complying with an agreement that would be similar to the requirements imposed by the proposed rules, they were surveyed to gather information regarding potential economic impact. Out of the one hundred four licensees surveyed, thirty-nine responded. The following information was gathered from these surveys:

Reporting and Record-keeping Requirements: Thirty-eight licensees stated they had experienced no new reporting or record-keeping requirements, and one business owner indicated new record-keeping or reporting requirements had to be adopted as a result of not selling certain alcohol products. This merchant explained he had to maintain a list of the restricted alcohol products in order to make sure these products were not stocked or sold.

Increased Costs: Thirty-two businesses indicated they have not incurred further costs, and seven businesses indicated they have incurred increased costs as a result of not selling certain alcohol products. The following costs were sited:

One-time expenses for better equipment, such as shelving or freezers, to attract more customers in order to make up for the revenue lost due to not selling certain alcohol products.
One merchant reported an increase in certain administrative costs, but did not specify the amount of costs or the nature of the administrative costs.
Profit Loss: Twenty-seven businesses indicated they have not lost profits, and twelve businesses indicated they have lost profits as a result of not selling certain alcohol products. Of the twelve that stated they lost profits, the following losses were sited:

An estimated loss of $2,000 dollars a year.
Approximately $5,000 dollars a month in lost sales from alcohol and other products.
A loss of approximately $100 a week.
More than half of beer sales lost.
Loss of two-thirds of business.
A loss of 35% in revenues.
A loss of "some" profits.
Three of the twelve businesses who indicated that they have lost profits as a result of not selling certain alcohol products stated this loss of revenue has been mitigated by decreased costs in other areas. These merchants indicated the following mitigating factors:

Revenue has increased as a result of employees and patrons feeling safer in the area due to less individuals loitering and less litter.
Grocery sales have increased and matters of safety and cleanup have improved.
Mitigation of Costs: As a result of the above outlined survey results, the board has determined that the proposed rules will not impose more than minor costs on businesses in the affected industry, and that any minor costs incurred will not be disproportionate to small businesses.

Regarding potential loss of revenue, the survey results were inconclusive (69% indicated no loss in revenue while 31% indicated a loss in revenue with greatly varying figures). It can be concluded that businesses in the affected industry may potentially lose revenue as a result of complying with the proposed rules, and that some of those revenue losses may be mitigated by other factors that occur as a result of the proposed rules.

RCW 19.85.030(3) outlines methods to reduce the costs on small businesses. Of the options outlined in this law, the method applicable to reduce costs imposed by this rule would be "reducing, modifying, or eliminating substantive regulatory requirements." In reviewing the proposed rules, the board believes it cannot modify the regulatory requirements proposed by these rules without eliminating the intent of the proposed rule making; e.g., the only way to eliminate any potential revenue loss would be to not create the alcohol impact areas proposed by the rules. The board believes it is justified in proposing these rules due to their potential benefit to communities.

In an effort to ensure that mandatory product restrictions are only implemented as a result of documented problems and only when other measures have failed, the board has placed the following requirements in the proposed rules:

The local government subdivision must recommend the adoption of an alcohol impact area by ordinance.
The recommending ordinance must include findings of fact which establish that chronic public inebriation or illegal activity associated with alcohol sales and/or consumption within the proposed alcohol impact area is contributing to the deterioration of the general quality of life within the area or threatens the welfare, health, peace, or safety of the area's visitors and occupants.
There must be a pervasive pattern of public intoxication and/or public consumption of alcohol as documented in crime statistics, police reports, emergency medical response data, detoxification reports, sanitation reports, public health records, or similar records.
The board must find that the off-premises sale of such alcohol products is reasonably linked to the problems associated with chronic public inebriation.
The local government subdivision must have made a good faith effort to control the problem through voluntary efforts that may include cooperation with neighborhood citizen and/or business organizations, and must include the notification of licensees within the proposed AIA of public intoxication problems and of voluntary remedies available to them to resolve the problem.
Implementation of these voluntary agreements must have been attempted for at least six months before the government subdivision presents information to the board that voluntary efforts have failed or need augmentation.
Hearing Information: On April 7, 1999, at 9:30 a.m., at the Liquor Control Board, Capital Plaza Building, Board Room, 5th Floor, 1025 East Union Avenue, Olympia.

Submit Written Comments to: Teresa Berntsen, Liquor Control Board Rules Coordinator, standard mail P.O. Box 43080, Olympia WA 98504-3080, e-mail teb@liq.wa.gov, fax (360) 704-4920. Please submit comments by April 14, 1999.

Date of Intended Adoption: April 21, 1999.

A copy of the statement may be obtained by writing to Teresa Berntsen, Rules Coodinator, P.O. Box 43080, Olympia, WA 98504-3080, phone (360) 586-1641, fax (360) 704-4920.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. The Washington State Liquor Control Board is not a listed agency in section 201.

Hearing Location: Liquor Control Board, Capital Plaza Building, Board Room, 5th Floor, 1025 East Union Avenue, Olympia, on April 7, 1999, at 9:30 a.m..

Assistance for Persons with Disabilities: Contact Teresa Berntsen by April 6, 1999, TDD (360) 586-4727, or (360) 586-1641.

Submit Written Comments to: Teresa Berntsen, Rules Coordinator, P.O. Box 43080, Olympia, WA 98504-3080, fax (360) 704-4920, by April 14, 1999.

Date of Intended Adoption: April 21, 1999.

March 3, 1999

Eugene Prince

Chair


NEW SECTION
WAC 314-12-210
Chronic public inebriation (CPI) and alcohol impact areas (AIA)--Definitions--Purpose

(1) What is the purpose of these rules concerning chronic public inebriation and alcohol impact areas?

(a) The enabling statutes for the liquor control board are contained in Chapter 66.08 RCW. These statutes authorize the board to exercise the police power of the state for the protection of the welfare, health, peace, and safety of the people of Washington.

(b) The board's mandate to protect the welfare, health, peace and safety of the people is to ensure that liquor licensees conduct their business in a lawful manner and that the presence of a licensee's alcohol sales does not unreasonably disturb the welfare, health, peace, or safety of the surrounding community.

(c) The purpose of these rules concerning chronic public inebriation and alcohol impact areas is to establish a framework under which the board, in partnership with local government and community organizations, can act to mitigate negative impacts on a community's welfare, health, peace, or safety that result from the presence of chronic public inebriation.

(d) For the purpose of these rules, chronic public inebriation exists when the effects of the public consumption of alcohol and/or public intoxication occur in concentrations that endanger the welfare, health, peace, or safety of a neighborhood or community.

(2) What do these rules concerning chronic public inebriation and alcohol impact areas seek to do? WAC 314-12-210 and 12-215 seek to:

(a) Establish an expanded local review process for liquor license applications, assumptions*, and renewals inside a recognized alcohol impact area (AIA);

(b) Create standards under which the board may refuse to issue a liquor license; may refuse to permit the assumption or renewal of a liquor license; may place conditions or restrictions upon the issuance, assumption, or renewal of a license; or may place conditions or restrictions on an existing license inside a recognized AIA;

(c) Allow the board, in specific circumstances, to restrict the off-premises sale of certain alcohol products or alcohol product containers inside a recognized AIA.

*Note: A liquor license assumption refers to an application by a prospective new owner/operator for an existing licensed business. Under certain conditions, such applicants may apply for a temporary license to continue operations during the new license application review period.

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NEW SECTION
WAC 314-12-215
Alcohol impact areas--Definition--Guidelines

(1) What is an alcohol impact area (AIA)? An alcohol impact area is a geographic area within a city, town, or county that is adversely affected by chronic public inebriation or illegal activity associated with alcohol sales or consumption. The area must be designated by ordinance by the government subdivision and recognized by resolution of the board before any enhanced processes described by these rules are applied.

(2) What guidelines will the board use to recognize an alcohol impact area (AIA)? The board, by resolution, may recognize an AIA adopted by a city, town, or county and subsequently referred to the board by that government subdivision. To achieve recognition, the AIA must meet all of the following conditions:

(a) The AIA comprises a geographic area that does not include the entire territory of the local jurisdiction;

(b) The government subdivision has given a rationale, expressed in the ordinance, for the establishment of the proposed boundaries of the AIA;

(c) The government subdivision has described the boundaries of the AIA in the ordinance in such a way that:

(i) the board can determine which liquor licensees are in the proposed area; and

(ii) the boundaries are understandable to the public at large.

(d) The AIA ordinance includes findings of fact which establish:

(i) chronic public inebriation or illegal activity associated with alcohol sales and/or consumption within the proposed AIA is contributing to the deterioration of the general quality of life within the area or threatens the welfare, health, peace, or safety of the area's visitors and occupants;

(ii) there is a pervasive pattern of public intoxication and/or public consumption of alcohol as documented in crime statistics, police reports, emergency medical response data, detoxification reports, sanitation reports, public health records, or similar records; and,

(iii) a good faith effort has been made by the government subdivision to control the problem through voluntary efforts that may include cooperation with neighborhood citizen and/or business organizations, and must include the notification of licensees within the proposed AIA of public intoxication problems and of voluntary remedies available to them to resolve the problem.

(e) The AIA will take effect on the date of the board's resolution extending recognition to the AIA.

(3) Once an AIA is recognized by the board, what processes, conditions, or restrictions may the board apply?

(a) The board will apply a unique local license review process for liquor license applications, assumptions, and renewals within the AIA.

(b) The board may place conditions or restrictions on the off-premises sale privilege of liquor licenses within the AIA. These restrictions must be reasonably related to reducing chronic public inebriation or illegal activity associated with off-premises alcohol sales and/or consumption. These restrictions may include but are not limited to:

(i) restrictions on the hours of operation for off-premises alcohol sale within the AIA,

(ii) restrictions on the off-premises sale of certain alcohol products within the AIA, and

(iii) restrictions on alcohol container sizes available for off-premises sale within the AIA.

(4) What are the circumstances required for the board to restrict the off-premises sale of alcohol within an AIA? The board may restrict the off-premises sale of alcohol within an AIA, subject to all of the following conditions:

(a) Product restrictions must be requested by the government subdivision's law enforcement agency or public health authority;

(b) The board must find that the off-premises sale of such alcohol products is reasonably linked to the problems associated with chronic public inebriation; and

(c) The government subdivision must have shown that voluntary efforts have failed to significantly reduce the impact of chronic public inebriation, or that voluntary efforts need augmentation by license restrictions described in WAC 314-12-215(3).

(5) What type of voluntary efforts must the government subdivision attempt before the board will implement mandatory product restrictions? Before the board will implement mandatory product restrictions, the government subdivision's voluntary efforts must include:

(a) Notification of all off-premises sales licensees in the proposed AIA that behavior associated with alcohol sales is having an impact on chronic public inebriation.

(b) Documentation that the government subdivision has made reasonable efforts to implement voluntary agreements to promote business practices that reduce chronic public inebriation and promote public welfare, health, peace, and safety with licensees within the AIA who sell alcohol for off-premises consumption.

(c) Implementation of these voluntary agreements must have been attempted for at least six months before information is presented to the board that voluntary efforts have failed or need augmentation.

(6) If restrictions are approved for an AIA, the Board will:

(a) Notify the appropriate beer and wine distributors of the product restrictions placed on off-premises licensees within the AIA.

(b) When product restrictions on the off-premises sale of alcohol products are placed on licensees within an AIA, no state liquor store or agency within the AIA may sell these restricted products.

(7) What is the process for liquor license applications and renewals for licensees inside a recognized AIA? Subject to the provisions of RCW 66.24.010(8):

(a) When the board receives an application for a liquor license that includes an off-premises sale privilege, the board will establish an extended time period of 60 days for the government subdivision to comment on the liquor license application or assumption.

(i) The government subdivision may and is encouraged to submit comment before the end of this 60 day period, but may request an extension of this period when unusual circumstances, explained in the request, require additional time for comment.

(ii) The requesting government subdivision will notify the licensee or applicant when an extension of the 60 day comment period is requested.

(b) For renewals, notice will be mailed to the government subdivision not less than 90 days before the current license expires.

(8) How long will an AIA be in effect? An AIA will remain in effect until:

(a) The sponsoring government subdivision repeals the specific enabling ordinance that originally defined the specific AIA recognized by the board, or

(b) The board repeals its recognition of an AIA as the result of a public hearing, called by the board acting on its own initiative or at the request of a community organization within the AIA, made after the AIA has been in effect for at least two years.

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NEW SECTION
WAC 314-12-220
General review.

The board will initiate a study of the effectiveness of WAC 314-12-210 and 12-215 one year following recognition of the first AIA under these rules. The study, which shall take no more than 90 days, will recommend the continuation, modification, or repeal of these rules.

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NEW SECTION
WAC 314-12-225
Severability.

If any provision of WAC 314-12-210 through 314-12-220 or the application thereof to any person or circumstance shall be held invalid, such invalidity shall not affect the provisions or the application of these rules which can be given effect without the invalid provision or application, and, to this end, the provisions of these rules are declared to be severable.

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Washington State Code Reviser's Office