No. 42290 (Change in Proposed Rule): Section R81-1-11. Multiple-Licensed Facility Storage and Service

DAR File No.: 42290
Filed: 02/01/2018 03:24:57 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This change in proposed rule is meant to implement a "room" definition as authorized by Subsection 32B-5-207(1)(a)(ii). This rule is consistent with the provisions of H.B. 442, passed in the 2017 General Session. H.B. 442 sought to streamline dining licenses and make a clear distinction between a restaurant license and a bar license. As part of that rule, if there are licenses within the same room as of 07/01/2018, one or more of those licenses must be surrendered if they do not meet the exception of Subsection 32B-5-207(1)(b). This proposed rule change also establishes a procedure by which a licensee surrenders a retail license if there are two or more licensed premises in the same room as required by Subsection 32B-5-207(3)(d). This proposed rule change is to establish the restrictions that must be met in order for a bar and a restaurant to be considered in separate rooms and not in violation of Section 32B-5-207.

Summary of the rule or change:

This proposed rule change establishes the restrictions that must be met in order for a bar or tavern and a restaurant to be considered in separate rooms and not in violation of Section 32B-5-207. This proposed rule change also changes the due date for a request for a Department of Alcoholic Beverage Control (Department) decision as to whether their licenses are in violation until after the potential effective date of this proposed change. It creates a procedure and establishes a deadline to notify the Department of which license(s) will be surrendered effective 07/01/2018; and creates an avenue for Commission action in the event that a licensee fails to surrender a license that is in violation of Section 32B-5-207. (EDITOR'S NOTE: The original proposed amendment upon which this change in proposed rule (CPR) was based was published in the November 15, 2017, issue of the Utah State Bulletin, on page 17. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the CPR and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

Statutory or constitutional authorization for this rule:

• Section 32B-2-201
• Subsection 32B-5-207(1)(b)
• Subsection 32B-5-207(1)(a)(ii)

Anticipated cost or savings to:

the state budget:

None--Any anticipated cost or savings to the state budget are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses). Costs and savings for administering the change was calculated as part of the fiscal note. This rule does not create additional cost or savings beyond what was anticipated during the legislative process.

local governments:

None--Any anticipated cost or savings to local governments are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses). Costs and savings to local governments were calculated as part of the fiscal note. This rule does not create additional cost or savings beyond what was anticipated during the legislative process.

small businesses:

None--Any anticipated cost or savings to small businesses are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses). Costs and savings to small businesses should have been calculated as part of the fiscal note. This rule does not create additional cost or savings beyond what was anticipated during the legislative process.

persons other than small businesses, businesses, or local governmental entities:

None--Any anticipated cost or savings to persons other than small business, businesses, or local government entities are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses). Costs and savings to Persons other than small businesses, businesses, or local government entities was calculated as part of the fiscal note. This rule does not create additional cost or savings beyond what was anticipated during the legislative process.

Compliance costs for affected persons:

None--This rule does not create any required compliance cost for licensees. It clarifies whether a license will need to be surrendered if in violation of Section 32B-5-207 and creates a procedure for compliance. There are no fees associated with this process and any costs for compliance are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses).

Comments by the department head on the fiscal impact the rule may have on businesses:

None--Any anticipated cost or savings to businesses are a result of statutory requirements of H.B. 442 (2017), which requires that a licensee hold only one license per room (with a small exception for banquet/reception and beer recreational licenses). This proposed rule change establishes the restrictions that must be met in order for a bar and a restaurant to be considered in separate rooms within a premises and not in violation of Section 32B-5-207. The statute and rule did not create a fee for the business to comply. Costs and savings to businesses should have been calculated as part of the fiscal note. There was no fee in statute and there is no fee in the proposed rule. Savings to the business would result in reduced licensing fees as a result of surrendering one or more license(s) as required by statute. While some businesses may choose to construct walls rather than surrender a license, that choice is not required by the rule. Therefore, this rule does not create additional cost or savings beyond what was anticipated during the legislative process.

Salvador D. Petilos, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Alcoholic Beverage Control
Administration
1625 S 900 W
SALT LAKE CITY, UT 84104-1630

Direct questions regarding this rule to:

• Vickie Ashby at the above address, by phone at 801-977-6801, by FAX at 801-977-6889, or by Internet E-mail at [e-mail]
• Nina McDermott at the above address, by phone at 801-977-6805, by FAX at 801-977-6888, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/19/2018

This rule may become effective on:

03/26/2018

Authorized by:

Sal Petilos, Executive Director

RULE TEXT

R81. Alcoholic Beverage Control, Administration.

R81-1. Scope, Definitions, and General Provisions.

R81-1-11. Multiple-Licensed Facility Storage and Service.

(1) For the purposes of this rule:

(a) "premises" as defined in Section 32B-1-102(75) shall include the location of any licensed restaurant, limited restaurant, beer-only restaurant, bar establishment, or recreational amenity on-premise beer retailer facility or facilities operated or managed by the same person or entity that are located within the same building or complex, and any similar sublicense located within the same building of a resort license under 32B-8. Multiple licensed facilities shall be termed "qualified premises" as used in this rule[. Two premises], except that two premises may not be located in the same room except as allowed by 32B-5-207(1)(b).

(i) A bar or tavern and a restaurant premises will be considered in the same room in violation of section 32B-5-207 if the following restrictions are not met.

(A) Shared permanent walls may extend partially or fully from the floor to the ceiling, so long as a partial wall measures at least 8 feet high.

(B) Shared permanent walls may be translucent and include windows and doors, so long as the separation of rooms completely restricts patron access from the restaurant premises to premises licensed as a bar or tavern and prevent visibility to the bar structure of a bar or tavern.

(C) Two or more rooms within a building may be connected by a common hallway, stairway, entrance or exit to the building so long as each room has a separate definable entryway that does not require a patron to pass through a premises licensed as a restaurant, bar or tavern, to gain access to a premises licensed as a restaurant, bar or tavern.

(b) the terms "sell", "sale", "to sell" as defined in Section 32B-1-102(92) shall not apply to a cost allocation of alcoholic beverages as used in this rule.

(c) "cost allocation" means an apportionment of the as purchased cost of the alcoholic beverage product based on the amount sold in each outlet.

(d) "remote storage alcoholic beverage dispensing system" means a dispensing system where the alcoholic product is stored in a single centralized location, and may have separate dispensing heads at different locations, and is capable of accounting for the amount of alcoholic product dispensed to each location.

(2) Where qualified premises have consumption areas in reasonable proximity to each other, the dispensing of alcoholic beverages may be made from the alcoholic beverage inventory of an outlet in one licensed location to patrons in either consumption area of the qualified premises subject to the following requirements:

(a) point of sale control systems must be implemented that will record the amounts of each alcoholic beverage product sold in each location;

(b) cost allocation of the alcoholic beverage product cost must be made for each location on at least a monthly or quarterly basis pursuant to the record keeping requirements of Section 32B-5-302;

(c) dispensing of alcoholic beverages to a licensed location may not be made on prohibited days or at prohibited hours pertinent to that license type;

(d) if separate inventories of liquor are maintained in one dispensing location, the storage area of each licensee's liquor must remain locked during the prohibited hours and days of sale for each license type;

(e) dispensing of alcoholic beverages to a licensed location may not be made in any manner prohibited by the statutory or regulatory operational restrictions of that license type;

(f) alcoholic beverages dispensed under this section may be delivered by servers from one outlet to the various approved consumption areas, or dispensed to each outlet through the use of a remote storage alcoholic beverage dispensing system.

(3) On qualified premises where each licensee maintains an inventory of alcoholic beverage products, the alcoholic beverages owned by each licensee may be stored in a common location in the building subject to the following guidelines:

(a) each licensee shall identify the common storage location when applying for or renewing their license, and shall receive department approval of the location;

(b) each licensee must be able to account for its ownership of the alcoholic beverages stored in the common storage location by keeping records, balanced monthly, of expenditures for alcoholic beverages supported by items such as delivery tickets, invoices, receipted bills, canceled checks, petty cash vouchers; and

(c) the common storage area may be located on the premises of one of the licensed liquor establishments.

(4) 32B-5-207(3)(d) requires that the commission establish by rule a procedure by which a licensee surrenders a retail license if there are two or more licensed premises in the same room in violation of 32B-5-207(1).

(a) If there are two or more premises located in the same room as of May 9, 2017 the licensee shall notify the commission of each retail license the licensee will surrender effective July 1, 2018.

(c) A Request for department decision regarding whether a premises is in violation of the same room requirement must be submitted to the department by[March 12, 2018]April 10, 2018. Requests received by[March 12, 2018]April 10, 2018 will receive a decision by May 1, 2018.

(d) Notification of surrender shall be made on a form provided by the department and submitted to the department by May 31, 2018.

(e) Failure to submit notification of surrender will result in non-renewal of retail licenses found to be in violation of the same room requirement.

 

KEY: alcoholic beverages

Date of Enactment or Last Substantive Amendment: [2017]2018

Notice of Continuation: May 2, 2016

Authorizing, and Implemented or Interpreted Law: 32B-2-201(10); 32B-2-202; 32B-2-204; 32B-2-206; 32B-3-203(3)(c); 32B-3-205(2)(b); 32B-5-304; 32B-1-305; 32B-1-306; 32B-1-307; 32B-1-607; 32B-1-304(1)(a); 32B-6-702; 32B-6-805(3); 32B-9-204(4); 32B-4-414(1)(b) and (c)