LQR-02-15-00002-P Signage, Services and Gifts to Retailers

1/14/15 N.Y. St. Reg. LQR-02-15-00002-P

NEW YORK STATE REGISTER

VOLUME XXXVII, ISSUE 02

January 14, 2015

RULE MAKING ACTIVITIES

STATE LIQUOR AUTHORITY

PROPOSED RULE MAKING

HEARING(S) SCHEDULED

 

I.D No. LQR-02-15-00002-P

Signage, Services and Gifts to Retailers

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of sections 83.3, 86.2, 86.3, 86.4, 86.5 and 86.6 of Title 9 NYCRR.

Statutory authority:

Alcoholic Beverage Control Law, sections 101(1)(c) and 105(7)

Subject:

Signage, Services and Gifts to Retailers.

Purpose:

To enact business friendly amendments; eliminate interior sign restrictions; and increase annual dollar limits for advertising.

Public hearing(s) will be held at:

10:00 a.m., March 10, 2015 at State Liquor Authority, 317 Lenox Ave., New York, NY.

Interpreter Service:

Interpreter services will be made available to hearing impaired persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.

Accessibility:

All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.

Text of proposed rule:

Title 9, Subtitle B, of the Official Compilation of Codes, Rules and Regulations of the State of New York (NYCRR), is hereby amended to include amendments to sections 83.3, 86.2, 86.3, 86.4, 86.5, and 86.6 as follows:

§ 83.3 Interior signs

Signs may be displayed in the interior of:

(a) premises licensed to sell alcoholic beverages for on-premises consumption;

(b) premises licensed to sell liquor or wine for off-premises consumption; or

(c) in the window display of such premises, provided that:

(1) Such signs do not have a utility or secondary use or value aside from their actual advertising value. Signs which have a utility or secondary use or value are covered by Part 86 of this subtitle.

(2) Such signs shall not contain:

(i) any statement, illustration, design, device or representation that is false or misleading;

(ii) any statement that is disparaging of a competitor's product;

(iii) any statement, design, device, matter or representation which is obscene or indecent or which is obnoxious or offensive to the commonly and generally accepted standard of fitness and good taste;

(iv) the words “bond”, “bonded”, “bottled in bond”, “aged in bond” or phrases containing these or synonymous terms, unless the distilled spirits so advertised were in fact bottled in bond under the Bottling in Bond Act of the United States;

(v) the terms “double distilled”, “triple distilled” or any similar term;

(vi) any statement which is inconsistent with the label on the product;

(vii) any statement, design or device which represents or which tends to create or give the impression that the use of the alcoholic beverage has curative or therapeutic effects;

(viii) any statement of, or reference to, price which is deceptive or misleading or tends to deceive or mislead;

(ix) any illustration which is not dignified, modest and in good taste;

(x) any scene in which is portrayed a child or objects (such as toys) suggestive of the presence of a child or in any manner portrays the likeness of a child or contains the use of figures or symbols which are traditionally associated with children;

(xi) except as otherwise provided in Part 86 of this Subtitle, any statement, design, device or representation relating to any refund, exchange or money-back guarantee, irrespective of truth or falsity;

(xii) any portrayal of an athlete or athletes or athletic events in such manner as to imply that the consumption of alcoholic beverages improves athletic prowess or physical stamina, or any portrayal or suggestion that athletes recommend drinking alcoholic beverages;

(xiii) the name of or depiction of any biblical characters;

(xiv) any reference by name or other identification to any retailer selling the products advertised;

(xv) any statement, design, device or representation of or relating to analyses, standards or tests irrespective of falsity which the Authority finds to be likely to mislead the consumer.

[(3) Such signs are not hung or displayed in a manner which obstructs a clear and full view into the interior of said premises from the street.

(4) Such signs, when relating to alcoholic beverages, shall not exceed 1,200 square inches. If the sign is made up of two or more parts, the area of each part shall be included when computing the total of square inches in the sign as a whole. Any increase in the depth of the sign which does not extend beyond the perimeter thereof shall not be included in the size or the area of such sign.]

§ 86.2 Advertising and promotions generally

(a) Sections 86.3 through and including 86.6 of this Part describe the kinds of advertising and promotional materials that manufacturers or wholesalers may give, sell or install in a licensed retail premises. Unless specifically stated otherwise, such sections apply both to on-premises and off-premises licensees.

[(b) All of the dollar limitations contained in sections 83.3 through 86.6 will be adjusted annually by a cost adjustment factor, equal to the percentage change in the Bureau of Labor Statistics, Consumer Price Index. By using the cost adjustment factor, it is intended that the dollar limitations will remain identical to the dollar limitations established and adjusted annually by the Director, Federal Bureau of Alcohol, Tobacco & Firearms, and described in 27 Code of Federal Regulations, Part 6.82.]

§ 86.3 Product displays

(a) A product display means any wine racks, bins, barrels, casks, shelving, and the like, from which alcoholic beverages are displayed and sold, and which bears conspicuous and prominent advertising matter.

(b) A manufacturer or wholesaler may give, rent, loan or sell product displays to a retail licensee. The total value of all product displays furnished by a manufacturer or wholesaler under this section may not exceed $[1]300 per brand, [or such other dollar limitation as may be established pursuant to section 86.2(b) of this Part,] in use at any one time in any one retail establishment. The value of a product display is the actual cost to the manufacturer or wholesale licensee who initially purchased it. Transportation and installation costs are excluded. Provision of a product display to a retailer may be conditioned upon the purchase of sufficient product for initial setup of the display.

(c) Manufacturers and wholesalers may not pool or combine their dollar limitations in order to provide a retailer a product display valued in excess of such dollar limitation.

§ 86.4 Inside signs

(a) Inside signs include such things as posters, placards, designs, mechanical devices, digital displays and window decorations which bear advertising matter, and have no secondary value and are of value to the retailer only as advertising.

(b) A manufacturer or wholesaler may furnish, give, rent, loan or sell inside signs to a retailer, provided that (i) the inside sign shall be used only in the windows or other internal portions of the retail establishment, and (ii) the manufacturer or wholesaler may not directly or indirectly pay or credit the retailer for displaying the inside sign or for any expense incidental to its operation.

§ 86.5 Retailer advertising specialties

(a) A retailer advertising specialty is an item which bears advertising matter and is primarily valuable to the retailer as point of sale advertising, but which has some secondary value to the retailer in connection with the operation of the business. Examples of retailer advertising specialties include trays, coasters, mats, menu cards, meal checks, paper napkins, foam scrapers, thermometers, clocks, shirts, hats, visors and calendars. The manufacturer or wholesaler may add the name or address of the retailer to the retailer advertising specialty.

(b) The total value of all retailer advertising specialties furnished by a manufacturer or wholesaler to a retailer may not exceed $[5]200 per brand, [or such other dollar limitation as may be established pursuant to section 86.2(b) of this Part,] in any one calendar year per retail establishment. The value of a retailer advertising specialty is the actual cost of that item to the manufacturer or wholesaler who initially purchased it. Transportation and installation costs are excluded.

(c) Manufacturers and wholesalers may not pool or combine their dollar limitations in order to provide a retailer with retailer advertising specialties valued in excess of such dollar limitation.

§ 86.6 Consumer advertising specialties

(a) A consumer advertising specialty is an item which bears advertising matter and which is designed for unconditional distribution by the retailer to the general public. Examples of consumer advertising specialties include ashtrays, bottle or can openers, cork screws, shopping bags, matches, printed recipes, pamphlets, cards, leaflets, blotters, postcards, shirts, hats, visors and pencils.

[(b) A manufacturer or wholesaler may furnish, give or sell consumer advertising specialties to on-premises retail licensees and off-premises beer licensees. The only consumer advertising specialties which may be furnished, given or sold to off-premises retail liquor or wine licensees are recipe books and matchbooks, which cannot contain the name or address of the retail licensee.]

([c]b) The retail licensee may not be paid or credited in any manner, directly or indirectly, for the distribution of consumer advertising specialties.

([d]c) There is no limitation on the amount or value of consumer advertising specialties which may be given to any retail licensee.

Text of proposed rule and any required statements and analyses may be obtained from:

Paul Karamanol, Senior Attorney, State Liquor Authority, 80 South Swan Street, Suite 900, Albany, NY 12210, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

Five days after the last scheduled public hearing.

Regulatory Impact Statement

Statutory authority:

These proposed regulations concerning permissible advertising, signage, and services or gifts to retailers are being issued by the State Liquor Authority and will appear as amendments to Parts 83.3, 86.2, 86.3, 86.4, 86.5 and 86.6 of Title 9 of the New York Codes, Rules and Regulations.

These regulations are issued pursuant to the following:

Alcoholic Beverage Control Law section 101(1)(c), which authorizes the State Liquor Authority to determine at what point any gift or service provided to a retailer is intended to influence the retailer to purchase the alcoholic beverages of a given manufacturer or wholesaler;

Alcoholic Beverage Control Law section 105(7), which authorizes the State Liquor Authority to approve or disapprove any advertising sign whether printed, painted, electric or otherwise on the exterior or interior of any retail off-premises licensee;

State Administrative Procedure Act section 201, which authorizes all agencies to adopt by rule additional procedures not inconsistent with statute.

Legislative objectives:

Changing the public policy underpinnings of the Alcoholic Beverage Control Law to be more business friendly where possible was recommended by the New York State Law Revision Commission in their 2009 Report on the Alcoholic Beverage Control Law and its Administration, which included recommendations of “supporting economic growth, job development, and the state’s alcoholic beverage production industries and its tourism and recreation industry…provided that such activities do not conflict with the primary regulatory objectives of [promoting the health, welfare and safety of the people of the state, and promoting temperance in the consumption of alcoholic beverages.]” Along those lines, a recent legislative change put into effect the recommendations of the Law Revision Commission via Chap. 406 of the Laws of 2014. The policy underpinnings of the Alcoholic Beverage Control Law (“ABCL”) have been updated to include supporting, where possible, the economic development and job opportunities for New York residents when making decisions related to the regulation of alcoholic beverages.

It was from the Law Revision Commission recommendations that these regulatory proposals were conceived, to be used by the State Liquor Authority to promote economic growth and job opportunities for New York by liberalizing advertising and signage restrictions on licensed premises, and increasing annual per brand dollar limitations for certain advertising and promotion materials to adjust for inflation since the original enactment of Parts 86.3 (product displays) and 86.5 (retailer advertising specialties), thereby eliminating several outdated and anachronistic regulatory restrictions for alcoholic beverage manufacturers, wholesalers and marketing agencies alike.

Needs and benefits:

These regulatory proposals will help modernize administration of the ABCL in keeping with the new public policy goals of supporting economic growth and job development by liberalizing various advertising and signage restrictions on licensed premises, specifically authorizing digital signs for the first time, and increasing annual per brand dollar limitations for certain advertising and promotional materials to match the inflation adjusted numbers that the alcoholic beverage industry in New York is currently operating with.

Costs:

There will be no additional costs to regulated parties or to local governments resulting from these proposals. In an effort to comply with the Consumer Price Index cost of living adjustments required pursuant to Part 86.2, the State Liquor Authority has already been advising industry members to utilize the increased per brand dollar limitations as inflation adjusted numbers via both verbal advice at open meetings and written advice in the form of a website posting of proposed rule amendments and as part of an overall effort to provide inflation adjusted numbers to the industry in a transparent and business friendly manner. As a result, the alcoholic beverage industry in New York has already been operating with an effective $300 per brand per year limit on product displays and a $200 per brand per year limit on retailer advertising specialties for some time. Due to the above, there will be no added costs to the State Liquor Authority, to regulated parties or to local governments as a result of the implementation of the proposed rule amendments.

Local government mandates:

None. Local governments are not involved in the manufacture, distribution or retail sale of alcoholic beverages or the marketing of same, and therefore would not be impacted by the proposed rule amendments.

Paperwork:

The proposed rule amendments impose no new recordkeeping or reporting requirements to industry members.

Duplication:

The federal Alcohol and Tobacco Tax and Trade Bureau rules no longer draw a distinction between point of sale advertising that either does or does not have a secondary use for the retailer, and there is no longer any annual dollar limitations for either under the federal rules. In New York, several industry members have cautioned the Authority that they would prefer to see the annual dollar limitations for retailer advertising specialties codified to match the currently enforced inflation adjusted numbers of $200 per brand per year and that they would be reluctant to see the New York dollar limitations done away with entirely to match the federal rules. With regard to product displays, the Alcohol and Tobacco Tax and Trade Bureau rules also caps spending at $300 per brand per year per retailer, except that manufacturers and wholesalers have the ability under federal rules to combine their annual dollar amounts for different brands to exceed the annual $300 limitation. New York has never allowed this and does not propose to do so via the instant proposed amendments.

Alternatives/federal standards:

As noted above, the State Liquor Authority could have chosen to propose removal of the dollar limitations on retailer advertising specialties altogether to match the federal rules on point but, after consulting with various industry representatives, chose to propose matching the inflation adjusted numbers currently being utilized by the industry.

Compliance schedule:

The period of time the industry will require to enable compliance is likely to be negligible as they are already likely in compliance with several of the proposals. The State Liquor Authority expects to be compliant immediately upon adoption.

Regulatory Flexibility Analysis

Effect of rule:

The proposed amendments to Parts 83.3, 86.2, 86.3, 86.4, 86.5, and 86.6 would affect approximately all 3000 wholesalers, manufacturers, and marketing permit holders and tens of thousands of on and off-premises retailers currently licensed or permitted by the State Liquor Authority.

Compliance requirements:

The proposed rule amendments would not impose any additional compliance requirements on small businesses or local governments.

Professional services:

No new professional services would be needed to comply with the proposed rule amendments.

Compliance costs:

The proposed rule amendments would not impose any initial capital costs or continuing compliance costs for regulated businesses or local governments.

Economic and technological feasibility:

Compliance with the proposed rule amendments by small businesses and local governments would be economically and technically feasible because the amendments would not impose any additional compliance requirements but would either relieve regulatory burdens on regulated businesses or conform regulations to current industry practices.

Minimizing adverse impact:

Since the proposed rule amendments would either relieve regulatory burdens on regulated businesses by liberalizing signage restrictions and increasing annual per brand dollar limitations on advertising materials or merely conform regulations to current industry practices, there is expected to be no adverse impact to regulated small businesses. It is anticipated that the rule amendments would have no impact on local governments.

Small business and local government participation:

Comments on the proposed rule amendments were solicited from all effected segments of the industry with generally favorable comments including from the executives of the three retail package store associations in New York who were unanimously in favor of the proposed amendments. The Authority did not engage with any local governments because it is anticipated that the proposed amendments would have no impact on local governments.

Rural Area Flexibility Analysis

Types and estimated numbers of rural areas:

The proposed amendments to 9 N.Y.C.R.R. Parts 83.3, 86.2, 86.3, 86.4, 86.5, and 86.6 would affect businesses throughout the state.

Reporting, recordkeeping and other compliance requirements; and professional services:

The proposed rule amendments would not impose any additional compliance requirements on small businesses or local governments. No new professional services would be needed to comply with the proposed rule amendments.

Costs:

The proposed rule amendments would not impose any initial capital costs or continuing compliance costs for regulated businesses or local governments.

Minimizing adverse impact:

Since the proposed rule amendments would either relieve regulatory burdens on regulated businesses by liberalizing signage restrictions and increasing annual per brand dollar limitations on advertising materials or merely conform regulations to current industry practices, there is expected to be no adverse impact to rural areas.

Rural area participation:

Among the businesses that would be positively affected by the proposed amendments would be bars, restaurants and package stores in rural areas. Authority staff shared the proposed rule amendments with all effected segments of the industry with generally favorable comments including from the executives of the three retail package store associations in New York who were unanimously in favor of the proposed amendments. Rural area businesses will be afforded the opportunity to directly participate in public hearings regarding the proposed amendments via webcast from either of the Authority’s upstate offices in Albany or Buffalo.

Job Impact Statement

The proposed amendments to 9 N.Y.C.R.R. Parts 83.3, 86.2, 86.3, 86.4, 86.5, and 86.6 would relieve regulatory burdens on regulated businesses by liberalizing signage restrictions and increasing annual per brand dollar limitations on advertising materials or conform existing regulations to current industry practices. As a result, the proposed amendments will not have an adverse impact on jobs or employment opportunities. Because it is evident from the nature of the proposed amendments that they will have no impact on jobs or employment opportunities, no further steps were needed to ascertain those facts and none were taken by the Authority. Accordingly, a job impact statement is not required for any of the proposed amendments and none has been prepared.