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PA Bulletin, Doc. No. 08-1526



[ 40 PA. CODE CH. 13 ]

Promotion of Sale of Liquor by Vendors

[38 Pa.B. 4629]
[Saturday, August 23, 2008]

   The Liquor Control Board (Board), under the authority of section 207(i) of the Liquor Code (47 P. S. § 2-207(i)), proposes to amend Chapter 13 (relating to promotion).


   In accordance with Executive Order 1996-1, the Board has reviewed its regulations and determined that these revisions to 40 Pa. Code are necessary to obtain certain products that are in short supply and high demand. Obtaining these products is consistent with the statutory mandate of section 207 of the Liquor Code that authorizes the Board to '' . . . buy liquor and alcohol at the lowest price and in the greatest variety reasonably obtainable.'' (47 P. S. § 2-207(a)). These products are often rare wines, for which the demand, world-wide, is great.

   The Liquor Code authorizes only two categories of liquor that the Board may sell: stock items (47 P. S. § 2-207(a)), consisting of those items sold by means of the Board's wine and spirits stores, and special order items, otherwise known as Special Liquor Orders (SLO), which consist of those items not currently available from the Board's wine and spirits stores (47 P. S. § 3-305(a)). The Board's regulations currently prohibit liquor vendors from processing orders for stock items which the Board carries. (40 Pa. Code §§ 13.73(b) and 13.76(a) (relating to privileges of vendor's agents; special order listings)).

   There is an ever-growing demand for fine wines which are of limited quantity. If a liquor vendor believes that such a rare fine wine has a niche market within this Commonwealth (for example, within certain high-end restaurants or specific cultural or cuisine venues), the vendor may be unwilling to share these products with the Board, by means of the Board's wine and sprits stores, since allowing its product to be sold as a stock item would preclude the vendor from processing orders by means of SLO on behalf of members of the niche market (for example, private citizens or Board licensees). In making the proposed regulatory changes, thereby permitting vendors of these ''luxury items'' to process orders both from the Board and from licensees or other persons, the Board will be in a better position to acquire these products in furtherance of its statutory mandate.

Summary of Amendments

   This proposed rulemaking creates a new category of liquors, ''luxury items.'' These are varieties of liquor (including wine) that are in short supply or high demand, as may be determined by the Board. Vendors will be allowed to process orders for ''luxury items'' both from the Board as well as from Board licensees and other persons, similar to current procedures for SLOs.

Affected Parties

   The proposed rulemaking will allow vendors to process orders for ''luxury items'' from the Board, Board licensees and other persons. Failing to allow vendors to process orders for ''luxury items'' from the Board and Board licensees and other persons is expected to result in limiting the Board's access to the rare fine wines, thereby reducing the availability to the Pennsylvania public at large by means of the Board's wine and spirits stores.

Paperwork Requirements

   This proposed rulemaking will not significantly increase paperwork for the Board or the regulated community.

Fiscal Impact

   Because the market forces of supply and demand and the popularity and availability of certain vintages of fine wine will affect the Board's identification of an item as a ''luxury item,'' fiscal impact is impossible to estimate. In the 2007 Fiscal Year, the Board's revenue from sales of SLO items, which are similar in nature to ''luxury items,'' was approximately $70,000,000.

Effective Date

   This proposed rulemaking will become effective upon its publication in final-form in the Pennsylvania Bulletin.

Public Comment/Contact Person

   Written comments, suggestions or objections will be accepted for 30 days after publication of the proposed rulemaking in the Pennsylvania Bulletin. Comments should be addressed to James F. Maher, Assistant Counsel, Office of Chief Counsel, Liquor Control Board, Room 401, Northwest Office Building, Harrisburg, PA 17124-0001.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (act) (71 P. S. § 745.5(a)), on August 7, 2008, the Board submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Liquor Control and Senate Committee on Law and Justice. A copy of this material is available to the public upon request.

   Under section 5(g) of the act, IRRC may convey any comments, recommendations or objections to the proposed regulations within 30 days of the close of the public comment period. The comments, recommendations or objections shall specify the regulatory review criteria that have not been met. The act specifies detailed procedures for review by the agency, the General Assembly and the Governor of comments, recommendations or objections raised prior to final publication of the regulation.


   Fiscal Note: 54-65. No fiscal impact; (8) recommends adoption.

Annex A





§ 13.71. Definitions.

   The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

*      *      *      *      *

   Luxury items--Liquor items designated by the Board that are in short supply or high demand.

*      *      *      *      *

   Stock merchandise--Liquors which are obtainable at a State Liquor Store, without placing a special liquor order and which have not been designated as luxury items.

*      *      *      *      *

§ 13.73. Privileges of vendors' agents.

   (a)  Agents may advertise and promote the sale of stock merchandise by ''missionary work'' of only those brands sold to the Board by the vendor by whom the agents are employed. [The work may include the use of the ''Agents Order'' form approved by the Board.]

*      *      *      *      *

   (d)  Agents may solicit from licensees or other persons, orders for those brands of liquor which have been designated by the Board as luxury items. Orders for luxury items obtained by vendors' agents shall be filed with one of the State Liquor Stores as required in this subchapter.

§ 13.77. [Agents' order books] (Reserved).

   [The Board, upon request, will issue order books to vendors for themselves and their agents, in which each special order for liquors shall be entered. Each order shall be prepared in quadruplicate and bear the signature and address of the person from whom it is obtained, and the signature of the agent. In the case of a licensee, the order shall include the license number. The original order shall be forwarded to a State Liquor Store not later than the business day after the order is obtained. One copy of the order shall be furnished by the licensed vendor or the vendor's agent to the person from whom the order is obtained and one copy shall be retained by the vendor for vendor's records; and the other copy shall remain in the order book. The Board reserves the right to examine the records of any licensed vendor or the vendor's agents.]

§ 13.78. Special and luxury item orders: requirements and conditions.

*      *      *      *      *

   (b)  Orders presented at State Liquor Stores by agents on behalf of persons other than licensees shall be at the established retail special liquor order or luxury item prices. [No] An order may not be taken for less than [case quantities] two bottles.

*      *      *      *      *

§ 13.79. Special orders and luxury item orders: restrictions.

   (a)  Licensed vendors and their agents shall place special orders for liquor at State Liquor Stores [on the prescribed order book forms signed by the licensee or an authorized agent, or in the case of a retail sale, by the customer].

*      *      *      *      *

   (d)  Special orders placed by a licensed vendor or the vendor's agent for a retail customer may be released by the State Liquor Store [for delivery to the customer].

   (e)  Licensed vendors and their agents shall place luxury item orders for liquor at State Liquor Stores.

   (f)  Except by special permission of the Board, luxury item order merchandise may not be delivered to a State Liquor Store until the licensed vendor has received from the Board a formal purchase order calling for the delivery of the liquor. Each case of liquor so delivered shall have clearly marked thereon, in addition to the information required by Federal or State regulations, the purchase order number, the store order number, the brand and size, the code number as called for in the purchase order and other information the Board may prescribe.

   (g)  Liquor sold to licensees will be released only at the State Store, to the licensee or the licensee's agent as named on the Wholesale Purchase Permit Card of the licensee.

   (h)  Luxury item orders placed by a licensed vendor or the vendor's agent for a retail customer may be released by the State Liquor Store.

§ 13.86. Agency provisions.

   Licensed vendors and their agents shall, except as otherwise restricted in this title, be considered the agents of the persons from whom they obtain special liquor orders or luxury item orders. Neither the Commonwealth nor the Board will be responsible for the proper disposition of moneys collected from a licensee or other person by a licensed vendor or his agents, and under no circumstances will the Commonwealth or the Board be responsible for actions of a licensed vendor or his agents.

§ 13.87. Records.

   (a)  Every licensed vendor shall maintain and keep complete records of all operations in this Commonwealth for 2 years, which shall be open to inspection by authorized representatives of the Board during normal business hours. These records [shall] must include salaries or commissions of all agents and other [employes] employees working in this Commonwealth, expenses of the [employes] employees supported by detailed vouchers, all promotional and advertising expenditures, special order sales, luxury item sales and stock merchandise requests.

   (b)  The agents of vendors operating in this Commonwealth shall maintain complete records covering their operations in this Commonwealth. The records [shall] must also be open to inspection by authorized representatives of the Board during normal business hours.

[Pa.B. Doc. No. 08-1526. Filed for public inspection August 22, 2008, 9:00 a.m.]

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