In South Carolina, can a caterer or other agent buy and deliver alcohol for a private event, or only the host?

Official title

Opinion regarding the proper interpretation by the Department of Revenue's own Regulation 7-403.

Requester

Requested by The Honorable G. Murrell Smith, Jr., Speaker of the House, South Carolina House of Representatives.

Plain-English summary

The Speaker of the House had heard that the Department of Revenue (DOR) was changing how it read its own Regulation 7-403, the rule about supplying alcohol at private events. The worry was that DOR would now let only the host or sponsor of a private function (a wedding, a private reception) buy and deliver the alcohol, dropping the regulation's reference to a "designated agent or representative" such as a caterer or bartending service, without going through the formal rulemaking process.

The Attorney General's office did something practical: it asked DOR directly and got a written statement of the agency's position. DOR said it had not changed its interpretation. Its longstanding reading is that the host or sponsor, or their designated agent or representative, may purchase and deliver alcohol to a private function. A caterer can serve as that agent in limited circumstances, though not if the caterer holds a permanent retail license and itself sold the alcohol to the host, and a caterer cannot mark up the price or serve its own alcohol at the private event.

The office then laid out the legal rules that constrain DOR. Courts give great deference to an agency's reading of its own regulation, but the plain language of the regulation controls if the agency's interpretation contradicts it (Brown v. S.C. DHEC). An agency must follow its own regulations (Triska v. DHEC), and a longstanding interpretation is entitled to considerable weight (Media Gen'l. Comms. v. S.C. DOR). If DOR wanted to actually change Regulation 7-403, it would have to use the APA process (§ 1-23-10 et seq.). Because DOR confirmed it had not changed its position, the office agreed with the agency's longstanding interpretation and found the Speaker's concern was apparently not borne out.

What this means for you

Hosts and sponsors of private events: Under DOR's interpretation as confirmed in this opinion, you or your designated agent or representative may purchase and deliver alcohol for a private function not open to the general public, consistent with Regulation 7-403.

Caterers and bartending services: The opinion describes when a caterer may act as the host's agent to buy and deliver alcohol, and the limits DOR places on it: a caterer cannot be the agent if it holds a permanent retail license and sold the alcohol to the host, may only be reimbursed for cost (no markup, which would be an illegal sale), and cannot sell or serve its own alcohol at the private function. Selling and serving alcohol otherwise requires the appropriate Title 61 license or a special event permit.

State agencies generally: The opinion restates that an agency is bound by its own duly promulgated regulations and must change them through the APA process, not by a shift in interpretation, and that courts are skeptical of a sudden departure from a longstanding construction.

Common questions

Can a caterer pick up and deliver alcohol for my wedding in South Carolina?
According to DOR's position in this opinion, yes, in limited circumstances, when the caterer acts as the host's designated agent or representative. But a caterer that holds a permanent retail license and sold the alcohol to the host cannot serve as that agent, and a caterer cannot mark up the alcohol or serve its own.

Did DOR actually change the rule to require only the host to handle the alcohol?
No. When the Attorney General's office asked, DOR stated in writing that it had not changed its interpretation and that the "designated agent or representative" language still applies. The office agreed with that longstanding interpretation.

What would DOR have to do to change Regulation 7-403?
The opinion says DOR would have to go through the APA rulemaking process (§ 1-23-10 et seq.). It cannot effectively rewrite the regulation by simply reinterpreting it, and courts are highly skeptical of a sudden change from a longstanding construction.

Can a caterer just sell its own alcohol at a private party?
No. The opinion explains that Regulation 7-403 applies only to alcohol belonging to the host or sponsor. To sell and serve alcohol, a caterer generally needs the appropriate permanent Title 61 license (with the function on its own licensed premises and no charge to attend) or a temporary special event permit.

Background and statutory framework

South Carolina heavily regulates alcohol through a three-tier system (brewer, wholesaler, retailer) and Title 61 licensing, with DOR as the exclusive licensing and enforcement authority (§ 61-2-80). Section 61-6-1620(B) allows alcoholic liquors to be possessed or consumed in separate and private areas leased for a function not open to the general public. In 2003, DOR promulgated Regulation 7-403 to set enforcement guidelines for that statute. Regulation 7-403(B) lets the host or sponsor, or their designated agent or representative, purchase and deliver alcohol to the leased area, with conditions on possession, serving, and storage.

The opinion applies settled administrative-law principles. An agency's construction of a statute it executes is owed respectful consideration (Logan v. Leatherman, 290 S.C. 400, 351 S.E.2d 146 (1986)), and a court typically defers to an agency's reading of its own regulation, but rejects it where the plain language is contrary (Brown v. S.C. DHEC, 348 S.C. 507, 560 S.E.2d 410 (2002)). An agency must follow its own regulations (Triska v. DHEC, 282 S.C. 190, 355 S.E.2d 531 (1987)), and a longstanding interpretation gets considerable deference (Media Gen'l. Comms., Inc. v. S.C. DOR, 388 S.C. 138, 694 S.E.2d 525 (2010); Marchant v. Hamilton, 279 S.C. 497, 309 S.E.2d 781 (Ct. App. 1983); Spencer v. S.C. Tax Comm'n., 281 S.C. 492, 316 S.E.2d 386 (1984)). A duly promulgated regulation has the force of law, and changes must follow the APA (§ 1-23-10 et seq.).

Citations

Statutes and regulations: Section 61-6-1620(B); Section 61-6-1420(B); § 61-2-80; Sections 61-6-1600 and 61-6-1610; Title 61; Regulation 7-403 and 7-403(B) (S.C. Code Ann. Regs. § 7-403); § 1-23-10 et seq. (the APA).

Cases: Logan v. Leatherman, 290 S.C. 400, 351 S.E.2d 146 (1986); Brown v. S.C. DHEC, 348 S.C. 507, 560 S.E.2d 410 (2002); Triska v. DHEC, 282 S.C. 190, 355 S.E.2d 531 (1987); Media Gen'l. Comms., Inc. v. S.C. DOR, 388 S.C. 138, 694 S.E.2d 525 (2010); Marchant v. Hamilton, 279 S.C. 497, 309 S.E.2d 781 (Ct. App. 1983); Spencer v. S.C. Tax Comm'n., 281 S.C. 492, 316 S.E.2d 386 (1984).

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-regarding-the-proper-interpretation-by-the-department-of-revenue-s-own-regulation-7-403/
• Original PDF: https://www.scag.gov/media/em0hqrrq/03403548.pdf

Original opinion text

O®

Alan Wilson
attorney General

October 2, 2023

The Honorable G. Murrell Smith, Jr.
Speaker of the House

South Carolina House of Representatives
P.O. Box 11867

Columbia, SC 29211

Dear Mr. Speaker:

You have asked for our opinion regarding the proper interpretation by the Department of
Revenue (“DOR”) of its own regulation (7-403).
By way of background, you state the
following:
I was informed that the Department of Revenue was changing its interpretation
concerning the manner of providing alcohol at private events.
Since this new
interpretation will likely negatively impact our tourism industry and cause confusion
as potential legal liability to those who hosts private events in our state, I am asking
for your assistance.
Currently a person or group that has a private event has to comply with S.C. Code

Section 6 1-6- 1420(B) and Regulation 7-403. Section 6 1-6- 1620(B) provides that
"[a]lcoholic liquors may be possessed or consumed in separate and private areas of
an establishment ... where specific individuals have leased these areas for a function
not open to the general public." In 2003, the Department of Revenue promulgated
regulation 7-403 that provides, in pertinent part, that "[w]hen a separate and private
area of an establishment is leased by a specific individual or individuals for a
function not open to the general public pursuant to Section 6 1-6- 1620(B), the host or
sponsor of said function, or the designated agent or representative of said host or
sponsor must purchase and deliver to the leased area any alcoholic beverages to be
possessed and consumed therein ... " The Department of Revenue has recently
informed interested parties that going forward only the host or sponsor may purchase

and deliver the alcohol to the leased area.
My first question to you is whether the Department of Revenue's new interpretation

is consistent with the current regulation. As you can read, Regulation 7-403 allows
someone who is a representative of the host or sponsor of a private event to purchase
and deliver any alcohol. It seems obvious that someone, like a caterer or bartending
service, who is directed by a host or sponsor to pick up and deliver alcoholic
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The Honorable G. Murrell Smith, Jr.
Page 2

October 2, 2023

beverages to a private event would be the representative of the host who directed that
activity and thereby comply with the current regulation. Is the new interpretation that
limits to the host or sponsor the sole ability to pick up and deliver alcohol deleting
representative from the existing regulation without going through the statutory
requirements necessary to promulgate a new regulation and achieve that result?
My second question is whether the current regulation as interpreted by the
Department of Revenue is impermissible as it amends Section 61-6-1420(B) rather
than fills in necessary details. The purpose of regulation is to fill in the details
necessary to carry out the legislature's will as evidenced in the enacted statute. Here
the underlying statute is a broad legislative statement permitting alcoholic beverages
in private areas not open to the general public. The question is whether the new
agency interpretation undermines the clear intent of the General Assembly in
allowing private functions to serve alcohol ):,y mandating difficult means of pick up

and delivery.
As you are aware, a fundamental rule in ascertaining legislative intent is that the
legislature would never intend an absurd result. Unfortunately, the Department of
Revenue's new interpretation of requiring the actual host or sponsor to pick up and
deliver alcoholic beverages turns the statutory goal of permitting alcohol at private
events into an absurdity with very costly consequences. In order to obtain the
legislature's goal, we would have to assume that the legislature passed a law that
would require the father of a bride from Texas whose daughter is to be married in
Charleston or a trade association in Virginia that is hosting a conference for its
members in Greenville to rent trucks once they arrived in South Carolina to pick up

any alcohol they desired for their private receptions. Clearly that could not have been
intended nor has the statutory scheme ever operated that way.

Law/Analysis

In Op. S.C. Att’y Gen„ 1998 WL 993676 (December 8, 1998), we enunciated the broad

power of the State in the regulation of alcohol. There, we stated the following:
[p]ursuant to the Twenty-First Amendment of the United States Constitution, the
states possess almost absolute power to prohibit or regulate alcoholic beverages.
Wide latitude as to choice of the means to accomplish such prohibition or regulation
is accorded to the state and its regulatory agencies.

Op. Atty. Gen.. Februaiy 27,
1985, referencing Oklahoma v. Burris, 626 P.2d 1316, 1317-18, 20 ALR 4th 593,
596 (Okla. 1980). Pursuant to its broad constitutional power, the transfer of beer
within the State of South Carolina is highly regulated by the General Assembly. Op.

Atty. Gen., July 3, 1991. In South Carolina, the” ... intended policy of the state
relative to beer and wine is that of regulation rather than prohibition.” See State v,
Langley, 236 S.C. 583, 1 1 S.E.2d 308 (1960), cited in Op. Atty. Gen., Op. No. 4272
(February 26, 1976). The General Assembly is thus concerned “with promoting the
fair and efficient distributors of beer throughout the state . . . and in providing the
regulation of that distribution . . .” Op. Atty. Gen., May 20, 1991.

The Honorable G. Murrell Smith, Jr.
Page 3

October 2, 2023

As part of its regulatory scheme, the General Assembly has constructed so-called a
“three tier” scheme of regulation, regulating beer at the brewer, wholesale and retail
level.

Section 6 1-6-1 620(B) provides that “[a]lcoholic liquors may be possessed or consumed
in separate and private areas of an establishment whether or not the establishment includes

premises which are licensed pursuant to Sections 61-6-1600 or 61-6-1610, where specific
individuals have leased these areas for a function not open to the general public.” Pursuant to §
61-2-80, the State through the [Department of Revenue] “is the sole and exclusive authority
empowered to regulate the operation of all locations authorized to sell beer, wine, or alcoholic
liquors [and] is authorized to establish conditions or restrictions which the department considers
necessary. . . .” As we noted in Op. S.C. Att’v Gen., 2012 WL 469994 (January 6, 2012), the

authority to regulate and enforce provisions of the South Carolina Code dealing with beer and
wine [and alcoholic liquor] resides in the Department of Revenue. See also Op. S.C. Att’v Gen.,
2019 WL 6445342 (November 14, 2019).

As your letter states, in 2003, pursuant to its authority, DOR promulgated Regulation 7403, setting guidelines for enforcement of § 6 1-6- 1620(B).

Regulation 7-403(B), provides as

follows:
B. Purchase, Delivery and Possession of Alcoholic Beverages. When a separate and
private area of an establishment is leased by a specific individual or individuals for a
function not open to the general public pursuant to Section 6 1-6- 1620(B), the host or
sponsor of said function, or the designated agent or representative of said host or
sponsor must purchase and deliver to the leased area any alcoholic beverages to be

possessed and consumed therein and must remain constantly in actual possession of
these beverages until such time as the function is concluded, at which time all
alcoholic beverages must be removed from the leased area and taken to a location
where they may be legally stored. Nothing contained herein shall prohibit the host or
sponsor or his designated agent or representative from having other persons, whether
employed by the licensee or employed by the host or his agent or representative, from
mixing and serving alcoholic beverages belonging to the host of the party.

(emphasis added).
Following your opinion request, which informs us that DOR has possibly changed its
interpretation of the Regulation, we inquired of the agency and sought a written statement
regarding DOR’s current interpretation. The agency then assured us in writing that it had not

changed its interpretation of Regulation 7-403. It provided the following information, which was
noted as reflecting the Department’s “longstanding position”:

The Honorable G. Murrell Smith, Jr.
Page 4
October 2, 2023

Question: Does Regulation 7-403 permit a caterer (or other business) purchase
or pick up beer, wine, or alcoholic liquor from a retailer and deliver it to a
private function?

Answer: Yes, but only in very limited circumstances.

The following statement concerning delivery of alcohol does not constitute a new
by the Department, but reflects the Department's longstanding

interpretation
position.

See S.C. Code Ann. Regs.§ 7403 (effective June 27, 2003); SC Revenue

futlillg # 12-3.

A person may only sell beer, wine, or liquor in accordance with Title 61, and must be
licensed by the Department of Revenue to do so.[ ]

In accordance with South

Carolina's Three-Tier system of alcohol regulation, the Department issues a variety of
licenses and permits to manufacturers, wholesalers, and retailers.f ]

Relevant to its

question, the retail licenses generally fall into the following categories:
Permanent
Beer and wine permitsf ] - on premises consumption (e.g. restaurants); or

off-premises consumption (retail store). [ ]
Alcoholic liquor licensesf ] - on premises consumption (liquor by the drink,
limited to restaurants, hotels, or nonprofit organizations^ ]; or off-premises
consumption (retail store). [ ]
•

Temporary:

Beer and Wine Special Event Permit[ ]
Liquor Special Event Permit (only for nonprofit organizations^ ]
A person licensed by the Department under Title 61 may not sell and transfer
possession of alcohol to a purchaser anywhere other than on the license holder's
licensed premises. [ ]

As a general rule, purchaser of beer, wine, and liquor must

either (a) consume the alcohol on the premises where it was purchased, or (b)

transport the alcohol off-premises to a location where it can be legally stored and
consumed at a later date. The purchase/ultimate consumer of beer, wine, and liquor
may not use a third party to transport or deliver the alcohol.

S.C. Code Reg. 7-403(B) provides a limited exception to this general rule.

The

Regulation permits the host or sponsor of a function not open to the general public
(e.g. a wedding reception or other private gathering), or the designated agent or
representative of said host or sponsor, to purchase and deliver to the function location
any alcoholic beverages to be possessed and consumed therein.
provides additional conditions for this

limited exception,

The Regulation

including who must

maintain actual possession of the alcohol during the function, who may mix or serve
the alcoholic beverages, and how the alcohol must be stored once the function
concludes.

The Honorable G. Murrell Smith, Jr.
Page 5
October 2, 2023

Title 61 does not authorize, and the Department does not issue, a “caterer's" permit or
license. As DOR understands and uses the term, a “caterer” is a for-profit business
that provides food or services (to include bartending services) at a function for a
predetermined fee. In many instances, the caterer is otherwise unlicensed by the
Department of Revenue.

However, to the extent a caterer intends to purchase, sell,

deliver, or serve beer, wine, and liquor in any fashion, it may only do so in
accordance with the requirements of Title 61 .
In some instances, a caterer could serve as the designated agent or representative of
the host or sponsor of a private function as contemplated in Regulation 7-403.
However, the caterer may not serve as the designated agent or representative of the

host or sponsor if the caterer (a) holds a permanent retail license and (b) sold the
alcoholic beverages to the host or sponsor.

While the caterer may purchase the

alcoholic beverages on behalf of the host or sponsor, it may only be reimbursed for
its costs and may not charge the host a markup (which would constitute an illegal
sale).

Further, because Regulation 7-403 only applies for alcoholic beverages

belonging to the host or sponsor, a caterer may not sell or serve its own beer, wine, or
liquor at a private function.
Generally, a caterer may legally sell and serve alcohol at a private function only if:
(1) it has obtained a permanent on-premises beer and wine permit or liquor by the
drink license, and (2) the function and sale occur on the caterer's permanently

licensed premises in a separate or private area of the establishment, (3) the function is

not open to the general public, and (4) there is no charge or fee of any kind to attend
the function.

In addition, a caterer may legally purchase, deliver, sell, and serve beer and wine at a
including one that charges admission, fundraises, or has paid
sponsorships, but only if the Department has issued a temporary Beer and Wine
Special Event Permit to the appropriate party(s). Whether the Special Event Permit

public event,

is issued to the caterer (such that the caterer is the license holder) or another party
(the event organizer) depends on the specific facts of each event, including which

party is responsible for selling tickets and collecting the admission fee or other
consideration from the attendees, and whether the ticket price includes beer or wine.
Caterers or other special event organizers are encouraged to contact the Department
of Revenue's ABL Section with any questions about licensing a specific event.

It is the general rule, of course, that “[c]onstruction of a statute by the agency charged
with executing it is entitled to the most respectful consideration [by the courts] and should not be
overruled absent cogent reasons.” Logan v. Leatherman, 290 S.C. 400, 403, 351 S.E.2d 146, 148
(1986).

In this instance, DOR’s construction and policies and procedures are applicable.

However, it is also a rule of interpretation that, while “the Court typically defers to the
[agency’s] . . . construction of its own regulation, where the plain language of the regulation is
contrary to the [agency’s] . . . interpretation, the Court will reject its interpretation.” (citing
authorities).

Brown v. S.C. DHEC, 348 S.C. 507-515-16, 560 S.E.2d 410, 415 (2002). Most
importantly, the agency must follow its own regulations. Triska v. DHEC, 282 S.C. 190, 194,

The Honorable G. Murrell Smith, Jr.
Page 6
October 2, 2023

355 S.E.2d 531, 533 (1987). The agency’s longstanding interpretation is entitled to considerable
deference. Media Gen’l. Comms., Inc, v. S.C. DOR, 388 S.C. 138, 144, 694 S.E.2d 525, 528
(2010).

As our courts have advised, “[w]here the Legislature has acquiesced in an agency’s
longstanding interpretation and does not, in express terms, change it, that interpretation will be

deemed accepted as reasonable. Marchant v. Hamilton, 279 S.C. 497, 309 S.E.2d 781 (Ct. App.
1983). Any attempt to change the agency’s continuous and longstanding interpretation is usually
met with skepticism by the courts. Spencer v. S.C. Tax Comm’n., 281 S.C. 492, 495, 316 S.E.2d
386, 387-88 (1984), affd., 471 U.S. 82 (1985). As we stated in Op. S.C. Att’y Gen., 1979 WL
43073 (June 19, 1979),
[i]t is axiomatic that ‘[a] valid rule or regulation duly promulgated by a public
administrative agency is binding on the agency and on all those to whom its terms

apply . . . ’

73 C.J.S. Public Administrative Bodies And Procedure, § 107 (1951).

Also see Mace v. Berry, 225 S.C. 160, 81 S.E.2d 276 (1954); Faile v. South Carolina
Employment Sec. Com’n., 267 S.C. 536, 230 S.E.2d 219 (1976); 1 Am.Jr.2d
Administrative Law § 96 (1962).

Thus, “. . . if a state agency has followed the procedures in the promulgation of rules and
regulations as set forth in § 1-23-10 et seq., . . . such duly promulgated rules and regulations
have force and effect of law immediately upon going into effect.” Id. Accordingly, DOR is
bound by R. 7-403 and the plain meaning of its terms.
Conclusion

As we point out above, while courts give great deference to the administrative agency’s
construction of its own regulations, the plain language of that regulation will prevail. Moreover,
the agency is bound by its regulations and it must follow them.
regulation, it must go through the APA process.

If it wishes to change its

See § 1-23-10 et seq.

Courts are highly

skeptical of an administrative agency’s sudden change in interpretation from its longstanding
construction. Often, the court will not defer to or follow such a sudden change.
In this instance, DOR has assured us that it has not changed its construction of Regulation
7-403 and that such Regulation remains consistent with its interpretation over many years.
Indeed, at our request, it has submitted its current position to us in writing.
It is our
understanding from DOR that it has stood by its longstanding interpretation of Regulation 7-403
and that it does so today.

In particular, your concern regarding DOR’s not heeding of the

language “designated agent or representative” as contained in the Regulation apparently is not
the case. Such position of DOR appears to be reasonable. We agree with the agency’s
longstanding interpretation of Regulation 7-403 submitted to us by DOR in writing.

The Honorable G. Murrell Smith, Jr.
Page 7

October 2, 2023

Sincerely,

4

Robert D. Cook
Solicitor General