COMMISSION MEETING. May 28, 2015

Transcription

1 COMMISSION MEETING May 28, 2015 Texas Alcoholic Beverage Commission 5806 Mesa Drive Austin, Texas José Cuevas, Jr., Presiding Officer Steven M. Weinberg, MD, JD, Member Ida Clement Steen, Member Midland Colleyville San Antonio

2 TITLE TABLE OF CONTENTS PAGE Agenda TABC Commission Meeting May 28, Minutes TABC Commission Meeting March 24, Attachment 1: Attachment 2: Attachment 3: Attachment 4: Attachment 5: Attachment 6: Attachment 7: Attachment 8: Attachment 9: Commission Report: Executive Director and Agency Activities, Budget Issues, Staff Achievements, Legislative Activities Legislative Update Tax and Marketing Practices Division Briefing Approve Publication of Proposed Amendments to Rule 35.11, Bottle Capping Devices Approve Publication of Proposed Amendments to Rule 41.1, Sale to Lien Holders Approved Publication of Proposed Amendments to Rule 41.2, Sale by Carriers Approve Publication of Proposed Amendments to Rule 41.3, Sale after Cancellation or Expiration of License or Permit Approve Publication of Proposed Repeal of Rule 41.4, Mixed Beverage Permittee Voluntary Cancellation Approve Publication of Proposed Amendments to Rule 41.11, Records in General Attachment 10: Adopt Proposed Amendments to Rule 31.3, Petition for the Adoption of a Rule Attachment 11: Adopt Proposed Amendment to Rule 31.11, Resolution and Information on Complaints Attachment 12: Adopt Proposed Amendments to Rule 33.2, Application and Fee Payment Procedures Attachment 13: Adopt Proposed Amendments to Rule 33.4, Manufacturer s Warehouse License Fee Attachment 14: Adopt Proposed Amendments to Rule 33.33, Notification Requirements Attachment 15: Adopt Proposed Amendment to Rule 37.5, Population in Certain Counties Attachment 16: Adopt Proposed Amendments to Rule , On-Premises Promotions Attachment 17: Re-Adopt Without Change Rule 35.41, Term Defined Attachment 18: Re-Adopt Without Change Rule 37.2, Contested Case Attachment 19: Approval to Withdraw Proposed Repeal of Current Rule , Rebates, Coupons and Premium Stamps Attachment 20: Approval to Withdraw Proposed New Rule , Coupons and Loyalty Programs Certification of Minutes... 22

3 AGENDA REGULAR COMMISSION MEETING 10:00 a.m. May 28, Mesa Drive Austin, TX 78731

4 José Cuevas, Jr. Presiding Officer-Midland Steven M. Weinberg, MD, JD Member-Colleyville Ida Clement Steen Member- San Antonio Sherry Cook Executive Director Thursday, May 28, :00 a.m. Agenda 1. Call to Order Steven Weinberg 2. Approval of Commission Meeting Minutes of March 24, Commission Report: Executive Director and Agency Activities, Budget Issues, Staff Achievements, Legislative Activities Steven Weinberg Sherry Cook 4. Legislative Update Mariann Morelock 5. Tax and Marketing Practices Division Briefing Thomas Graham 6. Executive Session to Consult with Legal Counsel Regarding Pending and Anticipated Litigation Against the Agency and to Deliberate the Appointment, Employment, Evaluation, Duties of the Position of Executive Director, General Counsel and/or Auditor (Govt. Code , , (a) and (a)(1) and Texas Alcoholic Beverage Code 5.11) Steven Weinberg 7. Action on the Internal Audit Services Contract Steven Weinberg 8. Approve Publication of Proposed Amendments to Rule 35.11, Bottle Capping Devices 9. Approve Publication of Proposed Amendments to Rule 41.1, Sale to Lien Holders 10. Approve Publication of Proposed Amendments to Rule 41.2, Sale by Carriers 11. Approve Publication of Proposed Amendments to Rule 41.3, Sale After Cancellation or Expiration of License or Permit Martin Wilson Martin Wilson Martin Wilson Martin Wilson 1

5 12. Approve Publication of Proposed Repeal of Rule 41.4, Mixed Beverage Permittee Voluntary Cancellation 13. Approve Publication of Proposed Amendments to Rule 41.11, Records in General 14. Adopt Proposed Amendments to Rule 31.3, Petition for the Adoption of a Rule 15. Adopt Proposed Amendment to Rule 31.11, Resolution and Information on Complaints 16. Adopt Proposed Amendments to Rule 33.2, Application and Fee Payment Procedures 17. Adopt Proposed Amendments to Rule 33.4, Manufacturer s Warehouse License Fee 18. Adopt Proposed Amendments to Rule 33.33, Notification Requirements 19. Adopt Proposed Amendments to Rule 37.5, Population in Certain Counties 20. Adopt Proposed Amendments to Rule , On-Premises Promotions Martin Wilson Martin Wilson Martin Wilson Martin Wilson Martin Wilson Martin Wilson Martin Wilson Martin Wilson Martin Wilson 21. Re-Adopt Without Change Rule 35.41, Terms Defined Martin Wilson 22. Re-Adopt Without Change Rule 37.2, Contested Case Martin Wilson 23. Approval to Withdraw Proposed Repeal of Current Rule , Rebates, Coupons and Premium Stamps 24. Approval to Withdraw Proposed New Rule , Coupons and Loyalty Programs Martin Wilson Martin Wilson 25. Public Comments Steven Weinberg 26. Next Meeting Date: Tuesday, July 28, 2015 Steven Weinberg 27. Adjournment Steven Weinberg Note: Items may not necessarily be considered in the order they appear on the agenda. Executive session for advice of Counsel (pursuant to of the Government Code) may be called regarding any agenda item. Action may be taken on any agenda item. NOTICE OF ASSISTANCE AT PUBLIC MEETINGS Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services (such as interpreters for persons who are deaf, hearing impaired readers, large print, or Braille) are requested to contact Gloria Darden Reed at (512) (voice) (512) (fax). Relay Texas at (TTY/TDD), at least three (3) days prior to the meeting so that appropriate arrangements can be made. 2

6 MINUTES REGULAR COMMISSION MEETING 10:00 a.m. May 28, Mesa Drive Austin, TX 78731

7 COMMISSION MEETING MINUTES May 28, 2015 The Commissioners of the Texas Alcoholic Beverage Commission (TABC) met in Regular Session on Tuesday, January 28, 2014 at the Texas Alcoholic Beverage Commission, 5806 Mesa Drive, Suite 185, Austin, Texas. COMMISSIONERS PRESENT: Steven Weinberg, MD, JD Ida Clement Steen STAFF PRESENT: Sherry Cook, Executive Director Josh Alexander, District Supervisor, Austin Audit Office Gene Bowman, Director, Audit & Investigations Administration David Brandon, Director, Project Manager, Information Resources Division Mindy Carroll, Director, Education & Prevention Dustin Carter, Analyst, Ports of Entry Julie Davis, Education Coordinator, Education & Prevention Marc Decatur, Major, North Texas Region Luann Dickerson, Executive Assistant, Executive Division Loretta Doty, Director, Human Resources Division Shelby Eskew, Director, Business Services Division Tiffany Forister, Budget Analyst, Business Services Division Diana Figueroa, Executive Assistant, Executive Division Thomas Graham, Director, Tax & Marketing Practices Bruce Harlan, Training Specialist, Training Division Toni Hale, Program Specialist, Education & Prevention Amy Harrison, Director, Licensing Division Emily Helm, General Counsel, Legal Division Gary Henderson, Project Manager Officer, Information Resources Division Joe Iagnemmo, Web Administrator, Information Resources Division 3

8 Stacy Jackson, Assistant Supervisor, San Antonio Regional Audit Office Ricardo Jauregui, Major, Enforcement Division, San Antonio Shaun Jordan, Regional Manager, Austin JoAnn Joseph, Assistant Director, Licensing Division Victor Kuykendoll, Major Andrea Maceyra, Supervisor, Tax & Marketing Practices Vanessa Mayo, Assistant Director, Business Services Division Mark Menn, Major, Lubbock Enforcement District Office Mariann H. Morelock, Director, Governmental Relations Harry Nanos, Captain, Austin District Office Earl Pearson, Assistant Chief, Enforcement Division Andy Pena, Director, Office of Professional Responsibility Gloria Darden Reed, Executive Assistant, Executive Division Anastacia Rodriguez, Specialist, Human Resources Division Robert Saenz, Chief of Field Operations Karen Smithwick, Director, Ports of Entry Division Todd Talley, Management Analyst, Enforcement Division Jay Webster, Director, Information Resources Division Martin Wilson, Assistant General Counsel, Legal Division GUESTS PRESENT: Vickie Adams, Coalition Director, Circles of San Antonio Grace Barnett, Statewide Coalition Coordinator, Texans Standing Tall Adam Bitter, Assistant Attorney General, Office the Attorney General Vic Brooks, Vice President, Republic National Distributing Company Maria Amelia Calaf, Assistant Attorney General, Office of the Attorney General Keishmond J. Davis Steve Greinert, Wholesale Beer Distributors of Texas Hunter Holmes, Legislative Assistant, Glazer s Cheri Huddleston, Legislative Consultant, Glazer s Chelsy Hutchison, Republic National Distributing Company Kyle Hill, Attorney, Martin, Frost & Hill Law Office Matt Martin, Shareholder, Addison Law Firm Robert Peeler, Attorney Anna Rodriguez, Senior Account Executive, Gartner Tyler Rudd, Legal Consultant, California Wine Institute Marcus Schwartz, Attorney, Gardene Tom Spilman, Executive Vice President, Wholesale Beer Distributors of Texas 4

9 CALL TO ORDER The meeting of the Texas Alcoholic Beverage Commission was called to order at 10:05 a.m. by Acting Presiding Officer Steven Weinberg. Presiding Officer José Cuevas was unable to attend the Commission meeting due to a prior scheduled commitment. APPROVAL OF COMMISSION MINUTES OF MARCH 24, 2015 Acting Presiding Officer Steven Weinberg called for approval of the Commission meeting minutes of March 24, Commissioner Ida Clement Steen so moved to approve the minutes as written. Acting Presiding Officer Weinberg seconded. The motion carried. EXECUTIVE DIRECTOR S REPORT: EXECUTIVE DIRECTOR AND AGENCY ACTIVITIES, BUDGET ISSUES, STAFF ACHIEVEMENTS, LEGISLATIVE ACTIVITIES Acting Presiding Officer Weinberg called upon Executive Director Sherry Cook to present the Executive Director s Report: Administrator and Agency Activities, Budget Issues and Staff Achievements, and Legislative Activities. After welcoming the Commissioners back to Austin for another Commission meeting Executive Director Cook offered her concern for those that may have been affected by the flooding. She stated that her prayers go out to those who have lost so much due to the torrential rains and hoped everyone remains safe in anticipation of rain to come. She took a moment to recognize and officially welcome Mrs. Ida Clement Steen as the newest member to the Commission. Executive Director Cook stated that Commissioner Steen was confirmed by a unanimous vote of the Texas Senate on April 28 th. She commented that she, General Counsel Emily Helm, and Director Mariann Morelock attended the hearing with Commissioner Steen and she did an incredible job and that she will represent the Commission well. Executive Director Cook added that she is honored to have the privilege of working with Commissioner Steen and the Board representing the People of Texas. 5

10 Commissioner Steen thanked everyone for their support as she was very nervous during the confirmation. She commented that everyone was very kind and that she could not have done it without them. Executive Director Cook reported that the end of the 84 th Legislative Session is fast approaching exactly 4 days to go. She stated that Director Mariann Morelock will elaborate more on the legislative activities in her report. In her report, Executive Director Cook discussed the proposed budget. She stated that the budget had been voted out of conference committee and was anticipated to move on to the Governor for final approval. She reminded the Commissioners that during the Legislative Budget Board (LBB) process, a baseline budget that rightsized the Agency aligning resources, cost and funding was submitted. She outlined the top three priorities that remained constant throughout the session: 1. Civilian Employee Hiring/Retention Plan which was funded 5%, 2.5% & 2.5% within each year of the biennium; 2. Request for 17 full-time employees; 3. Funding to support 17 full-time employees Executive Director Cook stated that the proposed second and third requests went hand-in-hand and were comprised of (4) field licensing processors, (5) field auditors, (4) ports of entry, (4) field enforcement agents and the necessary funding to complete the replacement of all law enforcement radios were received. Unfortunately, she reported that the request for the economic program was not approved; however other automation efforts in addition to a continued analysis of Agency s resources will be explored to determine the best allocation for existing resources. Acting Presiding Officer Weinberg asked if the resources could be moved to allocate funds to those positions not approved, for example in the label approval area. Executive Director Cook responded that within certain strategies consideration in moving resources could be explored. Acting Presiding Officer Weinberg stated that he is aware of the complexity in the transfer of funds from the capital budget to the operating budget. Executive Director Cook stated that in Director Graham s presentation, he will talk about the creative things happening in automation that can offset some of their budget shortfalls. She added that the Education and Prevention division can also be counted upon to locate grants and other sources of funding. Other requests not adopted included: (2) field agents, however funded was (6) fulltime employees (FTEs) in the Special Investigative Unit (SIU) as part of the border security bill. Funding was received for all the law enforcement radios. Funding was denied for vehicle and information technology improvement, however she stated that there are other alternative solutions to ensure the protection and integrity of securing Agency data and alternative funding sources for vehicles are being explored. Acting Presiding Officer Weinberg inquired about the hot item in police forces body cameras and asked if there is a need for the Agency to purchase them. Executive Director Cook responded that the body camera is currently used on a limited basis and deferred further comments to Chief Robert Saenz. Chief Saenz stated that an 6

11 issue with body cameras is where and how long the data will be stored. He added that data is stored at other law enforcement agencies for at least 30 days. He stated that TABC s security specialist says it can be done through the Cloud system. Chief Saenz stated that a policy would have to be developed along with decisions of when to turn the camera on and when to turn it off. He concurred with Acting Presiding Officer Weinberg that the body camera would protect the law enforcement officer. Executive Director Cook stated that Director Shelby Eskew is very excited due to the approval of funding for the Centralized Accounting and Payroll & Personnel System (CAPPS). She stated that the approved funding will include (1) full-time employee. Acting Presiding Officer Weinberg inquired when CAPPS will be implemented. Director Eskew answered that implementation will occur on September 1, 2015 for the accounting payroll systems. She anticipates the human resources processes will go live in August Acting Presiding Weinberg commented that the new processes should be very helpful. As recommended by the State Auditors recommendations, she stated that the Executive compensation was treated the same across state agencies and funded at 90%. Also not adopted, was a contingency rider that was contingent upon the Agency increasing surcharges and certification by the Comptroller of Public Accounts. Executive Director Cook took the opportunity to thank the entire TABC staff for the long hours and tedious work in responding to fiscal notes, attending hearings or back at the office holding down the fort so that those at the Capitol could focus on the external demands presented by the legislative session. She thanked the Board Commissioners for their support and guidance throughout the session. She discussed the Agency s primary responsibility as a resource serving the public, industry and legislative members with vital and accurate information upon request. Acting Presiding Officer Weinberg thanked Executive Director Cook and the staff for performing a Yeoman s task and a fantastic job. Executive Director Cook stated she feels that the Agency will begin the next fiscal year with a strong baseline budget. Lastly, but not least she thanked the industry for their communication and collaboration throughout the process of a significant number of alcohol bills that were filed. She commented that through the process, issues may get a little heated at times, but it is always handled in a professional and effective way for the betterment of the state. Executive Director Cook stated that she wanted to take a closer look at the Agency s role as a regulator. She charged Deputy Executive Director Swedberg with a task to create a visual chart depicting her idea of the other three tier system and how TABC fits into the overall framework of regulation. 7

12 The following chart was developed with the assistance of Deputy Executive Director Swedberg as a visual aid; Executive Director Cook explained TABC role as it fits into the overall framework of regulation: In her explanation, Executive Director Cook stated that the left hand side of the chart depicts the role of TABC, three preventative functions in Licensing, Education and Marketing Practices ensuring compliant behavior. Also there are three investigative punitive functions lead by Enforcement, Audit and Investigation and Legal. Executive Director Cook stated that during the legislative session, the role of the Commission is to educate and assess information, laws, and the budget. Once the legislation has passed, the Commission is charged with regulatory responsibility to interpret and enforce those laws regulating alcohol. When those laws and decisions are challenged, the judicial process is set in motion, and it becomes the Commission s responsibility to prosecute and defend. Executive Director Cook stated that the industry has a different interaction within the same framework. She stated that during the legislative session, the industry lobby for legislation that support their specific interest groups within the different tiers and/or segment within the alcoholic beverage industry. Once legislation has passed, industry s regulatory role is to comply and/or petition for rulemaking. However, she stated that when business models, actions or discrepancies occur, the industry can seek due process through the judicial process. 8

13 Executive Director Cook stated that her objective for this illustration was to explain the complexities the Commission is faced with throughout the regulatory framework. She added that the Commission has to operate and align with each segment as it has a definite role throughout the process. Executive Director Cook will laminate card with The Other Three Tier System of Alcoholic Beverage Regulation chart information for Acting Presiding Officer Weinberg to handout and support inquiries about TABC role in the alcohol regulatory industry. Executive Director Cook reported that agents conducted 930 minor stings at bars, clubs and other alcohol selling establishments statewide, March 9 th through March 20 th, as part of an effort to prevent alcohol sales to minors during Spring Break. She stated that 92 violations were written during the course of the operation, which was conducted at or along corridors leading to popular Spring Break destinations. She added that prior to the operation, auditors visited each of the establishments to offer training on best practices to avoid selling alcohol to minors and also forewarned personnel at the establishment about the minor sting operation. In addition to the Commissioned Peace Officers (CPOs) presence at the South by Southwest event, Executive Director Cook stated that CPOs were present from the beginning to end at the Fiesta, a public festival, in San Antonio s providing training for the concessionaires volunteer staff, dealing with marketing practices issues, and conducting open inspections and undercover operations helping to maintain order and enforcing the Alcoholic Beverage Code. Acting Presiding Officer Weinberg quizzed Executive Director Cook about the facts surrounding the accident that happened during last year s SXSW event and what has happened to the man charged in the accident. Executive Director Cook will provide Acting Presiding Officer Weinberg a follow-up report on the accident that occurred during SXSW last year. Executive Director Cook stated that in April, a newly designed Tax ID stamp was issued to package stores across the state along with a new Online Ordering System designed to accommodate package stores to ensure the stamps they need are on hand. She stated that the Tax and Marketing Director Thomas Graham will offer more information later in the meeting. Automation continues in the Licensing Division with the Online Applicant Interviews Project. Executive Director Cook stated that currently applicants for a permit are required to participate in an interview that instructs an applicant the responsibilities of holding a permit. She explained that the new online application will allow access to online interviews beginning with Wine and Beer Retailers (BG). She stated that a pilot program is being conducted in the Arlington District Office with BQs to be tried next. Although mentioned in the last Commission meeting, Executive Director Cook congratulated Director Mindy Carroll and the Education and Prevention team for their platinum award video, Best PSA/Non-Commercial Short at the WorldFest Houston 9

14 International Independent Film Festival. Director Carroll attended and received the award at the ceremony held in Houston, Texas. Executive Director Cook congratulated Director Carroll and her team stating that this is just one example of the incredible work the Division of Education and Prevention continues to produce. Acting Presiding Officer Weinberg inquired where is the video being shown. Executive Director Cook stated that the video is posted on the Agency s website, and available on Facebook and YouTube. Executive Director Cook stated that management has strongly pushed for CPOs to focus at least half of their inspection attention on priority locations. She commented that TABC s visibility in these locations has increased and are having an impact on the number of priority locations as they continue to drop. Acting Presiding Officer Weinberg asked Executive Director Cook about the Waco situation. Executive Director Cook deferred to General Counsel Emily Helm, who stated that she spoke with the district attorney and city attorney offices on this matter. She stated that the establishment voluntarily surrendered its permit. General Counsel Helm commended Major Victor Kuykendoll, Lieutenant Tana Travis, and Agent Doris Board in performing an excellent job obtaining information to help supplement the cooperation with the Waco officials on the incident in Waco. The next slide focused on the repeat public safety offenders. Executive Director Cook commented that under trends, the typical repeat offender is a bar, sexually oriented business, or a convenience store/gas station. After reviewing the information for onpremises versus off-premises, she stated that on-premises has the higher portion of violations typically for sale to intox, breach of the peace, or prohibited hours offenses and the off-premises retailers more likely to be charged with sale to a minor. She added that on-premises retailers, specifically mixed beverage permittees and businesses operating as bars or sexually oriented businesses, were the most frequent re-offenders, followed by off-premises convenience stores/gas stations. She stated that the consequences of being charged with a public safety offense (fine/suspension and priority treatment) were sufficient to deter 84 percent of public safety offenders from re-offending and to hold the vast majority of those who did re-offend to only one additional violation. Executive Director Cook stated that a matrix depicting all source investigations was created in July 2013 and was sent to the field supervisors on a weekly basis. She added that management instituted a procedure where agents must provide weekly updates on the status of their source investigations. She explained that this procedure has helped improve the quality and timeliness of source investigations, where cases are open for a shorter amount of time and have had a direct result in more cases being filed. Management has reported that the average number of days a source investigation is open has gone from a high of 75 to the current low of 48. She commented that delays may occur and can be attributed to circumstances out of control from the investigator that would impact the number of days these investigations are open such as obtaining laboratory results and waiting for civil trials to complete prior to cooperation from suspects. 10

15 Positive trends are occurring in state licensed businesses. Executive Director Cook reports that the state has steadily rebounded since the dip seen in 2010 and continues into the fiscal year She stated that the state has enjoyed a net gain of 505 licenses businesses since the end of the previous fiscal year of August 31, Executive Director Cook s discussion centered on the losses experienced on the retail tier. She stated Texas lost more than 1,600 licensed businesses upper tiers manufacturers and wholesalers increased in numbers for the fiscal year of However, during this current fiscal year retailers have increased in numbers, while the upper tiers; specifically the manufacturing tier has experienced losses. The Beer and Wine Off-Premises retailers have accounted for 81 percent of the offpremises retailers net gain. She reports that Package Liquor Stores and Beer Only Off-Premises retailers also experienced growth. However, in the upper tiers, Wineries and Breweries experienced the greatest net losses. A net gain was reported by the license/permit classes authorized to sell alcoholic beverages for off-premises consumption. Acting Presiding Officer Weinberg quizzed Executive Director Cook s explanation of growth in areas that had licenses for a number of years versus areas that go through new local option elections would growth occur in the new areas. Executive Director Cook responded in the past North Texas has been the powerhouse for growth, however the growth has shifted to the Houston area. She stated that the Agency cannot be complaisant of where resources are assigned. She stressed the constant review of the trends to see where the population is moving to, where new permit holders are establishing their businesses, and where the resources and support is focused. After 2010 census, Acting Presiding Officer Weinberg stated that the Agency moved its personnel around the state. He asked will areas that are experiencing growth dictate the need to move Agency personnel. Executive Director Cook answered in the affirmative. She stated that the Deputy Executive Swedberg is very attentive to reports on the best usage of resources and personnel/office lease locations. Commissioner Steen asked who the Agency collaborates with on growth. Executive Director Cook stated that Roy Hale, TABC s Statistician, is the source for retrieving data compiled from the State Comptroller s Office, Census Bureau and local option elections information. Executive Director Cook stated that geographically all regions of the state enjoyed some growth. She commented that some statewide growth in the North Texas/Arlington District had the smallest percentage gain in licensed businesses during the first eight month of fiscal year She summarized that Texas has experienced a modest 1% growth in the number of licensed businesses since the beginning of the current fiscal year. She said, Texas continues to grow within the alcoholic beverage industry. 11

16 Acting Presiding Officer Weinberg inquired if during the legislative session was there any legislation presented to focus on the BYOB/SOB businesses, specifically allowing TABC to have regulatory authority over them. Executive Director Cook responded that TABC would not have regulatory authority over BYOB/SOB. However, she stated that a bill has been introduced to help with the issues of drink solicitation in those types of establishments. Acting Presiding Officer Weinberg commented that most of the television networks are required to run Public Service Announcements (PSA) and suggested that the short video Executive Director Cook reported in her presentation to be offered to television networks. He stated that the video would need to be shorten for use in PSA spots. Executive Director Cook concurred with his suggestion. Administrator Cook s report is supported by a PowerPoint presentation (Attachment 1) LEGISLATIVE UPDATE Acting Presiding Officer Weinberg called upon Director Mariann Morelock to present the next agenda item entitled Legislative Update. Director Morelock s legislative update report highlighted: Legislative Deadlines Monday, June 1, 2015 SINE DIE! (End of Legislative Session) Sunday, June 21, 2015 Last day Governor can sign or veto bills Monday, August 31, 2015 Date bills without specific effective dates that could not be effective immediately become law Director Morelock discussed bills that were introduced and passed in the House of Representatives and the Senate that will affect the Alcoholic Beverage Code: SB 700 Electronic signatures SB 367 Subterfuge HB 1348 Label Approval Process HB 2296 Central Business Districts HB 2339 Walkabout in Public Entertainment Facilities SB 858 Brewpub Label Approval HB 3982 Drink Solicitation SB 1228 Children of TABC Employees In the addition to the bills that were introduced and passed, there are other bills that are procedurally dead and will not have any effect on the Alcoholic Beverage Code: HB 409 Insurance for certain permittees/licensees HB 688 Commission increases to 5 members HB 1018 Powdered alcohol SB 609 Distilled spirits not limited to package stores SB 1198 De Minimis HB 2328 and HB 3015 Wineries have to make wine SB 526 Package Stores SB 326 Lifts cap on wine shipments by winery SB 828 Commemorative bottles 12

17 HB 2118 Alcohol dispensing machines In her summary, Director Morelock stated that there were 6415 bills filed in legislation in which 732 passed legislation and 34 bills amended the Alcoholic Beverage Code. She committed to keeping the Commissioners updated on legislation that will impact the alcoholic beverage code/agency/industry through s for the remainder of the session. Director Mariann H. Morelock s report is supported by a PowerPoint presentation. (Attachment 2) TAX AND MARKETING PRACTICES DIVISION BRIEFING Acting Presiding Officer Weinberg called for the next agenda item, Tax and Marketing Practices Division Briefing. Director Thomas Graham and Supervisor Andrea Maceyra, both of the Excise Tax and Marketing Practices, came forward to address the Commission. Director Thomas Graham welcomed the Commissioners and stated that his part of the presentation would focus on the three core functions in his division: Marketing Practices, Label Approval and Excise Tax. Director Graham stated that he would brief the Commissioners on recent and upcoming project announcements. Before recognizing the members of the staff, Director Graham introduced Supervisor Andrea Maceyra. He stated that his division is broken into two teams Label Approval and Excise Tax. Supervisor Maceyra stated that the Label Approval team is made up of 4 staff members. Sarah Leatherman is our Label Approval Coordinator and Team Lead for the Label Approval Team. Sarah oversees malt beverage and low wine applications as well as liaison with industry in regards to label approval inquiries. Sarah has been with the Agency for more than two years and previously was a licensing and Permit Specialist II in the Licensing Division. Sherri Diaz is our Label Approval Support for wine and distilled spirits label approval applications. She has been with the Agency for 18 years. Julie Almaraz is our Data Entry Operator who is responsible for issuing label approval certificates for wine and distilled spirits applications. She has been with the Agency for 13 years. Dora Halter is our Chemist. She is responsible for testing malt beverage and low wine samples for label approval and test seized evidence brought in from the field. She is our newest member to the Agency. Director Graham stated that the Excise Tax Team is comprised of three Account Examiners and one Administrative Assistant. Each team member has their own reports and responsibilities that require processing and reviewing each month. Members of the team are: 13

18 Kelly Greene is responsible for the wholesalers reports. Ms. Greene has been with the Agency for 10 years. Shatia Hayes has been with the Agency for 10 months and is responsible for malt beverage, distributors, manufacturers, trains and planes. Lauren Key is the newest addition to the team. She started in March and is responsible for wineries, distilleries, brewpubs and direct shippers. Rickie Eddins is an Administrative Assistant who is responsible for Tax ID stamps, private club temporary membership cards and carrier s reports. Mrs. Eddins has been with the Agency for 9 years. Director Graham briefed the Commissioners on the Marketing Practices role as a preventive function to education and to interpret the Alcoholic Beverage Code and Rules. He stated that his division provides guidance to Agency employees and industry organizations in the development and integration of marketing practices standards and guidelines while identifying trends and current practices relating to the alcoholic beverage industry. Director Graham added that the term Marketing Practices refers to the governing of the commerce, labeling and advertising of alcoholic beverages. He stated that Marketing Practices is responsible for reviewing for compliance, promotions and marketing strategies. Director Graham stated that on a normal day, he and Supervisor Maceyra field around 40 calls and inquiries and the Division published bulletins to clarify certain marketing issues that are not clearly defined in the code or administrative rules as required in the Alcoholic Beverage Code Commissioner Steen asked Director Graham to explain about things prohibited in advertising. Director Graham stated that paying a retailer for advertising is not allowed. Supervisor Maceyra commented on the Division s responsibility to review product labels for compliance in accordance to state law. She stated the Division has been able to identify several new trends in the label approval process. Trends discussed included: Increase in the number of applications since the last legislative session; Collaboration Purely creative in nature; Decrease in market share with manufacturers becoming more creative by creating promotion specific labels; Increased number of cider applications; Control brands and private labels Supervisor Maceyra stated that the trend over the last five years has seen an increase in the number of applications while not increasing the number of full-time employees to process the label approval applications. She commented that in comparing September to April of fiscal year 2015 to the same time period in fiscal year 2014, the Division s average number of days to process label approval applications has 14

19 remained the same at 15 days, however, the volume of applications has increased by 18 percent. Acting Presiding Officer Weinberg asked how many persons process the applications. Supervisor Maceyra responded (1). Director Graham stated that Supervisor Maceyra has done a good job to reorganize the application work process. In reviewing the three different types of applications, (malt beverage, wine, spirits), Supervisor Maceyra commented that the Division received more wine applications by volume to process. Supervisor Maceyra announced the Division s new Online Label Approval website. She thanked Information Resources Division (IRD) and the Licensing Division for their hard work and dedication to ensure a successful project launch. She, Director Graham and the Division s staff are excited for its launch on June 1 st. She stated that some of benefits to the online label approval process would include: 1) increased efficiency; 2) reduction of application errors that occur up front; 3) help industry get product to market quicker. While she spoke of the appreciation in the automation process for the increase in productivity in reducing the average number of days to process, Supervisor Maceyra stated that automation will not completely solve the problem as more producers come to Texas. However, it will be a great tool for the Agency to manage the growth. She commented that some early adopters were the local craft breweries. Director Graham stated that the Excise Tax section of the Division is responsible for collecting, processing and reviewing excise tax payments and reports along with all the supporting reports from the suppliers and non-tax paying permittees. He stated that Excise Tax is a tax per gallon assessed on the distributor/wholesaler upon sale to the retailer or the manufacturer upon sale to the retailer or consumer. He added that every taxpayer submits a report on their sales on a monthly basis. Director Graham reported that during the last fiscal year, the Division reviewed over 56,000 reports (reports were reviewed and processed by three accounts examiners working with permittees to ensure proper tax payments and reports were submitted). Director Graham briefed the Commissioners on how the reports and payments are digitally stored in Neubus and are used by the Audit and Investigations to conduct their field audits and investigations. In addition to tax collection, Director Graham stated that the Agency has to track barrel gallonage limitations assessed by the Legislature. Acting Presiding Officer Weinberg quizzed Director Graham on the audit conducted every 2 to 4 years is conducted by internal or external auditors. Director Graham stated that the audit is conducted by the Agency s account examiners review each quarter every month and the information is recorded into Neubus. He reported that the checks and balances are in place when the auditors go to the actual on-site establishment location to review the records. Acting Presiding Officer Weinberg commented that the State of Texas collects a lot in excise tax and inquired how much 15

20 was collected last fiscal year. Director Graham stated that $212 million in taxes was collected. Director Graham focused on preventative function to decrease tax fraud and to bring awareness to the public safety in the use of Tax ID Stamps and Temporary Memberships. He stated identification stamps serve three purposes: Ensure mixed beverages and private clubs buy from a legitimate source; Ensure that the Comptroller has the ability to receive the proper amount of gross receipts tax is paid; Agency field staff has a tool to detect refilling and substitution of brands. He stated temporary membership as required by the Alcoholic Beverage Code requires private clubs with limited memberships to pay a fee of $3 for every nonmember they serve. Director Graham commented that the Tax Division processes orders for those temporary memberships and issues temporary membership booklets. To ensure correct purchases during the field audits, the Division tracks this information for the field auditors. Director Graham gave more kudos to IRD and added Field Operations for their assistance in the product launch of the new online ordering system and redesigned Tax ID stamp. He credited Supervisor Maceyra as being instrumental in the development of the new stamp design. He discussed the new design features: Texas shape printed with new color-changing ink Stamp designed to self-mutilate to prevent illegal reuse VOID wording appears after stamp is removed from bottle, also appears in ultraviolet light New background harder to accurately reproduce/replicate The Tax ID Stamps Online Ordering System automation project was introduced in Director Graham s presentation. He cited that both the Agency and permittees would be greatly benefitted from this online ordering system. He stated that this project has been in the planning stages for about a year and currently one-third of the package store permittees are participating in the pilot program. Acting Presiding Officer Weinberg asked for Director Jay Webster s opinion from a security aspect if the online system would be secure from being hacked. Director Webster answered in the affirmative and stated that the Agency s security is safe and reliable. Director Thomas Graham & Supervisor Andrea Maceyra s report is supported by a PowerPoint presentation. (Attachment 3) PUBLIC COMMENTS Acting Presiding Officer Weinberg opened the floor for additional comments before the Commission. No one came forward to address the Commission. 16

21 EXECUTIVE SESSION TO CONSULT WITH LEGAL COUNSEL REGARDING PENDING AND ANTICIPATED LITIGATION AGAINST THE AGENCY AND TO DELIBERATE THE APPOINTMENT, EMPLOYMENT, EVALUATION, DUTIES OF THE POSITIONS OF EXECUTIVE DIRECTOR AND GENERAL COUNSEL AND/OR AUDITOR (Govt. Code , , (a) AND (a)(1) AND TEXAS ALCOHOLIC BEVERAGE CODE 5.11) Acting Presiding Officer Weinberg announced the regular open session of the Texas Alcoholic Beverage Commission will be recessed at this time, 11:46 a.m., May 28, 2015 and an executive session will be held to consult with Legal Counsel regarding pending and anticipated litigation against the Agency and to deliberate on personnel or employment matters, under Government Code , ) The Texas Alcoholic Beverage Commission has concluded its Executive session and is now in open regular session. The date is May 28, 2015 and the time is 12:42 p.m. No final action, decision or vote was made in Executive session. ACTION ON THE INTERNAL AUDIT SERVICES CONTRACT Acting Presiding Officer Weinberg called for a motion for the agenda entitled, Action on the Internal Audit Services Contract. Commissioner Steen moved to direct the Director of Business Services to renew the current internal audit contract for a two-year period at the current hourly rate as discussed in executive session. Acting Presiding Officer Weinberg seconded the motion and stated that the motion had been made and seconded. All those in favor say Aye. All those opposed say No. The motion was approved. Agenda Items 8-13 were grouped together for discussion Acting Presiding Officer Weinberg read agenda items 8-13 for the Commissioners consideration Assistant General Counsel Martin Wilson briefed the Commissioners that the rules are mandated by the Government Code to be reviewed every 4 to 5 years. He stated that these five rules are related to the auditing functions and are consistent with Commission s common practice. He stated that the changes are minor and noncontroversial. A public hearing to receive oral comments on the proposed amendments will be held on Thursday, July 2, 2015 at 1:30 p.m. in the Commission Meeting room at the TABC Headquarters. APPROVE PUBLICATION OF PROPOSED AMENDMENT TO RULE BOTTLE CAPPING DEVICES Section is being reviewed under Government Code , which requires each state agency to periodically review and consider for re-adoption each of its rules. 17

22 APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 41.1, SALE TO LIEN HOLDERS The proposed amendments clarify that the Administrator may designate someone to receive notices and applications. The language in subsection (d) is clarified and a requirement is added that the lien holder must include with the application copies of any documentation in which the lien holder acquired title to the alcoholic beverages to be sold. APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 41.2, SALE BY CARRIERS The proposed amendments clarify that the Administrator may designate someone to receive required applications. The language is clarified and a requirement is added that the carrier must include with the application documentation supporting the amount of the charges due to the carrier. APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 41.3, SALE AFTER CANCELLATION OR EXPIRED OF LICENSE OR PERMIT The proposed amendments to 41.3(a) clarify language and expand the scope of the section to address the disposition of inventory after any permit or license is cancelled or expires. APPROVE PUBLICATION OF PROPOSED REPEAL OF RULE 41.4, MIXED BEVERAGE PERMITTEE VOLUNTARY CANCELLATION It is proposed in a separate rulemaking setting to amend 41.3 to provide procedures for the disposal of inventory that would be applicable to all permittees and licensees when their permit or license is cancelled or expires for whatever reason. In connection with this proposal to amend 41.3, it is proposed to repeal 41.4 for its redundancy or inconsistency. APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 41.11, RECORDS IN GENERAL The proposed amendments would eliminate the requirements for approval and inspection of each export shipment and substitute a requirement that records of such shipment to be maintained for inspection or audit by the commission. The title of the section would be changed. Commissioner Steen moved to approve publication of agenda items 8-13 as grouped together for discussion, for a 30-day comment period in the Texas Register. Acting Presiding Officer Weinberg seconded the motion and stated that a motion was made and seconded. Asking for a vote on the motion, Acting Presiding Officer Weinberg asked for all those in favor say Aye. All those opposed say No. The motion passes. 18

23 Agenda Items were grouped together for discussion Acting Presiding Officer Weinberg read agenda items for the Commissioners consideration Assistant General Counsel Wilson briefed the Commissioners on the amendments for adoption. ADOPT PROPOSED AMENDMENTS TO RULE 31.3, PETITION FOR THE ADOPTION OF A RULE This section provides procedures for any interested person (petitioner) to request the Alcoholic Beverage Commission to adopt a rule. ADOPT PROPOSED AMENDMENT TO RULE 31.11, RESOLUTION AND INFORMATION ON COMPLAINTS The amendment provides that the Commission will notify the complaint of the resolution of a complaint upon request. Alcoholic Beverage Code 5.53(a) requires the Commission to have a rule to clearly define the Agency s complaint process from the time the complaint is received until it is resolved. ADOPT PROPOSED AMENDMENTS TO RULE 33.2, APPLICATION AND FEE PAYMENT PROCEDURES The amendments reflect that all fees and surcharges for the issuance of permits and licenses are payable directly to the Commission and not to the County. The application process for certificates is subject to specification by the Administrator with the payments due to the Commission at the time of the application. ADOPT PROPOSED AMENDMENTS TO RULE 33.4, MANUFACTURER S WAREHOUSE LICENSE FEE The amendments reflect that all fees and surcharges for the issuance of permits and licenses are payable to the Commission and not to the County. ADOPT PROPOSED AMENDMENTS TO RULE 33.33, NOTIFICATION REQUIREMENTS This section as amended requires the holder of a license, permit or certificate to maintain a current address on file with the Commission. A change of address must be filed with the Commission within seven business days of the change. Certificate holders will continue to file changes of address by mail with the Seller/Server Training Division. 19

24 ADOPT PROPOSED AMENDMENTS TO RULE 37.5, POPULATION IN CERTAIN COUNTIES The adoption of the proposed amendment adopts without change to the amendments to 37.5, relating to Population in Certain Counties including changing the title of the section to Determining Population. ADOPT PROPOSED AMENDMENTS TO RULE , ON-PREMISES PROMOTIONS The amendments apply the same public safety restrictions of the section that was previously applicable only to retailers, to all permittees and licensees who are authorized to sell or serve alcoholic beverages for on-premises consumption. Commissioner Steen moved to adopt the amendments of agenda items as grouped together for discussion. Acting Presiding Officer Weinberg seconded the motion and stated that a motion was made and seconded. Asking for a vote on the motion, Acting Presiding Officer Weinberg asked for all those in favor say Aye. All those opposed say No. The motion passes. Agenda Items were grouped together for discussion Acting Presiding Officer Weinberg read agenda items for the Commissioners consideration Assistant General Counsel Wilson briefed the Commissioners on the amendments for re-adoption without change. He stated that the review and re-adoption of rules and 37.2 continue to exist. The rule is not obsolete and reflects current legal and policy considerations and current procedures of the Commission. He stated that no comments were received. RE-ADOPT WITHOUT CHANGE RULE 35.41, TERMS DEFINED RE-ADOPT WITHOUT CHANGE RULE 37.2, CONTESTED CASE Commissioner Steen moved to Re-Adopt Without Change agenda items as grouped together for discussion. Acting Presiding Officer Weinberg seconded the motion and stated that a motion was made and seconded. Asking for a vote on the motion, Acting Presiding Officer Weinberg asked for All those in favor say Aye. All those opposed say No. The motion passes. 20

25 Agenda Items were grouped together for discussion Acting Presiding Officer Weinberg read agenda items for the Commissioners consideration Assistant General Counsel Wilson recommends withdrawing the proposed repeal which would leave the current rule in effect. APPROVAL TO WITHDRAW PROPOSED REPEAL OF CURRENT RULE , REBATES, COUPONS AND PREMIUM STAMPS APPROVAL TO WITHDRAW PROPOSED NEW RULE , COUPONS AND LOYALTY PROGRAMS Commissioner Steen moved to approve the withdrawal of agenda items as grouped together for discussion. Acting Presiding Officer Weinberg seconded the motion and stated that a motion was made and seconded. Asking for a vote on the motion, Acting Presiding Officer Weinberg asked for All those in favor say Aye. All those opposed say No. The motion passes. NEXT MEETING DATE: Tuesday, July 28, 2015 ADJOURN Acting Presiding Officer Weinberg called for a motion to adjourn. Commissioner Steen made a motion. Acting Presiding Officer Weinberg seconded. Acting Presiding Officer Weinberg stated that the motion was made and seconded. The motion passes. Acting Presiding Officer Weinberg announced that the meeting was adjourned at 1:12 p.m. 21

26 Attachment 1 Commission Report: Executive Director and Agency Activities, Budget Issues, Staff Achievements, Legislative Activities

27 2/2/2018 Commission Meeting May 28, 2015 Executive Director Sherry Cook ANNOUNCEMENT 1

28 2/2/ th Proposed Budget 84 th Proposed Budget 2

29 2/2/2018 THE OTHER THREE TIER SYSTEM OF ALCOHOLIC BEVERAGE REGULATION Three Preventative Functions: Licensing Education Marketing Practices EDUCATE & ASSESS Legislative (Make the Laws and Appropriate the Regulatory Budget) LOBBY Three Tiers: Manufacturing Distributing Retailing TABC Three Investigative/ Punitive Functions: Enforcement Audit/ Investigation Legal INTERPRET & ENFORCE PROSECUTE & DEFEND Regulatory (Make Rules, License Entities, Collect Taxes, and Ensure Compliance with Public Safety, Marketing Practice, and Tier Separation Provisions) Judicial (Provide Due Process Through Administrative and Civil Courts) PETITION AND COMPLY SEEK DUE PROCESS INDUSTRY Three Segments: Malt Beverages Wine Spirits March 2015 Spring Break 930 Minor Stings 92 violations CPOs conducted Undercover Operations, Minor Stings and Inspections of licensed/permitted locations. There were no major issues pertaining to the consumption of alcoholic beverages during Spring Break. SXSW 3

30 2/2/2018 April 2015 Fiesta 2015 San Antonio s oldest and largest annual public festival. 100 separate events, attended by more than 3 million people, and had an estimated economic impact of more than $300 Million Dollars. Tax ID Stamps online ordering went live on April 13th Automation Continues in Licensing What Really Happened TRENDS # of Priority Locations Average Number of Priority Locations & Undercover Operations (CY Quarters January 2014 March 2015) 4,131 1, ,197 1, ,108 4,064 4,050 1,141 1,226 1,513 1,005 1,067 1,211 Jan Mar '14 Apr Jun '14 Jul Sep '14 Oct Dec '14 Jan Mar '15 Average Number of Priority Locations Total Undercover Operations Undercover Operations at Priority Locations 4

31 2/2/2018 TRENDS Contacts, Compliants & Cases ,188 Total Government Contacts Resulting in Complaints & Administrative Cases (Jan 2014 Mar 2015) Jan Mar '14 Apr Jun '14 Jul Sep '14 Oct Dec '14 Jan Mar '15 Total Gov Contacts Resulting Complaints Resulting Admin Case TRENDS Repeat Public Safety Offenders By License Type Pkg Liquor Store 16-3% May April 2015 B/BW Off % Mixed Beverage % B/BW On % Pvt Club 38-7% Temps 2-0% Repeat Public Safety Offenders: On-Premises vs Off-Premises Sales May Apr 2015 Off- Premises % On- Premises % Total = 591 Total = 591 Repeat Public Safety Offenders & the Number of Separate Incidents for which Repeat Public Safety Offenders by They Were Charged Business Type May April 2015 Total = 591 May April 2015 Bar/SOB % C-Store/Gas Station % Grocery/Mkt 7-1% Other Liquor/Pkg Restaurant 29-5% Store 88-15% 16-3% Number of Repeat Offenders Number of Chargeable Public Safety Incidents 5

32 2/2/2018 Source Investigations # of Source Investigations % 236 Sources Received from LE and Other Agencies (FY , Sep-Feb) 52% 52% 62% % TRENDS % FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Total Source Investigations % of Total 48% 111 Rc'd From LE & Other Agencies 80% 60% 40% 20% Average Days Source Investigations Are Open 5000 (FY ; Sep-Feb) FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Total Source Investigations Average Days Open Texas Crashes With Alcohol As A Contributing Factor ( ) 4,739 4,595 4, , ,154 4,031 4, , Average # of Days Open Number of Crashes Fatal Crashes Serious Bodily Injury Crashes Combined Total Info courtesy TxDot ( TRENDS 51,000 50,000 49,000 48,000 47,000 46,000 45,000 44,000 43,000 42,000 41,000 44,547 Licensed In-State Businesses End of FY End of FY ,013 47,690 50,095 48,479 Aug 2010 Aug 2011 Aug 2012 Aug 2013 Aug ,000 50,000 49,000 48,000 47,000 46,000 45,000 44,000 43,000 42,000 41,000 44,547 In-State Licensed Businesses End if August End of April ,095 49,013 48,984 48,479 48,560 48,589 48,591 48,660 48,630 48,573 48,610 47,690 Aug Aug Aug Aug Aug Sep Oct Nov Dec Jan Feb Mar Apr

33 2/2/2018 TRENDS Change Since Start of FY Retailers Upper Tiers -16 All In-State Businesses Change in Retailer Population Since Start of FY 2015 by Class On-Premises Off-Premises All Retailers TRENDS Net Gain in Licensed Businesses Net Increase in Texas Licensed Businesses by Region FY 2015: September - April % 1.4% 1.4% 1.4% 1.3% % % 1.0% % % % 0.4% 0.2% Growth Rate 0 0.0% West Texas North Texas Upper Gulf Coast Central Texas South Texas Net Gain in Licensed Businesses Growth Rate Since End of FY

34 2/2/2018 Questions? 8

35 Attachment 2 Legislative Update

36 2/2/ th Legislature Session Update Mariann H. Morelock Director of Communications and Governmental Affairs 5/28/ Legislative Update Legislative Deadlines Legislation Summary 1

37 2/2/2018 Legislative Deadlines Monday, June 1, 2015 (140th day) SINE DIE! Sunday, June 21, 2015 Last day governor can sign or veto bills Monday, August 31, 2015 Date bills without specific effective dates (that could not be effective immediately) become law SB 700 electronic signatures SB 1651 HB 601 HB 2022 SB 540 SB 680 SB 367 subterfuge HB 1348 label approval process Alcoholic Beverage Code PASSED HB 2296 by Smith central business districts HB 2339 Public Entertainment Facilities SB 808 SB 858 HB 909 2

38 2/2/2018 Alcoholic Beverage Code STILL ALIVE SB 326 lifts cap on wine shipments by winery HB 482 Class b fix et al SB 828 HB 824 SB 881 HB 1039 SB 1228 SB 1296 Alcoholic Beverage Code PROCEDURALLY DEAD HB 409 by C. Turner insurance for certain permittees/licensees HB 688 commission increases to 5 members HB 1018 by Geren powdered alcohol HB 1225/SB 609 by Isaac/Hancock distilled spirits not limited to package stores HB 2882 by D. Miller TABC collects and remits local fees SB 1198 by Eltife de minimis SB 719 by Burton manufacturers can ship direct to consumers HB 2047 by Ashby alcohol free zones HB 2072 by Isaac a retailer operates as a winery HB 2328 by Thompson and HB 3015 by Geren wineries have to make wine SB 526 3

39 2/2/2018 Other Legislation Impacting Agency HB 5 SB 53 SB 668 SB 705 SB 880 SB 1267 HB 1296 SB 1576 HB 1743 HB 1832 HB 2116 HB 2319 Summary 6305 Filed Legislation Xxx Passed Legislation 88 Bills amending Alcoholic Beverage Code Bills Tracked by TABC = 439 High/Medium Priority = 129 Low Priority/Informational = 310 4

40 Attachment 3 Tax and Marketing Practices Division Briefing

41 2/2/2018 Excise Tax and Marketing Practices Division Thomas Graham Excise Tax and Marketing Practices Division Director Andrea Maceyra Supervisor of Excise Tax and Marketing Practices Excise Tax and Marketing Practices Division 1

42 2/2/2018 Label Approval Team Sarah Leatherman Label Approval Coordinator (Team Lead) Years with TABC: 2Years Key Responsibilities: Label approval team lead, malt beverage and low wine label approval Sherri Diaz Administrative Assistant Years with TABC: 18 Years Key Responsibilities: Label approval support for wine and distilled spirits Julie Almaraz Data Entry Operator III Dora Halter Chemist Years with TABC: 13 Years Key Responsibilities: Data enter label approval certificates for wine and distilled spirits applications Years with TABC: 5 months Key Responsibilities: Test malt beverage and low wine samples for label approval, test seized evidence from the field Excise Tax Team Kelly Greene Accounts Examiner Shatia Hayes Account Examiner Years with TABC: 10 Years Key Responsibilities: Wholesalers Years with TABC: 10 months Key Responsibilities: Malt beverage, distributors, manufacturers, trains and airplanes Lauren Key Account Examiner Rickie Eddins Administrative Assistant Years with TABC: 2 months Key Responsibilities: Wineries, distilleries, brewpubs, direct shippers Years with TABC: 9 years Key Responsibilities: Tax ID stamps, private club temporary membership cards, carrier s reports 2

43 2/2/2018 THE OTHER THREE TIER SYSTEM OF ALCOHOLIC BEVERAGE REGULATION Three Preventative Functions: Licensing Education Marketing Practices EDUCATE & ASSESS Legislative (Make the Laws and Appropriate the Regulatory Budget) LOBBY Three Tiers: Manufacturing Distributing Retailing TABC Three Investigative/ Punitive Functions: Enforcement Audit/ Investigation Legal INTERPRET & ENFORCE PROSECUTE & DEFEND Regulatory (Make Rules, License Entities, Collect Taxes, and Ensure Compliance with Public Safety, Marketing Practice, and Tier Separation Provisions) Judicial (Provide Due Process Through Administrative and Civil Courts) PETITION & COMPLY SEEK DUE PROCESS INDUSTRY Three Sectors: Malt Beverages Wine Spirits Marketing Practices Marketing practices relates to the relationship between members of upper tiers (manufacturers, wholesalers, distributors) and the retail tier in ways that influence business practices Monitor Inter Industry relationships Assist industry with common marketing practices questions Assist Enforcement and Audit with investigations of interindustry relationships Encourage voluntary compliance through training for industry members to maintain balance of competition and fair trade practices throughout the State 3

44 2/2/2018 Marketing Practices Review for compliance, promotions and marketing strategies Sweepstakes promotions Product advertising Use of coupons and related material On and off premise promotions/samplings with retail accounts Sponsorship and Charity Events/Temporary events Equipment Product market research compliance Consignment, recalls and damaged product Third party service providers Mobile Apps Delivery services Use of social media 40 phone calls and s on daily basis Industry, permit/license holders and general public Bulletins The division publishes bulletins to clarify certain marketing issues that are not clearly defined in the Code or Administrative Rules as required in 5.57 in the Code. Label Approval Label Approval Trends Contract Brewing number of applications have increased since last legislative session when it opened the door for more breweries to contract brew and engage in alternating proprietorships Collaboration purely creative in nature; common industry term Promotion specific labels Increased number of cider applications Control brands and private labels 4

45 2/2/2018 Label Approval Processing Times & Volume 25,000 20,000 15,000 10,000 5,000 0 Label Applications Processed FY FY ,151 17,262 18,137 12,500 13,322 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Number of Label Applications Processed All Labels - Average Application Processing Time & Volume Processed 25, , ,151 17,262 18, ,000 12,080 12,500 13, , , FY FY FY FY FY FY Volume Average Days Average Number of Days to Process a Label Application Label Approval Average Days to Process Label Applications Processed & Average Number of Days Required to Process a Label Application FY 2015: September April 14, ,500 Applications Processed 13,000 12,500 12,000 11,500 11, , , Average Days to Process 10,500 0 FY 2014 FY 2015 Applications Processed Average Days to Process 5

46 2/2/2018 Label Approval Applications by Beverage Class Label Applications Processed FY 2015: September - April Wine 9,261-68% Malt Beverage 2,453-18% Spirits 1,917-14% Total = 13,631 Online Label Approval Shorter processing times Reduces initial application errors Pilot testing was rolled out in segments Malt Beverage March 3, 2015 Wine & Distilled Spirits April 1, 2015 Official Announcement Date June 1,

47 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY /2/2018 Excise Tax Division is responsible for collecting, processing and reviewing excise tax payments and reports as well as other reports Excise tax is paid by the wholesaler/distributor upon sale to the retailer and/or by the manufacturer upon sale to the retailer or direct to consumer 56,382 reports were received and reviewed for FY 2014 Account examiners reconcile all reports; supervisor conducts secondary, sampling review Auditors conduct audits every 2 4 years of all excise tax payers as well as random field audits Continuing to pursue excise tax automation Statutory limitation challenges gallonage and barrel limitations new excise tax forms Excise Tax Gross Excise Tax Revenues Gross Excise Tax Revenues FY FY 2014 $215,000,000 $210,000,000 $205,000, ,629, ,811, ,929,084 $200,000, ,899,242 $195,000, ,427, ,903, ,057,618 $190,000,000 $185,000,000 $180,000,000 7

48 2/2/2018 Excise Tax Gross Excise Tax Collections $3,000,000 $2,000,000 $2,470, % Changes in Gross Excise Tax Collections From FY 2014 to FY 2015 (September - April) $1,000,000 $442, % $542, % $974, % $0 Distilled Spirits Wine Beer Malt Liquor All Classes -$1,000,000 -$2,000,000 -$3,000,000 -$2,480, % Excise Tax Excise Tax Revenue by Beverage Class Gross Excise Tax Revenue By Beverage Class FY 2015: September - April Wine $9,783,891 7% Beer $63,114,157 46% Distilled Spirits $56,075,125 40% Malt Liquor $9,528,388 7% 8

49 2/2/2018 Tax ID Stamps & Temporary Memberships 2500 total package stores in the State 690 have the authority to sell alcohol to mixed beverage and private club permittees ID stamps are placed on distilled spirit bottles by the LP upon sale to the MB or N/NE (Private Club) Issue temporary memberships to private clubs (dry areas within the State) Required for guests to consume alcoholic beverages Texas shape printed with new color changing ink Stamp designed to selfmutilate to prevent illegal re use VOID wording appears after stamp is removed from bottle, also appears in ultraviolet light New background harder to accurately reproduce/replicate Tax ID Stamps Re Design 9

50 2/2/2018 Tax ID Stamps Online Ordering System Questions? 10

51 Attachment 4 Approve Publication of Proposed Amendments to Rule 35.11, Bottle Capping Devices

52 Agenda Item 8: Appron Publication of Proposed Amendments to Rule 35.11, Bottle Capping Devices The Texas Alcoholic Bewrage Commission proposes amendments to 35.1 l, relating to Bottle Capping Devices. The proposed amendments eliminate unnece sary language. Section is also being re\ ie\\ ed under Gowrnment Code which requires each state agency to periodically review and consider for readoption each of its rules. The commission has detennined that the need for the section continues to exist but that it should be amended. :vlartin Wilson. Assistant General Counsel. has determined that for each year of the first fi\'e years that the proposed amendments \\ ill be in effect. there will be no fiscal impact on state or local go\'emment attributable to the amendments. The proposed amendments \\ ill ha\ e no fiscal or regulatory impact on micro-businesses and small businesses or persons regulated by the commission. There is no anticipated negati\ e impact on local employment. Mr. Wilson has determined that for each year of the first five years that the proposed amendments \, ill be in effect, the public,,. ill benefit because the language used in the rule will be clearer. Comments on the proposed amendments may be submitted in \\T1tmg to Martin \\'ilson. Assistant General Counsel. Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas or by facsimile transmission to (512) They may also be submitted electronically through the cornrniss1on s pub\ ic website at Comments,vill be accepted for 30 days following publication in the Texas Register. The staff of the commission will hold a public hearing to recei\ e oral comments on the proposed amendments on Thur s day. July at 1:30 p.m. in the commission meeting room at the commission s headquarters. which is located at 5806 Mesa Drive in Austin. Texas. The proposed amendments are authorized by Alcoholic Beverage Code 5.31, \vhich grants authority to prescribe rules necessary to carry out the proyisions of the Code. The proposed amendments affect Alcoholic Be\'erage Code 5.31 and Go\ emment Code Pagelof2

53 35.11 Bottle Capping Devices. "' f, - \ \ i 12 B-6-::12 -=: ::::: -= - o o:!:..:. 2.!,J!:0::.: 1:..:-,.: :.; ::C ;1: : n1ay. for unla,yful purposes'\ possess on the ;-,:,:; :b.::: ::; licensed premises a device used for capping or recapping of beverage bottles. Page 2 of 2 -

54 Attachment 5 Approve Publication of Proposed Amendments to Rule 41.1, Sale to Lien Holders

55 Agenda Item 9: Appro, e Publication of Proposed Amendments to Rule -41.1, Sale to Lien Holders The Texas Alcoholic Be\ erage Commission proposes amendments to relating to Sale to Lien Holders. The propo s ed amendment s clarify that the administrator may designate someone to rece1\ e required notices and applications. Language in subsection (d) is clarified and a requirement is added that the lien holder must include \Vith the application copies of any documentation in \\'hich the lien holder acquired title to the alcoholic be\'erages to be sold. Section 41.1 is also being re\ iewed under Government Code , which requires each state agency to periodically reviev; and con s ider for readoption each of its rules. The commission has detem1ined that the need for the section continues to exist but that it should be amended. Maiiin Wilson. Assistant General Counsel. has detem1ined that for each year of the first fi\'e years that the proposed amendments \\'ill be in effect. there will be no fiscal impact on state or local go\ ernment attributable to the amendments. The proposed amendments will ha\ e no fiscal or regulatory impact on micro-businesses and small businesses or per s ons regulated by the conunission. There is no anticipated negative impact on local employment. Mr. Wilson has determined that for each year of the first fi\'e years that the proposed amendments will be in effect. the public will benefit because the language used in the rule \, ill be clearer and current practices,vi 11 be codified. Comments on the proposed amendments may be submitted in \\T1tmg to Martin Wilson. Assistant General Counsel, Texas Alcoholic BeYerage Commission. at P.O. Bo 13127, Austin, Texas , or by facsimile transmission to (512) They may also be submitted electronically thrnugh the cornm1ss1on s public website at w.tabc.texas.gov/laws/proposed_rules.asp. Comments will be accepted for 30 days following publication in the Texas Register. The staff of the commission will hold a public hearing to receive oral comments on the proposed amendments on Thursday, July at 1:30 p.rn. in the commission meeting room at the commission's headquaiiers. v.hich is located at 5806 Mesa Drive in Austin, Texas. The proposed amendments are authorized by Alcoholic Ben rage Code which grants authority to prescribe rule s necessary to carry out the proyisions of the Code. Page 1 of 2

56 The proposed amendments affect Alcoholic BeYerage Code 5.31 and Government Code Sale to Lien Holders. (a) All alcoholic be\ erages are subject to le\)' and other judicial process the same as any other personal property under the general la\\ s of the state. (b) Sale thereof may be to lien holders and to pe1111ittees and licensees \\'ho are pri\ileged to purchase and sell the same. (c) In all instances after such sale has been made 0 the person making such a sale shall notif y the adminiscrator c::.\l:s:::: or ti1e administralor's desi nee. gi\ing the date of sale, the names and address of both the original 0\\11er and the purchaser. an inyentory of the beverages sold and the name of the lien holder or lien holders. A lien holder \\ ho is not a licensee or permittee and \Vho purchases the same or \Yho procures title thereto in any other lav.;ful manner. shall dispose of such alcoholic beverages within 30 days after acquiring title thereto. provided hov;e\ er. that the administrator may grant an additional time for good cause shown. (d) As a condition precedent to making such resale 0 the lien holder shall apply to the administrator or the administrator's desiirnee for pern1ission to make such sale. The application shall shov,: the name and address of the intended purchaser. the number of B-i-s the intended omchaser's license or permit. the ::::::0:.1::t quantit \. and tvpe of be\ erages and ki:: to be sold and Lhe date and manner of the sale. and sbai I include cojjie:s of an\ c ocumentatio11 in v;hich &c the lien holder procured title thereto. Page 2 of 2

57 Attachment 6 Approve Publication of Proposed Amendments to Rule 41.2, Sale by Carriers

58 Agenda Item 10: Carriers Approve Publication of Proposed Amendments to Rule -H.2, Sale by The Texas Alcoholic BeYerage Commission proposes amendments to relating to Sale by Caniers. The proposed amendments clarify that the administrator may designate someone to recet\'e required applications. Language is clarified and a requirement is added that the carrier must include with the application documentation suppo1iing the amount of the charges due to the earner. Section 41.2 is also being reyiewed under Go,ernment Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has determined that the need for the section continues to exist but that it should be amended. Martin Wilson. Assistant General Counsel. has determined that for each year of the first fi\ c years that the proposed amendmems \\ill be in effect. there \\ill be no fiscal impact on state or local government attributable to the amendments. The proposed amendments \11 ill have no fiscal or regulatory impact on micro-businesses and small businesses or persons regulated by the commission. There is no anticipated negative impact on local employment. Mr. Wilson has determined that for each year of the fi r st fi,e years that the proposed amendments \11 ill be in effect. the public will benefit because the language used in the rule \\lill be clearer and current practices \,vill be codified. Comments on the proposed amendments may be submitted in v:ntmg to.'v1anin Wilson. Assistant General Counsell, Texas Alcoholic Beverage Commission. at P.O. Box Austin. Texas or by facsimile transmission to (512) They may also be submitted electronically through the comm1ss1on s public v,-ebsite at /laws/proposed_rules.asp. Comments will be accepted for 30 days following publication in the Texas Register. The staff of the commission \,-ill hold a public hearing to receive oral comments on the proposed amendments on Thursday, July 2, 2015 at I :30 p.m. in the commission meeting room at the commission s headquatiers. which is located at 5806 Mesa DriYe in Austin. Texas. The proposed amendments are authorized by Alcoholic Beverage Code 5.31l,,vhich grants authority to prescribe rules necessary to cany out the provisions of the Code. Pagell of2

59 The proposed amendments affect Alcoholic Be\ erage Code 5.31 and Go\ ernment Code H.2 Sale by Carrier. (a) Any person authorized to transpon tb::.:;:::;::"2- ::.lcol1olic be\ era0:es may sell. in accordance \Yith la\\-. any alcoholic bewrage \Yhich Be-tbe Dersc,;1 acquires by reason of unpaid charges. to any pennittee or licensee \Vho is pri\'ileged to import and sell such alcoholic be\ eragc. (b) Any person contemplating such sale. shall first make application to the administratorl:-,:.\:._;5:;-;=r or the adrninisi:r2.t0/s desiqi:ee. setting out the facts regarding uch shipment. the names and addresses of the consignor and consignee. the name and address of the proposed purchaser. and docurne;1tation sudooninq the amount of the charges due. (c) :\'o person amho; ized to c1 3nsDort alcoholic be\ enuzes shall sell or offer for sale any alcoholic be\ erages for unpaid charges except in the manner herein pro\ ided. Page 2 of2

60 Attachment 7 Approve Publication of Proposed Amendments to Rule 41.3, Sale after Cancellation or Expiration of License or Permit

61 Agenda Item 11: Approve Publication of Proposed Amendments to Rule -H.3, Sale after Cancellation or Expiration of License or Permit The Texas Alcoholic BeYerage Commission proposes amendments to relating to Sak after Cancellation or Expiration of License or Permit. Section 41.3 currently provides procedures for the disposal of alcoholic beverages \\'hen a permit or license is cancelled. Section of the commission's rules cu1tently provides procedures for the disposal of inventory by a mixed beyerage pennittee v:ho desires to discontinue business. The commission proposes to amend 41.3 to pro\ ide procedures for the disposal of inventory that would be applicable to all pem1ittees and licensees when their permit or license is cancelled or expires for whatever reason. In com1ection \Vith this proposal to amend the commission is simultaneously proposing in a separate rulemaking to repeal Proposed amendments to 4 1.3(a) clarify language and expand the scope of the section to addre s s the disposition of iml entory after any permit or license is cancelled or expires. The proposed amendment to subsection (b) allows the adrnini s trator to designate someone to appro, e a request to extend the period for disposition of the inventory beyond 30 days. The proposal deletes current s ubsection ( c ), adds a ne\y subsection ( c ). and adds and renumbers subsequent subsections appropriately. Proposed new subsection ( c) allows a pem1ittee or licensee to request apprornl to transfer im entory from a location \Yhere the pem1it or license is cancelled to another location for which it holds a pennit or license. Amendments to subsection (d) require the filing of a sv;orn transfer document for bulk disposal of alcoholic beverages, which must be approved by the administrator or the administrator's designee. Subsection ( d) also pro Yi des that such a sale or transfer may not be appro\ ed if either the seller or the purchaser 1s delinquent under Alcoholic Be, erage Code , relating to Sale of Liquor: Credit Restrictions. The pro po 5 al moves the substance of cu1tent subsection ( e) to new subsection (h). ":\ew subsection (e) pro, ides that the transfer document required by nev-; subsection (d) must be accompanied by a complete inventory and states \ hat must be included in the inventory. New subsection (f) requires the transfer document required by new subsection (d) to be signed and notarized by both the transferor and the transferee. New subsection (g) requires that all alcoholic be\erages be transfened in a single transaction unless the administrator or the administrator's designee appro, es multiple transactions. Page 1 of 3

62 e\v subsection (h) contains the requirement in current subsection (e) that any disposition of alcoholic be\ eragcs after the expiration or tem1ination of a permit or license must comply \Yith this section. and adds a provision that the administrator or the administrator's designee may grant \\Titten pennission otherwise. Section..J.1.3 is also being re, ie,wd under GO\ ernment Code : \\ hich requires each state agency to periodically re\ iew and consider for readoption each of its rules. The commission has detern1ined that the need for the section continues to exist but that it should be amended. Martin \Vilson. Assi tant General Counsel. ha detem1ined that for each year of the first fi\'e years that the proposed amendments will be in effect. there,vill be no fiscal impact on state or local government attributable to the amendments. The proposed amendments will have no fiscal or regulatory impact on micro-businesses and small businesses or persons regulated by the commission. There i no anticipated negative impact on local employment. Mr. Wilson has determined that for each year of the first fi\ e years that the proposed amendments \vill be in effect. the public will benefit because the procedures for the disposal of alcoholic beverages after a pe1111it or license is cancelled or expires will be clearer and cunent practices will be codified. Comments on the proposed amendments may be submitted in wntmg to Martin \\"ilson. Assistant General Counsel, Te:-.:as Alcoholic Be\ erage Commission. at P.O. Box Austin. Texas or by facsimile transmission to (512) They may also be submitted electronically through the comm1ss1on s public website at Comments v, ill be accepted for 30 days following publication in the Texas Register. The staff of the commission \\ ill hold a public hearing to receiye oral comments on the proposed amendments on Thursday. July at 1 :30 p.m. in the commission meeting room at the commission s headquarters. \Vhich is located at 5806 \1esa Dri\e in Austin. Texas. The proposed amendments are authorized by Alcoholic Be\ erage Code 5.3o1.,vhich grants authority to prescribe rules necessary to carry out the provisions of the C'ode. The proposed amendments affect Alcoholic Be\'erage Code 5.31 and Govemrnent Code Page 2 of 3

63 .t 1.3 Sale after Cancellation or Expiration of License or Permit. (a; '"'P \,: J [n the e\ ent any permit or license granted under the code is cancelled or e'-:pires. the permittee or licensee is authorized within 30 days thereafter to sell or dispose of the ii1\ emon rn bulk to a permittee or licensee authorized to purchase and sell same the remainder of stock of alcoholic be\'era2:es on hand at the time of the license or permit termination : ; e2l!::lc;'l. '-- (b) If a necessity e'-:ists for a longer period. \Hitten permission must be procured from the administrator or the admii1istr?. wi"'s desi i1ee. The application for such permission shall specif y the reasons "'-i- e,..j,, =r, , -:-, =,... :-., = :-, : 2::.s.:::..-. fit:. -\, =: :=. s -.:=J2:s Y.- :.--, :L \...l.i \,..1,..4\.'- dj. J. ',\, _._1_..._._J. \.J. "" J J.L ;;_; s CJ pc :r:ssio: :s p: 0&ci- a-f.._ - :-.2 2r: -::: -1.ist :...._ (c) A holder of a license or permit who holds more than oae such license or permit and who submi s one to the commission for cancellation. mav : eouest 2,oproYal to transfer the im emon on hand to one of its mher licensed or oermitted locations. (d) In all cases \\ here alcoholic be\'erages are disposed of or sold in bulk as herein set out, a sworn transfer document -i--;1y.:::l;-.:ory ::;;p2c'. :::-:d :::2k;10w!.2;::ge;:! by bo: --.. :he seller :.;-d-tbc pu-f-2-rase; shall be filed with -he local office 01' the commission and is subject to appro\ al by 1he administrator or the administrator's desig:nee. Aomoval of the sale or transfer shall not be 0.ranted if either the seller or purchaser is delinouent under Alcoholic Beverare Code and 16 Texas Admi nisuati ve Code at the time of the request :-:.-:.a.i!.::d to t 1,2 :::dn-:ir,.;sti ::::or \e ) The trnnsrer docur:.,em filed \\ i1h the commissio11 must sho\\ die comole1e inyenlvn or alcoholic be\ era0.es on hand. The invemon shall show the quantitv. brand and size of each container of alcoholic beveraue. and for dis Lil led soirirs it shall also show the identificarion stamp number aft1'-:ed to each container. ( f) Both the tr:.msferor and the transferee shall siq:n the transfer document under oath before a notary public swearing to tbe correctness of the transaction. ( 1 All alcoholic be\ eraqe:::i shall be lransfeitecl in :J sinule transaction unless. based on the circumstances. multipk trans ctions are appro\ ed bv the administrator or the administrator's desi \mee. 1h) o person shall dispose of anv alcoholic bewra0.es after the e'-:piration or cancdlation of a pennit or license e'-:cept in the manner ::1nd v;ithin the time herein specified unless \ l 'itten permission is orocured from the administrator or the administrator's desiq:nee. Page 3 of 3

64 Attachment 8 Approve Publication of Proposed Repeal of Rule 41.4, Mixed Beverage Permittee Voluntary Cancellation

65 Agenda Item 12 : Approve Publication of Proposed Repeal of Rule 41.4, Mixed BeHrage Permittee - Voluntary Cancellation The Texas Alcoholic Beverage Conunission proposes the repeal of relating to Mixed Beverage Permittee - Voluntary Cancellation. Section -J. 1.4 currently proyides procedures for the disposal of inventory by a mixed beverage permittee who desires to discontinue business. Section of the commission's rules cunently provides procedures for the disposal of alcoholic beverages when a pennit or license is cancelled. The commission is simultaneously proposing in a separate rulemaking to amend to provide procedures for the disposal of irn entory that would be applicable to all permittees and licensees when their permit or license is cancelled or expires for \,vhatever reason. In connection \Yith this proposal to amend the conrn1ission proposes the repeal of which would become either redundant or inconsistent. Section is also being re\ iewed under Go\'ernment Code 200l1.039, \ \ hich requires each state agency to periodically reviev, and consider for readoption each of its rules. The commission has determined that there is no longer a need for ( in light of the simultaneous amendment of 4 1.3) and that it therefore should be repealed. Martin Wilson. Assistant General Counsel, has detern1ined that for each year of the first five years that the proposed repeal will be in effect. there will be no fiscal impact on state or local go\ emment attributable to the repeal. The proposed repeal will have no fiscal or regulatory impact on micro-businesses and small businesses or persons regulated by the commission. There is no anticipated negative impact on local employment. ;\{r. W ilson has determined that for each year of the fi rst fi ve years that the proposed repeal -ill be in effect, the public will benefit because redundant or inconsistent procedures for the disposal of certain alcoholic beverages after a permit or license is c ancelled or expires will be eliminated. Comments on the proposed repeal may be submitted in \\Titing to Martin Wilson. Assistant General Counsel. Texas Alcoholic Beverage Commission, at P.O. Box , Austin, Texas or by facsimile transmission to (512) They may also be submitted electronically tlu ough the comm1ss10n s public website at \ S/proposed_rules.asp. Comments will be accepted for 30 days following publication in the Texas Register. The staff of the commission \.\ ill hold a public hearing to receive oral comments on the proposed repeal on Thursday, July 2, at 1 : 30 p.m. in the commission meeting room at the commission s headquarters. \\ hich is located at 5806 Mesa Drive in Austinl, Texas. Page 1 of 2

66 The proposed repeal is authorized by Alcoholic Be\ erage Code \Yhich grants authority to prescribe rules necessary to carry out the pro\ isions of the Code. The proposed repeal affects Alcoholic Bewrage Code and GO\ enrn1ent Code ,, --i.-..., _3,c,._ ,..- 2 ::;cs c-;-: :-ha:-:c!. T!.:2 i:i \ :-::u y sl-:.--a!l sl a\. : -,.c ti: :; -,.d size a....: 2:1 cc:::cja2: c l "' a1cal:ai:c: b Y -t ges :.::c!-ffi-.: :-2 ci!..: a;1 sr:-'"-s-'" r.. :7: b : :.- l "' :: ad :aaa l-, ca: :2 3i:;:i:l.?E! spi its. ~c :-:-=,.mi-k: pc:.. -1~,~-.!:-vL:! c~: :::=-~Td=,-2-<~:::: icf--s-~~~rcl \ ~ f -~1:2 -ea::~::-:.i:.:;i J~=L:-~-=1.-:~+c-c!--:.:::~~ ~.:: \~~-!:~~ :!:e 5-e-l-! it.; pc:~l:-i..: ::ec-i-s-:-2rc:::2d. t : d t:: b.:t e 2.. :1-2r:, -y p:.ib!: \\ in; :v :!-l2 cc: e2:::..:ss af t!1 sales :i ::: 1..s::.:c o::. /\ opy-a- f : -.. -=- 2..s-a-!-c-::i7 :-J..: s::- :i c! -c-i :-:2: ai-1+c-e-a-f :,2 co -:-;_lr:1iss:-e+:-:-, J..., ,,...1:..., 1...,..::L:.'_,......, r... i. :",,... l,... ' ' -.., ! L ,; f... J..""t"d.1.. cr C.. c-:)-\....1,,\ , _ ,.1v p-:r-c o c:... ' J,,\. tk i-: J ). -:ss:v:.:;. :-=-2c- :',2.:l!-s-ci-a-?1: -----,(.-:::+-i;----?- qj:.: :.: '3---5-Slt.: 1,:1 2...cc ::t:: :c :-r;..:--f23 1 : JJ... :: :... iol::: t, yc: :.:;.:s v -:!:::7 : :;: c1..\ 1::-g - ---, ' )' CT- FiT::!=rc-11: '-'µ :- 7..:-:7...::.-fc-- cr-c 2-cr2 :-.=r -Tn --..,_._,1,,._... p Page 2 of2

67 Attachment 9 Approve Publication of Proposed Amendments to Rule 41.11, Records in General

68 Agenda Item 13: Approve Publication of Proposed Amendments to Rule 41.11, Records in General The Texas Alcoholic Beverage Commission proposes amendments to 41.11, relating to Records in General. Section currently provides that permittees authorized to export wine and distilled spirits must apply to. and receive permission from, the commission for each export shipment. It also currently requires the commission to inspect each such shipment. The proposed amendments would eliminate the requirements for commission approval and inspection of each export shipment and substitute a requirement that records of such shipments be maintained for inspection or audit by the commission. The title of the section would also be changed. Section is also being reviewed under Govenunent Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has determined that the need for the section continues to exist but that it should be amended. Martin Wilson, Assistant General Counsel, has determined that for each year of the first five years that the proposed amendments will be in effect, there will be no fiscal impact on state or local government attributable to the amendments. The proposed amendments will have no fiscal or regulatory impact on micro-businesses and small businesses or persons regulated by the commission. There is no anticipated negative impact on local employment. Mr. Wilson has determined that for each year of the first five years that the proposed amendments will be in effect, the public will benefit because wine and distilled spirits exporters will no longer be required to get approval from the conunission for each export shipment and the commission will no longer be required to inspect each such shipment. Comments on the proposed amendments may be submitted in \\Titing to Martin Wilson, Assistant General Counsel, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas , or by facsimile transmission to (512) They may also be submitted electronically through the commission's public website at Comments will be accepted for 30 days following publication in the Texas Register. The staff of the commission will hold a public hearing to receive oral comments on the proposed amendments on Thursday July 2, 2015 at I :30 p.m. in the commission meeting room at the commission s headquarters, which is located at 5806 Mesa Drive in Austin, Texas. Page 1 of 2

69 The proposed amendments are authorized by Alcoholic Beverage Code 5.31, which grants authority to prescribe rules necessary to carry out the provisions of the Code. The proposed amendments affect Alcoholic Beverage Code 5.31 and Government Code Record Reouiren:ents R.eco ds in G.::;1.::: ::l. (a) Permittees authorized to export distilled spirits and wines shall n:ake a s\, ora applicatier The ::pplicar.t sl1all a:tac!: tc.::ich pplicat on maintain copies of billirnr invoices and shippin2. documents to supp011 anv export out of the Srnte of Texas. Suppo1ting documentation shall include an order signed by the purchaser of the distilled spirits or wines or in case of return to a distillery or manufacturer a letter of authority. (b) The distilled spirits or \Vines may then be delivered to a common carrier, holding a carrier's pem1it, or if the applicant is the holder of a private carrier permit, such distilled spirits or wines may be transported and exported upon vehicles described in the application filed with the commission of such private carrier permit. Only common carriers holding a carrier permit and holders of a private carrier pe1mit are privileged to transport for export distilled spirits and wines. ) e, lo,&. o:1fo11i1i:y 1tvi:l eve y i equi1.ar-;.1ent. : c- ( c) If an export shipment of distilled spirits or wines is transported upon vehicles under a private carrier pennit, the permittee must also obtain verification of the receipt of the merchandise from the state liquor authority in the state where the shipment is received. Verifications of this type must be kept on file by the permittee for inspection or audit by any representative of the commission. (d) After ;:he inspection of such export shipment by the commission's rnpresentativa, he shall appro\ e all :J.r1 ee copies of the application. T 1e applicaat shall retain one copy and send the o: igir:.al and one copy to the office of tlle con:missio::1 at i\ustin, Texas, as an attachinent to his monthly report of distilled spirits and wines i..:ceive;:! aad disposed of. To the original he The pern1it holder shall attach a copy of the invoice covering the shipment to the consignee and a copy of the bill of lading furnished by the carrier permittee, or a copy of the invoice furnished by the private carrier pem1ittee. to the monthlv repo11 of distilled spirits and wines filed with the commission. Copies of these documents shall be maintained bv the permit holder for inspection or audit bv anv representative of the commission. ( e) No person shall export any distilled spirits or wines in any manner other than as herein specified. Page 2 of 2

70 Attachment 10 Adopt Proposed Amendments to Rule 31.3, Petition for the Adoption of a Rule

71 Agenda Item 14: Adopt Proposed Amendments to Rule 31.3, Petition for the Adoption of a Rule The Texas Alcoholic Beverage Commission adopts without change the amendments to 31.3, relating to Petition for Adoption of a Rule, proposed in the April 10, 2015 issue of the Texas Register (40 TexReg 2057). The amendments require that the name of the person or entity on whose behalf a petition for rulemaking is filed must be identified if it is different from the person filing the petition. The amendments also clarify that, pursuant to Government Code ( c ), a rulemaking will be initiated if the commission fails to act on a petition within 60 days of the date it \\:as received. The amendments extend from six months to one year the period within which the Administrator may choose not to bring to the commission a repetitive petition (i.e., a petition that is the same as one previously considered by the commission). No comments were received by the commission. Section 31.3 was reviewed under Government Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has determined that the need for the section continues to exist but that it should be amended. The amendments are adopted pursuant to Alcoholic Beverage Code 5.31, which grants authority to prescribe rules necessary to carry out the provisions of the Code, by Government Code , which requires the commission to have a rule regarding petitions for rulemaking, and by Goyernment Code which requires each state agency to periodically review and consider for readoption each of its rules Petition for the Adoption of a Rule. (a) Purpose. This section provides procedures for any interested person (petitioner) to request the Alcoholic Beverage Commission ( commission) to adopt a rule. _(b) Content of Petition. (1) The petition must be in writing. No form is required but all information must be provided, or a reason why required infonnation cannot be provided given. (2) The petition must contain the following: (A) petitioner's name, address. aflei organization or affiliation, if any. and the name of 1he person or entitv on whose behalf the petition is filed. if different from the person submittirnz the petition; (B) a plain and brief statement about why a rule or change in an existing rule is needed, required, or desirable, including the public good to be served and any effect affcet on those who would be required to comply with the rule: (C) an estimate of the fiscal impact on state and local government as a result of enforcing or administering the proposed rule, an estimate of the economic impact on persons Page 1 of2

72 required to comply with the proposed rule, whether there may be an effect a fec: on local employment. and the facts, assumptions and methodology used to prepare estimates and impacts required by this subparagraph; (D) a statement on the commission's authority to adopt the proposed rule; (E) the proposed text of a new rule, or proposed changes to an existing rule; and (F) a list of individuals, organizations or affiliations that may be interested or affected by the proposed rule, if known. (c) Submission. A petition is submitted on the date it is received by the Administrator. The petition must be addressed to the Administrator, Texas Alcoholic Beverage Commission, and mailed to P.O. Box 13127, Austin, Texas , or hand delivered to the Administrator at commission headquarters in Austin, Texas. (d) Review. The Administrator will review the petition for compliance with the requirements of this section. If all requirements of this section are met, the Administrator will bring the petition to the commission, or any member of the conunission for consideration. (e) Decision to Deny or Accept. The commission will deny a petition for rulemaking, or accept, in whole or in part, a petition for rulemaking within 60 days from the date the petition is submitted. If the commission neither denies nor accents the petition within 60 davs from the date it is submitted. a2:encv staff will initiate the rulemakin2: orocess under Chapter Subchanter B. of the Government Code. In such case. aqency staff mav redraft the prooosed text to conform to style and fonnat requirements for the agency's rules. (1) The Administrator e&fil?.1issiatt will notify the petitioner in writing if the petition is denied and state the reason or reasons for the denial. (2) The commission will refer an accepted petition to agency staff to initiate the rulemaking process under Chapter 2001, Subchapter B, of the Government Code. Agency staff may redraft the proposed text to confonn to style, format and policy decisions of the agency. (f) Repetitive petitions. f-h The Administrator adm::.:is,: :.:tor may refuse to bring a petition for rulemaking to the commission if, within the preceding vear six a10:i:hs, the commission has considered aad d2ai2 a previously submitted petition for the same or subs:::::tively he sa:ne rule. ( ') Page 2 of 2

73 Attachment 11 Adopt Proposed Amendment to Rule 31.11, Resolution and Information on Complaints

74 Agenda Item 15: Adopt Proposed Amendment to Rule 31.11, Resolution and information on Complaints The Texas Alcoholic Beverage Commission adopts without change the amendment to , relating to Resolution and Infommtion on Complaints, proposed in the April 10, 2015 issue of the Texas Register ( 40 TexReg 2058). The amendment provides that the commission will notify the complainant of the resolution of a complaint upon request. Alcoholic Beverage Code 5.53(a) requires the commission to have a rule clearly defining the agency's complaint process from the time the complaint is received until it is resolved. No comments were received by the commission. Section was reviewed under Government Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has determined that the need for the section continues to exist but that it should be amended. The amendment is adopted pursuant to: Alcoholic Beverage Code 5.31, which grants authority to prescribe rules necessary to carry out the provisions of the Code; Alcoholic Beverage Code 5.53(a), which requires the commission to have a rule clearly defining the agency's complaint process; and Government Code , which requires each state agency to periodically review and consider for readoption each of its rules Resolution and Information on Complaints. (a) The commission investigates all complaints. The time and resources allocated to an investigation will be based on facts stated in the complaint. Complaints alleging conduct that presents a serious risk to the public health and safety will be given priority. (b) If an investigation results in a finding that a provision of the Texas Alcoholic Beverage Code (Code) or commission rules have been or may have been violated. the commission may proceed with an action to cancel, suspend, or refuse to issue a permit or license under Chapters 11 and 61 of the Code, and the complainant will be infonned if contact infonnation is provided and if the complainant requests to be infonned. ( c) If an investigation results in a finding that no violation of the Code or commission rules has occurred, the complainant will be informed of this result if contact information has been provided. (d) General information and the nature and disposition of complaints can be accessed on the Texas Alcoholic Beverage Commission (TABC) public website at ( e) The public can access the violation history of a license or permit issued by the commission on the TABC public website at (f) Information about a specific complaint against an individual or entity holding a license, permit or certificate issued by the commission may be obtained by filing a request under the Page 1 of 2

75 Texas Public Information Act (TPIA). Some information in a complaint or investigation of a complaint may not be subject to disclosure under the TPIA. Page 2 of 2

76 Attachment 12 Adopt Proposed Amendments to Rule 33.2, Application and Fee Payment Procedures

77 Agenda Item 16: Adopt Proposed Amendments to Rule 33.2, Application and Fee Payment Procedures The Texas Alcoholic Beverage Commission adopts without change the amendments to 33.2, relating to Application and Fee Payment Procedures, proposed in the April 10, 2015 issue of the Texas Register (40 TexReg 2059). The amendments reflect that all fees and surcharges for the issuance of permits and licenses are now payable directly to the commission and not to the county. Additionally, the amendments recognize that the application process for certificates is likewise subject to specification by the administrator, with payments due to the commission at the time of the application. No comments \Vere received by the commission. Section 33.2 was reviewed under Government Code which requires each state agency to periodically review and consider for readoption each of its rules. The commission has detennined that the need for the section continues to exist but that it should be amended. The amendments are adopted pursuant to: Alcoholic Beverage Code which grants authority to prescribe rules necessary to carry out the provisions of the Code; and Government Code , which requires each state agency to periodically review and consider for readoption each of its rules Application and Fee Payment Procedures. (a) Applications for licenses.,_ 8-ad pennits and certificates shall be made by an applicant in such a manner as may be directed by the administrator upon fom1s provided by the commission. (b) Each application shall include all infonnation required by the administrator to insure compliance with all applicable statutes and rules and regulations of the agency. ( c) Each applicant for g an original or renev, al license.,_ 6f permit or certificate p ovided for issued by the commission Alcoholic Be, etagc Code, shall submit with the application proof of the payment of all state fees, and surcharges. and couaty fees. if applicable, in accordance with the applicable provisions of the code and rules. Page 1 of 1

78 Attachment 13 Adopt Proposed Amendments to Rule 33.4, Manufacturer s Warehouse License Fee

79 Agenda Item 17: Adopt Proposed Amendments to Rule 33.4, Ylanufacturer's \Varehouse License Fee The Texas Alcoholic Beverage Commission adopts without change the amendments to 33.4, relating to Manufacturer's Warehouse License Fee. proposed in the April issue of the Texas Register ( 40 TexReg 2060). The amendments reflect that all fees and surcharges for the issuance of permits and licenses are now payable directly to the conunission and not to the county. o comments \Vere received by the commission. Section 33.4 was reviewed under Government Code , which requires each state agency to periodically reviev,r and consider for readoption each of its rules. The commission has detern1ined that the need for the section continues to exist but that it should be amended. The amendments are adopted pursuant to: Alcoholic Beverage Code 5.3 L which grants authority to prescribe rules necessary to carry out the provisions of the Code; and Government Code , which requires each state agency to periodically review and consider for readoption each of its rules Manufacturer's \Varehouse License Fee. (a) Each applicant for an original or renewal licensed warehouse under the Alcoholic Beverage Code, 62.13, known as a manufacturer's warehouse license, shall submit with the application p oo ar payment of all state fees:: and surchanzes and couaty fees, if applicable, in accordance with tfic Alcoholic Beverage Code and t (b) The annual state license fee for each manufacturer's warehouse license shall be $300. Page 1 of 1

80 Attachment 14 Adopt Proposed Amendments to Rule 33.33, Notification Requirements

81 Agenda Item 18: Adopt Proposed Amendments to Rule 33.33, Notification Requirements The Texas Alcoholic Beverage Commission adopts without change the amendments to relating to Notification Requirements, proposed in the April 10, 2015 issue of the Texas Register ( 40 TexReg 2060). The section as amended requires the holder of a license, pem1it, or certificate to maintain a current address on file with the commission. The section as amended requires that a change to a mailing address must be filed with the commission within seven business days of the change. By deleting the commission's general mailing address in subsection (b)(1), the commission recognizes that the change of address notifications may be filed by license and permit holders at the commission's district offices, as,vell as at the commission's headquarters. Certificate holders will continue to file changes of address by mail with the Seller/Sener Training Division at the commission's headquarters. Subsection (c) clarifies that notices sent by the commission will be sent to the last knmvn mailing address that has actually been filed with the commission. No comments were received by the commission. Section was reviewed under Government Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has determined that the need for the section continues to exist but that it should be amended. The amendments are adopted pursuant to: Alcoholic Beverage Code 5.31, which grants authority to prescribe rules necessary to carry out the provisions of the Code; and Government Code , which requires each state agency to periodically review and consider for readoption each of its rules Notification Requirements. (a) A person who holds a license, pem1it or certificate issued by the Alcoholic Beverage Commission shall maintain a current mailing address r.d telephone number and address on file with the division that has issued the license, pem1it or certificate. (b) A person who holds a license, permit, or certificate issued by the Alcoholic Beverage Commission shall file Sena a written notice of change of mailing address with ffi the Commission within seven (7) business days of the change. (1) /\ person v, ho holds a license or permit issued by the Commission shall file a ehange of address v,ith the Licensing Division at TA.BC. P.O. Box 13127, Austin, Texas P-1 A person who holds a certificate issued by the Commission shall file the a change of address with the Seller/Server Training Division at TABC, P.O. Box 13127, Austin, Texas (c) A notice sent to a person by the Alcoholic Beverage Commission shall be sent by first class mail to the last known mailing address of a person that is on file with the commission. Page 1 of 2

82 ( 1) A person notified by mail under this subsection is presumed notified on the third day after the date on which the notice is mailed. (2) This subsection does not apply to a notice required by Government Code Page 2 of 2

83 Attachment 15 Adopt Proposed Amendment to Rule 37.5, Population in Certain Counties

84 Agenda Item 19: Adopt Proposed Amendments to Rule 37.5, Population in Certain Counties The Texas Alcoholic Beverage Commission adopts without change the amendments to 37.5, relating to Population in Ce1iain Counties, proposed in the April 10, 2015 issue of the Texas Register (40 TexReg 2061), including changing the title of the section to Determining Population. Section 37.5 as amended eliminates references to specific rules, applies to all of the commission's rules, and adopts the wording of Code Construction Act (3). No comments were received by the commission. Section 37.5 was reviewed under Government Code , which requires each state agency to periodically review and consider for readoption each of its rules. The commission has detennined that the need for the section continues to exist but that it should be amended. The amendments are adopted pursuant to: Alcoholic Beverage Code which grants authority to prescribe rules necessary to carry out the provisions of the Code; and Government Code , which requires each state agency to periodically review and consider for readoption each of its rules Determining Population ir-c li--r-hes-. c..nd 69.02(b) of the Alcoholic Be,;erage Code. th) For purposes of 2.nv provision of the Alcoholic Beverage Code or the commission's rules that refers to g,._.-c population. it 6f a cour{:y shall be determined by the most recent last preceding federal decennial census. Page 1 of 1

85 Attachment 16 Adopt Proposed Amendments to Rule , On-Premises Promotions

86 Agenda Item 20: Adopt Proposed Amendments to Rule , On-Premises Promotions The Texas Alcoholic Beverage Commission adopts without change the amendments to , relating to On-Premises Promotions, proposed in the February 13, 2015 issue of the Texas Register ( 40 TexReg 677). The amendments apply the same public safety restrictions of the section, which \Vere previously applicable only to retailers, to all permittees and licensees who are authorized to sell or serve alcoholic beverages for on-premises consumption. In addition to retailers, the Legislature has authorized on-premises consumption by wineries (see Alcoholic Beverage Code (Code) 16.0l(a)(S)(A) and (a)(8)), certain distillers (see Code 14.0l(a)(7) and (8), 14.04(a) and 14.0S(a)), certain brewers (see Code ) and certain manufacturers (see Code ). Also, some members of the manufacturing tier are authorized to conduct samplings or dispense alcoholic beverages for free where alcoholic beverages are served rather than sold for on-premises consumption. The commission received comments from Texans Standing Tall stating that the proposed amendments, that are now adopted, are consistent with Alcohol Policy Institute policies regarding price-related promotions, which are considered best practices to combat underage drinking and binge drinking. The amendments are adopted pursuant to Alcoholic Beverage Code 5.31, which grants authority to prescribe rules necessary to carry out the provisions of the Code On-Premises Promotions. (a) This rule is adopted to prohibit those practices by on-premise i.:ta:l establislunents that are reasonably calculated to result in excessive consumption of alcoholic beverages by consumers. Such practices constitute a manner of operation contrary to the public welfare, health and safety of the people in violation of l 1.61(b)(7) and 61.71(a)(l 7) of the Alcoholic Beverage Code. (b) Excessive consumption of alcoholic beverages shall be detem1ined by the standard of public intoxication articulated in of the Penal Code. ( c) Licensees Reta:! licensees and permittees authorized to sell or serve alcoholic beverages for on-premises consumption may not: (1) serve, sell, or offer to serve or sell, two or more open containers of alcoholic beverages at a price less than the number of containers actually sold or served; (2) increase the volume of alcohol contained in a drink without increasing proportionally the price thereof; (3) serve or offer to serve more than one free alcoholic beverage to any identifiable segment of the population during the course of one business day. Licensees and permittees may, however, without prior advertising, give one free alcoholic beverage to individual consumers in celebration of birthdays, anniversaries or similar events; Page 1 of 2

87 ( 4) sell, serve, or offer to sell or ser v e an undetermined quantity of alcoholic beverages for a fixed price or ' all you can drink'' basis; (5) sell, ser v e, or offer to sell or ser\'e. alcoholic beverages at a reduced price to those consumers paying a fixed "buy in price; (6) sell, serve, or offer to sell or serve, alcoholic beverages at a price contingent on the amount of alcoholic beverages consumed by an individual; (7) reduce drink prices after 11 :00 p.m.; (8) sell. serw or offer to sell or serve more than two drinks to a single consumer at one time; (9) impose an entry fee, cover or door charge for the purpose of recovering financial losses incurred by the licensee or permittee because of reduced or low drink prices; (10) conduct, sponsor or participate in, or allow any person on the licensed premises to conduct, sponsor or participate in, any game or contest to be detem1ined by the quantity of alcoholic beverages consumed by an individual or group, or \\ here alcoholic beverages or reduced price alcoholic beverages are awarded as prizes; (11) engage in any practice, whether listed in this rule or not, that is reasonably calculated to induce consumers to drink alcoholic beverages to excess, or that would impair the ability of the licensee or permittee to monitor or control the consumption of alcoholic beverages by consumers. (d) The provisions of subsections (c)(i) through (c)(7) do not apply where: ( 1) the pem1ittee or licensee has entered into an agreement under the terms of which all or a portion of the licensed premises are utilized for a private party or a meeting of a particular organization; or (2) a caterer's or other temporary pennit or license is used for a private party or a meeting of a particular organization. ( e) Notwithstanding the provisions of ( c )(1) through ( c )(7) of this rule. licensees and pem1ittees may: (1) offer free or reduced-price food or entertainment at any time. provided the offer is not based on the purchase of an alcoholic beverage; (2) include alcoholic beverages as part of a meal or hotel/motel package; (3) sell, serve or deliver,vine by the bottle to individual consumers during the sale or service of a meal to the consumer: ( 4) sell, serve or deliver alcoholic beverages in pitchers. carafes, buckets or similar containers to two or more consumers at one time. Page 2 of 2

88 Attachment 17 Re-Adopt Without Change Rule 35.41, Term Defined

89 Agenda Item 21: Re-Adopt \Vithout Change Rule 35.41, Terms Defined The Texas Alcoholic BeYerage Commission files notice of the completion of its review and readoption of 16 Texas Administrative Code 35.41, Tem1s Defined. This review and readoption \\-as conducted in accordance with Texas Government Code As a result of its review, the commission detem1ined that the reasons for adopting the rule continue to exist, that the rule is not obsolete, and that the rule reflects current legal and policy considerations, and current procedures, of the Commission. The commission received no comments on the proposed rule review, which was published in the April 10, 2015, issue of the Texas Register ( 40 TexReg 2101 ) Terms Defined. The follo\ving words and tenns, when used in this chapter, shall have the following meanings, except when the context clearly indicates otherwise. (a) Lewd or vulgar entertainment or acts-any sexual offenses contained in the Texas Penal Code, Chapter 21 or any public indecency offenses contained in the Texas Penal Code, Chapter 43. (See Texas Alcoholic BeYerage Code, (6).) (b) Narcotic-Any substance defined in the Texas Controlled Substances Act, (5),(6),(7), or (26). (See Texas Alcoholic Beverage Code (9).) Page 1 of 1 --

90 Attachment 18 Re-Adopt Without Change Rule 37.2, Contested Case

91 Agenda Item 22: Re-Adopt \Vithout Change Rule 37.2, Contested Case The Texas Alcoholic Beverage Conunission files notice of the completion of its review and readoption of 16 Texas Administrative Code Contested Case. This review and readoption was conducted in accordance with Texas Government Code As a result of its review, the commission determined that the reasons for adopting the rule continue to exist. that the rule is not obsolete, and that the rule reflects current legal and policy considerations, and current procedures, of the Commission. The conunission received no comments on the proposed rule review, which was published in the April 10, 2015, issue of the Texas Register (40 TexReg 2101) Contested Case. (a) This rule relates to any contested case under the Alcoholic Beverage Code (Code) where notice and hearing are required, or an opportunity for public participation is provided under the Code. (b) All notices and pleadings in a contested case shall comply with the provisions of Texas Government Code. Chapter 2001, Subchapters C, D, and F and the rules of procedure adopted by the State Office of Administrative Hearings in Title 1. Texas Administrative Code, Chapter 155. Page 1 of 1

92 Attachment 19 Approval to Withdraw Proposed Repeal of Current Rule , Rebates, Coupons and Premium Stamps

93 Agenda Item 23: Approval to \Vithdraw Proposed Repeal of Current Rule , Rebates, Coupons and Premium Stamps He1 e is the text of the current rule. Staff recommends withdrawing the proposed repeal, which,vould leave the current ru!e in effect Rebates, Coupons and Premium Stamps. (a) It shall be unlawful for the holder of a license or permit to give or offer to give to any person premium stamps or any other type of inducement with the purchase of alcoholic beverages. The term "premium stamp" is hereby declared to include but not be limited to the following: exchange stamps, trade stamps, green stamps, gold stamps, and cash register premium tapes. (b) No holder of a manufacturing, wholesale, or retail level license or pem1it may give any rebate or coupon redeemable by the public for the purchase of or for a discount on the purchase of any alcoholic beverage. ( c) No holder of a manufacturing, wholesale, or retail level license or permit may offer or give away with or without the purchase of any alcoholic beverage, a coupon redeemable for a rebate, cents-off or for any free non-alcoholic beverage item or product. A retailer, manufacturer, or wholesaler may, however, offer a discount, rebate, or cents-off coupon on any non-alcohol product except non-alcohol malt beverages and wines that he sells if it does not require the purchase of any alcoholic beverage. (d) None of the above prohibits any retailer from offering a complimentary drink or drink discount as part of a meal package, a hotel package or any airline frequent flier program or in conjunction with any airline ticket purchase, provided, however, that no discount or complimentary beverage shall be brand identified or redeemed by a wholesaler or manufacturer. Page 1 of 1

94 Attachment 20 Approval to Withdraw Proposed New Rule , Coupons and Loyalty Programs

95 Agenda Item 24: Approval to \Vithdraw Proposed New Rule , Coupons and Loyalty Programs Here is the text of the proposed rule that Staff recommends be ;Yi th drawn: Coupons and Loyalty Programs (a) This section relates to Alcoholic Beverage Code 1.03, 5.31, and For purposes of this section, the term coupon includes rebates. (b) The holder of a manufacturing or wholesale tier license or permit may not offer a coupon redeemable by consumers or, except as provided in subsection (d) offer a loyalty program to consumers, for the purchase of or for a discount on the purchase of an alcoholic beverage. ( c) The holder of a manufacturer or wholesale tier license or permit may not directly or indirectly reimburse a retailer for a coupon or a loyalty program. (d) Loyalty Programs Offered by a Manufacturer Authorized to Sell Directly to Consumers ( l) The holder of a manufacturing tier license or pennit who is authorized to sell directly to consumers may offer a loyalty program subject to the conditions in this subsection. (2) The loyalty program may award consumers free alcoholic beverages and nonalcoholic be\'erage products, as well as discounts on the purchase of alcoholic be\'erages and non-alcoholic beverage products. (3) The loyalty program may have a point accrual and redemption component in addition to discounts. Accrued points may be redeemed on alcoholic beverages or on nonalcoholic beverage products. ( 4) If the license or permit holder is authorized to sell alcoholic beverages for onpremises consumption, the license or pennit holder may only redeem one free or discounted alcoholic beverage drink per consumer per day. ( e) Coupons Offered by a Retailer (1) A retailer may offer a coupon redeemable by consumers for the purchase of or for a discount on the purchase of alcoholic beverages or non-alcoholic beverage products. A retailer who is authorized to sell alcoholic beverages for on-premises consumption is subject to the conditions in paragraph 2 of this subsection. Page 1 of 2

96 (2) A retailer may redeem only one coupon per consumer per day for on-premises consumption of alcoholic beverages and a coupon may not be valid for more than one free or discounted alcoholic beverage for on-premises consumption per consumer per day. (f) Loyalty Programs Offered by a Retailer ( 1) A retailer may offer a loyalty program subject to the conditions in this subsection. (2) The loyalty program may award consumers free alcoholic beverages and nonalcoholic beverage products, as well as discounts on the purchase of alcoholic beverages and non-alcoholic beverage products. (3) The loyalty program may have a point accrual and redemption component in addition to discounts. Accrued points may be redeemed on alcoholic be\ erages or on nonalcoholic beverage products. ( 4) If the retailer is authorized to sell alcoholic beverages for on-premises consumption, the retailer may only redeem one free or discounted alcoholic beverage drink per consumer per day. Page 2 of 2

97 CERTIFICATION REGULAR COMMISSION MEETING 10:00 a.m. May 28, Mesa Drive Austin, Texas 78731

98 STATE OF TEXAS COUNTY OF TRAVIS This certifies that the attached is a true copy of the proceedings of the Texas Alcoholic Beverage Commission meeting held on May 28, Sherry Cook Executive Director Sworn and subscribed before me this the 23 nd day of June Gloria Darden Reed Notary in and for Travis County P.O. Box Austin, Texas (512) An Equal Opportunity Employer