Proposed Rules Title 16

TITLE 16. ECONOMIC REGULATION

PART 3. TEXAS ALCOHOLIC BEVERAGE COMMISSION

CHAPTER 33. LICENSING

The Texas Alcoholic Beverage Commission (TABC, agency, or commission) proposes amendments to §§33.5, 33.72, and 33.78; and new §§33.1 and 33.80. The repeal of §33.52 is proposed in a separate, simultaneous proposal.

Background and Summary

The commission proposes new §33.1 to provide in rule the commission's standards for timeliness of filings and to combine the content of current §33.52, regarding how to count days when a rule includes a period of time. A rule related to timely filing is necessitated by the new Alcohol Industry Management System (AIMS), which allows filing of documents at any time through an internet-based portal.

The commission proposes to amend §33.5 to conform with the statutory changes made by S.B. 911 (2021 R.S.), which provides an additional mechanism to obtain a Food and Beverage Certificate, and to clarify language existing in the current rule. Holders of a mixed beverage permit or a private club permit must also hold a Food and Beverage Certificate to engage in delivery and to-go sales of alcoholic beverages. Additionally, areas within certain counties (e.g. Dallas County) have a local option election status wherein holding a Food and Beverage Certificate is a prerequisite to obtaining a permit allowing the sale of liquor for on-premise consumption. Prior to S.B. 911's passage, businesses could not qualify for a Food and Beverage Certificate unless, inter alia, the receipts from the sale of alcoholic beverages at the location are 60% or less of the location's total receipts. S.B. 911 allows businesses that meet the newly added definition of a restaurant (see Tex. Alco. Bev. Code §1.04(29) (effective Jan. 1, 2022)) to qualify for a Food and Beverage certificate irrespective of the alcohol sales at the location. Going forward, businesses that do not meet the required alcohol-sales threshold, may qualify if the business (1) operates its own permanent food service facility with commercial cooking equipment on its premises; and (2) prepares and offers to sell multiple entrees for consumption on or off the premises. Lastly, the commission's proposed amendments clarify various statutory terms used in the rule by adding practical examples used by the commission's license and permit holders.

Rules for events at temporary locations were adopted in late 2020 and went into effect on Sept. 1, 2021. After their adoption, commission staff noted that §§33.72 and 33.78 were overbroad. The commission proposes amendments to §§33.72 and 33.78 to narrow their applicability. Moreover, stakeholders raised concerns about the impacts of the two-day minimum duration of a temporary event authorization in certain circumstances. The commission proposes to eliminate the minimum duration.

The commission proposes new §33.80 to state clearly in rule that mixed beverage permit holders may continue to host events at temporary locations, subject to certain limitations. This is consistent with current commission policy and does not represent a change for industry members.

Amended §33.5 is proposed to become effective on January 1, 2022, concurrent with the effective date of the underlying statutory amendments. All other new and amended rules are proposed to become effective 20 days after their submission to the Texas Register for adoption.

Section by Section Discussion

§33.1 General Provisions

The commission proposes new §33.1 to provide clear rules related to submission deadlines applicable to all submissions under Chapter 33.

§33.5 Food and Beverage Certificate

§33.72 Term of Authorization; Annual Limitation on Authorizations

The commission proposes to amend §33.72 to remove the two-day minimum duration for a temporary event authorization and narrow the category of license and permit holders to whom the 10-event limit on events at a temporary location applies and clarify that a venue need not hold the Public Entertainment Facility designation to qualify for exemption.

§33.78 Nonprofit Entity Temporary Events

The commission proposes to amend §33.78 to exempt certain nonprofit auction events from the requirement to obtain commission authorization and associated late fees.

§33.80 Temporary Events Authorized under a Mixed Beverage Permit

The commission proposes new §33.80 to clarify that mixed beverage permit holders may still hold events at temporary locations under the authority of their mixed beverage permit, subject to this rule. This is not a change to the authorizations under a mixed beverage permit but is proposed to be added in rule to address confusion resulting from the implementation of other new rules related to events at temporary locations.

Fiscal Note: Costs to State and Local Government

Shana Horton, Rules Attorney, has determined that for each year of the first five years that the proposed new and amended rules will be in effect, including proposed amendments to §33.5 necessitated by S.B. 911 (2021), they are not expected to have a significant fiscal impact upon the agency. Implementation will be performed using existing agency resources. There are no foreseeable economic implications anticipated for other units of state or local government due to the proposed new and amended rules. The rules do not impact fees or fines that can be collected by another state or local government nor do they impose additional regulatory obligations on other units of government. Implementation of changes necessitated by H.B. 1545 (2019) was previously funded by the Texas Legislature.

Rural Communities Impact Assessment

The proposed new rules and amendments will not have any material adverse fiscal or regulatory impacts on rural communities. Likewise, the proposed rules will not adversely affect a local economy in a material way. The new and amended rules apply statewide and do not impact rural communities in any manner different from urban ones or any local economy in a manner different from other local economies or the state's economy.

Small Business and Micro-Business Assessment/Flexibility Analysis

No material fiscal implications are anticipated for small or micro-businesses due to the proposed new and amended rules. Therefore, no Small Business and Micro-Business Assessment/Flexibility Analysis is required.

Takings Impact Assessment

The proposed amendments do not affect a taking of private real property, as described by Attorney General Paxton's Private Real Property Rights Preservation Act Guidelines. The rulemaking would impose no burdens on private real property because it neither relates to, nor has any impact on, the use or enjoyment of private real property and there is no reduction in value of property as a result of this rulemaking.

Public Benefits and Costs

Ms. Horton has determined that for each year of the first five years that the proposed new and amended rules would be in effect, the public would benefit from the updated rules conforming to statutory changes. Their adoption will ensure the continued funding of the activities of the commission that protect public health and safety and the Texas economy. The proposed new and amended rules would also decrease confusion and lead to greater compliance with the agency's rules. There is no increase in costs to the public.

Government Growth Impact Statement

This paragraph constitutes the commission's government growth impact statement for the proposed new and amended rules. The analysis addresses the first five years the proposed new and amended rules would be in effect. The proposed new and amended rules neither create nor eliminate a government program. They do not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the proposed new and amended rules requires neither an increase nor a decrease in future legislative appropriations to the commission.

Comments on the proposed new and amended rules may be submitted in writing to Shana Horton, Rules Attorney, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127, by facsimile transmission to (512) 206-3498, attention: Shana Horton, or by email to rules@tabc.texas.gov. Written 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 rules on October 26, 2021, at 10:00 a.m. The commission has designated this hearing as the appropriate forum to make oral comments under Government Code §2001.029. DUE TO PUBLIC HEALTH CONCERNS RELATED TO COVID-19, THIS HEARING WILL BE HELD BY VIDEOCONFERENCE ONLY. Interested persons should visit the TABC's public website prior to the meeting date to receive further instructions or call Shana Horton, Rules Attorney, at (512) 206-3451.

SUBCHAPTER A. APPLICATIONS

16 TAC §33.1, §33.5

New §33.1 is proposed pursuant to the commission's authority §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code. Amendments to §33.5 are proposed to conform to changes to the Code made by S.B. 911 (2021), which will become effective on January 1, 2022.

The proposed new and amended rules do not impact any other current rules or statutes.

§33.1.General Provisions.

(a) When used in this chapter:

(1) the word "days" refers to calendar days, unless otherwise specified; and

(2) a "business day" is any day that is not a Saturday, a Sunday, a state or federal holiday (unless the commission is required to be open for business), or a standard Federal Reserve bank holiday.

(b) A "day" or "business day" ends at:

(1) 5:00 p.m. Central Time for submissions by hand-delivery to a commission office or by e-mail; and

(2) 11:59 p.m. Central Time for submissions through the commission's internet-based application information management system.

(d) When computing periods of time prescribed or allowed in subchapter D of this chapter:

(1) the day of the act, event, or default from which the designated time period begins to run is not counted; and

(2) the last day of the time period is counted, unless it is not a business day as defined by subsection (a)(2) of this section, in which case the time period will end on the next business day.

§33.5.Food and Beverage Certificate.

(a) This rule relates to §§25.13, 28.18, 32.23 and 69.16 of the Texas Alcoholic Beverage Code.

(b) The following words and terms, when used in this section, shall have the following meaning unless the context clearly indicates otherwise:

(1) Entree--[~~main dish or~~] course of a meal that may include an appetizer, small plate, main dish, dessert or other similar food item.

(2) Food service--the cooking, preparing, or assembling of food on the location available [~~primarily~~] for consumption at the location. Commercially pre-packaged items purchased off of the location which require no cooking or assembly do not constitute food service under this section.

(3) Food service facilities--a designated permanent portion of the licensed location[~~, including commercial cooking equipment,~~] where food is stored and prepared [~~primarily~~] for consumption at the location.

(4) Location--the designated physical address of a premises, but also including all areas at that address where the license or permit holder may sell, serve or deliver alcoholic beverages for immediate consumption at the address, regardless of whether some of those areas are occupied by other businesses, as long as those businesses are contiguous.

(5) Premises--the designated area at a location that is licensed by the commission for the sale, service, or delivery of alcoholic beverages.

(6) Restaurant--a business that:

(A) operates its own permanent food service facility with commercial cooking equipment on its premises; and

(B) prepares and offers to sell multiple entrees for consumption on or off the premises.

(c) An applicant is qualified for a food and beverage certificate if the following conditions, in addition to other requirements, are satisfied:

(1) multiple entrees are available to customers; [~~and~~]

(2) permanent food service facilities are maintained at the location; and [.]

(3) either:

(A) the receipts from the sale of alcoholic beverages by the license or permit holder at the location are 60 percent or less of the total receipts from the location; or

(B) the facility meets the definition of Restaurant under subsection (b)(6) of this section.

(d) The hours of operation for sale and service of food and of alcoholic beverages are the same except that food may be sold or served before or after the legal hours for sale of alcoholic beverages.

(e) If the applicant is a hotel that maintains separate area restaurants, lounges or bars, food service facilities must exist for each of the designated licensed premises.

(f) An applicant for an original food and beverage certificate shall furnish the following, as well as any other information requested by the commission to ensure compliance:

(1) the menu or, if no menu is available, a listing of the food and beverage items;

(2) hours of operation of food service and hours of operation for sale or service of alcoholic beverages;

(3) if qualifying under subsection (c)(3)(A) of this section, sales data (including complimentary drinks, as recorded pursuant to subsection (k)(3) of this section) or, if not available, a projection of sales. The sales data or projection of sales should include sufficient breakdown of revenues of food, alcoholic beverages, and all other [~~major~~] sales categories at the location (e.g., tickets, merchandise, retail goods);

(4) if qualifying under subsection (c)(3)(B) of this section, a list [~~listing~~] of commercial cooking equipment used in food service; and

(5) copies of floor plans of the location indicating the licensed premises and permanent areas devoted primarily to [~~the preparation and service of~~] food service.

(g) Applicants for renewal of food and beverage certificates shall submit sales data described in subsection (k) of this section. The commission may request additional information or documentation to indicate that the licensed location has permanent food service facilities for the preparation and service of multiple entrees.

(h) The commission may review the operation at the location to determine that food service with food service facilities for the preparation and service of multiple entrees is maintained. In doing so the commission may review such items as required in the original or renewal application as well as advertising, promotional items, changes in operations or hours, changes in floor plans, prominence of food items on the menu as compared to alcoholic beverages, name of the business at the location, number of transactions with food components, copies of city or county permits or certificates relating to the type of business operation, and any other item deemed necessary or applicable.

(i) Failure to provide documentation requested or accurately maintain required records is prima facie evidence of non-compliance.

(j) In verifying that food service is being maintained at the location, the commission may examine all books, papers, records, documents, supplies and equipment of the certificate holder.

(k) The following recordkeeping requirements apply to certificate holders:

(1) records must be maintained to reflect separate totals for alcoholic beverage sales or service, food sales, and all other [~~major~~] sales categories at the location that, when combined, make up the location's total sales;

(2) purchase invoices must be maintained to reflect the total purchases of alcoholic beverages, food, and all other [~~major~~] purchase categories at the location;

(3) complimentary alcoholic beverages must be recorded and included in the total alcoholic beverage sales as if they were sold and clearly marked as being complimentary; and

(4) all records must be maintained for four years and made available to authorized representatives of the commission upon [~~reasonable~~] request.

(l) In considering alcoholic beverage sales, the dollar value of complimentary drinks shall be added to total sales or service of alcoholic beverages in determining the percentage of alcoholic beverage sales or service from [on] the licensed premises.

(m) In determining the permanent food service facilities requirement for businesses qualifying under subsection (c)(3)(B) of this section, the gross receipts of all business entities sharing the location [~~(as identified in the original or a supplemental application)~~] will be considered. For audit purposes, it shall be the responsibility of the food and beverage certificate holder to provide financial and accounting records related to food, alcohol, and other major sales categories of all business entities sharing the location. For audit purposes, if such information that is provided is deemed insufficient to determine if a license or permit holder qualifies for issuance of a food and beverage certificate at the location, the computation and determination of the percentage of alcohol sales or service fees to total gross receipts at the licensed location may be based upon any available records of information.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103770

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER E. EVENTS AT A TEMPORARY LOCATION

16 TAC §§33.72, 33.78, 33.80

Amendments to §§33.72 and 33.78 and new 33.80 are proposed pursuant to Alcoholic Beverage Code §§16.12(c), 25.15(c), 28.19(c), 30.08, 32.25(d), and 69.18(c), as amended effective September 1, 2021; and under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new and amended rules do not impact any other current rules or statutes.

§33.72.Term of Authorization; Annual Limitation on Authorizations.

~~[(a) All event authorizations shall be effective for a minimum of two consecutive days.]~~

(a) [~~(b)~~] Temporary Event Approvals and File and Use Notifications shall be effective for no more than four consecutive days.

(b) [c] A person or entity may use a Temporary Event Approval or File and Use Notification at the same location for no more than ten events in a calendar year if the person or entity that will hold the authorization has an ownership interest in the real property or a portion of it or has a lease for its use of the location. For purposes of this rule, a lease is defined as a contractual agreement by which one party conveys an estate in property to another party, for a limited period, subject to conditions, in exchange for something of value, but retains ownership. The ten-event limitation does not apply to a location that meets the definition of a Public Entertainment Facility in Alcoholic Beverage Code §108.73, regardless of whether it holds that designation.

(c) [~~(d)~~] A Nonprofit Entity Temporary Event Permit shall be effective for no more than ten consecutive days unless the executive director or the executive director's designated representative, on the basis of a case-by-case review of the specific situation, grants additional time.

(d) [~~(e)~~] Upon written request, the executive director or the executive director's designated representative may make an exception to the limitations of subsections (a) - (c) [~~through (d)~~] of this section on a case-by-case basis. An exception request will be granted or denied in writing.

(e) [~~(f)~~] Authorization for an event under this subchapter automatically terminates upon issuance of a two-year license or permit for the event location, regardless of the term of the temporary event authorization.

(f) [~~(g)~~] The effective dates of an event authorization under this subchapter must cover the period in which alcoholic beverages will be delivered or stored in addition to the event itself.

(g) [~~(h)~~] A temporary permit or license expires on the date indicated on the license or permit or on the same date as the primary permit, whichever occurs earlier.

§33.78.Nonprofit Entity Temporary Events.

(a) A Nonprofit Entity Temporary Event Permit shall only be issued to a nonprofit entity as defined by Alcoholic Beverage Code §30.01.

(b) An application for a Nonprofit Entity Temporary Event Permit shall be made on forms provided by the commission and shall be signed and sworn to by the applicant.

(c) The requestor shall e-mail the completed Nonprofit Entity Temporary Event Permit application forms to the Events email address for the TABC Region in which the event will be held.

(d) The applicant shall remit payment of fees at the time the application is filed. The fee for a Nonprofit Entity Temporary Event Permit is $50 per day.

(e) In addition to the application forms, other documents related to the event that may be required include a letter from the property owner, sponsorship agreements, promoter agreements, concession agreements, management agreements, diagrams, site maps, local governmental authorization, and any other documents needed to determine qualification under the Alcoholic Beverage Code.

(f) If the event is approved, the commission shall issue to the applicant a Nonprofit Entity Temporary Event Permit showing on its face the effective dates of the permit.

(g) Permit holders may sell any alcoholic beverage authorized by law [~~allowed~~] to be sold where the event is to be held.

(h) Permit holders must purchase distilled spirits for Nonprofit Entity Temporary Events from a local distributor permit holder.

(i) A nonprofit entity is not limited in the number of events it may hold under this section in a calendar year, except for certain events in dry areas as provided by Alcoholic Beverage Code §30.09.

(j) Events in dry counties must comply with Alcoholic Beverage Code §30.09.

(k) Auction-only Events.

(1) Subsections (d) - (h) of this section do not apply to a Nonprofit Temporary Event at which alcoholic beverages are auctioned but not otherwise sold or served to a consumer.

(2) Events under this subsection do not require prior approval and are not subject to late fees.

§33.80.Temporary Events Authorized Under a Mixed Beverage Permit.

(a) The holder of a mixed beverage permit may hold an event at a temporary location subject to all rules applicable to the mixed beverage permit.

(b) An event under this section may be authorized by a File and Use Notification if it meets the requirements of 16 TAC §33.71(a) of this subchapter, or by a Temporary Event Approval.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103771

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

CHAPTER 33. LICENSING

SUBCHAPTER D. APPLICATION REVIEW AND PROTESTS

16 TAC §33.52

The Texas Alcoholic Beverage Commission (TABC, agency, or commission) proposes the repeal of 16 Texas Administrative Code §33.52. This rule is being readopted with amendments at a different location in a separate, simultaneous rule proposal.

Background and Summary of Basis for the Proposed Rules

The agency has proposed a new rule §33.1 to contain provisions related to requirements related to timeliness of filings. Because current §33.52 is a timing-related provision, it is proposed to be incorporated into new §33.1 simultaneously with this proposal for repeal, in a separate rulemaking.

The repeal is proposed pursuant to the commission's general powers and duties under §5.31 of the Code.

Fiscal Note: Costs to State and Local Government

Shana Horton, Rules Attorney, has determined that for each year of the first five years that the proposed repeal will be in effect, it is not expected to have a significant fiscal impact upon the agency. There are no foreseeable economic implications anticipated for other units of state or local government due to the proposed repeal. The content of the repealed rule is proposed to be simultaneously reincorporated into Chapter 33 in another rule. The proposed repeal will have no impact on agency resources. The proposed repeal does not impact other units of state and local government.

Rural Communities Impact Assessment

The proposed repeal will not have any material adverse fiscal or regulatory impacts on rural communities. The repeal applies statewide and has the same effect in rural communities as in urban communities. Likewise, the proposed repeal will not adversely affect a local economy in a material way.

Small Business and Micro-Business Assessment/Flexibility Analysis

No material fiscal implications are anticipated for small or microbusinesses due to the proposed repeal. Therefore, no Small Business and Micro-Business Assessment/Flexibility Analysis is required.

Takings Impact Assessment

The proposed repeal does not affect a taking of private real property, as described by Attorney General Paxton's Private Real Property Rights Preservation Act Guidelines. The repeal would impose no burdens on private real property because it neither relates to, nor has any impact on, the use or enjoyment of private real property and there is no reduction in value of property as a result of this rulemaking.

Public Benefits and Costs

Ms. Horton has determined that for each year of the first five years that the proposed repeal would be in effect, the public would benefit from the reorganization of Chapter 33 of the commission's rules to make it more logical and concise. There is no increase in costs to the public.

Government Growth Impact Statement

This paragraph constitutes the commission's government growth impact statement for the proposed repeal. The analysis addresses the first five years the proposed repeal would be in effect. The proposed repeal neither creates nor eliminates a government program. The proposed repeal does not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the proposed repeal requires neither an increase nor a decrease in future legislative appropriations to the commission. The proposed repeal is not expected to result in a significant change in fees paid to the agency. The proposed repeal is not anticipated to have any material impact on the state's overall economy.

The proposed repeal does not create any new regulations. The proposed repeal has no impact on existing regulation. The proposed repeal has no impact on the number of individuals subject to the rule's applicability.

Comments on the proposed repeal may be submitted in writing to Shana Horton, Rules Attorney, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127, by facsimile transmission to (512) 206-3498, attention: Shana Horton, or by email to rules@tabc.texas.gov. Written 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 repeals on October 26, 2021, at 10:00 a.m. The commission has designated this hearing as the appropriate forum to make oral comments under Government Code §2001.029. DUE TO PUBLIC HEALTH CONCERNS RELATED TO COVID-19, THIS HEARING WILL BE HELD BY VIDEOCONFERENCE ONLY. Interested persons should visit the TABC's public website prior to the meeting date to receive further instructions or call Shana Horton, Rules Attorney, at (512) 206-3451.

This repeal is proposed pursuant to the commission's authority under §5.31 of the Code to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed repeal does not impact any other current rules or statutes.

§33.52.Computation of Time.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103754

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

CHAPTER 35. ENFORCEMENT

SUBCHAPTER A. TRANSPORTATION OF LIQUOR

16 TAC §§35.1 - 35.3, 35.5, 35.6

The Texas Alcoholic Beverage Commission (TABC, agency, or commission) proposes the repeal of 16 Texas Administrative Code §§35.1, 35.2, 35.3, 35.5, and 35.6. These rules are being readopted with amendments in chapter 41 of the commission's rules in a separate, simultaneous proposal.

Background and Summary of Basis for the Proposed Repeals

The commission identified these five rules in chapter 35, Enforcement, as more appropriately included in chapter 41, Auditing, due to their content. Moving the rules to a more logical chapter will assist users of the rules in locating rules that apply to their circumstances. Simultaneously with this proposal for repeal, the content of these rules is proposed to be incorporated into chapter 41 in a separate rulemaking.

The repeals are proposed pursuant to the commission's general powers and duties under §5.31 of the Code.

Fiscal Note: Costs to State and Local Government

The contents of the repealed rules are proposed to be simultaneously reincorporated into chapter 41 of the commission's rules in a separate rule proposal. Therefore, Shana Horton, Rules Attorney, has determined that for each year of the first five years that the proposed repeals will be in effect, they are not expected to have a significant fiscal impact upon the agency or its resources. Likewise, there are no foreseeable economic implications or other impacts anticipated for other units of state or local government due to the proposed repeals.

Rural Communities Impact Assessment

The contents of the repealed rules are proposed to be simultaneously reincorporated into chapter 41 of the commission's rules in a separate rule proposal. Therefore, the proposed repeals will not have any material adverse fiscal or regulatory impacts on rural communities. Likewise, the proposed repeals will not adversely affect a local economy in a material way.

Small Business and Micro-Business Assessment/Flexibility Analysis

No material fiscal implications are anticipated for small or microbusinesses due to the proposed repeals. Therefore, no Small Business and Micro-Business Assessment/Flexibility Analysis is required.

Takings Impact Assessment

The proposed repeals do not affect a taking of private real property, as described by Attorney General Paxton's Private Real Property Rights Preservation Act Guidelines. The repeals would impose no burdens on private real property because they neither relate to, nor have any impact on, the use or enjoyment of private real property and there is no reduction in value of property as a result of the repeals.

Public Benefits and Costs

Ms. Horton has determined that for each year of the first five years that the proposed repeals would be in effect, the public would benefit from the relocation of the rules to a more logical chapter to assist users of the rules in locating rules that apply to their circumstances. There is no increase in costs to the public.

Government Growth Impact Statement

This paragraph constitutes the commission's government growth impact statement for the proposed repeal. The analysis addresses the first five years the proposed repeals would be in effect. The proposed repeals neither create nor eliminate a government program. The proposed repeals do not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the proposed repeals requires neither an increase nor a decrease in future legislative appropriations to the commission. The proposed repeals are not expected to result in a significant change in fees paid to the agency. The proposed repeals are not anticipated to have any material impact on the state's overall economy.

The proposed repeals do not create any new regulations and have no impact on existing regulations. The proposed repeals have no impact on the number of individuals subject to the rule's applicability.

Comments on the proposed repeals may be submitted in writing to Shana Horton, Rules Attorney, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127, by facsimile transmission to (512) 206-3498, attention: Shana Horton, or by email to rules@tabc.texas.gov. Written comments will be accepted for 30 days following publication in the Texas Register.

These repeals are proposed pursuant to the commission's authority under §5.31 of the Code to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed repeals do not impact any other current rules or statutes.

§35.1.Transportation of Alcoholic Beverages by Package Stores and Wine Only Package Stores.

§35.2.Transportation of Imported Liquor.

§35.3.Vehicle Identification.

§35.5.Private Carrier Permit Requirements.

§35.6.Regional Forwarding Centers.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103756

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

CHAPTER 41. AUDITING

The Texas Alcoholic Beverage Commission (TABC, agency, or commission) proposes the repeal of 16 Texas Administrative Code §§41.1 - 41.3, 41.11, 41.18, 41.19, 41.20 - 41.23, 41.25, 41.27, 41.28, 41.30 - 41.32, 41.35, 41,38, 41.39, 41.41 - 41.46, 41.49, 41.51 - 41.57, 41.61, and 41.71. This list includes all current rules in Chapter 41 except for §41.48, which is not proposed to be repealed at this time. The repeals are part of a comprehensive reorganization and streamlining of Chapter 41, Auditing.

Background and Summary of Basis for the Proposed Repeals

In a separate rulemaking, the agency is proposing new and amended rules in Chapter 41 to reflect changes made by H.B. 1545, 86th Tex. Leg. R.S. (2019) and to improve the chapter overall as a part of the agency's regular cycle of comprehensive rule review. In that rulemaking, the provisions of rules in Chapter 41 have been moved or consolidated into other rule sections within the chapter, with the following exceptions: §41.16, Industrial Permits and Local Industrial Alcohol Manufacturer's Permits is repealed because industrial permits were eliminated by the Texas Legislature in H.B. 1545; §41.27 is repealed because the wine bottler's permit was also eliminated by H.B. 1545 and the provisions for winery permit holders already exist within Chapter 16 of the Alcoholic Beverage Code; §41.30 Sale and Delivery of Ale to Retail Premises and Private Clubs is no longer necessary because of the consolidation of beer and ale into a single malt beverage category by H.B. 1545; and §41.48 Changes Relating to Control, remains unchanged and is not impacted by these proposed repeals.

The repeals are proposed pursuant to Section 410 of H.B. 1545 and the commission's general powers and duties under §5.31 of the Code.

Fiscal Note: Costs to State and Local Government

Shana Horton, Rules Attorney, has determined that for each year of the first five years that the proposed repeals will be in effect, they are not expected to have a significant fiscal impact upon the agency. There are no foreseeable economic implications anticipated for other units of state or local government due to the proposed repeals. The proposed repeals will have no impact on agency resources. The proposed repeals do not impact other units of state and local government.

Rural Communities Impact Assessment

The proposed repeals will not have any material adverse fiscal or regulatory impacts on rural communities. The repeals apply statewide and have the same effect in rural communities as in urban communities. Likewise, the proposed repeals will not adversely affect a local economy in a material way.

Small Business and Micro-Business Assessment/Flexibility Analysis

No material fiscal implications are anticipated for small or microbusinesses due to the proposed repeals. Therefore, no Small Business and Micro-Business Assessment/Flexibility Analysis is required.

Takings Impact Assessment

The proposed repeals do not affect a taking of private real property, as described by Attorney General Paxton's Private Real Property Rights Preservation Act Guidelines. The repeals would impose no burdens on private real property because it neither relates to, nor has any impact on, the use or enjoyment of private real property and there is no reduction in value of property as a result of this rulemaking.

Public Benefits and Costs

Ms. Horton has determined that for each year of the first five years that the proposed repeals would be in effect, the public would benefit from the reorganization of Chapter 41 of the commission's rules to make it more logical and concise and to update it as necessitated by recent statutory changes. There is no increase in costs to the public.

Government Growth Impact Statement

This paragraph constitutes the commission's government growth impact statement for the proposed repeals. The analysis addresses the first five years the proposed repeals would be in effect. The proposed repeals neither create nor eliminate a government program. The proposed repeals do not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the proposed repeals requires neither an increase nor a decrease in future legislative appropriations to the commission. The proposed repeals are not expected to result in a significant change in fees paid to the agency. The proposed repeals are not anticipated to have any material impact on the state's overall economy.

The proposed repeals do not create any new regulations.

SUBCHAPTER A. SALES

16 TAC §§41.1 - 41.3

The repeals are proposed pursuant Section 410 H.B. 1545, 86th Tex. Leg. R.S. (2019), which eliminated certain authorizations, and §5.31 of the Code, which authorizes the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed repeals do not impact any other current rules or statutes.

§41.1.Sale to Lien Holders.

§41.2.Sale by Carrier.

§41.3.Sale after Cancellation or Expiration of License or Permit.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103760

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER B. EXPORTS OF LIQUOR

16 TAC §§41.11, 41.18, 41.19

The proposed repeals do not impact any other current rules or statutes.

§41.11.Record Requirements.

§41.18.Providing Retailer Samples: Distiller's and Rectifier's Permit.

§41.19.Providing Retailer Samples: Non-Resident Seller.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103761

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER C. RECORDS AND REPORTS BY LICENSEES AND PERMITTEES

16 TAC §§41.20 - 41.23, 41.25, 41.27, 41.28, 41.30 - 41.32, 41.35, 41.38, 41.39, 41.41 - 41.46, 41.49, 41.51 - 41.57

The proposed repeals do not impact any other current rules or statutes.

§41.20.Timely Filing of Reports.

§41.21.Industrial Permits and Local Industrial Alcohol Manufacturer's Permits.

§41.22.Compliance Reporting by License and Permit Holders.

§41.23.Basic General Records Required.

§41.25.Records and Invoice Requirements.

§41.27.Wine Processing.

§41.28.Sale and Delivery of Beer to Retail Premises and Private Clubs.

§41.30.Sale and Delivery of Ale to Retail Premises and Private Clubs.

§41.31.Excise Tax.

§41.32.Monthly Report of Distilled Spirits, Wines, Ale and Malt Liquor, and Beer.

§41.35.Bottling Record.

§41.38.Carrier Report.

§41.39.Bonded Warehouse Report.

§41.41.Nonresident Seller's Report.

§41.42.Amount of Excise Tax Bonds.

§41.43.Required Signature.

§41.44.Report Retention.

§41.45.Failure to make Reports and Records.

§41.46.Nonresident Manufacturer's Report.

§41.49.Private Clubs--Temporary Memberships.

§41.51.Private Clubs--Purchases--Pool Systems.

§41.52.Private Clubs--In General.

§41.53.Required Records for Brewpubs.

§41.54.Destructions.

§41.55.Malt Beverages for Export.

§41.56.Out-Of-State Winery Direct Shipper's Permits.

§41.57.Warehouse Registration.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103763

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER D. SACRAMENTAL WINE

16 TAC §41.61

The proposed repeals do not impact any other current rules or statutes.

§41.61.Permission and Reports.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103765

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER E. IDENTIFICATION STAMPS

16 TAC §41.71

The proposed repeals do not impact any other current rules or statutes.

§41.71.Identification Stamps and Local Distributor's Records.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103766

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

CHAPTER 41. AUDITING

The Texas Alcoholic Beverage Commission (TABC, agency, or commission) proposes new Chapter 41, Auditing, §§41.1 - 41.6; 41.11 - 41.26; 41.30 - 41.40; 41.41 - 41.43; 41.50 - 41.56; and 41.60. The repeal of all but one of the rules comprising current Chapter 41 is proposed in a separate, simultaneous proposal.

Background and Summary

The agency proposes new Chapter 41 of the agency's rules as the result of a comprehensive review of the chapter pursuant to the regular four-year review cycle prescribed by Government Code §2001.039, as well as to conform its rules to statutory changes made by House Bill 1545 (86th Tex. Leg. R.S. (2019)) and add a definition of "tamper-proof container" as authorized by statutory changes made by House Bill 1024 (87th Tex. Leg. R.S. (2021)). Due to extensive rearrangement of the chapter, only one rule retained its original rule number (§41.48). With that exception, the agency proposes to repeal the rules in current Chapter 41 and adopt these proposed rules to replace them.

The rules are proposed pursuant to Section 410 of H.B. 1545 (2019); §§28.1001(a)(2)(C) and 32.155(a)(2) of the Alcoholic Beverage Code (the "Code"); and the commission's general powers and duties under §5.31 of the Code.

Section by Section Discussion

§41.1 Scope and Applicability

The commission proposes new §41.1 to state who is subject to the rules in Chapter 41 and the statutory basis for the rules, consistent with other chapters of the agency's rules.

§41.2 Timely Filing of Reports

The commission proposes new §41.2 to relocate current §41.20 to the beginning of the chapter, consistent with the placement of generally applicable rules in other agency rule chapters.

§41.3 Required Signature

The commission proposes new §41.3 to relocate current §41.43 to the beginning of the chapter, consistent with the placement of generally applicable rules in other agency rule chapters.

§41.4 Report and Record Retention

The commission proposes new §41.4 to relocate and consolidate current §§41.44 and 41.25(d) at the beginning of the chapter, consistent with the placement of generally applicable rules in other agency rule chapters.

§41.5 Records and Invoice Requirements

The commission proposes new §41.5 to relocate current §41.25 to the beginning of the chapter, consistent with the placement of generally applicable rules in other agency rule chapters.

§41.6 Failure to Make Reports and Records

The commission proposes new §41.6 to relocate current §41.23 to the beginning of the chapter, consistent with the placement of generally applicable rules in other agency rule chapters.

§41.11 Basic General Records Required

The commission proposes new §41.11 to relocate current §41.45 to a more logical location at the beginning of new Subchapter B, Recordkeeping and Reports, and to provide a requirement for receipt retention by license and permit holders selling alcoholic beverages to-go under Alcoholic Beverage Code Chapter 28 or 32 that is consistent with the requirement for holders of consumer delivery permits.

§41.12 Compliance Reporting by License and Permit Holders

The commission proposes new §41.12 to relocate current §41.22 to a more logical position in the reorganized chapter, with other generally applicable rules.

§41.13 Carrier Report

The commission proposes new §41.13 to relocate current §41.38 to a more logical position in the reorganized chapter and eliminate a duplicative subsection.

§41.14 Transfer of Alcoholic Beverages by Package Stores and Wine-Only Package Stores

The commission proposes new §41.14 to relocate the rule from §35.1 of the commission's rules for a more logical and intuitive placement in the Auditing rule chapter, rather than the Enforcement rule chapter, and to make other non-substantive changes.

§41.15 Transportation of Imported Alcoholic Beverages

The commission proposes new §41.15 to relocate this rule from §35.2 of the commission's rules for a more logical and intuitive placement in the Auditing rule chapter, rather than the Enforcement rule chapter, and to make other non-substantive changes.

§41.16 Tamper-proof Containers

The commission proposes new §41.16 to implement §§28.1001(a)(2)(C) and 32.155(a)(2) of the Code, pursuant to House Bill 1024 (87th Tex. Leg. R.S. (2021)), by providing in rule approved types of tamper-proof containers and clarifying that some common sealing methods do not comply with the statutes and rule.

§41.17 Vehicle Identification and Liability

The commission proposes new §41.17 to reorganize provisions of current §§35.3 and 35.5 of the commission's rules and relocate them for a more logical and intuitive placement in the Auditing rule chapter, rather than the Enforcement rule chapter, and to other make non-substantive changes to conform to H.B. 1545 (2019).

§41.18 Regional Forwarding Centers

The commission proposes new §41.18 to relocate §35.6 of the commission's rules for a more logical and intuitive placement in the Auditing rule chapter, rather than the Enforcement rule chapter, and to other make non-substantive changes.

§41.19 Warehouse Registration

The commission proposes new §41.19 to relocate current §41.57 to a more logical position in the reorganized chapter, adjacent to similar and/or related and/or related rules.

§41.20 Bonded Warehouse Report

The commission proposes new §41.20 relocate current §41.39 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.21 Record Requirements: Export

The commission proposes new §41.21 to consolidate current §§41.11 and 41.55 and locate the consolidated rules in a more logical position in the reorganized chapter, adjacent to similar and/or related rules, as well as to update Code references to conform to statutory changes made by H.B. 1545 (2019).

§41.22 Sale and Delivery of Malt Beverages to Retail Premises and Private Clubs

The commission proposes new §41.22 to consolidate current §§41.28 and 41.30, pursuant to the legislature's consolidation of beer and ale into a single malt beverage category under H.B.1545 (2019), and to locate the consolidated rule in a logical position in the reorganized chapter.

§41.23 Providing Retailer Samples: Nonresident Seller

The commission proposes new §41.23 to relocate current §41.19 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.24 Providing Retailer Samples: Distiller's and Rectifier's Permit

The commission proposes new §41.24 to relocate current §41.18 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.25 Nonresident Seller's Report

The commission proposes new §41.25 to relocate current §41.41 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.26 Nonresident Brewer's Report

The commission proposes new §41.26 to relocate current §41.46 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.30 Excise Tax

The commission proposes new §41.30 to relocate current §41.31 to be the top-most rule in new subchapter C, Excise Taxes.

§41.31 Monthly Report of Distilled Spirits, Wines, and Malt Beverages

The commission proposes new §41.31 to relocate current §41.32 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.32 Out-Of-State Winery Direct Shipper's Permits

The commission proposes new §41.32 to relocate current §41.56 to a more logical position in the reorganized chapter, adjacent to similar and/or related rules.

§41.33 Excise Tax Exemptions

The commission proposes new §41.33 to contain a concise, comprehensive list of transactions exempt from excise taxes, including exemptions contained in current rules §§41.54 and 41.61.

§41.34 Sacramental Wine

The commission proposes new §41.34 to contain the requirements that must be met for the excise tax exemption for sacramental wine, currently in §41.61 of the commission's rules, and locate it adjacent to other excise tax exemption rules.

§41.35 Export of Alcoholic Beverages

The commission proposes new §41.35 to contain the requirements of current §41.11 for excise tax exemption for export of alcoholic beverages; locate it adjacent to other excise tax exemption rules; clarify that the rule applies to all types of alcohol; and remove references to permits eliminated by H.B. 1545 (2019).

§41.36 Export of Malt Beverages Not Legal for Sale

The commission proposes new §41.36 to contain the requirements that must be met for the excise tax exemption for the out-of-state sale of malt beverages not legal for sale in the state of Texas, currently in §41.55 of the commission's rules; to locate it adjacent to other excise tax exemption rules; and to update the rule to consolidate beer and ale into a single malt beverage category pursuant to H.B. 1545 (2019).

§41.37 Destructions

The commission proposes new §41.37 to contain the requirements that must be met for the excise tax exemption for alcoholic beverages that are destroyed, currently in §41.54 of the commission's rules, and locate it adjacent to other excise tax exemption rules.

§41.38 Production Record

The commission proposes new §41.38 to contain the provisions of current §41.35, updated to refer to all production forms to which it applies (including kegs, cans, etc.) rather than only bottling and to make additional non-substantive changes for clarity.

§41.39 Amount of Excise Tax Bonds

The commission proposes new §41.39 to relocate current §41.42 so that it is adjacent to other excise tax-related rules.

§41.40 Required Records for Brewpubs

The commission proposes new §41.40 to relocate current §41.53 adjacent to other similar and/or related rules.

§41.41 Sale to and by Lien Holders

The commission proposes new §41.41 to relocate current §41.1 to a more appropriate location within the chapter, under a new subchapter for sales of alcoholic beverages not in the regular course of business.

§41.42 Sale by Carrier

The commission proposes new §41.42 to relocate current §41.2 to a more appropriate location within the chapter, adjacent to other similar and/or related rules.

§41.43 Sale after Cancellation, Expiration, or Voluntary Suspension of License or Permit

The commission proposes new §41.43 to relocate current §41.3 to a more appropriate location within the chapter, adjacent to other similar and/or related rules.

§41.50 General Provisions

The commission proposes new §41.50 to contain provisions generally applicable to private clubs, including definitions and authorization for digital recordkeeping, and be the top-most rule in new subchapter E, Private Cubs.

§41.51 Requirements for Permit; Membership

The commission proposes new §41.51 to contain requirements for obtaining a private club registration permit and provisions generally applicable to holders of private club registration permits previously in §41.52.

§41.52 Temporary Memberships

The commission proposes new §41.52 to contain requirements for the holder of a private club registration permit related to temporary memberships, currently contained in §41.49, and to make non-substantive revisions for style, brevity, and clarity.

§41.53 Pool Systems

The commission proposes new §41.53 to contain requirements for the use of pool systems for the purchase and replacement of alcoholic beverages at a private club, currently contained in §41.51.

§41.54 Locker Systems

The commission proposes new §41.54 to provide a rule specific to the use of locker systems used by members of private clubs to store alcoholic beverages for on-premises consumption. Subsection (c) contains the portion of current rule §41.51 pertaining to locker systems. The rule also provides statutory authority, conforming with the format of other commission rules; a general authorization for the use of lockers; the method for collection of taxes on alcoholic beverages in lockers systems and related recordkeeping requirements; and the statutory prohibition on removal of the alcoholic beverages from the premises.

§41.55 Food Service

The commission proposes new §41.55 to contain the food service-related provisions from current §41.51, making the provisions easier to find in their own, descriptively titled rule.

§41.56 Enforcement

The commission proposes new §41.56 to outline the executive director's options for enforcement of rules applicable to private club registration permits, currently contained in §41.51, as well other reasons for enforcement as authorized by statute.

§41.60 Identification Stamps and Local Distributor's Records

The commission proposes new §41.60 to move current rule §41.71 to its own subchapter, Identification Stamps, to assist rule users in locating the rule.

Fiscal Note: Costs to State and Local Government

Shana Horton, Rules Attorney, has determined that for each year of the first five years that the proposed rules will be in effect, they are not expected to have a significant fiscal impact upon the agency. There are no foreseeable economic implications anticipated for other units of state or local government due to the proposed rules. The vast majority of the proposed new rules are current rules that have been rearranged and/or consolidated for efficiency, edited for clarity, grammar, internal consistency, and conciseness, an/or updated as required by the legislature to conform to changes to license and permit types and the consolidation of beer and ale under H.B. 1545 (2019). In addition, new §41.16 provides a detailed definition of what qualifies as a tamper-proof container, as authorized by statute.

Enforcing or administering the new rules does not have foreseeable implications relating to cost or revenues of state or local governments. Because the proposed rules are largely non-substantive, they are not expected to have a significant fiscal impact upon the agency, which will be able to administer the rules using existing agency resources. Moreover, none of the rules are anticipated to cause the agency to collect more in either permitting fees or enforcement fines. On their face, the proposed rules do not impact other units of state and local government, therefore there are no foreseeable economic implications anticipated for other units of state or local government due to the proposed rules.

Rural Communities Impact Assessment

The proposed rules will not have any material adverse fiscal or regulatory impacts on rural communities. The rules apply statewide and have the same effect in rural communities as in urban communities. Likewise, the proposed rules will not adversely affect a local economy in a material way.

Small Business and Micro-Business Assessment/Flexibility Analysis

Because the proposed new rules are largely relocated versions of existing rule provisions revised for style and clarity and conformity with statutory changes made by H.B. 1545 (2019), they are not expected to have adverse economic impacts on small businesses, micro-businesses, or rural communities.

Most of the revisions to existing rules are required by the legislature under H.B. 1545 (2019), limiting the commission's flexibility with respect to their adoption. Where possible, the proposed rules mitigate impacts on small and micro-businesses.

None of the other proposed rules have material fiscal impacts.

Takings Impact Assessment

The proposed rules do not affect a taking of private real property, as described by Attorney General Paxton's Private Real Property Rights Preservation Act Guidelines. The rulemaking would impose no burdens on private real property because it neither relates to, nor has any impact on, the use or enjoyment of private real property and there is no reduction in value of property as a result of this rulemaking.

Public Benefits and Costs

Ms. Horton has determined that for each year of the first five years that the rules would be in effect, the public would benefit from the new rules in the following ways:

Non-substantive changes that make the rules better organized, clearer, and more internally consistent will make the rules easier to navigate and understand. There are no direct costs to the public as a result of these improvements.

There are no direct public costs as a result of the adoption of new §41.54, providing regulations pertaining to the use of locker systems at private clubs. Locker systems are not common, and the proposed rules reflect how the agency currently regulates them. The public benefits from the transparency and clarity of a formal rule for locker systems.

The public costs and benefits of changes necessitated by H.B. 1545 (2019) and new rule §41.16 were already considered by the Texas legislature when it adopted the underlying legislation.

Government Growth Impact Statement

This paragraph constitutes the commission's government growth impact statement for the proposed rules. The analysis addresses the first five years the proposed rules would be in effect. The proposed rules neither create nor eliminate a government program. The proposed rules do not require the creation of new employee positions or the elimination of existing employee positions. Implementation of the proposed rules requires neither an increase nor a decrease in future legislative appropriations to the commission. The proposed rules are not expected to result in a significant change in fees paid to the agency. The proposed rules are not anticipated to have any material impact on the state's overall economy.

The proposed rules do not create any new regulations except proposed new §41.54. As proposed, §41.54 reflects current agency and industry practices regarding locker systems, which are not in widespread use. Other proposed rules do not expand the applicability of any rules or increase the number of individuals subject to existing rules' applicability beyond current rule requirements.

Comments on the proposed rules may be submitted in writing to Shana Horton, Rules Attorney, Texas Alcoholic Beverage Commission, at P.O. Box 13127, Austin, Texas 78711-3127, by facsimile transmission to (512) 206-3498, attention: Shana Horton, or by email to rules@tabc.texas.gov. Written comments will be accepted for 30 days following publication in the Texas Register.

SUBCHAPTER A. GENERAL PROVISIONS

16 TAC §§41.1 - 41.6

New §41.1 - 41.6 are proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rules require the repeal of current §§41.1 - 41.3.

§41.1.Scope & Applicability.

(a) This chapter relates to and implements chapters 201, 202, and 203 of the Alcoholic Beverage Code.

(b) The rules in this chapter apply to regulated entities required to keep records and/or file reports for taxation purposes.

§41.2.Timely Filing of Reports.

With respect to all tax reports required under the Texas Alcoholic Beverage Code, Chapter 201, or this chapter, it is a violation of this rule if a report or a payment is not received or postmarked by 11:59 p.m. on the date that it is due.

§41.3.Required Signature.

Each report required by this chapter shall be signed and affirmed to be true and correct by the permittee or licensee or a duly authorized representative.

§41.4.Report and Record Retention.

(a) The license or permit holder must keep all records required by the Alcoholic Beverage Code or by rule and an exact copy of each report required by this chapter for a period of at least two years, unless a different period is specified in the Alcoholic Beverage Code or in another rule.

(b) The license or permit holder must keep all records and reports available for inspection by the commission or its authorized representatives during reasonable office hours.

§41.5.Records and Invoice Requirements.

(a) An invoice that is required by the Alcoholic Beverage Code or by rule for any alcoholic beverage must have the exact trade name and license or permit number of the issuing licensee or permittee and the receiving licensee or permittee, if any.

(b) A licensee or permittee who owns more than one business operating under separate licenses or permits or a single business operating at two or more locations under separate licenses or permits shall keep separate records for each such business or place of business.

(c) Each licensee or permittee who is also engaged in any other kind of business shall make and keep all records for the alcoholic beverage business that are required by the Alcoholic Beverage Code or by rule separate and apart from any and all other records.

(d) Making a false entry or any alteration in records that are required by the Alcoholic Beverage Code or by rule is a violation of this section.

§41.6.Failure to Make Reports and Records.

Failing to make any record or report required by this chapter, or failing to make any entry or entries on any record or report required by this chapter at the time or in the place or manner required, is a violation of this section.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103775

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER B. RECORDKEEPING AND REPORTS

16 TAC §§41.11 - 41.26

New §§41.11 - 41.26 are proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rules require the repeal of current §§41.11, 41.18 - 41.23, and 41.25.

§41.11.Basic General Records Required.

(a) Except as provided by subsections (b) and (c) of this section, a brewer, distiller, winery, rectifier, wholesaler, Class B wholesaler, package store, brewpub, or distributor must keep at each place of business, for a period of two years, for inspection at all times by the commission or its authorized representatives:

(1) a complete record of all alcoholic beverages manufactured, distilled, sold, purchased, received, blended, or bottled, including all invoices, bills of lading, way bills, freight bills, express receipts, and all other shipping records furnished by the carrier and the seller or shipper of the alcoholic beverages, including, at a minimum:

(A) the name and address of the person from whom alcoholic beverages were purchased;

(B) the name and address of the person receiving alcoholic beverages;

(D) the address at which the alcoholic beverages were received;

(E) the quantity and kind of alcoholic beverage received; and

(F) except as provided in subsection (b) of this section, inventories on the last day of each month, showing the quantities, sizes, brands, and taxable class of beverages on hand; and

(2) a complete record of each sale or distribution of alcoholic beverages, upon an invoice to be furnished by the licensee or permittee.

(b) Package store permittees are not required to keep inventories of alcoholic beverages on hand on the last day of each month under subsection (a)(1)(F) of this section.

(c) Wine and malt beverage retailers are required to keep the records required by subsection (a) of this section only as to wine purchases.

(d) Invoices must:

(1) be printed, numbered, and issued in consecutive order;

(2) show the date of sale or distribution, the purchaser's tradename, purchaser's license or permit number , purchaser's address, the means of delivery, the name and permit number of the carrier (if delivered by common carrier), and the quantity, price, container size and brand name of alcoholic beverages sold;

(3) be supported by the receipts or other records furnished by the carrier of such alcoholic beverages; and

(4) include the alcohol percentage by volume or an approved symbol or statement in the product description for malt beverages.

(e) The licensee or permittee making the sale shall keep each invoice or a copy thereof and shall deliver an invoice to the purchaser.

(f) Each purchaser and seller of tax-free alcohol shall keep for inspection of the commission or its authorized representatives all invoices of tax-free alcohol for a period of at least two years.

(g) License and permit holders selling alcoholic beverages to-go under Alcoholic Beverage Code Chapter 28 or 32 shall maintain receipts for those sales for a period of at least six months.

§41.12.Compliance Reporting by License and Permit Holders.

(a) This rule implements Alcoholic Beverage Code §§5.31 and 5.361. The purpose of this rule is to allow the commission to better leverage resources in meeting its charge to inspect, supervise, and regulate members of the alcoholic beverage industry; reduce unnecessary physical inspections of industry locations; and use automation to better and more efficiently protect public safety and serve the alcoholic beverage industry.

(b) Each permittee and licensee must prepare and file an automated compliance report with the commission as instructed by the commission. The commission may require that the report be filed using a specified digital application.

(c) The commission will annually notify each permittee and licensee of the requirement to file its compliance report. The license or permit holder will have 90 days from the date of notification to file the report.

(d) The commission may issue a written warning to a permittee or licensee who fails to file the mandated compliance report within 90 days of being notified by the commission. The commission may initiate an administrative case to cancel or suspend the license or permit of any permittee or licensee who does not file the compliance report within 30 days following issuance of the written warning.

§41.13.Carrier Report.

(a) Each holder of a carrier permit under Chapter 41 of the Alcoholic Beverage Code shall make a monthly report to the commission on forms prescribed by the executive director.

(b) The permittee shall file the report with the commission on or before the 15th day of the month following the calendar month for which the report is made.

(c) The report shall give an accurate account of all liquor, wine, and malt beverages transported by the carrier in interstate commerce during the month for which the report is made, and shall state the date of shipment, consignor, point of origin, consignee, destination, freight bill number, number of packages, kind of commodity shipped, and the date of delivery, and shall give all information requested by the form. If no shipments were transported, the permittee shall submit a report stating so.

§41.14.Transfer of Alcoholic Beverages by Package Stores and Wine-Only Package Stores.

(a) This rule relates to transportation of alcoholic beverages under the authority of §§22.08, 23.04 or 24.04 of the Alcoholic Beverage Code.

(b) Only a holder of a package store permit, wine-only package store permit, local distributor's permit, or a carrier's permit may transport alcoholic beverages under the authority of §§22.08, 23.04 or 24.04 of the Alcoholic Beverage Code.

(c) Package stores and wine only package store permittees transporting shipments of alcoholic beverages governed by this rule to a permitted location shall prepare an invoice in duplicate. The invoice shall show:

(1) the date of the shipment;

(2) the quantity, container size and brands of alcoholic beverages shipped, and if sold, a price extension for each line item listed on the invoice; and

(3) the store name and address of the origination and destination point of the shipment.

(d) The purchaser must sign the invoice acknowledging receipt of the alcoholic beverages.

(e) The original of the invoice mandated by this rule shall be maintained at the originating store for two years after the date of shipment. The copy of the invoice shall accompany the shipment and be maintained at the receiving store for two years after the date of shipment.

(f) Shipments of alcoholic beverages governed by this rule may not be transported outside the county in which the shipment originated and must be transported by the most direct practical route from point of origination to point of destination.

(g) Shipments made by local distributor permittees under the authority of §23.04 of the Alcoholic Beverage Code are subject to the restrictions expressed in §102.56(d) of the code.

§41.15.Transportation of Imported Alcoholic Beverages.

(a) This rule relates to alcoholic beverages imported into the state under the authority of §§14.071, 16.10, 19.06, 20.04, 41.01(a), 62.15, 63.01, 64.10, and 66.01 of the Alcoholic Beverage Code.

(b) Alcoholic beverages imported into the state for resale may only be transported by the holder of a license or permit authorizing transport or a carrier's permit. Shipments of alcoholic beverages into the state must be accompanied by an invoice.

(c) Nonresident sellers shipping alcoholic beverages for importation to any class of licensees or permittees shall cause the invoice covering that shipment of alcoholic beverages to show delivery to the authorized license or permit holder.

(d) All license and permit holders subject to this section shall transport alcoholic beverages by the most direct route practical to the place of destination.

§41.16.Tamper-proof Containers.

(a) This rule relates to Alcoholic Beverage Code §§28.1001 and 32.155.

(b) A "tamper-proof container" means a container that, once sealed, clearly shows whether it has been opened. The term includes a closed cup or similar container that is:

(1) placed into a bag that has been sealed with a zip tie or staple;

(2) sealed with shrink wrap or a similar seal;

(3) sealed with a tamper-evident adhesive tape or seal having one or more indicators or barriers to entry which, if breached or missing, can reasonably be expected to provide visible evidence that tampering has occurred; or

(4) sealed mechanically on-premises with a can seamer.

(c) The following sealing methods, unless used in combination with a method described in subsection (b) of this section, are not sufficient to meet the standard for a tamper-proof container:

(1) freezing the beverage, putting a lid on it, and leaving the straw out of the lid's straw hole; and

(2) sealing with a sticker or adhesive tape that is not tamper-evident.

(d) The list in subsection (c) of this section is non-exclusive.

§41.17.Vehicle Identification and Liability.

(a) This rule applies to vehicles used in the alcoholic beverage business by license and permit holders operating under the authority of §§ 14.071, 19.06, 20.04, 22.08, 24.04, 62.15, or 64.10 of the Alcoholic Beverage Code.

(b) Each vehicle subject to this section shall have the correct TABC license or permit number painted or printed or attached in a conspicuous place on the vehicle, with each character being not less than 1.5 inches in height. These characters shall never be covered from public view when the vehicle is being used in the alcoholic beverage business.

(c) For each vehicle subject to this section, the license or permit holder shall carry at least $500,000 of liability insurance for bodily injury and property damage covering every registered vehicle whose gross weight, registered weight or gross-weight rating exceeds 26,000 pounds.

(d) For each vehicle subject to this section or operating pursuant to §16.10 of the Alcoholic Beverage Code, the license or permit holder shall file with the commission an affidavit stating that the license or permit holder has knowledge of, and will conduct operations in accordance with, all federal and state safety regulations, and that it is in compliance with the requirements for insurance coverage under this section.

(e) For each vehicle subject to this section, the license or permit holder shall maintain proof of insurance in the licensed or permitted vehicle at all times.

§41.18.Regional Forwarding Centers.

(a) This rule relates to Alcoholic Beverage Code, §§37.01(a)(2), 62.08, and 63.01.

(b) Members of the manufacturing tier transporting alcoholic beverages into the state, or from point to point within the state under the authority of Alcoholic Beverage Code §§37.01(a)(2), 62.08(a), or 63.01 may temporarily hold such alcoholic beverages in a regional forwarding center, subject to the following conditions:

(1) A regional forwarding center is a facility wherein alcoholic beverages may be held under the control of the manufacturing tier member responsible for shipping the alcoholic beverages.

(2) The regional forwarding center may be operated by a third party who acts as the agent of the manufacturing tier member in arranging for interstate or intrastate shipments of alcoholic beverages to licensees and permittees authorized to receive such beverages or for shipment to locations outside the state.

(3) No member of the wholesale or retail tiers of the alcoholic beverage industry may, directly or indirectly, hold any interest in, or right of operation of a regional forwarding center.

(4) No alcoholic beverages may be sold to a person or entity from a regional forwarding center. For purposes of this rule, a "sale" occurs when an order is taken and/or payment is made.

(5) No member of the retail tier may take delivery of alcoholic beverages at a regional forwarding center.

(6) A regional forwarding center must be located in an area that is wet for the type of alcoholic beverages held therein.

(7) A licensee or permittee, by using a regional forwarding center under the authority of this rule, consents to inspection of such facility by the commission, its agents or employees, or any peace officer, to the same extent as consent is given for inspection of licensed premises by §101.04 of the Alcoholic Beverage Code.

(c) Licensees and permittees using regional forwarding centers under the authority of this rule shall maintain a record at the regional forwarding center with information relating to specific shipments entered into the record on the day the shipment is received or sent. The record shall show the:

(1) invoice number for each receipt and transfer;

(2) date for each receipt and transfer;

(3) point of origin for each receipt;

(4) destination (name and address) for each transfer;

(5) type of alcoholic beverages and total gallons for each receipt and transfer; and

(6) name of the carrier making delivery and transfer, and its TABC license or permit number if one is required by the Alcoholic Beverage Code.

(d) Licensees and permittees using regional forwarding centers under the authority of this rule shall pay an annual fee to the commission pursuant to §33.23 of this title.

(e) All records required by this section shall be kept for at least two years.

§41.19.Warehouse Registration.

(a) Licensees required by Code §62.08 to register a warehouse with the Commission shall provide the warehouse's address and all other information required on a form prescribed by the Commission. Should any information required by the form change, a licensee is required to submit a new form reflecting those changes within 30 days. A licensee may not operate a warehouse until the registration form is received by the Commission's Licensing Division.

(b) A registered warehouse is a place of business of the license holder for purposes of §§41.5 and 41.11 of this title.

§41.20.Bonded Warehouse Report.

(a) Each holder of a bonded warehouse permit shall make a monthly report to the commission on forms prescribed by the executive director.

(b) The report shall:

(1) state the name, address, and permit number of the warehouse;

(2) state the name, address, and permit number of each customer storing liquor;

(3) show monthly opening inventory receipts, withdrawals and closing inventory in gallons for each class of liquor;

(4) affirm that the permittee is in compliance with Alcoholic Beverage Code §46.03, which requires the holder of a bonded warehouse permit to derive at least 50 percent of its gross revenue in a bona fide manner during each three month period from the storage of goods or merchandise other than liquor; and

(5) be signed by the custodian of the bonded warehouse.

(c) Reports shall be filed with the commission on or before the 15th day of the month following the calendar month for which the report is made.

(d) A holder of a bonded warehouse permit may only store or offer to store liquor in full and unbroken case lots.

(e) Except as provided in this subsection, a holder of a bonded warehouse permit may only allow the withdrawal of liquor in full and unbroken case lots. When actual breakage occurs in a bonded warehouse which results in actual loss, the holder of a bonded warehouse permit may allow withdrawal in partial or broken case lots if the bonded warehouse permit holder executes duplicate affidavits documenting the actual breakage. The bonded warehouse permit holder shall retain one such affidavit shall be on file, and permittee shall submit the other affidavit with the monthly report required by this section.

§41.21.Record Requirements: Export.

(a) This rule relates to Alcoholic Beverage Code §§ 14.01, 16.01, 19.01, 20.01, 62.01, 62.09, 64.09, 66.11, and 74.08.

(b) No person shall export any distilled spirits or wines in any manner except in compliance with the following:

(1) Permittees authorized to export distilled spirits and wines shall maintain copies of billing invoices and shipping documents to support any export out of the State of Texas. Supporting documentation shall include an order signed by the purchaser of the distilled spirits or wines or, in case of return to a distillery or winery, a letter of authority.

(2) The distilled spirits or wines may then be delivered to a common carrier holding a carrier's permit, or if the permittee is authorized under its permit to transport distilled spirits or wines in vehicles owned or leased by the permittee, such distilled spirits or wines may be transported and exported in vehicles registered with the commission by the permittee.

(3) A license or permit holder exporting under this section must obtain proper proof from the purchaser that the distilled spirits or wine was sold or disposed of outside of this state and keep such records on file for inspection or audit by any representative of the commission for at least two years.

§41.22.Sale and Delivery of Malt Beverages to Retail Premises and Private Clubs.

(a) Malt beverages intended to be delivered in sales transactions consummated at a licensed retailer's place of business or at a private club located in a wet area may be transported through dry areas in vehicles owned or leased and operated by one of these authorized sellers, who are authorized to sell to retailers or private clubs located in wet areas: the holder of a brewer's self-distribution license; the holder of any type of distributor license; or the holder of a brewpub license. The person directly in charge of the vehicle used in such transportation must possess a written statement furnished and signed by the authorized seller showing the quantity of malt beverages so delivered to such person, the origin thereof, and the fact that said malt beverage is intended for delivery only upon any sale that may be consummated by such person acting as agent for the authorized seller at the place of business of a licensed retail dealer or a private club located in a wet area.

(b) A person into whose charge malt beverages are delivered as provided in this section and who is delivering and obtaining payment for any such malt beverages at a licensed retailer's place of business or at a private club located in a wet area must at that time provide a sales invoice for such malt beverages that must be signed by the purchaser of the malt beverages. The invoice must show the purchaser, the quantity of each type of container sold, and the price. A copy of such invoice shall be furnished to the purchaser at the time of sale and a copy of the signed sales invoice must be furnished to the authorized seller of such malt beverages within 24 hours from the time of its delivery.

(c) A person into whose charge malt beverages are delivered as provided in this section must possess the signed sales invoices required by subsection (b) of this section for any such malt beverage that is not in the person's possession. Records pertaining to any such shipment must be shown to any representative of the commission or any peace officer upon demand.

§41.23.Providing Retailer Samples: Nonresident Seller.

(a) A holder of a Nonresident Seller's Permit must purchase samples from a package store permit or wholesale permit holder.

(b) Samples purchased by a nonresident seller from a wholesaler's inventory are considered "first sale" for purposes of taxation under Alcoholic Beverage Code §201.03. The wholesaler shall remit excise taxes for samples purchased not later than the 15th day of the month following the month in which occurs the "first sale."

§41.24.Providing Retailer Samples: Distiller's and Rectifier's Permit.

(a) A holder of a Distiller's and Rectifier's Permit may provide samples obtained from the distiller's inventory to a retailer in accordance with Alcoholic Beverage Code §14.07.

(b) Samples taken from the distiller's inventory are considered "first sale" for purposes of taxation under Alcoholic Beverage Code §201.03. The holder of the Distiller's and Rectifier's Permit shall remit excise taxes for samples taken from inventory not later than the 15th day of the month following the month in which occurs the "first sale."

§41.25.Nonresident Seller's Report.

(a) Each holder of a nonresident seller's permit shall make a monthly report to the commission on forms prescribed or approved by the executive director or the executive director's designee.

(b) The report shall be electronically submitted or, if mailed, postmarked on or before the 15th day of the month following the calendar month for which the report is made.

(c) Upon request by an authorized representative of the commission, invoices shall be submitted to support each entry in the report. A legible copy of each invoice must show the:

(1) invoice number and invoice date;

(2) trade name, permit number, and address of the seller;

(3) trade name, permit number, and shipping address of the purchaser;

(4) brand name, type, number and size of containers, total cases, unit or line item extension price, and total sales price;

(5) origin of shipment and shipping date; and

(6) total by taxable class gallons of each class of liquor.

(d) As long as a nonresident seller's permit remains active, the monthly report required by this section must be filed each month even if no sales or shipments have been made.

§41.26.Nonresident Brewer's Report.

(a) Each holder of a nonresident brewer's license shall make a monthly report to the commission on forms prescribed or approved by the executive director or the executive director's designee.

(b) The report shall be electronically submitted or, if mailed, postmarked on or before the 15th day of the month following the calendar month for which the report is made.

(c) Upon request by an authorized representative of the commission, invoices shall be submitted to support each entry in the report. A legible copy of each invoice must show the:

(1) invoice number and invoice date;

(2) trade name, license number, and address of the brewer;

(3) trade name, license or permit number, and shipping address of the purchaser;

(4) brand name, type, number and size of containers, total cases, unit or line-item extension price, and total sales price;

(5) origin of shipment and shipping date; and

(6) total gallons of malt beverages invoiced.

(d) As long as a nonresident brewer's license remains active, the monthly report required by this section must be filed each month even if no sales or shipments have been made.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103777

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER C. EXCISE TAXES

16 TAC §§41.30 - 41.40

New §41.30 - 41.40 are proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rules require the repeal of current §§41.30 - 41.32, 41.35, 41.38, and 41.39.

§41.30.Excise Tax.

Holders of licenses and permits authorizing the manufacture, wholesaling, or distribution of distilled spirits, wine, and malt beverages in this state must pay the assessed excise tax not later than the 15th day of the month following the month in which occurs the "first sale" as this term is defined in Alcoholic Beverage Code §§201.02, 201.41 and 203.02. All taxes shall be remitted by electronic funds transfer, check, or money order made payable to the Texas Alcoholic Beverage Commission.

§41.31.Monthly Report of Distilled Spirits, Wines, and Malt Beverages.

(a) Each holder of a distiller's and rectifier's permit, any class of wholesaler's permit, a winery permit, a brewer's license, or a distributor's license shall make a monthly report to the commission on forms prescribed or approved by the executive director or the executive director's designee.

(b) The report shall be electronically submitted or postmarked by the license or permit holder with the commission at its offices at Austin, Texas, on or before the 15th day of the month following the calendar month for which the report is made.

(c) Upon request by an authorized representative of the commission, invoices shall be submitted to support each entry in the report. A legible copy of each invoice must show:

(1) invoice number and invoice date;

(2) trade name, license number and address of licensed brewer for malt beverages;

(3) trade name, permit number and address of permitted non-resident seller, distiller or winery for wine and distilled spirits;

(4) trade name and shipping address of customer;

(5) brand name, type, number and size of containers, total cases, unit or line-item extension price, and total selling price;

(6) origin of shipment and shipping date; and

(7) total gallons by taxable class of alcohol invoiced.

(d) The monthly report required by this section must be filed each month even if no sales or shipments have been made.

§41.32.Out-Of-State Winery Direct Shipper's Permits.

(a) This rule relates to Chapter 54 of the Alcoholic Beverage Code.

(b) Each holder of an out-of-state winery direct shipper's permit shall make reports (Direct Shipper's Report) to the commission on forms prescribed by the executive director or executive director's designee.

(c) The report shall be made and filed by the permittee with the commission at its offices in Austin, Texas, on or before the 15th day of the month following the end of the reporting period for which the report is made and shall show:

(1) the reporting period and year for which the report is made, the permit number and the name and address of the winery; and

(2) the ship date, invoice date, invoice number, customer name, city, total wine gallons per invoice, and carrier name and tracking number for each sale and delivery.

(d) The permittee shall attach to the Direct Shipper's Report either:

(1) complete, unredacted copies of invoices showing:

(A) the names and addresses of the individuals to whom the alcoholic beverages were shipped;

(B) the brand name shipped, the container size and the quantities of each brand name;

(D) the licensed common carrier used to deliver the alcoholic beverages; and

(E) the licensed common carrier tracking number used to identify each shipment; or

(2) a complete, unredacted list containing the information described in paragraph (1) of this subsection.

(e) Holders of out-of-state winery direct shipper's permits must pay the excise tax on the total gallons of wine shipped into the state, not later than the 15th day of the month following the reporting period the wine was shipped into the state. Remittance of the tax due on wine, less 2.0% of the amount due when submitted within the required time, shall accompany the Direct Shipper's Report and shall be made by check, United States money order, or other acceptable methods of payment payable to the Texas Alcoholic Beverage Commission.

(f) As long as an out-of-state winery direct shipper's permit remains active, the reports required herein must be filed even though no sales or shipments have been made.

(g) Holders of out-of-state winery direct shipper's permits that shipped 5,000 gallons annually or more to consumers in Texas during the previous calendar year, must file a monthly report.

(h) Holders of out-of-state winery direct shipper's permits that shipped less than 5,000 gallons annually to consumers in Texas during the previous calendar year, must file a quarterly report. Quarterly Reporting Periods: January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31.

(i) Holders of out-of-state winery direct shipper's permits must:

(1) require adult signature upon delivery of alcoholic beverages and notify the carrier that the shipment contains alcoholic beverages;

(2) ensure that any third party it uses for order fulfillment identifies and marks the packages to be shipped as containing alcohol and obtains an adult signature upon delivery of the alcoholic beverage product;

(3) maintain tracking status documentation for each shipment to a Texas consumer, which must include delivery confirmation and undeliverable shipments; and

(4) provide records relating to alcohol shipments to Texas consumers made by a third party on behalf of the permit holder.

(j) Failure to comply with the requirements of this section or accurately maintain required records may result in cancellation or suspension of the direct shipper's permit.

(k) Holders of out-of-state winery direct shipper's permits that contract with a third party to provide packaging services and/or recordkeeping services, such as filing state tax reports, shall ensure all service records and tax reports subject to the third-party contract are available upon commission request.

§41.33.Excise Tax Exemptions.

The following transactions are exempt from the requirement to pay excise taxes:

(1) Sales of sacramental wine in compliance with §41.34 of this title;

(2) Out-of-state sales in compliance with §41.35 of this title;

(3) Export of malt beverages that are not legal for sale in Texas in compliance with §41.36 of this title;

(4) Alcoholic beverages destroyed in compliance with §41.37 of this title; and

(5) Sales of alcoholic beverages for industrial purposes.

§41.34.Sacramental Wine.

(a) Any minister, priest, rabbi, or the authorized head of any religious organization may obtain any wine, tax free, for sacramental purposes.

(b) Each wholesaler, Class B wholesaler, or winery shall, for each transaction, obtain a letter from the minister, priest, rabbi, or other authorized head of any religious organization who obtains from him any wine for sacramental purposes, tax-free, to the effect that said wine will be used for sacramental purposes. In computing tax liability, no credit shall be allowed for such transactions unless such letter is submitted as documentary proof that such wine was delivered to a minister, priest, rabbi, or other authorized head of a religious organization, and such letter shall be kept available for the inspection of a representative of the commission for a period of at least two years.

§41.35.Export of Alcoholic Beverages.

(a) This rule applies to license and permit holders authorized under Alcoholic Beverage Code §§14.01, 16.01, 19.01, 20.01, 62.01, 62.09, 64.01, 66.01, and 74.08.

(b) License and permit holders to whom this rule applies may export alcoholic beverages only in compliance with all of the following:

(1) License and permit holders authorized to export alcoholic beverages must maintain copies of billing invoices and shipping documents to support any export out of the State of Texas. Supporting documentation must include an order signed by the purchaser of the distilled spirits or wines or, in case of return to a distillery or brewery, a letter of authority.

(2) The alcoholic beverages may then be delivered to a common carrier that holds a carrier's permit, to transport alcoholic beverages for export.

(3) If an export shipment of alcoholic beverages is transported under this section, the license or permit holder must also obtain verification of the receipt of the alcoholic beverages from the state liquor authority in the state where the shipment is received. Verifications of this type must be kept on file by the license or permit holder for inspection or audit by any representative of the commission.

(4) Transactions under this section must be listed as tax-exempt out-of-state exports on monthly excise tax reports.

§41.36.Export of Malt Beverages Not Legal for Sale.

(a) This section applies to the export of malt beverages that are not legal for sale in Texas under Alcoholic Beverage Code §§62.09, 64.09, and 66.11.

(b) The holder of any class of distributor's license with the intent to receive, store, transport, and deliver for export to another state malt beverages that are otherwise illegal to sell to a Texas retailer because of alcohol content, container size, package, or label shall:

(1) store and segregate the products separately from products that are legal to sell to a Texas retailer;

(2) prepare a separate invoice for each transaction, which shall be different from the invoice used for malt beverages that are legal to sell to a Texas retailer; and

(3) maintain each invoice for at least two years and make them available upon request by an authorized representative of the commission.

§41.37.Destructions.

(a) Each permittee subject to the provisions of Alcoholic Beverage Code §§201.03, 201.04, or 201.42, and each licensee subject to the provisions of Alcoholic Beverage Code §203.01, is entitled to receive a tax exemption or a tax credit for alcoholic beverages destroyed in accordance with subsections (c) - (g) of this section.

(b) Each permittee or licensee eligible to destroy alcoholic beverages following a natural disaster pursuant to Alcoholic Beverage Code §109.09, is entitled to receive a tax exemption or a tax credit for alcoholic beverages destroyed in accordance with subsection (i) of this section.

(c) To be claimed as a destruction for purposes of receiving a tax exemption or a tax credit, the alcoholic beverages must be destroyed in such a manner that the product is rendered unrecoverable or unfit for human consumption.

(d) A permittee or licensee must comply with the following requirements prior to the destruction of alcoholic beverages for which a tax exemption or tax credit is claimed, unless it submits to the commission a written request for an exception and receives approval of the request prior to destruction:

(1) At least three full working days prior to the destruction, the permittee or licensee must notify the nearest authorized representative of the commission of the intent to destroy the alcoholic beverages. This notification must be made in writing on the commission's Application for Destruction of Alcoholic Beverages and contain a complete listing by brand, quantity, container size, and package size of the alcoholic beverages to be destroyed. This requirement for a complete listing may be satisfied by attaching a computerized listing that provides all the required documentation to the Application for Destruction of Alcoholic Beverages.

(2) The permittee or licensee must receive written approval from an authorized representative of the commission to conduct the destruction.

(e) To support a claim for a tax exemption or tax credit for a destruction, the permittee or licensee must retain the following documentation and make it available to an authorized representative of the commission upon request:

(1) a signed copy of the Application for Destruction of Alcoholic Beverages indicating that it was approved, which an authorized representative of the commission shall provide to the permittee or licensee when the destruction is approved;

(2) if the alcoholic beverages were destroyed at a location that charges a fee for this service, a copy of the receipt for payment of the fee; and

(3) an affidavit of destruction executed by an employee of the permittee or licensee who witnessed the destruction of the alcoholic beverages. The affidavit must include the date of destruction, the destruction location, and a description of how the alcoholic beverages were destroyed. A separate affidavit must be prepared for distilled spirits, wine, and malt beverages.

(f) The license or permit holder shall submit the approved Application for Destruction of Alcoholic Beverages (including any attachments) with the monthly excise tax report it files with the commission upon which it claims the tax exemption for the destroyed alcoholic beverages. If the permittee or licensee is unable to claim the destroyed alcoholic beverages as an exemption on a tax report, it may submit a letter to the commission requesting issuance of an authorized tax credit.

(g) The license or permit holder shall maintain a copy of the approved Application for Destruction of Alcoholic Beverages (including any attachments) and make it available upon request for inspection by an authorized representative of the commission.

(h) The commission may require that the alcoholic beverages designated for destruction be physically inspected and inventoried by a representative of the commission prior to the scheduled destruction and/or that the actual destruction be witnessed by an authorized representative of the commission.

(i) A permit or license holder may destroy uninsured malt beverages subject to destruction under Alcoholic Beverage Code §109.09 only in compliance with the following requirements:

(1) the alcoholic beverages must be destroyed in such a manner that the product is rendered unrecoverable;

(2) an employee of the permittee or licensee who witnessed the destruction of the malt beverages must execute an affidavit of destruction that includes the date of destruction, the destruction location, and a description of how the alcoholic beverages were destroyed;

(3) not later than 30 days following the destruction of malt beverages under this section, the permittee or licensee must submit to the commission the affidavit required under subsection (i)(2) of this section with a completed and signed commission form for notification of destruction of uninsured product after a natural disaster; and

(4) The permittee or licensee must retain the following documentation and make it available to the commission upon request:

(A) a copy of the receipt for the cost of destruction, if the malt beverages were destroyed at a location that charged a fee for the service;

(B) a copy of the completed and signed Notification of Destruction of Uninsured Product after a Natural Disaster; and

§41.38.Production Record.

(a) Each holder of a distiller's and rectifier's permit, winery permit, brewer's license, or brewpub license shall make a production record to be retained by the license or permit holder and made available to a representative of the commission upon request.

(b) The production record shall show:

(1) a full and complete report of all liquor or malt beverages manufactured, received, and produced;

(2) the date of each day's operation;

(3) for each day's operation, the opening inventory in bulk gallons;

(4) receipts in bulk gallons;

(5) bulk gallons used in production;

(6) closing inventory in bulk gallons;

(7) total units produced, stating number, size, and type of container;

(8) total gallons produced; and

(9) total taxable gallons produced of malt beverage or class of liquor.

(c) Entries shall be made on the production record no later than three days after malt beverage or liquor is received or produced.

(d) Each winery shall maintain a record of wine manufactured and labeled pursuant to Alcoholic Beverage Code §16.01(b). This record shall include date of manufacture, the name of the adult(s) for whom the wine was manufactured and labeled, a sample label, and the total gallons manufactured for each adult. Each record shall be made available to a representative of the commission upon request.

§41.39.Amount of Excise Tax Bonds.

(a) Excise tax bonds required by Chapter 204 of the Alcoholic Beverage Code and by Chapter 33, subchapter C of this title to be maintained by license or permit holders authorized to import malt beverages or liquor into this state shall be in a minimum amount of $1,000 and the maximum amounts of the bonds shall be determined by the executive director. The maximum bond fixed by the executive director must be an amount that will adequately protect the State of Texas against the anticipated tax liability of the principal during any six-week period.

(b) The executive director may investigate the adequacy of any bond and adjust the bond as they deem justified by the investigation results.

§41.40.Required Records for Brewpubs.

(a) Each holder of a brewpub license shall make a monthly report to the commission on forms prescribed or approved by the executive director or executive director's designee.

(b) The report shall be electronically submitted or, if mailed, postmarked on or before the 15th day of the month following the calendar month for which the report is made.

(c) Upon request by an authorized representative of the commission, invoices shall be submitted to support each entry in the report. A legible copy of each invoice must show the:

(1) invoice number and invoice date;

(2) trade name, license number, and address of the brewpub;

(3) trade name, license or permit number, and shipping address of the purchaser;

(4) brand name, type, number and size of containers, total cases, unit and or line-item extension price, and total sales price;

(5) origin of shipment and shipping date; and

(6) total gallons of malt beverage invoiced.

(d) As long as a brewpub license remains active, the monthly report required by this section must be filed each month even if no sales or shipments have been made.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103779

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER D. SALES OF ALCOHOLIC BEVERAGES NOT IN REGULAR COURSE OF BUSINESS

16 TAC §§41.41 - 41.43

New §§41.41 - 41.43 are proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rules require the repeal of current §§41.41 - 41.43.

§41.41.Sale to and by Lien Holders.

(a) All alcoholic beverages are subject to levy and other judicial process the same as any other personal property under the general laws of the state.

(b) Alcoholic beverages may be sold to and purchased by lien holders and licensees and permittees who are privileged to purchase and sell the same.

(c) In all instances after such sale has been made, the person making the sale shall notify the executive director or the executive director's designee, giving the date of sale, the names and addresses of both the original owner and the purchaser, an inventory of the beverages sold and the name of the lien holder or lien holders. A lien holder who is not a licensee or permittee and who purchases alcoholic beverages or who procures title thereto in any other lawful manner shall dispose of such alcoholic beverages within 30 days after acquiring title thereto, unless the executive director grants additional time for good cause shown.

(d) Before reselling alcoholic beverages under this section, the lien holder shall apply to the executive director or the executive director's designee for permission to make such sale. The application shall show the name and address of the intended purchaser, the number of the intended purchaser's license or permit, the quantity and type of beverages to be sold, and the date and manner of the sale, and shall include copies of any documentation by which the lien holder procured title thereto.

§41.42.Sale by Carrier.

(a) Any person authorized to transport alcoholic beverages may sell, in accordance with law, any alcoholic beverage the person acquires by reason of unpaid charges, to any permittee or licensee who is privileged to import and sell such alcoholic beverage.

(b) Any person contemplating such sale shall apply to the executive director or the executive director's designee, setting out the facts regarding such shipment, the names and addresses of the consignor and consignee, the name and address of the proposed purchaser, and documentation supporting the amount of the charges due.

(c) No person authorized to transport alcoholic beverages shall sell or offer for sale any alcoholic beverages for unpaid charges except in the manner herein provided.

§41.43.Sale after Cancellation, Expiration, or Voluntary Suspension of License or Permit.

(a) In the event any license or permit granted under the code is cancelled, expires, or is voluntarily suspended by the license or permit holder, the license or permit holder is authorized for 30 days thereafter to sell or dispose of its remaining inventory of alcoholic beverages on hand at the time of the license or permit cancellation, expiration, or voluntary suspension, in bulk, to a licensee or permittee authorized to purchase and sell same.

(b) If a necessity exists for a longer period, written permission must be procured from the executive director or the executive director's designee. The application for such permission shall specify the reasons.

(c) A holder of a license or permit who holds more than one such license or permit and who submits one to the commission for cancellation or voluntary suspension may request approval to transfer the inventory on hand to one of its other licensed or permitted locations.

(d) In all cases where alcoholic beverages are disposed of or sold in bulk as herein set out, a sworn transfer document shall be filed with the local office of the commission and is subject to approval by the executive director or the executive director's designee. Approval of the sale or transfer shall not be granted if either the seller or purchaser is delinquent under Alcoholic Beverage Code §102.32 and §45.130 of this title at the time of the request.

(e) The transfer document filed with the commission must show the complete inventory of alcoholic beverages on hand. The inventory shall show the quantity, brand, and size of each container of alcoholic beverage, and for distilled spirits it shall also show the identification stamp number affixed to each container.

(f) Both the transferor and the transferee shall sign the transfer document under oath before a notary public swearing to the correctness of the transaction.

(g) All alcoholic beverages shall be transferred in a single transaction unless, based on the circumstances, multiple transactions are approved by the executive director or the executive director's designee.

(h) No person shall dispose of any alcoholic beverages after the expiration, cancellation, or voluntary suspension of a license or permit except in the manner and within the time herein specified unless written permission is procured from the executive director or the executive director's designee.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103781

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER E. PRIVATE CLUBS

16 TAC §§41.50 - 41.56

New §§41.50 - 41.56 are proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rules require the repeal of current §§41.51 - 41.56.

§41.50.General Provisions.

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

(1) Club--A private club.

(2) Guest--An individual who is personally known by the member or one of the member's family and who is admitted to the club premises by personal introduction of, or in the physical company of, the member or one of the member's family.

(3) Member and membership--A member of and membership in a private club.

(4) Member's family--A spouse, parent, sibling, or adult child of the member.

(b) Digital Recordkeeping. A club using a computer system to maintain its membership records is not be required to keep a well-bound book if such computer system provides the information as required by these rules.

§41.51.Requirements for Permit; Membership.

(a) This section does not apply to temporary members or to hotel patrons, as described in Alcoholic Beverage Code §§32.09, 32.10, and 32.11.

(b) To qualify to hold a private club registration permit, a private club must:

(1) have 50 or more members at all times;

(2) have a membership committee composed of three or more members of the club and vested with authority by charter, bylaw or regulation to approve or reject membership applications and terminate existing memberships. The governing body of a club, if qualified under this provision, may be the membership committee, and when functioning as such is subject to and governed by all provisions herein relating to the membership committee. When considering a membership application or termination of membership, the membership committee shall keep written minutes showing the meeting date, the names of all committee members present, the name of any person admitted to membership, and the name of any person whose membership was terminated. No minutes are required of any discussion or action regarding a membership application that is denied;

(3) have, other than charter members, no members except those approved by at least three members of the membership committee at a meeting of such a committee;

(4) keep a well-bound book in which is shown the following about each member: the full name of the member, the member's initial membership number which shall be issued in sequence, the current complete address of such member, the date such member was admitted to membership, and the date such member was removed from membership. When a member has been removed from membership, the membership number may be reassigned to another member. Additional well-bound books may be used if necessary to record the information required by this paragraph, but all such books shall be kept permanently by the club;

(5) keep all books, records, and minutes required herein on the premises of the club, and make them available to any representative of the commission upon reasonable notice; and

(6) maintain in force any bond required and executed by the corporation as principal, if an incorporated club, or by an officer of the club as principal, if an unincorporated club. Such bond shall be executed by a surety company duly authorized and qualified to do business in this state, as surety, in an amount required by rule of the commission payable to the State of Texas conditioned that all fees and taxes owed by such club to the State of Texas shall be paid. Such bond shall be in a form approved by the executive director and the attorney general of Texas.

(c) No membership shall be terminated except by action of the membership committee or by written resignation of the member. Resignation of any member shall be recorded immediately in the minute book of the membership committee and in the records required by subsection (b) of this section.

(d) The executive director may, after notice and hearing, refuse to issue a private club registration permit if the executive director finds that the applicant has failed to comply with any requirement set forth in this subsection.

(e) As provided in the Alcoholic Beverage Code §32.01, alcoholic beverages owned by members of a private club may only be served to and consumed by a member, a member's family, or their guests.

(f) Permittees may access electronically readable information on a driver's license, commercial driver's license, or identification certificate for the purpose of verifying the accuracy of the records required by this rule. Information so accessed may not be retained longer than is reasonably necessary to ensure verification. The information may not be marketed in any manner. Written consent must be obtained from the club member or prospective member when accessing electronically readable information and proof of such consent must be maintained with the permittee's membership records.

§41.52.Temporary Memberships.

(a) This rule relates to §32.09 of the Alcoholic Beverage Code.

(b) A holder of a private club registration permit shall:

(1) issue a temporary membership card to any person who intends to be served alcoholic beverages on its licensed premises, except a person who is a member of the club or a guest of a member of the club, or, if the club is located in a hotel, a patron of the hotel who is at the hotel for overnight lodging and is a guest of the hotel manager who is a member of the club; and

(2) keep a record with entries made in chronological order showing the following about temporary membership cards issued: the date issued, the name of the person to whom the card was issued, and the serial number of the temporary membership card.

(c) A holder of a private club registration permit shall not serve an alcoholic beverage to a person who holds a temporary membership card unless the temporary card is:

(1) issued to the club by the commission;

(2) issued to the temporary member by the manager of the club, or other person in charge of the premises of the club;

(3) complete and legible, with all blanks, except signature blanks, properly completed, including the name of the temporary member, club name, city, and time period covered;

(4) signed at the time of issuance by the manager of the club or other person in charge of the licensed premises; and

(5) in possession of the temporary member to whom it is issued.

(d) The commission shall not issue a temporary membership card to a club until the commission has received a written request from a club in the manner prescribed by the commission, together with the effective fee established in the Texas Alcoholic Beverage Code. Payment of the fee shall be made only by cashier's check, certified check, corporate check, through the commission's electronic portal, or by United States postal money order payable to the Texas Alcoholic Beverage Commission.

§41.53.Pool Systems.

(a) This section relates to §§32.06 and 32.13 of the Alcoholic Beverage Code.

(b) Equal Assessment Pool Systems. Each holder of a private club registration permit operating under a pool system that requires each member of the pool to participate equally in the purchase and replacement of alcoholic beverages shall:

(1) purchase all such alcoholic beverages with money assessed and collected in advance from each member equally;

(2) initially set the assessment fee according to the club's by-laws or governing body and increase or decrease the fee as needed upon approval of the club's governing body and recording of the fee change in the club's minutes;

(3) use only money from the fee assessment to purchase or replace alcoholic beverages purchased for use under the equal assessment pool system; and

(4) keep a well-bound book in which is recorded the following about each member of the pool: the member's name and membership number, the date and amount of each liquor pool assessment, and the date of payment of the assessment. This rule does not apply to fraternal organizations or to veterans' organizations.

(c) Replacement Pool Systems. Each holder of a private club registration permit operating under a replacement pool system by which a designated percentage of daily service charges collected for the service of alcoholic beverages is set aside to replace alcoholic beverages served to club members and their guests and to temporary membership card holders shall:

(1) initially set the percentage according to the club's by-laws or governing body and increase or decrease the percentage as needed upon approval of the club's governing body and recording of the percentage change in the club's minutes; and

(2) use only money from the designated percentage of daily service charges collected for the service of alcoholic beverages to purchase or replace alcoholic beverages purchased for use under the replacement pool system.

(d) Each holder of a private club registration permit operating under the pool system using either equal assessments or a replacement percentage shall prepare a record showing separately the pool assessments or replacement funds collected from the membership and the disbursements of these collections for purchases of alcoholic beverages.

(e) The holder of a private club registration permit or a private club exemption certificate permit may purchase wine only from the holder of a local distributor's permit.

§41.54.Locker Systems.

(a) This section relates to §§32.05, 32.10, and 32.13 of the Alcoholic Beverage Code.

(b) A club may allow its members to store their privately-owned alcoholic beverages in secure lockers on the club premises.

(c) All alcoholic beverages owned by each member under the locker system must be kept in a locker rented only to such member at all times, except when the member, one of the member's family or the member's guest is present on the premises and using such alcoholic beverages. This section does not apply to fraternal organizations or to veterans' organizations.

(d) The club will be assessed gross receipts taxes on alcoholic beverages kept in member lockers based upon storage fees, corkage fees, and/or service fees collected by the club.

(e) The club must keep the following records on the premises for at least two years and must make available to the TABC upon reasonable request:

(1) receipts or other records of storage fees, corkage fees, and/or service fees collected;

(2) an inventory of each alcoholic beverage stored in a member locker, including the brand and container size of distilled spirits, locker number, and member name or other unique identifier, such as a membership number; and

(3) with respect to distilled spirits, the inventory must include other identification approved by the commission sufficient to demonstrate that the distilled spirit is owned by the member.

(f) Once stored, members may not remove an alcoholic beverage from the club premises except as authorized by §32.15 of the Alcoholic Beverage Code.

§41.55.Food Service.

A private club shall provide regular, adequate food service including, at a minimum, meals available on the club premises for service to members, their families, and guests. The food service requirement may be fulfilled through the use of a concession or catering agreement with an outside vendor. Prepared food must be available upon request and must be delivered and served at the licensed premises. Payment for food service must be made to the private club. This section does not apply to fraternal organizations or veterans' organizations.

§41.56.Enforcement.

The executive director may, after notice and hearing, suspend for a period not exceeding 60 days or cancel a private club registration permit:

(1) if the executive director finds that the club or any of its members, agents, servants, or employees has:

(A) served, consumed or permitted another person to consume an alcoholic beverage on the premises of the club at any time when the private club registration permit of such club is suspended by an order of the executive director;

(B) made a false statement or a misrepresentation in any book, record, minutes or report, or other written matter required to be kept or reported by this subchapter or by any provision of the Alcoholic Beverage Code; or

(2) for any reason listed in §32.17 of the Alcoholic Beverage Code.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103783

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

SUBCHAPTER F. IDENTIFICATION STAMPS

16 TAC §41.60

New §41.60 is proposed pursuant to the commission's authority under §5.31 of the Code, which allows the commission to prescribe and publish rules necessary to carry out the provisions of the Code.

The proposed new rule does not impact any other current rules or statutes.

§41.60.Identification Stamps and Local Distributor's Records.

(a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:

(1) Identification stamp--The identification stamp referenced in §§28.15 and 32.20 of the Alcoholic Beverage Code.

(2) Invoice--An instrument requesting payment for alcoholic beverages issued by the seller of alcoholic beverages to a permittee.

(3) Mutilate--To scratch, cut, tear, or abrade in a manner which inflicts obvious and substantial damage to the stamp but does not totally remove or obliterate the stamp.

(4) Retail permittee--The holder of a mixed beverage permit, a private club registration permit, or private club exemption certificate permit.

(b) The holder of a local distributor's permit shall keep any record required by any rule of the commission or by the Alcoholic Beverage Code for a period of two years on the licensed premises and shall make any such record available to a representative of the commission upon request within a reasonable time.

(c) Identification stamps shall be affixed only by the holder of a local distributor's permit to whom such stamps have been issued by the commission. When affixing identification stamps, the holder of a local distributor's permit shall affix each identification stamp near the top of the brand label of the bottle of distilled spirits in such a manner that some portion of the identification stamp covers and is attached to some portion of the brand label but does not cover any information on the brand label, unless the exception in subsection (d) of this section applies. "Brand label" means the principal display panel that is most likely to be displayed, presented, shown, or examined under normal and customary conditions of display for retail sale.

(d) A licensee selling cases of distilled spirits containing only multiple spirits containers each with a capacity of 375 mL or less may stamp the case with one identification stamp prior to selling the alcoholic beverages to a mixed beverage permittee, rather than individually stamping each bottle in the case. The mixed beverage permittee purchasing cases of distilled spirits subject to this section shall retain for two years invoices showing the identification stamp for each case purchased.

(e) Transaction records.

(1) Each holder of a local distributor's permit shall prepare a record making an entry thereon on each date there occurs any of the following transactions involving identification stamps and showing the following:

(A) Quantity of identification stamps received.

(B) Quantity and serial numbers of identification stamps affixed, and also showing the invoice date, invoice number, retailer trade name, and retailer permit number.

(D) When the holder of a local distributor's permit affixes identification stamps prior to the sale of such stamped merchandise, the permittee shall also record the date the merchandise is stamped showing the number of stamps used per brand and size. Stamped merchandise shall be stored separately from all other merchandise on hand. Stamps issued from pre-stamped stock must be listed individually per invoice line item on sales invoices prepared for retail sales.

(E) The serial number of each stamp issued, lost, stolen, voided, destroyed, or issued as a replacement stamp must be recorded.

(2) Full title and ownership of all identification stamps shall remain vested in the commission. Upon termination of any local distributor's permit, all unaffixed identification stamps on hand shall be surrendered to the commission along with distribution records of stamps issued by the local distributor permittee.

(f) An invoice shall be issued in original and one copy in consecutive numbered order, showing the date of the sale or distribution, the name and permit number of the seller and the purchaser, and the purchaser's complete address, the serial numbers of all identification stamps affixed to the merchandise, the quantity, brand and class of alcoholic beverages sold and the total price of each brand and class shown thereon. Such invoices or a copy thereof shall be delivered to the permittee and a copy of such invoices shall be kept by the seller making same. The seller's copy of the invoice must be signed by the purchaser.

(g) A local distributor may elect to maintain identification stamp records required by subsection (e) of this section in an electronic format using an automated stamp record system. If this election is made, the automated system must provide the information required by subsection (e) of this section, and the automated system must be inspected and have prior approval from the Commission.

(h) The invalidation of identification stamps required by §28.09 of the Alcoholic Beverage Code shall be done by mutilating the stamp. The marking of a stamp with ink, dye, or other material is not authorized as a method for invalidating the stamp.

(i) No retail permittee shall possess or permit any person to possess on the permittee's licensed premises any distilled spirits in any container bearing an identification stamp that has been mutilated or otherwise damaged or marked to a substantial degree.

(j) No retail permittee shall possess or permit any person to possess on the permittee's licensed premises any blank or serially numbered TABC identification stamp that is not properly attached to a distilled spirits container that has been properly invoiced to the retail permittee by a local distributor.

(k) All provisions of §§28.08, 28.09, and 28.15 of the Alcoholic Beverage Code applicable to a mixed beverage permittee apply to holders of private club registration permits and private club exemption certificate permits.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 24, 2021.

TRD-202103784

Shana Horton

Rules Attorney

Texas Alcoholic Beverage Commission

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 206-3451

PART 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION

CHAPTER 61. COMBATIVE SPORTS

16 TAC §§61.10, 61.20, 61.23, 61.40, 61.41, 61.43, 61.47, 61.80

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 61, §§61.10, 61.20, 61.23, 61.40, 61.41, 61.43, 61.47, and 61.80, regarding the Combative Sports Program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC Chapter 61 implement Texas Occupations Code, Chapter 2052, Combative Sports.

The proposed rules implement the provisions of House Bill (HB) 1560, 87th Regular Session (2021) that removed licensure requirements for persons acting as combative sports seconds, matchmakers, and event coordinators. The proposed rules remove the licensure requirement for seconds, matchmakers, and event coordinators; repeal provisions that are no longer necessary in light of the removal of the licensing requirement; add a provision stating that a combative sports contestant is responsible for the conduct of his or her seconds; and make non-substantive changes to correct style and gender-specific language. The proposed rules are necessary to implement HB 1560.

The proposed rules were presented to and discussed by the Combative Sports Advisory Board at its meeting on September 21, 2021. The Advisory Board did not make any changes to the proposed rules. The Advisory Board voted and recommended that the proposed rules be published in the Texas Register for public comment.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §61.10 (Definitions) to remove subsection (11) (the definition of "matchmaker") and correct gender-specific language in subsection (8) (the definition of "knock-down").

The proposed rules amend §61.20 (General Licensing Requirements) to remove the requirement in subsection (a) that combative sports seconds, matchmakers, and event coordinators hold a license in order to participate in a combative sports event. The proposed rules also correct gender-specific language in subsection (c).

The proposed rules amend §61.23 (General Prohibitions) to repeal subsection (d), which prohibited licensed matchmakers from also being licensed as a contestant, ring official, or second. The proposed rules also amend existing subsection (e) to make it clear that a licensed promoter may continue to act as a combative sports second. Additionally, the proposed rules remove a reference to matchmakers in subsection (a) and correct gender-specific language in subsection (f).

The proposed rules amend §61.40 (Responsibilities of the Promoter) to remove references to matchmakers and event coordinators in sections (b)(10), (b)(15)(F), and (b)(17). The proposed rules also modify subsection (a) to make it clear that promoter staff, not only the promoter, are allowed in contestant dressing rooms.

The proposed rules amend §61.41 (Responsibilities of the Referee) to remove the provision in subsection (i) requiring a referee to hold the chief second responsible for the conduct of a licensed contestant. This change is required by HB 1560. The proposed rules also reword subsection (b) without substantive change.

The proposed rules amend §61.43 (Responsibilities of Seconds) to remove language stating that a second is responsible for a contestant's corner supplies.

The proposed rules amend §61.47 (Responsibilities of Contestants) to add new subsection (z), which states, "A contestant is responsible for the conduct of his or her seconds. Violation of these rules by a second may subject the contestant to disqualification, forfeiture, administrative penalty, and/or sanction." This change was required in due to HB 1560's removal of the licensure requirement for combative sports seconds. A licensed contestant is the most appropriate party to bear responsibility for a violation of the program statutes or rules by one of their seconds.

The proposed rules amend §61.80 (Fees) to remove fees related to the licensing of seconds, matchmakers, and event coordinators.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, the department will experience an estimated $11,900 annual reduction in costs. The expected cost reductions are related to a reduced need for time and resources spent processing license applications, responding to customer service inquiries, conducting background checks, investigating complaints, and taking enforcement action against licensees. Mr. Couvillon has also determined that for each year of the first five years the proposed rules are in effect, the department will lose approximately $11,000 per year in licensing revenues.

Mr. Couvillon has also determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect the local economy; thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon also has determined that for each year of the first five-year period the proposed rules are in effect, the public benefit will be the elimination of unnecessary licensing requirements. Former license holders will also save money each year, as they will not have to submit license applications.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Since the agency has determined that the proposed rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do require a decrease in fees paid to the agency. The proposed rules implement the repeal of three license types and therefore will result in a decrease in fees paid to the department.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules make it clear that a licensed contestant will bear the responsibility for his or her seconds' compliance with program statutes and rules.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Vanessa Vasquez, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY

The proposed rules are proposed under Texas Occupations Code, Chapters 51 and 2052, which authorize the Texas Commission of Licensing and Regulation, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 2052. No other statutes, articles, or codes are affected by the proposed rules.

§61.10.Definitions.

The following words and terms have the following meanings:

(1) - (7) (No change.)

(8) Knock-down--A knock-down occurs when any part of a contestant's body, other than the [~~his~~] feet, contacts the floor of the ring or fighting area as a result of a blow struck to the contestant by an opponent.

(9) - (10) (No change.)

~~[(11) Matchmaker--One who arranges matches for professional combative sports contestants.]~~

(11) [~~(12)~~] Person--Any natural person, corporation, partnership, association or other similar entity.

(12) [~~(13)~~] Purse--The financial guarantee or any other remuneration promised to contestants for participating in an event and includes guarantees for cable pay per view, radio, television or motion picture rights.

(13) [~~(14)~~] Ring Officials--Referees, judges, ringside physicians and timekeepers.

(14) [~~(15)~~] Ringside Physician--An individual who has an unrestricted and unlimited license to practice medicine in this state and who by agreement, is assigned as the physician for a combative sports event.

(15) [~~(16)~~] Second--A person who provides assistance or advice to a contestant during a contest.

(16) [~~(17)~~] Technical Zone--An alcohol free area located between the ring and a department-approved barrier with access restricted to designated medical personnel and equipment; working officials including, managers, ring officials, contestants, seconds, the promoter, promoter representatives and assignees, round card staff, department staff, assigned contract inspectors, authorized members of the media, authorized members of the event's sanctioning bodies, and security personnel; and regulatory oversight authorities.

(17) [~~(18)~~] Timekeeper--A person who is the official timer of the length of rounds/heats and the intervals between rounds/heats and counts when a contestant is down.

§61.20.General Licensing Requirements.

(a) Professional combative sports contestants, promoters, referees, judges, and [~~seconds, matchmakers,~~] managers[~~, and event coordinators~~] who officiate or participate in a regulated professional event authorized by the Code must be licensed or registered by the executive director. Referees who officiate at regulated amateur events must also be licensed or registered by the executive director.

(b) (No change.)

(c) If a licensee or registrant[,] other than a contestant [~~or a second,~~] changes his or her address of record, the licensee or registrant shall inform the executive director in writing of the change within 30 days [~~of the change~~].

(d) - (e) (No change.)

§61.23.General Prohibitions.

(a) Judges, Timekeepers[~~, Matchmakers~~], Referees, and Ringside Physicians may not have a direct or indirect financial interest in any contestant.

(b) - (c) (No change.)

~~[(d) A matchmaker may not act as, and may not be licensed as; a contestant, ring official or second.]~~

(d) [~~(e)~~] A promoter may not act as, and may not be a timekeeper or licensed as a referee or judge. A promoter may be licensed as a manager and may act as a second. A promoter may be licensed as a contestant unless prohibited by Federal law.

(e) [~~(f)~~] A promoter shall not permit a [~~his~~] promoter's license to be used by another person.

(f) [~~(g)~~] Licensed promoters may engage in promotions with other licensed promoters so long as each promoter holds a valid unexpired license.

(g) [~~(h)~~] No person shall be allowed to participate in an event performing a function for which a license is required, unless the person has proof of identification and a current license. Acceptable proof of identification includes driver's licenses, passport, state issued identification cards, federal identification cards, or any other identification required by the executive director.

(h) [~~(i)~~] A contestant may not act as, and may not be licensed as a judge.

(i) [~~(j)~~] A person who is an officer or director of a Ranking Organization may not act as, and may not be licensed as a judge.

§61.40.Responsibilities of the Promoter.

(a) (No change.)

(b) A promoter shall:

(1) - (9) (No change.)

(10) Provide no less than two private dressing rooms of adequate size for the contestants, [~~and~~] their licensed managers, and seconds, and separate dressing rooms for male and female contestants. Only working department employees, contract inspectors, media, physicians, working ring officials, promoter, promoter staff, [~~matchmaker,~~] manager, and seconds will be allowed in the dressing rooms.

(11) - (14) (No change.)

(15) Ensure that the rules in §61.106 regarding equipment and gloves that apply to a particular type of event are followed and that each event is conducted in compliance with the following:

(A) - (E) (No change.)

(F) There shall be at least one, but no more than three, authorized promoter representative(s) at ringside at all times. Only the promoter's representative(s), department officials, the press, physicians, representatives of sanctioning bodies, and judges shall sit at the ringside tables. For purposes of this subparagraph, [~~an event coordinator is a representative of the promoter; however,~~] assignees are not representatives of the promoter.

(16) Pay by check or money order the licensing fee of any contestant[~~, second,~~] or manager[,] who intends to participate in a scheduled combative sports event and who is not licensed at the time of the event weigh-in.

(17) Supervise the activities of employees [~~and event coordinators~~] to ensure [~~assure~~] that promoted events are conducted in compliance with this chapter and applicable statutes.

(18) (No change.)

§61.41.Responsibilities of the Referee.

(a) (No change.)

(b) The referee may eject from an event any person who violates the Code or department rules. If a second violates this chapter or the Code, the referee may disqualify the [~~seconds'~~] contestant to whom the second is assigned.

(i) Before each bout, the referee shall call the contestants and their chief seconds together for final instructions. [~~The referee shall hold the chief second responsible for his contestant's conduct during the bout.~~]

(j) - (p) (No change.)

§61.43.Responsibilities of Seconds.

(a) - (h) (No change.)

(i) The following rules apply to [~~A second shall be responsible for a contestant's~~] corner supplies:[.]

(1) - (5) (No change.)

(j) - (k) (No change.)

§61.47.Responsibilities of Contestants.

(a) - (y) (No change.)

(z) A contestant is responsible for the conduct of his or her seconds. Violation of these rules by a second may subject the contestant to disqualification, forfeiture, administrative penalty, and/or sanction.

§61.80.Fees.

(a) The annual fee shall accompany each license or registration application or renewal as follows:[.]

(1) Promoter--$900

(2) Contestant--$20

(3) Manager--$100

~~[(4) Second--$20]~~

~~[(5) Matchmaker--$100]~~

(4) [~~(6)~~] Referee--$125

(5) [~~(7)~~] Judge--$100

(6) [~~(8)~~] Amateur Combative Sports Association--$50

~~[(9)Event Coordinator--$200]~~

(b) - (d) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 27, 2021.

TRD-202103808

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 463-3671

CHAPTER 82. BARBERS

16 TAC §82.80

The Texas Department of Licensing and Regulation (Department) proposes amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 82, §82.80, regarding the Barbering Program. These proposed changes are referred to as the "proposed rule."

EXPLANATION OF AND JUSTIFICATION FOR THE RULE

The rules under 16 TAC Chapter 82 implement Texas Occupations Code, Chapters 1601 and 1603.

The proposed rule is necessary to begin implementing House Bill (HB) 1560, 87th Legislature, Regular Session (2021). HB 1560 makes many changes, including combining the Barbering and Cosmetology program statutes, and eliminating instructor licenses. Under HB 1560, TDLR will discontinue issuing instructor licenses at some point before September 1, 2023, and instructors will transition to holding only the individual practitioner license for their field of instruction. In preparation for that transition, the proposed rule reduces instructor license renewal fees to match the renewal fees for the Class A Barber certificate and specialty licenses or certificates.

SECTION-BY-SECTION SUMMARY

The proposed rule amends §82.80 by reducing the instructor license renewal fee to $55 and reducing the specialty instructor license renewal fee to $30.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rule is in effect, there are no estimated additional costs or reductions in costs to state government as a result of enforcing or administering the proposed rule. The activities required to implement the proposed rule are one-time administrative tasks that are routine in nature and will not result in an increase or decrease in program costs.

Mr. Couvillon has determined that for each year of the first five years the proposed rule is in effect, there will be a loss in revenue to the State as a result of enforcing or administering the rule. The proposed rule will reduce the renewal fee for a barber instructor license from $65 to $55, and the renewal fee for a specialty instructor license from $65 to $30. The lost revenue from reducing renewal fees is estimated to be $2,170 per year for the next five fiscal years. However, at some point before September 1, 2023, the Department will cease issuing instructor licenses, and instructors will transition to holding individual practitioner licenses.

Mr. Couvillon has determined that for each year of the first five years the proposed rule is in effect, there is no estimated increase in revenue to the State as a result of enforcing or administering the proposed rule.

Mr. Couvillon has determined that for each year of the first five years the proposed rule is in effect, enforcing or administering the proposed rule does not have foreseeable implications relating to costs or revenues of local governments. Local governments are not responsible for enforcing or administering the proposed rule.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rule will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022. The reduction of licensing fees will not increase or decrease the number of people instructing barbering in Texas.

PUBLIC BENEFITS

Mr. Couvillon also has determined that for each year of the first five-year period the proposed rule is in effect, the public benefit will be a reduction in fees paid by licensees. Barber instructors will pay $10 less for each license renewal, and specialty instructors will pay $35 less for each license renewal. This will ensure that the holder of an instructor license pays the same amount to renew as an individual practitioner license or certificate holder.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rule is in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rule. The proposed rule reduces fees; it does not increase them.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rule. Since the agency has determined that the proposed rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rule does not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rule. For each year of the first five years the proposed rule will be in effect, the agency has determined the following:

1. The proposed rule does not create or eliminate a government program.

2. Implementation of the proposed rule does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rule does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rule does require an increase or decrease in fees paid to the agency. The proposed rule reduces instructor renewal fees, resulting in a reduction in fees paid to the Department.

5. The proposed rule does not create a new regulation.

6. The proposed rule does not expand, limit, or repeal an existing regulation.

7. The proposed rule does not increase or decrease the number of individuals subject to the rule's applicability.

8. The proposed rule does not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rule, and the proposed rule does not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rule does not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rule may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Vanessa Vasquez, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY

The proposed rule is proposed under Texas Occupations Code, Chapters 51, 1601, and 1603, which authorize the Texas Commission of Licensing and Regulation, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposed rule are those set forth in Texas Occupations Code, Chapters 51, 1601, and 1603. No other statutes, articles, or codes are affected by the proposed rule.

§82.80.Fees.

(a) (No change.)

(b) Renewal Fees:

(1) (No change.)

(2) Barber Instructor License--$55 [~~$65~~]

(3) - (4) (No change.)

(5) Specialty Instructor License--Barber Technician, Manicurist, Barber Technician/Manicurist, Barber Technician/Hair Weaving, Hair Weaving--$30 [~~$65~~]

(6) - (13) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 27, 2021.

TRD-202103802

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 463-3671

CHAPTER 83. COSMETOLOGISTS

16 TAC §83.80

The Texas Department of Licensing and Regulation (Department) proposes amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 83, §83.80, regarding the Cosmetologists Program. These proposed changes are referred to as the "proposed rule."

EXPLANATION OF AND JUSTIFICATION FOR THE RULE

The rules under 16 TAC Chapter 83 implement Texas Occupations Code, Chapters 1602 and 1603.

The proposed rule is necessary to begin implementing House Bill (HB) 1560, 87th Legislature, Regular Session (2021). HB 1560 makes many changes, including combining the Barbers and Cosmetologists program statutes, eliminating instructor licenses, and deregulating wig specialty certificates and wig salons. Under HB 1560, TDLR will discontinue issuing instructor licenses at some point before September 1, 2023, and instructors will transition to holding only the individual practitioner license for their field of instruction. In preparation for that transition, the proposed rule reduces instructor license renewal fees to match the renewal fees for the cosmetology operator and specialty licenses.

Additionally, the proposed rule implements HB 1560 by removing wig specialty certificates from the list of initial application fees and renewal fees.

SECTION-BY-SECTION SUMMARY

The proposed rule amends §83.80 by removing wig specialty certificates from the list of initial application fees and renewal fees; reducing the instructor license renewal fee to $50; and reducing the instructor specialty license renewal fee to $50.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Mr. Couvillon has determined that for each year of the first five years the proposed rule is in effect, there will be a loss in revenue to the State as a result of enforcing or administering the rule. The proposed rule will reduce the renewal fee for a cosmetology instructor license and all cosmetology specialty instructor licenses from $60 to $50. Additionally, the proposed rule removes the initial fee and renewal fee for a wig specialty certificate. The lost revenue from eliminating the wig specialty certificate fees and reducing renewal fees for instructors is estimated to be $26,970 per year for the next five fiscal years. However, at some point before September 1, 2023, the Department will cease issuing instructor licenses, and instructors will transition to holding individual practitioner licenses.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rule will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code §2001.022. The reduction and elimination of licensing fees will not increase or decrease the number of people instructing cosmetology or performing wig services in Texas.

PUBLIC BENEFITS

Mr. Couvillon also has determined that for each year of the first five-year period the proposed rule is in effect, the public benefit will be a reduction in fees paid by licensees. Cosmetology instructors will pay $10 less for each license renewal. This will ensure that the holder of an instructor license pays the same amount to renew as an individual practitioner license holder. Additionally, removing the fee amounts for wig specialty certificates may help communicate to potential applicants that wig specialty certificates are no longer being issued.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

GOVERNMENT GROWTH IMPACT STATEMENT

1. The proposed rule does not create or eliminate a government program.

2. Implementation of the proposed rule does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rule does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rule does require an increase or decrease in fees paid to the agency. The proposed rule reduces instructor renewal fees and eliminates fees for wig specialty certificates, resulting in a reduction in fees paid to the Department.

5. The proposed rule does not create a new regulation.

6. The proposed rule does not expand, limit, or repeal an existing regulation.

7. The proposed rule does increase or decrease the number of individuals subject to the rule's applicability. The proposed rule implements HB 1560, which eliminates wig specialty certificates. Persons currently holding wig specialty certificates will no longer be required to obtain the certificate or pay the fee associated with the certificate.

8. The proposed rule does not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

PUBLIC COMMENTS

STATUTORY AUTHORITY

The proposed rule is proposed under Texas Occupations Code, Chapters 51, 1602, and 1603, which authorize the Texas Commission of Licensing and Regulation, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposed rule are those set forth in Texas Occupations Code, Chapters 51, 1602, and 1603. No other statutes, articles, or codes are affected by the proposed rule.

§83.80.Fees.

(a) Application fees.

(1) - (2) (No change.)

(3) Specialty Certificate--Hair Weaving[~~, Wig~~]--$50

(4) - (13) (No change.)

(b) Renewal fees.

(1) - (2) (No change.)

(3) Specialty Certificate--Hair Weaving[~~, Wig~~]--$50

(4) Instructor License--$50 [~~$60~~]

(5) Instructor Specialty License--Esthetician, Manicurist, Esthetician/Manicure, Eyelash Extension--$50 [~~$60~~]

(6) - (12) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 27, 2021.

TRD-202103804

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 7, 2021

For further information, please call: (512) 463-3671