HBA-TYH H.B. 3555 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3555 By: Wilson Licensing & Administrative Procedures 4/13/1999 Introduced BACKGROUND AND PURPOSE Provisions of the U.S. Constitution give the state authority to regulate the manufacture, distribution, sale, use, possession, and transportation of alcoholic beverages. Texas has adopted the Alcoholic Beverage Code. H.B. 3555 clarifies how legislative appropriations to the Texas Alcoholic Beverage Commission are to be spent, the effect of suspension of alcoholic beverage licenses and permits of notification to interested persons of an expired or suspended alcoholic permit or license, the relationship between manufacturer and distributors of certain alcoholic beverages, and other regulations regarding the sale of wine. This bill also increases the alcohol percentage limit for certain alcoholic beverages from 14 to 17 percent by volume. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 5.50, Alcoholic Beverage Code, by adding Subsection (e), as follows: (e) Provides, for the purposes of Subsection (b), exceptions to the term "the legislative appropriation to the commission for the regulation of alcoholic beverages." SECTION 2. Amends Section 11.09, Alcoholic Beverage Code, as follows: Sec. 11.09. New title: EXPIRATION OR SUSPENSION OF PERMIT. Provides that a secondary permit that requires the holder of the permit to first obtain another permit, including a late hours permit or temporary permit, expires on the same date the basic or primary permit expires. Prohibits the Alcoholic Beverage Commission (commission) from prorating or refunding any part of the fee for the secondary permit if the application of this section results in the expiration of the permit in less than one year. Provides that an action by the commission resulting in the suspension of a basic or primary permit also acts to suspend any secondary permit held by the holder of the basic or primary permit. SECTION 3. Amends Subchapter A, Chapter 11, Alcoholic Beverage Code, by adding Section 11.091, as follows: Sec. 11.091. NOTIFICATION OF EXPIRED OR SUSPENDED PERMIT; LIABILITY FOR UNAUTHORIZED SALE. (a) Requires the commission to verify that the holder of an expired or suspended retail permit is not operating in violation of this code. Provides that the verification, including any inspection of the premises by commission personnel, must occur within a reasonable time after the date the permit expires or is suspended. (b) Requires the commission to promptly notify each wholesaler, as that term is ordinarily used and understood in Section 102.01 (Tied House Prohibited), who regularly supplies retailers in the geographic area that the holder's retail permit has expired or has been suspended. (c) Prohibits a wholesaler from being charged with or being held liable for a violation of this code relating to the sale of alcoholic beverages to a non-permitted premise if the commission has not notified the wholesaler. (d) Provides that this section does not apply if the holder of a retail permit has timely filed a renewal application and is operating during the pendency of the renewal application subject to this code and the regulations of the commission. SECTION 4. Amends Subchapter C, Chapter 11, Alcoholic Beverage Code, by adding Sections 11.72 and 11.73, as follows: Sec. 11.72. AFFIRMATION OF COMPLIANCE. Prohibits a person who holds a permit under Chapter 19 (Wholesaler's Permit), 20 (General Class B Wholesaler's Permit), 21 (Local Class B Wholesaler's Permit), or 23 (Local Distributor's Permit) form being held liable for selling or delivering an alcoholic beverage to a retailer not authorized to purchase and receive the alcoholic beverage if the permit holder reasonably believes that the retailer is authorized to purchase and receive that type of alcoholic beverage, and obtains from the retailer at the time of delivery a written affirmation that the retailer is authorized to purchase and receive the type of alcoholic beverage sold and delivered by the permit holder. Sec. 11.73. DISCIPLINE FOR ACTIONS OF AGENT. Authorizes the commission or administrator to suspend or revoke the permit of a person who is represented by the holder of an agent's permit as described by Section 35.01 (Authorized Activities) or otherwise discipline the person based on an act or omission of the holder of an agent's permit only if an individual employed by the person in a supervisory position was directly involved in the act or omission of the holder of an agent's permit, had notice or knowledge of the act or omission, and failed to take reasonable steps to prevent the act or omission. SECTION 5. Amends Section 24.07, Alcoholic Beverage Code, to increase the alcohol percentage limit for certain alcoholic beverages form 14 to 17 percent by volume. SECTION 6. Amends Section 25.01, Alcoholic Beverage Code, to make conforming changes. SECTION 7. Amends Section 25.09, Alcoholic Beverage Code, to make conforming changes. SECTION 8. Amends Section 26.01, Alcoholic Beverage Code, to make conforming changes. SECTION 9. Amends Section 27.01, Alcoholic Beverage Code, to make conforming changes. SECTION 10. Amends Section 27.11, Alcoholic Beverage Code, to make conforming changes. SECTION 11. Amends Section 42.01(a), Alcoholic Beverage Code, to authorize the transport of liquor by certain licensed individuals in a vehicle owned or leased by the holder of a permit issued under Chapter 35 (Agent's Permit). SECTION 12. Amends Section 61.03, Alcoholic Beverage Code, as follows: Sec. 61.03. New title: EXPIRATION OR SUSPENSION OF LICENSE. (a) Prohibits a license from being issued, rather than authorizes a license to be issued, for a term longer than one year, except as provided by Subsection (b). (b) Provides that a secondary license which requires the holder of the license to first obtain another license, including a late hours license or temporary license, expires on the same date the basic or primary license expires. Prohibits the commission from prorating or refunding any part of the fee for the secondary license if the application of this section results in the expiration of the license in less than one year. (c) Provides that an action by the commission resulting in the suspension of a basic or primary license also acts to suspend any secondary license held by the holder of the basic or primary license. SECTION 13. Amends Subchapter A, Chapter 61, Alcoholic Beverage Code, by adding Section 61.031, as follows: Sec. 61.031. NOTIFICATION OF EXPIRED OR SUSPENDED PERMIT; LIABILITY FOR UNAUTHORIZED SALE. (a) Requires the commission to verify that the holder of an expired or suspended retail license is not operating in violation of this code. Provides that the verification, including any inspection of the premises by commission personnel, must occur within a reasonable time after the date the license expires or is suspended. (b) Requires the commission to promptly notify each wholesaler, as that term is ordinarily used and understood in Section 102.01(Tied House Prohibited) who regularly supplies retailers in the geographic area that the holder's retail license has expired or has been suspended. (c) Prohibits a wholesaler from being charged with or being held liable for a violation of this code relating to the sale of alcoholic beverages to an unlicensed premise if the commission has not notified the wholesaler. (d) Provides that this section does not apply if the holder of a retail license has timely filed a renewal application and is operating during the pendency of the renewal application subject to this code and the regulations of the commission. SECTION 14. Amends Subchapter C, Chapter 61, Alcoholic Beverage Code, by adding Sections 61.86 and 61.87, as follows: Sec. 61.86. AFFIRMATION OF COMPLIANCE. Prohibits a person who holds a license under Chapter 64 (General Distributor's License), 65 (Local Distributor's License), or 66 (Branch Distributor's License) from being held liable for selling or delivering an alcoholic beverage to a retailer not authorized to purchase and receive the alcoholic beverage if the license holder reasonably believes that the retailer is authorized to purchase and receive that type of alcoholic beverage, and obtains from the retailer at the time of delivery a written affirmation that the retailer is authorized to purchase and receive the type of alcoholic beverage sold and delivered by the license holder. Sec. 61.87. DISCIPLINE FOR ACTIONS OF AGENT. Authorizes the commission or administrator to suspend or revoke the license of a person who is represented by the holder of an agent's license as described by Section 73.01 (Authorized Activities) or otherwise discipline the person based on an act or omission of the holder of an agent's license only if an individual employed by the person in a supervisory position was directly involved in the act or omission of the holder of an agent's license, had notice or knowledge of the act or omission, and failed to take reasonable steps to prevent the act or omission. SECTION 15. Amends Section 71.04, Alcoholic Beverage Code, to make conforming changes. SECTION 16. Amends Section 102.07, Alcoholic Beverage Code, is amended by amending Subsection (a) and adding Subsection (g) to read as follows: (a) Makes conforming changes. (g) Provides that Subsection (a) does not prohibit a permittee covered under Subsection (a) from prearranging or preannouncing a promotional activity otherwise permitted by this code with a retailer about a promotional activity to be held on the retailer's premises. Authorizes a holder of wholesaler's or class B wholesaler's permit to prearrange a promotional activity only for distilled spirits or wine. Prohibits a permittee from preannouncing a promotion to a consumer, if the permittee is the holder of a wholesaler's or class B wholesaler's permit, or preannouncing the purchase of wine or distilled spirits to a consumer. SECTION 17. Amends Section 102.72, Alcoholic Beverage Code, by adding Subsections (d) and (e), as follows: (d) Authorizes a manufacturer or distributor to file a copy of any agreement entered into under this subchapter with the commission. (e) Requires an agreement entered into, renewed, or amended under this subchapter (Beer Industry Fair Dealing Law) after September 1, 1999, to contain, on the front page of the agreement, information on whether any portion of the agreement is subject to arbitration or subject to Chapter 26 (Statute of Frauds), Business & Commerce Code. SECTION 18. Amends Section 107.07(f), Alcoholic Beverage Code, as follows: (f) Provides that an offense under this subsection is a Class A misdemeanor unless it is shown at the trial of the offense that the person shipped an alcoholic beverage or caused an alcoholic beverage to be shipped after the person received written notice from the commission that the person was violating this subsection, in which event the offense is a state jail felony. SECTION 19. Amends Sections 251.14(a) and (e), Alcoholic Beverage Code, to make conforming changes. SECTION 20. Amends Subchapter D, Chapter 251, Alcoholic Beverage Code, by adding Section 251.81, as follows: Sec. 251.81. SALE OF WINE. Provides that if the sale of wine was approved in an area by a local option election, other than a local option election that approved the sale of all alcoholic beverages, before September 1, 1999, an alcoholic beverage license or permit holder is prohibited from selling in that area wine containing more than 14 percent alcohol by volume unless a subsequent local option election approves the sale of wine or wine and other alcoholic beverages. Requires the commission, on the face of each alcoholic beverage license or permit, to indicate whether the holder may sell wine and, if the license or permit holder may sell wine, whether the holder may sell wine up to 14 percent alcohol or 17 percent alcohol by volume. SECTION 21. Repealer: Sections 22.09 and 24.08, Alcoholic Beverage Code. Both sections limit the volume of alcoholic beverage sold in a single transaction. SECTION 22. Provides that Sections 11.72 and 61.86, Alcoholic Beverage Code, as added by this Act, apply only to a sale or delivery of an alcoholic beverage on or after the effective date of this Act. SECTION 23. Provides that Sections 11.73 and 61.87, Alcoholic Beverage Code, as added by this Act, apply only to an act or omission of the holder of an agent's permit under Chapter 35, Alcoholic Beverage Code, or of an agent's beer license under Chapter 73 (Agent's Beer License), Alcoholic Beverage Code, that occurs on or after the effective date of this Act. SECTION 24. Provides that the change in law made to Section 107.07, Alcoholic Beverage Code, by this Act applies only to an offense committed on or after the effective date of this Act. For purposes of this section, an offense is committed before the effective date of this Act if any element of the offense occurs before the effective date. Provides that an offense committed before the effective date of this Act is covered by the law in effect when the offense was committed, and the former law is continued in effect for that purpose. SECTION 25. Effective date: September 1, 1999. SECTION 26. Emergency clause.