PART 3. TEXAS ALCOHOLIC BEVERAGE COMMISSION
CHAPTER 34. SCHEDULE OF SANCTIONS AND PENALTIES
The Texas Alcoholic Beverage Commission (commission) adopts new Chapter 34, titled Schedule of Sanctions and Penalties. Within this new chapter, the commission adopts new §§34.1, 34.2, and 34.3 with changes to the proposed text as published in the June 6, 2008, issue of the Texas Register (33 TexReg 4444). These new adopted sections are: §34.1, relating to General Provisions; §34.2, relating to Schedule of Sanctions and Penalties for Health, Safety and Welfare Violations; and §34.3, relating to Schedule of Sanctions and Penalties for Major Regulatory Violations.
The commission has withdrawn and does not adopt proposed new §34.4, relating to Schedule of Sanctions and Penalties for Marketing Practices Violations, as published in the June 6, 2008, issue of the Texas Register (33 TexReg 4444).
Senate Bill 904, §10, 80th Legislature, Regular Session, 2007, amended Chapter 5 of the Texas Alcoholic Beverage Code (Code) to add new §5.362 to the Code. This new section requires the commission to adopt a schedule of sanctions that may be imposed on a license or permit holder for violations of this Code or rules adopted under the Code. The schedule must:
- Impose a penalty or sanction that is appropriate for the violation that is the basis for disciplinary action;
- Include the number of days a permit or license may be suspended and the corresponding civil penalty under §11.64 for each violation;
- Consider the permit or license held by the person who violates the code;
- Consider the type of violation;
- Consider the violation history of the permit or license holder; and
- Allow for deviations for clearly established mitigating or aggravating circumstances.
The new chapter and sections are adopted to comply with the requirements of this new section of the Code.
New §34.1 sets out general provisions of the rule relating to legal authority, applicability, and implements the requirements set forth in new §5.362.
New §34.2 is a table showing the schedule of sanctions and penalties for violations relating to health, safety and welfare violations of the Code. It contains a description of the violation and the number of days and dollar amount to be assessed under the chart for the first, second, and third violation of the Code.
New §34.3 is a table showing the schedule of sanctions and penalties for violations relating to major regulatory violations of the Code. It contains a description of the violation and the number of days and dollar amount to be assessed under the chart for the first, second, and third violation of the Code.
The commission has received numerous comments from individuals and organizations in response to the proposed rule text as well as comments from agency staff. Comments were received in writing and in public meetings with commission staff. Comments on the proposed rules were received from organizations concerned with the effects of alcohol consumption on public health and safety: Texans Standing Tall, LifeSteps County Coalition, the Coalition on Underage Drinking, the City of Grand Prairie, and Mothers Against Drunk Driving (health and safety commenters collectively). Comments were also received from industry groups and individuals and organizations that represent these groups, including Brookshire Grocery Company, Kroger Food Stores, The Beer Institute, the Texas Restaurant Association, the Texas Retailer's Association, Jack Martin and Associates, the Texas Wine & Grape Growers Association, Texas Petroleum and Convenience Store Association, Texas Package Stores Association, Wholesale Beer Distributors of Texas, and numerous individuals (industry members collectively). Changes to the proposed rule text and attached charts were made as a result of these comments.
Comment: Concerning §34.4, relating to Sanctions and Penalties for Marketing Practices Violations, numerous comments and recommendations were made by industry members, both in writing and during public meeting. Generally, these commenters were interested in exploring ways to better distinguish between violations which were inadvertent, violations which did not present serious disruption or disorder to the market place, and violations that did adversely affect or disrupt the marketplace. The commenters also asked the commission to consider implementing model or voluntary compliance plans that if adopted and implemented in good faith by a permit holder could be used as a factor in assessing penalties.
Response: The commission agrees that marketing practices violations are not as well understood as other violations of the Code. The commission also agrees that further discussion and development of a plan that would incorporate expanding education and voluntary compliance relating to marketing practices is warranted. This section of the rule is withdrawn for further development and discussion with industry members.
Comment: Concerning §34.2 and §34.3, relating to the penalties for public safety and major regulatory violations, numerous comments were received from industry members expressing concern with the wide range of dollar amounts and the day ranges in both sections. Specifically, it was felt that having different dollar amounts and day ranges made the resulting penalty amounts unpredictable and generally excessive and punitive.
Comment: Also concerning §34.2 and §34.3, comments received from health and safety commenters were generally in favor of increasing the dollar amounts and the day ranges for violations, in particular for repeat violations. These commenters felt that for the rules to achieve their desired effect of deterrence, the penalties would have to be high enough to encourage compliance with the law and effective in preventing recidivism.
Response: The commission agrees in part and disagrees in part with comments and the rule has been changed as a result of this comment. The dollar amount has been changed to $300.00 for all violations that have a range of suspension days and a dollar amount set in lieu of suspension. The commission believes this amount is reasonable in view of the length of time the dollar amount has been set at the current level. The penalty chart was first used in 1984. At that time, the dollar amount was set at $150.00 per day of suspension assessed. This is the minimum amount per day established by §11.64(a) of the Code.
Using the Consumer Price Index, the $150.00 used since 1984 is the equivalent to approximately $310.00 today. Therefore, the commission does not believe the increase is either excessive or punitive.
With regard to the days assessed, the commission has for the most part maintained the day range for the first violation. For second violation, the number of days is double that of the first violation and the number of days for the third violation is triple that of the second violation. The commission believes this will provide the necessary deterrent effect, while providing a level of predictability for the suspension assessed and the civil penalties in lieu of suspension.
Comment: Also concerning §34.2 and §34.3, industry members were concerned at the severity of penalties for second and third offenses. They indicated that for large and small retailers alike the turn-over rate of employees who serve and sell alcoholic beverages to the public is very high. As a result of this high turn-over rate, it is difficult to keep individuals adequately educated and trained. The result is a higher risk of repeat violations for the same offense within the time frames established by the rules.
Response: The commission agrees with concerns that the penalties were too severe. The second and third penalties were reduced as a result of these comments. Changes to the proposed charts were made as a result of these comments.
Comment: Concerning §34.1(d), relating to warnings, several comments were received from industry members. Generally, they felt that putting the warning provision in the rule and using it as a factor in assessing a penalty, and also making it subject to the contested case process, militates the warning beyond the common understanding of why a warning rather than a violation is issued. Another issue was the timeframe within which a warning could be used as an aggravating circumstance under the rules.
Response: The commission disagrees with this comment. The warning section was added to the rule text because warnings were deleted as an option from the penalty chart. The rule provides that a warning may be issued for any violation, not just the narrow list of violations set forth in the prior chart. The rule also expressly provides that a warning may be issued if it is believed to be an effective deterrent. If there is a subsequent violation, the effect of the warning as a deterrent has failed and the warning should, therefore, be considered in the subsequent violation. The commission has additionally added a definition of warning to clarify that it is issued for a violation of the Code, and, therefore, should be subject to the due process protection of a contested case. Regarding defining a timeframe within which a warning could be used as an aggravating circumstance, the commission believes subsection (g) timeframes apply and no separate timeframe for warnings is necessary. No changes were made to the rule as a result of this comment.
Comment: Concerning the rules generally, some commenters expressed a concern that the increase in civil penalties will inevitably result in fewer settlements under the rules and more cases being referred to the legal division as contested cases.
Response: The commission can neither agree nor disagree with this comment. The decision of whether to settle a violation to avoid the cost and expense of litigation, and the risk of being assessed a higher penalty if the commission prevails at the hearing, have always been factors for permit holders to weigh and consider. No change to the rule was made as a result of this comment.
Comment: Concerning §34.2 and §34.3, industry members were concerned that for a large number of the violations listed, the third violation would result in cancellation of the permit or license. The commenters wanted the discretion of some penalty short of cancellation to remain an option.
Response: The commission disagrees with this comment. The violations which will result in cancellation on a third or even a second violation are violations which either present a serious health and safety risk to the public or indicate that the permit holder defies regulation. For example, under §34.2, some of the violations that require cancellation on the second violation involve violence or an unacceptable risk to public health or safety, including breach of the peace that results in serious bodily injury, death, or involving a deadly weapon, and possession sale or delivery of a controlled substance. Cancellations for a third violation include sale of an alcoholic beverage to an intoxicated person, sale of alcoholic beverages during prohibited hours, and Penal Code violations that are also violations of the Alcoholic Beverage Code. The permittee may contest the cancellation in an administrative hearing, so due process continues to be available to the permittee, giving them an opportunity to show why cancellation is not an appropriate sanction. No change was made to the rule as a result of this comment.
Comment: One commenter pointed out that two minor violations (excessive noise and violation of a city code) no longer had a range of days, when under the previous chart the range was warning to 3 days for a first violation, and also that since there was no dollar amount listed, it appeared that these required a suspension.
Response: The commission agrees with this comment and the rule has been changed to reflect both a range of days and a dollar amount that can be paid per day in lieu of suspension.
Comment: One commenter expressed concern that the policies regarding deviations from penalties assess using the penalty chart should be in place before the new rules are adopted and requested the commission to defer adoption of the new rules until such time as the internal policy regarding deviation from the chart is finalized.
Response: The commission disagrees with this comment. The policy regarding deviation from the chart is an internal policy to ensure that agents and auditors consistently apply the chart except when a deviation is justified and can be articulated in writing for approval. Section 11.64(b) and (c) and §11.641 of the Code provide the general framework for reasons that justify a deviation and the internal policy merely adopts these and sets forth the internal procedure for obtaining approval of the deviation. No change to the rules was made as a result of this comment.
Comment: One commenter expressed concern about the "look back period" for violations and how it affects due process.
Response: The commission disagrees with this comment. The commission has always used past violation history to determine what penalty will be assessed. The only thing this rule changes is the amount of the penalties, so the commission does not see the effect on due process. A permittee will always be provided with an opportunity to forgo settlement under this rule and request a contested case hearing on any violation of the Code, so due process is always provided. No change was made to the rules as a result of this comment.
The adopted new chapter and sections are authorized by §5.31 and §5.362 of the Alcoholic Beverage Code (Code). Section 5.31 gives the commission authority to prescribe and publish rules necessary to carry out the provisions of Code. Section 5.362 provides the specific authority to adopt these rules to establish a schedule of sanctions to be imposed on a license or permit holder for violations of the Code or rule of the Commission.
Cross Reference: Sections 5.31, 5.362, 11.64, and 11.641 of the Alcoholic Beverage Code will be affected by these actions.
§34.1.General Provisions.
(a) This rule relates to §§11.61, 11.64, 11.641 and 106.13 of the Alcoholic Beverage Code.
(b) Agents, compliance officers or other specifically designated commission personnel have authority to settle a complaint issued by the commission against a person for a violation of the Texas Alcoholic Beverage Code (Code), prior to filing a contested case under Government Code, Chapter 2001, Subchapter C (Administrative Procedure Act).
(c) A settlement authorized by this chapter must reflect the number of days a permit will be suspended or the amount of civil penalty authorized per day in lieu of suspension and shall conform to the other provisions of this chapter.
(d) A written warning may be issued for any violation if it is determined by designated commission personnel to be an effective deterrent from further violations of the Code.
(1) A written warning may be used as an aggravating circumstance for purposes of determining the appropriate sanction under §34.2.
(2) A written warning is subject to the rights and procedures of a contested case under the Administrative Procedure Act.
(3) A written warning is an administrative notice issued by a representative of the commission to the permit or license holder documenting that a violation of the TABC code or rules has occurred.
(e) Any case alleging a sale to a minor or intoxicated person in violation of Alcoholic Beverage Code §§11.61(b)(14), 61.71(a)(6) or 101.63 in which the unlawful sale or service directly or indirectly caused death or serious bodily injury shall be referred directly to the Legal Services Division by district or regional personnel without an offer of settlement or compromise provided to the permittee/licensee. For purposes of this section, "serious bodily injury" means as defined in §1.07(a)(46) of the Texas Penal Code.
(f) Each suspension of a permit or license shall run for consecutive days. A person assessed a suspension by the commission may be provided with an opportunity to pay a civil penalty in lieu of a suspension as provided by §11.64 of the Code. The commission may, in its discretion, allow a licensee/permittee to divide an imposed sanction between civil penalty and suspension.
(g) A subsequent violation of the Code or rule will result in a sanction in the next higher violation level if the subsequent violation:
(1) is for a health, safety and welfare violation and occurs within 36 months of the prior violation, or
(2) is for a violation listed in the major regulatory violation category within 24 months of the prior violation, and
(3) the person has been given written notice of the prior violation, or
(4) the subsequent violation is issued during an undercover operation.
(h) The list of violations in §34.2 is not intended to be an exhaustive list of possible violations of the Code or rules of the commission. A sanction for a violation of the Code or rules that is not listed in §34.2 must be approved by either the assistant administrator for field operations or a division director prior to entering into a settlement.
(i) A person authorized to enter into a settlement under this section is also authorized to recommend a deviation from sanctions in §34.2 when aggravating or mitigating circumstances are found to exist.
(1) A recommendation to deviate from sanctions in §34.2 must be made in writing.
(2) The administrator or his designee must approve a recommendation to deviate from §34.2 before the settlement may be offered.
(j) This section does not apply to a contested case brought under Chapters C and D of the Administrative Procedure Act, or a complaint or violation referred to the legal division of the commission for resolution.
§34.2.Schedule of Sanctions and Penalties for Health, Safety and Welfare Violations.
An act or failure to act which results in a violation of the code or rules that represents a threat to the public health, safety, or welfare will be assessed sanctions and penalties as follows:
§34.3.Schedule of Sanctions and Penalties for Major Regulatory Violations.
An act or failure to act which results in a violation of a major regulatory provision of the code or rules will be assessed sanctions and penalties as follows:
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 1, 2008.
TRD-200804006
Alan Steen
Administrator
Texas Alcoholic Beverage Commission
Effective date: August 21, 2008
Proposal publication date: June 6, 2008
For further information, please call: (512) 206-3204
SUBCHAPTER B. PENALTIES
The Texas Alcoholic Beverage Commission (commission) adopts the repeal of §37.60 as published in the May 16, 2008, issue of the Texas Register (33 TexReg 3866) without changes.
This rulemaking repeals §37.60, relating to the commission's standard penalty chart. New Chapter 34 titled Schedule of Sanctions and Penalties has been adopted and it entirely replaces this rule.
Comments are addressed under the Chapter 34 rule adoption.
The adopted repeal is authorized by §5.31 and §5.362 of the Alcoholic Beverage Code (Code). Section 5.31 gives the commission authority to prescribe and publish rules necessary to carry out the provisions of the Code. Section 5.362 provides the specific authority to adopt a schedule of sanctions that may be imposed for a violation of the Code.
Cross Reference: Sections 5.31, 5.362, 11.64, and 11.641 of the Alcoholic Beverage Code will be affected by these actions.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 1, 2008.
TRD-200804008
Alan Steen
Administrator
Texas Alcoholic Beverage Commission
Effective date: August 21, 2008
Proposal publication date: May 16, 2008
For further information, please call: (512) 206-3204