TITLE economic-regulation

Part I. Railroad Commission of Texas

Chapter 13. Regulations for Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG)

Subchapter A. Scope and Definitions

16 TAC §13.10

The Railroad Commission of Texas adopts new §13.10, relating to CNG advisory committee, without changes to the version published in the November 20, 1998, issue of the Texas Register (23 TexReg 11755). The new section establishes a new advisory committee to examine the use of compressed natural gas (CNG). It also establishes the committee's duration; sets forth the purpose and duties of the committee; prescribes the composition of the committee, the appointment process, and the membership terms of the committee; and sets forth the mechanism by which the committee will meet, perform its work, and be evaluated.

The Commission received no comments on the proposal.

The new section is adopted under Texas Natural Resources Code, §116.012, which authorizes the commission to adopt rules and standards relating to compressed natural gas activities to protect the health, welfare, and safety of the general public.

The Texas Natural Resources Code, §116.012, is affected by the new section.

Issued in Austin, Texas, on January 26, 1999.

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 January 26, 1999.

TRD-9900542

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Effective date: February 15, 1999

Proposal publication date: November 20, 1998

For further information, please call: (512) 463-7008


Part II. Public Utility Commission of Texas

Chapter 22. Practice and Procedure

Subchapter J. Summary Proceedings

16 TAC §22.181

The Public Utility Commission of Texas adopts an amendment to §22.181 relating to Dismissal of a Proceeding without changes to the proposed text as published in the November 27, 1998 issue of the Texas Register (23 TexReg 11884). Project Number 17709 has been assigned to this proceeding. The proposed amendment provides the presiding officer more flexibility in dismissing proceedings, with or without prejudice.

The Appropriations Act of 1997, House Bill 1, Article IX, §167 (§167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to Government Code, Chapter 2001. Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission had invited specific comments regarding the §167 requirement, as to whether the reason for adopting the rules continues to exist, in the comments on the proposed amendments. No interested persons commented on the §167 requirement or on the proposed amendment. The commission finds that the reason for adopting this section continues to exist.

This amendment is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 and §14.052 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure.

Cross Index to Statutes: Public Utility Regulatory Act §14.002 and §14.052.

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 January 29, 1999.

TRD-9900601

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: February 18, 1999

Proposal publication date: November 27, 1998

For further information, please call: (512) 936-7308


Chapter 23. Substantive Rules

Subchapter B. Records and Reports

16 TAC §23.15

The Public Utility Commission of Texas adopts the repeal of §23.15 relating to Local Exchange Company Assessment without changes to the proposed text as published in the October 30, 1998 issue of the Texas Register (23 TexReg 11016). The repeal is necessary to avoid duplicative rule sections. The commission has adopted §26.7 of this title (relating to Local Exchange Company Assessment) to replace §23.15. This repeal is adopted under Project Number 17709.

The commission received no comments on the proposed repeal.

This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross Index to Statutes: Public Utility Regulatory Act §14.002.

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 January 29, 1999.

TRD-9900600

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: February 18, 1999

Proposal publication date: October 30, 1998

For further information, please call: (512) 936-7308


Subchapter H. Telephone

16 TAC §23.106

The Public Utility Commission of Texas adopts the repeal of §23.106, relating to Selection of Telecommunications Utilities with no changes to the proposed text as published in the September 4, 1998 Texas Register (23 TexReg 8958). The repeal is necessary to avoid duplicative rule sections. The commission has adopted §26.130 of this title (relating to Selection of Telecommunications Utilities) to replace §23.106. This repeal is adopted under Project Number 17709.

The commission received no comments on the proposed repeal.

This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross Index to Statutes: Public Utility Regulatory Act §14.002.

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 February 1, 1999.

TRD-9900610

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: February 21, 1999

Proposal publication date: September 4, 1998

For further information, please call: (512) 936-7308


Chapter 26. Substantive Rules Applicable to Telecommunications Service Providers

Subchapter A. General Provisions

16 TAC §26.7

The Public Utility Commission of Texas (commission) adopts new §26.7 relating to Local Exchange Company Assessment without changes to the proposed text as published in the October 30, 1998 issue of the Texas Register (23 TexReg 11031). This section replaces §23.15 of this title (relating to Local Exchange Company Assessment) and sets out the calculation and payment of an annual assessment by each local exchange company subject to the commission's jurisdiction. This section is adopted under Project Number 17709.

The Appropriations Act of 1997, House Bill 1, Article IX, §167 (§167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the commission is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of §167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers.

The commission received no comments on this section. The commission had requested specific comments on the §167 requirement as to whether the reason for adopting or readopting the rule continues to exist. The commission finds that the reason for adopting the rule continues to exist.

This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, PURA §52.060 and §53.308, which grant the commission the authority to prescribe and collect fees or assessments from local exchange companies to recover the commission's and the Office of Public Utility Counsel's costs of activities and services carried out and referenced in §52.060 and §53.308.

Cross Index to Statutes: Public Utility Regulatory Act §§14.002, 52.060 and 53.308.

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 January 29, 1999.

TRD-9900599

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: February 18, 1999

Proposal publication date: October 30, 1998

For further information, please call: (512) 936-7308


Subchapter F. Regulation of Telecommunications Service

16 TAC §26.130

The Public Utility Commission of Texas (commission) adopts new §26.130 relating to Selection of Telecommunications Utilities with changes to the proposed text as published in the September 4, 1998 Texas Register (23 TexReg 8959). This section is necessary to implement the provisions of Acts 1997, 75th Legislature, chapter 919, §1, to ensure that all customers are protected from the unauthorized switching of a telecommunications utility selected by the customer to provide telecommunications service. This section is adopted under Project Number 17709.

The Appropriations Act of 1997, HB 1, Article IX, §167 (§167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The commission held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the commission is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of §167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers.

The commission received comments on the proposed section from AT&T Communications of the Southwest, Inc. (AT&T).

AT&T stated that it had objected to certain aspects of the commission's rule when originally adopted in September, 1997. However, since the commission has already ruled on those objections, AT&T did not reiterate its objections in this project. AT&T did object to the provision in proposed new §26.130(g)(4)(A), as it was carried over from existing §23.106(h)(4)(A), that would require telecommunications utilities to mail notice of customer rights to each customer 30 days after the effective date of the section. AT&T stated that this one time initial notice has already been complied with. AT&T suggested replacing the language "within 30 days of the effective date of this section" with "by November 1, 1997", which is 30 days after the original effective date of this section.

The commission agrees with AT&T that this one time initial notice has already been complied with. Instead of replacing the language with the date "November 1, 1997" the commission has deleted the sentence as no longer necessary.

The Texas Register published the letter of agency (LOA) language located in proposed §26.130(d)(3)(A) and the "Selecting a Telecommunications Carrier - Your Rights as a Customer" language located in §26.130(g)(3) as separate graphics at 23 TexReg 9082 and 23 TexReg 9084 respectively. Incorrect graphics were initially submitted to the Texas Register for publication. The corrected graphics, which leave the language exactly as it was in existing §23.106, were published October 16, 1997 at 23 TexReg 10737 and 23 TexReg 10740. In §26.130(h)(2) as published September 4, 1997, the language "(2)(C) of this section to the commission staff upon request" was missing from the original publication. The corrected language was published October 16, 1997 at 23 TexReg 10741. The commission adopts §26.130 as corrected in the October 16, 1997 Texas Register.

The commission requested specific comments on the §167 requirement as to whether the reason for adopting or readopting the rule continues to exist. The commission received no comments on the §167 requirement and finds that the reason for adopting the rule continues to exist.

This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, Acts 1997, 75th Legislature, chapter 919, §1, which requires that the commission adopt nondiscriminatory and competitively neutral rules to implement this statute to ensure that all customers are protected from the unauthorized switching of a telecommunications utility.

Cross Index to Statutes: Public Utility Regulatory Act §14.002 and Acts 1997, 75th Legislature, chapter 919, §1.

§26.130.Selection of Telecommunications Utilities.

(a)

Purpose. The provisions of this section are intended to ensure that all customers in this state are protected from an unauthorized change in a customer's local or long-distance telecommunications utility.

(b)

Application. This section, including any reference in this section to requirements in 47 Code of Federal Regulations §64.1100 and §64.1150 (changing interexchange carriers), applies to all "telecommunications utilities," as that term is defined in §26.5 of this title (relating to Definitions).

(c)

Changes initiated by a telecommunications utility. Before a carrier-initiated change order is processed, the telecommunications utility initiating the change (the prospective telecommunications utility) must obtain verification from the customer that such change is desired for each affected telephone line(s) and ensure that such verification is obtained in accordance with 47 Code of Federal Regulations §64.1100. In the case of a carrier- initiated change by written solicitation, the prospective telecommunications utility must obtain verification as specified in 47 Code of Federal Regulations §64.1150, and subsection (d) of this section, relating to Letters of Agency. The prospective telecommunications utility must maintain records of all carrier-initiated changes, including verifications, for a period of 12 months and shall provide such records to the customer, if such customer challenges the change, and to the commission staff if it so requests. A carrier-initiated change order must be verified by one of the methods set out in paragraphs (1)-(4) of this subsection.

(1)

Verification may be obtained by written authorization from the customer in a form that meets the requirements of subsection (d) of this section.

(2)

Verification may be obtained by electronic authorization placed from the telephone number(s) which is (are) the subject of the change order(s) except in exchanges where automatic recording of the ANI from the local switching system is not technically possible; however, if verification is obtained by electronic authorization, the prospective telecommunications utility must:

(A)

ensure that the electronic authorization confirms the information described in subsection (d)(3) of this section; and

(B)

establish one or more toll-free telephone numbers exclusively for the purpose of verifying the change whereby calls to the toll-free number(s) will connect the customer to a voice response unit or similar mechanism that records the required information regarding the change, including automatically recording the ANI from the local switching system.

(3)

Verification may be obtained by the customer's oral authorization to submit the change order, given to an appropriately qualified and independent third party operating in a location physically separate from the marketing representative, that confirms and includes appropriate verification data (e.g., the customer's date of birth or mother's maiden name).

(4)

Verification may be obtained by sending each new customer an information package via first class mail within three business days of a customer's request for a telecommunications utility change provided that such verification meets the requirements of subparagraph (A) of this paragraph and the customer does not cancel service after receiving the notification pursuant to subparagraph (B) of this paragraph.

(A)

The information package must contain at least the information and material as specified in 47 Code of Federal Regulations §64.1100(d) and this subparagraph which includes:

(i)

a statement that the information is being sent to confirm a telemarketing order placed by the customer within the previous week;

(ii)

the name of the customer's current provider of the service that will be provided by the newly requested telecommunications utility;

(iii)

the name of the newly requested telecommunications utility;

(iv)

the type of service(s) that will be provided by the newly requested telecommunications utility

(v)

a description of any terms, conditions, or charges that will be incurred;

(vi)

the statement, "I understand that I must pay a charge of approximately $ (industry average charge) to switch providers. If I later wish to return to my current telephone company, I may be required to pay a reconnection charge to that company. I also understand that my new telephone company may have different calling areas, rates and charges than my current telephone company, and by not canceling this change order within 14 days of the date that this information package was mailed to me I indicate that I understand those differences (if any) and am willing to be billed accordingly;

(vii)

the telephone numbers that will be switched to the newly requested telecommunications utility;

(viii)

the name of the person ordering the change;

(ix)

the name, address, and telephone number of both the customer and the newly requested telecommunications utility;

(x)

a postpaid postcard which the customer can use to deny, cancel or confirm a service order;

(xi)

a clear statement that if the customer does not return the postcard the customer's telecommunications utility will be switched to the newly requested telecommunications utility within 14 days after the date the information package was mailed by (the name of the newly requested telecommunications utility); and

(xii)

the statement, "Complaints about telephone service and unauthorized changes in a customer's telephone service provider ("slamming") are investigated by the Public Utility Commission of Texas. If a telephone company "slams" you and fails to resolve your request to be returned to your original telephone company as required by law, or if you would like to know the complaint history for a particular telephone company, please write or call the Public Utility Commission of Texas, P.O. Box 13326, Austin, Texas 78711- 3326, 512/936-7120, or toll-free within Texas at 1-888-782-8477. Hearing and speech-impaired individuals with text telephones (TTY) may contact the commission at 512/936-7136."

(B)

The customer does not cancel the requested change within 14 days after the information package is mailed to the customer by the prospective telecommunications utility.

(d)

Letters of Agency (LOA). If a telecommunications utility obtains written authorization from a customer for a change of telecommunications utility as specified in subsection (c)(1) of this section, it shall use a letter of agency (LOA) as specified in this subsection.

(1)

The LOA shall be a separate or easily separable document containing only the authorizing language described in paragraph (3) of this subsection for the sole purpose of authorizing the telecommunications utility to initiate a telecommunications utility change. The LOA must be signed and dated by the customer of the telephone line(s) requesting the telecommunications utility change.

(2)

The LOA shall not be combined with inducements of any kind on the same document; except that the LOA may be combined with a check if the LOA and the check meet the requirements of subparagraphs (A)-(B) of this paragraph.

(A)

An LOA combined with a check may contain only the language set out in paragraph (3) of this subsection, and the necessary information to make the check a negotiable instrument.

(B)

A check combined with an LOA shall not contain any promotional language or material but shall contain, on the front of the check and on the back of the check in easily readable, bold-faced type, type near the signature line, the following notice: "By signing this check, I am authorizing (name of the telecommunications utility) to be my new telephone service provider for (the type of service that the telecommunications utility will be providing).

(3)

LOA language.

(A)

The LOA must be printed clearly and legibly and use only the following language:

Figure: 16 TAC §26.130(d)(3)(A)

(B)

In the LOA set out by subparagraph (A) of this paragraph, the telecommunications utility seeking authorization shall replace, in bold type, the words:

(i)

"(new telecommunications utility)," with its corporate name;

(ii)

"(type of service(s) that will be provided by the new telecommunications utility)," with the type of service(s) that it will be providing to the customer; and

(iii)

"I must pay a charge of approximately $ (industry average charge)" with the text, "there is no charge" only if there is no charge of any kind to the customer for the switchover.

(4)

The LOA shall not suggest or require that a customer take some action in order to retain the customer's current telecommunications utility.

(5)

If any portion of a LOA is translated into another language, then all portions of the LOA must be translated into that language. Every LOA must be translated into the same language as any promotional materials, oral descriptions or instructions provided with the LOA.

(e)

Changes initiated by a customer. In the case of a customer-initiated change of telecommunications utility, the telecommunications utility to which the customer has changed his service shall maintain a record of nonpublic customer specific information that may be used to establish that the customer authorized the change. Such information is to be maintained by the telecommunications utility for at least 12 months after the change and will be used to establish verification of the customer's authorization. This information shall be treated in accordance with the Federal Communications Commission (FCC) rules and regulations relating to customer-specific customer proprietary network information, and shall be made available to the customer and/or the commission staff upon request.

(f)

Unauthorized changes.

(1)

Responsibilities of the telecommunications utility that initiated the change. If a customer's telecommunications utility is changed and the change was not made or verified consistent with this section, the telecommunications utility that initiated the unauthorized change shall:

(A)

return the customer to the telecommunications utility from which the customer was changed (the original telecommunications utility) where technically feasible, and if not technically feasible, take all action within the utility's control to return the customer to the original utility, including requesting reconnection to the original telecommunications utility from a telecommunications utility that can execute the reversal, within three business days of the customer's request;

(B)

pay all usual and customary charges associated with returning the customer to the original telecommunications utility within five business days of the customer's request;

(C)

provide all billing records to the original telecommunications utility that are related to the unauthorized provision of services to the customer within 10 business days of the customer's request to return the customer to the original telecommunications utility;

(D)

pay the original telecommunications utility any amount paid to it by the customer that would have been paid to the original telecommunications utility if the unauthorized change had not occurred, within 30 business days of the customer's request to return the customer to the original telecommunications utility; and

(E)

return to the customer any amount paid by the customer in excess of the charges that would have been imposed for identical services by the original telecommunications utility if the unauthorized change had not occurred, within 30 business days of the customer's request to return the customer to the original telecommunications utility.

(2)

Responsibilities of the original telecommunications utility. The original telecommunications utility from which the customer was changed shall:

(A)

provide the telecommunications utility that initiated the unauthorized change with the amount that would have been imposed for identical services by the original telecommunications utility if the unauthorized change had not occurred, within 10 business days of the receipt of the billing records required under paragraph (1)(C) of this subsection;

(B)

provide to the customer all benefits associated with the service(s) (e.g., frequent flyer miles) that would have been awarded had the unauthorized change not occurred, on receipt of payment for service(s) provided during the unauthorized change; and

(C)

maintain a record related to customers that experienced an unauthorized change in telecommunications utilities that contains:

(i)

the name of the telecommunications utility that initiated the unauthorized change;

(ii)

the telephone number(s) that were affected by the unauthorized change;

(iii)

the date the customer requested that the telecommunications utility that initiated the unauthorized change return the customer to the original carrier; and

(iv)

the date the customer was returned to the original telecommunications utility.

(g)

Notice of customer rights.

(1)

Each telecommunications utility shall make available to its customers the notice set out in paragraph (3) of this subsection in both English and Spanish as necessary to adequately inform the customer; however, the commission may exempt a telecommunications utility from the requirement that the information be provided in Spanish upon application and a showing that 10% or fewer of its customers are exclusively Spanish-speaking, and that the telecommunications utility will notify all customers through a statement in both English and Spanish, in the notice, that the information is available in Spanish from the telecommunications utility, both by mail and at the utility's offices.

(2)

Each notice provided as set out in paragraph (4)(A) of this subsection shall also contain the name, address and telephone numbers where a customer can contact the telecommunications utility.

(3)

Customer notice. The notice shall state:

Figure: 16 TAC §26.130(g)(3)

(4)

Distribution and timing of notice.

(A)

Telecommunications utilities shall send the notice to new customers at the time service is initiated, and upon customer request.

(B)

Each telecommunications utility shall print the notice in the white pages of its telephone directories, beginning with the first publication of such directories subsequent to the effective date of this section; thereafter, the notice must appear in the white pages of each telephone directory published for the telecommunications utility. The notice that appears in the directory is not required to list the information contained in paragraph (2) of this subsection.

(h)

Compliance and enforcement.

(1)

Records of customer verifications. A telecommunications utility shall provide a copy of records maintained under the requirements of subsections (c) - (e) of this section to the commission staff upon request.

(2)

Records of unauthorized changes. A telecommunications utility shall provide a copy of records maintained under the requirements of subsection (f)(2)(C) of this section to the commission staff upon request.

(3)

Administrative penalties. If the commission finds that a telecommunications utility has repeatedly engaged in violations of this section, the commission shall order the utility to take corrective action as necessary, and the utility may be subject to administrative penalties pursuant to PURA §15.023 and §15.024. For purposes of §15.024(b) and (c), there shall be a rebuttable presumption that a single incident of an unauthorized change in a customer's telecommunications utility ("slamming") is not accidental or inadvertent if subsequent incidents of slamming by the same utility occur within 30 days of when the incident is reported to the commission, or during the 30-day cure period. Any proceeds from administrative penalties that are collected under this section shall be used to fund enforcement of this section.

(4)

Certificate revocation. If the commission finds that a telecommunications utility is repeatedly and recklessly in violation of this section, and if consistent with the public interest, the commission may suspend, restrict, or revoke the registration or certificate of the telecommunications utility, thereby denying the telecommunications utility the right to provide service in this state. For purposes of this section, a single incident of slamming may be deemed reckless if subsequent incidents of slamming by the same telecommunications utility occur during the 30-day grace period after an incident of slamming is reported to the commission regarding the initial incident.

(i)

Notice of identity of a customer's telecommunications utility. Any bill for telecommunications services must contain the information contained in paragraphs (1)-(4) of this subsection in legible, bold type in each bill sent to a customer. Where charges for multiple lines are included in a single bill, the information contained in paragraphs (1)-(3) of this subsection must be contained on the first page of the bill to the extent possible. Any information that cannot be located on the first page must be displayed prominently elsewhere in the bill.

(1)

If a bill is for local exchange service, the name and telephone number of the telecommunications utility that is providing local exchange service directly to the customer.

(2)

If the bill is for interexchange services, the name and telephone number of the primary interexchange carrier.

(3)

In such cases where the telecommunications utility providing local exchange service also provides billing services for a primary interexchange carrier, the first page of the combined bill shall identify both the local exchange and interexchange providers, as required by paragraphs (1) and (2) of this subsection; however, the commission may, for good cause, waive this requirement in exchanges served by incumbent local exchange companies serving 31,000 access lines or less.

(4)

A statement, prominently located in the bill, that if the customer believes that the local exchange provider or the interexchange carrier named in the bill is not the customer's chosen interexchange carrier, that the customer may contact: Public Utility Commission of Texas, Office of Customer Protection, PO Box 13326, Austin, Texas 78711-3326, (512) 936-7120 or in Texas (toll-free) 1-888-782- 8477. Hearing and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136.

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 February 1, 1999.

TRD-9900609

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Effective date: February 21, 1999

Proposal publication date: September 4, 1998

For further information, please call: (512) 936-7308


Part III. Texas Alcoholic Beverage Commission

Chapter 45. Marketing Practices

Subchapter D. Advertising and Promotion-All Beverages

16 TAC §45.100

The Texas Alcoholic Beverage Commission adopts an amendment to new §45.100, concerning Advertising and Promotion with changes to the proposed text as published in the December 11, 1998, edition of the Texas Register (23 TexReg 12599). The rule operates to allow members of the manufacturing and wholesale tiers of the alcoholic beverage industry to advertise, promote and sponsor entertainment events at public entertainment facilities without establishing unlawful relations with members of the retail tier operating in those facilities.

Members of the upper tiers may not provide money, service or things of value to retailers, pay or make allowances to retailers for advertising services or offer prizes, premiums or gifts to retailers under the provisions of the Alcoholic Beverage Code cited in paragraph (a) of the adopted rule. The rule reflects the commission's judgment that promotional activities, conducted according to the provisions of the rule, do not, in general, constitute the provision of an unlawful benefit to the retailer.

The commissioners concluded that the risk of unlawful benefits provided to the retailer by members of the upper tiers through the agency of promotional or advertising agreements is substantially greater in facilities primarily designed and used for the sale or service of food and alcoholic beverages. The risk of such unlawful relations between tiers of the industry is significantly smaller when advertising and promotional agreements are addressed to activities within public entertainment facilities as those facilities are defined in the rule.

In part, this judgment is based on the fact that the primary source of revenue and concern for owners or operators of public entertainment facilities, or promoters presenting events within those facilities, is not the sale of alcoholic beverages. Further, advertising and promotional agreements governed by this rule are typically between upper tier members of the alcoholic beverage industry and facilities owners or operators or event promoters who do not hold licenses or permits under the Alcoholic Beverage Code. Thus, the primary purpose of this rule is to establish conditions under which commercial relations between members of the alcoholic beverage industry and unlicensed persons or entities do not result in the provision of benefits to members of the retail tier such that the independence of the retail tier is thereby compromised.

The following, by rule paragraph, are the changes to the rule as originally published that were adopted by the commission:

(a) Reference to §102.04(b)(2), (5) and (6) of the Alcoholic Beverage Code was added in response to a comment received. These provisions are identical to those originally referenced in the proposed rule and are part of the Alcoholic Beverage Code that is interpreted by this rule.

(b) There were no changes to this paragraph as originally proposed.

(c) The phrase "convention center or similar facility that" was added in response to a received comment. This addition more accurately describes the kind of facility intended to be within the definition of public entertainment facility. Similarly, the phrase "such as any establishment commonly known as a bar, nightclub, restaurant, pool hall or dance hall" was added in response to a comment. This addition gives substance to the rule by listing examples of the types of venues to be excluded from the definition of public entertainment facility.

(d) In response to a comment, the commissioners added the phrase "holder of a private club permit or food and beverage certificate" in order to make clear that such persons or entities may be considered independent concessionaires under the rule. The provisions of §(d)(1) of the rule were added in response to a comment to insure that agreements made under the authority of this rule are reflected in written contracts. This requirement makes enforcement of the rule easier by requiring relations between the involved parties be stated in objective terms.

(e) In response to a comment, this paragraph was reorganized to accommodate the addition of (e)(1). This addition applies the provisions of the rule to existing contracts, as well as contracts executed in the future. Section (e)(3) of the rule was modified in response to a comment. This provision serves to notify all contracting parties of the substantive terms of this rule through contractual provisions. Thus, affected members of the alcoholic beverage industry will be informed of their rights and obligations regardless of whether they have consulted the terms of this rule.

Section (e)(4) was added to the rule to inform persons subject to the rule that contracts filed with the commission under the rule are confidential by operation of the Alcoholic Beverage Code. This amendment was added in response to a comment received by the commission.

Several commenters suggested amendments to the rule that were rejected by the commission. Two commenters suggested different wording for the terms of paragraph (b). This suggestion was declined because of the commission's judgment that the suggested language accomplished the same regulatory objective as the language of the rule as proposed and, therefore, no amendment was necessary.

Two commentors suggested addition of the phrase "or publicly owned land" to the first sentence of paragraph (c). This suggestion was rejected because of the commission's conclusion that the decisive criteria for purposes of defining public entertainment facilities was the function of the facility rather than its ownership or geographic location.

One commenter suggested that public entertainment facility be defined by reference to the size and seating capacity of the facility. The commission concluded that this proposal would operate as an artificial barrier unrelated to the policy interest of preserving the independence of the retail tier that is served by the rule. Thus, some venues would be excluded from the activities authorized by the rule without an adequate basis for that exclusion. For the same reasons, the commission rejected the suggestion that entertainment facilities located in sites with multiple users be excluded from the definition of public entertainment facilities.

One commenter suggested that the definition of public entertainment facility be amended to specifically include pari-mutual racing facilities. The commission rejected this suggestion as unnecessary in that such facilities are included in the definition as originally proposed.

One commenter suggested that the rule be amended to add a definition of "fixed service area" as that term is used in the rule. The commission disagreed with this suggestion because conditions in public entertainment facilities around the state are so variable as to not admit a single definition of this terms. The commission concluded that disputes about fixed service areas are best resolved through the contested case process.

One commenter objected to the rule requirement that contracts subject to the rule be filed with the commission. The commenter's stated concern was the disclosure of confidential, proprietary information contained in the contracts. The commission declined to follow this objection because contracts filed with the commission under the authority of this rule are exempt from public disclosure by operation of §5.48(b) of the Alcoholic Beverage Code. Further, in furtherance of its duty to inspect and supervise this aspect of the alcoholic beverage industry, as imposed by §5.31 of the Alcoholic Beverage Code, the commission has an affirmative need to review the contracts executed under the authority of this rule.

Finally, several commenters suggested that the rule be amended to state that contracts filed with the commission under the rule be deemed public records. The commission rejected this suggestion because it would contravene the clear language of §5.48(b) of the Alcoholic Beverage Code. Further, the affected contracts would inevitably contain the kind of proprietary information not commonly shared by competitors in the marketplace. The commission concluded that no policy reason existed to justify public disclosure of such information.

No commenter was unconditionally for or against adoption of this rule in that each offered one or more of the suggested amendments summarized above. Comments were received from the Fine Host Corporation; Anheuser-Busch; Sam Houston Race Park; Wholesale Beer Distributors of Texas; Harris County Beer Distributors; Licensed Beverage Distributors and Pace Productions.

This rule is adopted under §5.31 of the Alcoholic Beverage Code which provides the Alcoholic Beverage Commission with the authority to prescribe and publish rules necessary to carry out the provision of the Alcoholic Beverage Code.

Cross Reference: Alcoholic Beverage Code, §§102.01, 102.04, 102.07, 102.12, 102.13, 102.15, 102.16, 108.05 and 108.06 are affected by this rule.

§45.100.Advertising and Promotion in Public Entertainment Facilities

(a)

This rule relates to §§102.04(b)(2), (5), (6), 102.07(a)(2), (6), (8), 102.12, 102.15, 108.05 and 108.06 of the Alcoholic Beverage Code.

(b)

Members of the manufacturing and wholesale tiers may advertise, promote and sponsor entertainment events at public entertainment facilities, provided that alcoholic beverages sold or served at such facilities may only be furnished by an independent concessionaire. However, no advertising materials or signs provided by members of the manufacturing or wholesale tiers may be placed in the concessionaire's fixed service areas from which alcoholic beverages are served or sold, or any area immediately adjacent thereto except as otherwise provided by the rules of the commission.

(c)

Public entertainment facilities, for purposes of this rule, are defined as any arena, stadium, amphitheatre, auditorium, theater, civic center, convention center or similar facility that is primarily designed and used for live artistic, theatrical, cultural, educational, charitable, musical, sporting or entertainment events. This definition shall not include facilities of which the primary purpose is the sale of food or alcoholic beverages such as any establishment commonly known as a bar, night club, restaurant, pool hall or dance hall.

(d)

Independent concessionaire, for purposes of this rule, means a licensed or permitted member of the retail tier, holder of a private club permit or food and beverage certificate who:

(1)

has a written concession agreement from the owner, lessee or operator of the public entertainment facility; and

(2)

receives no direct or indirect monetary benefit from advertising or sponsorship revenues generated by operation of the facility; and

(3)

has no right or authority to control, directly or indirectly, any programming or booking decision at the facility; and

(4)

is not subject to the direction or control, directly or indirectly, of the facility owner, operator, event producer, or any upper tier member of the alcoholic beverage industry as to the quantities or brands of alcoholic beverages bought and sold by the retailer.

(e)

All advertising, promotional, sponsorship and concession agreements made by members of the alcoholic beverage industry pursuant to this rule shall:

(1)

be filed within thirty days of the effective date of this rule with the office of the commission having jurisdiction over the facility if the agreement is in effect on the effective date of this rule; and

(2)

be filed within thirty days of the execution of the agreement, or any amendments thereto, with the office of the commission having jurisdiction over the facility if the agreement or amendment is executed after the effective date of this rule; and

(3)

contain an affirmative provision disavowing the right of any party to engage in the conduct prohibited by paragraphs (d)(2), (3) and (4) of this rule; and

(4)

all documents filed under this section are deemed confidential by Section 5.48(b) of the Alcoholic Beverage Code.

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 January 27, 1999.

TRD-9900573

Doyne Bailey

Administrator

Texas Alcoholic Beverage Commission

Effective date: February 16, 1999

Proposal publication date: December 11, 1998

For further information, please call: (512) 206-3204