Texas Register
on pages 7753 - 7754; (2) The on-line
version of the November 18, 2005, issue of the
Texas
Register
is accessible through the Secretary of State's website, www.sos.state.tx.us.
Individuals have the choice between an Adobe pdf version, or an html version
of the issue. For the Adobe pdf version, clicking on "Tables and Graphics"
goes directly to the Chart on pages 7753 - 7754; (3) If utilizing the html
version available on the Secretary of State's website, clicking on the "Texas
Lottery Commission" link goes directly to §402.707 which contains another
link to the Chart; and (4) The Chart is available on the Texas Lottery Commission's
website, www.txlottery.org by going to "Legal Notices," "Proposed Rules,"
"11/18/05," Figure: 16 TAC 402.707(g).
The commenter states that the proposed rules could have an adverse effect
on small businesses. Specifically, the proposed penalties do not appear to
take into account the limited means of certain smaller, for-profit licensees,
such as distributors and commercial lessors, who may risk being put out of
business by the assessment of a single administrative penalty. The size of
the licensee should be taken into account in determining an appropriate penalty.
Commission response: Section 402.706(i) provides that the Commission will
determine the amount of a penalty or the degree to which a remedy is applied
by considering certain factors, as applicable, including any "matter that
justice may require." Further, during the extensive informal period where
this rule was available for comment, individuals in the bingo industry indicated
that the size of the licensee should not be included as a factor in the rule.
The Commission now addresses the comments received at the public comment
hearing.
Ten comments were made expressing concern that bingo games are primarily
conducted by volunteer workers, and that these volunteers may be prone to
simple, honest mistakes, including mathematical errors.
Commission response: Seventy-six percent of organizations filing quarterly
reports with the Commission in the third quarter of 2005 reported paying salaries
to callers, cashiers or ushers. Additionally, all organizations conducting
in a unit reported paying salaries to callers, cashiers or ushers. Therefore,
the statement that "...bingo games are primarily conducted by volunteer workers..."
seems inconsistent with information the organizations themselves submit to
the agency. Finally, §402.706(i)(5)(A) states that one factor for consideration
when imposing a penalty is "whether the violation was intentional, inadvertent,
simple negligence, gross negligence, or the unavoidable result of a related
violation."
Four comments were made expressing concern that "repeat violation" is not
clearly defined within the rule.
Commission response: The Commission agrees there is no definition of the
term "repeat violation" in the rule. Further, the Commission finds that when
a term is not defined in statute or rule then the common interpretation or
usage applies and that a repeat violation would apply to an identical violation
that had previously occurred.
Twelve comments were made expressing concern that the rule changes will
create hardships for and/or take money away from the charities.
Commission response: The Commission disagrees. These rules do not create
any new violations that are not already contained in the Act or Rules. Therefore,
these rules do not create hardships for organizations. The violations of the
Act or Rules committed by organizations may create hardship. The Commission
finds that a greater hardship is created for organizations if their license
is ultimately denied or revoked. Through these rules, organizations are provided
an alternative to license revocation or denial.
Two comments were made expressing concern with the language, "The list
of statutory violations and the standard administrative penalty is not an
exclusive list." The commenters are concerned that there is not a complete
list.
Commission response: The Commission agrees that the rule does not contain
every violation provided for in the Bingo Enabling Act and Charitable Bingo
Administrative Rules. All violations can be found in the Bingo Enabling Act
and Charitable Bingo Administrative Rules. Further, during the extensive informal
comment period, previous draft versions of this rule contained every violation
contained in the Act and Rules. Individuals in the bingo industry indicated
that the rule was "too long." In response to these informal comments, the
rule was amended to only include the most serious and/or the most common violations.
Two comments were made expressing concern that the new rule penalizes people
for their right to appeal.
Commission response: The Commission disagrees. There is nothing in either
rule that penalizes or otherwise prohibits a person from exercising their
right to appeal.
Three comments were made expressing the belief that the new rules are too
drastic and/or that there should be proof that someone did something intentionally
before a penalty is assessed.
Commission response: The Commission disagrees. The rules conform to the
standards contained in the Bingo Enabling Act and Charitable Bingo Administrative
Rules. The rules are intended to serve as a guide for persons who wish to
resolve disciplinary matters through an alternative process other than an
Administrative Hearing. Should the person desire to seek an administrative
hearing in lieu of settlement, they have that right. Further, in response
to the comment that the "...rules are too drastic..." the Commission makes
the assumption that this reference is to the dollar amount of the penalty.
In all categories of the Standard Administrative Penalty Chart, the penalty
amounts contain a range that starts at zero.
One comment was made expressing concern that the new rules are mostly directed
at licensed authorized organizations and very few are directed at manufacturers,
distributors and/or licensed commercial lessors.
Commission response: The Commission disagrees. The rules are applicable
to all license types. The charts within the rules contain the violations most
commonly cited on audits and inspections conducted by the Charitable Bingo
Operations Division. Since licensed authorized organizations conducting bingo
are the single largest type of license, violations related to the conduct
of bingo are the most common. Finally, the Bingo Enabling Act and Charitable
Bingo Administrative Rules contain violations not listed in these rules and
some of those violations relate to manufacturers, distributors and licensed
commercial lessors.
One comment was made concerning the 20-day period that an organization
has to accept the recommended penalty. The commenter recommended this period
be extended to accommodate nonprofit organizations that only meet quarterly.
Commission response: The Commission disagrees. Section 2001.604 of the
Bingo Enabling Act states that not later than the 20th day after the date
the person receives the notice, the person may: (1) accept the recommendation
of the director, including the recommended administrative penalty; or (2)
make a written request for a hearing on the determination.
One comment was made expressing the belief that the new rules are unfair
when compared to the penalty guideline rule applicable to lottery retailers.
Commission response: The Commission disagrees. Lottery retailers are governed
under a different statute than organizations engaged in bingo related activities.
Therefore an exact comparison of the penalty guidelines is not appropriate.
For example, unlike the Bingo Enabling Act, the State Lottery Act does not
allow for administrative penalties to be assessed.
One comment was made expressing the belief that the new rules will result
in significant fiscal implications for state or local governments, and there
will be a significant effect on small businesses.
Commission response: The Commission disagrees. The commenter did not provide
sufficient information to thoroughly address this comment. The fiscal note
prepared by the agency indicates there will be no significant fiscal implications
for state or local governments, nor will there be a significant effect on
small businesses. It is conceivable that individual businesses that violate
the Act or Rules could be fiscally impacted, but that impact is not anticipated
for all small business.
One comment was made expressing concern that the new rule is only a guideline,
does not seem to be binding on the commission, and is therefore subject to
an arbitrary and capricious application.
Commission response: The Commission agrees that the rule is a guideline
and does not bind the Commission. The Commission disagrees that the rule is
subject to an arbitrary and capricious application. The rule will be applied
to the facts specific to an individual case.
One comment was made expressing concern that subsection (i) of §402.706
makes it difficult to ascertain exactly how all of the provisions would apply.
Commission response: The Commission disagrees. The application of the factors
contained in subsection (i) of §402.706 are unique to each specific case.
All of the factors listed in §402.706(i) will be considered for each
case although they may not apply.
One comment was made that the length of time the licensee has held a license
should make no difference with regard to the new rules.
Commission response: The Commission disagrees. The longer an organization
has held a license to conduct bingo, the more familiar it should be with the
requirements of the Act and Rules.
One commenter made several suggestions about the Standard Administrative
Penalty Chart. First, some violations have been coupled in a single item and
should be considered separately. Second, violations with the potentially highest
penalties should require proof of intent. Third, many of the penalties should
be moved down into the warning category.
Commission response: The Commission disagrees. First, the organization
of the Standard Administrative Penalty Chart does not prohibit violations
from being considered separately. Second, violations on the Standard Administrative
Penalty Chart are consistent with the Act and the Rules. Third, all categories
provide for the possibility of a warning.
One comment stated that the first sentence in §402.706(h) seemed to
be unrelated to the second sentence.
Commission response: The Commission agrees. The sentences have been put
into separate subsections to eliminate confusion.
One comment stated that he did not understand the intended meaning of §402.707(b).
Commission response: The Commission has added language in §402.707(b)
to clarify the meaning.
One comment suggested that the word "alleged" should be added before the
word "violation" in §402.707(c) and (d)(5).
Commission response: The Commission agrees that the word "alleged" should
be added for consistency.
One comment suggested that the word "expediently" should be changed to
"expeditiously" in §402.707(c).
Commission response: The Commission agrees and has made the suggested change.
One comment stated that the wording in §402.707(d)(5) "comply with
the violation" should be edited to be more accurate.
Commission response: The Commission agrees and has revised the wording.
One comment stated that §402.707(g) should be rewritten for clarity.
Commission response: The Commission agrees and has moved the first sentence
of subsection (g) to subsection (b).
Several individuals attending the hearing simply stated that they opposed
the rules, and wished to make no further comment.
The following groups or associations made comments on the new rules: Goodtime
Bingo, National Council for the Veterans of Foreign Wars, Therapeutic Riding
of Texas, Fort Worth Bookkeeping, AKIBA Academy, AMVETS Auxiliary of Dallas,
AMVETS Department of Texas, Improved Order of Redmen of Texas, Post 74 AMVET,
K & B Sales, and Bingo Interest Group.
The Commission made some changes to correct clerical errors, improve clarity,
and simplify the Standard Administrative Penalty and Expedited Penalty Charts.
Proposed violation number 36 was deleted because it was essentially duplicative
of violation number 31. Accordingly, proposed violation numbers 37 and 38
were renumbered. In addition, the column labeled "Reference" was removed to
simplify the charts.
The new rules are adopted pursuant to Occupations Code, §2001.054,
which authorizes the Commission to adopt rules necessary to enforce and administer
the Bingo Enabling Act.
The new rules implement Occupations Code, Chapter 2001.
§402.706.Standard Administrative Penalty Guideline.
(a)
The purpose of this section is to provide guidance for
administering an administrative penalty to persons that violate the Bingo
Enabling Act and/or the Charitable Bingo Administrative Rules. The objectives
for applying an administrative penalty are to protect the public, encourage
compliance with the Bingo Enabling Act and the Charitable Bingo Administrative
Rules, deter future violations, offer opportunities for rehabilitation as
appropriate, punish violators, and deter others from committing violations.
This guideline is intended to promote consistent sanctions for similar violations,
facilitate timely resolution of cases and encourage settlements.
(b)
The Commission, through the Director of the Charitable
Bingo Operations Division or his designee, may offer settlements to persons
charged with violating the Bingo Enabling Act and/or the Charitable Bingo
Administrative Rules.
(c)
Unless otherwise provided by this subchapter, the terms
and conditions of a settlement agreement between the Commission and a person
charged with violating the Bingo Enabling Act and/or the Charitable Bingo
Administrative Rules will be based on the Standard Administrative Penalty
Chart incorporated into this section.
Figure: 16 TAC §402.706(c)
(d)
The following words and terms, when used in this section
and §402.707, shall have the following meanings, unless the context clearly
indicates otherwise:
(1)
Bingo Enabling Act--Occupations Code, Chapter 2001.
(2)
Charitable Bingo Administrative Rules--Texas Administrative
Code, Title 16, Part 9, Chapter 402.
(3)
Licensee--a person issued a license under Occupations Code,
Chapter 2001, or a Unit.
(4)
Organization--a licensee, an applicant for a license, or
a person required to obtain a bingo license.
(5)
Respondent--a person responsible for answering a charge
of violating the Bingo Enabling Act and/or the Charitable Bingo Administrative
Rules.
(e)
The Commission shall render the final decision in a contested
case and has the responsibility to assess sanctions against licensees who
are found to have violated the Bingo Enabling Act and/or the Charitable Bingo
Administrative Rules. The Commission welcomes any recommendation of an administrative
law judge as to the appropriate sanctions imposed, but the Commission is not
necessarily bound by such recommendations. A determination of the appropriate
sanction is reserved to the Commission consistent with the Bingo Enabling
Act.
(f)
Additional remedies may be imposed along with or in lieu
of an administrative penalty which may include: a redeposit of funds to the
bingo account; a removal of funds from the bingo account; a disbursement of
net proceeds in order to comply with the minimum 35% charitable distribution
requirement; suspension, revocation or denial of a license; or denial or removal
from the registry of approved workers.
(g)
A settlement agreed to under this section shall be in the
form of a written Memorandum of Agreement and Consent Order prepared by the
Commission that must be signed by both parties. A Memorandum of Agreement
and Consent Order shall contain findings of fact and conclusions of law. The
conditions of the settlement, including the payment of an administrative penalty
shall be completed within the time frame provided for in the settlement. Failure
to comply with the conditions of the settlement may subject the respondent
to further administrative action.
(h)
The list of statutory violations in the Standard Administrative
Penalty Chart is not an exclusive list of violations of the Bingo Enabling
Act or the Charitable Bingo Administrative Rules.
(i)
If a person is charged with a repeat violation within 36
months (3 years) of the first violation, then the penalty for a repeat violation
will be imposed according to the Standard Administrative Penalty Chart for
repeat violations.
(j)
The amount of a penalty or the degree to which a remedy
is applied will be determined by considering the following factors, as applicable:
(1)
seriousness of the violation which includes the nature,
circumstances, extent and gravity of the prohibited acts;
(2)
history of previous violations which includes:
(A)
the number of previous violations; and
(B)
the number of repeated violations;
(3)
the amount necessary to deter future violations;
(4)
efforts to correct the violation after awareness of the
violation through personal knowledge or notification by the commission;
(5)
any other matter that justice may require, including:
(A)
whether the violation was intentional, inadvertent, simple
negligence, gross negligence, or the unavoidable result of a related violation;
(B)
cooperation with the Commission during its examination,
audit, or investigation of the person;
(C)
length of time the licensee has held a license;
(D)
risk to the public or state;
(E)
whether the organization or person has acknowledged a violation
and agreed to comply with the terms and conditions of remedial action through
an agreed settlement with the Commission; and
(F)
the cost of the investigation, examination or audit associated
with the violation.
(k)
If the Director or the Director's designee and the authorized
representative for the respondent agree, the two parties may utilize §402.707,
Expedited Administrative Penalty Guideline as alternative guidance related
to this subsection.
§402.707.Expedited Administrative Penalty Guideline.
(a)
The purpose of this subchapter is to provide an alternative
disciplinary procedure for certain violations of the Bingo Enabling Act (Act)
and the Charitable Bingo Administrative Rules (Rules) in which the Director
of the Charitable Bingo Operations Division seeks to facilitate expeditious
resolution of cases and encourage settlements.
(b)
The list of statutory violations in the Expedited Administrative
Penalty Chart is not an exclusive list of violations that may be expedited.
The scope of this guideline will be limited to violations of the Bingo Enabling
Act and/or the Charitable Bingo Administrative Rules that are identified by
the Director or his designee.
(c)
Upon completion of an examination, inspection, audit, or
investigation, and after which both parties have agreed that an alleged violation
of the Bingo Enabling Act or the Charitable Bingo Administrative Rules can
be resolved expeditiously, the Director or his designee may cause a Notice
of Administrative Violation and Settlement Agreement (NAVSA) to be issued
to an authorized representative for the respondent.
(d)
The NAVSA shall include the following information:
(1)
date of the notice;
(2)
names and addresses of both parties;
(3)
a brief summary of the alleged violation;
(4)
the dollar amount of the administrative penalty recommended
by the Director or his designee;
(5)
a brief explanation of the additional conditions required
to ensure future compliance with the Act or Rules alleged to be violated;
(6)
notice that an investigation, including an examination
or audit, was conducted which alleges a violation was committed;
(7)
a statement signed by an authorized representative for
the respondent indicating the respondent agrees to the terms of the settlement
being offered;
(8)
notice that if the person does not accept the settlement
offered, they may request a hearing on the occurrence of the violation, the
amount of the penalty or both; and
(9)
notice that if the person does not accept the settlement
offered or request a hearing, the Commission may seek the maximum penalty
authorized for the violation under the Bingo Enabling Act and the Charitable
Bingo Administrative Rules, which may include revocation, suspension or denial
of the person's license or worker registration, or application for a license
or worker registration as applicable.
(e)
The respondent shall have 20 days from the date the respondent
receives the NAVSA to accept the recommendation of the Director, including
the recommended administrative penalty; or make a written request for a hearing
on the determination. If notification of acceptance or the written request
for a hearing is not made within 20 days, the Director shall cause a hearing
to be set and give notice of the hearing to the respondent. The opportunity
for an agreement in accordance with this subsection will expire.
(f)
After the NAVSA is accepted and returned to the Commission,
the NAVSA will be forwarded to the Director for final approval and a copy
will be forwarded to the respondent along with the Order. The respondent will
have 60 days from the date of the Order to pay the recommended administrative
penalty. Failure to comply with the terms of this Agreement may result in
the imposition of a more severe degree of penalty which may include the revocation,
suspension, denial of the license or worker registration, or removal from
the worker registry as applicable.
(g)
If a person is charged with a repeat violation that may
be expedited within 36 months (3 years) of the first violation, then the penalty
for a repeat violation will be imposed according to the Expedited Administrative
Penalty Chart for repeat violations.
Figure: 16 TAC §402.707(g)
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 April 5, 2006.
TRD-200602030
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Effective date: April 25, 2006
Proposal publication date: November 18, 2005
For further information, please call: (512) 344-5113