The House Committee on Licensing & Administrative Procedures released its interim report to the 87th Legislature. The report includes information on legislation passed last session, the Texas Lottery Commission, TABC human trafficking prevention, control labels, and wine appellation standards. For more information, the full report can be found here.
Spotlight on Recommendations and Statements
Charge #1 – Monitor measures passed in the 86th Legislature
HB 1545: TABC Sunset Bill
- The Sunset bill requires TABC to post statutory fees effective August 31, 2021, so that local governments will know how to set their local fees, which by statute can be up to one-half of the statutory fee. However, many of the permits will be abolished or merged on September 1, 2021, resulting in several instances in which there will be a lack of clarity in terms of which statutory fee local governments may use to set their own fees. The Legislature may want to consider an alternative approach for local governments to maintain this revenue stream.
- The 86th Legislature passed SB 1232, authorizing Beer and Wine Retailer’s permittees to deliver alcoholic beverages to consumers if they obtain a Local Cartage subordinate permit. However, HB 1545 eliminates the need to have a Local Cartage for other permittees, such as Package Stores. TABC will need to maintain the Local Cartage permit specifically for Beer and Wine Retailers even though the Legislature intended to eliminate the need for this separate permit in the Sunset bill for other retailers.
- Statute allows cities and counties to charge fees to permittees based on fees set in statute, not rule. The Sunset bill both eliminated statutory fees and renamed, eliminated, or combined an array of permits. While the bill provides that cities and counties can continue charging based on statutory fees in place as of August 31, 2021, some confusion still exists and cities and counties are still waiting on the final permit crosswalk. The crosswalk will assist cities and counties in determining what fees and how much they are now able to charge. This is an area to monitor for the upcoming session.
SB 1450: Alcohol Delivery
- Concerning Governor Abbott’s temporary waiver allowing restaurants and certain other mixed beverage permittees to sell for carryout and delivery alcohol in original manufactures’ containers and carryout and delivery of mixed drinks under certain rules, known as “cocktails to go,” it is the Committee’s opinion that it is not material to the function of SB 1450 and is an entirely separate policy discussion.
HB 892: County Regulation of Game Rooms
- The purpose of HB 892 was to provide all counties proven regulatory authority to combat illegal activity. It was not and is not a back-door gambling bill and the Committee is unaware of any evidence to the contrary.
HB 2847: TDLR Omnibus Bill
- Will evaluate programs on a go-forward basis to determine whether changing license terms and continuing education requirements could reduce fee amounts. In cases where fees may be lowered by increasing or decreasing the length of a license term or continuing education requirements, the Commission will consider all input from advisory boards, industry groups, and the public before making its decision.
Charge #2 – TABC Efforts to Combat Human Trafficking
- The investigation of human trafficking consumes a great deal of the unit’s resources and time. With the projected increase in the state’s population and the growth in the number of TABC licensed businesses, the agency will have to increase the number of its human trafficking investigations. The agency has asked for additional resources to support victims by connecting them with victim services organizations, which are critical for assisting human trafficking survivors and ensuring the successful prosecution of traffickers.
Charge #3 – Control Labels
- While statute and spirit of the three-tier system might, in fact, prohibit control labels, their ubiquity may make such enforcement impractical. So rather than outright prohibition, the Committee recommends implementing statutory regulations and equipping TABC with the necessary rulemaking authority to ensure transparency, fair play, and basic compliance with the three-tier system. Collaboration within the industry will be key to meeting this goal.
Charge #4 – Texas Wine Appellation Standards
- Has been a debate among producers and enthusiasts if Texas should embrace being a serious wine state and tighten its appellation of origin requirement. It is the committee’s view that, at its most basic, this argument is about how to use “Texas” as a wine signifier, as both sides clearly see economic value in the term.
- The Committee has found that it would not be contrary to federal regulation to pass a state law regarding appellation standards. In fact, the federal percentage requirement is set up as the baseline with clear language authorizing states to implement stricter standards.
- If Texas were to remain using the federal standard or create its own, it would be consistent with that worldwide practice. Encouraging winemakers to label their bottles with anything but an actual appellation, “100% Texas” for example, would not.
- The Committee recognizes that this is a serious issue in the Texas wine industry. It is one of philosophical nuance but also of serious economic realities, both of which are of great importance to the Committee. For this reason, the Committee looks forward to continuing its education on this subject so it can make a decision that ultimately serves the best interest of the entire Texas wine community.