The House Committee on Licensing and Administrative Procedures met on October 25 to hear invited testimony regarding advancements in technology-based alcohol and industry services, a review of local and state occupational licensing and regulations for redundancies, and statutory changes enacted through S.B. 2065 (85R), the Committee’s omnibus deregulation bill.
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Study the recent advancements in technology-based alcohol and industry services. Determine if current regulations and permitting rules are able to respond to the ongoing shifts in the modern marketplace and continue to provide consumer and public protections without restricting innovation.
Bentley Nettles, Texas Alcoholic Beverage Commission
- There are many portions of code that could not have been designed to keep up with changing technology
- Concern with delivery of alcohol has always been an issue of public safety that they not get into the hands of minors or intoxicated people
- There are two permits that allow delivery of alcohol
- Local cartage permit under code 41 – used by package stores
- Carrier permit under code 4101 – typical carrier like UPS
- A package store in code includes – liquor store, wine only stores, package stores like groceries
- Described package store deliveries through cartage permits that can also be contracted out
- Deliveries by carriers can be more difficult for the agency
- Purchases through portal apps can make it even more difficult because the portal is not permitted nor is the delivery vehicle
- Unauthorized model like resale are illegal under current code
- Safety and regulatory concerns include:
- Sale to minors or intoxicated persons
- Age of carrier or cartage delivery driver
- Current law makes distinction for delivery between liquor and beer/wine
Keith Duncan, Favor Delivery
- Described Favor Delivery, app-based delivery service
- Have made changes to business model to add technology to confirm age of buyer and intoxication
- Kuempel – what do you do as far as education for the runners?
- There is some support to encourage taking server/seller training, but not required as the company does not have the authority to require
Caroline Joiner, Technet
- Described Technet, network of industry stakeholders promoting technology innovations
- Have seen app-based delivery options grow as it expands availability and ease of access
- Have seen them expand small business’ reach as well as offer more options for limited mobility persons
- Drivers all comply fully with regulations
- Kuempel – encouraged to work with TABC on regulation
- Guillen – you verify that you are the same person that ordered the product?
- There are ID scanners that can verify that the persons ID matches the account purchased from
- Cannot complete the delivery if it is not the same person
- Goldman – you are testing alcohol delivery now; what market are you testing it in?
- Duncan – correct, we are testing it in Austin, Dallas, and San Antonio
- Goldman – just for beer and wine?
- Duncan – that is correct
- Goldman – do you know how many deliveries you have made?
- Duncan – we average between 300-700 per day
- Goldman – how many times have you denies the delivery?
- Duncan – do not have a specific number at present but it is quite a few and it is tracked
- Goldman – if you have a package store delivery you have to have a permit?
- Nettles – that is correct
- Nettles – for a cartage permit they must have signage on the vehicle
- Goldman – favor drivers do not have signage?
- Duncan – that is correct
- Hernandez – you scan the ID, what is done with that information?
- It is used for the initial verification, but it is not saved
- Guillen – what exactly needs to be addressed?
- Nettles – under the motor carrier model for delivery, when it is subcontracted down to internet/app-based contractors there are difficulties in regulating it, like it does not address selling to intoxicated persons
- The business model depends on a flexible workforce and making the drivers take courses would lessen the available qualified workforce
- Duncan – the app does remind drivers to pay attention to intoxication as well as id checks
- Guillen – what keeps you from making drivers get this certification?
- Duncan – it is the 1099 classification
- Goldman – you mentioned a contract with HEB, do you not buy through any other package stores?
- Duncan – only serve from HEB at this time
- Goldman – what insurance requirements do you have on your contractors?
- Duncan – they have to carry auto insurance but there are several carried on the Favor side, which covers the company for liability
- Herrero – what insurance requirements do you have for people that transport alcohol?
- Nettles – there are some through the transportation code but not specifically for alcohol delivery
- Guillen – do they have to have a different level of insurance for when they drive for you?
- Duncan – not sure what their requirements
- Joiner – Will provide an answer after speaking with member companies
Review local and state occupational licensing and regulations for redundancies. Determine the most effective balance of promoting the economic growth and development of Texas’ businesses and workforce with government interests and public safety.
Brian Francis, Texas Department of Licensing and Regulation
- Described implementation of HB 100
- Have reviewed entities with local nexus to review for redundancies
- Bill was signed May 29th, 2017, rules were published in September of 2017, and now have 10 companies licensed – has been a successful implementation
- Related to air-conditioning and electrician licensing programs – they are statewide programs that allow municipalities to issue licenses that are not redundant with state licenses
- There is no disparity between the standards between elevator codes that are municipal (Houston only) versus state regulation
- The massage program is a little different, language is written in such a way to allow for law enforcement to intervene/go into unsavory operations
- Did not find any licenses that are redundant
Arif Panju, Institute for Justice
- Texas has 49 licensing boards
- They have the power to write and enforce regulation
- Most of the boards are made up of market participants
- Special interest has means and financial interest to encourage occupational licensing
- Committee should consider what the constitution requires and why the legislature has to consider it a binary choice
- Described lawsuit (Patel case) related to cosmetology and eyebrow threading which was not tested in the course
- Guiding principal that should be applied is should be the least restrictive form possible
- Written testimony includes list of less restrictive occupational regulation options
Tom Newell, Foundation for Government Accountability
- Estimates show that 1 in 3 Texans has a criminal record, each year 70,000 people leave incarceration
- The leading factor in recidivism is employment
- Texas has 130 restrictions on licensure for convicted persons
- Described specific example on a person with criminal record attempting to get a licensed and being denied
- Recommends:
- Require licensing board to list specifically the criminal offences that disqualify someone from holding that license
- Limit the lookback period to 5 years for non-violent, non-sexual offences
- Have a predetermination clause for people to find out at the beginning if they could get their licensed
- Polling shows 82% of Texas voters would support legislation like this
- Guillen – is Mr. Newell right?
- Francis – he is right for other states, not for Texas, we have already done the recommendations in chapter 53. The fix needs to take place in the statute for some specific licenses in the occupations code
- Panju – there is a separation of powers issue at stake within the boards and agencies, it should be the most narrowly defined restrictions
- Guillen – are there instances that were gross overreach and need to be changed?
- Panju – the documentation provided includes that information and will follow up with Texas specific examples
- Newell – licensing boards are designed to exclude as many people as possible – it should be tightened up as much as possible
- Guillen – would like a list of the restrictions to be able to make fixes
- Kuempel – complimented TDLR on their work and noted that all licensure original from some sort of necessity
Monitor the statutory changes enacted through S.B. 2065 (85R), the Committee’s omnibus deregulation omnibus bill. In particular, monitor the effectiveness and efficiency of the Texas Department of Licensing and Regulation’s (TDLR) role in regulating the applicable occupations and activities including but not limited to Vehicle Protection Product businesses, Temporary Common Worker Employers, For-Profit Legal Service Contract Companies, Barbering and Cosmetology, and Vehicle Booting and Towing Operators. Review TDLR’s current strategic planning efforts and the potential recommendations for occupations and activities which may undergo regulation changes in the future.
Brian Francis, Texas Department of Licensing and Regulation
- SB 2065 is one of the largest deregulation bills in Texas history
- Roughly $1.7 million in fees getting rid of
- Have completed deregulation of multiple phases and will be complete by the September 2019 required completion
- HB 2615 – 3,524 individuals with dual licenses now only operator
- Roughly $428,000 in fee savings over 2 years
- On target for completion
- 22 license types have been eliminated since 2017
- Noted rules reduction as part of an effort to streamline the regulatory process
- 823,000 licensees being served
- Potential deregulation of mold removal licensure in the future
- Elimination of voluntary prosthetic license can go away – as it is voluntary
- Driver education physical building should not be needed to have an online course offering – should consider that
- Should simplify the renewal process
- Cosmetology and barbering program – the practical tests ability to demonstrate sanitation skills – looking at system to allow schools to give that exam after the rest of the program instead of requiring the exam be taken at one of 8 facilities, allowing for the students to get licensed quicker
- Should look at word searches to find potential efficiencies – look for “mailed” to find opportunities to digitize
- Noted a need for one licensing system (currently 9 systems) requested in appropriations request – $1.9 million over the biennium