By A. Bentley Nettles
TABC Executive Director
 
The Texas Alcoholic Beverage Commission (TABC) redefined itself and its relationship with the alcoholic beverage industry in 2018. The year’s successes include the agency’s proactive efforts to engage all members of the industry, implementing new initiatives and overhauling significant policy positions to address industry issues, a new program that leverages the combined power of TABC’s stakeholders to end human trafficking, and major budgetary and legislative proposals to build a TABC for the 21st century. In order to continue down the path of success, it’s important that we recognize the progress that’s been made and what’s in store for the year ahead.

Engaging and Taking Action

TABC set the tone for 2018 starting with its active stakeholder engagement events all across Texas. These efforts included roundtable discussions, executive summits, presentations at industry association conferences and board meetings, and one-on-one meetings with industry around the state. Just counting the roundtables and summits, TABC hosted 12 events in 6 cities, reaching more than 230 industry members from all three tiers.
These engagements helped TABC develop positive working relationships with stakeholders and identify key improvements for the agency. Some of the biggest issues raised were the need for TABC to improve its communications with industry, provide better educational opportunities, and be more amenable to finding workable solutions to industry problems. These issues are key elements of providing fair and predictable regulation, and they set the tone for what TABC needed to accomplish this year.

Improving Communications and Transparency

• Agency Advisories[i]: TABC reversed an old policy and now allows industry to request agency advisories. These provide general guidance on various matters affecting stakeholders, setting the standard for TABC staff and industry. TABC issued a licensing advisory in 2018 on a new rule, and is currently working on several new and updated marketing practices advisories.
• Industry Newsletters[ii]: TABC has begun publishing articles for industry (like this one) that provide updates on agency happenings, new rules, and other timely matters. These articles are distributed to industry associations, some of which publish the articles in their newsletters, and to those who request to receive them. These articles are also accessible on TABC’s website.
• Commission Meeting Connectivity[iii]: TABC initiated a new service called Board Docs, which makes the agency’s commission meeting materials publicly available online. This will also allow TABC to post audio recordings, and eventually video recordings, of these meetings online. The goal is to make sure all TABC stakeholders can easily stay informed and engaged no matter where they are. This service will be active for TABC’s first commission meeting of 2019, which will be accessible through the “Commission Meetings” page on TABC’s website.
• New Open Records Processing System: TABC has begun allowing the public to submit open records requests directly through TABC's online portal, greatly improving user experience and response times. At the beginning of 2018, open records requests were routinely taking more than 60 days to complete. Processing times now average less than 10 days.

Improving Education Opportunities

• TABC Talks[iv]: TABC has launched TABC Talks. This is a free online education program in which a TABC division conducts a live video conference on a topic relevant to stakeholders each month. These are recorded and placed on TABC’s YouTube Channel (www.YouTube.com/TABCChannel) in an effort to build an online training database that industry can access at all times.

Implementing Workable Solutions

• Common Tasting Rooms Are Allowed: TABC reversed prior agency interpretations and has determined that a person or entity may receive multiple permits to make various types of alcoholic beverages at the same location and may serve those products to consumers for on-premises consumption in a common area.
• Revised Protest Policy[v]: TABC reversed prior agency policy that once allowed anyone to challenge a license/permit. Now, only certain local officials authorized in statute may protest original or renewal applications, and protests by members of the public are limited to those within 300 feet of a proposed licensed premises. This new policy more closely follows the letter of the law and protects the industry from unnecessary delays.
• Self-Pour Machines: TABC ended fluctuating interpretations about retailers’ use of consumer self-pour machines. The agency determined that retailers’ operation of these machines at their locations is allowed under the Alcoholic Beverage Code. TABC is currently developing a written policy detailing under what circumstances retailers can engage in this practice.

TABC Rules[vi]

TABC also adopted several formal policies this year in the form of administrative rules. These changes to TABC’s rules are a product of collaboration between the agency and industry to improve the regulatory process, enhance efficiency, and better enforce the law.

• Rule §45.106 – Sweepstakes & Games of Chance (amendment): Allows brewers to offer prizes to consumers as part of a promotional sweepstakes, clarifies types of acceptable prizes, and clarifies the parameters of conducting private events at a retailer’s premises as part of the prize.
• Rule §35.1 – Transportation of Alcohol by Package Stores (amendment): Clarifies that the rule doesn’t apply to deliveries to consumers. It also requires that the invoice for goods transported under the rule include the price of items sold, and that the invoice be signed by the recipient.
• Chapter 50 – Seller Server Training (amendment): Accommodates seller server training classes offered on mobile device applications, clarifies technical support requirements for internet-based courses, provides additional grounds for refusal or cancellation of seller server school certificates, and ensures timely completion of applications.
• Rule §41.56 – Out-of-State Winery Direct Shipper’s Permits (amendment): Clarifies information required in and attached to a Direct Shipper’s Report, changes the frequency of reporting, and requires the shipper to notify the carrier that the package contains alcoholic beverages and that an adult signature is required at delivery. TABC made these changes at industry’s request to ensure Texas’ laws are followed, specifically that wine brought into Texas is properly taxed and is not delivered to persons not authorized to receive it.
• Rules §§33.11-12, 33.15, & 33.23 – Caterer, Winery Festival, and Temporary Events (amendment): Creates a new file and use system for most caterer and wine festival certificates, and requires all others not eligible for this system to submit their applications at least 10 business days before the event to avoid expedited processing fees.
• Rule §41.22 – Compliance Reporting by License and Permit Holders (new rule): Modernizes inspections of TABC-licensed/permitted locations. With this change, industry is directed to use TABC: Compliance Reporting, a new mobile device application, to conduct and submit an annual compliance report. The app will ask the industry user to answer a series of questions specific to their license/permit type and to submit pictures of their TABC license/permit along with other required signage. This new process will be a time saver for industry and replaces lengthy on-site inspections conducted by TABC. You will hear much more about this in the coming months as the app is launched for the industry’s voluntary use in early 2019 and when it becomes a requirement in September 2019.

Human Trafficking[vii]

Part of TABC’s mission is to protect public health and safety in Texas. To carry out its mission, this year TABC set a goal of eradicating human trafficking at its licensed locations. Human trafficking is modern-day slavery, and Texas is ranked second in the nation for this activity, which occurs in secret rooms at bars and other licensed locations across the state.
In 2018, TABC took major steps toward accomplishing this goal through industry training and a public awareness campaign with First Lady of Texas Cecilia Abbott. These initiatives turn all Texans into a force multiplier in the fight against this heinous criminal activity by explaining how to identify and anonymously report suspected human trafficking. Since their launch, TABC has received an 84% increase in reports of human trafficking.
If you haven’t already, visit TABC’s website for training information, watch TABC’s “Be The One” video with Texas First Lady Cecilia Abbott[viii], and encourage everyone you know to do the same. Let’s make all Texans a force from which the human traffickers cannot hide.

Preparing for the 86^th Legislature

Last but not least, TABC has been actively preparing for the 86^th Session of the Texas Legislature. This will be a big session for TABC. The agency is requesting funding in its budget necessary to implement critical improvements. TABC is also under Sunset review, which has the potential to significantly alter the operations of the agency. TABC has heavily relied on the feedback it received from industry this year as it developed reports and recommendations to the Texas Legislature on these matters.
TABC’s 2020-2021 budget request[ix] seeks to bring TABC into the 21st century in order to better address the needs of a modern and dynamic industry. Key components of the request ask for $14 million to overhaul TABC's technology and cybersecurity. This will lead to stronger protections for industry’s personally sensitive information and allow industry to submit applications, reports, and payments online. Another key item seeks $12 million so that TABC can hire 64 additional law enforcement personnel to serve in areas that pose significant public safety risks. This need is exemplified by the almost 10% loss in TABC law enforcement personnel versus the almost 40% industry growth in the last 10 years, and the growing number of human trafficking complaints the agency must investigate. This item will allow TABC to effectively enforce the law against the small percentage of bad actors who negatively impact the entire industry. If approved by the Texas Legislature in 2019, this budget will ensure TABC’s ability to perform its core mission of helping businesses and upholding public safety.
TABC’s ability to perform its core mission will also be impacted by the Legislature’s sunset review of this agency. This is a legislative review that all agencies must undergo about once a decade to determine the necessity of the agency and improve its efficiency, effectiveness, and accountability. TABC has been working with Sunset Commission staff for most of the year, and stakeholder input has been a cornerstone of this process. In October, Sunset released its staff report[x], which recommends continuing TABC’s existence, simplifying its licensing structure, updating its licensing systems, streamlining the process for approving alcoholic beverages for sale, eliminating overly restrictive outdoor advertising requirements, and restructuring TABC’s protest process – among other things. In November, TABC published its response[xi] to Sunset’s staff recommendations. The Sunset process continued in December with a public hearing at the Texas Capitol[xii]. The Sunset Advisory Commission is set to make decisions on recommendations for TABC on January 9, 2019[xiii]. You are highly encouraged to continue participation in the Sunset process to help build the TABC you want to see.

Looking Forward

2018 has been a unique year at TABC. It’s the first full year that the agency’s new leadership team has been in place. With new direction, the entire agency has been working hard to improve its culture and operations. Sustained stakeholder engagement is key to this progress, especially with an upcoming legislative session. In 2019, TABC looks forward to continue supporting the growth of this $40 billion industry and protecting law-abiding businesses and the public.