H.B. No. 2732
1-1 AN ACT
1-2 relating to alcoholic beverage regulation.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 11.32, Alcoholic Beverage Code, is
1-5 amended to read as follows:
1-6 Sec. 11.32. Renewal Application. Renewal applications shall
1-7 be made under oath and shall contain all information required by
1-8 the commission or administrator showing that the applicant is
1-9 qualified to hold the permit. The application shall be accompanied
1-10 by the required bond and state fee. The commission or
1-11 administrator may issue a renewal permit if it is found that the
1-12 applicant is qualified. The renewal of any permit is timely made
1-13 if not later than the date on which the application is due the
1-14 application is mailed to the commission in an envelope with the
1-15 proper address and postage and is received by the commission not
1-16 later than the 10th day after the date on which it was due.
1-17 SECTION 2. Section 35.01, Alcoholic Beverage Code, is
1-18 amended to read as follows:
1-19 Sec. 35.01. Authorized Activities. The holder of an agent's
1-20 permit may:
1-21 (1) represent permittees other than retailers within
1-22 this state who are authorized to sell liquor to retail dealers in
1-23 the state; and
2-1 (2) solicit, <and> take orders for the sale of liquor
2-2 from authorized permittees and deliver liquor to authorized
2-3 permittees.
2-4 SECTION 3. Section 206.01(a), Alcoholic Beverage Code, is
2-5 amended to read as follows:
2-6 (a) A permittee who distills, rectifies, manufactures, or
2-7 receives any liquor shall make and keep a record of each day's
2-8 production or receipt of liquor and the amount of tax stamps
2-9 purchased by the permittee. A permittee other than a retailer
2-10 shall make and keep a record of each sale of liquor and to whom the
2-11 sale is made and such records may be stored electronically. Each
2-12 transaction shall be entered on the day it occurs. Permittees
2-13 shall make and keep any other records required by the commission.
2-14 All required records shall be kept available for inspection by the
2-15 commission or its authorized representatives for at least four
2-16 years.
2-17 SECTION 4. Section 107.07, Alcoholic Beverage Code, is
2-18 amended by adding Subsection (f) to read as follows:
2-19 (f) Any person in the business of selling alcoholic
2-20 beverages in another state or country who ships or causes to be
2-21 shipped any alcoholic beverage directly to any Texas resident under
2-22 this section is in violation of this code.
2-23 SECTION 5. Section 16.01(a), Alcoholic Beverage Code, is
2-24 amended to read as follows:
2-25 (a) The holder of a winery permit may:
3-1 (1) manufacture, bottle, label, and package wine
3-2 containing not more than 24 percent alcohol by volume;
3-3 (2) manufacture and import grape brandy for fortifying
3-4 purposes only and to be used only on his licensed premises;
3-5 (3) sell wine in this state to holders of wholesaler's
3-6 permits, winery permits, and wine bottler's permits;
3-7 (4) sell wine to ultimate consumers in unbroken
3-8 packages for off-premises consumption in an amount not to exceed
3-9 25,000 gallons annually;
3-10 (5) sell the wine outside this state to qualified
3-11 persons;
3-12 (6) blend wines; <and>
3-13 (7) dispense free wine for consumption on the winery
3-14 premises; and
3-15 (8) sell, by the drink, wine manufactured and bottled
3-16 on the winery premises to ultimate consumers for consumption on the
3-17 winery premises if the premises is in an area where the sale of
3-18 wine is legal.
3-19 SECTION 6. Section 25.01, Alcoholic Beverage Code, is
3-20 amended to read as follows:
3-21 Sec. 25.01. Authorized Activities. The holder of a wine and
3-22 beer retailer's permit may sell:
3-23 (1) for consumption on or off the premises where sold,
3-24 but not for resale, wine, beer, and malt liquors containing alcohol
3-25 in excess of one-half of one percent by volume and not more than 14
4-1 percent by volume; and
4-2 (2) for consumption on the premises traditional port,
4-3 madeira, sake, or sherry containing alcohol in excess of one-half
4-4 of one percent by volume and not more than 24 percent by volume.
4-5 SECTION 7. Sections 251.14(b), (c), (d), and (e), Alcoholic
4-6 Beverage Code, are amended to read as follows:
4-7 (b) In areas where any type or classification of alcoholic
4-8 beverages is prohibited and the issue submitted pertains to
4-9 legalization of the sale of one or more of the prohibited types or
4-10 classifications, the ballot shall be prepared to permit voting for
4-11 or against one of the following issues:
4-12 (1) "The legal sale of beer for off-premise
4-13 consumption only."
4-14 (2) "The legal sale of beer."
4-15 (3) "The legal sale of beer and wine for off-premise
4-16 consumption only."
4-17 (4) "The legal sale of beer and wine."
4-18 (5) "The legal sale of all alcoholic beverages for
4-19 off-premise consumption only."
4-20 (6) "The legal sale of all alcoholic beverages except
4-21 mixed beverages."
4-22 (7) "The legal sale of all alcoholic beverages
4-23 including mixed beverages."
4-24 (8) "The legal sale of mixed beverages."
4-25 (9) "The legal sale of wine on the premises of a
5-1 holder of a winery permit for off-premises consumption only."
5-2 (c) In areas where the sale of all alcoholic beverages
5-3 including mixed beverages has been legalized, the ballot shall be
5-4 prepared to permit voting for or against one of the following
5-5 issues in any prohibitory election:
5-6 (1) "The legal sale of beer for off-premise
5-7 consumption only."
5-8 (2) "The legal sale of beer."
5-9 (3) "The legal sale of beer and wine for off-premise
5-10 consumption only."
5-11 (4) "The legal sale of beer and wine."
5-12 (5) "The legal sale of all alcoholic beverages for
5-13 off-premise consumption only."
5-14 (6) "The legal sale of all alcoholic beverages except
5-15 mixed beverages."
5-16 (7) "The legal sale of all alcoholic beverages
5-17 including mixed beverages."
5-18 (8) "The legal sale of mixed beverages."
5-19 (9) "The legal sale of wine on the premises of a
5-20 holder of a winery permit for off-premises consumption only."
5-21 (d) In areas where the sale of all alcoholic beverages
5-22 except mixed beverages has been legalized, the ballot shall be
5-23 prepared to permit voting for or against one of the following
5-24 issues in any prohibitory elections:
5-25 (1) "The legal sale of beer for off-premise
6-1 consumption only."
6-2 (2) "The legal sale of beer."
6-3 (3) "The legal sale of beer and wine for off-premise
6-4 consumption only."
6-5 (4) "The legal sale of beer and wine."
6-6 (5) "The legal sale of all alcoholic beverages for
6-7 off-premise consumption only."
6-8 (6) "The legal sale of all alcoholic beverages except
6-9 mixed beverages."
6-10 (7) "The legal sale of wine on the premises of a
6-11 holder of a winery permit for off-premises consumption only."
6-12 (e) In areas where the sale of beverages containing alcohol
6-13 not in excess of 14 percent by volume has been legalized, and those
6-14 of higher alcoholic content are prohibited, the ballot shall be
6-15 prepared to permit voting for or against one of the following
6-16 issues in any prohibitory election:
6-17 (1) "The legal sale of beer for off-premise
6-18 consumption only."
6-19 (2) "The legal sale of beer."
6-20 (3) "The legal sale of beer and wine for off-premise
6-21 consumption only."
6-22 (4) "The legal sale of beer and wine."
6-23 (5) "The legal sale of wine on the premises of a
6-24 holder of a winery permit for off-premises consumption only."
6-25 SECTION 8. Subchapter C, Chapter 102, Alcoholic Beverage
7-1 Code, is amended by adding Section 102.55 to read as follows:
7-2 Sec. 102.55. APPLICATION OF TERRITORIAL LIMITS TO LOCAL
7-3 DISTRIBUTOR'S PERMITTEES. (a) A local distributor's permittee
7-4 under Chapter 23 who has purchased beer, ale, or malt liquor from
7-5 the holder of a general, local, or branch distributor's license or
7-6 from the holder of a general class B wholesaler's or local class B
7-7 wholesaler's permit may not deliver the product purchased from such
7-8 distributor or wholesaler to any mixed beverage or private club
7-9 permittee whose premises is located outside of the territory
7-10 assigned to such distributor or wholesaler under a territorial
7-11 limit agreement authorized by this subchapter.
7-12 (b) Except as provided in Subsection (c) of this section, a
7-13 local distributor's permittee may only purchase beer, ale, or malt
7-14 liquor from a distributor or wholesaler who has been assigned the
7-15 territory in which the premises of the local distributor's permit
7-16 is located.
7-17 (c) A local distributor's permittee who delivers beer, ale,
7-18 or malt liquor to a mixed beverage or private club permittee which
7-19 is located outside of the assigned territory in which the premises
7-20 of the local distributor's permit is located must purchase that
7-21 beer, ale, or malt liquor from the distributor or wholesaler who
7-22 has been assigned the territory in which the premises of the mixed
7-23 beverage or private club permittee is located.
7-24 SECTION 9. Chapter 102, Alcoholic Beverage Code, is amended
7-25 by adding Subchapter E to read as follows:
8-1 SUBCHAPTER E. LIQUOR INDUSTRY FAIR DEALING LAW
8-2 Sec. 102.90. DEFINITIONS. In this subchapter:
8-3 (1) "This Act" means this subchapter, which shall be
8-4 known and may be cited as the Liquor Industry Fair Dealing Law.
8-5 (2) "Liquor" has the meaning provided in Section
8-6 1.04(5) of this code but shall not include ale or malt liquor.
8-7 (3) "Supplier" means a person holding a permit under
8-8 Section 14.01, 16.01, 18.01, or 37.01 of this code.
8-9 (4) "Wholesaler" means a person holding a permit
8-10 authorizing the purchase of liquor for sale to retailers, but does
8-11 not include any holder of a local distributor's permit.
8-12 (5) "Territory" or "sales territory" means the
8-13 geographic area of distribution and sales responsibility designated
8-14 by an agreement between a wholesaler and a supplier, as provided
8-15 for in Section 102.93 of this code, for any brands of the supplier.
8-16 (6) "Brand" or "label" means the name by which any
8-17 liquor or its logo is known as authorized by its federal label
8-18 approval including all authorized sizes or configurations
8-19 authorized for sale within the state.
8-20 Sec. 102.92. PURPOSES AND POLICIES. The legislature finds
8-21 that this subsection is necessary in the public interest of the
8-22 state and that the public interest is served by the purposes and
8-23 policies hereinafter stated, all of which is enacted pursuant to
8-24 the authority granted to the state under the provisions of the
8-25 Twenty-first Amendment to the United States Constitution:
9-1 (1) to prevent unfair business practices,
9-2 discrimination, and undue control of one segment of the liquor
9-3 industry by any other segment;
9-4 (2) to foster vigorous and healthy competition in the
9-5 liquor industry;
9-6 (3) to promote and keep alive a sound and stable
9-7 distribution of liquor in this state;
9-8 (4) to protect public revenues by facilitating the
9-9 collection and accountability of state liquor excise taxes; and
9-10 (5) to promote the public health, safety, and welfare
9-11 of the people of the State of Texas.
9-12 Sec. 102.93. DESIGNATION OF SALES TERRITORIES AND EXCLUSIVE
9-13 WHOLESALE DISTRIBUTORS. (a) Every supplier shipping liquor into
9-14 the state shall submit to the commission one label for each brand
9-15 of liquor to be shipped into this state and shall designate the
9-16 sales territories for each of its brands sold in this state and
9-17 name one wholesaler who shall be the exclusive distributor of the
9-18 brand within the territory.
9-19 (b) Each supplier shall enter into an agreement with one
9-20 wholesaler in each sales territory, appointing that wholesaler the
9-21 exclusive wholesaler of the brands to be sold in that territory.
9-22 Every wholesaler in this state who was handling a brand or label on
9-23 May 1, 1995, shall be designated by the supplier as the exclusive
9-24 wholesaler for such brand or label in the sales territory.
9-25 (c) Every wholesaler shall file with the commission a copy
10-1 of each territorial assignment by which the wholesaler was
10-2 appointed by a supplier as the exclusive wholesaler of the brand
10-3 handled by the supplier within the territory.
10-4 (d) The commission shall initially approve such designations
10-5 of wholesalers and sales territories, and such designations of
10-6 wholesalers and sales territories shall not be changed or initially
10-7 disapproved by the commission.
10-8 (e) Any brand or label which is the same as, similar to, or
10-9 a modification, substitution, upgrade, or extension of a brand or
10-10 label which has already been registered by a supplier shall be
10-11 assigned by the supplier to the wholesaler to which the original
10-12 brand or label was assigned.
10-13 Sec. 102.94. UNLAWFUL TRANSACTIONS. (a) No supplier may
10-14 sell any brand or label of liquor in this state other than to the
10-15 wholesaler appointed by that supplier as the exclusive wholesaler
10-16 of that brand or label in an assigned territory.
10-17 (b) No wholesaler may sell any liquor in this state to a
10-18 retailer whose premises is not located within the wholesaler's
10-19 assigned sales territory unless the wholesaler has been appointed
10-20 as the exclusive wholesaler of that brand of liquor for the
10-21 territory in which the sale is made.
10-22 (c) Violation of this section shall be grounds for
10-23 cancellation or suspension of any permit held by the violator.
10-24 Sec. 102.95. REQUEST TO CHANGE DESIGNATIONS. (a) Any
10-25 supplier desiring to change a wholesaler with respect to any brand
11-1 or to alter the sales territory of an exclusive wholesaler shall
11-2 file with the commission a wholesaler change request on a form
11-3 prescribed by the commission which contains the following
11-4 information:
11-5 (1) the name of each brand involved;
11-6 (2) the case volume in Texas for each brand for the
11-7 current year or portion thereof and the three previous calendar
11-8 years;
11-9 (3) the name of the wholesaler currently distributing
11-10 such brand;
11-11 (4) the name of the proposed new wholesaler; and
11-12 (5) a detailed explanation of the specific business
11-13 reasons for the request to change wholesalers and business reasons
11-14 which may be considered by the commission in determining good cause
11-15 for authorizing a change.
11-16 (b) At the same time that the change request is filed with
11-17 the commission, a copy thereof shall be sent by certified mail by
11-18 the supplier to each wholesaler who may be affected by the proposed
11-19 changes.
11-20 (c) Grounds that the commission may consider in determining
11-21 good cause for authorizing a change in wholesalers or sales
11-22 territories are:
11-23 (1) a wholesaler's bankruptcy or serious financial
11-24 instability, including its consistent failure to pay its debts on
11-25 demand therefor in accordance with agreed payment terms or its
12-1 failure to meet or maintain any objective standards of
12-2 capitalization expressly agreed to between the wholesaler and
12-3 supplier, provided such standards are determined by the commission
12-4 to be commercially reasonable;
12-5 (2) a wholesaler's repeated violation of any provision
12-6 of federal or state law or regulations or the revocation or
12-7 suspension of a permit for a period of 30 days or more relating to
12-8 the business and which materially and adversely affects the
12-9 wholesaler's ability to continue in business; and
12-10 (3) a wholesaler's failure to maintain reasonable
12-11 sales volume of the brand, taking into consideration such factors
12-12 as the extent of the supplier's advertising and promotion of the
12-13 particular brand, sales history by other wholesalers in the state
12-14 and region, national trends, and prevailing economic conditions
12-15 affecting sales generally, or the extent of the wholesaler's
12-16 efforts, or lack thereof, to promote a particular brand.
12-17 Sec. 102.96. PROTEST OF CHANGES IN DESIGNATIONS. An
12-18 appointed exclusive wholesaler adversely affected by a contemplated
12-19 change in designation shall have the right to protest any proposed
12-20 alteration of territory or change in the appointment of exclusive
12-21 wholesaler. Within 90 days after receipt of such notice as
12-22 required in Section 102.95 of this code, any affected wholesaler
12-23 may object to the proposed alteration of territory or change in the
12-24 appointment of an exclusive wholesaler by filing a written
12-25 objection to the commission. During such 90-day period and until
13-1 the proposed changes have been finally approved by the commission,
13-2 the supplier proposing the change shall continue to supply the
13-3 designated wholesaler, on commercially reasonable terms, such
13-4 reasonable quantities of the brand involved as the wholesaler may
13-5 require. If a petition for judicial review is filed pursuant to
13-6 Section 102.97 of this code, the supplier shall likewise continue
13-7 to supply the designated wholesaler, on commercially reasonable
13-8 terms, such reasonable quantities of the brand involved as the
13-9 wholesaler may require until judgment or order of the court,
13-10 including appeals, is final.
13-11 Sec. 102.97. HEARING. (a) On receipt of a protest by an
13-12 affected wholesaler or on its own motion, the commission shall,
13-13 within 60 days, set the matter for hearing for the purpose of
13-14 determining the truth of any matters of fact alleged by any party
13-15 and determining whether the proposed changes are based on
13-16 sufficient cause and are otherwise consistent with the policies set
13-17 out in Section 102.95 of this code. The hearing shall be conducted
13-18 in Travis County as a contested case under the provisions of
13-19 Chapter 2001, Government Code. Any wholesaler aggrieved by a final
13-20 decision or order by the commission or administrator is entitled to
13-21 judicial review in accordance with the provisions of Chapter 2001,
13-22 Government Code, by filing a petition in a district court of Travis
13-23 County or a district court in any county within the wholesaler's
13-24 exclusive sales territory. The judgment of the district court may
13-25 be appealed by any party as in other civil cases.
14-1 (b) If no objection is filed, change of wholesaler shall
14-2 take effect 90 days from notification. The supplier must purchase
14-3 from its former wholesaler all brands involved at laid-in cost and
14-4 remove said inventory to the new wholesaler.
14-5 (c) Any manufacturer, shipper, or broker who obtains or
14-6 acquires in any manner the right to sell, ship, or distribute any
14-7 brand or label shall for the purpose of this subchapter stand in
14-8 the place of and be subject to all of the rights, privileges,
14-9 duties, and obligations of its predecessor or its predecessors from
14-10 which such brands or labels were obtained or acquired.
14-11 Sec. 102.98. EFFECT. The effect of this subchapter may not
14-12 be varied by contract. Any agreement purporting to do so is void
14-13 and unenforceable to the extent of such variance.
14-14 Sec. 102.99. PROHIBITED CONDUCT. No supplier shall:
14-15 (1) induce or coerce or attempt to induce or coerce
14-16 any wholesaler to engage in any illegal act or course of conduct;
14-17 (2) require a wholesaler to assent to any unreasonable
14-18 requirement, quota, condition, understanding, or term of an
14-19 agreement prohibiting a wholesaler from selling the product of any
14-20 other supplier;
14-21 (3) fix or maintain the price at which a wholesaler
14-22 may resell liquor; or
14-23 (4) require any wholesaler to accept delivery of any
14-24 liquor or any other product, including any nonalcoholic product,
14-25 which shall not have been ordered by the wholesaler.
15-1 Sec. 102.991. TRANSFER OF BUSINESS ASSETS OR STOCK. (a) No
15-2 supplier shall unreasonably withhold or delay its approval of any
15-3 assignment, sale, or transfer of the stock of a wholesaler or all
15-4 or any portion of a wholesaler's assets, wholesaler's voting stock,
15-5 the voting stock of any parent corporation, or the beneficial
15-6 ownership or control of any entity owning or controlling the
15-7 wholesaler, including the wholesaler's rights and obligations under
15-8 the terms of an agreement whenever the person or persons to be
15-9 substituted meet reasonable standards imposed not only on the
15-10 wholesaler but also on all other wholesalers of the supplier of the
15-11 same general class, taking into account the size and location of
15-12 the sales territory and market to be served. On the death of one
15-13 of the partners of a partnership operating the business of a
15-14 wholesaler, no supplier shall deny the surviving partner or
15-15 partners of such partnership the right to become a successor in
15-16 interest to the agreement between the supplier and such
15-17 partnership.
15-18 (b) Notwithstanding the provisions of Subsection (a) of this
15-19 section, on the death of a wholesaler, no supplier shall deny
15-20 approval for any transfer of ownership to a surviving spouse or
15-21 adult child of an owner of a wholesaler, provided that subsequent
15-22 transfers of such ownership by such ownership by such surviving
15-23 spouse or adult child shall thereafter be subject to the provisions
15-24 of Subsection (a) of this section.
15-25 SECTION 10. The importance of this legislation and the
16-1 crowded condition of the calendars in both houses create an
16-2 emergency and an imperative public necessity that the
16-3 constitutional rule requiring bills to be read on three several
16-4 days in each house be suspended, and this rule is hereby suspended,
16-5 and that this Act take effect and be in force from and after its
16-6 passage, and it is so enacted.