1-1     By:  Zaffirini, Moncrief, Nelson, Shapleigh             S.B. No. 55

 1-2           (In the Senate - Filed November 12, 1996; January 14, 1997,

 1-3     read first time and referred to Committee on Health and Human

 1-4     Services; April 21, 1997, reported adversely, with favorable

 1-5     Committee Substitute by the following vote:  Yeas 11, Nays 0;

 1-6     April 21, 1997, sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 55                    By:  Harris

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the regulation of the sale, distribution, and use of

1-11     tobacco products; providing penalties.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13         ARTICLE 1.  DISTRIBUTION OF CIGARETTES OR TOBACCO PRODUCTS

1-14           SECTION 1.01.  Subchapter H, Chapter 161, Health and Safety

1-15     Code, is amended to read as follows:

1-16         SUBCHAPTER H.  DISTRIBUTION [SALE] OF CIGARETTES OR TOBACCO

1-17                            PRODUCTS [TO MINORS]

1-18           Sec. 161.081.  DEFINITIONS.  In this subchapter:

1-19                 (1)  "Cigarette" has the meaning assigned by Section

1-20     154.001, Tax Code.

1-21                 (2)  "Permit holder" has the meaning assigned by

1-22     Section 154.001 or 155.001, Tax Code, as applicable.

1-23                 (3)  "Retail sale" means a transfer of possession from

1-24     a retailer to a consumer in connection with a purchase, sale, or

1-25     exchange for value of cigarettes or tobacco products.

1-26                 (4)  "Retailer" has the meaning assigned by Section

1-27     154.001 or 155.001, Tax Code, as applicable.

1-28                 (5)  "Tobacco product" has the meaning assigned by

1-29     Section 155.001, Tax Code.

1-30                 (6)  "Wholesaler" has the meaning assigned by Section

1-31     154.001 or 155.001, Tax Code, as applicable.

1-32           Sec. 161.082.  SALE OF CIGARETTES OR TOBACCO PRODUCTS TO

1-33     PERSONS YOUNGER THAN 18 YEARS OF AGE [MINORS] PROHIBITED; PROOF OF

1-34     AGE REQUIRED.  (a)  A person commits an offense if the person, with

1-35     criminal negligence [as a commercial enterprise]:

1-36                 (1)  sells, gives, or causes to be sold or given a

1-37     cigarette or [other] tobacco product to someone who [the person

1-38     knows] is younger than 18 years of age; or

1-39                 (2)  sells, gives, or causes to be sold or given a

1-40     cigarette or [other] tobacco product to another person who[,

1-41     knowing that the person receiving the cigarette or other tobacco

1-42     product] intends to deliver it to someone who is younger than 18

1-43     years of age.

1-44           (b)  A retailer commits an offense if:

1-45                 (1)  an agent or employee of the retailer commits an

1-46     offense under Subsection (a); and

1-47                 (2)  the retailer, with criminal negligence, failed to

1-48     prevent the offense through adequate supervision and training of

1-49     the agent or employee.

1-50           (c)  An offense under this section is a Class C misdemeanor.

1-51           (d) [(c)]  It is a defense to prosecution under Subsection

1-52     (a)(1) [this section] that the person to whom the cigarette or

1-53     [other] tobacco product was sold or given presented to the

1-54     defendant [an] apparently valid proof of [Texas driver's license or

1-55     an] identification.

1-56           (e)  A proof of identification satisfies the requirements of

1-57     Subsection (d) if it contains [card, issued by the Department of

1-58     Public Safety and containing] a physical description and photograph

1-59     consistent with the person's appearance, purports [that purported]

1-60     to establish that the person is [was] 18 years of age or older, and

1-61     was issued by a governmental agency.  The proof of identification

1-62     may include a driver's license issued by this state or another

1-63     state, a passport, or an identification card issued by a state or

1-64     the federal government.

 2-1           (f)  It is not a defense to prosecution under this section

 2-2     that the retailer complied with the provisions of Section 161.085.

 2-3           Sec. 161.083.  SALE OF CIGARETTES OR TOBACCO PRODUCTS TO

 2-4     PERSONS YOUNGER THAN 27 YEARS OF AGE.  (a)  A person may not sell,

 2-5     give, or cause to be sold or given a cigarette or tobacco product

 2-6     to someone who is younger than 27 years of age unless the person to

 2-7     whom the cigarette or tobacco product was sold or given presents an

 2-8     apparently valid proof of identification.

 2-9           (b)  A retailer shall adequately supervise and train the

2-10     retailer's agents and employees to prevent a violation of

2-11     Subsection (a).

2-12           (c)  A proof of identification described by Section

2-13     161.082(e) satisfies the requirements of Subsection (a).

2-14           (d)  A person commits an offense if the person violates this

2-15     section.  A fine for an offense under this section may be up to

2-16     $100 per violation.

2-17           Sec. 161.084 [161.082].  Warning Notice.  (a)  Each person

2-18     who sells cigarettes or tobacco products at retail or by vending

2-19     machine shall post a sign in a location that is conspicuous to all

2-20     employees and customers and that is close to the place at which the

2-21     cigarettes or tobacco products may be purchased.

2-22           (b)  The sign must include the statement:

2-23                 PURCHASING OR ATTEMPTING TO PURCHASE [SALE

2-24                 OR PROVISION OF] TOBACCO PRODUCTS BY [TO] A

2-25                 MINOR UNDER 18 YEARS OF AGE IS PROHIBITED

2-26                 BY LAW.  UPON CONVICTION, A CLASS C

2-27                 MISDEMEANOR, INCLUDING A [MAXIMUM] FINE OF

2-28                 UP TO $500 [$200] MAY BE IMPOSED.

2-29           (c)  The comptroller [board] by rule shall determine the

2-30     design and size of the sign.

2-31           (d)  The comptroller [department] on request shall provide

2-32     the sign without charge to any person who sells cigarettes or

2-33     tobacco [cigarette] products.  The comptroller [department] may

2-34     provide the sign without charge to [cigarette] distributors of

2-35     cigarettes or tobacco products or wholesale dealers of cigarettes

2-36     or tobacco [cigarette] products in this state for distribution to

2-37     persons who sell cigarettes or tobacco [cigarette] products.  A

2-38     distributor or wholesale dealer may not charge for distributing a

2-39     sign under this subsection.

2-40           (e)  A person commits an offense if the person intentionally

2-41     fails to display a sign as prescribed by this section.  An offense

2-42     under this subsection is a Class C misdemeanor.

2-43           Sec. 161.085.  NOTIFICATION OF EMPLOYEES AND AGENTS.

2-44     (a)  Each permit holder shall notify each individual employed by

2-45     that permit holder who is to be engaged in retail sales of

2-46     cigarettes or tobacco products that state law:

2-47                 (1)  prohibits the sale or distribution of cigarettes

2-48     or tobacco products to any person who is younger than 18 years of

2-49     age as provided by Section 161.082 and that a violation of this

2-50     provision is a Class C misdemeanor;

2-51                 (2)  prohibits the sale or distribution of cigarettes

2-52     or tobacco products to any person who is younger than 27 years of

2-53     age unless the person to whom the cigarette or tobacco product is

2-54     sold or given presents an apparently valid proof of identification

2-55     as provided by Section 161.083 and that a violation of this

2-56     provision may result in a fine of up to $100 per violation; and

2-57                 (3)  requires each person who sells cigarettes or

2-58     tobacco products at retail or by vending machine to post a warning

2-59     notice; requires each employee to ensure that the appropriate sign

2-60     is always properly displayed as provided by Section 161.084, while

2-61     that employee is exercising the employee's duties; and provides

2-62     that an intentional violation of this provision is a Class C

2-63     misdemeanor.

2-64           (b)  The notice required by Subsection (a) must be provided

2-65     within 72 hours of the date an individual begins to engage in

2-66     retail sales of tobacco products.  The individual shall signify

2-67     that the individual has received the notice required by Subsection

2-68     (a) by signing a form stating that the law has been fully

2-69     explained, that the individual understands the law, and that the

 3-1     individual, as a condition of employment, agrees to comply with the

 3-2     law.

 3-3           (c)  Each form signed by an individual under this section

 3-4     shall indicate the date of the signature and the current address

 3-5     and social security number of the individual.  The permit holder

 3-6     shall retain the form signed by each individual employed as a

 3-7     retail sales clerk until 120 days after the individual has left the

 3-8     employer's employ.

 3-9           (d)  A permit holder required by this section to notify

3-10     employees commits an offense if the permit holder fails, on demand

3-11     of an officer, to provide the notice prescribed by this section.

3-12     An offense under this section is a Class C misdemeanor.

3-13           (e)  It is a defense to Subsection (d) to show proof that the

3-14     employee did complete, sign, and date the notice required by

3-15     Subsection (a).  Proof must be shown to the comptroller or an agent

3-16     of the comptroller within 72 hours of the offense.

3-17           Sec. 161.086.  VENDOR ASSISTED SALES REQUIRED; VENDING

3-18     MACHINES.  (a)  Except as provided by Subsection (b), a retailer or

3-19     other person may not:

3-20                 (1)  offer cigarettes or tobacco products for sale in a

3-21     manner that permits a customer direct access to the cigarettes or

3-22     tobacco products; or

3-23                 (2)  install or maintain a vending machine containing

3-24     cigarettes or tobacco products.

3-25           (b)  Subsection (a) does not apply to a facility or business

3-26     that is not open to persons younger than 18 years of age at any

3-27     time.

3-28           (c)  The comptroller or a peace officer may, with or without

3-29     a warrant, seize, seal, or disable a vending machine installed or

3-30     maintained in violation of this section.  Property seized under

3-31     this subsection must be seized in accordance with, and is subject

3-32     to forfeiture to the state in accordance with, Subchapter H,

3-33     Chapter 154, Tax Code, and Subchapter E, Chapter 155, Tax Code.

3-34           (d)  A person commits an offense if the person violates

3-35     Subsection (a).  An offense under this subsection is a Class C

3-36     misdemeanor.

3-37           Sec. 161.087.  DISTRIBUTION OF CIGARETTES OR TOBACCO

3-38     PRODUCTS.  (a)  A person may not distribute to persons younger than

3-39     18 years of age:

3-40                 (1)  a free sample of a cigarette or tobacco product;

3-41     or

3-42                 (2)  a coupon or other item that the recipient may use

3-43     to receive a free or discounted cigarette or tobacco product or a

3-44     sample cigarette or tobacco product.

3-45           (b)  Except as provided by Subsection (c), a permit holder

3-46     may not accept or redeem, offer to accept or redeem, or hire a

3-47     person to accept or redeem a coupon or other item that the

3-48     recipient may use to receive a free or discounted cigarette or

3-49     tobacco product or a sample cigarette or tobacco product if such

3-50     recipient is younger than 18 years of age.  No coupons or other

3-51     items that the recipient may use to receive a free or discounted

3-52     cigarette or tobacco product or a sample cigarette or tobacco

3-53     product shall be redeemable through mail or courier delivery.

3-54           (c)  Subsections (a)(2) and (b) do not apply to a transaction

3-55     between permit holders unless the transaction is a retail sale.

3-56           (d)  A person commits an offense if the person violates this

3-57     section.  An offense under this subsection is a Class C

3-58     misdemeanor.

3-59           Sec. 161.088.  ENFORCEMENT; UNANNOUNCED INSPECTIONS.

3-60     (a)  The comptroller shall enforce this subchapter in partnership

3-61     with county sheriffs and municipal chiefs of police and with their

3-62     cooperation and shall ensure the state's compliance with Section

3-63     1926 of the federal Public Health Service Act (42 U.S.C. Section

3-64     300x-26) and any implementing regulations adopted by the United

3-65     States Department of Health and Human Services.  The comptroller

3-66     may not adopt any rules governing the subject matter of this

3-67     subchapter or Subchapter K, N, or O.

3-68           (b)  The comptroller may make block grants to counties and

3-69     municipalities to be used by county sheriffs and municipal chiefs

 4-1     of police to enforce this subchapter in a manner that can

 4-2     reasonably be expected to reduce the extent to which cigarettes and

 4-3     tobacco products are sold or distributed to persons who are younger

 4-4     than 18 years of age.  At least annually, random unannounced

 4-5     inspections shall be conducted at various locations where

 4-6     cigarettes and tobacco products are sold or distributed to ensure

 4-7     compliance with this subchapter.  The comptroller shall rely, to

 4-8     the fullest extent possible, on sheriffs or chiefs of police or

 4-9     their employees to enforce this subchapter.

4-10           (c)  The use of a person younger than 18 years of age to act

4-11     as a minor decoy to test compliance with this subchapter shall be

4-12     conducted in such a fashion that promotes fairness.  A person may

4-13     be enlisted by the comptroller to act as a minor decoy, only if the

4-14     following requirements are met:

4-15                 (1)  written parental consent is obtained for the use

4-16     of a person younger than 18 years of age to act as a minor decoy to

4-17     test compliance with this subchapter;

4-18                 (2)  at the time of the inspection, the minor decoy is

4-19     younger than 17 years of age;

4-20                 (3)  the minor decoy has an appearance that would cause

4-21     a reasonably prudent seller of tobacco products to request

4-22     identification and proof of age;

4-23                 (4)  the minor decoy carries either the minor's own

4-24     identification showing the minor's correct date of birth or carries

4-25     no identification and a minor decoy who carries identification

4-26     presents it on request to any seller of tobacco products; and

4-27                 (5)  the minor decoy answers truthfully any questions

4-28     about the minor's age.

4-29           (d)  The comptroller shall annually prepare for submission by

4-30     the governor to the secretary of the United States Department of

4-31     Health and Human Services the report required by Section 1926 of

4-32     the federal Public Health Service Act (42 U.S.C. Section 300x-26).

4-33           Sec. 161.089.  PREEMPTION OF LOCAL LAW.  This subchapter does

4-34     not preempt a local regulation of the sale, distribution, or use of

4-35     cigarettes or tobacco products or affect the authority of a

4-36     political subdivision to adopt or enforce an ordinance or

4-37     requirement relating to the sale, distribution, or use of

4-38     cigarettes or tobacco products if the regulation, ordinance, or

4-39     requirement:

4-40                 (1)  is compatible with and equal to or more stringent

4-41     than a requirement prescribed by this subchapter; or

4-42                 (2)  relates to an issue that is not specifically

4-43     addressed by this subchapter or Chapter 154 or 155, Tax Code.

4-44           Sec. 161.090.  REPORTS OF VIOLATION.  A local or state law

4-45     enforcement agency or other governmental unit shall notify the

4-46     comptroller, on the 10th day of every month, or the first working

4-47     day thereafter, of any violation of this subchapter that occurred

4-48     in the preceding month that the agency or unit detects,

4-49     investigates, or prosecutes.

4-50          ARTICLE 2.  ADVERTISING OF CIGARETTES OR TOBACCO PRODUCTS

4-51           SECTION 2.01.  Subchapter K, Chapter 161, Health and Safety

4-52     Code, is amended to read as follows:

4-53         SUBCHAPTER K.  PROHIBITION OF CERTAIN CIGARETTE OR TOBACCO

4-54                             PRODUCT ADVERTISING

4-55           Sec. 161.121.  DEFINITIONS.  In this subchapter:

4-56                 (1)  "Church" means a facility that is owned by a

4-57     religious organization and that is used primarily for religious

4-58     services.

4-59                 (2)  "Cigarette" has the meaning assigned by Section

4-60     154.001, Tax Code.

4-61                 (3)  "School" means a private or public elementary or

4-62     secondary school.

4-63                 (4) [(3)]  "Sign" means an outdoor medium, including a

4-64     structure, display, light device, figure, painting, drawing,

4-65     message, plaque, poster, or billboard, that is:

4-66                       (A)  used to advertise or inform; and

4-67                       (B)  visible from the main-traveled way of a

4-68     street or highway.

4-69                 (5) [(4)]  "Tobacco product" has the meaning assigned

 5-1     by Section 155.001, Tax Code.

 5-2           Sec. 161.122.  ADVERTISING.  (a)  The comptroller shall

 5-3     collect and the advertiser shall remit a fee that shall be 10

 5-4     percent of the gross purchase price of any outdoor advertising of

 5-5     cigarettes and tobacco products in Texas.

 5-6           (b)  This fee shall be put into a segregated fund called the

 5-7     tobacco education and enforcement fund.  Money collected by this

 5-8     fund shall be appropriated for enforcement and an education

 5-9     advertising campaign.

5-10           Sec. 161.123.  PROHIBITION RELATING TO CERTAIN SIGNS;

5-11     EXCEPTIONS.  (a)  A sign containing an advertisement for cigarettes

5-12     or tobacco products may not be located closer than 1,000 [500] feet

5-13     to a church or school.

5-14           (b)  The measurement of the distance between the sign

5-15     containing an advertisement for cigarettes or tobacco products and

5-16     an institution listed in Subsection (a) is from the nearest

5-17     property line of the institution to a point on a street or highway

5-18     closest to the sign, along street lines and in direct lines across

5-19     intersections.

5-20           (c)  This section does not apply to[:]

5-21                 [(1)]  a sign located on or in a facility owned or

5-22     leased by a professional sports franchise or in a facility where

5-23     professional sports events are held at least 10 times during a

5-24     12-month period[; or]

5-25                 [(2)  a contract for a cigarette or other tobacco

5-26     product advertisement entered into before August 26, 1991].

5-27           (d)  In Subsection (c) [(c)(1)], a "facility" includes a

5-28     stadium, arena, or events center and any land or property owned or

5-29     leased by the professional sports franchise that is connected to or

5-30     immediately contiguous to the stadium, arena, or events center.

5-31                        ARTICLE 3.  YOUTH TOBACCO USE

5-32           SECTION 3.01.  Chapter 161, Health and Safety Code, is

5-33     amended by adding Subchapters N and O to read as follows:

5-34                    SUBCHAPTER N.  TOBACCO USE BY MINORS

5-35           Sec. 161.251.  DEFINITIONS.  In this subchapter:

5-36                 (1)  "Cigarette" has the meaning assigned by Section

5-37     154.001, Tax Code.

5-38                 (2)  "Tobacco product" has the meaning assigned by

5-39     Section 155.001, Tax Code.

5-40           Sec. 161.252.  POSSESSION, PURCHASE, CONSUMPTION, OR RECEIPT

5-41     OF CIGARETTES OR TOBACCO PRODUCTS BY MINORS PROHIBITED.  (a)  An

5-42     individual who is younger than 18 years of age commits an offense

5-43     if the individual:

5-44                 (1)  possesses, purchases, consumes, or accepts a

5-45     cigarette or tobacco product; or

5-46                 (2)  falsely represents himself or herself to be 18

5-47     years of age or older by displaying proof of age that is false,

5-48     fraudulent, or not actually proof of the individual's own age in

5-49     order to obtain possession of, purchase, or receive a cigarette or

5-50     tobacco product.

5-51           (b)  It is an exception to the application of this section

5-52     that the individual younger than 18 years of age possessed the

5-53     cigarette or tobacco product in the presence of:

5-54                 (1)  an adult parent, a guardian, or a spouse of the

5-55     individual; or

5-56                 (2)  an employer of the individual, if possession or

5-57     receipt of the tobacco product is required in the performance of

5-58     the employee's duties as an employee.

5-59           (c)  It is an exception to the application of this section

5-60     that the individual younger than 18 years of age is participating

5-61     in an inspection or test of compliance in accordance with Section

5-62     161.088.

5-63           (d)  An offense under this section is a Class C misdemeanor.

5-64           Sec. 161.253.  TOBACCO AWARENESS PROGRAM.  (a)  On conviction

5-65     of an individual for an offense under Section 161.252, the court

5-66     shall suspend execution of sentence and shall require the defendant

5-67     to attend a tobacco awareness program approved by the comptroller.

5-68     The court may require the parent or guardian of the defendant to

5-69     attend the tobacco awareness program with the defendant.

 6-1           (b)  On request, a tobacco awareness program may be taught in

 6-2     languages other than English.

 6-3           (c)  If the defendant resides in a rural area of this state

 6-4     or another area of this state in which access to a tobacco

 6-5     awareness program is not readily available, the court shall require

 6-6     the defendant to perform eight to 12 hours of tobacco-related

 6-7     community service instead of attending the tobacco awareness

 6-8     program.

 6-9           (d)  The tobacco awareness program and the tobacco-related

6-10     community service are remedial and are not punishment.

6-11           (e)  Not later than the 90th day after the date of a

6-12     conviction under Section 161.252, the defendant shall present to

6-13     the court, in the manner required by the court, evidence of

6-14     satisfactory completion of the tobacco awareness program or the

6-15     tobacco-related community service.

6-16           (f)  On receipt of the evidence required under Subsection

6-17     (e), the court shall execute the sentence but may reduce the fine

6-18     imposed to not less than half the fine previously imposed by the

6-19     court.

6-20           Sec. 161.254.  DRIVER'S LICENSE SUSPENSION OR DENIAL.

6-21     (a)  If the defendant does not provide the evidence required under

6-22     Section 161.253(e) within the period specified by that subsection,

6-23     the court shall order the Department of Public Safety to suspend or

6-24     deny issuance of any driver's license or permit to the defendant.

6-25     The order must specify the period of the suspension or denial,

6-26     which may not exceed 180 days after the date of the order.

6-27           (b)  The Department of Public Safety shall send to the

6-28     defendant notice of court action under Subsection (a) by certified

6-29     mail, return receipt requested.  The notice must include the date

6-30     of the order and the reason for the order and must specify the

6-31     period of the suspension or denial.

6-32           Sec. 161.255.  EXPUNGEMENT OF CONVICTION. An individual

6-33     convicted of an offense under Section 161.252 may apply to the

6-34     court to have the conviction expunged.  If the court finds that the

6-35     individual satisfactorily completed the tobacco awareness program

6-36     or tobacco-related community service ordered by the court, the

6-37     court shall order the conviction and any complaint, verdict,

6-38     sentence, or other document relating to the offense to be expunged

6-39     from the individual's record and the conviction may not be shown or

6-40     made known for any purpose.

6-41           Sec. 161.256.  JURISDICTION OF COURTS.  A justice court or

6-42     municipal court may exercise jurisdiction over any matter in which

6-43     a court under this subchapter may:

6-44                 (1)  impose a requirement that a defendant attend a

6-45     tobacco awareness program or perform tobacco-related community

6-46     service; or

6-47                 (2)  order the suspension or denial of a driver's

6-48     license or permit.

6-49           Sec. 161.257.  APPLICATION OF OTHER LAW.  Title 3, Family

6-50     Code, does not apply to a proceeding under this subchapter.

6-51              (Sections 161.258-161.300 reserved for expansion

6-52             SUBCHAPTER O.  PREVENTION OF TOBACCO USE BY MINORS

6-53           Sec. 161.301.  TOBACCO USE PUBLIC AWARENESS CAMPAIGN.

6-54     (a)  The comptroller shall develop and implement a public awareness

6-55     campaign designed to reduce tobacco use by minors in this state.

6-56     The campaign may use advertisements or similar media to provide

6-57     educational information about tobacco use.

6-58           (b)  The comptroller may contract with another person to

6-59     develop and implement the public awareness campaign.

6-60                   ARTICLE 4.  RELATED TAX CODE PROVISIONS

6-61           SECTION 4.01.  (a)  Subsection (b), Section 154.111, Tax

6-62     Code, is amended to read as follows:

6-63           (b)  An application for a permit required by this chapter

6-64     must be accompanied by a fee of:

6-65                 (1)  $300 [$100] for a bonded agent's permit;

6-66                 (2)  $300 [$100] for a distributor's permit;

6-67                 (3)  $200 [$50] for a wholesaler's permit; [and]

6-68                 (4)  $15 for each permit for a vehicle if the applicant

6-69     is also applying for a permit as a bonded agent, distributor, or

 7-1     wholesaler or has received a current permit from the comptroller

 7-2     [treasurer] under Sections 154.101 and 154.110; and

 7-3                 (5)  $260 for a retailer's permit.

 7-4           (b)  Subsection (c), Section 154.111, Tax Code, is repealed.

 7-5           SECTION 4.02.  Section 154.121, Tax Code, is amended to read

 7-6     as follows:

 7-7           Sec. 154.121.  REVENUE.  (a)  Except as provided by

 7-8     Subsection (b), revenue [Revenue] from the sale of permits to

 7-9     distributors, wholesalers, and bonded agents is allocated in the

7-10     same manner as other revenue allocated by Subchapter J.

7-11           (b)  Revenue from the sale of retailer's permits shall be

7-12     deposited to the general revenue fund and may be appropriated only

7-13     as provided by this section.  The money may be appropriated first

7-14     to the comptroller for administration of licensing of retailers

7-15     under this chapter or Chapter 155.

7-16           (c)  If, after any appropriation is made under Subsection

7-17     (b), revenue remains from the sale of retailer's permits, the

7-18     remaining money may be appropriated to the comptroller for

7-19     administration and enforcement of Subchapters H, K, and N, Chapter

7-20     161, Health and Safety Code.

7-21           (d)  If, after any appropriation is made under Subsections

7-22     (b) and (c), revenue remains from the sale of retailer's permits,

7-23     the remaining money may be appropriated to the comptroller to

7-24     administer the comptroller's responsibilities under Subchapter O,

7-25     Chapter 161, Health and Safety Code.

7-26           SECTION 4.03.  Subchapter D, Chapter 154, Tax Code, is

7-27     amended by adding Section 154.1142 to read as follows:

7-28           Sec. 154.1142.  DISCIPLINARY ACTION FOR CERTAIN VIOLATIONS.

7-29     (a)  If the comptroller finds, after notice and hearing as provided

7-30     by this subchapter, that a permit holder has violated Subchapter H

7-31     or K, Chapter 161, Health and Safety Code, the comptroller may

7-32     suspend the permit or administratively fine the permit holder as

7-33     follows:

7-34                 (1)  if the permit holder has not been found to have

7-35     violated Subchapter H or K, Chapter 161, Health and Safety Code,

7-36     during the preceding 12 months, the comptroller may suspend the

7-37     permit for not more than three days or fine the permit holder up to

7-38     $500;

7-39                 (2)  if the permit holder has been found to have

7-40     violated Subchapter H or K, Chapter 161, Health and Safety Code,

7-41     once before during the preceding 12 months, the comptroller may

7-42     suspend the permit for not more than 10 days or fine the permit

7-43     holder up to $1,000; or

7-44                 (3)  if the permit holder has been found to have

7-45     violated Subchapter H or K, Chapter 161, Health and Safety Code, at

7-46     least twice before during the preceding 12 months, the comptroller

7-47     may suspend the permit for not more than two months and fine the

7-48     permit holder up to $2,000.

7-49           (b)  Notwithstanding Subsection (a), if the permit holder has

7-50     been found to have violated Section 161.082(b), Health and Safety

7-51     Code, on four previous and separate occasions during the preceding

7-52     12 months, the comptroller shall revoke the permit.

7-53           SECTION 4.04.  Section 154.504, Tax Code, is amended to read

7-54     as follows:

7-55           Sec. 154.504.  POSSESSION OF QUANTITIES LESS THAN INDIVIDUAL

7-56     PACKAGE.  A person commits an offense if the person sells

7-57     cigarettes in quantities less than an individual package containing

7-58     at least 20 cigarettes and is subject to a $100 fine.

7-59           SECTION 4.05.  (a)  Subsection (b), Section 155.049, Tax

7-60     Code, is amended to read as follows:

7-61           (b)  An application for a permit required by this chapter

7-62     must be accompanied by a fee of:

7-63                 (1)  $300 [$100] for a bonded agent's permit;

7-64                 (2)  $300 [$100] for a distributor's permit;

7-65                 (3)  $200 [$50] for a wholesaler's permit; [and]

7-66                 (4)  $15 for each permit for a vehicle if the applicant

7-67     is also applying for a permit as a bonded agent, distributor, or

7-68     wholesaler or has received a current permit from the comptroller

7-69     [treasurer] under Sections 155.041 and 155.048; and

 8-1                 (5)  $260 for a retailer's permit.

 8-2           (b)  Subsection (c), Section 155.049, Tax Code, is repealed.

 8-3           SECTION 4.06.  Section 155.058, Tax Code, is amended to read

 8-4     as follows:

 8-5           Sec. 155.058.  REVENUE.  (a)  Except as provided by

 8-6     Subsection (b), revenue [Revenue] from the sale of permits to

 8-7     distributors, wholesalers, and bonded agents is allocated in the

 8-8     same manner that other revenue is allocated by Subchapter H.

 8-9           (b)  Revenue from the sale of retailer's permits shall be

8-10     deposited to the general revenue fund and may be appropriated only

8-11     as provided by this section.  The money may be appropriated first

8-12     to the comptroller for administration of licensing of retailers

8-13     under this chapter or Chapter 154.

8-14           (c)  If, after any appropriation is made under Subsection

8-15     (b), revenue remains from the sale of retailer's permits, the

8-16     remaining money may be appropriated to the comptroller for

8-17     administration and enforcement of Subchapters H, K, and N, Chapter

8-18     161, Health and Safety Code.

8-19           (d)  If, after any appropriation is made under Subsections

8-20     (b) and (c), revenue remains from the sale of retailer's permits,

8-21     the remaining money may be appropriated to the comptroller to

8-22     administer the comptroller's responsibilities under Subchapter O,

8-23     Chapter 161, Health and Safety Code.

8-24           SECTION 4.07.  Subchapter C, Chapter 155, Tax Code, is

8-25     amended by adding Section 155.0592 to read as follows:

8-26           Sec. 155.0592.  DISCIPLINARY ACTION FOR CERTAIN VIOLATIONS.

8-27     (a)  If the comptroller finds, after notice and hearing as provided

8-28     by this subchapter, that a permit holder has violated Subchapter H

8-29     or K, Chapter 161, Health and Safety Code, the comptroller may

8-30     suspend the permit or administratively fine the permit holder as

8-31     follows:

8-32                 (1)  if the permit holder has not been found to have

8-33     violated Subchapter H or K, Chapter 161, Health and Safety Code,

8-34     during the preceding 12 months, the comptroller may suspend the

8-35     permit for not more than three days or fine the permit holder up to

8-36     $500;

8-37                 (2)  if the permit holder has been found to have

8-38     violated Subchapter H or K, Chapter 161, Health and Safety Code,

8-39     once before during the preceding 12 months, the comptroller may

8-40     suspend the permit for not more than 10 days or fine the permit

8-41     holder up to $1,000; or

8-42                 (3)  if the permit holder has been found to have

8-43     violated Subchapter H or K, Chapter 161, Health and Safety Code, at

8-44     least twice before during the preceding 12 months, the comptroller

8-45     may suspend the permit for not more than two months and fine the

8-46     permit holder up to $2,000.

8-47           (b)  Notwithstanding Subsection (a), if the permit holder has

8-48     been found to have violated Section 161.082(b), Health and Safety

8-49     Code, on four previous and separate occasions during the preceding

8-50     12 months, the comptroller shall revoke the permit.

8-51           ARTICLE 5.  FEDERAL WAIVER; TRANSITION; EFFECTIVE DATE;

8-52                              EMERGENCY CLAUSE

8-53           SECTION 5.01.  (a)  If, before the changes in law made by

8-54     this Act to Subchapter H or K, Health and Safety Code, take effect,

8-55     the Texas Board of Health determines that an exemption from federal

8-56     preemption from the federal Food and Drug Administration is

8-57     necessary for implementation, the board shall request the exemption

8-58     and may delay implementing the affected provision of law until the

8-59     exemption is granted.

8-60           (b)  If a provision of law affected by a delay in

8-61     implementation under Subsection (a) of this section contains a

8-62     criminal penalty:

8-63                 (1)  the Texas Board of Health shall publish in the

8-64     Texas Register notice of:

8-65                       (A)  the delay in implementation; and

8-66                       (B)  the grant of an exemption from preemption

8-67     requested under Subsection (a); and

8-68                 (2)  the provision is effective on the 90th day after

8-69     the date that notice of the grant of an exemption is published

 9-1     under Paragraph (B) of Subdivision (1) of this subsection.

 9-2           SECTION 5.02.  (a)  Except as provided by Subsection (b) of

 9-3     this section, this Act takes effect September 1, 1997.

 9-4           (b)  Sections 161.083, 161.085, and 161.086, Health and

 9-5     Safety Code, and Subchapter N, Chapter 161, Health and Safety Code,

 9-6     as added by this Act, take effect January 1, 1998.

 9-7           (c)  The change in law made by this Act applies only to an

 9-8     offense committed on or after the effective date of this Act.  For

 9-9     purposes of this subsection, an offense is committed before the

9-10     effective date of this Act if any element of the offense occurs

9-11     before that date.  An offense committed before the effective date

9-12     of this Act is governed by the law in effect when the offense was

9-13     committed, and the former law is continued in effect for that

9-14     purpose.

9-15           (d)  This Act applies to the sale or distribution of coupons,

9-16     cigarettes, or tobacco products on or after the effective date of

9-17     this Act.  The sale or distribution of a coupon, cigarette, or

9-18     tobacco product before the effective date of this Act is governed

9-19     by the law in effect when the sale or distribution was made, and

9-20     that law is continued in effect for that purpose.

9-21           (e)  The increase in the amount of a fee as provided by

9-22     Subsection (b), Section 154.111 and Subsection (b), Section

9-23     155.049, Tax Code, as amended by this Act, takes effect for and is

9-24     applicable to the permit years beginning on or after March 1, 1998,

9-25     and June 1, 1998, as applicable.

9-26           SECTION 5.03.  The importance of this legislation and the

9-27     crowded condition of the calendars in both houses create an

9-28     emergency and an imperative public necessity that the

9-29     constitutional rule requiring bills to be read on three several

9-30     days in each house be suspended, and this rule is hereby suspended.

9-31                                  * * * * *