Ryan Hughes

TABC's Proposed Rule Changes Will Increase Costs For TX Businesses and Push out Small Operators. This upcoming Friday, February 11, 2022, the TABC is hosting a Stakeholder Meeting regarding potentially dramatic changes to its rules relating to the safe harbor defense and how the agency imposes sanctions for TABC violations. The proposed rules, if implemented, will most likely lead to higher liquor liability insurance costs and push out small businesses operating in Texas. Safe Harbor Defense The safe harbor defense is essential for Texas businesses operating in the alcoholic beverage industry - it is the reason why employers require their servers to be TABC certified. It is an affirmative defense to an allegation of the following Texas Alcoholic Beverage Code violations: sale to intoxicated person; sale to minor; permitting a minor to consume; and sale to non-member (for private clubs). Essentially, if a business meets certain requirements, they can assert the safe harbor defense and any of the above alleged violations will not be attributable to the permit holder. The business also will not receive a suspension or penalty for the alleged violation. The TABC is attempting to add to the requirements to be eligible for the safe harbor defense with its proposed rule changes. Although the TABC is now proposing to keep section 34.4 of it's rules after industry backlash at the stakeholder meeting back in October of 2021 (you can find our blog post we posted prior to that meeting here), the Commission is still attempting to impose additional restrictions on when a business can qualify for the safe harbor defense by attempting to adopt Chapter 49 into its Rules. The additional restrictions include, among other things, requiring proof that an employer requested seller-server certificates within 7 days of hire, requiring proof none of its employees had any lapses in seller-server training in the last 24 months, and expanding situations in which a business could be found to have indirectly encouraged a violation of the TABC Code to negate the defense. While the TABC characterizes proof of compliance with these additional requirements as voluntary, they are requirements in reality due to clever wordsmithing and omission of important language from the existing rule. Although the TABC is now proposing to keep section 34.4 of it's rules after industry backlash at the stakeholder meeting back in October of 2021 (you can find our blog post we posted prior to that meeting here), the Commission is still attempting to impose additional restrictions on when a business can qualify for the safe harbor defense by attempting to adopt Chapter 49 into its Rules.