(a) This section applies only to conduct surety bonds required by Alcoholic Beverage Code §§11.11 and 61.13.
(b) A conduct surety bond, assignment of certificate of deposit, savings account, or letter of credit must cover the minimum time required for the applicant to qualify for exemption from the surety requirement imposed by Alcoholic Beverage Code §§11.11 and 61.13.
(c) A permittee or licensee who is required to file a conduct surety bond may furnish instead of all or part of the required bond amount:
  (1) one or more certificates of deposit assigned to the state issued by a federally insured bank or by a credit union authorized to do business in this state; or
  (2) one or more letters of credit issued by a federally insured bank or credit union authorized to do business in this state.
(d) Pursuant to Alcoholic Beverage Code §11.11(e), a license or permit holder is exempt from the requirement to post a conduct surety bond if, at the time the commission receives the second renewal application for the license or permit, the holder of the license or permit:
  (1) has not had any license or permit revoked within the preceding five years;
  (2) is not the subject of a pending revocation or cancelation proceeding; and
  (3) has continuously operated on the licensed or permitted premises for at least three years before the date the holder applied for renewal of the license or permit.
(e) Forfeiture of a Conduct Surety Bond.
  (1) When a license or permit is cancelled, or upon a final adjudication that the licensee or permittee has committed three violations of the Alcoholic Beverage Code prior to the exemption date, the commission shall notify the licensee or permittee, in writing, of its intent to seek forfeiture of the bond or alternative form of surety.
  (2) The licensee or permittee may, within 30 days of the notice specified in paragraph (1) of this subsection, request a hearing on the question of whether the criteria established by Alcoholic Beverage Code §§11.11 and 61.13 and by this section for forfeiture of the bond or alternative form of surety have been satisfied. The hearing shall be conducted in accordance with Chapter 2001 of the Government Code.
  (3) Evidence that an agent or servant of the licensee or permittee has been adjudicated guilty of, or granted deferred adjudication for, an offense under the Alcoholic Beverage Code, because of conduct occurring during the performance of their duties for the licensee or permittee, shall constitute evidence of an adjudication that the licensee or permittee has violated a provision of the Alcoholic Beverage Code. This paragraph only applies to violations which were not attributable to the licensee or permittee because of the operations of Alcoholic Beverage Code §106.14.
  (4) Upon entry of final order against the licensee or permittee in the hearing described in paragraph (2) of this subsection, or upon waiver of said hearing by the licensee or permittee, the commission shall notify the surety company, bank, or credit union to remit to the state the amount of surety required within ten days after notification.
  (5) The commission may institute action to recover the amount of the surety in its own name, for the benefit of the state, as set forth in Alcoholic Beverage Code §11.70.
  (6) Counting Violations for Conduct Surety Bond Forfeiture Purposes.
    (A) Except as provided by subsection (B) of this section, the commission may seek forfeiture of a conduct surety bond upon the third violation during the effective period of the bond, including warnings, of any statute or rule under the commission's jurisdiction.
    (B) For violations of Alcoholic Beverage Code §§102.31 and 102.32, the first six incidents may not be counted as violations supporting bond forfeiture. The seventh and subsequent violations will be counted as violations supporting bond forfeiture.
    (C) Violations in which the license or permit holder has qualified for the legal protections of Alcoholic Beverage Code §106.14 (related to Actions of Employee) will be considered for forfeiture purposes according to §§11.11(b)(2) and 61.13(b)(2) of the Code.
  (7) The commission will not seek forfeiture of a surety bond due solely to violations of Alcoholic Beverage Code §§102.31 and 102.32, but may seek forfeiture based upon violations of §§102.31 and/or 102.32 in combination with at least one other violation of the Code or commission rules.

Source Note: The provisions of this §33.41 adopted to be effective December 31, 2020, 45 TexReg 8771