1. (a) This section applies to conduct surety bonds, which are the bonds required by Alcoholic Beverage Code §11.11 and §61.13, and to performance bonds, which are the bonds required by Alcoholic Beverage Code §11.61(b-1) and §61.71(l). Subsections (b) - (h), (j), (k) and (m) of this section apply to both conduct surety bonds and performance bonds. Subsections (i) and (l) of this section apply only to conduct surety bonds. Subsection (n) of this section applies only to performance bonds.
2. (b) When either a conduct surety bond or a performance bond is required under the Alcoholic Beverage Code, it must be executed only on forms prescribed by this agency with the licensee or permittee as principal, a qualified surety company doing business in this state as surety and the state as payee.
3. (c) All conduct surety bonds and performance bonds of permittees and licensees shall be payable in Travis County.
4. (d) A separate conduct surety bond and a separate performance bond, when required, shall be obtained, submitted and maintained for each license or permit.

5. (e) A permittee or licensee who is required to file a conduct surety bond or performance bond may furnish instead of all or part of the required bond amount:

   1. (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. (2) one or more letters of credit issued by a federally insured bank or credit union authorized to do business in this state.
6. (f) If an assignment of a certificate of deposit, savings account or letter of credit are furnished in lieu of either a conduct surety bond or a performance bond, the administrator or his designee shall keep them in his possession. Interest earned on a certificate of deposit or savings account is not subject to the assignment and remains the property of the owner of the certificate of deposit or savings account.
7. (g) A certificate of deposit or savings account furnished in lieu of either a conduct surety bond or a performance bond by a licensee or permittee must be assigned to the state, in a manner approved by the administrator or his designee, to secure payment to the state.
8. (h) A letter of credit furnished in lieu of either a conduct surety bond or a performance bond by a licensee or permittee, under this section, must be on a form approved by the administrator or his designee and contain any conditions required by the administrator to secure payment to the state.
9. (i) A conduct surety bond, assignment of certificate of deposit, savings account, or letter of credit must cover the minimum time required of the applicant to qualify for exemption from the surety requirement imposed by Alcoholic Beverage Code §11.11 and §61.13.

10. (j) Qualifications of Surety.

    1. (1) A surety company, to qualify to provide bonds under this section, must be licensed by this state and in "good standing" with the State Board of Insurance, Comptroller of Public Accounts, Secretary of State and any other regulatory agencies with jurisdiction over its affairs.
    2. (2) A bank or credit union, in addition to the requirements of Alcoholic Beverage Code §11.11 and §61.13, must have a physical facility in this state to accept cash deposits, make cash advances to customers and carry out day-to-day operations within this state.

11. (k) Submission of Conduct Surety Bond or Performance Bond.

    1. (1) If required by Alcoholic Beverage Code §11.11 or §61.13, an applicant for an original or renewal license or permit must submit, at the time of its application, the bond, or alternative form of surety allowed in subsection (e) of this section, as prescribed by those sections, and must meet the requirements of this section.
    2. (2) If required by Alcoholic Beverage Code §11.61(b-1) or §61.71(l), an applicant for an original license or permit must submit, at the time of its application, the bond, or alternative form of surety allowed in subsection (e) of this section, as prescribed by those sections, and must meet the requirements of this section.
    3. (3) Failure to submit the necessary bond or alternative form of surety allowed in subsection (e) of this section in proper form will result in the denial of the application.

12. (l) Forfeiture of a Conduct Surety Bond.

    1. (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 since September 1, 1995, the commission shall notify the licensee or permittee, in writing, of its intent to seek forfeiture of the bond or alternative form of surety allowed in subsection (e) of this section. For purposes of this section, an order issued pursuant to an agreement of the parties in which the permittee or licensee waives its right to a hearing is a final adjudication of the violation that is the subject of the agreement and order.
    2. (2) The licensee or permittee may, within 30 days of the notice specified in paragraph (1) of this subsection, request 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 allowed in subsection (e) of this section, have been satisfied. The hearing shall be conducted in accordance with Chapter 2001 of the Government Code.
    3. (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 his/her 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. (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. (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.

13. (m) Release of Surety.

    1. (1) Upon expiration of the license or permit, its voluntary cancellation, or upon the applicant's subsequent approval for exemption from the surety requirement, the licensee or permittee may request the release and return of the security supporting their license or permit.
    2. (2) The release of this surety will not be unreasonably withheld; however, the surety company, bank, or credit union is not released from its obligation until it receives written notice of the release from the commission.
14. (n) Performance Bonds. The first bond filed by a licensee or permittee with the commission as prescribed under §11.61(b-1) and §61.71(j) of the Alcoholic Beverage Code shall be in the amount of $2,000. In the event the first bond is forfeited to the commission, a licensee or permittee must file a second bond with the commission as prescribed under those provisions in the amount of $4,000 before a license or permit may be reinstated. In the event the second bond is forfeited to the commission, a licensee or permittee must file a third bond issued under those provisions in the amount of $6,000 before a license or permit may be reinstated. If a permit or license that is secured by a performance bond is cancelled, the performance bond in place at the time of cancellation is forfeited to the commission.

Source Note:The provisions of this §33.24 adopted to be effective August 31, 1995, 20 TexReg 6322; amended to be effective April 25, 1996, 21 TexReg 3361; amended to be effective November 15, 2012, 37 TexReg 8973.