0001 1 TRANSCRIPT OF PROCEEDINGS 2 BEFORE THE 3 TEXAS LOTTERY COMMISSION 4 AUSTIN, TEXAS 5 16 TEXAS ADMINISTRATIVE CODE § 6 §402.103 § 16 TEXAS ADMINISTRATIVE CODE § 7 §402.406 § 16 TEXAS ADMINISTRATIVE CODE § 8 §402.410 § 16 TEXAS ADMINISTRATIVE CODE § 9 §402.422 § 16 TEXAS ADMINISTRATIVE CODE § 10 §402.604 § 11 12 PUBLIC COMMENT ON RULEMAKINGS 13 THURSDAY, DECEMBER 4, 2008 14 15 BE IT REMEMBERED THAT on Thursday, 16 the 4th day of December 2008, the above-entitled 17 public comment hearing was held from 10:02 a.m. to 18 10:24 a.m., at the Offices of the Texas Lottery 19 Commission, 611 East 6th Street, Austin, Texas 78701, 20 before SANDRA JOSEPH, SPECIAL COUNSEL. The following 21 proceedings were reported via machine shorthand by 22 Aloma J. Kennedy, a Certified Shorthand Reporter of 23 the State of Texas, and the following proceedings were 24 had: 25 0002 1 APPEARANCES 2 3 SPECIAL COUNSEL: Ms. Sandra Joseph 4 5 CHARITABLE BINGO OPERATIONS DIRECTOR: 6 Mr. Phil Sanderson 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0003 1 TABLE OF CONTENTS 2 PAGE 3 PROCEEDINGS - THURSDAY, DECEMBER 4, 2008 4 4 COMMENTS ON BEHALF OF THE BINGO 5 INTEREST GROUP (BRESNEN) 5 6 REPORTER'S CERTIFICATE 19 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0004 1 P R O C E E D I N G S 2 THURSDAY, DECEMBER 4, 2008 3 (10:02 a.m.) 4 MS. JOSEPH: Good morning. I'm Sandra 5 Joseph, Special Counsel of the Lottery Commission. 6 With me is Phil Sanderson, Director of the Charitable 7 Bingo Operations Division. And at this time I would 8 like to call to order the hearing to take public 9 comments on the following proposed bingo rules: 10 First is repeal of Section 402.103, 11 training program. Next is proposed adoption of new 12 Rule 16 TAC Section 402.103 pertaining to training 13 program; proposed adoption of 16 TAC Section 604 14 pertaining to delinquent purchaser; proposed adoption 15 of new Rule 402.410, amendment of a license - general 16 provisions; Section 16 -- excuse me -- 16 TAC Section 17 402.422, amendment of a license to conduct charitable 18 bingo; and, finally, 16 TAC Section 402.101 (sic) 19 relating to bingo chairperson. 20 MR. SANDERSON: 406. 21 MS. JOSEPH: 406. On bingo 22 chairperson? 23 MR. SANDERSON: Yes. 24 MS. JOSEPH: Okay. Just a second. 25 Okay. All right. Yes. 0005 1 Let me correct that last number 2 pertaining to bingo chairperson. The rule number is 3 16 TAC Section 402.406. 4 I have one appearance form at this time 5 from Mr. Steve Bresnen. Mr. Bresnen, I would like to 6 ask that you be sworn at this time, although this is 7 not an evidentiary hearing. 8 (Witness sworn) 9 MS. JOSEPH: Thank you. 10 All right. I will call on Mr. Bresnen 11 to offer his comments that he may have on any of these 12 rules. 13 COMMENTS ON BEHALF OF THE BINGO INTEREST GROUP 14 MR. BRESNEN: Thank you very much. 15 Steve Bresnen on behalf of the Bingo Interest Group. 16 And I'm understanding that I'm going to address these 17 proposed rules in the following order: the repeal of 18 103, the adoption of a new 103, 604, an amendment to 19 604, amendment to 410, amendment to 422 and amendment 20 to 406. Have I got it right? 21 MR. SANDERSON: That's fine. 22 MR. BRESNEN: Okay. Good. 23 MS. JOSEPH: If you could, as you begin 24 comments on each one, name the rule again. 25 MR. BRESNEN: Sure. I will. On the 0006 1 repeal of the 103, we understand the reason for that 2 and support the repeal of the existing rule. 3 On the new rule on 103, overall we 4 support the rule; in particular, the implementation 5 and availability of the on-line training, which we 6 think will be hugely helpful and reduce costs for the 7 charities. We do have one problem in that rule, 8 though, that I would like to bring to your 9 attention -- well, two problems. 10 The first is that Subsection (f) says 11 "At all times, the bingo chairperson and any operator 12 designated by a licensed authorized organization 13 holding a regular license to conduct bingo must have a 14 valid Certificate of Completion for the training 15 program." 16 In discussion with staff, I understand 17 that the agency reads two statutes combined to require 18 that all people designated "operators" have to have a 19 certificate of course completion, that that's the 20 agency's interpretation of the statutes. 21 So I would suggest, if that's your 22 interpretation, instead of saying "and any," it could 23 be implied that if I've got one of them done, then I'm 24 done. So you might say "all operators designated" and 25 each "each operator designated." 0007 1 Somebody said, "You said, well, I 2 didn't have to have any of them," and they're reading 3 that as any one of them rather than all of them. I'm 4 not sure I read the statute that way, and that's 5 something we might want to work on during the session. 6 But, secondly, I would note that 7 because the bingo chairperson is a new entity and 8 there is no current -- as I understand it, there is 9 only a definition in the rules right now of what a 10 bingo chairperson is and no requirement in the rules 11 to have one, although I know you've implemented it by 12 asking people to designate, we've encouraged people to 13 go ahead and comply with that, even in the absence of 14 a rule. As soon as this would be adopted by the 15 Commission and become effective, not all people 16 designated as bingo chairpersons would have the 17 certificate of completion. 18 So I would suggest that if you stick 19 with this -- I'm about to object to all of them having 20 to have it anyway -- but if you do have it, then 21 you've got to give them some time to get it done, and 22 I would suggest you put some sort of a period in here 23 where people can do it; otherwise, literally 24 everybody -- many people will be in violation from the 25 adopting of the rule. 0008 1 MR. SANDERSON: And, Mr. Bresnen, I'll 2 have to check and see, but I think somewhere in here 3 we discussed -- or I know we in our discussions in the 4 rule itself had some language about how long a person 5 had to get the training. For example, if you name a 6 new bingo chairperson, then they would need to have 7 that training within a certain time period. If it's 8 not in here, we'll have to go back and research it. 9 But I understand what you're saying. 10 MR. BRESNEN: All right. I may have 11 just missed that. If I did, I'll back up or I'll just 12 be in error. But, otherwise, I think you have to make 13 some transition. 14 Now I would to -- I'm hearing from 15 people that the requirement to have a bingo 16 chairperson is a significant change. The boards -- as 17 you all know, the boards of some of these charities 18 are much more active; the officers are much more 19 active than in other organizations. And I know that 20 the agency and probably everybody, just as a matter of 21 principle, would like to have the officers and 22 directors of the organization more on top of what's 23 going on. 24 And I'm sympathetic to your plight when 25 you have a problem with a charity and you go to 0009 1 enforce the statute and all of a sudden the officers 2 and directors finally get in gear when the hammer is 3 about to come down on them and say, "Well, we didn't 4 know," and, "We didn't know that that rule said that," 5 and so forth and so on. And so I've explaining that 6 to my clients until I'm about blue in the face. And 7 they understand that and try to keep their charities 8 informed and have them involved. But I'm 9 understanding there is a very practical problem with 10 doing that around the state, in particular maybe in 11 some of the smaller organizations. 12 So I think it would be a good 13 transition to this new model if you were to amend this 14 particular rule. I believe we've supported the 15 adoption of the definition of a bingo chairperson and 16 your designation of one, but we would like to have 17 either the word "and" in (f) there in the first -- I'm 18 making sure there is only one word "and" -- either 19 change that to "or" or allow the bingo chairperson to 20 designate another person to take the course who is not 21 an operator. 22 If your statutory interpretation is 23 that all operators have to have it by statute, then we 24 would request that all those people are going to have 25 to have it -- we can live with that -- but if you're 0010 1 either the bingo chairperson or the bingo 2 chairperson's designee, has to have it, and the 3 designee can't be one of the operators who has already 4 got to have it. 5 The reason for that is, the way I 6 envision it is sort of a chain of command type of 7 thing. The adoption of these rules, the bingo 8 chairperson is going to be the responsible person and 9 designee, and people will no longer be able to say, 10 "Well, we didn't know," because they're required to 11 know. On the other hand, I think you're going to have 12 a hard time getting all the bingo chairpersons up to 13 speed, even though you are offering an on-line course. 14 And I realize that that should facilitate that some. 15 Was that coherent? I didn't feel like 16 it was, but -- 17 MS. JOSEPH: As I understand it, you're 18 saying you would like for us to add the option for the 19 bingo chairperson to send a designee? 20 MR. BRESNEN: If the bingo chairperson 21 is not already an operator so covered by the statutory 22 requirement, then allow them to designate someone. 23 And the way I would envision it, if I'm a bingo 24 chairperson and I don't take the course and I 25 designate another member of the organization to take 0011 1 the course, it's my responsibility to be coordinating 2 with them and finding out what our duties are, in the 3 same way that the CEO of General Motors isn't going to 4 the diesel engine class and getting a certificate for 5 that but is still responsible for the production on 6 the line and the quality control and that sort of 7 thing. 8 MS. JOSEPH: All right. 9 MR. BRESNEN: So that's what I would 10 recommend. I just think there's going to be some 11 transitional problems in going to this new model with 12 the bingo chairperson having some meat in a rule that 13 gives them a responsibility now. 14 MR. SANDERSON: But I understand you to 15 also say that that designee should not be an operator 16 that's already required to take training? 17 MR. BRESNEN: Well, if the bingo 18 chairperson would also be an operator, they're going 19 to be required to do it by statute anyway. 20 MR. SANDERSON: And there is no problem 21 there? 22 MR. BRESNEN: I'm not trying to set up 23 a situation where they can dodge it by just saying, 24 "Okay. I'll designate somebody," and it's one of the 25 operators, because the operator was already 0012 1 statutorily required to do it. All right? So I'm 2 trying to give it some meat, but I'm also trying to 3 get a middle ground there where we can move towards 4 this model. 5 I think our members conceptually 6 understand the model, and I think it's going to take, 7 on the ground out there, people some time to realize 8 their responsibilities and, you know, get into that 9 mode. So I'm just suggesting a middle ground out 10 there. I'm basically negotiating between my clients 11 and me and you, because I know where you're trying to 12 go and I think it's a coherent place to go, but they 13 understand the practicalities on the ground out there. 14 I would now like to address 604, if I 15 might -- if I can find it. Subsection (b), we would 16 oppose that as it stands. Overall, we're fine with 17 the delinquent purchaser rule, with a couple of 18 caveats. It's my understanding there are very few of 19 these unit manager forums anyway, that most people are 20 doing as designated agent, but I understand we have a 21 statute that provides for a unit manager and rules 22 that do. 23 I don't see why all the units, if a 24 unit manager manages multiple units, why the other 25 units should be considered delinquent if one of them 0013 1 is. They could be paid up and have paid their bills 2 on time but still be considered delinquent, because 3 their unit manager was delinquent or another unit was 4 delinquent that their unit manager was associated 5 with, and that seems unfair to me. 6 The second thing is, I'm understanding 7 there is a practical problem in the universe out here. 8 I'm not sure I can point to a specific part of this 9 rule that needs to be fixed. But here is the problem 10 and I would like for you to consider -- it may require 11 modification to (a). And what I'm told is, is that 12 there are frequently discrepancies between the product 13 that is actually received from a distributor and what 14 the invoice -- what the bill says. Consequently, 15 there is a time lag while the shipping documents are 16 checked in and then compared to the invoice and worked 17 out with the distributor. 18 So we would want to be careful either, 19 you know, to not let people be delinquent in that 20 circumstance or to not have this Subsection (a) bite 21 them at a time when they were making an effort to work 22 out the problem with their distributor. 23 MR. SANDERSON: Well, Section (a), 24 especially Section (a)(1), is straight out of the 25 statute. 0014 1 MR. BRESNEN: Right. 2 MR. SANDERSON: And all we've done is, 3 we've added, because there was no clarify about 4 electronic card minders and the leasing, so it's the 5 actual delivery of any product or supplies. And if an 6 invoice is for like card-minders or leased bingo 7 equipment, then the 30 days starts when they receive 8 the invoice for their card-minders. 9 MR. BRESNEN: I don't have my statute 10 book with me. But are you saying this is verbatim, 11 (a) is verbatim? So the statute doesn't tell us 12 whether it's the earlier of, it just says within 30 13 calender days of the date of actual delivery or 14 invoice? 15 MR. SANDERSON: I believe so. Bruce is 16 checking it right now. Section 218? 17 MR. BRESNEN: I'm sorry. Are you 18 having to do my work for me? I should have been 19 better prepared. 20 MR. SANDERSON: It may not all be 21 verbatim, but the context is the same. 22 MR. BRESNEN: Well, what the statute 23 says is, "Each sale must be on terms of immediate 24 payment or on terms requiring payment not later than 25 the 30th day after the date of actual delivery." 0015 1 MR. SANDERSON: So we have paraphrased 2 that to say that they become a delinquent purchaser, 3 or the definition of a delinquent purchaser is someone 4 who has not provided that full payment within 30 5 calendar days. 6 MR. BRESNEN: All right. Then I would 7 like to make a recommendation -- and I think you could 8 do it in this rule. And I'm sorry we -- I can't 9 remember if this came up through the BAC. And if it 10 did, I wasn't -- it may have been that we deferred on 11 this, because it's partly a distributor issue. 12 But we would like to see the 13 distributors have to provide an invoice that is 14 either -- that's accurate. Any kind of wiggle room 15 that you can give us on this, we're not -- I don't 16 want to write the statute in the middle of your 17 public -- I mean, the rule in the middle of your 18 public hearing here. But we would request that the 19 agency take note that regardless of the statute 20 talking about actual delivery, that those -- there is 21 often a dispute between what they're billed for and 22 what is actually received. I guess it would be 23 incumbent upon the charity at that point to just pay 24 for what was received and nothing else. 25 MR. SANDERSON: Yes, I think so. And 0016 1 also, you know, I know it's not in here, but 2 potentially or possibly there could be maybe a 3 subsection added that would address disputes, that 4 they had documentation that they had disputed the 5 delivery. 6 MR. BRESNEN: Okay. We would ask you 7 to exercise prosecutorial discretion and see if you 8 can put a little silicon in there where the thing will 9 have a little wiggle room. 10 Okay. Now I'm on 410. It's one of 11 these documents that's got 410. 12 MR. SANDERSON: It would be on 13 33 TexReg 9172. 14 MR. BRESNEN: Yes. I'm just trying to 15 figure out which page it is -- 104, 410. 16 Okay. In Subsection (e), there is a 17 concern that this language requesting things like 18 minutes and so forth is very broad in that you could 19 request meeting minutes or other documentation for 20 anything. We realize that this is upon request of the 21 Commission, so you don't have to submit it every time. 22 But we would suggest that you consider 23 limiting that request for additional proof to some 24 category of major changes in the license. If it's a 25 matter of change in the day or time of play, that we 0017 1 would think that would not necessitate something like 2 that, since there is no requirement in the rules that, 3 say, meeting minutes be had for such a change or to 4 authorize somebody to make a change like that. In 5 fact, now that I'm thinking about it, I know of no 6 requirement in the rules that somebody has to be 7 authorized to have made those changes. So we might 8 want to think about that down the line. I'm not 9 suggesting you do it here. 10 But the bottom line is, we would like 11 to just see that limited a little bit so what you're 12 people is, if you're going to do something like change 13 your location, then you would want to see some 14 authorization of some more formal authorization. But 15 for days and times, things that happen routinely like 16 that, that you would be more limited in your requests. 17 Now I'm over on 420 -- I'm sorry. Give 18 me just a minute. I'm switching back to the one I 19 printed off the web. 20 Y'all, I think I'm done with my 21 comments, unless I'm missing a note. And if I am -- 22 when does the comment period close, please? 23 MR. SANDERSON: December 19th -- 14th. 24 MR. BRESNEN: Okay. Well, I think I'm 25 through, unless I'm missing a note here. If I am 0018 1 missing something, I will come back to you in writing 2 with comments before the close of the comment period. 3 MS. JOSEPH: All right. Well, thank 4 you for your comments and for taking time to be here. 5 MR. BRESNEN: Okay. 6 MR. SANDERSON: Not that I want to have 7 you personally comment on it, but you had mentioned 8 something about bingo chairperson. 406 is the rule 9 that requires that they name a bingo chairperson. 10 MR. BRESNEN: Let me find it. That 11 just says you got to have one. Right? 12 MR. SANDERSON: Correct. 13 MR. BRESNEN: And I think we're on 14 record as supporting the concept of a bingo 15 chairperson, and we're happy to go on record today 16 doing it, too. 17 MS. JOSEPH: All right. Thank you very 18 much. 19 Is anyone else in the room that wishes 20 to comment on the rules? 21 MR. MINER: No. 22 MS. JOSEPH: Seeing no one so 23 indicating, this hearing is adjourned at 10:24. 24 MR. BRESNEN: Thank y'all. 25 (Hearing recessed: 10:24 a.m.) 0019 1 C E R T I F I C A T E 2 STATE OF TEXAS ) 3 COUNTY OF TRAVIS ) 4 I, Aloma J. Kennedy, a Certified 5 Shorthand Reporter in and for the State of Texas, do 6 hereby certify that the above-mentioned matter 7 occurred as hereinbefore set out. 8 I FURTHER CERTIFY THAT the proceedings 9 of such were reported by me or under my supervision, 10 later reduced to typewritten form under my supervision 11 and control and that the foregoing pages are a full, 12 true and correct transcription of the original notes. 13 IN WITNESS WHEREOF, I have hereunto set 14 my hand and seal this 15th day of December 2008. 15 16 17 ________________________________ 18 Aloma J. Kennedy Certified Shorthand Reporter 19 CSR No. 494 - Expires 12/31/08 20 Firm Certification No. 276 Kennedy Reporting Service, Inc. 21 Cambridge Tower 1801 Lavaca Street, Suite 115 22 Austin, Texas 78701 512.474.2233. 23 24 25