TEXAS LIQUOR REGULATORS PARTYING ON TAXPAYERS’ TAB

Texas alcohol regulators know how to party: records show they've spent tens of thousands of dollars to travel to swanky resorts where liquor flows and industry lobbyists abound

By Jay Root

The Texas Tribune
March 24, 2017

No agency can kill a buzz quicker than the Texas Alcoholic Beverage Commission, but behind the scenes state liquor regulators have shown they know how to party — all on the tab of taxpayers and members of an industry they oversee.

Consider the boozy junket the top TABC brass took to San Diego in the summer of 2015 — depicted in a humorous illustration officials created during work hours at the agency. It portrays agency director Sherry Cook, licensing chief Amy Harrison, a TABC analyst and an agency contractor riding in a plane while holding or guzzling from bottles of Lone Star Beer.

"Here we come California!" reads the caption above the doctored picture. "Woo Hoo!!!"

Cook couldn’t say precisely how or if the illustration was used internally, but in an interview with The Texas Tribune she acknowledged that using government computers to create a cartoonish picture showing state alcohol regulators downing beer may not have been done “in the most appropriate manner.”

The illustration, included in a slew of documents obtained by a grocery supply company that is suing the agency, highlighted the regulators’ enthusiasm for the conference in San Diego — just one of numerous trips agency honchos take each year to attend meetings of the National Conference of State Liquor Administrators (NCSLA), an industry trade group that brings liquor interests and government regulators together at swanky resorts around the nation.

The gatherings aren’t cheap. TABC billed the state at least $8,000 for the jaunt to San Diego alone, records from the agency and the state comptroller's office show. And in 2013 TABC shelled out more than $10,000 in taxpayer funds to send four people to the association’s annual conference at the Sheraton Waikiki in Honolulu, according to the records.

NCSLA — funded in large part by the alcohol industry — spent another $2,000 in direct-billed lodging and airfare reimbursements for the island adventure, state records obtained by the Tribune show.

The state comptroller's records show the alcoholic beverage commission has spent at least $85,000 on out-of-state travel since the 2011 fiscal year, much of it on liquor industry conferences. Almost $17,000 has been paid to NCSLA for registration and membership fees over the same period, the comptroller records show.

TABC could not say how much the liquor association has provided in travel reimbursements over the years to the agency or its employees. NCSLA Executive Director Pam Frantz said in an email Thursday that Cook, who sits on the group's board, has received travel reimbursements as a member of the association. But Frantz could not provide a list of all the travel reimbursements Cook and other TABC officials have received in the past five years.

After the Tribune asked questions about travel reimbursements, Cook contacted the Texas Ethics Commission, which informed her that payments the liquor organization made to her should have been reported on the personal financial statements she must file as a top agency official; the commission is working with her to determine how to rectify the disclosure “oversights,” said agency spokesman Chris Porter.

TABC is also examining whether it gave erroneous information about travel reimbursements when it answered an open records request related to the grocery supply company's demand for documents in 2015 by saying Cook had not received any reimbursements from outside groups.

Cook says the group's meetings she and her colleagues attend provide vital training and networking opportunities that help keep her agency abreast of the complicated regulatory structure in various states; TABC officials, meanwhile, impart wisdom they’ve learned in Texas to their national counterparts, she said.

“NCSLA is a place where state regulators from across the United States come together, and we talk a lot about, you know, best practices,” Cook said. “This is that place where we come together to have these discussions.”

Critics say they're junkets that waste precious tax dollars while raising troubling questions about the cozy relationship between the government regulators and powerful corporate interests. Austin lawyer Howard Wolf, who as a Texas Sunset Commission member a decade ago publicly complained that the state’s arcane liquor laws foster monopolies and discourage competition, said the conferences do little more than strengthen the liquor industry’s grip on Texas regulators.

“These people have virtually unlimited budgets for entertainment of all types, in order to be on the scene continually to monitor what is going on in the regulatory scheme,” Wolf said. “The TABC is ... not protecting the consumer. It’s not protecting the taxpayer. It’s protecting these very wealthy industry companies that own and dominate the industry.”

Wolf says that domination explains why Texas has adopted some of the strictest — and strangest — alcohol laws in the country. They may have started out as well-intended regulations aimed at combating organized crime and public drunkenness at the end of prohibition in the 1930s, but in modern times they’ve been adopted and promoted at the behest of politically connected companies, he says.

For example, when brewing giant Anheuser-Busch bought SeaWorld parks in 1989, state law prevented its amusement park subsidiary from selling liquor under “tied house” rules that force alcohol makers, distributors and sellers into three separate silos and supposedly forbid commercial cross-pollination. The next year, the Legislature came to Anhueser-Busch’s rescue by making retail alcohol sales legal at any “marine park” in “an enclosed restricted access area of not less than 254 acres nor more than 255 acres in a county with a population of over 950,000.” Only SeaWorld qualified.

In the distribution silo, powerful beer wholesalers have benefited from laws that require they be paid in cash upon delivery of their product and allow them to profit from exclusive distribution rights that they can sell — but politically weak craft brewers can’t. Texas craft brewers sued over the distribution rights issue and won, but the state is still fighting to stop them.

And a another bizarre liquor law, believed to be the only one of its kind in the nation, prevents publicly traded companies from selling spirits — thereby favoring politically powerful package stores and their blood relatives in maintaining the exclusive rights to sell hard liquor.

All layers of the liquor industry show up at NCSLA conferences, but the internal emails, state travel records and association literature obtained by the Tribune show business isn’t the only thing being conducted at the meetings. They typically feature sponsored parties, a well-stocked open bar and a busy array of social events.

On the 2015 trip to California, where Cook signed off on paying $73 more per night than the maximum allowable lodging rate of $142, TABC employees stayed at the posh Rancho Bernardo Inn, which NCSLA described as a “warm and welcoming resort nestled on 280 acres of green lawns” with “an 18-hole championship golf course and luxurious day spa,” records indicated.

“This resort has it all, so plan to come early and/or stay after the conference to relax, rejuvenate, and play,” the association said in its greeting message.

Beside boasting about all the sightseeing that could be done in San Diego, NCSLA officials arranged for a discounted round of golf — $89, cart rental included. The hospitality suite remained open until 2 a.m. on all four nights “for those wishing to extend their business and socializing into the evening.”

“We might even break out the karaoke!” organizers gushed.

In Hawaii, entertainment options included a golf tournament at Pearl Country Club, a “luau under the stars,” a networking event at the Bishop Museum, which boasts “the world’s largest collection of Polynesian artifacts,” and more.

At least two top agency officials — Cook and Deputy Executive Director Ed Swedberg — brought their spouses to Honolulu, records show. TABC declined to elaborate about when and where spouses were included on that or any other NCSLA jaunts but stressed that taxpayers never fund their travel.

A year after the Hawaii junket, Texas hosted the national liquor conference in San Antonio, and TABC spent at least $28,000 to send 17 employees, state records show. Partying appears to have been on the agenda in the Alamo City as well: After the event, liquor lobbyist Dewey Brackin — a former TABC staff attorney — sent a picture of himself with TABC licensing chief Harrison and others.

“Feeling no pain,” he said of the moment captured in the photo. Brackin said later he was merely “enjoying the fellowship” with NCSLA attendees.

Last year, the boozing at the NCSLA conference in Austin spilled into the newspapers — after the agency was accused of failing to get the proper alcohol permit while serving alcohol in its own hospitality room. TABC launched an investigation of itself and determined there was no wrongdoing, said Porter, the spokesman.

TABC declined to immediately provide the investigative report, which the Tribune is now seeking under state open records laws. Porter said the Texas Rangers received a copy of the investigative report and decided no further action was warranted.

As the Texas Legislature grapples with a tight budget this year, the TABC is already making plans to send representatives to the upcoming NCSLA annual meeting in Colorado this summer.

Next year, NCSLA’s annual conference will once again graces the shores of Hawaii, according to the NCSLA calendar of events. This time, though, attendees will bypass Honolulu and hit the spectacular Waikoloa Beach on the Big Island, according the NCSLA website.

“As long as we’re a dues-paying members of NCSLA we’ll continue to attend those conferences to meet with our counterparts from across the country and discuss issues that are of importance to the alcoholic beverage industry in Texas and nationwide,” Porter said.

EDITOR’S NOTE: It’s real easy to spend money when it’s not your own