Can TABC Really Lift a Restaurant’s License Over COVID Rules? It’s Complicated.

Launderette attracted TABC’s attention when the East Austin restaurant asked diners for proof of vaccination (photo by John Anderson)

The ongoing COVID-19 crisis, and the recent return to Stage 5 of Austin and Travis County’s local Risk-Based Guidelines, has been particularly hard on the hospitality industry.

A recent scuffle between the Texas Alcoholic Beverage Commission and two Austin restaurants further illuminates the difficulties business owners are facing as they try to keep up with safety protocols and regulations.

Last week, local sister restaurants Launderette and Fresa’s announced on social media their plans to require proof of vaccination from customers seeking to dine inside their establishments. Their posted policy specified that the unvaccinated (including children under 12, who are not yet eligible) would have to dine outside, with masked access to indoor restrooms, in addition to the ongoing requirement that all guests mask indoors when not seated at a table. The restaurants both retracted their vaccine proof requirements after receiving word from TABC that the policy was in violation of Texas law, specifically Section 14 of Senate Bill 968, which was signed into law by Gov. Greg Abbott in June. (See Section 14 text at end of post.)

On August 11, the public agency posted a “reminder” on their website: “TABC wants to remind businesses in Texas that state law now prohibits businesses from requiring customers to show proof of a COVID-19 vaccination. TABC may require compliance with this law as a condition of holding a license, permit, certificate, or other authorization.” It adds that the agency has yet to take formal action against any businesses to date, but did request to meet with representatives of potentially non-compliant businesses. Their stated goal is education and information, not punishment, but the ramifications of their enforcement have seemingly stymied local restaurants as they try to operate their businesses

Kareem Hajjar and Josh Eames of Hajjar/Peters LLP, a business law firm that has been working with Austin restaurants and bars for over 17 years, spoke to the Chronicle about the legalities, impacts, and effects of SB 968.

“The question of what is ‘legal’ is a hard question to answer. We have an industry of hundreds of thousands of lawyers still trying to figure that out,” said Kareem Hajjar. “So what is code, what is law, that was passed in this last session does give the agency [TABC] the charge and the power, and does include descriptions about [whether licensees can require] COVID test results and vaccinations, etc. It is there, but the question then becomes ‘Is that law a legal law?’ And we don’t necessarily think that it is.”

Challenging the law is a long, expensive, and arduous process said Hajjar, and “it would take, to get the law overturned, either a singular restaurant who is extremely passionate and wants to make this a 10-year project, or the Texas Restaurant Association or someone like that, or maybe a public policy foundation.” From there it would have to climb through the appellate system with results pending until long after the pandemic.

“The [best] legal minds of Texas did not necessarily make this law,” said Hajjar, who cites an “incredibly diverse set of education levels” within the Lege. “We think our lawmakers ought to have a stronger sense of ethics, place, decorum, in making these laws because this was about as ridiculous a throw-in that was made into law as you can get. There is no rational reason this ever went in, other than extreme partisanship. This is absurd. It should never have gone into law. Ever. And it really infringes on the rights of Texans to run their businesses and their lives as they see fit.”

Hajjar also noted that SB 968 – an omnibus bill with other COVID-related provisions that don’t impact the industry at all – went into effect immediately, as an emergency measure, and not on Sept. 1 as is standard after a legislative session, and without any time for TABC to make rules or plans on how to enforce Section 14. That was done, he says, on purpose: It was “fast tracked” into code, a “conscious decision” by the hard-right wing of the Legislature.

“And,” continued Hajjar, “it runs completely counter to the policy that is not even a year old in terms of keeping Texans safe.” This is referring to Abbott’s prior plan to “re-open Texas,” ostensibly crafted with a blue-ribbon panel of experts’ advice, and his executive orders from 2020 – all of which Abbott has backtracked from in recent months under continued pressure from the hard right. Hajjar suggests that pressure is in turn being put on TABC: “There is an ongoing dialogue between the governor’s office and TABC, at all times, related to all kinds of things, and so right now TABC is taking its order from what is in code and who is directing it.”

The restaurants of Texas are now bystanders in this political tug-of-war. “There is no way that a restaurant owner who’s just trying to stay alive – both literally and also physically in business, with what we have going on in this pandemic – is going to have the time to go research whether or not this thing happens. They are making decisions on the fly just trying to keep the business going and family safe and staff safe, and they’re not looking at the newest laws that … literally are two months old.”

Texas restaurants are now bystanders in a political tug-of-war. “There is no way that a restaurant owner who’s just trying to stay alive – both literally and also physically in business, with what we have going on in this pandemic – is going to have the time to go research whether or not this thing happens.” – attorney Kareem Hajjar

Senate Bill 968 specifically states that Section 14 is not intended to “restrict a business from implementing COVID-19 screening and infection control protocols in accordance with state and federal law to protect public health.” So it’s unclear how the either/or choice offered by some establishments – proof of vaccination or a negative COVID test – jibes with the law and with TABC’s powers.

“The distinction lies within the difference between requiring proof of vaccination and screening for potential cases of Covid. That would seem to encompass temperature checks, possibly a negative test, visual screenings, etc. It’s trying to carve out what we’ve been trying to do for a while – to prevent the spread of Covid-19 and people getting infected,” said Eames. “It’s largely centered on the vaccine issue specifically.”

But can TABC really lift an establishment’s license for this? Eames compares it to TABC suspension in DWI cases if a license holder fails “to give a breathalyzer or test. I think the question would be whether or not that suspension, pending a full adjudication of the case would violate due process.” (In addition to that constitutional issue, Eames and Hajjar suggest Section 14 might violate a proprietor’s First Amendment rights.) Sometimes, a regulatory agency like TABC “can get tripped up, especially if they move too fast. There is no agency rule that lays out evaluating restaurants that are actually enforcing this policy, and how they might consider that for their license.”

That rulemaking takes time under state law, has to follow prescribed procedural steps, and typically requires several opportunities for public comment. “In the Launderette and Fresa’s case, [TABC’s warning] was a kind of shot across the bow. If in fact TABC did take action to revoke someone’s license, they would have to go through the administrative review process … and so although the statute ultimately does give them the authority to do it, they [could] be subject to a challenge for invalid rule making.”

Eames added, “As a general comment, I would say it is really counterintuitive – the posture that normally [Texas public policy] takes is individual business and economic freedom and liberty. Now we are mandating what [businesses] can and can’t do.”

SECTION 14. Subchapter A, Chapter 161, Health and Safety Code, is amended by adding Section 161.0085 to read as follows:

Sec. 161.0085. COVID-19 VACCINE PASSPORTS PROHIBITED. (a) In this section, “COVID-19” means the 2019 novel coronavirus disease.

(b) A governmental entity in this state may not issue a vaccine passport, vaccine pass, or other standardized documentation to certify an individual’s COVID-19 vaccination status to a third party for a purpose other than health care or otherwise publish or share any individual’s COVID-19 immunization record or similar health information for a purpose other than health care..

(c) A business in this state may not require a customer to provide any documentation certifying the customer’s COVID-19 vaccination or post-transmission recovery on entry to, to gain access to, or to receive service from the business. A business that fails to comply with this subsection is not eligible to receive a grant or enter into a contract payable with state funds.

(d) Notwithstanding any other law, each appropriate state agency shall ensure that businesses in this state comply with Subsection (c) and may require compliance with that subsection as a condition for a license, permit, or other state authorization necessary for conducting business in this state.

(e) This section may not be construed to:
(1) restrict a business from implementing COVID-19 screening and infection control protocols in accordance with state and federal law to protect public health; or
(2) interfere with an individual’s right to access the individual’s personal health information under federal law.