PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3. TAX ADMINISTRATION
SUBCHAPTER JJ. CIGARETTE, E-CIGARETTE, AND TOBACCO PRODUCTS REGULATION
The Comptroller of Public Accounts proposes new §3.1208, concerning prohibited e-cigarette products. The new section implements House Bill 4758, 88th Legislature, 2023, which enacted Health and Safety Code, §161.0876 (Prohibited E-Cigarette Products).
The Texas Legislature has identified concerns that electronic cigarette ("e-cigarette") manufacturers have begun marketing their products to attract youth.
"Various e-cigarette manufacturers package e-cigarette products to appear nearly identical to popular candy, flavored juice boxes, and other edible treats. The similarity in packaging of e-cigarette products to children's snacks is a direct appeal from manufacturers to children, which entices them to consume these dangerous nicotine products. The CDC reports that 69 percent of youth are exposed to e-cigarette advertisement via retail stores, magazines, TV shows, movies, and the Internet. These mediums also use cartoon-like characters and celebrity imagery to appeal to youths. According to the CDC, in the 10-year period from 2011 to 2021, vaping rates among middle and high school student increased from 1.5 percent of youth to nearly 30 percent of youth using e-cigarettes. These deliberate and ongoing efforts considerably impact the consumption rates of e-cigarettes among youth and require swift action. In 2018, the Department of State Health Services determined that e-cigarette use has reached epidemic status among teens." House Comm. on Pub. Health, Bill Analysis, Tex. C.S.H.B. 4758, 88th Leg., R.S. (2023).
The Legislature enacted Health and Safety Code, §161.0876 to reduce youth consumption of e-cigarettes by prohibiting the marketing, advertising, or sale of e-cigarette products in containers designed to appeal to minors. Id.
Subsection (a) provides definitions. Paragraph (1) defines "cartoon." Health and Safety Code, §161.0876 uses the term but does not define it. The comptroller derives this definition from the definition of "cartoon" in the Master Settlement Agreement entered into in November 1998 by four United States tobacco manufacturers and the attorneys general of 46 States. The Master Settlement Agreement is available at: https://www.naag.org/wp-content/uploads/2020/09/2019-01-MSA-and-Exhibits-Final.pdf (last visited November 27, 2023).
Paragraph (2) defines "celebrity." See, e.g., David Tan, Much Ado About Evocation: A Cultural Analysis of "Well-Knownness" and the Right of Publicity, 28 Cardozo Arts & Ent. L.J. 317, 340-41 (2010). The proposed definition is consistent with dictionary definitions of the term. For example, the Oxford English Dictionary defines "celebrity" as "{a} well-known or famous person; (now chiefly) spec. a person, esp. in entertainment or sport, who attracts interest from the general public and attention from the mass media." Oxford English Dictionary, https://www.oed.com/dictionary/celebrity_n?tab=meaning_and_use (last visited November 27, 2023). Dictionary.com defines "celebrity" to mean "a famous or well-known person." Dictionary.com, https://www.dictionary.com/browse/celebrity (last visited November 27, 2023).
Paragraph (3) defines "container" based upon the dictionary definition of the term. For example, Merriam Webster defines "container" as "a receptacle (such as a box or jar) for holding goods." Merriam-Webster.com, https://www.merriam-webster.com/dictionary/container (last visited November 27, 2023). Dictionary.com defines "container" as "anything that contains or can contain something, as a carton, box, crate, or can." Dictionary.com, https://www.dictionary.com/browse/container (last visited November 27, 2023). The proposed definition is consistent with the description of e-cigarette nicotine containers in Health and Safety Code, §161.0875 (Sale of E-cigarette Nicotine Containers), which provides that an e-cigarette nicotine container must satisfy the child-resistant effectiveness standards under 16 C.F.R. §1700.15(b)(1). Those federal standards, in turn, apply to "special packaging." The definition in paragraph (3) therefore provides that the term "container" includes the packaging of an e-cigarette product.
Paragraph (4) defines "e-cigarette" using the definition given in Health and Safety Code, §161.081(1-a) (Definitions).
Paragraph (5) defines "e-cigarette product" using the definition given in Health and Safety Code, §161.0876(a).
Paragraph (6) defines "food product." Health and Safety Code, §161.0876 uses the term but does not define it. The comptroller derives this definition from the definition of "food and food ingredients" in §3.293 of this title (relating to Food; Food Products; Meals; Food Service).
Paragraph (7) defines "minor" using the definition given in Health and Safety Code, §161.081(1-b).
Paragraph (8) defines "retailer." The definition is based on the definition given in Health and Safety Code, §161.081(4). The qualifier "coin-operated" is removed from the description of vending machines to better track the language in Tax Code, Chapters 154 (Cigarette Tax) and 155 (Cigars and Tobacco Products Tax), and to eliminate any confusion with coin-operated machines, which are regulated under the Occupations Code. In addition, because the comptroller does not permit e-cigarette vending machines, the term "e-cigarette" is deleted as a descriptor of vending machines.
Subsection (b) implements Health and Safety Code, §161.0876(b), which makes it an offense to market, advertise, sell, or cause to be sold an e-cigarette product if the product's container displays images or depictions aimed at minors, and §161.0901, which provides that the comptroller may take disciplinary action against a retailer who commits such an offense. Paragraph (1) provides specific examples of the types of depictions and images identified in §161.0876(b)(1) - (5). For example, Health and Safety Code, §161.0876(b)(1) provides that it is an offense to sell an e-cigarette product if the product's container "depicts a cartoon-like fictional character that mimics a character primarily aimed at entertaining minors." Subparagraph (A) adds that a superhero, video game character, or character from an animated television show may be a cartoon-like fictional character aimed at entertaining minors. Paragraph (2) cross-references §3.1204 of this title (relating to Administrative Remedies for Violations of Health and Safety Code, Chapter 161, Subchapter H or K).
Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed new rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.
Mr. Reynolds also has determined that the proposed new rule would benefit the public by conforming the rules to current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities. The proposed new rule would have no significant fiscal impact on the state government, units of local government, or individuals. There would be no anticipated significant economic cost to the public.
You may submit comments on the proposal to Jenny Burleson, Director, Tax Policy Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: tp.rule.comments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.
This section is proposed under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture), which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2 (State Taxation), and taxes, fees, or other charges which the comptroller administers under other law, and under Health and Safety Code, §161.0901 (Disciplinary Action Against Cigarette, E-Cigarette, and Tobacco Product Retailers), which provides the comptroller with the authority to adopt rules to implement the section.
The section implements Health and Safety Code, §161.0876 (Prohibited E-Cigarette Products) and §161.0901 (Disciplinary Action Against Cigarette, E-Cigarette, and Tobacco Product Retailers).
§3.1208.Prohibited E-Cigarette Products.
(a) Definitions. The following words and terms when used in this section shall have the following meanings, unless the context clearly indicates otherwise.
(1) Cartoon--Any drawing or other depiction of an object, person, animal, creature, or any similar caricature that satisfies any of the following criteria:
(A) the use of comically exaggerated features;
(B) the attribution of human characteristics to animals, plants, or other objects, or the similar use of anthropomorphic technique; or
(C) the attribution of unnatural or extra-human abilities, such as imperviousness to pain or injury, X-ray vision, tunneling at very high speeds, or transformation.
(2) Celebrity--An individual well-known to a significant section of the public.
(3) Container--Any object used to hold an e-cigarette product, including, but not limited to, a pod, bottle, jar, box, wrapper, or other packaging.
(4) E-cigarette--An electronic cigarette or any other device that simulates smoking by using a mechanical heating element, battery, or electronic circuit to deliver nicotine or other substances to the individual inhaling from the device; or a consumable liquid solution or other material aerosolized or vaporized during the use of an electronic cigarette or other device described by this subdivision. The term does not include a prescription medical device unrelated to the cessation of smoking. The term also includes:
(A) a device described in paragraph (1) of this subsection regardless of whether the device is manufactured, distributed, or sold as an e-cigarette, e-cigar, or e-pipe or under another product name or description; and
(B) a component, part, or accessory for the device, regardless of whether the component, part, or accessory is sold separately from the device.
(5) E-cigarette product--Any substance containing nicotine from any source that is intended for use in an e-cigarette.
(6) Food product--A product intended for human consumption that is consumed for taste, aroma, or nutritional value. The term includes, but is not limited to, fruit, juice, candy, cookies, cereal, coffee, ice cream, soft drinks, and mint and other herbs.
(7) Minor--A person under 21 years of age.
(8) Retailer--a person who engages in the practice of selling cigarettes, e-cigarettes, or tobacco products to consumers and includes the owner of a cigarette or tobacco product vending machine. The term includes a retailer as defined by Tax Code, §154.001 (Definitions) or §155.001 (Definitions), and an e-cigarette retailer as defined by Health and Safety Code, §147.0001 (Definitions).
(b) Violations and Penalties.
(1) A person commits an offense if the person markets, advertises, sells, or causes to be sold an e-cigarette product, if the product's container:
(A) depicts a cartoon-like fictional character that mimics a character primarily aimed at entertaining minors, including a superhero, video game character, or character from an animated television show marketed to minors;
(B) imitates or mimics trademarks or trade dress of products that are or have been primarily marketed to minors, including products that are candy, bubble gum, cookies, cereals, juice boxes, or soft drinks;
(C) includes a symbol that is primarily used to market products to minors;
(D) includes an image of a celebrity; or
(E) includes an image that is or resembles a food product.
(2) A retailer is subject to disciplinary action as provided by §3.1204 of this title (relating to Administrative Remedies for Violations of Health and Safety Code, Chapter 161, Subchapter H) if the comptroller finds, after notice and an opportunity for a hearing, that an agent or employee of the retailer marketed, advertised, sold, or caused to be sold an e-cigarette product in violation of this section.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on November 27, 2023.
TRD-202304371
Jenny Burleson
Director, Tax Policy Division
Comptroller of Public Accounts
Earliest possible date of adoption: January 7, 2024
For further information, please call: (512) 475-2220
SUBCHAPTER I. VALUATION PROCEDURES
The Comptroller of Public Accounts proposes new §9.4038, concerning definition of petroleum products. The new section replaces existing §9.4201, concerning definition of petroleum products, which the comptroller is proposing for repeal to improve the clarity and organization of Subchapter I. The section is also updated to better reflect the list of products that fall under this definition.
The definition in paragraph (14) is modified from its current form in order to hyphenate "kerosene-type," which is not currently hyphenated. The definitions are also expanded to incorporate the products of ethane, normal butane, isobtutane, and natural gasoline. No other changes are being made to the existing language of §9.4201.
The comptroller provides the definition of petroleum products to assist appraisal districts in the administration and implementation of Tax Code, §11.251 (Tangible Personal Property Exempt). The products defined by this section are not exempt under the "freeport" exemption provided by Tax Code, §11.251 and Texas Constitution, Article VIII, Section 1-j.
Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed new rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.
Mr. Reynolds also has determined that the proposed new rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed new rule would benefit the public by improving the organization and clarity of Subchapter I (Valuation Procedures.) There would be no anticipated significant economic cost to the public. The proposed new rule would have no significant fiscal impact on small businesses or rural communities.
You may submit comments on the proposal to Shannon Murphy, Director, Property Tax Assistance Division, P.O. Box 13528, Austin, Texas 78711 or to the email address: ptad.rulecomments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.
The comptroller proposes the new section under Tax Code, §5.03 (Powers and Duties Generally), which provides the comptroller with the authority to adopt rules establishing minimum standards for the administration and operation of an appraisal district.
The new section implements Tax Code, §11.251 (Tangible Personal Property Exempt).
§9.4038.Definition of Petroleum Products.
For the purposes of administration and operation of appraisal districts, the term "liquid or gaseous materials that are the immediate derivatives of the refining of oil or natural gas," as used in the Tax Code, §11.251, means the following products:
(1) ethane;
(2) propane;
(3) butane;
(4) normal butane;
(5) isobutane;
(6) butane-propane;
(7) motor gasoline;
(8) natural gasoline;
(9) kerosene;
(10) home heating oil;
(11) diesel fuel;
(12) other middle distillates;
(13) aviation gasoline;
(14) kerosene-type jet fuel;
(15) naphtha-type jet fuel;
(16) fuel oil #4 for utility use;
(17) fuel oils #5, #6 for utility use;
(18) fuel oil #4 for nonutility use;
(19) fuel oils #5, #6 for nonutility use;
(20) bunker C;
(21) navy special;
(22) lubricants;
(23) special naphtha;
(24) solvent products; and
(25) crude oil.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on November 27, 2023.
TRD-202304369
Victoria North
General Counsel for Fiscal and Agency Affairs
Comptroller of Public Accounts
Earliest possible date of adoption: January 7, 2024
For further information, please call: (512) 475-2220
The Comptroller of Public Accounts proposes the repeal of §9.4201, concerning definition of petroleum products. The comptroller repeals existing §9.4201 in order to propose the adoption of a replacement §9.4038 to improve the organization of Subchapter I. The repeal of §9.4201 will be effective as of the date the new §9.4038 takes effect.
Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed rule repeal is in effect, the repeal: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.
Mr. Reynolds also has determined that the proposed rule repeal would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed rule repeal would benefit the public by improving the clarity and organization of Subchapter I (Valuation Procedures.) There would be no anticipated significant economic cost to the public. The proposed rule repeal would have no significant fiscal impact on small businesses or rural communities.
You may submit comments on the proposal to Shannon Murphy, Director, Property Tax Assistance Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: ptad.rulecomments@cpa.texas.gov. The comptroller must receive your comments no later than 30 days from the date of publication of the proposal in the Texas Register.
The repeal is proposed under Tax Code, §5.03 (Powers and Duties Generally), which provides the comptroller with the authority to adopt rules establishing minimum standards for the administration and operation of an appraisal district.
The repeal implements Tax Code, §11.251 (Tangible Personal Property Exempt).
§9.4201.Definition of Petroleum Products.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on November 27, 2023.
TRD-202304368
Victoria North
General Counsel for Fiscal and Agency Affairs
Comptroller of Public Accounts
Earliest possible date of adoption: January 7, 2024
For further information, please call: (512) 475-2220