Legislature(2017 - 2018)BARNES 124
01/31/2018 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB301 | |
| HB265 | |
| HB299 | |
| HB301 | |
| HB265 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 299 | TELECONFERENCED | |
| *+ | HB 301 | TELECONFERENCED | |
| *+ | HB 265 | TELECONFERENCED | |
HB 299-EXTEND: ALCOHOLIC BEVERAGE CONTROL BOARD
4:01:08 PM
CHAIR KITO announced that the next order of business would be
HOUSE BILL NO. 299, "An Act extending the termination date of
the Alcoholic Beverage Control Board; and providing for an
effective date."
4:01:23 PM
LAURA STIDOLPH, Staff, Representative Adam Wool, Alaska State
Legislature, introduced HB 299 on behalf of Representative Wool,
prime sponsor. She explained that the proposed bill would
extend the Alcoholic Beverage Control (ABC) Board by four years
to June 30, 2022. She paraphrased the Legislative Budget and
Audit (LB&A) conclusions, which read as follows:
The Alcoholic Beverage Control Board (board) is a
regulatory and quasi-judicial board consisting of five
members appointed by the governor, created for the
purpose of controlling the manufacture, barter,
possession, and sale of alcoholic beverages in the
state. The board consists of one member actively
engaged in the public safety sector, one from the
general public, one who has resided in a rural area
within the last five years, and two actively engaged
in the alcoholic beverage industry. The audit
concluded the board should improve its procedures for
issuing renewals, recreational site licenses, and
beverage dispensary licenses that encourage tourism.
Testing found these licenses were not consistently
issued in accordance with statutes. Additionally,
operational improvements are needed in enforcing laws,
monitoring board-related local law enforcement
activity, and processing refunds to municipalities.
4:02:52 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit and Budget,
Legislative Agencies and Offices, presented the sunset audit
findings for the ABC Board. The audit found the board had
operated in the public interest in all areas except licensing.
There was a need to improve the board's procedures for issuing
renewals, recreational site licenses, and beverage dispensary
licenses for the purposes of encouraging tourism.
Additionally, operational improvements are needed in enforcement
of laws, monitoring local law enforcement activity, and
processing refunds to municipalities. She read from the
November 2017 audit [included in committee packets] as follows:
AMCO [Alcohol and Marijuana Control Board}
investigators have stopped conducting compliance
checks as of April 2015. The board, through AMCO
investigators, has historically conducted compliance
checks where investigators employ underage individuals
who attempt to purchase alcoholic beverages.
Licensees who fail a compliance check receive criminal
summons or citations. According to management, the
federal grant funding for this program was terminated
at the end of 2012, and the board received
supplemental funds to keep the program going through
June 2014. AMCO's enforcement section continued to
conduct compliance checks funded by program receipts
until April 2015. Although there is no statutory or
regulatory requirement to conduct compliance checks,
AMCO management reported it is an integral part of the
enforcement of alcoholic beverage laws and is
evaluating alternative means for providing the
enforcement through shared services with other
agencies. The audit noted the board and AMCO
management have not established a written enforcement
plan to direct its limited enforcement resources. For
example, the board has not formally established how
often licensed premises should be inspected.
Furthermore, the control office does not monitor and
track all complaints to ensure complaints are assessed
for follow up action and investigated in a timely
manner.
4:05:26 PM
MS. CURTIS added that the board and AMCO staff had not
maintained a list of restricted purchasers within the statewide
database in accordance with statute, potentially allowing
individuals who have been convicted of illegally selling alcohol
to continue to purchase alcohol via written order.
MS. CURTIS listed the eight recommendations in the audit. The
audit recommended the authority to renew licenses be limited to
the board to comply with statutes. The audit again recommended
that the board issue recreational site licenses in accordance
with statutory requirements. This was the second such
recommendation and had been given in the prior sunset audit.
Ten of the 29 recreational site licenses had been tested, and it
was found that all 10 did not meet the definition of a
recreational site. She gave the list of recreational sites,
including baseball games, car races, hockey games, dog sled
racing events and curling matches held during the season. The
non-compliant licensees the audit had found included travel
companies, bowling alleys, an arts council, a pool hall, a movie
theater, and a spa. Board members were aware that they were
issuing those licenses not in accordance with statute, but
believed it was in the public's best interest to continue to do
so. The board thought the issue would be addressed in a future
re-write of the statute.
MS. CURTIS spoke to the recommendation that the board issue
beverage dispensary licenses in accordance with statutory
requirements. The audit sampled 16 of the 126 beverage
dispensary licenses that encourage tourism and found that 5 were
transferred and 6 were renewed despite not meeting the statutory
requirements. She explained statutes give the board authority
to issue a beverage dispensary license without regard to
population limits if it appears that the issuance will encourage
tourism. She added that statutes also provide for a minimum
rental room rate, and, in the areas examined, the entities did
not meet the minimum rate. The board believed it was
appropriate to continue to issue those licenses as the original
licenses had been issued prior to 1985. However, there is no
statutory provision to grandfather licenses.
4:08:54 PM
MS. CURTIS continued to list the LB&A recommendations. The
audit recommended the board, the AMCO director, and the
enforcement supervisor work together to formally establish an
enforcement plan to direct AMCO's limited enforcement resources.
The audit further recommended the board and AMCO director
implement a process to monitor and track complaints to ensure
they are assessed for follow-up action and investigated in a
timely manner. The sixth recommendation was that the board and
the AMCO director develop written procedures for updating the
statewide database with restricted purchasers. Procedures
should include working with the court system to receive reports
of violations in a timely manner. The audit recommended the
board and AMCO director improve procedures to ensure
municipalities report violations of alcoholic beverage laws.
Finally, the audit recommended the AMCO director develop and
implement procedures to ensure refunds to municipalities are
appropriately reviewed.
4:11:33 PM
MS. CURTIS stated LB&A was recommending a 4-year extension for
the board. The department concurred with all recommendations
except recommendation 1 regarding the authority to renew
licenses. The board believed there is an alternative
interpretation of statute. The board chair concurred with all
but recommendation 3 concerning beverage dispensary licenses
which encourage tourism. The board maintained it is appropriate
to continue to grandfather those licenses. Ms. Curtis explained
that when an auditee does not agree with any recommendation, she
responds in the audit findings. In this instance, the board
chair was unable to provide more information for her to
consider. She therefore reaffirmed the findings.
4:12:50 PM
REPRESENTATIVE JOSEPHSON asked whether the boards ever report to
the state about the lack of resources.
MS. CURTIS replied that the ABC Board was different from other
boards in not being an occupational licensing board. The
board's response acknowledges the need for an enforcement plan
and some sort of prioritization due to limited resources.
REPRESENTATIVE JOSEPHSON asked what the board needed to do to
fix the information gap with the court system.
MS. CURTIS answered she thought that it was as simple as asking
the court system to send in the information.
4:15:21 PM
REPRESENTATIVE BIRCH asked about efforts to receive feedback
from licensees regarding the board's operations.
MS. CURTIS answered that at times surveys were sent out to ABC
stakeholders. The audit also examined board meeting minutes to
determine whether the public was commenting and how those
comments were considered by the board. She deferred to the
board chair for more information.
4:17:37 PM
REPRESENTATIVE KNOPP remarked the audit had triggered a lot of
discussion, including the proposals of HB 301 and HB 265. He
asked whether it was not more appropriate to decide that the
statute "doesn't fit," and he said he thought that it made sense
to return to pre-1985.
MS. CURTIS replied it was outside of her role as auditor to
comment on the appropriate nature of statute.
CHAIR KITO added that he thought it made sense for the
legislators to examine legislation that may no longer "fit."
REPRESENTATIVE KNOPP spoke to the population base and said he
thought there were different distinctions for incorporated areas
of the boroughs. He asked why the population base was not taken
out of the incorporated areas.
MS. CURTIS said she did not know which areas were examined. She
specified that the analysis was applied to a sample group of the
126 licenses.
REPRESENTATIVE KNOPP asked whether, with separate sections for
incorporated areas, it made sense to exclude the population
base.
MS. CURTIS said she did not know if she could address that
issue. She stated the auditors had not had trouble interpreting
the criteria and asked whether he was questioning why the
statute was written the way it was.
REPRESENTATIVE KNOPP said, "if it was meant to be all inclusive
incorporated cities inside an organized borough, we would never
have put the exclusions for the incorporated cities in there, so
we should only be counting the unorganized areas of the
borough." He said he thought that was not what was done in the
audit.
4:23:03 PM
MS. CURTIS deferred to the auditor who carried out the testing.
4:23:19 PM
CHRISTINE LUMBA, Legislative Auditor, Legislative Audit and
Budget, stated she was not sure she has an answer for that.
4:23:47 PM
CHAIR KITO asked whether she was able to describe how the audit
was tested.
4:23:57 PM
MS. LUMBA answered that the division had generated random
samples and found that certain licenses were issued without
regard to population limits to encourage tourism. When the
renewal came up, they were evaluated under AS 04.11.400(d).
4:24:31 PM
REPRESENTATIVE KNOPP responded that he would contact the
division in person later.
4:24:48 PM
MS. CURTIS remarked that LB&A had vetted the findings with the
ABC and AMCO Boards and they had no issue with the criteria or
methodology.
4:24:59 PM
REPRESENTATIVE WOOL commented on an inconsistency in the number
of rooms required for licenses in different areas. He went on
to ask about qualifications for enforcement officers.
MS. CURTIS deferred to AMCO.
4:26:44 PM
ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office,
Department of Commerce, Community, and Economic Development
(DCCED), answered that the board's enforcement officers were
classified as special investigator I, requiring four years of
advanced level investigative work or four years of full-time law
enforcement experience. She specified that all the board's
current officers were previously law enforcement officers.
REPRESENTATIVE WOOL said he felt that the ABC board and AMCO
office staff were overworked. He disclosed that he is a license
holder and has had trouble reaching the office via telephone.
He asked whether the addition of marijuana [control enforcement]
to the workload was something "they could do comfortably."
MS. MCCONNELL answered that there had been an adjustment period
as the office had taken on the marijuana program. It had grown
incrementally to accommodate the marijuana board and had also
seen a great deal of staff turnover. She remarked that the
office had heard other people complain that it can be difficult
to reach staff, and the office had developed policies to ensure
it was more responsive.
4:29:50 PM
REPRESENTATIVE WOOL asked how many enforcement officers were
currently employed by the board.
MS. MCCONNELL replied there is one special investigator II in
Anchorage and seven enforcement officers.
REPRESENTATIVE WOOL remarked that there were 1,885 alcohol
licenses requiring enforcement and a growing number of marijuana
licenses. He spoke to one of the recommendations that the board
carry out license renewals whereas currently the AMCO office was
doing that. He asked for her thoughts.
MS. MCCONNELL replied that as noted in the audit response, AMCO
felt that statutes can be interpreted differently, but it had
agreed to adjust its procedures based on the audit. She added
that AMCO had taken 350 renewals to the board. However, they
were not providing the board with all the paperwork. The
renewals provided to the board were those which had met the
requirements for renewal.
4:31:46 PM
REPRESENTATIVE WOOL said he felt renewing 900 licenses was a lot
of work for the board. He asked whether the director having a
tie-breaking vote was something that existed in other boards.
MS. CURTIS replied that she was not aware of the policy.
REPRESENTATIVE WOOL directed his question to Ms. McConnell.
MS. MCCONNELL answered that the Marijuana Board did not have
that policy.
REPRESENTATIVE WOOL mentioned that in discussions with staff in
the licensing areas, it was disclosed that the vote was in
statute which had been repealed but had remained in regulation.
He asked for confirmation from LB&A.
MS. CURTIS replied that it was not a topic in the audit.
4:34:05 PM
CHAIR KITO stated he thought it may have been a decision that
had come up post-audit.
4:34:49 PM
ROBERT KLEIN, Chair, Alcohol and Beverage Control Board, Alcohol
& Marijuana Control Office, Department of Commerce, Community,
and Economic Development (DCCED), testified in the hearing on HB
299. He complimented the LB&A for the thorough job on the
audit. He said he agreed with recommendations 4-8 and the board
had already implemented a number of them. Regarding renewals, he
stated the law said the board was the only group that could
grant renewals, so at the January 23 board meeting they had
staff bring around 300 renewals to them. He stated it was
onerous, but that staff had done a lot of homework.
MR. KLEIN spoke to recreational site licenses, specifying the
board does not grant any recreational site licenses that do not
follow the statute requirements very closely and only renews
practicing businesses. He mentioned that the board was waiting
for SB 76 to move through the legislature. If the proposed bill
passed, the board would comply, otherwise it would address how
to avoid renewing some of the licenses. He addressed the
recommendation regarding tourism, indicating that in the
application of Title 4, the board looked at licenses granted
before 1985 and applied common sense. The board did not want to
ask those holding tourism licenses to build more rooms because
the population increases and had not taken that action. In
closing, he stated that he supports the 4-year extension in the
proposed legislation.
4:38:56 PM
REPRESENTATIVE BIRCH extended his personal appreciation for the
services and support the ABC Board had provided to Alaskans. He
asked whether there was anything the legislature could do to
ensure that common sense prevails.
4:39:44 PM
MR. KLEIN remarked that the application of common sense was what
had enabled Title 4 to exist for almost 40 years.
4:40:00 PM
REPRESENTATIVE KNOPP spoke to the rejection of the reinstatement
of an alcoholic beverage license to a well-established Elks
Lodge. He said he felt the ABC Board had been following the
intent of the law but asked whether the board could not have
used discretion.
4:40:59 PM
MR. KLEIN answered that the people responsible for renewing the
license chose to ignore the requirements to apply for the
renewal and had missed all the deadlines. He underlined the
action taken by the board did not preclude the lodge from re-
applying for the license.
4:41:51 PM
REPRESENTATIVE STUTES asked how many members are on the ABC
Board.
MR. KLEIN replied there are five members on the board.
4:42:07 PM
REPRESENTATIVE WOOL remarked that the five board members were
selected for different roles. He asked whether the director had
a tie-breaking vote and whether it was ever used.
MR. KLEIN answered that he was against applying the tie-breaking
vote of the director. He added that the board had dropped the
legislative aspect of the director having the tie-breaking vote.
He clarified that the board was quasi-judicial in nature and
that at times the director was the prosecutor in the cases that
come before the board. He said he thought the regulation was
left in the statute inadvertently.
REPRESENTATIVE WOOL asked whether the board can keep up with the
900 license renewals every year.
4:44:04 PM
MR. KLEIN answered there was an efficient way for the staff to
review renewals. There was a public process as well as a series
of checks and balances in the system. He added that by the time
the five members of the board review a renewal, the renewal has
gone through those hurdles.
4:44:53 PM
REPRESENTATIVE JOSEPHSON asked whether the director of AMCO cast
a tie-breaking vote relying on a regulation that was previously
connected to a statute. He added that the statute had been
repealed, and he said he thought it was a standalone regulation.
He asked whether people were questioning the legitimacy of the
vote.
MR. KLEIN answered that the tie-breaking vote has not been used
in his experience and has not been used in many years. It was
brought up in a meeting because the regulation had been found.
He added the assistant attorney general who supports the board
suggested it might be difficult to defend should any lawsuits be
brought forward.
4:46:11 PM
CHAIR KITO opened public testimony on HB 299.
4:46:29 PM
WILLIAM HARRINGTON testified that he does not think the
alcoholic beverage industry needs a control board.
4:48:15 PM
CHAIR KITO announced he would leave public testimony on HB 299
open.
CHAIR KITO held over HB 299.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB299 Sponsor Statement 1.29.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 299 |
| HB299 ver A 1.31.18.PDF |
HL&C 1/31/2018 3:15:00 PM |
HB 299 |
| HB299 Supporting Document Audit 11.17.17.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 299 |
| HB299 Fiscal Note DCCED AMCO 1.27.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 299 |
| HB301 Sponsor Statement 1.24.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 301 |
| HB301 Supporting Documents ABC Memo Tourism BDL 9.13.17.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 301 |
| HB301 Ver D 1.31.18.PDF |
HL&C 1/31/2018 3:15:00 PM |
HB 301 |
| HB265 Fiscal Note DCCED AMCO 1.25.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 265 |
| HB265 Version D 1.31.18.PDF |
HL&C 1/31/2018 3:15:00 PM |
HB 265 |
| HB301 Fiscal Note DCCED AMCO 1.26.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 301 |
| HB265 Explanation of Changes.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 265 |
| HB265 Sponsor Statement.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 265 |
| HB301 Support Letters 1.31.18.pdf |
HL&C 1/31/2018 3:15:00 PM |
HB 301 |