Legislature(1995 - 1996)

04/27/1995 01:33 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SB 87 - ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC.                           
 Number 232                                                                    
 CO-CHAIR IVAN noted that in the members' packets was a fiscal                 
 note, sectional analysis, sponsor statement, position paper and               
 backup materials.  He invited Mr. Ambrose to introduce the bill.              
 He also indicated that the committee was on teleconference.                   
 Number 239                                                                    
 MR. AMBROSE, Legislative Assistant to Senator Taylor, presented               
 CSSB 87(FIN) to the committee on behalf of Senator Taylor.   At               
 the request of the Alcoholic Beverage Control Board, this                     
 legislation was introduced to address concerns over the lack of               
 clarity on how local option elections were conducted.  This                   
 legislation simplified that process and addressed long needed                 
 technical and common sense amendments to Title 4.  The bill                   
 addressed the concern that there is no provision to move from one             
 type of local option to another.  Under current law, a community              
 must first vote to remove restrictions on sale and importation of             
 alcoholic beverages and then conduct another vote on the new                  
 Number 280                                                                    
 PATRICK SHARROCK, Director, Alcoholic Beverage Control Board,                 
 Department of Revenue, testified that the board had requested the             
 legislation over concerns for local option elections and the                  
 deficiency in those laws.  He indicated that this legislation had             
 almost made it through the system last session.                               
 Number 307                                                                    
 REPRESENTATIVE VEZEY asked for an explanation of Section 7 of the             
 MR. SHARROCK indicated that people familiar with the brew pub                 
 business had said that 75,000 gallons was the amount necessary to             
 make an investment economically viable.  He stated that a brew                
 pub was the ability of a person who already has a bar license or              
 beverage dispensary license to install a facility to produce beer             
 on that licensed premises.  He indicated there had been only two              
 or three requests in the last year and they had indicated that                
 75,000 was the experienced production rate in other states.                   
 REPRESENTATIVE VEZEY asked if a brew pub license allowed them to              
 wholesale their brew.                                                         
 MR. SHARROCK stated they could only retail it on their premises.              
 There was no one with the brew pub license who had been in                    
 business long enough to know how their production was going to                
 Number 378                                                                    
 REPRESENTATIVE KOTT asked why 75,000 gallons was the figure                   
 MR SHARROCK indicated it was based on what other states used.  It             
 also related to the use of containers and the frequency of                    
 rolling over the production of the beer.                                      
 Number 394                                                                    
 REPRESENTATIVE KOTT inquired with regard to section 4 of the                  
 bill, why, in a dry community, was more that 12 gallons                       
 MR. SHARROCK noted that under some of the provisions of the new               
 section of the local option law, people could import alcohol but              
 not for resale.                                                               
 REPRESENTATIVE KOTT asked if dry communities could make home                  
 MR. SHARROCK stated they could not.                                           
 Number 410                                                                    
 CO-CHAIR IVAN recognized Senator Dave Donley and invited him to               
 join the members at the table.                                                
 Number 420                                                                    
 CO-CHAIR AUSTERMAN indicated it was his understanding that                    
 villages could be dry, damp or wet.  He asked if alcohol could be             
 brought into a dry village.                                                   
 Number 434                                                                    
 MR. SHARROCK stated that the bill did not change the current                  
 provisions of local options for communities.  It changed the                  
 language to allow elections to change between options and                     
 clarified language of elections.  It did say that elections could             
 not be held earlier than 12 months or more than once in 18                    
 Number 455                                                                    
 MR. AMBROSE noted that the change to 12 gallons was only changing             
 liters to gallons.  The quantity had not changed.  Those types of             
 technical changes had been made throughout the legislation.                   
 Number 464                                                                    
 CO-CHAIR IVAN understood that the intent of the legislation was               
 to clarify the confusion around elections.  He indicated he was               
 well aware that there was much confusion in this area and there               
 was a great need for clarification.                                           
 Number 486                                                                    
 CO-CHAIR AUSTERMAN asked for a clarification on whether the board             
 had proposed the legislation.                                                 
 MR. SHARROCK stated that the legislation had been proposed last               
 year.  There were some amendments that the board had not seen but             
 he felt confident that they would support them.  He noted that                
 the reason for the length of the bill was because the local                   
 option provisions had been renumbered causing changes to almost               
 every page.                                                                   
 Number 495                                                                    
 SENATOR DAVE DONLEY asked if Sections 11 and 12 were not proposed             
 by the board, but by a Senate committee.                                      
 MR. SHARROCK stated they had been added last year and the board               
 had not taken a position either way.                                          
 Number 512                                                                    
 CO-CHAIR IVAN indicated that Representative Nicholia had joined               
 the committee.  He then stated that the committee would be taking             
 testimony via teleconference.                                                 
 Number 520                                                                    
 DAVID HARDING, Mayor's Office in Barrow, stated that he was                   
 faxing the mayor's testimony to the committee.                                
 Number 524                                                                    
 JIM WOOD, North Slope Borough Police Department, expressed a                  
 desire to have the legislation amended so that the punishment for             
 possession of alcohol in a dry community would be a class A                   
 Number 605                                                                    
 CO-CHAIR AUSTERMAN asked what specific amendment he was                       
 MR. WOOD indicated he wished to amend Section 39 (e) to add "or               
 who possesses an alcoholic beverage," after "...sends,                        
 transports...in violation of  AS 04.11.499 ,".                              
 Number 640                                                                    
 MARK HAMLIN of Barrow, testified that he was concerned that Title             
 4 was being distorted and was unfair to those opposed to                      
 Number 680                                                                    
 TOM NICOLOS of Barrow, testified in opposition to government                  
 setting the limits of the local option laws.  He feared citizens              
 would become felons because they had too much beer in their                   
 homes.  He felt felonies were for heinous crimes.  He itemized                
 several changes he wished to have made in the legislation.                    
 TAPE 95-17, SIDE B                                                            
 Number 130                                                                    
 CO-CHAIR IVAN asked Mr. Nicolos to provide the committee with his             
 recommendations in writing.                                                   
 Number 143                                                                    
 PAT CARLSON, Kodiak Island Borough Assessor, speaking on behalf               
 of the mayor, spoke in support of the legislation.  There was a               
 need for streamlining and the legislation allowed for the                     
 community to address those needs.                                             
 Number 169                                                                    
 MARK GAGNIER of Anchorage, a felon under a DWI conviction, felt               
 that the legislation should be directed at distributors as the                
 problem, not the people consuming the alcohol.                                
 Number 216                                                                    
 REPRESENTATIVE ELTON asked regarding Section 12, if a person that             
 owns a bar, restaurant, club or package liquor store may buy                  
 alcoholic beverages only from a wholesaler, brewer, winery or a               
 distiller.  He asked if this precluded a purveyor from going to               
 Costco to shop for beverages for resale.                                      
 MR. SHARROCK indicated that a person may not purchase alcohol for             
 resale except for someone licensed under the title.  He indicated             
 it was difficult to ascertain the intent of a buyer.                          
 Number 264                                                                    
 RICK URION, Lobbyist for the Alaska Wine and Spirits Wholesalers              
 Association, stated that it was illegal to have an interest in                
 both wholesale and retail activities.   Costco cannot make                    
 wholesale sales since they have a retail license.                             
 Number 290                                                                    
 REPRESENTATIVE VEZEY expressed concern about bootlegging liquor               
 because of the lack of control.  He thought the purpose of                    
 Sections 11 and 12 was to establish a chain of responsibility.                
 Number 313                                                                    
 REPRESENTATIVE ELTON asked if it was true that Costco could not               
 sell alcoholic beverages for retail and if so, why was there a                
 need for Section 12.                                                          
 Number 320                                                                    
 MR. URION indicated that the people he represented had no problem             
 with retailers buying from Costco.  The retail buyers who buy in              
 quantity buy it cheaper.  The excise taxes are paid by the                    
 wholesaler and for that reason the retailer should buy from a                 
 wholesaler.  It protects the revenue stream as they are the ones              
 paying the tax.                                                               
 REPRESENTATIVE ELTON asked for clarification.  He inquired as to              
 whether a retailer could or could not shop at Costco and if that              
 is so why is it being restated in the bill.  He asked if this was             
 adding another level of taxation.                                             
 MR. URION stated that Section 12 was a continuation of Section 11             
 which was a brand registration law.  It requires wholesalers to               
 register their suppliers, brands and have certification that they             
 are the primary source.  The intent was to eliminate the gray                 
 market which is foreign or otherwise not controlled.  At this                 
 time, there is no one selling gray market goods.  Section 12 says             
 if you are a retailer, you must buy from a primary source.  He                
 indicated that anyone could become a wholesaler and sell any                  
 product that is not already being sold in the state.  He stated               
 that Costco could not become a wholesaler because they were a                 
 retailer.  The intent was to prevent monopolies.                              
 Number 447                                                                    
 MR. AMBROSE indicated that most people would buy from a                       
 wholesaler because it is more cost effective.  The intent was to              
 prevent gray markets.  Section 11 was the revenue generating                  
 section of the bill.                                                          
 Number 460                                                                    
 REPRESENTATIVE IRENE NICHOLIA asked if it was possible to limit               
 the amount of an item sold per day as an option.                              
 SENATOR DONLEY noted that the bill did ban Everclear.                         
 MR. SHARROCK indicated that a community that was under local                  
 option could, by ordinance, limit the amount sold as outlined                 
 under 4.11.491(a)1, (a)2, and (a)3.                                           
 Number 524                                                                    
 CO-CHAIR AUSTERMAN indicated that previous testimony had raised a             
 question regarding whether there was a disparity in who could ask             
 for an election.                                                              
 MR. AMBROSE stated that the amendment had been added in the                   
 Senate Judiciary Committee.  Senate Finance had proposed the 18               
 months as a compromise for time between elections.  It was felt               
 that there was a period of time needed to see if the option voted             
 on was working.  He indicated that both sides had the same                    
 options in calling for an election and didn't favor either side.              
 He noted there were 24 communities in the state that banned                   
 alcohol.  He stated the intent of the local governments was                   
 toward prevention, not punishment.                                            
 Number 588                                                                    
 CO-CHAIR AUSTERMAN asked someone to address the concern regarding             
 the amendment to make possession of alcohol a class A                         
 MR. SHARROCK noted that there was already a considerable body of              
 law defining the charges on possession of alcoholic beverages.                
 The board doesn't see a need to change any of that at this time.              
 The only changes in this legislation were to local options.                   
 Number 617                                                                    
 REPRESENTATIVE ELTON moved an amendment requiring two of the                  
 three public members on the Alcoholic Beverage Control Board to               
 be as follows:  One from the public health field and one from the             
 law enforcement field.                                                        
 REPRESENTATIVE VEZEY objected and noted that he could not recall              
 any complaints about the makeup of the board.                                 
 Number 652                                                                    
 MR. AMBROSE expressed concern that restricting the membership in              
 that way might not be positive.   He indicated that these                     
 provisions were added in Senate Finance.  He noted that another               
 amendment had dealt with the makeup of a quorum to require two                
 public members be present.                                                    
 REPRESENTATIVE VEZEY asked if the board had always had three                  
 public members and was informed that was true.   He did not                   
 support the amendments made in Senate Finance.                                
 Number 678                                                                    
 REPRESENTATIVE ELTON stated that the people appointed under the               
 amendment would remain public members and didn't feel it would                
 create a quorum problem.                                                      
 TAPE 95-18, SIDE A                                                            
 Number 005                                                                    
 CO-CHAIR AUSTERMAN indicated that he did not support the                      
 CO-CHAIR IVAN asked that a roll call vote be taken.  Voting in                
 favor of the amendment was Representative Elton; voting against               
 the amendment were Representatives Ivan, Austerman, Kott and                  
 Vezey.  The amendment failed.                                                 
 Number 023                                                                    
 REPRESENTATIVE VEZEY moved to delete Sections 1 and 2 which were              
 amendments made in the Senate and were not in the bill last year.             
 MR. SHARROCK indicated that requiring two public members to be                
 present did pose a potential problem for the board since the                  
 industry members of the board were the more willing and dedicated             
 Number 076                                                                    
 REPRESENTATIVE VEZEY stated that his main reason for making the               
 motion was that they didn't do anything that wasn't already in                
 REPRESENTATIVE ELTON noted that the argument was probably true on             
 Section 2; however, he opposed the amendment to Section 1.  He                
 felt that it clarified some things that may be problems in the                
 future.  He objected to the motion.                                           
 Number 128                                                                    
 CO-CHAIR AUSTERMAN asked if the committee wished to divide the                
 question.  Hearing no objection, the motion was divided.  He                  
 indicated the question before the committee was to delete Section             
 1.  The roll was taken and the motion passed.  Voting in favor of             
 the motion were Representatives Vezey, Kott, Austerman.  Voting               
 against the motion was Representative Elton.                                  
 Number 157                                                                    
 CO-CHAIR AUSTERMAN announced that since there was not a quorum                
 present, the committee would stand in recess to a call of the                 
 Chair at 3:15 p.m.                                                            
 TAPE 95-19, SIDE A                                                            
 Number 000                                                                    
 CO-CHAIR IVAN called the House Community and Regional Affairs                 
 Committee meeting back to order at 9:57 p.m.  Members present at              
 the call to order were Representatives Austerman, Kott, Vezey and             
 Ivan.  He indicated that SB 87 was before the committee.                      
 CO-CHAIR AUSTERMAN stated that when the committee had recessed,               
 Amendment No. 3 was before the committee.  It was agreed that the             
 amendment was to delete Section 2 of the bill.                                
 Number 017                                                                    
 TOM WRIGHT, legislative assistant to Representative Ivan,                     
 informed the committee that if they removed Sections 1 and 2 from             
 the bill, they would need a concurrent resolution suspending the              
 Uniform Rules for a title change.                                             
 Number 020                                                                    
 REPRESENTATIVE VEZEY stated that the entire bill addressed the                
 duties of the Alcoholic Beverage Control Board and he did not                 
 feel that was a technicality the committee needed to be concerned             
 Number 038                                                                    
 C0-CHAIR IVAN indicated that he had not been present at the                   
 conclusion of the afternoon session and was therefore turning the             
 meeting over to Co-Chair Austerman.                                           
 CO-CHAIR AUSTERMAN stated that the amendment before the committee             
 was to remove Section 2 from the bill.  There was no objection                
 and the amendment was adopted.                                                
 MR. WRIGHT informed the committee that Section 78 needed to be                
 deleted as it dealt with Sections 1 and 2 of the bill.                        
 REPRESENTATIVE KOTT moved to delete Section 78 and renumber                   
 CO-CHAIR AUSTERMAN, hearing no objections, indicated the motion               
 was adopted.                                                                  
 REPRESENTATIVE VEZEY moved that the committee adopt a C&RA                    
 committee substitute for CSSB 87(FIN) incorporating the amendment             
 passed by the committee.                                                      
 CO-CHAIR AUSTERMAN asked for objections; hearing none, the                    
 committee substitute was adopted.                                             
 REPRESENTATIVE VEZEY moved that HCS CSSB 87(CRA) be passed from               
 committee with individual recommendations.                                    
 CO-CHAIR AUSTERMAN asked for objections.  There were none, and                
 the bill passed from committee.                                               

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