Legislature(1999 - 2000)
03/19/1999 01:50 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 69
"An Act relating to the Alcoholic Beverage Control
Board; and providing for an effective date."
Co-Chair Therriault pointed out that Committee members
packets contained letters from the Alaska Cabaret Hotel,
Restaurant & Retailers Association (CHARR) Board addressing
concerns which had been voiced by Senator Donley. [Copy on
File]. Additionally, the packet contains correspondence
from the Alcohol Beverage Control (ABC) Board, Douglas
Griffin, Director. [Copy on File].
REPRESENTATIVE NORMAN ROKEBERG acknowledged the timely
response from the ABC Board. He pointed out that industry
does support the legislation, and urged Committee members to
move the bill from Committee.
Representative Grussendorf advised that he had received a
call from the CHARR Board and that they indicated that they
would endorse only the concept of the brewpub and the
extension of the board. The Board has reserved comments on
other amendments floated into the bill.
Co-Chair Mulder questioned why the one-year requirement had
been placed on limited liability corporations (LLC).
LINDA KESTERSON, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
ALCOHOL BEVERAGE CONTROL BOARD, ANCHORAGE, corrected that a
change involved limited liability corporations which can
hold a liquor license under statute. The resident issue
would place limited liability corporations and limited
liability partnerships under the same rules that now exist
for corporations and partnerships under AS 4.11.390.
"RESIDENCE REQUIREMENTS. (a) A beverage dispensary
license or package store license may not be issued to a
person or association of persons who have not resided
in the state for at least one year before the date of
application."
Co-Chair Mulder again questioned why trade was being
restricted. Ms. Kesterson replied that was not the intent.
In order to provide appropriate background checks of the
individuals who will be conducting liquor business in the
State, it has been State policy that those persons should be
in business or have connections with the State for at least
one year. She stressed that this would not preclude foreign
corporations from doing business in the State and that
current law requires that corporations or partnerships must
reside in the State for one year. The proposed change would
make limited liability partnerships consistent with existing
law.
Co-Chair Mulder observed that current law provides a
"hurdle" for new, upcoming businesses. He stated that the
proposed language would expand the problem. Ms. Kesterson
believed that at this time, there is not a problem with the
one-year residency requirement and that she knew of no one
who had objected to it. She noted that the change would
place licensees on par with partnerships and corporations.
DOUGLAS GRIFFIN, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
ALCOHOL BEVERAGE CONTROL BOARD, ANCHORAGE, stated that he
personally would support Co-Chair Mulder's suggestions of
removing the requirement on existing business entities, He
noted that larger policy questions have not been scrutinized
by the Board.
Representative Rokeberg clarified that portion of the bill
had been drafted from information received in a memorandum
from the office of Ms. Kesterson. He questioned the
hesitation.
Representative Moses suggested that it would be "unfair" to
deny the benefits to a limited liability corporation (LLC)
if that corporation could not access residency for one year.
Representative J. Davies commented that the letter from
CHARR should not be characterized as support for the
legislation. It was not stated that they support the
legislation but rather, they clarified specific issues.
Representative Rokeberg respectfully disagreed. Co-Chair
Therriault pointed out that Mr. Hackenmiller, President,
CHARR, indicated that he "hoped" the brewpubs would support
this. Representative Moses advised that the membership of
CHARR is mainly dispensary license holders with one brewpub
member.
Representative J. Davies MOVED to adopt Amendment #1. [Copy
on File]. Co-Chair Therriault OBJECTED.
Representative J. Davies explained that at this time, when a
license is up for renewal or change, the local governing
body would have an opportunity to comment on it. The
current problem is that the ABC Board does not have the
authority in statute to attach a condition to their
approval. Amendment #1 would allow local citizens an
opportunity to address concerns with the ABC Board.
Representative J. Davies stated that current language reads
that the board "shall deny the application or continued
application unless the board finds that the protest is
arbitrary". Amendment #1 would add the issue of conditions
to that language.
Mr. Griffin explained that the ABC Board could attach
conditions of approval, which, to date, has only been done
selectively because it tends to increase enforcement needs.
Representative Bunde understood that the ABC Board does not
have the authority to approve or disapprove conditions,
however, testimony received from Mr. Griffin indicates
differently. Mr. Griffin pointed out that "meeting of
conditions" is addressed in AS 04.11.395. The revoking of a
license is not an option. If conditions are violated, the
process begins with filing an accusation, followed by a
response period to decide if the accusation could be settled
informally, and then a hearing involving the Administrative
Procedures Act. At that time, a finding would be made.
Co-Chair Therriault asked if Amendment #1 would expand the
conditions of license approval and extension. Mr. Griffin
replied that the amendment would shift power to local
government. The Board recognizes the authority of local
governments to exercise their right to use the conditions.
However, Mr. Griffin worried about the restrictions that the
amendment would implement. He stated that he opposed the
amendment because he did not know the limitations that it
might bring forth. Mr. Griffin added that conditions have
been used in Anchorage as an agreement between the licensee
and the Assembly, acting as a precursor in cases of
violations. If the conditions are mutually agreed upon and
there is a violation, then the Board would be comfortable
with the condition, as it had been agreed upon. It would
not involve the Board except, that it would create a record
on which to base a legitimate protest.
Co-Chair Mulder asked who would be included in a "local
governing body".
REPRESENTATIVE ERIC CROFT replied that was referenced in
statute and would include the Municipal Assembly of
Anchorage as the governing body. It would not be a
community counsel but rather, it is the recognized elected
assembly or city council.
Co-Chair Mulder asked if the amendment would provide the ABC
more power than they currently have. Mr. Griffin replied
that the amendment would not give more power, but would make
the local governing body stronger on the condition of
alcohol service. It would increase the workload of the
enforcement staff. Mr. Griffin noted that the Board would
be comfortable with conditions agreed between a local
government and a licensee, and that the ABC Board would not
be required to be party to that. He believed that
Amendment #1 would make the ABC Board responsible for
enforcement.
Representative J. Davies apologized that it had been
perceived that the purpose of the amendment was to give the
board more responsibility. The concern of the amendment is
focused on the governing body and that it be able to attach
a condition of approval for an issue. He questioned the
current enforcement condition which the ABC Board is
responsible to meet. Mr. Griffin explained that the Board
does not provide a level of oversight and enforcement at
work places. The Board is uncomfortable with that because of
enforcement restraints and the size of their travel budget.
He acknowledged that many places in the State do not have a
Board presence and in those instances, the Board relies on
local police enforcement.
Representative Austerman noted that because he had served on
the local assembly, he would support the concept of the
amendment. He believed that communities should have as much
authority as the ABC Board to implement conditions and
concerns. They currently can not do that.
Representative Grussendorf spoke in support of the
amendment.
Representative Moses voiced concern with local governing
bodies having too much power particularly in small
communities that can be politically polarized. He admitted
that even in large cities, influential city assembly members
can be "troublesome" and create an unfair protest.
(Tape Change, HFC 99-48, Side 2).
Representative J. Davies summarized that the current
practice has resulted in local citizens feeling that their
needs are not being met. That concern would be
substantially met with adoption of Amendment #1.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Moses, Austerman, J. Davies
OPPOSED: Foster, Bunde, Therriault, Mulder
Representatives G. Davis, Williams, Kohring were not present
for the vote.
The MOTION FAILED (4-4).
Representative J. Davies MOVED to adopt Amendment #2. [Copy
on File]. Co-Chair Therriault OBJECTED.
Representative J. Davies explained that the amendment would
address audit concerns regarding the issuance of arrest
notices on a premises. Amendment #2 would provide when
there is an arrest, the Board would be notified.
Representative Austerman stated that he agreed with the
amendment, however, he pointed out that the ABC Board has
indicated that they are in the process of drafting
regulations requiring timely and complete reporting and
enforcing annual license fees. Mr. Griffin suggested that a
60-day wait period would be sufficient. The Board plans to
have a full disclosure reporting through the last quarter
prior to disbursement. He noted that the ABC Board was
investigating regulations requiring only Title 4 violations,
whereas, Amendment #2 speaks to any kind of arrests. Mr.
Griffin questioned if the ABC Board would support the
amendment as it would change Title 12.
Co-Chair Therriault inquired if the amendment would act as
an unfunded mandate to local assemblies and if it would
require a fiscal note for State Troopers. Representative J.
Davies denied that the motion would have that great of a
fiscal impact. At the present time, all items are being
tracked, and that, the amendment would require only an
additional three-month summary be sent to the ABC Board.
Mr. Griffin suggested that there would be a screening
process by the Board. The immediate items checked would be
the Board's capability and the potential licensee. He
pointed out that this action would be a policy call made by
the Legislature. He acknowledged that all information
received by the Board would be useful.
Representative Bunde questioned how the responsibility would
impact the Board's workload. Mr. Griffin replied that it
would be difficult to predict the increased workload. At
present time, all information is received from Anchorage,
which has the largest number of licensed premises. Mr.
Griffin believed that it would not require additional
funding needs.
Representative Rokeberg implied that the amendment would
fiscally affect the Department of Public Safety and the ABC
Board, as well as being an unfunded mandate to local
governments.
Representative Moses recommended that it would be better if
the ABC Board was restricted to license violations only. He
stated that many violations that occur at his liquor store,
are drug-related events. He worried about increased police
activity which could unwarrently close bars. Representative
Foster agreed, pointing to the lose of licenses.
Representative J. Davies pointed out that the ABC Board
currently is responsible for the work recommended in
Amendment #2. He acknowledged that there could be
circumstance where the patterns of these types of arrests
are important. If drugs and prostitution are occurring on a
premises, one would conclude that there is business going on
at that location that should be checked.
In response to Co-Chair Therriault, Mr. Griffin noted that
the ABC Board's regulations would be available for public
comment within sixty (60) days.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Moses, J. Davies
OPPOSED: Foster, Austerman, Bunde, Mulder, Therriault
Representatives Williams, Kohring, G. Davis were not present
for the vote.
The MOTION FAILED (3-5).
Representative J. Davies MOVED to adopt Amendment #3. [Copy
on File]. Co-Chair Therriault OBJECTED.
Representative J. Davies explained that Amendment #3
addresses work performed by the ABC Board investigators for
prostitution and gambling issues. The concern is that in
the audit, there is not explicate statutory authority to do
that work. He observed that the language of the amendment
would make that work consistent with the actual practice.
Mr. Griffin advised that the ABC Board supports the
amendment to give them power to investigate gambling and
prostitution.
In response to Representative Bunde, Mr. Griffin reiterated
that the ABC Board suggested that language be added which
stipulates that those actions be limited to licensed
premises only.
Representative J. Davies did not object to adding that
language, however, pointed out that the issue was somewhat
addressed on Lines 11 & 12. He added, prostitution issues
are defined in AS 11.66.100-130 and gambling related
offenses are defined in AS 11.66.200-280. Those definitions
limit the work too specifically gambling and prostitution.
Representative Rokeberg stated that he would support the
amendment if he received a guarantee from the House Finance
Committee that when the bill reach the House Floor,
Committee members would support the change to the intent and
title.
Co-Chair Therriault asked if the language of the amendment
would adequately cover the concern voiced by Mr. Griffin.
Mr. Griffin agreed that his concerns were adequately
addressed on Lines 12 & 13. Representative J. Davies
indicated that he would speak with the drafter of the
amendment for recommendations regarding the wording of that
language.
Representative Moses questioned why the language was being
limited to gambling and prostitution. He suggested that
there are more problems with drug use than other concerns.
Representative Foster stipulated that this is the ABC Board,
not a "beverage, gambling and prostitution commission". He
questioned including the above listed concerns. He asked,
"Why limit it to only those concerns". He reiterated that
this is the ABC Board, and urged that it be restricted to
alcohol only. Co-Chair Therriault pointed out that the ABC
Board is requesting clearer statutory authority for what
they are already doing in the arena of prostitution and
gambling.
Representative Bunde asked if the legislation addressed ABC
agents carrying firearms. Mr. Griffin replied that
allowance is for defensive purposes only. The investigators
work hand and hand with local police, who are eager to have
the investigators armed. Mr. Griffin advised that the ABC
Board has worked diligently to stay away from doing arrests.
He concluded that gambling, prostitution and alcohol
circumstances are much less dangerous than events involving
drugs.
Co-Chair Therriault WITHDREW his OBJECTION to adopt
Amendment #3. Co-Chair Therriault MOVED a conceptual
amendment to #3 that the drafter tighten the title, to
restrict ABC employees to only "investigation" not
"enforcement". There being NO OBJECTION to the conceptual
change to Amendment #3, it was adopted.
Representative J. Davies MOVED to adopt the amended
Amendment #3.
Representative Foster OBJECTED to Amendment #3. He stated
that police cover the additional concerns and that he
objected to the formation of a "police type" state. He
reiterated that he objected to providing another agency
power without the attention of State police. Co-Chair
Therriault commented that the amendment would provide
authority to the Board for work that they are already doing.
Representative J. Davies added that the ABC Board would be
doing this work in concurrence with Department of Public
Safety.
Representative Foster recommended that if the bill passes,
the name of the board should be expanded to include the
expanded language.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Moses, Austerman, Bunde, J.
Davies, Therriualt
OPPOSED: Foster, Mulder
Representatives Kohring, Williams, and G. Davis were not
present for the vote.
The MOTION PASSED (6-2).
(Tape Change HFC 99 - 49, Side 1).
Co-Chair Mulder MOVED to adopt a conceptual Amendment #4
which would remove existing language to Page 6, Section #9,
Line 9. Representative J. Davies asked if the change would
effect only the way corporations respond to the State
requirements for beverage dispensary. Co-Chair Mulder
advised that it was his intention that the change address
only ABC licensees. Representative J. Davies questioned why
such action should be taken with current statutory
requirements to incorporating a business in the State.
Ms. Kesterson replied that most business do not have to be a
State resident for a year to form an incorporated business.
Co-Chair Therriault pointed out that Amendment #4 would
remove language from current statute. Ms. Kesterson
suggested that the easiest way to address the issue would be
to repeal AS 4.11.390 which speaks to resident requirements.
The expansion language of the amendment would broaden that
to include LLC and LLP. She clarified that if it was
intended to eliminate the one-year residency requirement, it
would be best to repeal AS 4.11.390.
Representative Rokeberg voiced concern that no public or
industry input had been taken on the issue. He offered to
work with Representative Mulder on an amendment to be
addressed on the House Floor. Co-Chair Therriault noted
that Representative Mulder had made the conceptual
amendment, and suggested that once the final draft of the
bill was received, the Committee could then address any
additional concerns.
There being NO OBJECTION, conceptual Amendment #4 was
adopted.
Co-Chair Mulder MOVED to report CS HB 69 (FIN) out of
Committee with individual recommendations and with the zero
fiscal note. Representative J. Davies OBJECTED for the
purpose of a statement. He asked why the Committee would
add a conceptual amendment and then wait for the final bill
to reconsider. Co-Chair Therriault replied that often, he
would hold a bill in Committee for reconsideration if the
new language had changed the bill's structure or intent.
Co-Chair Mulder added that such action could speed up the
process for the bill.
Representative J. Davies WITHDREW his OBJECTION. There
being NO further OBJECTIONS, it was so ordered.
CS HB 69(FIN) was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Revenue dated 3/8/99.
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