Legislature(2003 - 2004)
04/23/2003 01:36 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 234
"An Act relating to brewpubs, and continuing the
existence of the Alcoholic Beverage Control Board; and
providing for an effective date."
REPRESENTATIVE LISEL MCGUIRE, SPONSOR, testified in support
of the legislation. She explained that Section 1 of the
bill allows for the sale of "growlers" of up to five gallons
per day, as stated in current statute, but eliminates a
technical provision that required a brewery must be on the
premises in order to sell a "growler" to customers. She
explained that this provision prevented the Moose's Tooth
Brewery [Anchorage] from being in the marketplace, since
their brewery was in Ship Creek. She also noted that an
earlier version of the bill pertained to gallonage, which
was removed from the bill based on testimony in the [House]
Labor and Commerce Committee that indicated that it was a
fundamental policy decision better suited to a separate
vehicle. In response to a question by Co-Chair Williams,
Representative McGuire confirmed that this change would be
implemented by amendment.
Representative McGuire also noted that Section 3 extends the
Alcoholic Beverage Control Board to June 30 2007. She
referred to a Legislative Budget and Audit (LB&A) report
commending the Board's success. She pointed out that
suggested changes from the Department of Public Safety were
forthcoming, one of them stemming from the LB&A audit. She
stated that her office did not have objections to the
Administration's amendments.
In response to a question by Representative Stoltze,
Representative McGuire defined a "growler" as being a micro
brewery that distributes an amount under five gallons. She
stressed that the bill did not change this amount
requirement.
PAT DAVIDSON, DIRECTOR, DIVISION OF LEGISLATIVE AUDIT
provided information on the department's audit of the board.
She stated that the audit had recommended a three-year
extension, due to some operational deficiencies discovered
during the audit. She noted that overall they believed the
continuation of the Alcoholic Beverage Control Board was in
the best public interest.
DOUGLAS GRIFFIN, DIRECTOR, ALCOHOLIC CONTROL BOARD testified
via teleconference in support of the legislation. He stated
that they would prefer a four-year, rather than a three-year
extension of the board. He commended the audit procedure
and noted that the Board was making recommended changes and
acknowledged that the Board was experiencing funding
shortfalls.
MATT JONES, MOOSE'S TOOTH, ANCHORAGE testified via
teleconference in support of the bill.
DAN COFFEE, ATTORNEY, ANCHORAGE testified via teleconference
in support of the legislation. He noted he had served on
the board of fisheries as well. He commended the Alcoholic
Beverage Control Board for its excellent work. He observed
that their only problems were funding shortfalls. He
supported the extension of the board and expressed industry
support for the amendment pertaining to brewpubs. He asked
for information regarding forthcoming amendments from the
Administration and how to comment on these changes.
Representative Stoltze referred to the provision of the bill
that provided for free samples, and asked whether this
practice was new. Mr. Coffee stated that this was a
standard procedure for brewpubs, allowing them to provide
small samples for potential customers.
Representative Croft MOVED amendment #1.
Section 1 -
Pg. 2, Lines 6-8
(5) sell beer manufactured on the premises licensed
under the beverage dispensary license to a person
licensed as a wholesaler under AS 04.11.160; sales
under this paragraph may not exceed 15,000 gallons
[OR THE AMOUNT SOLD UNDER THIS PARAGRAPH IN CALENDAR
YEAR 2001, PLUS 10 PERCENT, WHICHEVER AMOUNT IS
GREATER].
Should be amended to read:
(5) sell beer manufactured on the premises licensed
under the beverage dispensary license to a person
licensed as a wholesaler under AS 04.11.160; sales
under this paragraph may not exceed 15,000 gallons
OR THE AMOUNT SOLD UNDER THIS PARAGRAPH IN CALENDAR
YEAR 2001, PLUS 10 PERCENT, WHICHEVER AMOUNT IS
GREATER.
Section 2 -
Pg. 2, Lines 24-27
(B) to a wholesaler licensed under AS 04.11.160;
sales under this subparagraph may not exceed 15,000
gallons [OR THE AMOUNT SOLD UNDER THIS SUBPARAGRAPH
IN CALENDAR YEAR 2001, PLUS 10 PERCENT, WHICHEVER
AMOUNT IS GREATER];
Should be amended to read:
(B) to a wholesaler licensed under AS 04.11.160;
sales under this subparagraph may not exceed 15,000
gallons OR THE AMOUNT SOLD UNDER THIS SUBPARAGRAPH IN
CALENDAR YEAR 2001, PLUS 10 PERCENT, WHICHEVER
AMOUNT IS GREATER;
Co-Chair Williams OBJECTED.
Representative McGuire stated that the intent of the
amendment was to preserve the existing statute as written in
relation to gallonage and percentage. She explained that
when the Committee Substitute from the House Labor and
Commerce Committee had been written, it had inadvertently
excluded a portion of the existing statute.
Co-Chair Williams REMOVED his OBJECTION. There being NO
OBJECTION, the amendment was Adopted.
Representative Stoltze MOVED Amendment #2.
Amendment No. 2
*Section . AS 04.06.010 is amended to read:
Sec. 04.06.010. Establishment of board. There is
established in the Department of Public Safety the
[THE] Alcoholic Beverage Control Board [IS ESTABLISHED]
as a regulatory and quasi-judicial agency. [THE BOARD
IS IN THE DEPARTMENT OF REVENUE, BUT FOR ADMINISTRATIVE
PURPOSES ONLY.]
Co-Chair Harris OBJECTED.
WILLIAM TANDESKE, COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY,
provided information about Amendment #2, that effectively
transfers the Alcoholic Beverage Control Board from the
Department of Revenue to the Department of Public Safety.
He noted the language change was to remove "for
administrative purposes only". He explained that the
purpose of the change was not to change function of the
Board, but rather to recognize that the nine employees of
the Board were employed by the state of Alaska, such as with
other boards within the Department of Public Safety, such as
the Council on Domestic Violence and Sexual Assault. He
stressed that this change was directed at the licensing and
review function of the Alcoholic Beverage Control Board.
Co-Chair Harris asked whether officers of the Alcoholic
Beverage Control Board would carry weapons in order to
respond to dangerous situations. Mr. Tandeske stated he did
not support Board investigators carrying weapons. He gave
the example of Division of Family and Youth Services, when
officers entered into volatile situations, and maintained
that weapons were not necessary for ABC investigators and
would only escalate such situations. He also noted that
this would create additional issues of recruiting and
training. In response to another question by Co-Chair
Harris, Mr. Tandeske confirmed that local police officers
would support the efforts of the Alcoholic Beverage Control
Board officers.
Representative Croft asked about the practical effect of
moving the Alcoholic Beverage Control Board to the
Department of Public Safety. Mr. Tandeske explained that
this was a portion of the process of realigning functions
within all departments, and that the Department of Revenue
expressed that the Board was more properly placed in the
Department of Public Safety, given that they are a quasi-
judicial, investigative and enforcement agency. He added
that if other parts of the state required officers, their
becoming official State employees he noted that their
function was autonomous within the Department.
Representative Croft asked why the Board was not indicated
as being "only administrative" within the Department of
Public Safety. Mr. Tandeske reiterated that the officers
were employees of the state of Alaska. He differentiated
this from the Alcoholic Beverage Control Board, but referred
to enforcement officers and administrative staff. He
stressed that the Board will still be separate in order to
consider licensing and other quasi-judicial issues.
Co-Chair Harris REMOVED his OBJECTION. There being NO
OBJECTION, amendment #2 was adopted.
Representative Stoltze MOVED Amendment #3,
*Sec. . AS 04.06.020 is amended to read:
Sec. 04.06.020. Appointment and qualifications. The
board consists of seven [FIVE] members: the
commissioner of public safety, the commissioner of
revenue, and five members appointed by the governor and
confirmed by a majority of the members of the
legislature in joint session. A member of the board may
not hold any other state or federal office, either
elective or appointive. Two members of the board shall
be persons actively engaged in the alcoholic beverage
industry, except that no member may hold a wholesale
license or be an officer, agent, or employee of a
wholesale alcoholic beverage enterprise. No three
members of the board may be engaged in the same
business, occupation, or profession. At least three
members of the board shall represent the general
public. A board member representing the general public
or an immediate family member of a board member
representing the general public may not have any
financial interest in the alcoholic beverage industry.
In this section, "immediate family member" means a
spouse, child, or parent.
*Sec. . AS 04.06.030 is amended to read:
Sec. 04.06.030. Terms of office; chair. (a) The
commissioners of public safety and revenue shall serve
as members during their tenure as commissioner. The
other m[M]embers of the board shall be appointed for
overlapping terms of three years.
(b) Except for the commissioners of public safety and
revenue, a [A] vacancy occurring in the membership of
the board shall be filled within 30 days by appointment
of the governor for the unexpired portion of the
vacated term.
(c) The board shall select a chairman from among its
members.
*Sec. . AS 04.06.060 is amended to read:
Sec. 04.06.060. Quorum and majority. Four [THREE]
members of the board constitute a quorum for the
conduct of business, except that a majority of the
whole membership of the board must approve all
applications for new licenses, and all renewals,
transfers, suspensions, and revocations of existing
licenses. If a majority of the board is present and
voting, the director, with the consent of the members
present, may cast a tie-breaking vote.
Representative Stolze MOVED to AMEND the amendment to
include other designees for the two Commissioners.
Co-Chair Harris OBJECTED. Representative Croft OBJECTED.
Commissioner Tandeske explained the proposed changes of the
amendment. He noted that when the proposal was originally
made to move the ABC Board to the Department of Public
Safety, the Department took a closer look at Title 4
enforcement that specified procedures. He cited a finding
in the LB&A audit that recommended that the Board be
expanded from five to seven members. He referred to the
Administration's concern regarding alcohol related issues.
He maintained that the Department of Public Safety brought
to the Board resources and skills that address the
consequences involved in these issues. He acknowledged that
the Department of Revenue had contributed other skills to
the Board over the past ten years. He stated that the
Department viewed this change as an opportunity to readdress
language in statutes that were 25 years old.
Representative Croft referred to page 22 of the audit, and
its reference to the possibility of disproportionate
influence by alcohol members, but maintained that the
intent of the recommendation was to add two more public
members.
Commissioner Tandeske clarified that the suggestion was for
two other members, specifying that one might be from the
medical community and one from law enforcement.
Representative Croft asked why there was a change from an
audit recommendation of a public health/medical community
and law enforcement member to two commissioners.
Commissioner Tandeske reiterated that alcohol issues were
the focal point. He expressed his commitment to personally
participate on the Board if the bill was passed into law,
and suggested that he would fulfill the law enforcement
member recommendation. He noted that from an administrative
standpoint, it seemed unusual for a Commissioner not to be
part of a Board within their own Department.
Representative Stoltze referenced the language that stated,
"a member of the board may not hold any other state or
federal office" and asked if the Commissioner was exempt
from this requirement. Co-Chair Harris recommended that a
technical change be made.
Representative Stoltze MOVED to AMEND amendment #3 to
include "except appointed Commissioners or their designees"
after "a member of the board".
Representative Foster stressed that given the controversial
issues that typically come before the Alcoholic Beverage
Control Board, continuity of representation was necessary.
Commissioner Tandeske stated his support of the language
change, and expressed his commitment to maintaining
continuity on the board. In response to a question by Co-
Chair Harris, Commissioner Tandeske confirmed that he
thoroughly briefed any designees on board issues.
Representative Croft concurred with Representative Foster,
and highlighted the distinction between the Council on
Domestic Violence or other organizations, in that the
Alcoholic Beverage Control Board was a semi judicial body.
He questioned whether a commissioner ought to be included in
such a body. He asked why the Board was being moved out of
the Department of Revenue to the Department of Public Safety
and again referred to the audit recommendation to add public
members to the Board from health and law enforcement, rather
than the two commissioners. He suggested that the language
be re-drafted to take that recommendation into
consideration.
TAPE HFC 03 - 62, Side B
Representative Stoltze WITHDREW amendment #3.
In response to a question by Representative Foster,
Commissioner Tandeske responded that he also sat on the
Western States Information Network Policy Board, and the
Executive [Committee] of the Land Mobile Radio Project
[Board].
Representative Foster stressed that the Alcoholic Beverage
Control Board required extensive executive sessions that
could last for a period of days, and pointed out that this
would add another burden to the Commissioner's level of
commitment. He asked if the Commissioner would by necessity
send representatives to these important meetings.
Representative Stoltze MOVED amendment #4. Co-Chair Harris
OBJECTED.
*Sec. . AS 04.06.110 is amended to read:
Sec. 04.06.110. Peace officer powers. The director and
the persons employed for the administration and
enforcement of this title may, with the concurrence of
the commissioner of public safety, exercise the powers
of peace officers when those powers are specifically
granted by the board. Powers granted by the board under
this section may be exercised only when necessary for
the enforcement of the [CRIMINALLY PUNISHABLE
PROVISIONS OF THIS TITLE,] regulations of the board[,
AND OTHER CRIMINALLY PUNISHABLE LAWS AND REGULATIONS,
INCLUDING INVESTIGATION OF VIOLATIONS OF LAWS AGAINST
PROSTITUTION AND PROMOTING PROSTITUTION DESCRIBED IN AS
11.66.100 - 11.66.130 AND LAWS AGAINST GAMBLING,
PROMOTING GAMBLING, AND RELATED OFFENSES DESCRIBED IN
AS 11.66.200 - 11.66.280].
Commissioner Tandeske emphasized that the Alcoholic Beverage
Control Board officers were most properly equipped to handle
alcohol related issues, and not issues of prostitution and
gambling. He noted the limited personnel resources, and the
need to properly align personnel for tasks.
Representative Croft recalled initial discussions in 1999,
when it was reasoned that Alcoholic Beverage Control Board
officers often viewed these related issues, and could
expeditiously handle them in the line of their duties.
Commissioner Tandeske stated that he was not part of those
discussions. He referenced his experience in law
enforcement, and noted that employees' authority should
align with their responsibilities.
Representative Hawker referred to the LB&A audit and noted
the divergence of opinions on whether investigators ought to
function as peace officers or administrative investigators.
He asked if this was a move toward the duties of a peace
officer.
Commissioner Tandeske emphasized the value of the Alcoholic
Beverage Control Board officers to the State. He
emphasized, however, that they were not law enforcement
officers.
Representative Hawker asked if the Department of Public
Safety would show any preference for an ABC officer wished
to enter law enforcement.
Commissioner Tandeske noted that all applicants for law
enforcement were treated equitably.
Representative Stoltze expressed his hope that this
amendment might prevent ABC officers from "clamping down" on
cribbage players at recreational halls.
Co-Chair Harris REMOVED his OBJECTION. Amendment #4 was
ADOPTED.
Representative Stoltze renewed his motion to MOVED Amendment
#3.
DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, DEPARTMENT
OF LAW, testified regarding potential changes to the
amendment. He stated that the current statute (AS
04.06.020) would not prevent a commissioner from being a
member of the Board. He maintained that the language
restricted them from holding any "other" office, other than
that which they currently hold. He suggested that courts
would view the statute as a whole, and not consider
membership on the ABC Board a conflict. He did not believe
any other statutes existed that would prevent the
Commissioner from being on the board.
Representative Croft maintained that the language "other"
referred to the Board position, and restricted the members
from holding positions apart from the Board.
Mr. Guaneli reiterated his belief that the courts would take
into consideration the legislative intent that the
commissioners of Revenue and Public Safety hold Board
positions. He suggested that it would be simple to insert
more language, such as "other than the commissioners of
Public Safety and Revenue".
Co-Chair Harris asked if this type of language was common
and necessary, and whether it could simply be omitted. Mr.
Guaneli noted that he hesitated to suggest that change,
since it was part of the original intent of the statute.
Representative Foster stressed that he did not support the
amendment. He recalled the regulations that prevented the
sale of Class III licenses for fifteen years in the state of
Alaska. He observed that a commissioner sitting on the
Board would have a disproportionate amount of influence
compared to other members. He stated his uneasiness about
granting a regulatory agency undue power over a board and
then allowing the commissioner to sit on that board and
grant licenses.
Commissioner Tandeske responded that it had not occurred to
him that he would be more influential than any other party
on the Board. He acknowledged the concern over the issue
with Class III licenses.
Representative Foster gave examples of potential conflicts
of interest for board members. He maintained that in small
villages, many public officials might have an interest in a
bar or other business that presented a conflict of interest.
He observed that the commissioner of Public Safety might
have an inherent conflict of interest sitting on the
Alcoholic Beverage Control Board.
Representative Stoltze WITHDREW Amendment #3.
Mr. Coffee commented on the amendments. He questioned the
reason behind moving the Alcoholic Beverage Control Board to
the Department of Public Safety. He noted the
Administration's desire to address alcohol related issues,
but pointed out that the agency was currently functioning
well. He observed that the bill would effectively make this
quasi-judicial and regulatory agency a part of the
Department of Public Safety, which is in the criminal
enforcement business. He asked what was to be gained by
making employees a part of the Department, and pointed out
that board and commissions must remain independent. He
commended the withdrawal of the amendment that allowed the
Commissioner to be on the board, for purposes of continuity.
He acknowledged that enforcement officers did stumble upon
gambling and prostitution activities in the course of
duties. He observed that the Alcoholic Beverage Control
Board had four executive directors during his tenure, and
noted that each one had worked to ensure compliance with
liquor laws, and did not focus on criminal enforcement. He
again asked about the benefit of making such changes to an
agency that has existed since statehood.
Representative Foster MOVED to report HB 234 out of
Committee with the accompanying fiscal note. Representative
Stoltze OBJECTED.
Representative Stoltze suggested that a conforming title
change must be made to accommodate amendments.
Representative Foster WITHDREW his MOTION.
Representative Stoltze MOVED a conforming title amendment.
There being NO OBJECTION it was so ordered.
Representative Croft expressed the intent to follow the
recommendation of the auditors by adding board members from
health care and law enforcement.
Co-Chair Harris addressed the fiscal note. He suggested
that it should include the cost of operating the agency.
LANDA BAILY, SPECIAL ASSISTANT, DEPARTMENT OF REVENUE,
explained that the movement of the Alcoholic Beverage
Control Board from the Department of Revenue to the
Department of Public Safety resulted in a zero fiscal note
by the Department of Revenue.
Co-Chair Harris asked why there was no fiscal note from the
Department of Public Safety. Commissioner Tandeske noted
that the fiscal note was attached to the Executive Order
when it was submitted and added that operational funding was
reflected in the Department's FY 04 budget plan. Co-Chair
Harris requested that a fiscal note reflecting the cost of
operations from the Department of Public Safety accompany
the bill the floor.
Representative Croft asked how this differed from the zero
budget line item related to community schools. Co-Chair
Harris maintained that the cost of eliminating the Community
Schools program in statute was zero. He maintained that the
cost of having the Alcoholic Beverage Control Board operated
by Department of Public Safety should be reflected in a
fiscal note.
Commissioner Tandeske reiterated that the suggestion
[amendment] of adding Board members was withdrawn. Co-Chair
Harris maintained that he wished to see a fiscal note.
Representative Foster MOVED to report HB 234 out of
Committee with the accompanying fiscal note. There being NO
OBJECTION it was so ordered.
CSHB 234 (FIN) was REPORTED out of Committee with individual
recommendations, a previously published zero fiscal note
from the Department of Revenue (#1) and a new fiscal impact
note from the Department of Public Safety.
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