Legislature(2005 - 2006)CAPITOL 120
04/07/2006 01:00 PM JUDICIARY
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HB 276 - BUSINESS LICENSE TOBACCO ENDORSEMENT 2:54:33 PM CHAIR McGUIRE announced that the final order of business would be HOUSE BILL NO. 276, "An Act relating to business license endorsements for tobacco products, to holders of business license endorsements for tobacco products, and to the employees and agents of holders of business license endorsements for tobacco products." [Left pending from 3/24/06 was a motion to adopt the proposed committee substitute (CS) for HB 276, Version 24-LS0855\L, Bannister, 3/23/06, as the work draft; in members' packets was another proposed committee substitute (CS) for HB 276, Version 24-LS0855\S, Bannister, 3/31/06.] REPRESENTATIVE KOTT, speaking as the sponsor, relayed that in the proposed CS, Version S, Section 1 still increases the penalty to $750 for a first offense but now allows an endorsement holder to come before a hearing officer, and Section 3 now contains the language pertaining to that hearing. 2:56:11 PM REPRESENTATIVE ANDERSON moved to adopt the proposed committee substitute (CS) for HB 276, Version 24-LS0855\S, Bannister, 3/31/06, as the work draft. There being no objection, Version S was before the committee. 2:57:20 PM ROGER HAMES, President, Hames Corporation, said simply that he supports Version S as being something he can live with though doing so will be difficult. 2:57:59 PM MICHAEL ELERDING, President, Northern Sales Company of Alaska, Inc., simply urged passage of HB 276. 2:58:26 PM CYNTHIA DRINKWATER, Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Anchorage), Department of Law (DOL), relayed that she represents the Department of Commerce, Community, & Economic Development (DCCED) in administrative hearings held under AS 43.70.075, and that she would be speaking to three issues. First, the language in Version S is potentially confusing. For example, proposed AS 43.70.075(d)(1) says in part, "after a hearing under (t) of this section", and the following paragraphs (2) through (4) don't contain similar language, but proposed AS 43.70.075(t) says in part, "this subsection governs the imposition ... of the business license endorsement suspension and civil penalty under (d) of this section". Thus there is some confusion regarding when subsection (t) will apply because it appears to pertain to all of proposed AS 43.70.075(d). REPRESENTATIVE KOTT, in response to questions, clarified that the hearing referred to in AS 43.70.075(d)(1) should only apply for a first offense. REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1, to change "(d)" on page 2, line 27, to "(d)(1)". There being no objection, Amendment 1 was adopted. MS. DRINKWATER then referred to the language in Section 3 that says the notice must inform the person of, among other things, the date and time of the hearing. She said this requirement will prove difficult because the initial notice goes out from the DCCED, but the hearing information falls under the purview of the Office of Administrative Hearings. 3:05:08 PM REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 2, to delete from page 3, line 1, the words ", and the date and time of the hearing", and place a period after the word "imposed". There being no objection, Amendment 2 was adopted. REPRESENTATIVE WILSON suggested adding language specifying that the hearing office shall set the date and time of the hearing. CHAIR McGUIRE characterized that as a conforming amendment. REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 3, to add to page 3, line 2, after the word "determine", the words "the date and time of the hearing,". CHAIR McGUIRE pointed out, however, that notice must still be given with regard to the date and time of the hearing. REPRESENTATIVE GRUENBERG restated Amendment 3 and called it conceptual: "that the [Office of Administrative Hearings] ... would set the date and time of the hearing and notify the parties". There being no objection, Conceptual Amendment 3 was adopted. MS. DRINKWATER then remarked that it appears that the proposed change in the statutory framework will mean that there will be an increase in the number of hearings, because retailers will have every incentive to request a hearing since there is discretion regarding the amount of the civil penalty and whether a suspension shall be imposed. This will result in an increase in attorney and hearing officer time; furthermore, with the lengthier hearing process and greater number of items that must be considered by the hearing officer, proceedings will become more like they were prior to 2002. Such hearings were lengthy, multi-day hearings with numerous witnesses and documentary evidence. She surmised, therefore, that costs will increase because of these proposed changes. 3:08:55 PM MICHAEL FORD, Alaska Native Health Board (ANHB), relayed that in the ANHB's view, the current law is effective and does what it is intended to do. The ANHB recommends that instead of allowing for an optional suspension, have a mandatory suspension but reduce the number of days for a first offense - for example, provide for a mandatory 3-day suspension. In this way, the law would still have teeth, it would still act as a deterrent, and yet retailers would be given some relief. In conclusion, he said he did share some of the concerns regarding Section 3, but hopes that those have now been addressed via the aforementioned amendments. 3:11:03 PM MICHELLE TOOHEY, Director, Public Relations & Advocacy, American Lung Association of Alaska, referring to Version S, said that although education efforts do play a constructive role, their value must not be overestimated. She elaborated: We know that businesses with education programs have been cited for making illegal sales. These illegal sales are plain evidence that an education program is not enough. The critical factor is active and diligent management, and that means there needs to be meaningful consequences in the case of a violation, including the first violation. The compliance data shows that once predictable, readily enforceable and meaningful penalties were put in place under current law, illegal sales dropped dramatically. The various proposals that have been advanced [thus] far - as HB 276 and subsequent drafts - would eliminate the certainty of a meaningful penalty for illegal sales in the case of a first violation. Under the most current CS, Version S, it would be possible for a violation to occur and there be no penalty whatsoever. In conclusion, in order to preserve the effectiveness of the enforcement program, we feel strongly that some meaningful level of suspension is essential to maintain in the case of a first violation. Businesses that elect to engage in the sale of tobacco products [have a very] serious responsibility to ensure that they do not make illegal sales to children. Therefore, the American Lung Association of Alaska does not support ... Version S as written because it does not include a guarantee of at least a minimum suspension on first offense. Thank you. 3:13:23 PM PATRICK LUBY, Advocacy Director, AARP Alaska, said that AARP members come from a generation that smoked freely, and they know the terrible health and financial consequences of all those cigarettes, adding, "We don't want to see anyone's grandchildren start to smoke." The AARP feels the State is doing a good job in its enforcement efforts, he relayed, noting that the State is using 15- and 16-year-olds in its compliance checks; therefore, if a retailer is selling cigarettes to 15- and 16-year-olds, then he/she should face the consequences. The AARP recommends that the current system be left as is in order to help Alaska continue to reduce youth smoking. 3:14:09 PM RICHARD MANDSAGER, M.D., Director, Central Office, Division of Public Health, Department of Health and Social Services (DHSS), relayed that David Kessler, former commissioner of the Food and Drug Administration (FDA), has said, "Nicotine addiction begins when most tobacco users are teenagers, so let's call this what it really is - a pediatric disease." Dr. Mandsager said that from the DHSS's point of view, he would echo comments made by Ms. Toohey and Mr. Luby: current law is working and there needs to be some minimum mandatory suspension for a first offense. Enforcement actions only visit a small percentage of retailers in any given year, and so chances are small that there will be a second visit within 24 months; therefore, if there isn't a mandatory suspension of some length for a first offense, it is unlikely that a license holder will ever get a suspension. In conclusion, he urged the committee to maintain some suspension [period] for a first offense. DR. MANDSAGER, in response to a question, said that a mandatory suspension period should be at least three days. CHAIR McGUIRE, after ascertaining that no one else wished to testify, closed public testimony on HB 276. 3:16:19 PM REPRESENTATIVE ANDERSON made a motion to adopt Conceptual Amendment 4, to have the 20-day suspension apply on a second offense. The committee took an at-ease from 3:17 p.m. to 3:18 p.m. REPRESENTATIVE ANDERSON, in response to questions, clarified that Conceptual Amendment 4 would result in deleting the language pertaining to a suspension for a first offense but would keep the language pertaining to the hearing in order to address the question of whether to impose a civil penalty for a first offense. He also indicated that Conceptual Amendment 4 would have the 45-day suspension period apply on a third offense, the 90-day suspension period apply on a fourth offense. He said he doesn't believe that there should be any restriction of sales on a first violation, and that he doesn't believe that removing the mandatory suspension for a first offense will have any impact on compliance statistics. CHAIR McGUIRE objected to Conceptual Amendment 4. REPRESENTATIVE GARA mentioned that the House Finance Committee might do more work on the bill, and that members could still attempt to change the bill on the House floor. REPRESENTATIVE ANDERSON withdrew Conceptual Amendment 4. 3:20:37 PM REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 5, which read [original punctuation provided]: page 2 line 27 after "shall" insert ", upon request of either party," REPRESENTATIVE GRUENBERG noted that to save costs and time, it may be that neither party would request a hearing, and Amendment 5 would provide for this. In other words, if neither party requests a hearing, then a hearing need not be held. REPRESENTATIVE KOTT agreed that there might be a situation in which the owner of the business decides he/she doesn't want to go through the hearing process. REPRESENTATIVE GRUENBERG remarked, "They could submit it on documentation and pleadings." CHAIR McGUIRE asked whether there were any objections to Amendment 5. There being none, Amendment 5 was adopted. 3:22:07 PM REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual Amendment 6, to alter Section 1 such that there would be a mandatory minimum 3-day suspension period [for a first offense]. REPRESENTATIVE ANDERSON objected. REPRESENTATIVE GRUENBERG in response to a question, clarified that Conceptual Amendment 6 would alter the language on page 1, lines 10-12 so that it read in part, "may, after a hearing under (t) of this section, suspend the endorsement for a period of 3 to 20 days". The committee took an at-ease from 3:23 p.m. to 3:24 p.m. REPRESENTATIVE ANDERSON maintained his objection to Conceptual Amendment 6. REPRESENTATIVE GRUENBERG remarked that a CS incorporating the adopted amendments will be forthcoming. REPRESENTATIVE KOTT objected to Conceptual Amendment 6. He posited that by stating a minimum suspension period of 3 days, a hearing officer will be inclined to always impose at least a 3- day suspension period unless there are also aggravating factors in a give case. REPRESENTATIVE GARA expressed a preference for dealing with this issue on the House floor, after the bill has been heard and perhaps changed in the House Finance Committee. REPRESENTATIVE GRUENBERG withdrew Amendment 6. 3:27:44 PM REPRESENTATIVE GRUENBERG moved to report the proposed committee substitute (CS) for HB 276, Version 24-LS0855\S, Bannister, 3/31/06, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 276(JUD) was reported from the House Judiciary Standing Committee. CHAIR McGUIRE concluded by saying, "I cannot stress enough that the movement of this bill today in no way endorses anybody's personal opinion on the bill."