Legislature(1995 - 1996)
03/08/1995 01:55 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SCRA - 03/08/95 SB 87 ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC. SENATOR TORGERSON brought SB 87 , sponsored by Senator Robin Taylor, before the committee, and asked Joe Ambrose to present an overview on the legislation. JOE AMBROSE, staff to Senator Taylor, read the following sponsor's statement into the record: "Last year the Alcoholic Beverage Control Board, prompted by concerns over a lack of clarity in how local option elections are to be conducted, asked for legislation to simplify the process. The board also asked that the same vehicle be used to address long needed technical and common sense amendments to Title 4." "The result was SB 372, which passed the Senate last year and moved through the committee process in the House, only to die in the Rules Committee in the hectic final days of the 18th State Legislature. SB 87 is substantially the same as last year's legislation." "The bill addresses the shortcoming in the current statute dealing with local option elections, for which no provision is made for moving from one type of option to another. Under current law, a community must first vote to remove all restrictions on the sale and importation of alcoholic beverages and then conduct another election on a new option. This burdensome process can cause confusion for municipalities and unincorporated villages alike." "The complete intent of this lengthy bill is better explained by those who will be charged with its enforcement. However, it should be pointed out that it is mainly a housekeeping measure with little potential for controversy." Mr. Ambrose noted that the sponsor has recommended a committee substitute and that the witnesses testifying are prepared to address that document. Number 055 PAT SHARROCK, Director, Alcoholic Beverage Control Board, agreed that the bill is lengthy and more of a housekeeping measure. The reason it is lengthy is because the section references to the local option provisions were changed. The amendments and clarifications to the local option provisions do not change the actual options themselves, except for one. Mr. Sharrock said the necessity for some amendments to Title 4 came to light a year or ago with the City of St. Mary's and the confusion as to how they were to proceed. Currently, there is a great deal of confusion in the City of Barrow as to where they are and how frequently they can hold an election to overturn an election that they had. Mr. Sharrock then went through the technical amendments recommended by the board and contained in the proposed committee substitute: Section 1: It is a clarification to say that a package store may not solicit in or receive orders from an agent in a local option area. Section 4: The amendment proposes, without creating a new class of license, to allow a current restaurant or eating place licensee to convert his license to what would be referred to as an exempt license where the primary activity would not have to be dining. Number 150 SENATOR R. PHILLIPS moved that CSSB 87(CRA) be adopted for discussion purposes. Hearing no objection, it was so ordered. Mr. Sharrock then continued with outlining the technical amendments in the committee substitute: Section 5: It increases the gallonage that could be produced by a brew-pub licensee from 16,000 gallons to 75,000 gallons per year. The board has had complaints that 16,000 gallons isn't enough, because the popular area in terms of an annual production falls into the 70,000 to 75,000 gallon area. Section 7: Relates to package store licensees who sell in response to written orders and provides that the package store licensee can only ship to the purchaser. There has been some concern that licensees have been shipping in response to a written order to someone other than the purchaser, which doesn't provide any control or good record keeping in terms of who the alcohol is going to, particularly in those areas that have prohibited the sale. Number 180 SENATOR ZHAROFF referred back to Section 5 and asked what the effect was of going from 16,000 gallons to 75,000 gallons. PAT SHARROCK responded that it is more economic than anything else. It provides sufficient production so that the bar owner who has a brew-pub license can viably produce enough to make it reasonable. He also noted there are only two of those licenses out, one in Wasilla and one in Anchorage, but he wasn't sure if they are in production yet. Section 9: Is basically a wholesale licensee provision that more or less solidifies what has been referred to for many years as the three-tier system of the sale and distribution of alcohol by wholesalers. It provides registering with the board certain kinds of brands or product lines of alcohol that are sold by wholesalers and establishes a fee for that. Section 10: It specifies that club, package store, restaurant and beverage dispensary licensees must purchase their alcoholic beverage from a wholesale licensee. Section 11: It is new but technical at the same time. Under current law, all licensees whose biennial license must be renewed must file an application for renewal by December 31. Under the current law, if the application isn't filed, the premises must cease operation and there is a $200 penalty for late filing. Over the years it has been found that this law has been enforced very inequitably, because neither the board nor the State Troopers have adequate staff to enforce it on New Years Eve. The board felt that to make it a little bit more equitable to let everyone stay open, but increase the late penalty to $500. The renewal applications may be filed from January 1 until to February 28. If the application isn't filed by that time, then the license expires and the business must cease operation. Section 17: It is new but also technical. There are times when the board has applications before it where there may be questions about a licensee or the kind of operation that they intend to have. The board felt that it would be appropriate for the board to impose restrictions on the operation or on the person involved, and this impedes the ability to do so in statute. Number 250 SENATOR TORGERSON asked what kind of restrictions could be imposed on a license. PAT SHARROCK said some municipalities, such as the Municipality of Anchorage, will sometimes review an application for a transfer of a license or renewal of a license and will say they will approve the application if the licensee doesn't begin to sell alcohol until after 4:00 p.m., that they cease selling alcohol after a certain time, etc. If they come to the board with those conditions, the board isn't empowered to enforce the local conditions. He said it exemplifies the fact that there are those times that even the board itself would want to impose restrictions and those would be noted on the license. SENATOR TORGERSON asked who was responsible for the enforcement of this. PAT SHARROCK answered that those conditions that the board puts on would be his responsibility, but the board has no responsibility for those conditions put on by the municipalities. He said the law provides that municipalities can put conditions on the control and sale of alcoholic beverages within their boundaries by ordinance. Of late, though, some municipalities come back with resolutions to the board imposing conditions. He added that therein lies a problem that the board has in terms of that relationship between the state and the municipality. SENATOR TORGERSON asked if a second class borough could come forward with certain restrictions for a liquor license in their borough. PAT SHARROCK answered that he thought they could make a recommendation if those conditions weren't codified by ordinance. SENATOR TORGERSON said his understanding was that the only avenue a municipality has in appealing the renewal of a license was if the licensee wasn't current on taxes. PAT SHARROCK answered that the Kenai Borough does have an ordinance that specifically says that, and the board has protests from the Kenai Borough all the time. SENATOR TORGERSON pointed out he was a member of that organization for awhile, and his understanding was that, basically, most of their protests were ignored and the licenses were issued anyway. He added that these restrictions seem to be something that the system just talks about and the local government hasn't really had any control over them. SENATOR TORGERSON asked what happens if the municipality requests a restriction, the board puts it on the license, and then the licensee is in clear violation of that restriction. PAT SHARROCK answered that he thought the assembly would then have grounds to protest that application for renewal. He added that the Supreme Court has told the board that they cannot replace their judgment for that of the local governing body. Number 347 SENATOR ZHAROFF asked how much weight against the renewal of a license a municipality carries if a licensee is in violation of a local ordinance, but meets all of the state's requirements. PAT SHARROCK referred to a board regulation entitled "Local Governing Body Protests" which are the guidelines that the board has given to local governing bodies in terms of what the board would look to for reasons for a protest so that the board would not have to end up finding a local governing body arbitrary, capricious or unreasonable. He said if the ordinances are violated and the city council or the assembly protests an application based on the violations, the board would be hard pressed to find that those reasons weren't suitable, so the local government has a lot of say in the renewal of that license. SENATOR TORGERSON expressed his concern that protests made by the citizens are listened to and that they have some sort of avenue to transmit that on to the board when they make their decisions. He added that that section of the bill would be flagged and revisited. Number 400 PAT SHARROCK continued with his overview on the committee substitute: Section 19: The amendment is a carryover to correct a glitch that was neglected when the statute were changed to provide for biennial renewal. It allows a 30-day window for municipalities even in the off-year of renewal, to still protest an application under the same grounds as if they were looking at an application. Section 27: Relates to the local option election and clarifies that once a community has adopted a local option, they may not vote to remove a local option or to change to a less restrictive option during the first 12 months after the local option was adopted. It also provides that the notice of elections to package stores be sent by certified mail, which is cheaper, rather than registered mail. Section 30: It prohibits the sale of an alcoholic beverage that contains more than 76 percent alcohol by volume. Section 45: It provides that a municipality may limit importation amount by ordinance under certain options. It is giving the municipality, by ordinance, the ability to regulate the kind of alcohol that is coming in. Number 475 SENATOR HOFFMAN commented that the City of Bethel was considering such an option, but the problem is the record keeping on the amount because there are so many different suppliers. Number 532 After brief discussion on the percent of alcohol by volume that an alcoholic beverage may contain, JOE AMBROSE clarified that the intent of Section 45 is to give the local municipality, after they have adopted an option, some flexibility in enforcing the option that the community has adopted. In other words, what the state law would be saying is that the local ordinance would not be inconsistent with state law if there was a restriction on the amount of alcohol a person could import in a month, if there was a restriction on the percentage of alcohol to be imported within certain limits. Number 572 PAT SHARROCK continued his overview on the committee substitute: Section 50: The server education training requirement became law last year and it was felt the criteria was somewhat overburdensome for common carriers. This simplifies the criteria for the training of their employees by common carriers. Section 52: Expands the definition of alcohol to include anything containing alcohol intended for human consumption. TAPE 95-6, SIDE B Number 010 Section 53: Clarifies the definition of "established village." Under current law there is no provision to determine what the perimeter or boundary of an established village is, and the intent of this section is to provide some means of structuring a boundary in which the law would be upheld. It is not intended to determine or give another definition of the boundary of an established village. Section 33: Repeals the requirement for the beverage dispensary bond that is required upon renewal of those kinds of licenses. It has been in the law for years and has required a lot of paper work for staff. Under current law, it provides the bond shall be $2,500 and surrendered to the state upon the third conviction in a five- year period of a licensee, which has never happened. Sections 65-71: These are transition provisions on sections implementing local option provisions, etc. Number 040 SENATOR TORGERSON referred to page 30, Section 51, and asked why "community liquor license" was being deleted. PAT SHARROCK explained that under current law "community liquor license" allows a community to opt to have certain kinds of licenses. He referred back to line 13 of page 15, which is a provision for municipalities to obtain a liquor license, so the "community liquor license" was an unnecessary classification. SENATOR HOFFMAN raised a concern about the ability of VFW members being able to bring their own alcohol into their club, and he said he thinks that's where many of the damp communities have had run- ins with the law. After brief discussion, SENATOR TORGERSON said that section of the bill would be flagged and revisited. Number 125 SENATOR TORGERSON announced the committee would take testimony over the teleconference network. MAYOR DON LONG, City of Barrow, read the following statement into the record: "I would like to direct my comments to those sections of SB 87 which affect local option elections and the importation of alcoholic beverages into communities such as Barrow, and I will not mention specific language changes." "First, I would like to thank Pat Sharrock from the ABC Board and Teresa Williams from the Attorney General's office for all the work they have done on this bill and for their recent comments." "I understand that much of this bill was before the Legislature during the last session and, unfortunately, it failed to pass. I say unfortunately, because all of the problems that the community of Barrow has encountered with the local option process in the last six months were all addressed and would have cleared up by the predecessor to SB 87." "For example, before the October 4, 1994 municipal election, petition sponsors wanted to place before the voters the question of prohibiting the importation and possession of alcoholic beverages. Instead of one question, the petitioners had to circulate two petitions and voters had to vote on two questions because that is how the options are presently set up." "Immediately after a majority of voters approved banning the importation and possession of alcoholic beverages, opponents to the ban began the process to hold an election to repeal the alcohol ban. Myself and the City Clerk are named as defendants in a lawsuit that is in Superior Court right now over when the City of Barrow had to hold an election on a vote to repeal the bank which was just approved on October 4, 1994." "SB 87 makes it clear that no election to repeal an option may be held within 12 months of the option's adoption." "Additionally, in order to go back to the damp status that existed in Barrow prior to October 4, 1994, under the present statutes, voters must first vote to go completely wet and then a new petition must be circulated and another election held on prohibiting the sale of alcoholic beverages in Barrow. SB 87 would make this option a one step, one election process instead of requiring two separate petitions and elections." "SB 87 also clarifies what the intent of the petition is. I heard from numerous people in Barrow who signed the most recent petitions which seek to repeal the alcohol ban. They told me that while they wouldn't mind having a new election on going back to being damp they did not want to have Barrow go wet. They were very upset whe they learned that the petitions they had signed would make Barrow go wet. They told me that they signed the petitions because they were told by the sponsor that it was for having Barrow go "damp" and that no one had mentioned "wet." The language in SB 87 will clear up the confusion that now exists." "I have two questions that do not seem to be addressed in the present SB 87:" "First: What happens when competing petitions are submitted, one to impose a restriction and one to repeal a restriction. My understanding is that the first petition submitted is voted on first. If the vote is in favor of imposing a restriction, what happens to the petition to repeal a restriction that was submitted before the election? Does this petition become void since no election to repeal may be held for 12 months, or is it simply deferred for twelve months?" "Second: What happens to petitions that are out there right now with the questions under the present statutes? My hope is that this committee will add a transition section that clearly states that a new petition with the new language must be submitted for any election that will be conducted after the effective date of this statute. I also hope that the effective date will be set as soon as possible to avoid confusion during the October municipal elections." "Finally, I would like to ask this committee to extend the waiting period before an election to repeal a prohibition may be held. I would like to see a two-year waiting period instead of a twelve- month wait - at least when it comes to the possession of alcoholic beverages. AS 29.26.190(a) prohibits the repeal of an ordinance created through the initiative process. Since the prohibition on possession of alcoholic beverages creates an ordinance of the municipality it should be clear that AS 29.26.190(a) applies to the ordinance prohibiting the possession of alcoholic beverages." "Again, thanks to Pat Sharrock and Teresa Williams for all their work and to this committee and the Legislature for their continued recognition of the harmful effects alcohol can have on a community and their support of local communities having the power to deal with their problems in their own way." SENATOR TORGERSON thanked Mayor Long for his testimony and asked him to forward a copy of it to the committee. Number 205 DAVID KOIVUNIEMI, Acting Director, Division of Elections, directed attention to material showing what the ballots would look like under the provisions of Section 20 of the bill. He pointed out that on the ballot question relating to the package store license, most of the authority will appear on the front ballot card; another portion of the authority will be on the back; and the question itself will appear on the back. On the other ballot questions, the question and the authority were fitted on the front of the ballot. Number 240 There was discussion on the situation of two opposing petitions for elections. SENATOR HOFFMAN said he thought the "in favor of" petition would take precedence, because if that is defeated, then it is the status quo and you wouldn't need the second question of whether or not you wanted to keep the status quo. He suggested that perhaps a preference could be put in statute saying that if there is a ballot for "in favor of" or in a change, that the one for change will take precedence. SENATOR TORGERSON asked if the 12-month period starts at the time the election is certified or at the time a local ordinance is adopted certifying the election. He also asked if it takes a local option after the election to adopt the provision of the petition that was passed. PAT SHARROCK answered that the adoption of the option is the final result. Number 350 KAREN HEGYI, representing the City of Barrow and testifying from Barrow, said if they got a petition to go dry and another petition to have a liquor store in town, they've got two petitions with very different results, and the question is what is the priority on holding the election. She said SB 87 makes it clear that there can't be an election to go to a lesser status in 12 months, and she asked if that completely voids the second petition, or does that mean that they must wait for 12 months. PAT SHARROCK said if they held an election to adopt a prohibition against importation that's very restrictive, he thinks the statute would prohibit them holding another election the next week. Concerning Mayor Long's question on the status of a petition that is existing when the legislation passes, Mr. Sharrock thought there would have to be some transitional provision in the bill. Number 450 There was extensive discussion on Section 53 and the definition of "established village" and the determination of the perimeters of an established village. JOE AMBROSE related that the definition was added in last year's legislation at the instigation of some of the villages in order to define an enforcement area. Because of a gray area, there was concern about their ability to enforce their local option in that gray area. Number 570 SENATOR TORGERSON stated CSSB 87(CRA) would be held over until the committee's next meeting for additional work.