Legislature(1995 - 1996)

04/07/1995 09:35 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 87                                                           
       An Act relating to community  local options for control                 
       of  alcoholic beverages;  relating  to the  control  of                 
       alcoholic  beverages;  relating  to the  definition  of                 
       'alcoholic beverage';  relating to purchase and sale of                 
       alcoholic   beverages;   relating  to   alcohol  server                 
       education courses; and providing for an effective date.                 
  Co-chairman Halford referenced  related correspondence  from                 
  Tom Nicolos of  Barrow and from  the McLaren River Lodge  on                 
  the Denali Highway and directed that the sectional review of                 
  SB 87 continue.                                                              
  PATRICK  SHARROCK,  Director,  Alcoholic   Beverage  Control                 
  Board, Dept. of Revenue, came before committee and commenced                 
  continued review:                                                            
  Sec. 20 contains the  menu of local  options.  There are  no                 
  changes from current statutes with  the exception of a minor                 
  addition, subsection (A)(2)(d).   That option would  allow a                 
  community  under  no  existing  option  to adopt  an  option                 
  permitting a beverage  dispensary licensee  or bar owner  to                 
  cater events at a  facility within the community.   The city                 
  of Saxman was cited as an example.                                           
  A further addition provides that if a municipality dissolves                 
  and is under a local option at the time of dissolution, that                 
  option continues and is determined by the same boundaries as                 
  when the municipality existed.                                               
  Mr.  Sharrock noted  that  a key  provision within  the bill                 
  relieves  communities  from need  to  hold two  local option                 
  elections to "get where a community  might want to go."  The                 
  community can hold  one election to adopt  a prohibition, or                 
  change the prohibition to another, or remove  the option the                 
  community is presently under.                                                
  At page 21, commencing with  line 11, language provides that                 
  a  local  option election  may not  be conducted  during the                 
  first 12 months after  the local option was adopted  or more                 
  than once in an 18-month period.                                             
  Discussion followed regarding the  local option situation at                 
  Barrow and litigation  relating thereto.  Mr.  Sharrock said                 
  that while  it was  generally understood  that local  option                 
  elections could only be  had once within a 12-month  period,                 
  there was contention  over whether Barrow which  had held an                 
  election to adopt a local option could, three or four months                 
  later, hold an  election to  remove the option.   The  judge                 
  ruled that it was reasonable for the 12-month prohibition to                 
  Secs.  21   through  27   contain   procedural  aspects   of                 
  implementing a local option election and the effect of  each                 
  local  option.   Provisions are  similar to current  law but                 
  refined to implement  the current rewrite of  local options.                 
  TERESA WILLIAMS,  Assistant Attorney General, Dept.  of Law,                 
  spoke  via  teleconference from  Anchorage.   She  said that                 
  language   within  the   sections  contains   a  significant                 
  improvement in  terms of  increased flexibility in  language                 
  that can be placed on a local option ballot.  It requires an                 
  explanation that a  package store is  a liquor store, and  a                 
  beverage dispensary license  represents a  bar.  Voters  are                 
  often  not  familiar  with  the  technical terms  for  those                 
  facilities.    Where communities  are  having problems  with                 
  existing  law,  the  proposed  bill   attempts  to  be  more                 
  responsive and provide a much easier process to follow.                      
  Mr. Sharrock  added  that  language at  page  21,  line  16,                 
  clearly indicates that only one question may be presented at                 
  an election.    And after  a  petition has  been  certified,                 
  another petition  may not be filed or  certified until after                 
  the question  presented in the first petition has been voted                 
  upon.  That is a significant clarification.                                  
  Mr.  Sharrock  referenced   a  list  of  115   local  option                 
  communities that implemented options between 1980 and  1984.                 
  These  communities  are  now   attempting  to  change  those                 
  determinations.  That is what  prompted the current rewrite.                 
  Under present law, two elections would have to be held:  one                 
  to do away with the existing option and another to implement                 
  the new option.   Sec. 21 allows  for repeal of an  existing                 
  option and implementation of a new one at a single election.                 
  In  response  to a  question  from Co-chairman  Halford, Mr.                 
  Sharrock  advised  of  authorization  for  a beer  and  wine                 
  restaurant  license.   There  is no  beer  and wine  package                 
  Responding to a  question from  Senator Sharp, Mr.  Sharrock                 
  said  that municipalities  pay  for  local elections  within                 
  their boundaries.   The division  of elections  pays if  the                 
  election is within  an established  borough.  Senator  Sharp                 
  voiced his understanding  that if there is  no municipality,                 
  the state pays the cost.                                                     
  Co-chairman  Halford  asked  that  a  list of  local  option                 
  communities be provided for members' files.                                  
  Discussion of the five-mile radius  (Sec. 22) around a local                 
  option community  followed between  Co-chairman Halford  and                 
  Mr. Sharrock.  Mr.  Sharrock advised that there had  been no                 
  challenge to the provision.                                                  
  Sec. 23 explains  what the  impact would be  if a  community                 
  were to adopt an option prohibiting importation.                             
  Senator Rieger raised a  question concerning the  definition                 
  of "possession" contained within subsection  (d) of Sec. 24.                 
  He noted that it refers to  physical possession but does not                 
  include having  an alcoholic beverage  within the  digestive                 
  system.    Teresa  Williams   advised  that  the  definition                 
  reflects current law.   She  said it  is not  clear why  the                 
  definition was originally included.                                          
  End:      SFC-95, #23, Side 1                                                
  Begin:    SFC-95, #23, Side 2                                                
  Sec.  25  contains an  explanation  of the  impact  should a                 
  municipality  adopt   an   option   relating   to   licenses                 
  municipalities would operate within communities.                             
  Sec. 26 sets  forth an explanation of what would  occur if a                 
  license within a  community is  operated by a  municipality.                 
  Co-chairman Halford asked  if a community  could vote in  an                 
  option for  a community  liquor store  and  thus cancel  the                 
  license of an existing  establishment outside the  five-mile                 
  radius  of  the  community.    Teresa  Williams  voiced  her                 
  understanding that the situation  has never arisen, although                 
  it could  possibly  occur.    The  intent  of  the  original                 
  legislation  is  to  prevent   someone  from  commencing  an                 
  operation three miles outside the boundary and thwarting the                 
  purpose of the local option.  Co-chairman Halford voiced his                 
  understanding of the  purpose on the  defensive side of  the                 
  issue.  He  then noted that he was seeking to ensure that it                 
  was  not  offensively  used against  an  establishment  that                 
  predates  the   option.    He   expressed  discomfort   with                 
  extraterritorial jurisdiction.                                               
  Sec. 27 describes the procedure  for local options--the same                 
  as  current law.    It merely  contains  a citation  change.                 
  Notice requirements at  Page 21,  Line 20, are  the same  as                 
  current law regarding results of local option elections.                     
  Secs. 28 and  29 relate to biennial licensing.   When it was                 
  implemented  last  year, half-year  licenses  were excluded.                 
  Provisions here allow  for half-year  licenses that  operate                 
  for  a  twelve-month  period  within  the  two-year  period.                 
  Alaska has approximately  200 half-year licenses.   Many are                 
  held by cruise ships and remote facilities that only operate                 
  six months a year.                                                           
  Sec. 30 reflects an  amendment by Senator Hoffman while  the                 
  bill was in Senate Judiciary.  In communities which prohibit                 
  sale, this section  provides that a club  incorporated under                 
  non-profit provisions of statute may  allow members to bring                 
  alcoholic beverages to  the premises,  if authorized by  the                 
  local governing body.   When queried by  Co-chairman Halford                 
  regarding the ABC Board position on the foregoing amendment,                 
  Mr. Sharrock said he  had not yet discussed the  change with                 
  the board.   He acknowledged that the  amendment was unusual                 
  in that it  provides an exemption  in an area where  alcohol                 
  has  been prohibited.   When  asked if  the provision  would                 
  apply in Barrow, Mr. Sharrock answered negatively, saying it                 
  would  apply  to  damp  rather  than  dry  communities.   In                 
  response  to  a  further question  from  Senator  Sharp, Mr.                 
  Sharrock  said  that  the  burden  would  be  on  the  local                 
  governing body.   The ABC Board  would have no control  over                 
  the establishment since it would not be a licensed premises.                 
   Teresa Williams added that the  language relates to "bottle                 
  clubs."  She explained that Dept.  of Law concerns stem from                 
  the   fact   that  "These   are   not  licensed   premises."                 
  Enforcement sections of Title 4 speak to conduct on licensed                 
  premises.  There are thus no prohibitions against  minors on                 
  the  premises, drunken individuals,  etc.  That  will be the                 
  case  unless  section (d)  is  altered to  require  that the                 
  facility  be  treated  as  a  licensed  premises  under  the                 
  appropriate title.                                                           
  Referencing cited but  unchanged statutory  law at Page  22,                 
  line  27  and  28,  Senator  Rieger  asked  if  there  is  a                 
  difference  between  "alcohol   beverages"  and   "alcoholic                 
  beverages."  Mr. Sharrock advised that the former reflects a                 
  typographic error.                                                           
  Sec. 31 contains language similar to 28 states that prohibit                 
  sale  of  an  alcoholic beverage  containing  more  than 76%                 
  alcohol by volume or alcohol in powdered form.                               
  Sec.  32  requires that  the  invoice  on the  outside  of a                 
  shipping container indicate the quantity and purchase  value                 
  of  distilled  spirits,   wine,  or  malt  shipped   into  a                 
  restricted community.                                                        
  Sec. 33 clarifies  that transportation may occur  for use on                 
  premises allowed  under  certain option  provisions where  a                 
  licensed  premises   may  reside   within  a   local  option                 
  community.  The amendment is technical in nature.                            
  Discussion  followed  among  Senator   Randy  Phillips,  Mr.                 
  Sharrock, and Ms. Williams regarding  definition of the word                 
  Secs. 34 and 35 contain clarification language.                              
  Sec. 36 relates to clarification of disposition of alcoholic                 
  beverages seized  by a  police officer.   In  response to  a                 
  question concerning disposal,  Mr. Sharrock advised that  it                 
  is forfeited and  destroyed.  He further  directed attention                 
  to Sec. 46, Page 28, and noted addition of the following:                    
       and  shall  order  any  property  forfeited  under this                 
       section  that  was  seized  in  a  municipality  to  be                 
       transferred to the  municipality in which  the property                 
       was seized.                                                             
  to  existing  language stating  that  the court  shall order                 
  destroyed  any  forfeited property  that  is harmful  to the                 
  public.   The foregoing new  language was offered  in Senate                 
  Judiciary by Senator  Adams.   Co-chairman Halford asked  if                 
  language  relates   to  the  alcohol  itself  or  incidental                 
  property.   Mr. Sharrock  voiced his  understanding that  it                 
  includes all property.   Teresa Williams noted  the existing                 
  requirement that  the alcohol  be destroyed.   New  language                 
  does  not  weaken  that requirement.    Co-chairman  Halford                 
  voiced his  understanding  that  the  amendment  deals  with                 
  "other property going  to the  municipality."  Ms.  Williams                 
  responded affirmatively.                                                     
  Sec. 38 contains a citation change.                                          
  Sec. 39  responds  to Dept.  of Law  concerns regarding  the                 
  original  bill  which  did not  define  who  would establish                 
  community  work  service.   Discussion followed  between Ms.                 
  Williams  and  Co-chairman  Halford regarding  the  types of                 
  entities that would qualify.  Ms.  Williams advised that the                 
  department  would  consult  with the  Dept.  of  Community &                 
  Regional Affairs  to determine qualification  in areas where                 
  there is no local governing body.                                            
  Secs. 40, 41, 42, 43, 44, and 45 contain citation changes.                   
  (See above (Sec.  36) discussion  of forfeiture of  property                 
  for information on Sec. 46.)                                                 
  Sec. 47  enhances municipal  ability, under  a local  option                 
  provision, to provide,  by ordinance, the monthly  amount of                 
  alcohol an individual  may import, the percent of alcohol by                 
  volume the beverage  may contain, and the  type of alcoholic                 
  beverage  container  that  may  be  possessed.   Co-chairman                 
  Halford inquired concerning need for a floor of 40%.  Teresa                 
  Williams advised that  it reflects  the number suggested  by                 
  the board.                                                                   
  Senator Rieger asked how control over the type  of alcoholic                 
  beverage  container would  be  interpreted.    Ms.  Williams                 
  explained  that the provision relates  to a problem cited by                 
  the Mayor of Nome.  She noted covers for beer cans that make                 
  the cans appear as though they  contain soda pop.  The Mayor                 
  further  sought  to   prohibit  individuals  from   carrying                 
  "certain  kinds  of flasks."   It  is  ultimately up  to the                 
  municipality to determine how provisions will be enforced.                   
  Sec.  48 provides that possession of  alcohol in addition to                 
  importation  and sale  could be  deemed  a misdemeanor  in a                 
  local  option community.    Senator Rieger  referenced  file                 
  correspondence indicating that the provision would allow for                 
  greater search warrant  activity.  Teresa  Williams attested                 
  to  legal  problems  associated  with "making  possession  a                 
  misdemeanor."  Right-to-  privacy issues are raised.   There                 
  will also be fiscal impact  if those charged with possession                 
  have a right  to a public  defender.  Ms. Williams  stressed                 
  that sale should  be treated differently than  possession in                 
  terms of the  severity with  it is viewed  in criminal  law.                 
  Because of  these problems,  the Dept.  of Law  felt it  was                 
  appropriate to  make possession  a violation  rather than  a                 
  JOE AMBROSE, aide to Senator Taylor, suggested that language                 
  within Sec. 48 was part of the original draft rather than an                 
  amendment.  Ms. Williams advised that  she did not recognize                 
  it as department  language.  Co-chairman Halford  noted that                 
  language "allows"  rather  than requires  a municipality  to                 
  adopt an ordinance.  Mr. Ambrose remarked that problems that                 
  might arise  under a municipal  ordinance would not  incur a                 
  fiscal impact on the state.   Discussion of right-to-privacy                 
  issues followed.                                                             
  Secs. 49 and 50 contain citation changes.                                    
  Sec. 51 requires  that those checking the  identification of                 
  patrons  entering  licensed  premises must  receive  alcohol                 
  server education  training.   References to  "common carrier                 
  dispensary"  and "community"   are deleted  because training                 
  for common carrier dispensary personnel is clarified in Sec.                 
  52,  and  the  community  liquor   license,  by  title,  was                 
  eliminated through rewrite of local option provisions.                       
  Sec. 52 speaks to  subjects that must be covered  in alcohol                 
  server education and clarifies that all subjects do not have                 
  to  be  covered for  training  of common  carrier personnel.                 
  Alaska Airlines supported the proposal in last year's bill.                  
  Sec. 53 deletes the designation "community liquor license."                  
  Sec. 54 clarifies and improves  the definition of "alcoholic                 
  beverage"  to  include  alcohol possessed  by  a  person who                 
  attempts to consume or possess it.  Mr. Sharrock cited items                 
  listed in correspondence to Longs Drug Store regarding items                 
  a  community did  not want  shipped  in because  alcohol was                 
  extracted from the products and consumed.   The focus is not                 
  intended to regulate  the products but to  allow prosecution                 
  in  instances where  alcohol  is extracted  and  individuals                 
  attempt to possess or  consume it.  Ms. Williams  noted that                 
  the department has  had problems  in instances where  judges                 
  have refused  to find  that possession  of products  such as                 
  hair spray converted  to alcohol is  in violation of  liquor                 
  laws  because  the  product  was   not  intended  for  human                 
  Sec. 55 contains a technical clarification of the definition                 
  of "established village."                                                    
  Sec.  56 implants  in another  title the same  definition of                 
  "established village" as set forth in Title 4.                               
  Co-chairman  Halford  asked if  there  was a  means, through                 
  definition,  to  deal with  situations  such as  the McLaren                 
  River Lodge.  Mr. Sharrock advised that legislation (HB 180)                 
  to address the issue was introduced by Representative James.                 
  It passed the  House and was  referred to two committees  in                 
  the Senate.                                                                  
  Secs. 57, 58, 59, 60, and 61 contain citation changes.                       
  NOTE  -  The  following  portion  of  the  minutes  is  from                 
  shorthand notes.]                                                            
  Sec. 62.  Mr.  Sharrock questioned the reference to  480 and                 
  asked  that Teresa Williams  comment.  She  advised that the                 
  reference is okay.                                                           
  Sec. 63 and 64 contain citation changes.                                     
  Sec. 65 contains a repealer of the existing  requirement for                 
  a $2,500 beverage dispensary bond.   This has been a problem                 
  for  both board  staff and  insurance companies.    The only                 
  instance in which  the bond would be  forfeited would result                 
  from three convictions within a five-year period.   That has                 
  never happened.  Co-chairman Halford commented that the bond                 
  appears to be ineffective and a waste of time.                               
  Sec. 66 contains transitional provisions regarding statutory                 
  citations that no longer apply.                                              
  Sec. 67 is a  new section relating to conditions  at Barrow.                 
  There is also talk of a petition at Tanana.                                  
  Senator Rieger referenced April 6, 1995, correspondence from                 
  Mr. Nicolos  in Barrow and  noted Mr. Nicolos'  objection to                 
  provisions of Sec. 67.                                                       
  TOM D. NICOLOS  next spoke  via teleconference from  Barrow.                 
  He voiced objection to language in  Sec. 67 which would void                 
  a petition  to adopt or remove  a local option  that has not                 
  been voted on  by the effective date  of Sec. 67.   He cited                 
  the  substantial  amount  of  work  involved  in   gathering                 
  necessary  signatures  for  a   petition  and  advised  that                 
  language  in  the proposed  bill  appears to  circumvent the                 
  right of people to petition government  to bring an issue to                 
  the polls.                                                                   
  In  response  to a  question  from Co-chairman  Halford, Mr.                 
  Nicolos advised that he is a resident of Barrow  and part of                 
  the local group  that sued  the city over  the local  option                 
  KAREN HEGYI  next spoke via teleconference from Barrow.  She                 
  explained that the  city of  Barrow requested that  existing                 
  petitions be voided  because the proposed bill  would change                 
  both options and  procedures.  It  would be difficult to  be                 
  tied into an old process when a better one is in place.  The                 
  petition in question was  sold to those who signed  with the                 
  understanding that Barrow would go back to being damp rather                 
  than wet.   At the present time the  city would have to hold                 
  an election to  completely repeal the current  local option,                 
  and then hold another election "going to damp."  The easiest                 
  way to solve this  problem is to void the  existing petition                 
  and hold only one election "going to damp."                                  
  JOHN FARLEIGH, owner of Luigis' Pizza Parlor, next spoke via                 
  teleconference  from Anchorage.    Referencing  Sec. 10,  he                 
  advised that it would restrict  his ability to purchase beer                 
  and wine  from a  package store.   Mr.  Farleigh voiced  his                 
  belief  that the  change is supported  by distributors.   He                 
  explained that his pizza parlor  specializes in micro brews.                 
  In many instances, distributors are  out of these beers, but                 
  they can still be  purchased from a liquor  store.  Sec.  10                 
  language would prohibit those purchases.                                     
  Mr.  Farleigh next directed attention  to Sec. 4 and advised                 
  that it poses  a more  immediate concern.   He advised  that                 
  while he was  generally in support  of the language, he  did                 
  not need  provisions (b)  and (e).   He  explained that  the                 
  problem  is  that he  cannot have  live  music in  his pizza                 
  parlor after 10:00 p.m.                                                      
  Mr.  Farleigh   further  objected  to   prohibitions  within                 
  subsection (3) of  Sec. 4, which would disallow  transfer of                 
  an exempt license  to another person.   He asked what  would                 
  happen  in  the event  of  the  death or  retirement  of the                 
  license holder.  Noting  that it is difficult to  sell pizza                 
  without beer, Mr.  Farleigh stressed his desire  to maintain                 
  the value of his business and pass it along to his heirs.                    
  Mr.  Farleigh reiterated  his wish to  provide entertainment                 
  beyond the 9:00  p.m. deadline and  asked if there could  be                 
  another way to achieve that goal.                                            
  In the  course of further  discussion of Sec.  10 provisions                 
  with  Senator   Donley  and  Mr.   Sharrock,  Mr.   Farleigh                 
  reiterated problems  resulting from lack of  adequate supply                 
  furnished by distributors.  He further advised that he could                 
  go to  Costco and  buy beer  and  wine cheaper  than from  a                 
  distributor.   He acknowledged  that Costco  often does  not                 
  carry the  beers he  needs, but  he advised  that he  saw no                 
  problem with a  free market.   Mr. Sharrock  noted that  Mr.                 
  Farleigh's point was well taken.                                             
  In  further  discussion  of  the   9:00  p.m.  deadline  for                 
  entertainment  in  restaurants,  Mr.   Sharrock  pointed  to                 
  existing regulations.  He  advised that the majority of  the                 
  revenue earned by  such establishments  is from dining,  and                 
  traditional dining hours  are 6:00  p.m. to 9:00  p.m.   Mr.                 
  Farleigh advised that he had just appeared before  the board                 
  on this issue  and was  turned down.   He acknowledged  that                 
  while  6:00  p.m. to  9:00 p.m.  is  the most  common dining                 
  period, a number of people stop by later after a hockey game                 
  or other evening events.  Mr.  Farleigh stressed that he was                 
  attempting  to increase  the  economically viable  period in                 
  which  a  restaurant  exists.   He  suggested  that existing                 
  regulations force people  to move  their activities to  bars                 
  after 9:00 p.m.   He noted that he had had  a number of such                 
  comments from customers.                                                     
  Co-chairman  Halford  advised  that  he  continued  to  have                 
  problems with sections of the  bill relating to bottle clubs                 
  and advised that  the bill  would be held  in committee  for                 
  further review.                                                              
  The meeting was adjourned at approximately 11:05 a.m.                        

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