Legislature(2005 - 2006)SENATE FINANCE 532

02/15/2006 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 209(JUD) Out of Committee
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
     SENATE BILL NO. 210                                                                                                        
     "An Act relating to the manufacture and transportation of                                                                  
     alcoholic beverages; relating to forfeitures of property for                                                               
     violations   of  alcoholic  beverage  laws;   and  relating  to                                                            
     violations of alcoholic beverage laws."                                                                                    
This was the first hearing for this bill in the Senate Finance                                                                  
HEATHER BRAKES, Staff to Senator Gene Therriault, the bill's                                                                    
sponsor, read the history and intent of the bill as specified in                                                                
the Sponsor Statement.                                                                                                          
     In  2004, Congress  passed  legislation recognizing  that  many                                                            
     rural  communities  and  their  residents  "…face  the  highest                                                            
     alcohol  abuse and family violence  rates in the country."  and                                                            
     establishing  the  Alaska  Rural Justice  and  Law Enforcement                                                             
     Commission.  The Commission released a Draft  Interim Report in                                                            
     late 2005 that contained  recommendations, including amendments                                                            
     to several provisions in Alaska Statutes.                                                                                  
     Senate  Bill 210 changes  current law  to help law enforcement                                                             
     better protect  communities that have chosen  to limit the sale                                                            
     or  possession  of  alcohol under  local  option  laws.  First,                                                            
     Senate  Bill 210 strengthens  current forfeiture provisions  in                                                            
     statute  by allowing seizure  of alcohol transported  by common                                                            
     carrier in violation  of current law. Second, it authorizes the                                                            
     seizure  of  property  determined  to have  been  purchased  or                                                            
     obtained  through the proceeds  of illegal importation  or sale                                                            
     of alcohol  and outlines  procedures for  a person claiming  an                                                            
     interest in property that has been seized.                                                                                 
     SB  210 also  defines  "manufacture"  of alcohol  and  provides                                                            
     consistency   between  statutes   by  amending  the   allowable                                                            
     quantities. While  current statute prohibits the manufacture of                                                            
     alcohol  in a community  that  has adopted  a local option,  it                                                            
     does not  include a definition. The legislation  also clarifies                                                            
     statutes  relating to the presumption  of possession  for sale.                                                            
     These  provisions provide  clarity and  assist law enforcement                                                             
     and  communities  in their  continued interdiction  efforts  in                                                            
     damp or dry areas of the state.                                                                                            
     More than 100 communities  in Alaska have chosen a local option                                                            
     to  combat  the problems  associated  with  alcohol  abuse  and                                                            
     violence. SB 210 clarifies,  strengthens, and brings uniformity                                                            
     to the state's alcohol  and beverage control statutes to assist                                                            
     law   enforcement  and   communities   to  fight  the   illegal                                                            
     importation of alcohol.                                                                                                    
Ms. Brakes noted that the bill would address inconsistencies in                                                                 
State Statutes  retaining to the presumption of guilt,  specifically                                                            
that  were a  person to  have  in their  possession  more than  10.5                                                            
liters of alcohol, an intent to sell could be presumed.                                                                         
Ms. Brakes  noted that,  as specified  on page  eight of the  Alaska                                                            
State Troopers  Alaska Bureau of Alcohol  and Drug Enforcement  2004                                                            
Annual Drug Report [copy  on file], "bootlegging is a very lucrative                                                            
business in Rural  Alaska." Page seven of the report  specifies that                                                            
681 gallons  of alcohol were  seized in 2004.  A graph on that  page                                                            
also depicts the number  of alcohol related arrests conducted during                                                            
the years 2002, 2003, and 2004.                                                                                                 
10:25:54 AM                                                                                                                   
Co-Chair  Green understood  that  the  provisions included  in  this                                                            
legislation  were  based   on the  Alaska   Rural  Justice  and  Law                                                            
Enforcement Commission's report.                                                                                                
Ms. Brakes affirmed  that the bill was based on determinations  made                                                            
in the Commission's Draft Report.                                                                                               
10:26:02 AM                                                                                                                   
Senator  Olson asked  regarding the  decision to  lower the  alcohol                                                            
possession limit from the current 12 liter limit to 10.5 liters.                                                                
10:26:24 AM                                                                                                                   
Ms. Brakes  responded that  the decision to  specify 10.5 liters  as                                                            
the  possession  limit was  made in  order  to have  consistency  in                                                            
regulations.   An  existing  separate   section  of  State   Statute                                                            
specifies  that  the transportation  of  more  than 10.5  liters  of                                                            
distilled spirits  into a local option community would  be a felony.                                                            
Co-Chair  Green understood  therefore that  lowering the  possession                                                            
limit would  align that regulation  with amounts specified  in other                                                            
State law.                                                                                                                      
In response to  a question from Senator Olson, Ms.  Brakes confirmed                                                            
that the 10.5  liter specification  is included in other  State law.                                                            
10:27:12 AM                                                                                                                   
Senator Bunde  asked for  an example of what  would constitute  10.5                                                            
liters, as alcohol is available in a variety of container sizes.                                                                
DOUG GRIFFIN,  Director, Alcohol Beverage Control  Board, Department                                                            
of Public Safety,  testified via teleconference from  an offnet site                                                            
and stated that 10.5 liters  of distilled spirits is the amount that                                                            
a package  store could  legally ship  to a person  each month.  This                                                            
limit has been  specified in State  Statute for several years.  10.5                                                            
liters would equate to a case of six 1.75 liter bottles.                                                                        
Mr. Griffin  continued  that a case  of twelve  750 milliliter  (ML)                                                            
bottles, or "fifths", would total nine liters.                                                                                  
10:28:48 AM                                                                                                                   
Senator  Bunde  appreciated  the information.   It would  assist  in                                                            
physically understanding the amounts being discussed.                                                                           
ED HARRINGTON, Captain,  Alaska State Troopers, Department of Public                                                            
Safety, testified  via teleconference from an offnet  site and noted                                                            
that  he  was  a  member  of  the  Alaska  Rural   Justice  and  Law                                                            
Enforcement  Commission and had participated  in the development  of                                                            
the recommendations to change State Statutes.                                                                                   
Captain  Harrington informed  the Committee  that the Troopers  Drug                                                            
Unit had seized  approximately 994 gallons of alcohol  in 2005. That                                                            
was a significant  increase over 2004. The changes  proposed in this                                                            
bill would  further assist  law enforcement  efforts to enforce  the                                                            
local  option  laws  of "those  communities  that  have  elected  to                                                            
restrict the flow of alcohol to their communities".                                                                             
Senator  Olson asked whether  the proposed  provisions would  affect                                                            
air taxi services that serve the communities.                                                                                   
10:30:21 AM                                                                                                                   
Captain  Harrington understood  that  the changes  proposed in  this                                                            
bill would  not affect  air carriers.  The effort  would enable  law                                                            
enforcement  officers  to seize  alcohol  illegally  transported  on                                                            
common carriers.  That option has  not always been available  in the                                                            
past. Subsequent  court proceedings  would  transpire in regards  to                                                            
the forfeiture of the alcohol.                                                                                                  
Senator  Olson stated  that  more "concrete"  information  would  be                                                            
desired in  regards to whether  air taxi  service aircraft  could be                                                            
confiscated as a result of these provisions.                                                                                    
Co-Chair Green asked whether  this legislation would change existing                                                            
regulations pertaining to "the transporter of the product".                                                                     
Captain Harrington  understood that nothing in that  regard would be                                                            
altered.  Any language  in  the bill  pertaining  to transportation                                                             
would  relate  specifically  to  the  transportation   of  alcoholic                                                            
beverages transported  by a common  carrier. There was no  intent to                                                            
affect air taxi services  that transport the alcohol to communities.                                                            
While  privately  owned  aircraft  involved in  the  importation  of                                                            
alcoholic beverages have  been seized, no common aircraft have been.                                                            
10:32:48 AM                                                                                                                   
ANNE CARPENETI, Assistant  Attorney General, Legal Services Section-                                                            
Juneau,  Criminal  Division,  Department  of Law,  affirmed  Captain                                                            
Harrington's remarks.  "This bill does not change  the definition of                                                            
common carrier for our bootlegging statutes."                                                                                   
10:33:11 AM                                                                                                                   
Senator Olson  understood therefore that "a common  carrier aircraft                                                            
would not be confiscated  even if they knowingly carry  alcohol into                                                            
the villages."                                                                                                                  
Ms. Carpeneti  stated that this bill  would specifically  allow "the                                                            
alcohol  on common  carriers sent  in violation  of the bootlegging                                                             
laws to be  seized and forfeited."  The bill would not "address  the                                                            
seizure of the aircraft itself".                                                                                                
10:33:46 AM                                                                                                                   
Senator Olson acknowledged.                                                                                                     
Senator  Olson asked  for further  explanation of  language in  Sec.                                                            
2(a)(6) page 3, line 3  that reads "or items of value purchased from                                                            
the proceeds".                                                                                                                  
     (6) money, securities,  negotiable instruments, or other things                                                            
     of  value used  in financial  transactions  or  items of  value                                                          
     purchased  from the proceeds  derived from actively  prohibited                                                          
     under  AS 04.11.010 or in violation  of a local option  adopted                                                            
     under AS 04.11.491.                                                                                                        
     New Text Underlined                                                                                                      
10:33:56 AM                                                                                                                   
Ms. Carpeneti  understood  that the language  would pertain  to such                                                            
things  as  snowmachines  and other  items  that  bootleggers  might                                                            
purchase with the proceeds of their operation.                                                                                  
Senator Bunde asked what proof would be required in those cases.                                                                
Ms. Carpeneti  responded that like other situations,  evidence would                                                            
be required to  support the claim that the item "was  purchased with                                                            
funds" generated  from bootlegging  operations. The burden  of proof                                                            
must  be supported  by  a  "preponderance  of  evidence in  a  civil                                                            
In response  to a  comment from  Senator Bunde,  Captain  Harrington                                                            
affirmed  that 994 gallons  of alcohol from  bootleg operations  had                                                            
been seized in 2005.                                                                                                            
Senator  Bunde calculated  that the  bootleg  profit generated  from                                                            
that amount of alcohol could amount to $300,000.                                                                                
Captain Harrington thought that would be correct.                                                                               
In order  to  better understand  the  profits made  by bootleggers,                                                             
Senator Bunde  asked for  examples of items  that bootleggers  might                                                            
have purchased.                                                                                                                 
10:36:05 AM                                                                                                                   
Captain  Harrington  communicated  that  in  his  experience,  "it's                                                            
fairly common  for people  that are involved  in bootlegging  in the                                                            
Rural  communities to  be fairly  wealthy by  community standards."                                                             
Active  bootleggers  typically  spend  "a  lot  of  their  money  on                                                            
conveyances" such as boats,  snowmachines, jet skis, "and other more                                                            
expensive toys".  In a case in Kotzebue, an investigator  followed a                                                            
bootlegger from the airport  where he loaded alcohol into a vehicle,                                                            
then drove  to a beach and loaded  it into a boat to transport  to a                                                            
local option village.  In that case, both the vehicle  and boat were                                                            
seized. When a  search warrant was obtained, brand  new snowmachines                                                            
and other boats  were found. Generally, the interview  process would                                                            
provide  evidence that  the person  had used the  proceeds from  the                                                            
bootlegging  effort  to purchase  that  equipment.  Law enforcement                                                             
officers could  then seize those items  for forfeiture in  the court                                                            
10:37:44 AM                                                                                                                   
Senator Bunde  asked for  an estimate of the  money that might  have                                                            
been generated by bootleg operations in the past year.                                                                          
10:37:55 AM                                                                                                                   
Mr.   Harrington  responded   that   drugs  and   alcohol   totaling                                                            
approximately  one million dollars  had been seized in 2004.  He had                                                            
no individual data specific to alcohol.                                                                                         
10:38:45 AM                                                                                                                   
Senator Olson  continued to  question the  language in Sec.  2(a)(6)                                                            
pertaining  to  the process  of  seizing  items purchased  with  the                                                            
proceeds  generated   from  bootlegging   operations,  specifically                                                             
whether a person's house could be confiscated.                                                                                  
Ms. Carpeneti  regarded  the  seizing of  a house  as being  "highly                                                            
unlikely" unless  it was "an extreme case where a  bootlegger bought                                                            
a  house solely  from  money  obtained  from  bootlegging  profits."                                                            
Evidence  must be presented  to prove that.  No house has ever  been                                                            
Senator Olson  stated that the law  in this regard, rather  than the                                                            
practicality  of  such  a  thing  to occur,  was  the  gist  of  his                                                            
question. Continuing, he  asked whether this legislation would allow                                                            
for the confiscation of  a $100,000 home that a person had purchased                                                            
with  the  help of  $10,000  generated  from  the  person's  bootleg                                                            
Ms. Carpeneti  responded that  she did not  believe that that  house                                                            
could be confiscated.                                                                                                           
Senator Olson asked whether that opinion could be confirmed.                                                                    
Ms. Carpeneti  expressed  that the  house would  not be confiscated                                                             
since bootlegging  operations did  not generate the majority  of the                                                            
funding used in the purchase.                                                                                                   
Senator Olson surmised  however that the bill's language would allow                                                            
for someone's house to be confiscated.                                                                                          
Ms.  Carpeneti  opined  that,   rather  than  it  allowing  for  the                                                            
confiscation  of the house, "it might  allow for confiscation  of an                                                            
interest in the house".                                                                                                         
10:40:28 AM                                                                                                                   
Senator Bunde concluded  that were a bootlegger with no other source                                                            
of income to purchase a  home, it might "be possible" that that home                                                            
could be forfeited.                                                                                                             
Ms.  Carpeneti  expressed  that  evidence  presented  in  the  court                                                            
proceedings would  have to prove that "all that money  that was used                                                            
to purchase  that house was derived  from illegal transportation  of                                                            
alcohol". She could not recall this ever having happened.                                                                       
Senator Bunde  remarked that were  a person with no other  source to                                                            
purchase  a   snowmachine,  that   machine  could  be  confiscated.                                                             
Therefore, were a person  with no other source of income to purchase                                                            
a house, the house should be treated in the same manner.                                                                        
Co-Chair  Green  understood  that  the bill  included  new  language                                                            
through   which  a  person   whose  possessions   were  subject   to                                                            
confiscation could respond and "lay out their case".                                                                            
Ms. Carpeneti affirmed.  A civil lawsuit would be conducted in which                                                            
the State  must present  burden of  proof and  the accused would  be                                                            
provided  "the opportunity  to make  a defense".  The case would  be                                                            
decided based  on those facts. In other words, forfeiture  would not                                                            
be automatic.                                                                                                                   
10:42:25 AM                                                                                                                   
Senator  Olson voiced  being  uncomfortable  with the  broad  powers                                                            
presented in this legislation.                                                                                                  
10:42:35 AM                                                                                                                   
Senator  Hoffman   asked  regarding  the  anticipated   increase  in                                                            
convictions that might  transpire as the result of this legislation.                                                            
10:42:57 AM                                                                                                                   
Captain Harrington  was hesitant to  respond as that is an  unknown.                                                            
However, he  allowed that the reduction  of the possession  limit to                                                            
10.5 liters might result  in a few additional cases during the year.                                                            
Overall, he thought  that the increases would not  be "substantial".                                                            
Senator  Hoffman stated  that  the purpose  of his  question was  to                                                            
determine  whether this legislation  would  assist "in stemming  the                                                            
flow of alcohol to dry communities".                                                                                            
Captain  Harrington stated  that lowering  the  possession limit  to                                                            
10.5  liters is  a benefit,  as  it "would  clear  up the  confusion                                                            
between law enforcement  and the Department of Law  and the citizens                                                            
in  general"  because  of the  differences  that  exist  in  current                                                            
Captain Harrington  informed the Committee  that 750 ML bottles  are                                                            
the most commonly  shipped size of  distilled spirits. Reducing  the                                                            
allowable transportation  limit from 12 liters to  10.5 liters would                                                            
result  in  "essentially"   a two  bottle   reduction.  He  did  not                                                            
anticipate this  change to increase law enforcement  arrest numbers.                                                            
Therefore,  the benefit of the legislation  would be the  removal of                                                            
the confusion with the conflicting statutes.                                                                                    
Senator  Hoffman   understood,  therefore,  while   the  bill  would                                                            
streamline  statutes, it  might only  result in  three or four  more                                                            
prosecutable  cases. "The vast majority  of the problem would  still                                                            
Captain  Harrington affirmed  that while the  bill would  streamline                                                            
statutes,  it  would  result  in fewer  than  "50  additional  cases                                                            
through the course of a year".                                                                                                  
Co-Chair  Green pointed  out that  the language  in Sec. 2(a)(6)  is                                                            
identical  to  language in  AS  17.30.116,  which pertains  to  drug                                                            
10:45:55 AM                                                                                                                   
Senator Hoffman  stated that he has been working on  efforts to stem                                                            
the flow of  alcohol into communities  since the 1980s, and  that he                                                            
would be supporting  this legislation. Continuing,  he stressed that                                                            
there is "no silver bullet"  through which to address the situation.                                                            
The  abuse  of alcohol  "is  a  major  cause of  problems  in  Rural                                                            
Co-Chair Green remarked  "as with many substances that people abuse,                                                            
all the efforts in the  world don't necessarily address the heart of                                                            
the problem  which is the hearts of  people and the minds  of people                                                            
to make better choices."                                                                                                        
Co-Chair Green  asked Senator Olson whether he would  desire to hold                                                            
the bill in Committee in order to further address his concerns.                                                                 
10:47:04 AM                                                                                                                   
Senator Olson  suggested that  a conceptual  amendment to exclude  a                                                            
person's primary residence  from forfeiture be considered in regards                                                            
to Sec. 2(a)(6).                                                                                                                
Ms. Carpeneti amended her  earlier remarks to clarify that a process                                                            
does  currently  exist  in regards  to  the seizure  of  a  person's                                                            
residence  due to a situation  associated  with a marijuana  growing                                                            
operation. As  she was unaware of the outcome of that  case, further                                                            
information on that issue could be provided.                                                                                    
Co-Chair  Green  ordered the  bill  HELD  in Committee  for  further                                                            
10:49:16 AM                                                                                                                   

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