Legislature(2007 - 2008)HOUSE FINANCE 519
04/28/2007 12:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB187 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 187 | TELECONFERENCED | |
| += | HB 177 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 28, 2007
April 29, 2007
11:07 A.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 11:07:03 AM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Richard Foster
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas Jr.
MEMBERS ABSENT
None
ALSO PRESENT
Representative Kyle Johansen; David Scott, Staff,
Representative Kyle Johansen; Diane Casto, Section Manager,
Prevention and Early Intervention Section, Division of
Behavior Health, Department of Health and Social Services;
Richard Godfre, Mendenhall Valley Tesoro, LLC., Juneau; Joan
Cahill, Juneau
PRESENT VIA TELECONFERENCE
Cindy Drinkwater, Assistant Attorney General,
Commercial/Fair Business Section, Civil Division
(Anchorage), Department of Law, Anchorage; Steve Rush,
Holiday Stationstores, Inc., Anchorage; John Trebow,
Attorney, Holiday Stationstores, Inc., Anchorage; Kip
Knudson, External Affairs Manager, Tesoro Alaska Company,
Anchorage; Jason Moulton, Safeway Carrs, Anchorage; Michelle
Toohey, Director, Public Relations & Advocacy, American Lung
Association of Alaska, Anchorage; Suzanne Meunier, American
Heart Association-Alaska, Anchorage; Stephen Warren, Youth
Tobacco Prevention Manager, Sitka Community Hospital, Sitka;
Roger Hames, President, Sea-Market Grocery Association,
Sitka
SUMMARY
HB 187 An Act relating to holders of business license
endorsements for sales of tobacco products.
HB 187 was HEARD & HELD in Committee for further
consideration.
11:07:41 AM
HOUSE BILL NO. 187
An Act relating to holders of business license
endorsements for sales of tobacco products.
DAVID SCOTT, STAFF, REPRESENTATIVE KYLE JOHANSEN, noted that
th
HB 187 addresses the lack of Due Process under the 5
Amendment of the Alaska and U.S. Constitutions that
retailers face during business license enforcement
proceedings under AS 43.70.075. He pointed out the handout
from the State of Alaska Superior Court decision in the case
of Holiday Alaska Inc. versus the State of Alaska, decided
on October 26, 2006. The Court held that AS 43.70.075(d)
was unconstitutional because it violated Holiday's due
process rights.
Mr. Scott advised that a facet of AS 74.70,075 was broken &
that HB 187 provides a fix for it. The bill recommended
that business license holders with a tobacco endorsement be
afforded a "meaningful hearing" where mitigating and
aggravating facts are considered by an Administrative Law
Judge (ALJ). In current license enforcement proceedings,
the State is not obligated to prove negligence by a
retailer, as the conviction of the employee who made the
sale is the only admissible evidence. A retailer is
prohibited from introducing the evidence of its policies
prohibiting illegal sales, its good faith efforts at
education and training of its employees, as well as the
sanction imposed on employees who do not abide by the
retailer's requirements.
· Section 1 would establish that a hearing must be
held before a business license endorsement can be
suspended.
· Section 2 makes the hearing meaningful by expanding
the evidence that the ALJ should consider.
· Section 3 consists of two parts. The first part,
Subsection (T) creates policy for license holders to
comply with, if they want an ALJ to consider a
reduction of sentence. The second part allows the
license holder and the Department to agree to an
informal disposition of suspension & allows the
Department to reduce the suspension. The Department
may reduce the period of suspension only if the
license holder has previously never received a
suspension. In essence, the reduction is a one-time
deal.
Mr. Scott continued, it is not the intent of HB 187 to allow
businesses that routinely and knowingly sell tobacco to
minors, a decrease in fines and penalties. The legislation
does allow for an ALJ to reduce the suspension if at a
hearing, the license holder can prove they had fulfilled the
requirements of Section 3, Subsection (T). He added that
the ALJ is not required to reduce the suspension but would
have the discretion to impose full civil penalties
delineated in Section 1.
11:12:27 AM
Vice Chair Stoltze asked when the license could be suspended
under the proposed bill. Mr. Scott replied, not until there
had been a hearing, requesting that the Department of Law
address the penalty issues.
11:13:57 AM
Representative Gara indicated concern with the Due Process
portion of the bill as it makes it more difficult to
penalize tobacco companies who sell to minors. He advised
it be addressed through regulation, noting the court opinion
and not changing the penalties. Mr. Scott explained that
the ALJ does not have to reduce penalties; the bill allows
discretion in that decision.
11:15:53 AM
CINDY DRINKWATER, (TESTIFIED VIA TELECONFERENCE), ASSISTANT
ATTORNEY GENERAL, COMMERCIAL/FAIR BUSINESS SECTION, CIVIL
DIVISION (ANCHORAGE), DEPARTMENT OF LAW, ANCHORAGE,
testified on behalf of the Department of Commerce, Community
& Economic Development in administrative proceedings
involving tobacco endorsements & the Department of Health &
Social Services investigators, who conduct the Tobacco
Compliance Program.
Ms. Drinkwater addressed the penalties. She referenced
Subparagraph (M-4), Page 3, Line 13, language which
establishes procedures for the hearing process. As
currently drafted, there are three narrow issues that could
be considered. In the Superior Court's decision in the
Holiday case, there was no option for the party accused to
confront the issues of the case. That language does not get
to the "heart" of the Due Process question & is problematic
in a number of ways. The language runs contrary to the
purpose of the statute, requiring an abiding or a
possibility of employers for the unlawful acts of their
employees. Ms. Drinkwater encouraged the Committee to amend
that provision, eliminating the requirement. The initial
language of that section makes the rest of the paragraph
ineffective. The purpose of the language was intended to
give incentive to endorsement holders to determine a
training and compliance program for their employees. It is
important for the ALJ to consider the training program
offered by the employer, but it does not address that
concern.
11:20:08 AM
Ms. Drinkwater referenced Subparagraph (T), where the
compliance program is established. She thought that as
currently drafter, it would be easy for any employer to come
up with a paper trail of compliance with requirements
without going the extra step of being pro active in terms of
how they address issues with their employees. She urged the
Committee to add additional requirements that required the
employer to have a training program in place relating to how
to implement and check identifications (ID).
Ms. Drinkwater recommended requirements that employers
monitor their employees. Also, the employer should make
sure that there has been a determination made that the
employee has the ability to perform the job they are given.
Ms. Drinkwater continued, Subparagraph 5, Page 3, Line 18,
allows the ALJ to consider other evidence that would reduce
and increase the suspension period or the civil penalty.
The ALJ can reduce the suspension time, there is no
provision that increases time. She urged the Committee to
adopt language that allows the State the ability to add
evidence and that the penalty might not be sufficient in any
given case.
11:22:40 AM
Ms. Drinkwater referenced Subparagraph (W), Page 4, Line 15,
the ALJ could reduce the suspension period to a floor of 10-
days. The Department suggests that a reduction would be
appropriate in certain first-time circumstances and that a
reduction of 10-days would be acceptable but clarified that
for subsequent offenses, there should be no reduction
warranted.
Ms. Drinkwater recommended amending language on Page 1, Line
9, "after the opportunity for a hearing" for those
situations in which retailers do not request a hearing, then
the Department could implement a suspension period.
Additionally, there is an allowance for disposition short of
a hearing & recommends correcting that language before a
suspension or penalty is imposed.
Page 4, Line 7, Paragraph (V), referenced an "informal
disposition", & that the Department recommends the language
be changed to a Memorandum of Agreement. Also, the
Administration requests that a reduction in the suspension
periods lapse or reflect the limitation reductions through
the settlement process. Paragraph (X), Page 4, Line 17,
addresses an important concept relating to Due Process in
contesting the central issues of the case. Through (X),
there is a mechanism by which an employer could raise issues
related to the sale, conducted by the employee.
11:27:44 AM
Representative Gara inquired which points of the opinion the
legislation addresses. Ms. Drinkwater explained that the
decision discussed what the Department could have done as an
alternative; the Department made the decision to say only
the employee, however, they could have sighted the employer,
which is an option available through AS 11.15.130, a
criminal provision providing for the legal accountability of
organizations. There was nothing in that opinion that would
requires a direct citation of the employer. In terms of Due
Process, under HB 187, the employer would have the
opportunity to introduce evidence that there was not
negligence of a sale by the employee.
Representative Gara asked if there was anything else in the
opinion indicating a short coming in the law in terms of Due
Process, needing to be fixed. Ms. Drinkwater responded on
reducing the suspension period, clarifying it does not make
sense to have a fuller hearing process. The Department does
not oppose the opportunity for the employer to see a
reduction in the suspension period under certain
circumstances. She added, a mandatory suspension period
should be mandatory and is justified.
Representative Gara asked if there was anything in the
opinion requiring that law be changed. Ms. Drinkwater
responded, it is an option to not change the law, however,
there are reasons to address Due Process through the
administrative process.
11:32:04 AM
MICHELLE TOOHEY, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
PUBLIC RELATIONS AND ADVOCACY, AMERICAN LUNG ASSOCIATION
(ALA) OF ALASKA, ANCHORAGE, acknowledged the need to make
statutory changes to provide Due Process. The American Lung
Association has been working with the Administration to that
end. However, it is important that the changes do not
compromise the enforcement of law prohibiting tobacco sales
to kids. The main concern with the current draft goes
beyond the Due Process and significantly undermines the
effective enforcement of State law regarding illegal selling
of tobacco to children.
Ms. Toohey highlighted specific areas of concern in the
House Judiciary Committee version of the bill. She
highlighted the requirement for the State to prove
negligence on the part of the employer to receive a
reduction in suspension & the ability of repeat offenders to
receive reduced suspension.
Ms. Toohey stressed that HB 187 goes far beyond addressing
Due Process, while weakening the enforcement program &
reduces a retailer's incentive to prevent sales to minor
tobacco consumers. She encouraged that the Committee accept
the changes recommended by the Department of Health & Social
Services.
11:37:16 AM
Co-Chair Meyer understood that American Lung Association
does not support the language of CS HB 187 (JUD). Ms.
Toohey reiterated that ALA prefers the recommendations made
by the Department of Health & Social Services and as
currently written, they oppose the House Judiciary version.
11:38:24 AM
Representative Gara pointed out statistics indicating that
previously, 30% of sales go to minors; however, with the
mandatory suspension laws, that number has decreased to
around 13%. Ms. Toohey explained that the statistics were
based on a compliance check, a federal law requiring the
State to offer the check. The statistics are based on the
compliance rates of kids that attempted to buy and 36% of
them had a successful purchase.
11:39:31 AM
STEVE RUSH, (TESTIFIED VIA TELECONFERENCE), HOLIDAY
STATIONSTORES, INC., ANCHORAGE, voiced support from the
Anchorage business community for hearing and passage of the
proposed bill. The bill addresses issues of business
license enforcement proceedings that the retailer faces for
the sale of tobacco products to underage buyers. The
statute as currently drafted is unconstitutional as it
deprives the fundamental right to Due Process. He
referenced comments made by Ms. Drinkwater. At this time,
the State is not obligated to show negligence by the
retailer as the conviction of the sales associate that made
the sale. The statute specifically prohibits consideration
of evidence of the retailer concerning policy prohibiting
illegal sales and good faith efforts of the employers.
Mr. Rush mentioned the sanctions imposed on employees not
abiding by the requirements. The consequences facing the
retailer are onerous. The retailer will automatically loose
their business license for 20-days. The loss is severe and
will affect sales in other categories including gasoline.
He urged passage of HB 187.
11:43:18 AM
Representative Hawker noted that the bill had moved through
the House Judiciary Committee and asked if these arguments
had been significantly addressed. Mr. Rush requested that
his attorney expound on those questions.
Representative Gara worried that the bill had not been
introduced until testimony had been taken in the last
committee of referral. He noted that if cigarettes are sold
to a minor, the operation does not loose their ability to
sell other products. Mr. Rush acknowledged that they would
not be prohibited from selling other items; however, being a
convenience store operation, people want one stop shopping.
Representative Gara advised that the legislation attempts to
change State policy; he asked why. Mr. Rush stated current
law will not be changed; the sanctions are too severe. He
pointed out many states have better compliance than Alaska
without mandatory periods of suspension.
Representative Crawford noted that the Department of Law
recommended that the licensee must be directly responsible;
if that language is left in, the other penalties in the bill
would be virtually mute. The licensee could use it as a
defense. He did not think that language should be
negotiable and that the business should be responsible for
their employees. Mr. Rush countered that business is not
attempting to avoid responsibility for their employees;
however, the results can impact each business greatly. It
is inconsistent with the notion of Due Process for a
business to suffer an automatic penalty with no ability to
offer evidence of good faith efforts. He worried about
loosing licensing for such a significant period of time.
11:51:18 AM
Representative Gara stressed it is not a violation of the
Due Process rights to be held responsible when your
employees sell cigarettes to a minor. The employer is
liable for their employee's negligence and that this is not
a Due Process issue. Mr. Rush differed, pointing out that
the businesses are liable for loosing their business
license. The State Supreme Court has recognized that this
type of property interest is one that can not be deprived
without a hearing, in order to provide evidence of good
faith and lack of negligence.
Representative Nelson agreed there should be a hearing,
however, if the employee did sell the tobacco product to a
minor, how would they prove differently. Mr. Rush
responded, in the current system, the business would not be
charged as the license holder until the party was found
guilty; the timing of the enforcement action is not being
contested. The process moves quickly.
Representative Nelson noted that there is a distributor in
Bethel, who is lamenting the difficultly in the training &
retaining of employees and the loss of licensure. She
emphasized it is a simple law and that the cashier should
look at the ID of each customer.
11:56:14 AM
JOHN TREBOW, (TESTIFIED VIA TELECONFERENCE), ATTORNEY FOR
HOLIDAY STATIONSTORES, INC., ANCHORAGE, commented about the
decision made by Judge Morris regarding the Holiday versus
State of Alaska decision. He questioned why the issue of
the Constitution had been involved during the discussion;
the determination made by Judge Morris was the determination
that the tobacco endorsement is a piece of property entitled
to Due Process. Holiday has a property interest in its
ability to sell products and that must be protected.
Mr. Trebow pointed out that Alaska has the strictest
prosecuting laws for selling tobacco in the country and
addressed the consequences of those actions. He identified
criminal offense to negligently selling tobacco as the issue
of concern. The conviction of the employees can not be used
as proof of suspension of the endorsement holder's license.
Fundamental fairness requires that the endorsement holder's
conduct be reviewed and evaluated before action is taken
that would affect constitutional rights. He advised that
the issue is the employees conduct & the conduct of the
endorsement holder.
12:00:07 PM
Representative Thomas inquired if Mr. Trebow supported the
amendments recommended by Ms. Clearwater. Mr. Trebow
focused on the amendment that specifically addresses if the
person holding the business license, which negligently
violates the statute. The language meets concerns expressed
by Judge Morris.
12:00:53 PM
AT EASE: 12:01:41 PM
RECONVENE: 12:02:11 PM
RICHARD GODFRE, MENDENHALL VALLEY TESORO, LLC., JUNAEU,
related his own experience with the tobacco laws as
currently written. He noted that he owns three convenience
stores. He was the first person to contest the tobacco law.
He stated that he took his case to the State Supreme Court
because upon notification of suspension hearing, the outcome
was predetermined as an employee had sold cigarettes to a
minor. That employee was fined and fired. He stressed the
verdict had been based on a preceding in which he had no
legal standing, the license was subject to suspension and
that violated his own Due Process.
Representative Gara pointed out that Mr. Godfre's case was
still pending for a decision and recommended that the bill
be TABLED until the Supreme Court determines how the law
should read. He did not think that the lower Court opinion
should stand and that the consideration should not be a
priority at this time in session.
Vice Chair Stoltze stated that the concern is a public
policy issue, which should not be affected by what the court
does or does not do. He thought that public policy should
be addressed by the Legislature regarding Due Process, not
by the Court.
Co-Chair Meyer agreed, pointing out that there is no license
suspensions being issued or enforced until the Legislature
does take action. Business owners do not know where they
stand nor does the State of Alaska; there needs to be a
resolution. The Administration supports the Legislature
addressing these concerns.
Representative Kelly interjected that Due Process is a valid
issue and that he did not support tabling the bill.
12:10:34 PM
Representative Crawford noted that language on Page 3, Line
13, "negligently violates", is an extremely high standard.
Mr. Godfre clarified that by nature of the product, they
regularly hold the establishment with multiple violations,
and that the negligence would be a high standard to prove
otherwise. He thought that the hearing officers could level
the playing field. The State of Alaska regularly sponsors
training programs, but ultimately, the outcome would be
based on a hearing. He wanted to see penalties higher for
the person who actually commits the crime.
RECESSED: 12:14:08 PM April 28, 2007
RECONVENED: 1:07:32 PM April 29, 2007
DIANE CASTO, SECTION MANAGER, PREVENTION AND EARLY
INTERVENTION SECTION, DIVISION OF BEHAVIOR HEALTH,
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that the
Division of Behavioral Health is responsible for enforcement
of illegal sale of tobacco to youth under the age of 19. In
addition, as required by the federal SYNAR legislation, the
State must maintain an illegal sell rate to minors of 20% or
face federal monetary penalties to the Substance Abuse
Prevention & Treatment Block Grant.
The Department opposes CS HB 187 (version K) as written.
The primary areas of concern are:
1) Section 2 - Currently the State has to prove that the
employee negligently sold tobacco to a minor. HB 187
would require the State to prove also the employer's
negligence in that sale. The intent is to hold the
employer accountable for the acts of the employee.
2) Section 3 - Allows retailers to develop, on paper, a
loosely identified and monitored "training" program to
inform employees of the State's laws related to the
sale of tobacco to minors, thereby reducing (or
eliminating), their responsibility for the actions of
their employees and reducing the period of suspension
to sell tobacco for the illegal sale.
3) Section 3, Paragraph (w) - While the bill does add a
10-day floor for suspension, guaranteeing that all
citations would include some level of tobacco
endorsement suspension, the floor appears to be the
same for all violations, which would provide for a
retailer with a history of non-compliance to continue
to have their suspensions reduced to 10 days instead of
45, 90 or 100 days. While the Department does support
a suspension floor, it should be graduated in relation
to the indicated number of days or not available at all
to those who repeatedly violate the law.
Ms. Casto pointed out that the current system of fines and
suspensions is working. State law was amended in 2002 to
ensure that retailer violations resulted in consistent,
temporary suspensions of tobacco sales, in addition to fines
to the clerk of the sale. In 2002, the State's illegal sell
rate was 30%; following a change in law, the 2003 rate was
10%. In addition to reducing youth access, youth usage of
tobacco also has decreased. The Department supports a fair
fix to the due process issue for Alaska retailers and does
not support dismantling the current system of fines and
suspensions for business that sell tobacco to youth under
the age of 19.
Ms. Casto addressed previous points brought forward to the
Committee on 4/28/07:
· Alaska does have the most stringent laws related to
enforcement of illegal sale of tobacco to minors and is
not the only state to impose suspensions, but is the
only State to have a mandatory number of suspension
days per violation. One problem noted by the U.S.
General Accounting Office is the inconsistent
application of fines and suspension in many states,
which reduces the quality of the tobacco enforcement
programming. Alaska's laws are equitable and
consistently applied to all retailers violating
Alaska's tobacco laws.
· As noted, there are other states with sell rates as low
as or lower than Alaska's rate, without mandatory
suspension. While true, there are varied reasons, one
of which is that many states are using youth ages 14-15
to conduct the purchases. Alaska's program uses youth
who are primarily 15-17 years old. The use of younger
kids naturally produces fewer sales. The federal
government is reviewing the age of youth buyers and
considering changes to the SYNAR methodology. Other
methodology inconsistencies affect the ability to
compare outcomes state-by-state and are under review by
the General Accounting Office.
· It is also important to remember that the number of
compliance checks the Department does each year is very
small; there are only three (3) Tobacco Investigators
that cover the entire State. In a report by the
Schneider Institute for Health Policy, it is estimated
that "even aggressive compliance inspections programs
th
will observe far less than 1/100 of 1% of all [tobacco
sale] transactions." The majority of tobacco sales
occur when Tobacco Investigators are not observing &
that compliance and enforcement work is not a constant
intrusion on retailers.
1:16:55 PM
Co-Chair Chenault asked if any 18 or 19 year olds were used
in the study. Ms. Casto said no.
Co-Chair Chenault noted that he had spoken with someone that
was out of compliance and understood that the kid was within
a week of turning 19 years old. That person was extremely
frustrated with the current law. Ms. Castro clarified that
when the program begun, there was much more attention to the
age; now however, 18 year olds are not used. Co-Chair
Chenault said the business owner believed the language was
an entrapment.
1:20:20 PM
Co-Chair Meyer asked if the Department preferred to get the
issue resolved. Ms. Castro commented that internally, the
Department has discussed the case before the Supreme Court.
That case could indicate that the State's Due Process is
fine. At this point, with the current Holiday decision
pending, the State's Due Process has been deemed not
appropriate. The Administration is currently handling the
compliance & enforcement checks and all suspension notices
are going to the Department of Commerce, Community &
Economic Development. The Department is sitting in wait
until a remedy is reached and intends to move forward with
the suspensions, not negating it until the Due Process is
fixed. The Department of Health and Social Services wants
to see some conclusion in order to make it cleaner through a
language fix.
Ms. Casto added, the Department looked at finding an
internal fix so not to have to go through the legislative
policy change to fix the regulation. That resulted in a fix
that could address about 90% of the cases; however, the
remaining 10% could not be handled in that way because they
are sole proprietors. The Department would not have the
authority to address such businesses. The program includes
three departments, Department of Health and Social Services,
Department of Commerce, Community & Economic Development &
Department of Law.
1:24:36 PM
Representative Gara noted that he generally supports the
department's position; however, asked why they had not
appealed the case. Ms. Castro did not know why that
decision had been made.
Representative Gara asked if the Department wanted the law
changed. Ms. Castro responded that she could not speak for
the entire Department on that particular issue; however,
pointed out that a temporary fix does not address the
problem. It would be good to have the issue resolved, to
meet the intent of the Tobacco Enforcement Program.
Representative Gara suggested that the Department's position
places the Legislature in a difficult position.
1:28:02 PM
SUZANNE MEUNIER, (TESTIFIED VIA TELECONFERENCE), AMERICAN
HEART ASSOCIATION-ALASKA, ANCHORAGE, stated that the
American Heart Association agrees that all are entitled to
Due Process, however, HB 187 goes beyond what is required by
the Court. Current law helps prevent illegal tobacco being
sold in Alaska and incorporates the best practices
recognized by the National Centers for Disease Control and
Prevention. Alaska's program combines tobacco vendor
education with random compliance checks. No store would be
cited if they made the minimum effort to verify the age of
the buyer. The State has seen the direct benefit of the
law.
Ms. Meunier listed concerns with the current version of the
bill. The proposed legislation has language which allows
for the reduction of suspension down to 10-days. She noted
that she supports adding language to clarify that on a first
violation, the suspension could be reduced to 10-days, based
on mitigating factors. She urged the Committee to address
the deficiencies of the legislation.
1:32:14 PM
STEPHEN WARREN, (TESTIFIED VIA TELECONFERENCE), YOUTH
TOBACCO PROTECTION MANAGER, SITKA COMMUNITY HOSPITAL, SITKA,
stressed that relaxing the penalties was not a good idea.
He encouraged that penalties instead be increased. He urged
that store owners be held responsible on strict tobacco
sales as tobacco is addictive to kids. Stores in Sitka have
used the penalties as a marketing tool and that some stores
receive a discount on tobacco products by using aggressive
advertising by the tobacco industry. Mr. Warren commented
on the misguided State law that allows under-age kids to
sell tobacco products. He encouraged a more active system
to educate the clerks about the responsibilities of selling
tobacco.
1:36:59 PM
ROGER HAMES, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, SEA
MART - GROCERY RETAILER, SITKA, indicated strong support for
HB 187. He understood the penalties, which cause retailers
compliance. He stressed that it is not easy being in
business, which complying with the laws. He said his last
suspension dramatically affected the business sales.
Representative Gara inquired about previous testimony
regarding a bonus from cigarette outlets to advertise
tobacco products in an effective way. Mr. Hames replied
that is called a "buy down" from the tobacco industry,
reflecting the price incentive passed on to the consumer to
remain competitive. Representative Gara asked if that was
based on where the cigarettes are placed on the shelves or
the actual advertising. Mr. Hames replied it was both and
that visibility is important for receiving the discount.
The stores are inspected through tobacco compliance
guidelines & are affected by visibility.
1:42:29 PM
JOAN CAHILL, JUNEAU, indicated that she is active in the
tobacco control field and encouraged that current law be
tightened and enforced. She endorsed comments by Mr. Warren
regarding tightening and enforcing the current law versus
relaxing it. There are repercussions when the law is
enforced, which is the point. It is the incentive for the
merchant to "beef up" their systems to insure that
cigarettes do not get passed to juveniles. The tobacco
industry is now marketing to children. She opposed relaxing
the standards.
Co-Chair Meyer mentioned a law placing tobacco products
behind the counter. He advised that HB 187 could provide
Due Process to business owners. Ms. Cahill stated that Due
Process currently exists and should not be amended.
1:47:12 PM
KIP KNUDSON, (TESTIFIED VIA TELECONFERENCE), EXTERNAL
AFFAIRS MANAGER, TESORO ALASKA COMPANY, ANCHORAGE, spoke in
support of restoration of the Due Process language in HB
187. He emphasized that Tesoro supports a no-under age
tobacco sales culture, accomplished through rigorous
training. In the 31 stores currently being operated by
Tesoro, they have received 18 violations since 2000. He
stressed that a twenty-day suspension has a huge impact on
stores even as big as the Tesoro company. Every employee
charged in a sales violation is immediately terminated. He
addressed the costs and burdens of business. Mr. Knudson
reiterated support of the Due Process language.
Representative Crawford hoped to see a generation of young
Alaskans that have no desire to smoke. He knows kids still
get tobacco products and are smoking at a very young age.
He asked why Tesoro has failed by selling tobacco to under-
age customers. Mr. Knudson did not know; however, thought
that often, the employee is only attempting to keep the
lines moving.
1:53:23 PM
Representative Gara observed that the suspension only occurs
where a sale was made to a minor. Mr. Knudson pointed out
that the employees involved admit to the sales and then the
business is held accountable. He added that State
enforcement officials are not allowed to use fake
identification.
PUBLIC TESTIMONY CLOSED
1:56:00 PM
Representative Gara questioned why the case had not been
appealed.
Ms. Drinkwater noted that she could not discuss that case at
this time. She explained that on another similar case
(Godfre) raised Due Process issues, similar to the Holiday
case. The hearings occurred at a time when the Division had
not yet issued regulations implementing the tobacco
enforcement statute. At that time, the hearing officer
decided the regulations weren't in place and would allow
Mendenhall Tesoro to raise any defenses they wanted to.
Mendenhall Tesoro raised a number of issues regarding
entrapment & government overreaching but they did not
succeed. The Superior Court advised that the hearing
allowed the issues to be raised. She could not hypothesis
the decision of the Supreme Court, but felt that they might
take a more narrow approach.
Ms. Drinkwater observed that it would be difficult to fix
the issue through statute. Hearings are limited in statute
and can not be fixed by regulation.
2:00:25 PM
Representative Gara summarized, the negligence issue is
before the Court. Ms. Drinkwater explained that the Court
could reach a decision that would affect the way the issues
are addressed.
Representative Gara asked if changes in the law could be
made contingent on the outcome of the Supreme Court ruling.
He explained that statute for a shorter sentence, if there
is good policy could retain existing statute if the court
found it appropriate. Ms. Drinkwater could not answer that.
2:03:18 PM
Representative Kelly questioned the place number in law,
where guilt is automatic and licenses are automatically
lost. Ms. Drinkwater could not respond, but noted that
there are a number of areas, in general context, where one
event causes automatic results.
HB 187 was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 2:07 P.M.
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