02/16/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB125 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 125 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 16, 2011
3:21 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Craig Johnson, Vice Chair
Representative Dan Saddler
Representative Steve Thompson
Representative Lindsey Holmes
MEMBERS ABSENT
Representative Paul Seaton
Representative Bob Miller
COMMITTEE CALENDAR
HOUSE BILL NO. 125
"An Act moving the Alcoholic Beverage Control Board to the
Department of Commerce, Community, and Economic Development and
relating to duties of that department; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 125
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL BOARD
SPONSOR(s): RULES BY REQUEST OF LEG BUDGET & AUDIT
01/26/11 (H) READ THE FIRST TIME - REFERRALS
01/26/11 (H) L&C, FIN
02/09/11 (H) L&C AT 3:15 PM BARNES 124
02/09/11 (H) Heard & Held
02/09/11 (H) MINUTE(L&C)
02/16/11 (H) L&C AT 3:15 PM CAPITOL 106
WITNESS REGISTER
BERNIE KARL, General Manager
Chena Hot Springs Resort
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 125.
KATE BURKHART, Executive Director
Alaska Mental Health Board
Governor's Advisory Board on Alcoholism and Drug Abuse (ABADA)
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
BELEN COOK, Public Member, Board of Directors
Alcoholic Beverage Control Board (ABC Board)
Cordova, Alaska
POSITION STATEMENT: Testified in opposition to HB 125.
LARRY HACKENMILLER, Member
Interior, Alaska Cabaret, Hotel, Restaurant, and Retailer's
Association (CHARR)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of on HB
125.
DAVE LAMBERT, Owner
Greyhound Lounge
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
DICK ELLSWORTH, Owner
Ivory Jacks Bar and Restaurant
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
BILL BISHOP, Owner
Mecca Lounge
Kodiak, Alaska
POSITION STATEMENT: Testified in support of HB 125.
BOB KLINE, Industry Member;
Chair; Alcoholic Beverage Control Board (ABC Board)
Director of Sales, Brown Jug Stores
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 125.
MIKE GORDAN, Owner
Chilkoot Charlies
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
BOB WINN, General Manager
Blues Central Chef's Inn
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
JEFF JESSEE, Chief Executive Officer
Alaska Mental Health Trust Authority (AMHTA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
WILLIAM DEVINY, Administrator
Loyal Order of Moose Lodge
Delta Junction, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
BILL BUBBEL, Owner
Pump House Restaurant and Saloon
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
CRYSTAL SHOENROCK, Owner
Nikiski Bar; Secretary,
Cabaret, Hotel, Restaurant & Retailers Association (CHARR)
Nikiski, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
BERNADETTE BRADLEY, Owner
Bradley House
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 125.
SYLVIA VILLAMIDES, Director
Alaska Cabaret, Hotel, Restaurant, and Retailer's Association
(CHARR)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 125.
DURAN POWELL, General Manager
Chilkoot Charlies
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
MICHELLE POWELL, Bartender
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
SHARON WHYTAL, Nurse; Coordinator
Southern Kenai Peninsula (SKP), Communities Project
Homer, Alaska
POSITION STATEMENT: Testified in opposition to HB 125.
SHIRLEY GIFFORD, Executive Director
Alcoholic Beverage Control Board (ABC Board)
Department of Public Safety (DPS)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 125.
ACTION NARRATIVE
3:21:25 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:21 p.m. Representatives Olson,
Johnson, Saddler, and Thompson were present at the call to
order. Representative Holmes arrived as the meeting was in
progress.
HB 125-ALCOHOLIC BEVERAGE CONTROL BOARD
3:21:51 PM
CHAIR OLSON announced that the only order of business would be
HOUSE BILL NO. 125, "An Act moving the Alcoholic Beverage
Control Board to the Department of Commerce, Community, and
Economic Development and relating to duties of that department;
and providing for an effective date."
3:22:54 PM
BERNIE KARL, General Manager, Chena Hot Springs Resort, related
his support for support of HB 125. He said he supports
relocating the Alcoholic Beverage Control Board (ABC Board) to
the Department of Commerce, Community & Economic Development
(DCCED) since it is more appropriate for licensing. He
described a sting operation that took place at his business at
Chena Hot Springs Resort. Although his establishment passed the
sting inspection, the officer appeared upset, he said. He
recalled testimony given last week that referred to licensees as
dubious miscreants. He said he takes offense to that
description. He stated that 99.99 percent of the people in the
liquor business in the state are just good people just like you.
They are trying to make a living and are doing the best job they
can to add to the state's economy. He stated that more people
have not expressed concern since they fear reprisal. He
remarked that he is motivated to work by his debt load and he
works hard. Not only were the investigators upset that his
establishment passed the sting they were really upset that
everyone had their credentials in order. The officers decided
that the liquor store was not properly located so it should be
shut down. He reported that he bought the liquor store from the
state. He related that the officer said rules are different for
the state than for the private sector. The investigator then
performed a compliance check on the ice museum, which had
previously been approved, he said.
3:27:44 PM
MR. KARL described the investigator conducted a compliance check
for the ice museum even though the ABC Board
investigator/officers were on premise to conduct a sting
operation. He offered his belief that they will do anything to
"bring you down, anything." He subsequently received a
certified letter that he needed to close his "illegal bar"
during his busiest time. Yet, he remarked he had previously
submitted paperwork, which was approved. He emphasized he did
not get the due process of law. Instead, the ABC Board simply
sent a letter to close him down during his busiest season. He
supported the ABC Board moving to the Department of Commerce,
Community & Economic Development (DCCED). He reported that his
establishment has an excellent record.
3:29:41 PM
MR. KARL disagreed with the ABC Board being located in the
Department of Public Safety (DPS), which does not make sense to
him. He acknowledged Ms. Gifford is trying her best to make
things better. He recalled testimony that the ABC Board's
policy is not to perform sting operations at the same time
compliance checks are conducted. He offered his belief the
investigators want everyone to be treated like criminals and
"we're not criminals." We take great offense to being
considered as criminals, he stated. He suggested that the ABC
Board should focus on education and join with the Cabaret,
Hotel, and Restaurant & Retailer's Association (CHARR) to
conduct education on alcohol to elementary students. He said
that they should teach third graders why they should not drink.
He offered his experience in teaching third grade students
recycling and the effectiveness in doing so. He reported that
his [recycling] business grows at about 100 percent a year
without him conducting any advertising. He recalled a student
once asked him if body parts could be recycled and he showed him
that he is an organ donor. He stressed the importance of
education and emphasized that the ABC Board should be working
with CHARR. He offered to copy his file for the committee.
3:34:14 PM
KATE BURKHART, Executive Director, Alaska Mental Health Board,
Governor's Advisory Board on Alcoholism and Drug Abuse (ABADA),
Department of Health and Social Services (DHSS), stated she is
speaking on behalf of the Governor's Advisory Board on
Alcoholism and Drug Abuse (ABADA). She related that although
the ABADA is located within the Department of Health and Social
Services (DHSS) that she was not speaking on behalf of the DHSS,
but for the ABADA. The ABADA does not support moving the ABC
Board from the DPS to DCCED due to what the board perceives as
potential outcomes. She expressed her appreciation for everyone
involved in this conversation. This is not an issue of "good
guys and bad guys," nor is this an issue of whether alcohol is
good or bad. The issue is to identify where the ABC Board can
continue to fulfill its statutory duties to the best possible
degree and continue to make progress in the issues identified as
areas for needed improvement. She recalled the LB&A's audit of
the ABC Board outlined concerns and recommendations for
improvement. She expressed concern that a potential move could
retard or halt the ABC Board's improvements. The ABC Board
controls not just licensing but the manufacturer, barter,
possession, and sale of alcoholic beverages in Alaska. That
duty is assigned to statutorily, but is not a duty undertaken
solely by the ABC Board. Alcohol retailers invest time and
money to ensure responsible sales are made to youth or adults.
Many retailers have strong histories of responsible sales
practices and community efforts to promote responsible
consumption. Those efforts should not be minimized. However,
as the 2009 data indicates not all retailers are at the same
level of compliance with the law. She remarked that retailers
are not the only source of alcohol for underage youth. While
retailers do provide a source of alcohol, improper purchases by
adults is also a problem. The ABC Board has the responsible to
oversee, identify, and address those issues with "shoulder
taps." She pointed out that home liquor cabinets and
bootlegging also provide youth with access to alcohol.
3:38:16 PM
MS. BURKHART related what evokes intense rhetoric over this
issue are the social problems that stem from the misuse and
abuse of alcoholic beverages. She reiterated that it is the
misuse and abuse of alcohol that causes the problems and not the
alcohol. The problem is not the retailers, but the way that
alcohol is used. Alaska's rate of alcohol-induced deaths is
three times the national average. Nationally, one third of
suicide victims test positive for alcohol. In Alaska, the
limited data shows 44 percent of suicide deaths test positive
for alcohol use. The state ranks 11th for binge drinking, and
in 2009, 22 percent of high school students surveyed report
binge drinking in the past month. The American Medical
Associate reports that underage drinking is a factor in nearly
half of all teen car crashes. Teen car crashes are the leading
cause of death among teenagers. Youth who begin drinking under
the age 14 are more likely to develop dependence. In Alaska,
nearly 20,000 adults are dependent on alcohol.
3:39:32 PM
MS. BURKHART related that in 2007, a series of town hall
meetings were held in a number of communities, including
Anchorage, Fairbanks, Juneau, Valdez, Galena, Yakutat, Nome, and
Sitka. Stakeholders identified the importance of compliance
checks and a robust system as one of the tools necessary to
prevent underage drinking. At the same time the Alaska Highway
Safety Office (AHSO) worked with stakeholders to develop its
strategic highway safety plan. These stakeholders also reached
the same conclusions as ABADA. In 2009, a new series of town
hall meetings were held in 22 communities, whose goal was to
reduce and curb underage drinking. Both plans emphasized the
need for strong compliance checks as one tool to address
underage drinking.
MS. BURKHART expressed concern about the proposed relocation of
the ABC Board to the DCCED as proposed in HB 125. The ABADA
reviewed states in which the alcoholic beverage control boards
were located in non law enforcement agencies. It compared
states in which the alcoholic control boards are located in law
enforcement agencies to five other states. Alaska, Idaho,
Delaware, and New Jersey are states whose boards are located in
law enforcement agencies. States in which ABC boards are
located in non-law enforcement agencies include Colorado,
Georgia, Kansas, Mississippi, and Missouri. The ABADA also
reviewed youth survey data on alcohol use and the rate of
alcohol teen car crash fatalities. In both instances, where the
ABC Board was located in non-law enforcement agencies, the
indication of youth alcohol use increased. These states also
had higher lifetime alcohol use reported, sometimes ranging as
much as six percent higher than Alaska's rate. They also
reported 3 to 10 percent higher rates of youth drinking under
the age of 13, and 1 to 7 percent reported drinking alcohol at
least once in the last month. Since 1995, Alaska has been able
to decrease youth alcohol use. She reported Alaska's survey
discovered reductions in the number of respondents who reported
alcohol use. She elaborated that 13.5 percent less youth
reported any lifetime use of alcohol, almost 20 percent less
indicated any alcohol use before the age of 13, almost 15
percent less had engaged in alcohol use in the past 30 days, and
10 percent less reported binge drinking. She reviewed the rate
of alcohol rate for car crashes. The national fatality rate for
crashes that involved youth under the age of 21 is 2 deaths per
100,000. In Alaska, the rate was 1.4 deaths per 100,000. The
fatality rate for states whose ABC board was located within a
law enforcement agency fell at the national average or below,
while the fatality rate for states whose ABC board was located
in a non-law enforcement agency was higher, she said.
3:43:26 PM
MS. BURKHART emphasized that for these reasons, the ABADA is
concerned about the proposed move. The ABADA suggested the need
for better communication and collaboration between the retail
industry and the ABC Board. It is important to note the
industry has a lot to offer in this area, she said. Further,
the ABADA has had the benefit of partnering with CHARR and its
affiliates on fetal alcohol spectrum disorder prevention
efforts. Additionally, the ABADA encouraged increased
collaboration between the ABC Board and retailers to take
advantage of ideas and strengths from both sides of the issues.
She concluded by expressing concern that moving the
responsibility of the ABC Board to another agency could halt
progress to improve the ABC Board's performance and could result
in detrimental changes to areas in which the state has seen
progress.
3:44:36 PM
BELEN COOK, Public Member, Alaska Beverage Control Board (ABC
Board), Board of Directors, stated she has served for two years
as the public member and since March also represents the rural
seat for the ABC Board, since she also fits that category. She
related her perspective, given her limited experience on the
board. She testified in opposition to HB 125. She has not
observed retailers who come before the board view the ABC Board
as "out to get them." She recalled hearing the board has been
more open and that the ABC Board has its "ducks in a row." When
Kotzebue decided to go "wet" the ABC Board held its meeting in
Anchorage. One board member suggested the ABC Board travel to
Kotzebue for the next meeting. In response to Chair Olson,
after conferring with Ms. Gifford, Ms. Cook clarified that
Kotzebue is "damp" not "wet." She explained the ABC Board held
its next meeting in Kotzebue. The city manager and members
commented during the public comment period with praise. Those
who commented stated they could talk to Ms. Gifford and actually
reach a "real person" to ask questions and that it had been a
pleasure to work with staff. She reported that the public
reported that the ABC Board's staff had gone out of their way to
assist them. She used that as an example of how the ABC Board
works. She expressed concern that it would be disruptive to
move the board to the DCCED.
3:48:18 PM
LARRY HACKENMILLER, Member, stated that the Interior Chapter of
CHARR supports moving the ABC Board to the DCCED since this
represents more of the original mandate. At its August
Legislative Budget and Audit Committee hearing the ABC Board
provided testimony that indicated it plans to continue with
enforcement duties no matter where the ABC Board is located.
The DPS also related that changing the department oversight
would not impact its joint support for enforcement compliance
conducted with the ABC Board. The ABC Board is a quasi-judicial
body that holds hearings and issues citations. He recalled that
the changes that allow its officers to carry weapons and
function more in the public safety role did not previously work
so the Department of Revenue revoked the specific firearm
authority. He acknowledged that the ABC Board investigators
will be carrying weapons again. He said that would not change
under the DCCED. He reiterated one key point to remember is
that enforcement operations will still occur. Sting operations
are based more on funding and are not specifically department
related. He turned to non-compliance issues. He offered his
belief that retailers cannot hire perfect people and sometimes
one or two instances of serving underage youth will happen. He
detailed how sting operations work, such that an underage person
attempts to buy alcohol and if he/she is not served, the minor
presents a card that the server passes the test. He wondered
when a bartender is apprehended why the officer does not
subsequently check the clientele to determine whether any
additional minors are being served since the goal of a sting is
to prevent minor consuming.
3:51:55 PM
MR. HACKENMILLER offered one solution. One means of reducing
serving minors, particularly if the belief is that this is
rampant, would be for the investigator conducting a sting or
compliance check to also check identification cards of patrons.
He reported that CHARR provides training for staff with respect
to minors on premises. In Anchorage, a civil penalty is
imposed. Still, approximately 300 minors attempt to buy alcohol
each year, perhaps because kids may view the process as a rite
of passage. He reiterated his reasons for supporting HB 125,
includes that the move would not affect the ABC Board's
enforcement effort and the ABC Board has independent
administrative authority regardless of which department it
resides in. He concluded, "And I think the move is a proper
move."
3:53:36 PM
DAVE LAMBERT, Greyhound Lounge, said he is a retailer who owns
two beverage dispensary licenses. Over the years he thinks he
has been treated like a criminal, which has improved since Ms.
Gifford has been the executive director since retailers can
obtain answers to their questions. He offered his belief that
the ABC Board is located in the wrong department. He recalled
that DPS offers a 20 year retirement, which would benefit the
ABC Board staff. He questioned if the DPS was the proper
department for the enforcement reasons, why other enforcement or
licensing functions are not also housed in DPS, such as the
Department of Environmental Conservation's enforcement and
licensing investigators. None of the other departments with
enforcement powers are located in public safety, he stated. He
emphasized the importance of employees' education. He concluded
that some people are anti-alcohol. He pointed out that the
young teenagers and pre-teens are not buying at establishments
so the solution is better achieved through education.
3:55:18 PM
DICK ELLSWORTH, Owner, Ivory Jacks Bar and Restaurant, stated
that he has an off premise and an on premise license, along with
a restaurant. He said he agrees with Larry Hackenmiller and
Dave Lambert's testimony.
3:56:40 PM
BILL BISHOP, Owner, Mecca Lounge, stated that he brings 50 years
experience in management in the beverage retail industry. He
has previously served as chair of the ABC Board. He asked to
testify in support for HB 125. The beverage industry deals with
the public which can be difficult, he stated. He related that
25 years ago the ABC Board had three or four investigators and
when a problem arose the owner had to explain the issue to the
ABC Board. At the time, when investigators conducted compliance
checks they checked everything. He said he appreciated that
attention to detail as an owner. Currently, the ABC Board's
investigators are law enforcement officers who only seem to be
interested in writing citations. He related that if an employer
forgets to renew his/her Techniques of Alcohol Management®
(TAM®) card, the officer will write a ticket. These citations
are misdemeanors so the employee/employer must appear in court
and probably would need to hire a lawyer for representation. He
stressed that no one wants to work under the current conditions.
As time has passed and administrations have changed things have
"gotten out of hand. It is bad for the industry. It is bad for
business. It is time for a change." He reported that Kodiak
has its own liquor association. The liquor association conducts
training sessions and CHARR helps train members. When issues
arise, the association helps owners deal with them. He
emphasized that his business supports his community, including
sports for children and scholarships. He urged members to
support HB 125. He said, "This is an honorable thing to do and
the right thing to do for our beverage industry and businesses.
Thank you."
4:01:04 PM
BOB KLINE, Industry Member; Chair; Alcoholic Beverage Control
Board (ABC Board), Director of Sales, Brown Jug Stores, stated
he has served for 14 years on the ABC Board for several
governors, including former Governor Steve Cowper and Governor
Sean Parnell. He related that he has experienced the ABC Board
while it was housed in the DOR and the DPS. He said he is proud
of the ABC Board and he is especially proud its executive
director, Ms. Gifford. The board has well trained and dedicated
enforcement staff and has an effective enforcement record. He
says he would take exception that the ABC Board would relax its
efforts in the event HB 125 passes. He also serves as Chair of
the Governmental Affairs Committee for CHARR. He recalled
testimony on compliance checks and assures members that the ABC
Board staff works hard to ensure that compliance checks are
fair. He stated that the motivation for the move to the DCCED
is one of perception as the public perceive the ABC Board's role
is to apprehend lawbreakers. While there may be some "bad
apples" the hospitality industry is a huge group of hard working
people. The DPS is in the business of catching criminals while
the DCCED is in the business of helping businesses grow, he
stated. Finally, he serves as the Director of Sales for Brown
Jug Stores, which operates 20 stores in Anchorage and the Mat-
Su. He finds it offensive to hear comments that the Alaska
State Troopers (AST) would not be interested in enforcement if
the ABC Board moves. He related he has worked with the AST to
develop a database, which is a cooperative effort between the
AST and beverage retailers. Brown Jug has a long history of
providing information on bootleggers. He concluded that he
strongly supports HB 125.
4:06:12 PM
MIKE GORDAN, Owner, Chilkoot Charlies, stated that he was
elected twice to the city council and borough assembly prior to
unification. He is one of 55 people in Anchorage that have
hardcover of the charter of the Municipality of Anchorage with
his name embossed on the cover. He related he is an Eagle Scout
and past president of the downtown Rotary Club. He has served
on many boards and has served twice on the ABC Board by two
different governors, serving for 10 years, including as Chair.
He mentions his accomplishments because he does not appreciate
being described as a member of "a small group of miscreant
licensees." The only violation he has had in 41 years involved
a catering permit issue for a not-for-profit business. He said
most of his tenure on the ABC Board was while it was under the
purview of the DOR. He pointed out that he was serving as board
chair when Governor Murkowski moved the ABC Board to the DPS.
He emphasized he was not consulted about the move. He stated he
did not like it but came to dislike it even more. He offered
his belief that having three public members and an attorney
serving on the board was already problematic. The problem, in
his view, was that the new board had little empathy for honest
hard working business people or what it was like to run a small
business or meet a payroll. Additionally, the new board had no
concept of the cost of being officially closed down for a week
or longer. He said that draconian punitive punishment was meted
out without a thought for the damage being done or the precedent
the actions set. He offered his belief that the string of
precedent set has created irreparable harm to licensees.
4:08:58 PM
MR. GORDON related that the old board was every bit as hard on
irresponsible operators but had the common sense to
differentiate between crooks and honest licensees. He said, "In
the eyes of the new board we're all the same." He also said
that the old board would never have dealt with the issue of an
expired Techniques of Alcohol Management® (TAM®) card, which
would have been referred to an investigator, who in turn would
have told the licensee to get the card renewed or "face the
consequences." Currently, the investigator "busts the licensee
or employee" who must face the board and the business risks
closure for a first offense of an expired TAM® card, which is an
administrative matter. He said, "I saw businesses during the
last months I was chairman of the board closed down for a week
for a first offense of serving a minor with no previous
infractions for 40 years. I was shocked." Not long after the
transfer he was summoned to the commissioner's office related to
the ABC Board's operation and to replace the ABC Board's
director. The outcome resulted in a memo outlining any ABC
Board issues, which were subsequently corrected. The executive
director remained, but the relationship was "rocky after that."
He related the next commissioner indicated the governor did not
want an industry person to chair the ABC Board even though the
chair had always been an industry member. He further said, "My
reaction was to continue doing my job. I thought that if the
governor wanted me to step down, she could tell me or remove me
for that manner. I was the appointed chairman of a quasi-
judicial body and did not answer to the commissioner." He
related that not long after his business had a series of
compliance checks, including a visit at 11 a.m. with a minor
attempting to buy liquor, which is an unlikely time for a minor
4:11:49 PM
MR. GORDON described a sting in which an older looking girl came
into his bar during the bartender change from the day to nigh
shift change, just prior to his security guard's arrival for the
evening. Two bartenders served the girl. The first bartender
was exonerated, after spending $27,000 in costs and the other
had the charges dropped to a misdemeanor charge not involving AS
04. He offered his belief that this represented a trap. The
bartender made a mistake, which is not a crime. Customers later
witnessed the investigator and the minor "high fiving it outside
of the bar afterwards." He subsequently resigned from the ABC
Board. He said, "I was wearing a target on my back and I was
unwilling to sacrifice my business for a non-paying civic duty
job." Several years later, in August 2010, an investigator
brought a minor to his bar three times in 45 days and finally
one of the bartenders served the minor. After an expenditure of
$10,000 in legal fees and numerous postponements that case was
dismissed. The bartender quit, although she who was one of his
best bartenders and had worked for him for 15 years. He read
correspondence from Director Gifford, "It does not appear the
reason for the dismissal had anything to do with the merits of
the case. As you know the result of a criminally prosecutable
case does not automatically affect administrative notice of
violation." He related his surprise when the ABC Board did not
seem to recognize the court's dismissal. The case appeared to
be active and was still under investigation. He subsequently
received a letter explaining that duplicate licensees would not
be included in the pool of random compliance checks after an
investigator had conducted five compliance checks at his
establishment. He concluded by stating that the ABC Board
director should be willing to do the job no matter what division
the agency is housed. He reiterated that it should make any
difference to the director as to which agency the ABC Board
resides.
4:14:39 PM
BOB WINN, General Manager, Blues Central Chef's Inn, stated that
it seems as though a more punitive attitude has gradually
happened since the ABC Board has been housed in the DPS. He
said he thought bringing the ABC Board back to the DCCED would
help bring the emphasis back to the business community. He
concluded that it would be greatly appreciated if the move
occurred.
4:15:37 PM
JEFF JESSEE, Chief Executive Officer, Alaska Mental Health Trust
Authority (AMHTA), said there is no question that licensees and
applicants of services for the ABC Board are entitled to be
treated with respect and dignity and should have their concerns
addressed. He said he understands that Ms. Gifford has prepared
a matrix which lays out ways in which an applicant or licensee
can have their concern be addressed. This ranges from more
informal approaches, including contacting a supervisor during
enforcement or licensing issues. The director's e-mail and
phone number is also available so licensees and applicants can
contact her directly. The ABC Board's agenda allows specific
time for industry to testify to address concerns during public
comment. Additionally, an individual can complain via the DPS
website on any unresolved issues. Finally, complaints can be
made to the state Ombudsman's office, which provides an
independent review on an issue. He emphasized the importance
for licensees to take advantage of the due process available to
have their concerns properly addressed. He offered his belief
that discussing where the ABC Board resides avoids the main
issue. He recalled previous testimony about the cost of
underage drinking in the state that totals over $360 million.
Representative Johnson asked whether that was considered a
success. We certainly do not consider that to be a success. He
referred to a chart in members' packets on the rate of illegal
sales of alcohol to minors compared to tobacco sales to minors.
4:18:42 PM
MR. JESSEE said, "It's quite disturbing to me that the rate of
illegal sales to minors has consistently been higher than the
rate of illegal sales of tobacco to minors." If anything
alcohol sales to be minors should be less than tobacco sales.
This rate of illegal sales is at these levels even though a
photo lineup of potential purchasers are shown to ABC Board
members and if any pictures that indicate the person appears to
be 21, the photos are not used. He pointed out that he wasn't
aware that it is illegal to sell to a minor who looks less than
21 years of age. He wondered if those minors who appear to be
21 were not excluded if the rate of sales to minors would be
higher. He stressed that the ABC Board, the industry, and
others should collaborate to find ways to reduce alcohol sales
to minors. He concluded, "This, in my view is a public policy
issue that needs to be addressed and not a game of musical
chairs of trying to move the agency between Revenue to DPS and
off to Commerce. We've got to get to these underlying issues
that are eating away at the fabric of our society."
4:21:02 PM
WILLIAM DEVINY, Administrator, Loyal Order of Moose Lodge,
stated that he thinks the ABC Board belongs in the DCCED to
provide education, training, and business support for Alaska's
beverage retailers. He explained that members must be 21, have
a current membership card to purchase anything. He said that
issuing bogus membership cards is in violation of the lodge
bylaws and federal regulations for not-for-profit organizations.
He concluded that he has always allowed peace officers access to
facilities and the ABC Board comes in "at will." He said, "We
don't serve alcohol to our kids."
4:22:32 PM
BILL BUBBEL, Owner, Pump House Restaurant and Saloon, stated he
has been licensee and restaurateur for 33 years. He has
experienced the changes in the ABC Board. He recalled the board
had an office in Fairbanks with an administrator. Licensees
could obtain help in filling out forms. The ABC Board
investigator would come into the licensed facilities to check
the operations and would point out things the owner needed to
take care of in an administrative fashion. Problems were dealt
with, he said. Over time it's become more restrictive. Instead
of one person performing compliance checks, the office moved to
the AST. The Fairbanks ABC Board person is never available so
any administrative help is obtained by calling the Anchorage
office. He offered his belief that the ABC Board has become,
from a service standpoint, almost a non-entity since the AST has
locked doors. He emphasized that it has become a police
atmosphere and makes a difference in the staff's attitude. He
acknowledged that in Fairbanks, the staff person is good person,
but his actions are directed by the ABC board. He related that
now licensees would likely receive a citation. He characterized
the relationship as difficult. He pointed out that licensees
face a huge risk for a licensee to "do anything stupid like
letting individuals get drunk on the premises or allowing
underage people to come in and drink." He stated that licensees
are cognizant of the risk and provide training to their
employees in order to follow the rules.
4:25:39 PM
MR. BUBBELL offered his belief that the industry does a pretty
good job to address the problem of serving underage minors.
Unfortunately the problem is bigger than the industry. He
acknowledged problems exist with drunk driving and underage
drinking, but if all the bars were shut down it would not
dramatically change statistics since "booze" is available and
people will figure out how to get it. Underage drinking
statistics have improved substantially in his view. He
recommended moving the ABC Board to the DCCED since it would
return the function to more of an administrative function since
the problem is more of a social problem. The ABC Board, CHARR
and licensees could better address the issues through education
rather than to condemn licensees. He also thought the dialogue
would be open rather than critical. He has observed sting
operations in which the licensee misreads the license. He
stated that the most important thing on a person's
identification is the date of birth and it is very tiny. He
recalled that CHARR is making that recommendation, which he
thought could help solve the problems. A tremendous amount of
money is being spent on enforcement issues. He related that
other people have testified and raised his concerns. He said he
supported the ABC Board becoming more of an administrative role
and to work to develop better relationships, which may help to
make progress with that approach over time.
4:28:35 PM
CRYSTAL SHOENROCK, Owner, Nikiski Bar, Secretary, Cabaret,
Hotel, Restaurant & Retailers Association CHARR, related that
everyone in the industry should have TAM® card. She related
that she provides a designated driver for any large functions,
or she will pay for a cab. She said that her establishment
definitely does not serve underage children. She related that
she has had "a sting operation" performed and that she passed.
She offered her belief that instead of catching thieves and
vandals that the troopers are sitting around the bars. She
related a scenario in which she called for assistance but they
wouldn't come since the bartender would not go to the parking
lot and obtain the license number and information on the car.
She supported her bartender's decision not to leave her post and
risk bodily harm. She supported moving the ABC Board to DCCED.
She would like the AST to focus on personal property crimes.
4:31:24 PM
BERNADETTE BRADLEY, Owner, Bradley House, Anchorage, stated that
she has never received a citation but she has the impression
that the ABC Board is always trying to catch her doing something
wrong. She has practiced due diligence in her business. She
stated neither she nor her staff is perfect. She said that
while director Gifford testified all is well with the ABC Board,
she disagreed. Something is amiss, she stated. She related that
as past president of the Old Seward/Oceanview Community Council,
she received notification of two package store licensees coming
to Huffman. The ABC Board failed to realize that Mo's O'Brady's
Irish Pub is a full beverage dispensary, and Tap Root restaurant
and bar no longer operates in the area since it moved to
Spenard. She forewarned the owner that the city councils may
protest his license since the notice read that it would be a
package store. He contacted the ABC Board to let them know of
their error. She related that the improper information put the
owner's business unnecessarily at risk. Last August, the
council directed her to obtain a copy of a licensing file but
the ABC Board could not find the licensing file. She offered
her belief that this never happened prior to DPS being the
oversight agency. The ABC Board officers previously worked side
by side with owners to better understand what the owners had to
contend with and the investigators arrested minors without
criminalizing the owner. She attributed her training to the
period prior to the ABC Board being housed at the DPS. She
contended that DPS has good intentions in how it administers
licensees, but it is from a police officer's point of view. She
says she is a business owner, not a criminal. The ABC Board
does not need to spend valuable tax dollars on someone like her.
She thinks the DCCED would have figured this out long before
this and focused the state's efforts on teaching owners how not
to get a notice of violation and to use the police on the few
problem licensees. She offered her support for HB 125, to move
the ABC Board to the DCCED and to allow law enforcement to
perform law enforcement duties. She would like the DCCED and
the beverage industry to rebuild their relationship so she can
focus on her business and help the state's economy grow without
fear.
4:35:10 PM
SYLVIA VILLAMIDES, Director, Alaska Cabaret, Hotel, Restaurant,
and Retailer's Association (CHARR), stated the Anchorage CHARR
has over 350 members including some multiple licensees. She
offered her belief that the beverage retailers are viewed as a
bad group of people. In Anchorage, the ABC Board has faced any
problems with enforcement officers, but licensees are not
against compliance checks or enforcement efforts. They are just
against the methods use. She related a scenario in which a few
months ago, downtown bars were hit with an abundance of
compliance checks. She offered that problems can be resolved
with community education. At this time licensees are treated as
criminals. The beverage industry does not seek to serve minors
or support drunks on premises. The industry helped draft
increased civil penalties for minors in conjunction with Senator
Kevin Meyer and with his assistance increased the civil
penalties. Additionally, in conjunction with the Alaska Highway
Safety Office, the CHARR has helped develop the "Off the Road
Program" designed to assist people get home if the person feels
he/she has had too much to drink. The program is free to
patrons. The CHARR also helps bar operators with the civil
penalty process. The CHARR does not represent the bar operator
in court, but will help them with paperwork. She concluded that
the beverage industry does not want any minors in their
premises.
4:38:31 PM
DURAN POWELL, General Manager, Chilkoot Charlies, stated that he
has worked in the beverage and hospitality industry for over 30
years. He offered his belief that sting operations are
conducted differently in Alaska than in other states. He
explained that the U.S. Department of Justice has developed
national standards. He remarked that one of the ABC Board
investigators was not familiar with the national standards. He
acknowledged that minors used in sting operations are now
screened. However, many minors being used are minorities and it
is difficult to determine their ages. He described one black
minor who was bald was used during a sting operation and the
underage minor appeared to be about 27 years old. At the time
the bartender carded two prior customers, but she thought the
sting minor was 27 years old so the bartender failed the
compliance check. Using the national standard, stings are
designed for the bartender to reasonably pass. In Alaska, the
officers use one of the 245 obscure federal identification
instead of the standard state driver's license or
identification. The problem with the obscure identification,
such as a military dependent's identification (ID) contains
three dates: the date of issue, the date of expiration, and the
date of birth. These dates are listed in the same type style,
which is confusing to clerks. Additionally, the investigator
waits until the shift changes. A few bartenders have been
changing their bank out. He stated that Chilkoot Charlies
arrests over 100 minors a year at their establishments. He
expressed dismay that when a bartender fails one compliance
check, the bar is not given any consideration for its good
record. Chilkoot Charlies bar contains 64 video cameras, metal
detectors on the front door, barbed wire on the fences, and
alarms on all the doors. He said, "We're just a hair away from
operating a prison. We're supposed to be a hospitality
operation. If someone tries hard enough, the bar owner is the
one to suffer. His bar has 80 employees that all lose their job
for a week when one bartender has a TAM card that fails, he
said. He pointed out that he is characterizing the tone of the
ABC Board. There is no mercy or understanding. He recalled the
owner of Hogg Brothers got cited once in 30 or more years of
operation. Her business was closed for a week and she decided
it was not worth it. He said, "She hung it up. She sold her
business. She walked away. She was so disgusted with the
process she got ground up in." The state could eliminate a lot
of problems by designing the sting so the clerk has an
opportunity to pass instead of designing the sting for failure
and the operator faces a two-week closure and is closed.
4:43:17 PM
MICHELLE POWELL, Bartender, stated that she has been a
professional bartender for sixteen years. She said she would
like to see the ABC Board moved to the DCCED. She reiterated
she worked for 16 years in a licensed establishment. She
related she has witnessed a change in the tone of the ABC Board
in the last six years from a cooperative nature to a less
cooperative one. She described a personal scenario. In 2006,
she said she was an unsuspecting victim of a sting operation.
The investigator waited 15 minutes for the shift change, brought
in a minor who appeared to be 25. She was the only person
served. It did matter to the officer that she had a good record
for previously detecting minors by checking identifications and
credit cards. Nor did it matter that the establishment arrested
at least one minor per weekend. She once identified a mother
and had her arrested for giving her 15-year-old daughter a beer.
She was familiar with AS 04 so she knew if she did not fight the
charge that she would face a felony charge for a second offense.
She said she did not knowingly or willingly serve a minor.
Eleven months later, in trial, she was found not guilty by a
jury. The experience was emotionally exhausting and the
financial cost to keep her career intact cost $27,000. She
recalled hearing how sting processes have changed and how
productive and cooperative the ABC Board's relationship is with
the AST and other law enforcement. However, she asked about the
relationship the ABC Board has with the hospitality industry.
She believed a significant change in the ABC Board's attitude
would happen by relocating the ABC Board from the DPS to the
DCCED.
4:45:47 PM
SHARON WHYTAL, Nurse; Coordinator, Southern Kenai Peninsula
(SKP), Communities Project, related that she has served as a
public health nurse for 17 years. Currently, she is working to
coordinate a needs assessment on behalf of the Southern Kenai
Peninsula called the Communities Project, which she described as
a partnership of about 50 organizations. The group conducted
over 100 community interviews with 1,400 surveys. The needs
assessment identified substance abuse as a top community
concern. Additionally, it identified that teenagers, in
particular found our communities give a mixed message about
appropriate use of alcohol and drugs. The SKP's Community
Project opposes HB 125 since the project's focus is on
prevention, which also relies on support of law enforcement to
promote positive values and healthy choices in our communities.
She offered her belief that moving ABC Board will weaken law
enforcement efforts to reduce minor's access to alcohol. It
would also be costly and disruptive to the efficient operation
of the agencies. She related her understanding that problems
happen that cause problems for individuals in the industry, but
also believe the compliance check program operates well in
random selection of licensees. She stated that the goals set FY
2007 would not likely be met if the ABC Board is relocated. She
urged members to oppose HB 125.
4:47:57 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 125.
4:48:28 PM
SHIRLEY GIFFORD, Executive Director, Alcoholic Beverage Control
Board (ABC Board), Department of Public Safety (DPS) answered a
question raised at an earlier hearing. She responded to an
earlier question by Representative Seaton, with respect to the
ABC Board's access to Alaska Public Safety Information Network
(APSIN) computer system. She said she erroneously testified
that that she did not think the ABC Board would have access to
APSIN due to the DPS's firewall. She related she was mistaken,
that the ABC Board investigators will still have access to the
system. One question not yet resolved is the type of case
management. Currently, the ABC Board uses the system, but the
DPS will switch to an Alaska Records Management System by the
end of summer. She anticipated if that occurs that the ABC
Board may incur a one-time license fee of $7,200, if it is not
under the DPS.
4:50:04 PM
MS. GIFFORD responded to an earlier question by Representative
Miller, who previously asked for a comparison between compliance
checks for the period of time that the ABC Board was under the
DOR. She was not able to locate the statistics under DOR. She
recalled the structure was different since the funds to conduct
compliance checks were distributed to local police departments.
She left the Soldotna Police Department in 2003, at the time the
ABC Board switched to the DPS. She offered her belief that the
department hired a person specifically to perform compliance
checks, in part, to ensure the detailed records were kept to
comply with the federal reporting requirements. She reported
that investigator Hamilton began working for the agency in
August 2005. She concluded that the ABC Board does not have any
statistics available for comparison purposes.
MS. GIFFORD said she appreciated Mr. Jesse's comments on
improved complaint procedures. She said copies are in members'
packets. She said she hopes the process will assist the
hospitality industry by providing other avenues to address their
concerns. She offered her assurance that she wants to
collaborate with the industry. She related her understanding
that the industry would like to attack the problem of underage
parties. She stated that she attended the Anchorage Police
Department's school resource officer's meeting to discuss
underage parties. She pointed out that with four investigators
that the ABC Board is limited in what it can accomplish. She
has a pool of grant funds for compliance checks. She stressed
that she believes in compliance checks. She also recalled the
hospitality industry also believes in compliance checks, which
are necessary to ensure that people are not selling alcohol to
underage persons.
4:53:25 PM
MS. GIFFORD recalled the UAA conducted research in 2007, which
highlighted $320 million as the cost of underage drinking. In
terms of the total cost, the state is 39th in the nation, but in
terms of cost per youth capita, Alaska ranks number 1 in the
nation, which is twice the cost of other states.
MS. GIFFORD reviewed the 2010 National Alcohol Beverage Control
Association's (NABCA) survey book. She reported that the vast
majority of other ABC Boards, 19, are housed under public safety
organizations including attorney general, homeland security, or
law enforcement offices. Approximately 18 others are
independent organizations or commissions, 10 boards were housed
under the revenue departments and two, Florida and Rhode Island,
were under organizations that were similar to the DCCED. The
national average of 22 states success rates for compliance
checks was 80 percent. Subtracting Florida's 11 percent success
for compliance checks increased the figure to 84 percent. She
commented that Florida is under business regulation.
MS. GIFFORD offered to respond to any complaints, but cautioned
that her answers may be answers that people don't always want to
hear. She reported that her position is to assist the ABC Board
in controlling the manufacture, sales, possession, and barter of
alcohol beverages. She welcomed an interpretation of her
duties. She attested that she and her staff are doing the best
job they can, but she acknowledged there is room for
improvement. She recently developed an eight-page survey to
gain feedback. She works with 1,800 licensees. She hears
accolades, but she and her staff are not perfect. It is not her
goal to shut businesses down but to hold licensees accountable
to the statutes and regulations. She recalled Mr. Karl's
testimony and she identified her investigator conducted the
visit to Chena Hot Springs. She offered to provide additional
details on the compliance check.
4:59:01 PM
REPRESENTATIVE SADDLER asked how much effort the ABC Board's
investigators spend on enforcement, education, and business
assistance, such as helping with signage.
MS. GIFFORD responded that the ABC Board has four investigators
and an enforcement unit supervisor. One investigator conducts
compliance checks, two investigators conduct inspections, and
one investigator works about 75 percent to provide assistance
and the remaining 25 percent on compliance. The vast majority
of the ABC Board's staff work is focused on ensuring that
licensed premises are in good operation and follow the statutes
in AS 04. She related that compliance checks and enforcement
represent one portion of the job and licensing provides another
function.
[HB 125 was held over.]
5:00:45 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:00 p.m.