Legislature(2001 - 2002)

04/18/2001 03:15 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 18, 2001                                                                                         
                           3:15 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Lisa Murkowski, Chair                                                                                            
Representative Andrew Halcro, Vice Chair                                                                                        
Representative Kevin Meyer                                                                                                      
Representative Pete Kott                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Joe Hayes                                                                                                        
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 225                                                                                                              
"An  Act relating  to municipal  taxation of  alcoholic beverages                                                               
and increasing the alcoholic beverage tax rates."                                                                               
     - MOVED CSHB 225(L&C) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 228                                                                                                              
"An Act relating  to the offense of selling or  giving tobacco to                                                               
a  minor,  to  the  accounting  of  fees  from  business  license                                                               
endorsements for  tobacco products, to the  disclosure of certain                                                               
confidential  cigarette  and   tobacco  product  information,  to                                                               
notification regarding  a cigarette  manufacturer's noncompliance                                                               
with  the   tobacco  product  Master  Settlement   Agreement,  to                                                               
business license  endorsements for  sale of tobacco  products, to                                                               
citations and  penalties for illegal  sales of  tobacco products;                                                               
and providing for an effective date."                                                                                           
     - MOVED CSHB 228(L&C) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 157                                                                                                              
"An Act  relating to trust  companies and providers  of fiduciary                                                               
services;  amending  Rules  6  and  12,  Alaska  Rules  of  Civil                                                               
Procedure,  Rule  40, Alaska  Rules  of  Criminal Procedure,  and                                                               
Rules  204, 403,  502, 602,  and 611,  Alaska Rules  of Appellate                                                               
Procedure; and providing for an effective date."                                                                                
     - BILL HEARING POSTPONED TO 4/19/01                                                                                        
PREVIOUS ACTION                                                                                                               
BILL: HB 225                                                                                                                  
SHORT TITLE:ALCOHOLIC BEVERAGE TAX                                                                                              
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI                                                                                          
Jrn-Date   Jrn-Page                     Action                                                                                  
03/30/01     0789       (H)        READ THE FIRST TIME -                                                                        
03/30/01     0789       (H)        L&C, FIN                                                                                     
04/03/01     0830       (H)        COSPONSOR(S): HUDSON                                                                         
04/09/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/09/01                (H)        Heard & Held                                                                                 
04/10/01                (H)        L&C AT 3:00 PM CAPITOL 120                                                                   
04/10/01                (H)        Heard & Held                                                                                 
04/11/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/11/01                (H)        Heard & Held                                                                                 
04/11/01                (H)        MINUTE(L&C)                                                                                  
04/18/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
BILL: HB 228                                                                                                                  
SHORT TITLE:SALE OF TOBACCO PRODUCTS                                                                                            
SPONSOR(S): REPRESENTATIVE(S)HARRIS                                                                                             
Jrn-Date   Jrn-Page                     Action                                                                                  
04/02/01     0809       (H)        READ THE FIRST TIME -                                                                        
04/02/01     0809       (H)        L&C, JUD, FIN                                                                                
04/03/01     0831       (H)        COSPONSOR(S): HUDSON,                                                                        
04/17/01     1021       (H)        COSPONSOR(S): KERTTULA                                                                       
04/18/01     1053       (H)        COSPONSOR(S): CRAWFORD                                                                       
04/18/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
WITNESS REGISTER                                                                                                              
JOHN MANLY, Staff                                                                                                               
to Representative John Harris                                                                                                   
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on behalf of the sponsor of HB
ELMER LINDSTROM, Special Assistant                                                                                              
Office of the Commissioner                                                                                                      
Department of Health & Social Services                                                                                          
PO Box 110601                                                                                                                   
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Testified on HB 228.                                                                                       
EDWIN SASSER, Project Coordinator                                                                                               
Division of Public Health                                                                                                       
Department of Health & Social Services                                                                                          
PO Box 110630                                                                                                                   
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Answered questions on HB 228.                                                                              
MICHAEL LIVINGSTON, Detective                                                                                                   
Anchorage Police Department                                                                                                     
4501 South Bragaw                                                                                                               
Anchorage, Alaska 99507                                                                                                         
POSITION STATEMENT:  Testified on HB 228.                                                                                       
DAN BRANCH, Assistant Attorney General                                                                                          
Commercial Section                                                                                                              
Civil Division (Juneau)                                                                                                         
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Answered questions on HB 228.                                                                              
JOHANNA BALES, Revenue Auditor                                                                                                  
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
550 west 7th Street                                                                                                             
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:  Answered questions on HB 228.                                                                              
JENNIFER STRICKLER, Administrative Officer                                                                                      
Division of Occupational Licensing                                                                                              
Department of Community & Economic Development                                                                                  
PO Box 110806                                                                                                                   
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Answered questions on HB 228.                                                                              
ACTION NARRATIVE                                                                                                              
TAPE 01-59, SIDE A                                                                                                              
Number 0001                                                                                                                     
CHAIR  LISA  MURKOWSKI  called   the  House  Labor  and  Commerce                                                               
Standing  Committee  meeting  to  order at  3:15  p.m.    Members                                                               
present  at the  call  to order  were Representatives  Murkowski,                                                               
Halcro, Crawford,  and Hayes.   Representatives Meyer,  Kott, and                                                               
Rokeberg joined the meeting as it was in progress.                                                                              
HB 225-ALCOHOLIC BEVERAGE TAX                                                                                                 
CHAIR MURKOWSKI announced that the  first order of business would                                                               
be HOUSE BILL NO. 225, "An  Act relating to municipal taxation of                                                               
alcoholic  beverages and  increasing the  alcoholic beverage  tax                                                               
CHAIR  MURKOWSKI reminded  members that  during the  last hearing                                                               
[April 11]  there was a  motion to reconsider after  a successful                                                               
vote to  move the  bill out of  committee.   That reconsideration                                                               
motion,  she  said, was  out  of  order.    The only  thing  [the                                                               
committee] had failed to do was [sign the committee report].                                                                    
Number 0166                                                                                                                     
CHAIR  MURKOWSKI  announced that  CSHB  225(L&C)  moved from  the                                                               
House Labor and Commerce Standing Committee.                                                                                    
HB 228-SALE OF TOBACCO PRODUCTS                                                                                               
CHAIR MURKOWSKI announced that the  final order of business would                                                               
be  HOUSE BILL  NO.  228,  "An Act  relating  to  the offense  of                                                               
selling or giving  tobacco to a minor, to the  accounting of fees                                                               
from business  license endorsements for tobacco  products, to the                                                               
disclosure of certain confidential  cigarette and tobacco product                                                               
information,    to    notification    regarding    a    cigarette                                                               
manufacturer's  noncompliance  with  the tobacco  product  Master                                                               
Settlement Agreement,  to business license endorsements  for sale                                                               
of  tobacco  products, to  citations  and  penalties for  illegal                                                               
sales of tobacco products; and providing for an effective date."                                                                
Number 0286                                                                                                                     
JOHN  MANLY, Staff  to Representative  John Harris,  Alaska State                                                               
Legislature, came forth  on behalf of the sponsor of  HB 228.  He                                                               
stated that this came to  Representative Harris's attention as he                                                               
was  doing the  Department of  Health &  Social Services  budget.                                                               
[The  state],  he   said,  is  being  thwacked   by  the  federal                                                               
government for $1.5 million in  the drug-and-alcohol block grants                                                               
because  the tobacco-sales-to-minors  [rate] is  too  high.   The                                                               
federal government sets a target of  about 20 percent of sales to                                                               
minors; however, Alaska is running  about 61 percent in the Bush,                                                               
and about one third in the urban areas.                                                                                         
MR.  MANLY  explained that,  essentially,  HB  228 increases  the                                                               
penalties that  would be paid  by the  owner of the  business who                                                               
holds the  endorsement on  the business  license to  sell tobacco                                                               
products.   Representative Harris has asked  for relatively hefty                                                               
fines in that regard; therefore,  they are set between $1,000 and                                                               
$5,000.  In addition, the  department currently has the option to                                                               
suspend  the  endorsement  so the  business  can't  sell  tobacco                                                               
products for  a certain amount  of time - up  to 45 days.   Those                                                               
suspensions, [with  this bill] would  be set  at 20 days  for the                                                               
first  offense, 45  days  for the  second, and  90  days for  the                                                               
MR. MANLY informed the committee that  the bill makes a number of                                                               
other changes.   The  most significant one  concerns the  cost of                                                               
the tobacco  endorsement for a  business license.   Currently, it                                                               
is $25 for  a two-year endorsement, whether it is  for a mom-and-                                                               
pop shop  or a  big chain  store.  This  bill proposes  to change                                                               
that to  $100 for a two-year  endorsement per outlet.   He stated                                                               
that  this  makes  it  easier  to  enforce  a  suspension  of  an                                                               
endorsement,  and to  keep track  of violations.   He  added that                                                               
there are  other minor parts of  the bill, such as  in Sections 3                                                               
and 4, that have to do  with the Department of Revenue's tracking                                                               
of  the  compliance with  the  tobacco  settlement that  all  the                                                               
states have entered into.                                                                                                       
Number 0657                                                                                                                     
CHAIR  MURKOWSKI asked  whether  [the  legislature] is  currently                                                               
being penalized for not being in compliance.                                                                                    
MR. MANLY responded  that the budget for this  coming fiscal year                                                               
has $1.5 million deducted from  the drug and alcohol abuse grant.                                                               
He said  this is  based on  compliance checks  that were  done in                                                               
1999.   He remarked that  presuming the legislature  will approve                                                               
the  attached   fiscal  notes  and  put   $481,000  into  tobacco                                                               
enforcement, the federal government  will relieve the legislature                                                               
of the penalty for this year.                                                                                                   
CHAIR  MURKOWSKI asked  whether the  $481,000 is  over and  above                                                               
what [the legislature] has currently  put in the operating budget                                                               
for tobacco prevention or cessation programs.                                                                                   
MR.  MANLY  answered   that  it  is  in  addition   to  what  the                                                               
legislature had spent in the last fiscal year.                                                                                  
Number 0749                                                                                                                     
REPRESENTATIVE HALCRO  said he  is only  concerned that  the bill                                                               
will  not  solve  the  problem  unless  there  is  a  substantial                                                               
investment in  enforcement.   He asked Mr.  Manly whether  he has                                                               
had discussions  with any of  the departments about how  to apply                                                               
the  money  to enforcement,  and  about  increasing ABC  [Alcohol                                                               
Beverage Control] enforcement.                                                                                                  
MR.  MANLY responded  that to  his  knowledge that  has not  been                                                               
discussed.  He  stated that the bulk of this  money would be used                                                               
to contract with local law enforcement to increase the checks.                                                                  
Number 0861                                                                                                                     
ELMER LINDSTROM,  Special Assistant, Office of  the Commissioner,                                                               
Department of  Health &  Social Services  [DHSS], came  forth and                                                               
stated that  this legislation  is an  important issue  facing the                                                               
department.  He referred to  a PowerPoint presentation [hard copy                                                               
provided in the committee packets]  and stated that this provides                                                               
a good deal of introductory  information on the impact of tobacco                                                               
on [Alaska and Alaskans].  The  latter sections, he said, go into                                                               
specific discussion of the enforcement issues.                                                                                  
CHAIR MURKOWSKI referred  on page 7 [of the  presentation] to the                                                               
statistic, "Between  1988 and 1996,  the percentage  of teenagers                                                               
taking up the habit jumped 73  percent."  She asked Mr. Lindstrom                                                               
whether  the  [department's]  statistical  evaluation  only  goes                                                               
through  1996, and  whether  there have  been  efforts that  have                                                               
decreased the incidence of teenage smoking.                                                                                     
MR. LINDSTROM  responded that these  numbers are from  the Center                                                               
for  Disease Control  [and  Prevention]  (CDC).   He  said he  is                                                               
guessing  that they  probably came  from the  youth risk-behavior                                                               
surveys that are done by most states.                                                                                           
Number 0994                                                                                                                     
EDWIN  SASSER, Project  Coordinator, Division  of Public  Health,                                                               
Department of  Health &  Social Services  [DHSS], came  forth and                                                               
stated  that  the   bulk  of  the  numbers   in  the  [PowerPoint                                                               
presentation] are CDC numbers, with a couple of exceptions.                                                                     
CHAIR  MURKOWSKI   asked  whether  it's  not   that  there  isn't                                                               
information after 1996, but that was  just the period of time the                                                               
survey was taking things into account.                                                                                          
MR. SASSER  responded that it was  the period of time  that there                                                               
were solid numbers the department felt were recordable.                                                                         
MR. LINDSTROM referred  to a description of  what a comprehensive                                                               
tobacco control  program ought to  look like [the bottom  of page                                                               
10, continuing to  page 12].  He noted that  it includes a number                                                               
of  components  such  as community  tobacco-prevention  programs,                                                               
chronic-disease   programs,   school  prevention   programs,   an                                                               
enforcement  component,  counter-marketing,  statewide  programs,                                                               
smoking cessation programs,  surveillance and evaluation systems,                                                               
and   an   administrative   system   to   make   it   all   work.                                                               
Unfortunately, he  said, the department does  not have sufficient                                                               
resources in its comprehensive tobacco  control program to do the                                                               
job that  needs to  be done on  each one of  these elements.   He                                                               
explained  that   the  enforcement  component  is   part  of  the                                                               
comprehensive program.  It is unique,  he said, because it is the                                                               
one  element by  its  very nature  that relies  on  the state  to                                                               
perform.    The advice  from everyone working in  tobacco control                                                               
in the absence  of fully funding the tobacco  control program has                                                               
been that enforcement  is not regarding as  the highest priority.                                                               
That is backed up by the CDC.                                                                                                   
MR.  LINDSTROM referred  to  page 13  [of  the presentation]  and                                                               
explained   that   the   federal   Synar   [amendment   requires]                                                               
"enforcement  of state-level  minors'  access  laws" to  decrease                                                               
sales to  persons under the  age of 18  to less than  20 percent.                                                               
This  is  done  by  annual   statewide  inspection  surveys  that                                                               
accurately  measure  the  effectiveness of  enforcement  efforts.                                                               
The department  then reports  annually to  the U.S.  Secretary of                                                               
Health and Human Services.   The penalty for noncompliance is the                                                               
reduction of the substance abuse  block grant - treatment dollars                                                               
for people who are alcohol  abusers or who abuse other controlled                                                               
Number 1190                                                                                                                     
MR. LINDSTROM remarked that he  has been frustrated over the last                                                               
year.   On the one  hand, the federal government,  which controls                                                               
tobacco,  says, "You  need a  comprehensive program,  but if  you                                                               
don't  have  enough  money,  enforcement  isn't  really  the  top                                                               
priority."   On the other  hand, another federal agency  "holds a                                                               
gun" and  says, "Unless you  make enforcement a priority,  we are                                                               
going  to  hold hostage  your  alcohol  treatment dollars."    He                                                               
expressed that  the people who are  responsible for administering                                                               
the  substance  abuse  programs  don't wake  up  in  the  morning                                                               
feeling that tobacco control is  their first priority.  Likewise,                                                               
people in  public health  really aren't tied  to the  desires and                                                               
needs of the  substance abuse community and the  federal law that                                                               
governs them.                                                                                                                   
CHAIR MURKOWSKI surmised that [the  legislature] is in compliance                                                               
in that [the  department] conducts the annual survey,  but is not                                                               
in  compliance with  getting the  numbers to  the level  the U.S.                                                               
Secretary of Health and Human Services wants.                                                                                   
MR. LINDSTROM responded  in the affirmative, but  noted that over                                                               
the  last   four  or  five   years  the  methodology   that  [the                                                               
department]  has  used  has  changed  from year  to  year.    For                                                               
example, one  year [the  department] had  access to  some federal                                                               
Food and  Drug Administration  dollars, which  thought it  was in                                                               
the business of  regulating tobacco until the  U.S. Supreme Court                                                               
ruled that it really didn't have jurisdiction.                                                                                  
Number 1317                                                                                                                     
MR.  LINDSTROM referred  to slide  35, which  gives a  picture of                                                               
what the enforcement program looks like.   If a clerk in a retail                                                               
outlet  sells tobacco  to a  minor and  is found  guilty of  that                                                               
offense, the  finding of guilt is  supposed to go from  the court                                                               
system to the Division of  Occupational Licensing.  The end point                                                               
is the suspension  of that retailer's ability to  sell tobacco to                                                               
anyone for up  to 45 days for  a first offense and up  to 90 days                                                               
for a  second offense.  The  problem, he said, is  that there are                                                               
many agencies  and people that  need to be involved  in different                                                               
parts  of the  process  to get  from  point  A to  point  B.   He                                                               
explained  that the  Division  of Alcoholism  and  Drug Abuse  is                                                               
responsible  for   generating  the   sample  of  outlets   to  be                                                               
inspected.   The Division of  Public Health has  been responsible                                                               
for contracting  with local law  enforcement.  If a  tobacco sale                                                               
is made, a citation will be issued,  and it will then go into the                                                               
court system.  The court system has  to be counted on to send the                                                               
material on  to the Division  of Occupational Licensing,  and the                                                               
division has to be counted on to pursue the suspension.                                                                         
Number 1434                                                                                                                     
MR. LINDSTROM  remarked that  with the  exception of  the tobacco                                                               
prevention  and  control people  within  the  Division of  Public                                                               
Health,  none of  these  other agencies  "wake  up every  morning                                                               
going, 'I know that one of  my top priorities, one of my missions                                                               
in life,  is to  enforce the  state tobacco  control ordinance.'"                                                               
He added that it doesn't surprise  him that the "tobacco sales to                                                               
minors" law does not rise to  the top as something that local law                                                               
enforcement  would  do.    Likewise, he  said,  the  Division  of                                                               
Occupational Licensing  is primarily a revenue-generator  and was                                                               
never conceived as a regulatory mechanism.                                                                                      
CHAIR MURKOWSKI asked how the  Division of Occupational Licensing                                                               
became involved in the first place.                                                                                             
MR. LINDSTROM responded that he  has not researched how that came                                                               
about.   However, the underlying  law has  been on the  books for                                                               
many  years, and  has only  sporadically  been used.   The  first                                                               
significant efforts,  he said, were  during the  negotiations for                                                               
the  tobacco  settlement  when  the  Department  of  Law  made  a                                                               
conscious decision  to pursue a  number of these citations.   The                                                               
[department's] task  today, he said,  is to  put in place  a real                                                               
system that will keep working  over time without special care and                                                               
attention on the part of a particular commissioner.                                                                             
MR. LINDSTROM remarked  that there was a reference  to the fiscal                                                               
penalties and  said [the  state] was  found in  noncompliance for                                                               
federal fiscal year  2000; the basis of that  noncompliance is on                                                               
[page] 15.  Of the outlets  surveyed last fall in the more remote                                                               
areas -  communities with fewer  than 9  outlets - 61  percent of                                                               
the  time  the  youths  were successful  in  buying  tobacco;  in                                                               
communities with 9 to 49 outlets,  it was 40 percent of the time;                                                               
and  in the  major  cities -  Anchorage,  Juneau, Fairbanks,  and                                                               
Ketchikan - it  was 26 percent of  the time.  The  bottom line is                                                               
that [minors] are buying tobacco at an unacceptably high rate.                                                                  
MR. LINDSTROM  reported that [Alaska] was  found in noncompliance                                                               
for federal  fiscal year  1999 and appealed.   Before  the appeal                                                               
could run  its course,  Congress, several  months ago,  passed an                                                               
alternative penalty.   The federal government said,  "We will not                                                               
take $1.5  million of  your substance  abuse treatment  money if,                                                               
effective  July of  2001, you  demonstrate that  you can  put new                                                               
resources   into    the   tobacco   enforcement    program   [of]                                                               
approximately  $481,000."   He  noted that  those  are the  funds                                                               
reflected in the fiscal note.                                                                                                   
Number 1664                                                                                                                     
CHAIR  MURKOWSKI  asked  what  could  be done  now  in  terms  of                                                               
training clerks about the sale of tobacco products.                                                                             
MR. LINDSTROM  responded that historically  very little  has been                                                               
done  by the  state.   That  is a  significant  component of  the                                                               
fiscal note,  and some of  the additional resources will  be used                                                               
for vendor  education and  training.  He  remarked that  he knows                                                               
there is a training program that  Philip Morris or someone in the                                                               
industry has made available to retailers.                                                                                       
MR. SASSER remarked  that the We Card program is  a consortium of                                                               
tobacco company  money.   As part  of a  settlement in  Juneau, a                                                               
curriculum  was prepared  whereby the  Division of  Public Health                                                               
worked out,  as part of the  settlement for vendors who  had sold                                                               
tobacco  products  to youths,  having  their  penalty reduced  by                                                               
going through a  vendor education program.  He stated  that it is                                                               
a  pretty good  curriculum, and  it is  adaptable to  a statewide                                                               
application as  part of tobacco  enforcement now.  He  added that                                                               
he thinks businesses and clerks  deserve knowing upfront how much                                                               
damage  they can  do to  their boss,  to their  business, and  to                                                               
themselves by  inadvertently or  volitionally selling  tobacco to                                                               
CHAIR MURKOWSKI  asked whether the  state sends out a  fact sheet                                                               
when a person renews his or her endorsement.                                                                                    
MR. SASSER  responded that  every vendor  who had  an endorsement                                                               
prior to  the year 2000  in the state  has received at  least one                                                               
packet.  The  division has since passed out letters  to those who                                                               
passed and failed the last Synar checks.                                                                                        
Number 1825                                                                                                                     
REPRESENTATIVE MEYER  stated that this  is a subject  of interest                                                               
to him.   He  said it seems  to him that  the clerks  should know                                                               
that what  they are selling  is different from  a candy bar.   He                                                               
remarked that  he is wondering if  20 days for the  first offense                                                               
is enough,  because it is  so hard  to catch businesses  that are                                                               
selling  to minors.   He  added that  it would  seem to  him that                                                               
there  should  be periodic  "stings."    In  terms of  a  vending                                                               
machine, he  said he thinks they  should be in the  vision of the                                                               
clerk or the owner.  He  asked whether [Alaska] still has federal                                                               
money  coming to  the local  municipalities for  the stings,  and                                                               
whether the  division would support  a stiffer penalty  for first                                                               
MR. LINDSTROM  responded that  to his  knowledge no  funding goes                                                               
directly to  municipalities from the federal  government for this                                                               
effort.   In the past, he  said, there have been  federal dollars                                                               
coming through [DHSS].   He remarked that under  the current law,                                                               
the first penalty  could be up to 45 days  and the second offense                                                               
could be up to 90 days.   He said he thinks from the department's                                                               
perspective,  the  certainty  of  the  penalty  is  at  least  as                                                               
important  as the  duration.   He added  that he  doesn't believe                                                               
[the department] would  object if it were a mandatory  45 days on                                                               
the  first offense,  but it  should be  fixed.   In addition,  he                                                               
said,  the bill  also includes  something that  isn't in  current                                                               
law, which is the  fine to the retailer - $1,000  - for the first                                                               
CHAIR MURKOWSKI asked whether each  vending machine would have to                                                               
have a separate endorsement.                                                                                                    
Number 2135                                                                                                                     
MR. LINDSTROM  responded that the  entity that actually  owns the                                                               
vending  machines  must have  an  endorsement,  and there  is  an                                                               
endorsement required  for the people  who are responsible  to see                                                               
that nobody accesses that particular  machine.  For example, if a                                                               
person owns  a bowling alley and  had a cigarette machine  on the                                                               
premises, the  bowling alley must  have an endorsement  and would                                                               
be held responsible  if kids are accessing that machine.   At the                                                               
same time,  the person who owns  the machine also has  to have an                                                               
MR. SASSER added  that in the bill, it is  very difficult to have                                                               
a  penalty  assessed  for  a  vending  machine  company,  because                                                               
[someone from the company] would  have to have placed the machine                                                               
either too  close to a door  or in a place  where 17-year-olds or                                                               
18-year-olds can  access it.  While  there is a provision  in the                                                               
bill for  a vending machine  company to lose its  endorsement, it                                                               
would be  very rare that would  be the case.   The responsibility                                                               
for observing the  sales made on a daily basis  from that machine                                                               
falls  to  the   place  that  contracted  with   the  vendor,  he                                                               
CHAIR MURKOWSKI asked, if the  bowling alley [clerk] consistently                                                               
looks  the  other way  when  kids  purchase cigarettes  from  the                                                               
machine, whether this  bill allows for the vending  machine to be                                                               
pulled from the premise.                                                                                                        
MR.  SASSER responded  that if  the vending  machine company  has                                                               
negligently placed the machine, then  its endorsement is at risk.                                                               
If the bowling alley negligently  supervised the machine, then it                                                               
loses  its  endorsement;  during  the  time  the  endorsement  is                                                               
suspended, the machine is either locked up or removed.                                                                          
CHAIR MURKOWSKI asked  whether there are two  endorsements in one                                                               
establishment:   the  endorsement on  the vending  machine that's                                                               
held by  the vending  machine owner, and  the endorsement  to the                                                               
premises to have the vending machine.                                                                                           
MR. SASSER  answered that  the vending  machine company  has only                                                               
one  endorsement  statewide, no  matter  how  many machines  [the                                                               
company] places.                                                                                                                
Number 2246                                                                                                                     
REPRESENTATIVE  HAYES  asked how  many  incidents  would have  to                                                               
happen  for   a  business   [with  a   vending  machine]   to  be                                                               
[considered] negligent.                                                                                                         
MR.  SASSER answered  that  the youth  would have  to  be on  the                                                               
premises where he or  she is not supposed to be,  in order to buy                                                               
from the vending  machine.  For example, the only  time a bowling                                                               
alley could have a vending machine  would be if there were a bar.                                                               
Incidental purchases, he said, are rare in those circumstances.                                                                 
REPRESENTATIVE ROKEBERG asked what  the financial impact would be                                                               
if the bill failed to pass.                                                                                                     
MR. LINDSTROM  responded that the  impact on the  tobacco program                                                               
is  nil; the  impact  on the  substance  abuse alcohol  treatment                                                               
program is $1.5 million.                                                                                                        
Number 2333                                                                                                                     
MICHAEL  LIVINGSTON,  Detective,   Anchorage  Police  Department,                                                               
testified via teleconference.   He shared with  the committee how                                                               
he became involved in this issue.  He stated:                                                                                   
     It  started back  in the  1980s when  I would  drive by                                                                    
     high schools  [and] there  would be  a large  number of                                                                    
     kids  outside smoking.   I'd  ask them  where they  get                                                                    
     their cigarettes  from, and they would  tell me, "About                                                                    
     any store in Anchorage."                                                                                                   
     I  wanted  to  begin   doing  tobacco  stings,  but  my                                                                    
     department  basically  said,   "No,  the  timing's  not                                                                    
     right."    Back  in  1997   the  State  of  Alaska  was                                                                    
     considering suing the tobacco  industry and the tobacco                                                                    
     industry filed a preemptive  lawsuit saying, "You can't                                                                    
     sue  us."    It  was  about  that  time,  the  attorney                                                                    
     general's office  got a  hold of  the chief  of police,                                                                    
     and the chief  of police got a hold of  me and asked me                                                                    
     to start doing stings.                                                                                                     
     Since 1997,  ... I have  written probably  more tickets                                                                    
     for sale  of tobacco  to minors  than any  other police                                                                    
     officer  in the  state of  Alaska.   I've testified  in                                                                    
     more  criminal cases  with defense  attorneys, probably                                                                    
     more than  any other  police officer  in Alaska.   I've                                                                    
     talked with  many store clerks,  I've talked  with many                                                                    
     tobacco license owners.  So  when I talk about tobacco,                                                                    
     I feel that  my information is based upon  a great deal                                                                    
     of experience. ...  Quite frankly, by now  I was hoping                                                                    
     that the problem would be  taken care of, but obviously                                                                    
     it is not.                                                                                                                 
DETECTIVE LIVINGSTON continued:                                                                                                 
     I  am  in support  of  almost  all of  the  provisions,                                                                    
     except for  any attempts to  amend Title 11.   Title 11                                                                    
     is not  [broken]; Title 11  works very well  right now.                                                                    
     The  changes on  the  surface that  are being  proposed                                                                    
     appear  to  be  good  changes.   I  am  in  support  of                                                                    
     progressive  discipline;  however,  I  can't  help  but                                                                    
     wonder whether  or not the proposed  changes are legal.                                                                    
     Number  one,  [AS]  11.76.100  is  a  violation.    The                                                                    
     maximum fine under Title 11  for any violation is $300.                                                                    
     So, if  you attempt to  amend the law and  increase the                                                                    
     fine to  anything over  $300, I  can't help  but wonder                                                                    
     whether  or  not  that  law   will  be  challenged  and                                                                    
     determined to be unconstitutional and improper.                                                                            
     Number  two, is  it necessary?   Of  all the  citations                                                                    
     that I've  issued or supervised  the issuance [of]   by                                                                    
     other police  officers, there's been only  one case out                                                                    
     of  at  least 100  citations  where  there were  repeat                                                                    
     offenders.   Typically,  it's not  the tobacco  license                                                                    
     owner who actually does the  sale.  Typically, it's the                                                                    
     clerk and typically, from one  time to the next, it's a                                                                    
     different clerk.  In summary,  I would request that you                                                                    
     leave Title 11 alone.                                                                                                      
     I  would like  to comment  just briefly  on the  20-day                                                                    
     suspension.    On  the surface,  initially,  I  was  in                                                                    
     opposition  of  that, because  I  do  believe in  harsh                                                                    
     punishment  for repeat  offenders.   However, over  the                                                                    
     years  I've   spoken  with   many  owners   of  tobacco                                                                    
     licenses, and I  think one thing we need to  do is make                                                                    
     certain that we're being fair to them.                                                                                     
TAPE 01-59, SIDE B                                                                                                              
Number 2459                                                                                                                     
DETECTIVE LIVINGSTON continued and stated that he thinks a 20-                                                                  
day suspension is fairer than a 45-day suspension.  He                                                                          
     Those of  us who  have been  around in  law enforcement                                                                    
     since  the  1980s  remember   ...  the  situation  with                                                                    
     alcohol vendors.   We would  try to get the  people who                                                                    
     owned the liquor  licenses to get their  clerks to stop                                                                    
     selling  alcohol  to  minors.     And  back  then,  the                                                                    
     response  we got  was, "There's  such  a high  turnover                                                                    
     with  alcohol clerks  that we  don't have  the time  to                                                                    
     train them."   And  it wasn't  until a  crisis occurred                                                                    
     that  that situation  was finally  addressed.   It took                                                                    
     the  liquor  store  clerk here  in  Anchorage  to  sell                                                                    
     alcohol  to a  minor.   That  minor got  drunk and  got                                                                    
     behind the  wheel of a car,  and then went out  and got                                                                    
     in  an accident  where  people died.    And the  police                                                                    
     found that receipt  in that car.  And it  was not until                                                                    
     then that  TAM (Techniques  of Alcohol  Management) was                                                                    
     mandated in Alaska. ...                                                                                                    
     I advocate that the State  of Alaska implement a system                                                                    
     in  which tobacco  vendors -  all tobacco  venders, not                                                                    
     just the  license owner but  the clerks - must  also go                                                                    
     through some  sort of training.   And I know  that it's                                                                    
     going to take  a crisis before we  finally take action,                                                                    
     but,  quite frankly,  we  are in  a  crisis right  now.                                                                    
     We've  got  more  and  more  kids  smoking,  especially                                                                    
     Alaskan  Native kids.   Twenty  percent of  the general                                                                    
     population of kids smoke. ...  We're getting whacked by                                                                    
     the federal government for $1.5  million.  And if those                                                                    
     first  two crises  don't get  our attention,  there's a                                                                    
     third crises on the  horizon that's looming, and that's                                                                    
     the suspension of more and more tobacco licenses.                                                                          
     Back in  1997 it was  the mom-and-pop stores  that were                                                                    
     selling tobacco to  minors.  Today it is  no longer the                                                                    
     mom-and-pop stores;  we suspended their  licenses [and]                                                                    
     they're  behaving today.   It's  no longer  the grocery                                                                    
     stores; they're  behaving.   Who's taking  their place?                                                                    
     It's the gas stations. ...                                                                                                 
     We're  running  a backward  system  in  Alaska:   we're                                                                    
     waiting until the  violation occurs.  We need  to run a                                                                    
     forward system:   we  need to  mandate that  all clerks                                                                    
     [and]   all  tobacco   license   owners  get   training                                                                    
     beforehand.  And I think that's  going to be a big step                                                                    
     toward taking care of the problem.                                                                                         
     We  need  to  get   those  companies  involved  in  the                                                                    
     process.   For example, [since]  back in 1997  when the                                                                    
     Fred Meyer store  was cited, they have  been very, very                                                                    
     progressive  in taking  care of  the  situation.   They                                                                    
     police  themselves.     They   do  their   own  tobacco                                                                    
     compliance   checks  with   secret   shoppers  out   of                                                                    
     Portland,  Oregon, and  when a  clerk sells  tobacco to                                                                    
     one  of  their secret  shoppers,  they  get an  arrest.                                                                    
     They   either  train,   retrain,   or  terminate   that                                                                    
     employee.   When a clerk  does not sell the  tobacco to                                                                    
     the secret  shopper, they would award  that person. ...                                                                    
     When I send my kids  into Fred Meyer here in Anchorage,                                                                    
     they don't  sell to us  anymore.  I would  even support                                                                    
     mandating laws in Alaska to  make it so that clerks and                                                                    
     tobacco  license  owners  need  to  get  that  training                                                                    
     upfront, so it's no longer a backward system.                                                                              
Number 2320                                                                                                                     
REPRESENTATIVE  HAYES  stated  that  it sounds  as  if  Detective                                                               
Livingston is a  "one-man gang" in Anchorage  checking for people                                                               
who are selling  [tobacco] to minors.  He asked  who is funded in                                                               
other areas of the state to do these types of checks.                                                                           
DETECTIVE  LIVINGSTON  responded  that   there  are  more  police                                                               
officers in  Anchorage involved in  the program.  In  general, he                                                               
said,  it  started out  at  the  request  of  the Office  of  the                                                               
Attorney General; there  was funding from the  [federal] Food and                                                               
Drug Administration  and the State  of Alaska.  He  remarked that                                                               
he would like to see more  involvement from the State of Alaska's                                                               
enforcement  division.   He said  he is  not aware  of one  state                                                               
trooper  or  one VPSO  (village  public  safety officer)  who  is                                                               
involved  in the  program.   In some  of the  tiny villages,  100                                                               
percent of the stores have sold to minors.                                                                                      
REPRESENTATIVE HAYES  asked, if [the committee]  passes the bill,                                                               
whether there would be enough folks  out in the field to actually                                                               
make   headway  in   regard  to   stopping  minors   from  buying                                                               
DETECTIVE LIVINGSTON  replied that there are  enough people; they                                                               
just need  to understand why  it's such  an important issue.   He                                                               
said  he doesn't  think  people  know there  is  a possible  $1.5                                                               
million "fine."                                                                                                                 
Number 2226                                                                                                                     
REPRESENTATIVE ROKEBERG,  in reference to  Detective Livingston's                                                               
testimony regarding Title  11, stated that he  is concerned about                                                               
how  that is  implemented currently  under AS  11.76.100(d).   He                                                               
asked, if an employee makes the  sale, whether he or she could be                                                               
punished by a $300 fine.                                                                                                        
DETECTIVE LIVINGSTON responded that he was correct.                                                                             
REPRESENTATIVE  ROKEBERG remarked  that the  bill reads  that the                                                               
person  making  the  sale  also owns  the  business  license  and                                                               
endorsement.   He  asked Detective  Livingston  how he  currently                                                               
handles the distinction  between the violation by  a business and                                                               
the violation by an employee.                                                                                                   
DETECTIVE LIVINGSTON answered that  currently, if the employee or                                                               
clerk sells tobacco to a minor, he  or she is cited for a sale of                                                               
tobacco to  a minor.   He  added that about  99.9 percent  of the                                                               
past  cases have  involved a  clerk and  not the  tobacco license                                                               
owner; therefore, he  said he doesn't think the  changes to Title                                                               
11 are necessary.                                                                                                               
Number 2147                                                                                                                     
MR. LINDSTROM  stated that he  thinks an alternative would  be to                                                               
delete [the fines] from AS  11.76.100 and integrate them into the                                                               
civil  penalties  under  AS  43.70.075(d)   [page  7,  Section  7                                                               
continuing on to page 4].                                                                                                       
REPRESENTATIVE  ROKEBERG  asked  whether   there  are  any  other                                                               
federal   requirements  the   [legislature]   needs   to  be   in                                                               
conformance with.                                                                                                               
MR.  LINDSTROM responded  that  he  would have  to  defer to  the                                                               
sponsor.  He noted that this  provision was not a suggestion from                                                               
the division.                                                                                                                   
MR. MANLY remarked that Representative  Harris wanted to make the                                                               
fines fairly stiff.  He said  there was some discussion that came                                                               
up  when  going  through  this.   For  example,  when  commercial                                                               
fishing  violations become  too  high, they  are  no longer  just                                                               
fines but  heavier criminal offenses.   He said he  doesn't think                                                               
Representative Harris  would have  a problem  if they  were moved                                                               
into AS 43.70;  it would probably make more sense  for them to be                                                               
there anyway.                                                                                                                   
REPRESENTATIVE ROKEBERG  asked Mr.  Lindstrom whether  [DHSS] has                                                               
any administrative  proceedings that  assess fines under  the APA                                                               
[Administrative Procedure Act].                                                                                                 
MR. LINDSTROM  responded that the  administration of  these civil                                                               
fines is not within his department;  it is within the Division of                                                               
Occupational  Licensing  [Department   of  Community  &  Economic                                                               
Development].     He  said  he   knows  that  [the   Division  of                                                               
Occupational   Licensing's  and   DHSS']   desire,  should   [the                                                               
committee] move  the bill,  is for  some certainty  that it  is a                                                               
$1,000  fine or  a  $5,000  fine, to  minimize  the potential  of                                                               
endless administrative hearings, appeals,  and all the costs that                                                               
go with that.                                                                                                                   
Number 1982                                                                                                                     
REPRESENTATIVE  ROKEBERG asked  Detective  Livingston whether  he                                                               
thinks those levels  of fines would be fair, and  if there should                                                               
be civil fines mandated.                                                                                                        
DETECTIVE LIVINGSTON  responded that he  would urge a  great deal                                                               
of  caution, because  when criminal  sanctions mingle  with civil                                                               
sanctions,  it can  get  extremely complicated.    Above all,  he                                                               
would  ask if  it is  necessary.   Right now  the clerk  is cited                                                               
under Title 11,  and if he or she is  convicted, then the tobacco                                                               
license [owner] is looking at  a suspension of the license, which                                                               
really gets the license owner's  attention.  He stated that there                                                               
needs  to  be more  consistency;  instead  of checks  every  four                                                               
years,  they need  to  be  done more  regularly.   The  long-term                                                               
solution, in his  opinion, is writing laws that  mandate that all                                                               
tobacco licensees and  tobacco clerks be trained  before they can                                                               
sell tobacco.                                                                                                                   
REPRESENTATIVE  ROKEBERG asked  Detective  Livingston whether  he                                                               
has ever  cited the  same clerk  or the  same business  more than                                                               
DETECTIVE LIVINGSTON  answered that he  has cited the  same clerk                                                               
more than  once.   One happened  to also  be the  tobacco license                                                               
owner; however, it  was determined that the he  could not legally                                                               
sell tobacco at  all in his location.  Typically,  he said, it is                                                               
a different clerk.                                                                                                              
REPRESENTATIVE ROKEBERG  suggested creating  a misdemeanor  for a                                                               
multiple offender because of the $300 violation cap.                                                                            
DETECTIVE  LIVINGSTON responded  that  he knows  there have  been                                                               
laws that have  been proposed in the past for  a second [offense]                                                               
to be a misdemeanor  and for a third offense to be  a felony.  He                                                               
said in general [those cases] are going to be very rare.                                                                        
REPRESENTATIVE ROKEBERG  suggested raising  the violation  cap to                                                               
Number 1811                                                                                                                     
DETECTIVE  LIVINGSTON replied  that  typically  store clerks  who                                                               
actually get  the $300 fine  are not highly paid;  therefore, the                                                               
fine does get their attention.   He remarked that the enforcement                                                               
just needs to be consistent.                                                                                                    
CHAIR MURKOWSKI referred to the  noncompliance survey results and                                                               
stated that it is troubling  that communities with less than nine                                                               
outlets  have a  61 percent  noncompliance rate.   These  are the                                                               
towns where  everyone knows everyone.   She remarked that  she is                                                               
making the logical  jump that people don't care what  the rule is                                                               
and will sell  cigarettes to anybody, regardless  of whether they                                                               
know the person.  She  asked Detective Livingston for his opinion                                                               
on how to deal with the smaller communities.                                                                                    
DETECTIVE LIVINGSTON  responded that  it was disturbing  for him,                                                               
too, when  he went out to  some of the  tiny places.  He  said he                                                               
thinks  part  of  the  reason   [the  percentage]  is  better  in                                                               
Anchorage is because citations have  been issued and the word has                                                               
been getting out,  whereas the chance of someone out  in a remote                                                               
village actually getting  a ticket seems to be pretty  small.  He                                                               
remarked that one of the best  ways to get the numbers reduced in                                                               
Alaska is to work with the big gas stations.                                                                                    
Number 1611                                                                                                                     
DAN  BRANCH,  Assistant  Attorney  General,  Commercial  Section,                                                               
Civil  Division  (Juneau),  Department   of  Law,  testified  via                                                               
teleconference.  In regard to Section  1 of the bill, which would                                                               
amend  AS 11.76.100(d),  he stated  that  he is  not prepared  to                                                               
totally explore  the constitutionality  of the  proposed changes.                                                               
He said  it is true  that a violation  is generally a  $300 fine;                                                               
however, he isn't sure that having  a higher penalty for this one                                                               
particular statute  would cause  a conflict.   The fact  that the                                                               
fine for  a person with two  prior [convictions] who is  also the                                                               
owner  of the  tobacco  endorsement is  $5,000 creates  concerns,                                                               
because generally  if punishment  is mandated  for an  offense in                                                               
the form of  a fine, it is high enough  to be considered criminal                                                               
by the court system.                                                                                                            
CHAIR MURKOWSKI  stated that as  the bill is drafted,  a citation                                                               
is  written up  but  the  person receiving  the  citation is  not                                                               
required to sign the notice.   She asked Mr. Branch whether there                                                               
is  any  problem  with  adequate notice  to  the  individual  who                                                               
receives the  citation.  Essentially,  she said, the  citation is                                                               
issued to the  person who sold [the tobacco] but  the entity that                                                               
holds the endorsement  is the one that is  ultimately punished if                                                               
the endorsement is pulled.   She asked whether there are noticing                                                               
MR. BRANCH responded that he doesn't  believe so.  He stated that                                                               
the citation  provisions in Section  11 are designed to  give the                                                               
folks at [DHSS]  the authority to require the clerk  to appear in                                                               
court.  The notice that is  provided through the citation form is                                                               
to the  clerk or  to the  person who  actually sold  the tobacco.                                                               
The fact  that they  don't have  to sign  it is  not significant,                                                               
because they  will receive  a copy of  it.  He  added that  it is                                                               
basically  the  same approach  as  when  police officers  summons                                                               
individuals  to court  for violations.   The  tobacco endorsement                                                               
holder  will receive  notice  of intent  to  suspend the  tobacco                                                               
Number 1286                                                                                                                     
REPRESENTATIVE  ROKEBERG  referred  to  page 6,  line  27,  which                                                               
states, "AS  44.62 (Administrative Procedure Act)  does not apply                                                               
to a  hearing under this  section", and asked Mr.  Branch whether                                                               
that is  typical statutory construction  - to exempt  the hearing                                                               
officers from the  APA and allow the department to  draft its own                                                               
MR. BRANCH  responded that  it is  not uncommon  to have  such an                                                               
approach.   The  APA  provides the  standards for  administrative                                                               
review.  This  particular bill, he said, provides quite  a bit of                                                               
structure.   It sets  out provisions  for how  the administrative                                                               
hearing  will be  conducted  and for  how  the commissioner  will                                                               
consider adopting  or rejecting the  decision.  There is  then an                                                               
opportunity to  appeal.  The  bill is designed to  streamline the                                                               
administrative process,  which makes  the penalties  mandatory as                                                               
opposed  to  discretionary.    He  added that  he  thinks  it  is                                                               
appropriate to  have this particular  bill provide  that, instead                                                               
of  having the  APA structures  apply.   By law,  any regulations                                                               
promulgated would have  to be consistent with  the statutes under                                                               
which they are implemented.                                                                                                     
Number 1132                                                                                                                     
REPRESENTATIVE  ROKEBERG asked  Mr.  Branch,  if [the  committee]                                                               
were  to  delete the  $1,000  to  $5,000  fines in  the  criminal                                                               
section  of Section  1, whether  the provisions  found under  the                                                               
hearing  procedures [subsection  (p) on  page 6]  allowing for  a                                                               
fine  of up  to $250  a day  in a  civil penalty,  not to  exceed                                                               
$5,000,  would give  a hearing  officer the  ability to  assess a                                                               
fine of any amount up to $5,000.                                                                                                
MR. BRANCH responded  that that provision would  give the hearing                                                               
officer the  authority to impose  a fine for  violating paragraph                                                               
(2) of AS  43.70.075, which requires that there be  a sign posted                                                               
on the premises.   He remarked that if the  [committee] wanted to                                                               
move  the fine  from Section  1 into  a civil  context, the  more                                                               
appropriate way to  do that would be to put  it in subsection (d)                                                               
or AS 43.70.075, as Mr. Lindstrom suggested.                                                                                    
REPRESENTATIVE ROKEBERG stated that  Mr. Lindstrom also indicated                                                               
that  he'd  prefer  to see  a  stipulated  nondiscretionary  fine                                                               
MR. BRANCH  responded that  he thinks  that is  reasonable, given                                                               
that the goal is to streamline the  process.  There needs to be a                                                               
streamlined process in order to punish violations of the fine.                                                                  
REPRESENTATIVE  ROKEBERG asked,  if the  fines are  mandated, why                                                               
there would be a hearing.                                                                                                       
MR.  BRANCH answered  that if  the  person who  is fined  doesn't                                                               
think  there  should be  a  fine,  he or  she  is  entitled to  a                                                               
hearing.     From  the  department's   point  of  view,   if  the                                                               
endorsement holder  doesn't ask for  a hearing, then  there won't                                                               
be one.                                                                                                                         
REPRESENTATIVE ROKEBERG stated that it  seems to him that it's at                                                               
the discretion  of the hearing  officer to  assess the fine.   He                                                               
said, "It could be a distinction  between Safeway and mom and pop                                                               
about what the amount of fine might be appropriate."                                                                            
Number 0881                                                                                                                     
MR. MANLY commented that the fines  [his office] has come up with                                                               
are not  particularly arbitrary;  Representative Harris  wants to                                                               
have some  fairly hefty fines.   He said he agrees  that a $1,000                                                               
fine might hit a  mom and pop [store] a lot  harder than it would                                                               
a Safeway;  however, if  the endorsements  are separated  out per                                                               
location, Safeway could lose the  endorsement for a store and not                                                               
be able to sell tobacco for 20 days.                                                                                            
REPRESENTATIVE  ROKEBERG stated  that  he  agrees with  Detective                                                               
Livingston  about  removing  the  penalties  from  Title  11  and                                                               
putting  any civil  penalty under  AS  43.   He suggested  having                                                               
default  minimum penalties  with ranges  and letting  the hearing                                                               
officer hear the testimony.                                                                                                     
MR.  LINDSTROM  responded  that  that  could  be  a  possibility;                                                               
however, he is concerned that  the $481,000 in new resources will                                                               
be spent a whole lot more  on hearing officers and attorneys than                                                               
on enforcement.                                                                                                                 
REPRESENTATIVE ROKEBERG  stated that  if he  was facing  a $5,000                                                               
fine,  he  would  be  more   interested  in  litigating  it  than                                                               
defaulting on it.                                                                                                               
Number 0722                                                                                                                     
CHAIR   MURKOWSKI  remarked   that   if   she  understands   what                                                               
Representative  Rokeberg is  saying,  he is  going  to choose  to                                                               
litigate, yet he is suggesting that  these penalties be set.  She                                                               
remarked that  perhaps it  needs to be  more difficult  to appeal                                                               
these mandatory  fines.  She  added that  Representative Rokeberg                                                               
had made a  point that there needs to be  some flexibility when a                                                               
mom-and-pop  shop that  has fouled  up a  couple of  times, since                                                               
when the gas  station appears to be the big  violator, the $2,000                                                               
fine is meaningless.                                                                                                            
DETECTIVE LIVINGSTON  stated, "On  the other  hand, I  think that                                                               
the suspension  of their endorsement  might have a  bigger impact                                                               
on them than it would on a mom and pop."                                                                                        
REPRESENTATIVE   ROKEBERG    remarked   that    there's   nothing                                                               
discretionary  with the  way the  bill is  drafted; there  is the                                                               
suspension  and  the fine.    It  certainly doesn't  provide  any                                                               
leeway in  terms of meting  out what  presumably would be  a fair                                                               
and equitable punishment, he added.                                                                                             
Number 0463                                                                                                                     
CHAIR MURKOWSKI  referred to Section  4 and asked Ms.  Bales from                                                               
the  Department  of  Revenue  whether   the  destruction  of  the                                                               
cigarettes or the  return to the manufacturer is  required by the                                                               
MSA [Master Settlement Agreement].                                                                                              
JOHANNA  BALES,  Revenue  Auditor, Tax  Division,  Department  of                                                               
Revenue, testified  via teleconference  that it is  not required.                                                               
She  explained that  the Department  of Revenue  is charged  with                                                               
tracking  product  into Alaska  from  manufacturers  who are  not                                                               
obligated to  the Master Settlement  Agreement.  The  majority of                                                               
those  manufacturers are  located out  of the  country.   In 1999                                                               
only 3 of those 23 manufacturers  could comply with the state law                                                               
under the Master Settlement Agreement.   Because of the fact that                                                               
the manufacturers are out of the  country, it causes a little bit                                                               
of a jurisdiction problem in trying  to prohibit the sale of that                                                               
product.     This   section,  she   said,   would  prohibit   the                                                               
distributors within  the state to  sell the product,  until those                                                               
manufacturers come into compliance with state statutes.                                                                         
CHAIR MURKOWSKI asked  whether the licensee is  currently free to                                                               
sell the product.                                                                                                               
MS. BALES  answered yes.  She  said under the statutes  that were                                                               
part of  the Master Settlement  Agreement, the Department  of Law                                                               
has to  sue those noncomplying  manufacturers, and would  have to                                                               
win in a lawsuit two years in a  row.  At that point, sale of the                                                               
product can be prohibited in the state for two years.                                                                           
CHAIR MURKOWSKI asked what happens  to the licensee if, after the                                                               
31st day, he  or she hasn't destroyed the  cigarettes or returned                                                               
them to the manufacturer.                                                                                                       
MS. BALES  responded that [the  department] would  confiscate the                                                               
cigarettes.   Of course,  she said, [the  licensee] would  be out                                                               
whatever he  or she  paid for  the cigarettes  and paid  in state                                                               
CHAIR  MURKOWSKI  asked  whether  there is  no  penalty  if  [the                                                               
licensee] tried to sell those cigarettes.                                                                                       
MS. BALES responded that she was correct.                                                                                       
Number 0127                                                                                                                     
CHAIR MURKOWSKI asked whether, if  she opened up a little grocery                                                               
store and  decided to  sell tobacco products,  she would  have to                                                               
apply  for an  endorsement through  the Division  of Occupational                                                               
JENNIFER   STRICKLER,   Administrative   Officer,   Division   of                                                               
Occupational  Licensing,  Department   of  Community  &  Economic                                                               
Development, testified via teleconference that she was correct.                                                                 
CHAIR MURKOWSKI  asked, when her  endorsement comes,  whether she                                                               
would receive anything telling her  what her obligations are as a                                                               
vendor of tobacco products.                                                                                                     
MS.  STRICKLER  responded  that   if  Chair  Murkowski  makes  an                                                               
application for  her initial business license,  she would specify                                                               
on  the  application   that  she  wishes  to   obtain  a  tobacco                                                               
endorsement  as well.   At  the  time [the  division] issues  the                                                               
license,  the  business  license  will  specify  "authorized  for                                                               
tobacco sale."   Following [issuance of] the  license itself, the                                                               
division mails out  a sign, currently required  in statute, which                                                               
needs to be posted conspicuously at the place of sale.                                                                          
TAPE 01-60, SIDE A                                                                                                              
CHAIR MURKOWSKI surmised  that if she were  renewing her license,                                                               
she  would  only  get  the   endorsement  and  wouldn't  get  any                                                               
information with regard to her obligations.                                                                                     
MS. STRICKLER responded that she was correct.                                                                                   
REPRESENTATIVE   ROKEBERG  asked   Ms.   Strickler  whether   she                                                               
envisions having  an investigator to review  compliance, and what                                                               
the compliance would relate to.                                                                                                 
Number 0076                                                                                                                     
MS. STRICKLER answered that currently  [the division] has funding                                                               
from DHSS for investigator services.   The investigator acts upon                                                               
notices of convictions that [the  division] gets from the courts.                                                               
So  far,   there  are  three   businesses  on  the  list.     The                                                               
investigator does the legal footwork  to put the suspensions into                                                               
place.   In response  to a further  question, she  said currently                                                               
[the division] has an investigator who  is funded in part by DHSS                                                               
to do that.                                                                                                                     
REPRESENTATIVE ROKEBERG  asked Ms. Strickler whether  most of the                                                               
hearing  officers  in  the  Division  of  Occupational  Licensing                                                               
follow APA procedure, or if they have separate procedures.                                                                      
MS.  STRICKLER answered  that to  her knowledge  [the division's]                                                               
hearing officer follows the APA.                                                                                                
REPRESENTATIVE  ROKEBERG  asked  whether those  hearing  officers                                                               
normally have  a certain  amount of  discretion in  assessing any                                                               
civil penalties.                                                                                                                
MS. STRICKLER stated that she doesn't know.                                                                                     
CHAIR  MURKOWSKI  asked  Ms.  Strickler   how  long  the  tobacco                                                               
endorsement has been $25.                                                                                                       
Ms. STRICKLER  answered that  it has  been set  at $25  since the                                                               
tobacco  endorsement  program went  into  effect  around 1990  or                                                               
REPRESENTATIVE HAYES  asked why  [the committee] is  changing the                                                               
price from $25 to $100.                                                                                                         
MS. STRICKLER responded  that it is her understanding  that it is                                                               
an attempt  to attain  more revenues  to support  the enforcement                                                               
Number 0315                                                                                                                     
MR.  MANLY remarked  that  the  main idea  was  to generate  more                                                               
revenue  and   to  make   the  endorsement   be  a   little  more                                                               
commensurate with the activity that it involves.                                                                                
REPRESENTATIVE HAYES  asked Mr.  Manly whether  he has  talked to                                                               
other folks who would be affected by this.                                                                                      
MR. MANLY answered no.                                                                                                          
MR. LINDSTROM  added that  [DHSS] wants  to make  the enforcement                                                               
program  as self-supporting  as it  could be.   He  remarked that                                                               
many  people  get  the  tobacco  endorsement  on  their  business                                                               
license  and  don't  even  sell tobacco,  which  lead  [DHSS]  to                                                               
believe that the $25 is trivial.                                                                                                
REPRESENTATIVE HAYES suggested that  under Mr. Lindstrom's logic,                                                               
if  some of  those folks  aren't  even selling  tobacco and  they                                                               
think $100 is  too high, then [DHSS] would lose  money.  He asked                                                               
Mr.  Manly whether  he has  thought of  using tobacco  settlement                                                               
money as an avenue.                                                                                                             
MR. MANLY  responded that he  thinks Representative  Harris would                                                               
like  to put  more tobacco  settlement money  into tobacco  sales                                                               
enforcement; however,  there have  been higher priorities  in the                                                               
[DHSS] budget.                                                                                                                  
CHAIR MURKOWSKI  asked whether the  sale of single  cigarettes is                                                               
still allowed.                                                                                                                  
REPRESENTATIVE ROKEBERG responded that  it was outlawed two years                                                               
Number 0625                                                                                                                     
REPRESENTATIVE  ROKEBERG  made  a   motion  to  adopt  conceptual                                                               
Amendment 1,  to delete  Section 1, which  leaves the  penalty at                                                               
REPRESENTATIVE MEYER objected for  discussion purposes.  He asked                                                               
what the rationale is for wanting to remove it.                                                                                 
DETECTIVE LIVINGSTON responded that [Title 11] is not "broken."                                                                 
CHAIR  MURKOWSKI added  that Detective  Livingston had  suggested                                                               
that  if it  was  going to  remain,  it should  be  in the  civil                                                               
section rather than the criminal section.                                                                                       
REPRESENTATIVE MEYER withdrew his objection.                                                                                    
CHAIR MURKOWSKI announced that there  being no further objection,                                                               
conceptual Amendment 1 was adopted.                                                                                             
REPRESENTATIVE  ROKEBERG remarked  that  [the goal  was] "not  to                                                               
exceed penalties  for the endorsement  holders who  have repeated                                                               
violations, but give the hearing  officer some discretion to mete                                                               
that out."   On the other hand, he said,  the department wants to                                                               
keep the  [fiscal] note down  by having more  stipulated amounts.                                                               
He said he thinks that can  be accomplished by having a not-less-                                                               
than-an-amount, and for the range to be up to $5,000.                                                                           
CHAIR MURKOWSKI asked Representative  Rokeberg whether he thinks,                                                               
with having  this range be  a minimum of  $1,000 to a  maximum of                                                               
$5,000, that a mom-and-pop shop would  appeal it in order to stay                                                               
away from the $5,000 fine.                                                                                                      
REPRESENTATIVE ROKEBERG responded that  currently, if someone has                                                               
been convicted  more than  once in  the past 24  months, it  is a                                                               
mandated $5,000 fine.                                                                                                           
Number 0843                                                                                                                     
MR.  MANLY  reiterated  that  the  sponsor  wanted  to  make  the                                                               
penalties as stiff  as the legislature would allow.   He said the                                                               
sponsor got pretty  [upset] with the fact that  since the [state]                                                               
is so out of compliance, it is costing $1.5 million.                                                                            
CHAIR MURKOWSKI  asked, if  the language from  Section 1  was put                                                               
into   Section   7,   whether    that   would   accomplish   what                                                               
Representative Harris is seeking.                                                                                               
REPRESENTATIVE  ROKEBERG asked  whether the  range could  be cut.                                                               
He suggested having  ranges of $500 to $1,000,  $1,000 to $2,000,                                                               
and $2,500  to $5,000; thus  the hearing officer could  have some                                                               
discretion.   He  asked  Mr. Lindstrom  whether  he thought  that                                                               
would generate more hearings.                                                                                                   
Number 0951                                                                                                                     
MR. LINDSTROM responded  that one of the principal  goals of this                                                               
legislation  from   [DHSS's]  perspective  is  to   minimize  the                                                               
possibility of the limited enforcement  dollars being "chewed up"                                                               
through endless appeals.                                                                                                        
CHAIR  MURKOWSKI  said she  likes  that  [the  fine] is  a  known                                                               
REPRESENTATIVE ROKEBERG asked  whether the fines could  be cut in                                                               
half and put in the civil section.                                                                                              
REPRESENTATIVE  KOTT pointed  out that  under Section  11 of  the                                                               
bill,  DHSS is  given  citation authority  if  there is  probable                                                               
cause to  believe that  a person has  violated AS  11.76.100, [AS                                                               
11.76.]106, and  [AS 11.76.]107.   He added that AS  11.76.107 is                                                               
failure  to supervise  the vending  machines, and  established in                                                               
that  is  a  $300  fine.    He  suggested  [the  sections  should                                                               
Number 1176                                                                                                                     
REPRESENTATIVE  ROKEBERG  made  a   motion  to  adopt  conceptual                                                               
Amendment 2, to  take the lines on page 1,  line 13, through page                                                               
2,  line 8,  and insert  them into  the civil  liability section,                                                               
Section 7  on page 3.   He added that  the $1,000 fine  should be                                                               
cut to $500 if the person  has not been previously convicted; the                                                               
$2,000 fine should  be cut to $1,000; and the  $2,500 fine should                                                               
be cut  to $5,000 if  [the person  has been convicted]  more than                                                               
once in the past 24 months.                                                                                                     
CHAIR MURKOWSKI objected for the  purposes of discussion.  If the                                                               
range in  [paragraph] (4)  is $2,500 to  $5,000, she  said, there                                                               
won't be any certainty.  She  added that she would be hesitant to                                                               
give ranges.                                                                                                                    
REPRESENTATIVE  ROKEBERG  removed   the  ranges  from  conceptual                                                               
Amendment 2.  He remarked, "We're  back to mom and pop versus big                                                               
[corporation] again."                                                                                                           
CHAIR MURKOWSKI  responded that the  answer to that is,  "You can                                                               
still go after the endorsement."                                                                                                
REPRESENTATIVE  ROKEBERG remarked  that the  reason he  likes the                                                               
discretion  is  because  the  hearing   officer  could  take  the                                                               
circumstances into account.                                                                                                     
CHAIR  MURKOWSKI agreed,  but said  she  thinks the  point is  to                                                               
avoid having to go to the hearing officer in the first place.                                                                   
REPRESENTATIVE ROKEBERG remarked that that  was one reason why he                                                               
was lowering the fines.                                                                                                         
Number 1327                                                                                                                     
CHAIR  MURKOWSKI   said  she  would   remove  her   objection  if                                                               
conceptual  Amendment 2  is to  take the  language in  Section 1,                                                               
beginning on  line 13, and  reduce it  from $1,000 to  $500; from                                                               
$2,000 to $1,000; and from $5,000 to $2,500.                                                                                    
REPRESENTATIVE KOTT  objected.   He stated,  "If you're  going to                                                               
tinker with that, you've got to tinker with [AS 11.76.107]."                                                                    
REPRESENTATIVE  ROKEBERG remarked  that he  thinks the  testimony                                                               
was that  the endorsement holder  is responsible for  the vending                                                               
machine;  therefore,  it  is  the  endorsement  holder,  not  the                                                               
vending  machine   owner,  who   would  be   fined.     He  asked                                                               
Representative Kott why he objected.                                                                                            
REPRESENTATIVE KOTT stated, "If  you've contracted with a vendor,                                                               
you  have the  endorsement [and]  you've got  an employee  that's                                                               
supposed to be  supervising or watching that  vending machine all                                                               
the time.   If he doesn't, then  the fine kicks in.   If there is                                                               
probable cause, then [DHSS] issues a citation,"                                                                                 
CHAIR  MURKOWSKI asked  whether  that  is the  same  thing as  in                                                               
Section 1(d)(1), which is not being changed.                                                                                    
MR. MANLY remarked that he thinks  Chair Murkowski is right.  The                                                               
$300 fine  applies to the clerk  who sells [the tobacco],  not to                                                               
the endorsement holder.                                                                                                         
REPRESENTATIVE KOTT withdrew his objection.                                                                                     
Number 1517                                                                                                                     
CHAIR MURKOWSKI announced that there  being no further objection,                                                               
conceptual Amendment 2 was adopted.                                                                                             
REPRESENTATIVE ROKEBERG stated  that he is still  troubled by why                                                               
the APA should not apply on page 6, lines 27 to 28.                                                                             
MR.  LINDSTROM answered  that  he believes  it  is the  preceding                                                               
section [above  line 27] that  specifies how the  hearing officer                                                               
may  consider how  a  hearing is  conducted  for this  particular                                                               
MR. BRANCH agreed  with Mr. Lindstrom and  stated that subsection                                                               
(m) would set out a "series  of burden of proofs" instructing the                                                               
hearing officer  on what issues  should be considered  during the                                                               
hearing.   The intent, he said,  is not to deny  a respondent the                                                               
opportunity  to  have  a  fair hearing,  but  to  recognize  that                                                               
there's a different structure because  of the provisions that can                                                               
be considered during the hearing.                                                                                               
Number 1636                                                                                                                     
MR. LINDSTROM pointed out that  the fiscal note submitted by DHSS                                                               
is basically all-inclusive.   It includes the funds  that will be                                                               
RSAed  (reimbursement services  agreement) to  the Department  of                                                               
Law  in its  fiscal note  and to  the Department  of Community  &                                                               
Economic Development  in its fiscal  note.  Every dollar  that is                                                               
additional  to what  [the department]  currently anticipates  for                                                               
the  hearing  proceedings is  a  dollar  that  comes out  of  the                                                               
program  elsewhere in  the  [DHSS] fiscal  note.   That  includes                                                               
vendor education and contracts with law enforcement [agencies].                                                                 
REPRESENTATIVE  KOTT remarked  that what  is being  determined is                                                               
probable cause  that the person  did not reasonably  monitor [the                                                               
machine].     He   asked  who   is  going   to  be   doing  these                                                               
investigations and issuing the citations.                                                                                       
MR.  SASSER answered  that the  majority of  the law  enforcement                                                               
activity will still  be by sworn police officers.   He said he is                                                               
anticipating that  the same groups  of police officers  that have                                                               
been used and trained over the years will be involved.                                                                          
REPRESENTATIVE KOTT  stated that the minority  of those citations                                                               
would then be issued by the  department.  He asked who within the                                                               
department would be issuing those citations.                                                                                    
MR. SASSER  responded that if  the youth is successfully  able to                                                               
buy out  of a vending  machine, which would represent  either the                                                               
negligence or the  state of mind that the  statute is discussing,                                                               
there would be  no way to establish probable cause  or failure to                                                               
monitor.   Mr.  Sasser  said  he, as  a  retired law  enforcement                                                               
officer, would  have the  statutory authority  to do  that within                                                               
the Division of Public Health.                                                                                                  
REPRESENTATIVE  KOTT  asked,  if  a  machine is  in  a  bar,  the                                                               
sprinkler system goes  off, the bartender walks  in another room,                                                               
and  a kid  under 19  comes in  and purchases  [tobacco], whether                                                               
[the bartender] would fall within that category.                                                                                
Number 1852                                                                                                                     
MR. SASSER responded:                                                                                                           
     In  the  world  of   law  enforcement,  we  make  those                                                                    
     decisions  every   day  about  ...   what's  reasonable                                                                    
     community  policing.  ... In  this  world  of sales  of                                                                    
     tobacco to  youth [there  are] plenty  of opportunities                                                                    
     to cite  vendors.   A small  percentage of  the vendors                                                                    
     who   sold  tobacco   to  youth   last  year   received                                                                    
     citations; the rest received  letters indicating that a                                                                    
     sale  was   made  on  a   certain  date  and   ...  the                                                                    
     description of the clerk who did that. ...                                                                                 
     It's  our intent  to be  fair in  every respect  and to                                                                    
     resolve doubt in the vendor's  favor when possible.  In                                                                    
     a  case where  a youth  buys from  a vending  machine -                                                                    
     which is extremely rare, by the  way - it's not part of                                                                    
     the normal Synar  survey checks. ... First  of all, the                                                                    
     youth is  buying an age-restricted  product in  an age-                                                                    
     restricted environment.  So they  are not even supposed                                                                    
     to be on  the premises.  They are supposed  to be 21 to                                                                    
     be there  and 19 to  purchase the tobacco product.   So                                                                    
     there  are really  two opportunities  there.   I  could                                                                    
     cite  or  an  ABC  officer  could  cite  for  different                                                                    
REPRESENTATIVE KOTT asked  whether a person under 19  could be in                                                               
a bar with a parent.                                                                                                            
MR. SASSER responded that there  could be a circumstance in which                                                               
a  child could  have  access  to a  vending  machine  in an  age-                                                               
restricted  environment.    He  added that  his  hope  [with  the                                                               
Division of Public  Health] having the authority is  to work with                                                               
the  VPSOs in  the rural  communities for  both vendor  education                                                               
issues and reduction of sale.   Right now, he said, no matter how                                                               
many jurisdictions  he contracts  with, it  is very  difficult to                                                               
get into some of the communities [in Western Alaska].                                                                           
REPRESENTATIVE  HAYES asked  how many  incidents a  year have  to                                                               
occur in order to lose the federal monies.                                                                                      
MR. SASSER answered  that he doesn't believe there  is a specific                                                               
number.   He  stated that  it is  interesting because  it is  not                                                               
known how many  outlets there are in the state.   Hopefully, as a                                                               
result of this bill, [they will  be known], because each one will                                                               
have an  endorsement.  [Until  now the department] has  found out                                                               
who is  selling by looking at  the 1,800 or so  endorsements that                                                               
[the Division]  of Occupational Licensing has;  subtracting those                                                               
that  have  no intention  of  ever  selling tobacco;  subtracting                                                               
those  that  are  out  of  state and  whose  home  office  is  in                                                               
Nashville,  for  example, but  with  30  outlets in  Alaska;  and                                                               
collecting  data from  all of  the  officers over  the last  four                                                               
years who have walked from door  to door and know who is selling.                                                               
That  comes  out to  be  about  400  business.   Of  those,  [the                                                               
department] wants fewer than 20 percent to sell [to minors].                                                                    
Number 2063                                                                                                                     
REPRESENTATIVE HAYES asked  whether there can only  be 20 percent                                                               
illegal  sales  from  the  400  businesses  to  get  the  federal                                                               
MR. SASSER  responded that  those are  roughly the  numbers being                                                               
REPRESENTATIVE  HAYES stated  that  if there  are 70  communities                                                               
that  have no  law enforcement,  where everybody  knows everybody                                                               
and  people are  buying  cigarettes, the  numbers  will bump  up.                                                               
However, there won't be any money for police.                                                                                   
MR.  SASSER  replied   that  one  tool  this   bill  provides  is                                                               
statutory  authority  for  [DHSS]  to write  citations  in  those                                                               
villages where  it traditionally does not  have contract officers                                                               
available, or which are outside  [the officer's] jurisdiction and                                                               
the officer  does not feel  comfortable writing citations.   That                                                               
is one  of the  main reasons, he  said, that  statutory authority                                                               
for [the Division of Public Health] is so useful.                                                                               
REPRESENTATIVE HAYES asked, if [DHSS]  issues citations, who does                                                               
the follow-up.   He said there  are places in Alaska  without law                                                               
enforcement, and he  thinks that could present more  of a problem                                                               
in the long run.                                                                                                                
REPRESENTATIVE ROKEBERG  pointed out  that he  thinks one  of the                                                               
problems  with  enforcement in  the  state,  particularly in  the                                                               
smaller communities, is that everybody  knows everybody else.  He                                                               
said  the case  could be  made that  providing this  authority is                                                               
positive,  because  the  local   people  could  be  reluctant  to                                                               
actually enforce the law.                                                                                                       
Number 2213                                                                                                                     
REPRESENTATIVE MEYER made a motion  to adopt conceptual Amendment                                                               
3, on page 4, line 1, to change the 20 days to 30 days.                                                                         
REPRESENTATIVE ROKEBERG  objected.   He stated that  according to                                                               
Detective Livingston,  it used to be  45 days, and that  he could                                                               
live with 20 days.                                                                                                              
CHAIR  MURKOWSKI  asked Mr.  Manly  whether  the current  statute                                                               
doesn't  address  any  suspension  if   a  person  has  not  been                                                               
convicted previously, but only if the person has.                                                                               
MR. MANLY answered in the affirmative.                                                                                          
CHAIR MURKOWSKI clarified  that this would mean the  first time a                                                               
person gets caught, [the endorsement] is suspended.                                                                             
MR. MANLY remarked  that it is also discretionary on  the part of                                                               
the department; it  may suspend for not more than  45 days.  This                                                               
would make it mandatory rather than discretionary.                                                                              
REPRESENTATIVE ROKEBERG  asked Mr. Manly whether,  because of the                                                               
discretion, there was a typical amount of time meted out.                                                                       
MR. Manly responded that he doesn't know.                                                                                       
MR. SASSER  remarked that he  has seen a memorandum  of agreement                                                               
as low as 3 days and that 20 days is fairly common.                                                                             
REPRESENTATIVE MEYER  stated that  currently it obviously  is not                                                               
working, because  businesses are  still selling  to minors.   The                                                               
only  way  to get  a  business's  attention  is to  withdraw  the                                                               
license.  He said he doesn't think "up to 20 days" is adequate.                                                                 
Number 2430                                                                                                                     
REPRESENTATIVE ROKEBERG withdrew his objection.                                                                                 
REPRESENTATIVE HAYES objected for the  purpose of discussion.  He                                                               
said his  problem with the  amount of days  is that it  seems the                                                               
business is being punished for an employee's mistake.                                                                           
TAPE 01-60, SIDE B                                                                                                              
REPRESENTATIVE   ROKEBERG  said   the  person   has  to   be  the                                                               
endorsement  holder for  the fine  but not  necessarily for  [the                                                               
Number 2453                                                                                                                     
REPRESENTATIVE  MEYER remarked  that  businesses are  responsible                                                               
for their employees, and the  business manager needs to make sure                                                               
the employees are  adequately trained.  He suggested  it needs to                                                               
be stressed that this is a serious offense.                                                                                     
REPRESENTATIVE  ROKEBERG  indicated  he  thinks  the  most  slack                                                               
should  be given  "up front"  regarding  the employee.   He  said                                                               
there is  an inconsistency with  enforcement right now,  and with                                                               
the change there  will be a mandatory $500 fine  and a suspension                                                               
of the endorsement.                                                                                                             
REPRESENTATIVE  MEYER stated  that  if employees  are trained  to                                                               
simply  just check  identifications, they  have nothing  to worry                                                               
about.   He  said the  numbers he  has read  indicated that  if a                                                               
person does  not start [smoking] until  after age 19, there  is a                                                               
90 percent chance he or she never will start.                                                                                   
REPRESENTATIVE CRAWFORD  shared that  when he  takes his  kids to                                                               
school,  he  sees 40  to  50  kids down  the  hill,  and a  large                                                               
majority are  smoking cigarettes.  He  said he would like  to cut                                                               
off as  many ways  for them  to get cigarettes  as possible.   He                                                               
believes this  bill is  a good  first step, he  said, and  that a                                                               
three-day  suspension  with  a  $300 fine  is  not  a  sufficient                                                               
Number 2274                                                                                                                     
REPRESENTATIVE HAYES  said while he  supports the bill,  he still                                                               
feels [the committee] is being awfully harsh on businesses.                                                                     
REPRESENTATIVE  CRAWFORD  mentioned  that   he  has  listened  to                                                               
previous testimony  that many times  [businesses] just  receive a                                                               
letter.   He  remarked that  he doesn't  think [law  enforcement]                                                               
tries to fine [businesses] on the first offense.                                                                                
CHAIR MURKOWSKI noted  that the sentence on page 4,  line 1, goes                                                               
on to  say "if the  person has  not been previously  convicted of                                                               
violating AS 11.76.100, ll.76.106,  or 11.76.107".  She clarified                                                               
that [AS 11.76.]100 is selling or  giving tobacco to a minor, [AS                                                               
11.76.]106 is selling tobacco outside  controlled access, and [AS                                                               
11.76.]107 is  failure to supervise a  cigarette vending machine.                                                               
She  asked  whether  a  person  who  has  never  been  previously                                                               
convicted would be subject to this.                                                                                             
MR. MANLY responded that she was correct.                                                                                       
CHAIR MURKOWSKI  said her hesitancy  with changing it to  30 days                                                               
is that right now there is  no education.  She offered her belief                                                               
that  businesses don't  even get  anything from  the Division  of                                                               
Occupational Licensing.   She said  her attitude is, if  a person                                                               
has been  informed as  to what  the consequences  are, he  or she                                                               
shouldn't have a "free shot."                                                                                                   
REPRESENTATIVE  HALCRO  noted  that  he thinks  the  Division  of                                                               
Occupational Licensing does give something out.                                                                                 
CHAIR MURKOWSKI asked whether it is minimal.                                                                                    
Number 1967                                                                                                                     
MR. LINDSTROM remarked  that it truly is minimal.   He added that                                                               
part of  [DHSS's] plan with the  additional resources is to  do a                                                               
lot more in the way of vendor education.                                                                                        
REPRESENTATIVE HALCRO  asked what  people receive  currently when                                                               
they get their tobacco licenses.                                                                                                
MR.  LINDSTROM answered  that he  understood  from the  testimony                                                               
from  the  Division  of  Occupational  Licensing  that  [business                                                               
owners] get  several copies  of the sign  that cites  the statute                                                               
and says, "You may not sell to minors."                                                                                         
REPRESENTATIVE HALCRO stated that  they are given notification of                                                               
the law, then.                                                                                                                  
CHAIR MURKOWSKI agreed, but stated:                                                                                             
     I don't have a set of these  in my home to refer to and                                                                    
     find out  what AS 11.76.105 is.   I think that  we need                                                                    
     to do  a better job  of telling people, "You  will lose                                                                    
     your right  to sell a  product for 20 days,  first time                                                                    
     around, or  45 days if you  fail to pay attention."   I                                                                    
     think  we   need  to   be  very   clear  in   what  the                                                                    
     consequences are."                                                                                                         
Number 1955                                                                                                                     
A roll call vote was taken.   Representative Meyer voted in favor                                                               
of  adopting  conceptual  Amendment  3.    Representatives  Kott,                                                               
Rokeberg,  Crawford,  Hayes,  and  Murkowski  voted  against  it.                                                               
[Representative  Halcro was  absent  for the  vote.]   Therefore,                                                               
conceptual Amendment 3 failed by a vote of 1-5.                                                                                 
Number 1953                                                                                                                     
REPRESENTATIVE  ROKEBERG  made  a   motion  to  adopt  conceptual                                                               
Amendment 4,  that upon  issuance of  an endorsement,  copies and                                                               
explanations of the penalties will be provided.                                                                                 
REPRESENTATIVE  KOTT  objected for  the  purposes  of offering  a                                                               
friendly amendment  to reduce the  $100 amount [in Section  6] to                                                               
$50.   He said  he thinks  $100 is  too much.   According  to Mr.                                                               
Lindstrom, many people aren't even using their endorsements.                                                                    
REPRESENTATIVE HAYES objected  to Representative Kott's [friendly                                                               
CHAIR MURKOWSKI  commented that she  thinks [the  two amendments]                                                               
should be separate.                                                                                                             
REPRESENTATIVE  ROKEBERG   stated  that   he  is   not  accepting                                                               
Representative Kott's friendly amendment.                                                                                       
Number 1831                                                                                                                     
CHAIR  MURKOWSKI also  objected  to the  amendment to  conceptual                                                               
Amendment 4.  She asked whether this is $100 every other year.                                                                  
MR. MANLY answered that she was correct.                                                                                        
REPRESENTATIVE KOTT remarked  that that's his point.   He said it                                                               
is the same as a business  license.  He withdrew his amendment to                                                               
conceptual Amendment 4.                                                                                                         
Number 1790                                                                                                                     
CHAIR MURKOWSKI announced that there  being no further objection,                                                               
conceptual Amendment 4 was adopted.                                                                                             
REPRESENTATIVE KOTT  made a motion to  adopt conceptual Amendment                                                               
5, to reduce the amount [of the endorsement] from $100 to $50.                                                                  
REPRESENTATIVE ROKEBERG objected.                                                                                               
CHAIR MURKOWSKI asked how much a business license costs.                                                                        
REPRESENTATIVE KOTT responded that he  thinks it is $50 every two                                                               
REPRESENTATIVE  ROKEBERG suggested  changing  the endorsement  to                                                               
REPRESENTATIVE  KOTT responded  that the  number of  endorsements                                                               
has  already been  increased.   He said  he thinks  if it  is $75                                                               
people  will start  "falling off"  who  would otherwise  continue                                                               
REPRESENTATIVE MEYER  stated that  the reason people  are getting                                                               
[endorsements] now  is because [the  endorsements] are  so cheap.                                                               
He said he thinks  the people who will pay $100  will be the ones                                                               
who  really   intend  to  sell  tobacco   and  tobacco  products.                                                               
However, he  does think the  price should be different  from that                                                               
for a  regular business license,  he added, because  those people                                                               
are selling a very dangerous, controlled, addictive substance.                                                                  
Number 1712                                                                                                                     
MR. LINDSTROM  remarked that  he believes  a business  license is                                                               
$25.  This  is qualitatively different from  the business license                                                               
fee.   One of the problems  is that the Division  of Occupational                                                               
Licensing  has not  regarded itself  as being  in the  regulatory                                                               
business, and yet it  is now being asked to do  that by virtue of                                                               
the tobacco endorsement.   The department thinks it  will be fine                                                               
if  those who  don't currently  sell  tobacco no  longer get  the                                                               
tobacco endorsement, he  said.  It will make it  easier to figure                                                               
out who does  sell tobacco.  He added that  this is a substantial                                                               
program; it  is only appropriate, given  how frequently retailers                                                               
are selling  tobacco to minors,  that they pay for  a significant                                                               
portion of the cost of regulating those folks.                                                                                  
CHAIR  MURKOWSKI asked  whether  [the  department] is  estimating                                                               
that about 400 Alaska businesses sell tobacco.                                                                                  
MR.  LINDSTROM responded  that  the 400  figure  was roughly  the                                                               
sample size  under the Synar protocol.   The number of  people on                                                               
the registry at  the Division of Occupational  Licensing is about                                                               
CHAIR MURKOWSKI  asked, if  this bill  passes and  every Williams                                                               
gas station has to have an  endorsement for each outlet, how many                                                               
more endorsements there would be.                                                                                               
MR. LINDSTROM  answered that  he doesn't have  the numbers.   The                                                               
change   in  revenues   is  $100,000,   but   [the  Division   of                                                               
Occupational  Licensing] is  suspicious  of  how many  additional                                                               
[endorsements] would  be picked up  because everyone has  to have                                                               
an endorsement.   [The  division is] equally  unsure of  how many                                                               
people are going  to "drop off" now that  [the endorsements cost]                                                               
CHAIR MURKOWSKI  surmised that if  there are  approximately 1,800                                                               
endorsements  already, [the  Division of  Occupational Licensing]                                                               
is  assuming  that  the  endorsements   purchased  are  at  1,000                                                               
MR.  LINDSTROM  remarked  that   he  doesn't  know  the  detailed                                                               
calculations that were made.                                                                                                    
Number 1531                                                                                                                     
REPRESENTATIVE HAYES  said he agrees  with the  amendment because                                                               
he fears the mom-and-pop [stores  will ask] what they are getting                                                               
for this big increase.                                                                                                          
CHAIR MURKOWSKI  asked Mr.  Lindstrom whether,  essentially, [the                                                               
bill] is trying to cover the increased costs of enforcement.                                                                    
MR. LINDSTROM responded that it [covers] about a quarter of it.                                                                 
A roll  call vote  was taken.   Representatives Hayes,  Kott, and                                                               
Rokeberg  voted  in favor  of  adopting  conceptual Amendment  5.                                                               
Representatives Crawford, Meyer, and  Murkowski voted against it.                                                               
[Representative  Halcro was  absent  for the  vote.]   Therefore,                                                               
conceptual Amendment 5 failed by a vote of 3-3.                                                                                 
Number 1421                                                                                                                     
REPRESENTATIVE  ROKEBERG  made  a  motion  to  move  HB  228,  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the  attached  fiscal notes.    There  being no  objection,  CSHB
228(L&C)  moved  from  the  House  Labor  and  Commerce  Standing                                                               
There being no further business  before the committee, the  House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
6:05 p.m.                                                                                                                       

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