Legislature(1995 - 1996)

03/08/1995 01:55 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                         
                         March 8, 1995                                         
                           1:55 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator John Torgerson, Chairman                                              
 Senator Randy Phillips, Vice Chairman                                         
 Senator Fred Zharoff                                                          
 Senator Lyman Hoffman                                                         
  MEMBERS ABSENT                                                               
 Senator Tim Kelly                                                             
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 87                                                            
 "An Act relating to community local options for control of                    
 alcoholic beverages; relating to the control of alcoholic                     
 beverages; relating to the definition of 'alcoholic beverage';                
 relating to purchase and sale of alcoholic beverages; relating to             
 alcohol server education courses; and providing for an effective              
 SENATE BILL NO. 96                                                            
 "An Act relating to municipal activities or services mandated by              
 state statute."                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 87 - No previous action to record.                                         
 SB 96 - No previous action to record.                                         
  WITNESS REGISTER                                                             
 Joe Ambrose, Staff to Senator Robin Taylor                                    
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:    Presented sponsor statement on                        
                       SB 87                                                   
 Patrick L. Sharrock, Director                                                 
 Alcoholic Beverage Control Board                                              
 550 W. 7th Ave., Suite 350                                                    
 Anchorage, AK 99501-3510                                                      
  POSITION STATEMENT:   Offered information on CSSB 87(CRA)                    
 Mayor Don Long                                                                
 City of Barrow                                                                
 P.O. Box 629                                                                  
 Barrow, AK 99723                                                              
  POSITION STATEMENT:   Testified in support of CSSB 87(CRA)                   
 Karen Hegyi                                                                   
 City of Barrow                                                                
 P.O. Box 629                                                                  
 Barrow, AK 99723                                                              
  POSITION STATEMENT:   Supports CSSB 87(CRA)                                  
 David Koivuniemi, Acting Director                                             
 Division of Elections                                                         
 P.O. Box 110017                                                               
 Juneau, AK 99811-0017                                                         
  POSITION STATEMENT:   Offered information on ballots                         
  ACTION NARRATIVE                                                             
 TAPE 95-6, SIDE A                                                             
 Number 001                                                                    
 SCRA - 3/8/95                                                                 
  CHAIRMAN TORGERSON  called the Senate Community & Regional Affairs           
 Committee meeting to order at 1:55 p.m.  He announced that at the             
 sponsor's request,  SB 96   (UNFUNDED MANDATES ON MUNICIPALITIES)             
 would not be taken up because a proposed committee substitute had             
 just been received by the committee right before the start of the             
 SCRA - 03/08/95                                                               
        SB  87 ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC.                       
 SENATOR TORGERSON brought  SB 87 , sponsored by Senator Robin Taylor,         
 before the committee, and asked Joe Ambrose to present an overview            
 on the legislation.                                                           
 JOE AMBROSE, staff to Senator Taylor, read the following sponsor's            
 statement into the record:                                                    
 "Last year the Alcoholic Beverage Control Board, prompted by                  
 concerns over a lack of clarity in how local option elections are             
 to be conducted, asked for legislation to simplify the process.               
 The board also asked that the same vehicle be used to address long            
 needed technical and common sense amendments to Title 4."                     
 "The result was SB 372, which passed the Senate last year and moved           
 through the committee process in the House, only to die in the                
 Rules Committee in the hectic final days of the 18th State                    
 Legislature. SB 87 is substantially the same as last year's                   
 "The bill addresses the shortcoming in the current statute dealing            
 with local option elections, for which no provision is made for               
 moving from one type of option to another.  Under current law, a              
 community must first vote to remove all restrictions on the sale              
 and importation of alcoholic beverages and then conduct another               
 election on a new option.  This burdensome process can cause                  
 confusion for municipalities and unincorporated villages alike."              
 "The complete intent of this lengthy bill is better explained by              
 those who will be charged with its enforcement.  However, it should           
 be pointed out that it is mainly a housekeeping measure with little           
 potential for controversy."                                                   
 Mr. Ambrose noted that the sponsor has recommended a committee                
 substitute and that the witnesses testifying are prepared to                  
 address that document.                                                        
 Number 055                                                                    
 PAT SHARROCK, Director, Alcoholic Beverage Control Board, agreed              
 that the bill is lengthy and more of a housekeeping measure.  The             
 reason it is lengthy is because the section references to the local           
 option provisions were changed.  The amendments and clarifications            
 to the local option provisions do not change the actual options               
 themselves, except for one.                                                   
 Mr. Sharrock said the necessity for some amendments to Title 4 came           
 to light a year or ago with the City of St. Mary's and the                    
 confusion as to how they were to proceed.  Currently, there is a              
 great deal of confusion in the City of Barrow as to where they are            
 and how frequently they can hold an election to overturn an                   
 election that they had.                                                       
 Mr. Sharrock then went through the technical amendments recommended           
 by the board and contained in the proposed committee substitute:              
 Section 1:  It is a clarification to say that a package store may             
 not solicit in or receive orders from an agent in a local option              
 Section 4:  The amendment proposes, without creating a new class of           
 license, to allow a current restaurant or eating place licensee to            
 convert his license to what would be referred to as an exempt                 
 license where the primary activity would not have to be dining.               
 Number 150                                                                    
 SENATOR R. PHILLIPS moved that CSSB 87(CRA) be adopted for                    
 discussion purposes.  Hearing no objection, it was so ordered.                
 Mr. Sharrock then continued with outlining the technical amendments           
 in the committee substitute:                                                  
 Section 5:  It increases the gallonage that could be produced by a            
 brew-pub licensee from 16,000 gallons to 75,000 gallons per year.             
 The board has had complaints that 16,000 gallons isn't enough,                
 because the popular area in terms of an annual production falls               
 into the 70,000 to 75,000 gallon area.                                        
 Section 7:  Relates to package store licensees who sell in response           
 to written orders and provides that the package store licensee can            
 only ship to the purchaser.  There has been some concern that                 
 licensees have been shipping in response to a written order to                
 someone other than the purchaser, which doesn't provide any control           
 or good record keeping in terms of who the alcohol is going to,               
 particularly in those areas that have prohibited the sale.                    
 Number 180                                                                    
 SENATOR ZHAROFF referred back to Section 5 and asked what the                 
 effect was of going from 16,000 gallons to 75,000 gallons.  PAT               
 SHARROCK responded that it is more economic than anything else.  It           
 provides sufficient production so that the bar owner who has a                
 brew-pub license can viably produce enough to make it reasonable.             
 He also noted there are only two of those licenses out, one in                
 Wasilla and one in Anchorage, but he wasn't sure if they are in               
 production yet.                                                               
 Section 9:  Is basically a wholesale licensee provision that more             
 or less solidifies what has been referred to for many years as the            
 three-tier system of the sale and distribution of alcohol by                  
 wholesalers.  It provides registering with the board certain kinds            
 of brands or product lines of alcohol that are sold by wholesalers            
 and establishes a fee for that.                                               
 Section 10:  It specifies that club, package store, restaurant and            
 beverage dispensary licensees must purchase their alcoholic                   
 beverage from a wholesale licensee.                                           
 Section 11:  It is new but technical at the same time.  Under                 
 current law, all licensees whose biennial license must be renewed             
 must file an application for renewal by December 31.  Under the               
 current law, if the application isn't filed, the premises must                
 cease operation and there is a $200 penalty for late filing.  Over            
 the years it has been found that this law has been enforced very              
 inequitably, because neither the board nor the State Troopers have            
 adequate staff to enforce it on New Years Eve.  The board felt that           
 to make it a little bit more equitable to let everyone stay open,             
 but increase the late penalty to $500.  The renewal applications              
 may be filed from January 1 until to February 28.  If the                     
 application isn't filed by that time, then the license expires and            
 the business must cease operation.                                            
 Section 17:  It is new but also technical.  There are times when              
 the board has applications before it where there may be questions             
 about a licensee or the kind of operation that they intend to have.           
 The board felt that it would be appropriate for the board to impose           
 restrictions on the operation or on the person involved, and this             
 impedes the ability to do so in statute.                                      
 Number 250                                                                    
 SENATOR TORGERSON asked what kind of restrictions could be imposed            
 on a license.  PAT SHARROCK said some municipalities, such as the             
 Municipality of Anchorage, will sometimes review an application for           
 a transfer of a license or renewal of a license and will say they             
 will approve the application if the licensee doesn't begin to sell            
 alcohol until after 4:00 p.m., that they cease selling alcohol                
 after a certain time, etc.  If they come to the board with those              
 conditions, the board isn't empowered to enforce the local                    
 conditions.  He said it exemplifies the fact that there are those             
 times that even the board itself would want to impose restrictions            
 and those would be noted on the license.                                      
 SENATOR TORGERSON asked who was responsible for the enforcement of            
 this.  PAT SHARROCK answered that those conditions that the board             
 puts on would be his responsibility, but the board has no                     
 responsibility for those conditions put on by the municipalities.             
 He said the law provides that municipalities can put conditions on            
 the control and sale of alcoholic beverages within their boundaries           
 by ordinance.  Of late, though, some municipalities come back with            
 resolutions to the board imposing conditions.  He added that                  
 therein lies a problem that the board has in terms of that                    
 relationship between the state and the municipality.                          
 SENATOR TORGERSON asked if a second class borough could come                  
 forward with certain restrictions for a liquor license in their               
 borough.  PAT SHARROCK answered that he thought they could make a             
 recommendation if those conditions weren't codified by ordinance.             
 SENATOR TORGERSON said his understanding was that the only avenue             
 a municipality has in appealing the renewal of a license was if the           
 licensee wasn't current on taxes.  PAT SHARROCK answered that the             
 Kenai Borough does have an ordinance that specifically says that,             
 and the board has protests from the Kenai Borough all the time.               
 SENATOR TORGERSON pointed out he was a member of that organization            
 for awhile, and his understanding was that, basically, most of                
 their protests were ignored and the licenses were issued anyway.              
 He added that these restrictions seem to be something that the                
 system just talks about and the local government hasn't really had            
 any control over them.                                                        
 SENATOR TORGERSON asked what happens if the municipality requests             
 a restriction, the board puts it on the license, and then the                 
 licensee is in clear violation of that restriction.  PAT SHARROCK             
 answered that he thought the assembly would then have grounds to              
 protest that application for renewal.  He added that the Supreme              
 Court has told the board that they cannot replace their judgment              
 for that of the local governing body.                                         
 Number 347                                                                    
 SENATOR ZHAROFF asked how much weight against the renewal of a                
 license a municipality carries if a licensee is in violation of a             
 local ordinance, but meets all of the state's requirements.  PAT              
 SHARROCK referred to a board regulation entitled "Local Governing             
 Body Protests" which are the guidelines that the board has given to           
 local governing bodies in terms of what the board would look to for           
 reasons for a protest so that the board would not have to end up              
 finding a local governing body arbitrary, capricious or                       
 unreasonable.  He said if the ordinances are violated and the city            
 council or the assembly protests an application based on the                  
 violations, the board would be hard pressed to find that those                
 reasons weren't suitable, so the local government has a lot of say            
 in the renewal of that license.                                               
 SENATOR TORGERSON expressed his concern that protests made by the             
 citizens are listened to and that they have some sort of avenue to            
 transmit that on to the board when they make their decisions.  He             
 added that that section of the bill would be flagged and revisited.           
 Number 400                                                                    
 PAT SHARROCK continued with his overview on the committee                     
 Section 19:  The amendment is a carryover to correct a glitch that            
 was neglected when the statute were changed to provide for biennial           
 renewal.  It allows a 30-day window for municipalities even in the            
 off-year of renewal, to still protest an application under the same           
 grounds as if they were looking at an application.                            
 Section 27:  Relates to the local option election and clarifies               
 that once a community has adopted a local option, they may not vote           
 to remove a local option or to change to a less restrictive option            
 during the first 12 months after the local option was adopted.  It            
 also provides that the notice of elections to package stores be               
 sent by certified mail, which is cheaper, rather than registered              
 Section 30:  It prohibits the sale of an alcoholic beverage that              
 contains more than 76 percent alcohol by volume.                              
 Section 45:  It provides that a municipality may limit importation            
 amount by ordinance under certain options.  It is giving the                  
 municipality, by ordinance, the ability to regulate the kind of               
 alcohol that is coming in.                                                    
 Number 475                                                                    
 SENATOR HOFFMAN commented that the City of Bethel was considering             
 such an option, but the problem is the record keeping on the amount           
 because there are so many different suppliers.                                
 Number 532                                                                    
 After brief discussion on the percent of alcohol by volume that an            
 alcoholic beverage may contain, JOE AMBROSE clarified that the                
 intent of Section 45 is to give the local municipality, after they            
 have adopted an option, some flexibility in enforcing the option              
 that the community has adopted.  In other words, what the state law           
 would be saying is that the local ordinance would not be                      
 inconsistent with state law if there was a restriction on the                 
 amount of alcohol a person could import in a month, if there was a            
 restriction on the percentage of alcohol to be imported within                
 certain limits.                                                               
 Number 572                                                                    
 PAT SHARROCK continued his overview on the committee substitute:              
 Section 50:  The server education training requirement became law             
 last year and it was felt the criteria was somewhat overburdensome            
 for common carriers.  This simplifies the criteria for the training           
 of their employees by common carriers.                                        
 Section 52:  Expands the definition of alcohol to include anything            
 containing alcohol intended for human consumption.                            
 TAPE 95-6, SIDE B                                                             
 Number 010                                                                    
 Section 53:  Clarifies the definition of "established village."               
 Under current law there is no provision to determine what the                 
 perimeter or boundary of an established village is, and the intent            
 of this section is to provide some means of structuring a boundary            
 in which the law would be upheld.  It is not intended to determine            
 or give another definition of the boundary of an established                  
 Section 33:  Repeals the requirement for the beverage dispensary              
 bond that is required upon renewal of those kinds of licenses.  It            
 has been in the law for years and has required a lot of paper work            
 for staff.  Under current law, it provides the bond shall be $2,500           
 and surrendered to the state upon the third conviction in a five-             
 year period of a licensee, which has never happened.                          
 Sections 65-71:  These are transition provisions on sections                  
 implementing local option provisions, etc.                                    
 Number 040                                                                    
 SENATOR TORGERSON referred to page 30, Section 51, and asked why              
 "community liquor license" was being deleted.  PAT SHARROCK                   
 explained that under current law "community liquor license" allows            
 a community to opt to have certain kinds of licenses.  He referred            
 back to line 13 of page 15, which is a provision for municipalities           
 to obtain a liquor license, so the "community liquor license" was             
 an unnecessary classification.                                                
 SENATOR HOFFMAN raised a concern about the ability of VFW members             
 being able to bring their own alcohol into their club, and he said            
 he thinks that's where many of the damp communities have had run-             
 ins with the law.  After brief discussion, SENATOR TORGERSON said             
 that section of the bill would be flagged and revisited.                      
 Number 125                                                                    
 SENATOR TORGERSON announced the committee would take testimony over           
 the teleconference network.                                                   
 MAYOR DON LONG, City of Barrow, read the following statement into             
 the record:                                                                   
 "I would like to direct my comments to those sections of SB 87                
 which affect local option elections and the importation of                    
 alcoholic beverages into communities such as Barrow, and I will not           
 mention specific language changes."                                           
 "First, I would like to thank Pat Sharrock from the ABC Board and             
 Teresa Williams from the Attorney General's office for all the work           
 they have done on this bill and for their recent comments."                   
 "I understand that much of this bill was before the Legislature               
 during the last session and, unfortunately, it failed to pass.  I             
 say unfortunately, because all of the problems that the community             
 of Barrow has encountered with the local option process in the last           
 six months were all addressed and would have cleared up by the                
 predecessor to SB 87."                                                        
 "For example, before the October 4, 1994 municipal election,                  
 petition sponsors wanted to place before the voters the question of           
 prohibiting the importation and possession of alcoholic beverages.            
 Instead of one question, the petitioners had to circulate two                 
 petitions and voters had to vote on two questions because that is             
 how the options are presently set up."                                        
 "Immediately after a majority of voters approved banning the                  
 importation and possession of alcoholic beverages, opponents to the           
 ban began the process to hold an election to repeal the alcohol               
 ban.  Myself and the City Clerk are named as defendants in a                  
 lawsuit that is in Superior Court right now over when the City of             
 Barrow had to hold an election on a vote to repeal the bank which             
 was just approved on October 4, 1994."                                        
 "SB 87 makes it clear that no election to repeal an option may be             
 held within 12 months of the option's adoption."                              
 "Additionally, in order to go back to the damp status that existed            
 in Barrow prior to October 4, 1994, under the present statutes,               
 voters must first vote to go completely wet and then a new petition           
 must be circulated and another election held on prohibiting the               
 sale of alcoholic beverages in Barrow.  SB 87 would make this                 
 option a one step, one election process instead of requiring two              
 separate petitions and elections."                                            
 "SB 87 also clarifies what the intent of the petition is.  I heard            
 from numerous people in Barrow who signed the most recent petitions           
 which seek to repeal the alcohol ban.  They told me that while they           
 wouldn't mind having a new election on going back to being damp             
 they did not want to have Barrow go wet.  They were very upset whe        
 they learned that the petitions they had signed would make Barrow             
 go wet.  They told me that they signed the petitions because they             
 were told by the sponsor that it was for having Barrow go "damp"              
 and that no one had mentioned "wet."  The language in SB 87 will              
 clear up the confusion that now exists."                                      
 "I have two questions that do not seem to be addressed in the                 
 present SB 87:"                                                               
 "First:  What happens when competing petitions are submitted, one             
 to impose a restriction and one to repeal a restriction.  My                  
 understanding is that the first petition submitted is voted on                
 first.  If the vote is in favor of imposing a restriction, what               
 happens to the petition to repeal a restriction that was submitted            
 before the election?  Does this petition become void since no                 
 election to repeal may be held for 12 months, or is it simply                 
 deferred for twelve months?"                                                  
 "Second:  What happens to petitions that are out there right now              
 with the questions under the present statutes?  My hope is that               
 this committee will add a transition section that clearly states              
 that a new petition with the new language must be submitted for any           
 election that will be conducted after the effective date of this              
 statute.  I also hope that the effective date will be set as soon             
 as possible to avoid confusion during the October municipal                   
 "Finally, I would like to ask this committee to extend the waiting            
 period before an election to repeal a prohibition may be held.  I             
 would like to see a two-year waiting period instead of a twelve-              
 month wait - at least when it comes to the possession of alcoholic            
 beverages.  AS 29.26.190(a) prohibits the repeal of an ordinance              
 created through the initiative process.  Since the prohibition on             
 possession of alcoholic beverages creates an ordinance of the                 
 municipality it should be clear that AS 29.26.190(a) applies to the           
 ordinance prohibiting the possession of alcoholic beverages."                 
 "Again, thanks to Pat Sharrock and Teresa Williams for all their              
 work and to this committee and the Legislature for their continued            
 recognition of the harmful effects alcohol can have on a community            
 and their support of local communities having the power to deal               
 with their problems in their own way."                                        
 SENATOR TORGERSON thanked Mayor Long for his testimony and asked              
 him to forward a copy of it to the committee.                                 
 Number 205                                                                    
 DAVID KOIVUNIEMI, Acting Director, Division of Elections, directed            
 attention to material showing what the ballots would look like                
 under the provisions of Section 20 of the bill.  He pointed out               
 that on the ballot question relating to the package store license,            
 most of the authority will appear on the front ballot card; another           
 portion of the authority will be on the back; and the question                
 itself will appear on the back.  On the other ballot questions, the           
 question and the authority were fitted on the front of the ballot.            
 Number 240                                                                    
 There was discussion on the situation of two opposing petitions for           
 elections.  SENATOR HOFFMAN said he thought the "in favor of"                 
 petition would take precedence, because if that is defeated, then             
 it is the status quo and you wouldn't need the second question of             
 whether or not you wanted to keep the status quo.  He suggested               
 that perhaps a preference could be put in statute saying that if              
 there is a ballot for "in favor of" or in a change, that the one              
 for change will take precedence.                                              
 SENATOR TORGERSON asked if the 12-month period starts at the time             
 the election is certified or at the time a local ordinance is                 
 adopted certifying the election.  He also asked if it takes a local           
 option after the election to adopt the provision of the petition              
 that was passed.  PAT SHARROCK answered that the adoption of the              
 option is the final result.                                                   
 Number 350                                                                    
 KAREN HEGYI, representing the City of Barrow and testifying from              
 Barrow, said if they got a petition to go dry and another petition            
 to have a liquor store in town, they've got two petitions with very           
 different results, and the question is what is the priority on                
 holding the election.  She said SB 87 makes it clear that there               
 can't be an election to go to a lesser status in 12 months, and she           
 asked if that completely voids the second petition, or does that              
 mean that they must wait for 12 months.  PAT SHARROCK said if they            
 held an election to adopt a prohibition against importation that's            
 very restrictive, he thinks the statute would prohibit them holding           
 another election the next week. Concerning Mayor Long's question on           
 the status of a petition that is existing when the legislation                
 passes, Mr. Sharrock thought there would have to be some                      
 transitional provision in the bill.                                           
 Number 450                                                                    
 There was extensive discussion on Section 53 and the definition of            
 "established village" and the determination of the perimeters of an           
 established village.  JOE AMBROSE related that the definition was             
 added in last year's legislation at the instigation of some of the            
 villages in order to define an enforcement area.  Because of a gray           
 area, there was concern about their ability to enforce their local            
 option in that gray area.                                                     
 Number 570                                                                    
 SENATOR TORGERSON stated CSSB 87(CRA) would be held over until the            
 committee's next meeting for additional work.                                 
 There being no further business to come before the committee, the             
 meeting was adjourned at 3:20 p.m.                                            

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