Legislature(1995 - 1996)
03/22/1995 01:37 PM Senate JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE March 22, 1995 1:37 p.m. MEMBERS PRESENT Senator Robin Taylor, Chairman Senator Lyda Green, Vice-Chairman Senator Mike Miller Senator Al Adams Senator Johnny Ellis MEMBERS ABSENT None COMMITTEE CALENDAR CS FOR SENATE BILL NO. 87(CRA) "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 date." SENATE BILL NO. 122 "An Act excluding certain direct sellers of consumer products from coverage under the state unemployment compensation laws." CS FOR HOUSE BILL NO. 9(FIN) "An Act relating to recovery of damages from a person having legal custody of a minor when property is destroyed by the minor, and to recovery from a minor's permanent fund dividend for injury or damage caused by the minor." CS FOR SENATE BILL NO. 85(STA) "An Act making corrective amendments to the Alaska Statutes as recommended by the revisor of statutes; and providing for an effective date." SENATE JOINT RESOLUTION NO. 14 Proposing an amendment to the Constitution of the State of Alaska relating to certain public corporations. PREVIOUS SENATE COMMITTEE ACTION SB 87 - See Community & Regional Affairs minutes dated 3/8/95 & 3/17/95. SB 122 - No previous Senate action. SB 85 - See State Affairs minutes dated 3/7/95. See Judiciary minutes dated 3/17/95. SJR 14 - See State Affairs minutes dated 2/21/95. HB 9 - See Judiciary minutes dated 3/20/95. WITNESS REGISTER Joe Ambrose Legislative Aide Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified on CSSB 87 (CRA) Michael Ford Legislative Legal Services Legislative Affairs Agency 130 Seward St., Suite 409 Juneau, AK 99801-2105 POSITION STATEMENT: Testified on CSSB 87 (CRA) Rick Urion Alaska Wine & Spirits Wholesalers Assn. P.O. Box 20868 Juneau, Alaska 99802 POSITION STATEMENT: Supports CSSB 87 (CRA) Patrick L. Sharrock Alaska Beverage Control Board 550 W 7th Ave. Anchorage, AK 99501 POSITION STATEMENT: Answered questions on CSSB 87 (CRA) Sherman Ernouf Senate Labor & Commerce Committee Aide Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified on SB 122 Pam Finley Legislative Legal Services Legislative Affairs Agency 130 Seward St. Suite 409 Juneau, AK 99801-2109 POSITION STATEMENT: Testified on CSSB 85(JUD) Dwight Perkins Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Supports CSSB 122(JUD) Wilda Whittaker Legislative Aide Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified for sponsor of HB 9 Senator Rick Halford Alaska State Legislature Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified on SJR 14 ACTION NARRATIVE TAPE 95-14, SIDE A Number 001 SJUD - 3/22/95 SB 87 ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC. CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 1:37 p.m. The first order of business was CSSB 87(CRA). JOE AMBROSE, legislative aide to Senator Taylor, gave the following testimony. Last year the Alcoholic Beverage Control Board (ABC Board), prompted by concerns over a lack of clarity about how local option elections are to be conducted, requested legislation to simplify the process. The ABC Board also asked the same vehicle be used to address technical amendments to Title 4. The result last year was SB 372, which passed the Senate but died in the House Rules Committee in the final days of the session. SB 87 is essentially the same as last year's legislation. MR. AMBROSE continued. CSSB 87(CRA) addresses the shortcomings in current statute governing local option, for which no provision is made for going from one type of option to another. Under current law, a community must first vote to remove all restrictions on the sale and/or importation of alcoholic beverages, then conduct a second election on new options. This burdensome process can cause confusion for municipalities and unincorporated villages. The Community and Regional Affairs committee substitute addresses specific concerns raised by local option communities. Those amendments were supported by the ABC Board, and the chairman of the sponsoring committee. MR. AMBROSE discussed proposed amendments to CSSB 87(CRA) that are supported by the Division of Elections, liquor industry and chair of the sponsoring committee. CSSB 87 (CRA) is primarily a housekeeping measure to clarify existing law to make local option a more understandable process. MR. AMBROSE explained Amendment #1 to page 22, lines 26-29. Line 27 should read, "under AS 04.11.491(a)(1) and the premises is a nonprofit club, corporation, or association that was..." and line 29 should cite "AS 04.11.491(a)(1)." Number 115 SENATOR GREEN asked if the nonprofit status would apply to corporations and associations. MIKE FORD, Legislative Legal Services, clarified the word "nonprofit" refers to "club," "corporation," and "association." SENATOR ADAMS noted to prevent future problems with interpretation, the word "nonprofit" should be inserted before all three words to clarify the intent. SENATOR TAYLOR made a motion to amend Amendment #1 to insert the word "nonprofit" in front of the words "club," "corporation," and "association" and to move Amendment #1. SENATOR ADAMS objected. MIKE FORD suggested an additional change to Amendment #1. He noted the word "place" was used on line 27 because it also appears on line 22. He suggested replacing the word "place" on line 22 with the word "premise" and changing line 27 to read, "premises are occupied by a nonprofit club...." SENATOR GREEN asked if line 24 needed to be amended to include the word "nonprofit." MR. FORD did not believe so. There being to objection to adopt Amendment #1, as amended, the motion carried. Number 173 SENATOR GREEN moved the adoption of Amendment #2 which was labeled "9-LS0673\F.1." SENATOR ADAMS objected. MR. AMBROSE addressed lines 19-22 on page 1 of Amendment #2 and line 1 on page 2. In revisions made to the Community and Regional Affairs Committee substitute, the effective date of Section 70 of the bill was inadvertently deleted. Section 73 would reinstate the immediate effective date. SENATOR ADAMS asked what Section 70 pertains to. MIKE FORD stated Section 70 allows the ABC Board to adopt regulations. RICK URION, Alaska Wine and Spirits Wholesale Association, explained the remainder of Amendment #2. He stated the 21st amendment to the U.S. Constitution allows states to control the importation of alcoholic beverages into their borders. All but six states have chosen to do so with a primary source law. Amendment register their suppliers and brands of liquor with the department, along with a statement from the manufacturer of the product that the wholesaler is the primary source. This procedure would protect the state and its revenue source by allowing products to be traced and ensuring the payment of excise taxes by wholesalers. It also protects the state, wholesalers and the jobs created within the industry. This language would prevent gray market goods (products manufactured in foreign countries intended for consumption or use in a foreign country) from entering the state of Alaska. SENATOR ADAMS questioned how Amendment #2 would affect a typical COSTCO member and how COSTCO distributes liquor from its warehouse. MR. URION clarified retailers would not be affected at all, unless they bought gray market goods. The bill is directed to wholesalers. He noted the industry will be self-policing. PATRICK SHARROCK, Director of the ABC Board, commented Amendment #2 does not address Senator Adams' question; Section 10 on page 5 does. Section 10 restricts purchases of alcoholic beverages for resale. SENATOR ADAMS asked what the ABC Board's position is on Amendment either amendment. He added the intent of the measure is to solidify, in law, what has been implied or perceived for many years. Number 265 SENATOR ELLIS asked Mr. Sharrock's personal opinion of the proposed amendment. MR. SHARROCK answered it solidifies a 3 tiered system of the distribution of alcoholic beverages throughout the country, which is probably beneficial. SENATOR ELLIS asked how the fees that would be established in statute compare to other states. MR. URION replied CSSB 87(CRA) differs from other state laws so it is difficult to compare. He developed the fee structure by determining the cost to the department to cover filing costs. SENATOR ELLIS asked if other states have a similar fee structure. MR. URION explained other states have fees but they are calculated in many different ways. SENATOR ELLIS questioned whether the fees in Amendment #2 are comparable in any way. MR. URION stated the industry believes the fees to be reasonable. SENATOR ELLIS requested, on behalf of the committee, that Mr. Urion and the ABC Board provide the committee with statistics on similar fees charged in other states. Number 300 SENATOR TAYLOR asked if the bill would generate new revenue. MR. URION replied affirmatively. SENATOR ADAMS asked for the ABC Board's position on Section 10, specifically in regard to a COSTCO member. MR. SHARROCK commented it would prohibit a licensed retailer from purchasing alcohol at that location for resale. SENATOR TAYLOR asked if liquor stores in the state were allowed to sell products at wholesale cost. MR. SHARROCK replied negatively, and explained a wholesale licensee cannot have an interest in a liquor store. SENATOR TAYLOR commented COSTCO has a retail license, but a COSTCO member could buy a large quantity of liquor at a discount price without paying sales tax. MR.SHARROCK noted that could be perceived as a wholesale purchase if the quantity was very large. SENATOR TAYLOR commented if the member bought the liquor for resale, he/she would be violating the law. MR. SHARROCK stated the problem lies in the fact that COSTCO is not required to ask the customer whether the purchase is for resale. SENATOR TAYLOR stated a retailer is prohibited from selling at wholesale prices. MR. SHARROCK added the sales tax has already been paid in the form of an excise tax. SENATOR MILLER asked where COSTCO purchases the liquor. MR. URION replied from a licensed wholesaler which must be Alaska based. SENATOR MILLER asked where the concern lies. MR. URION explained the bill does not change the way anything is currently done, and that there is not a problem with gray market goods; the bill merely closes up a loophole that exists. He reiterated a retailer cannot be a wholesaler, therefore the COSTCO situation is not a problem. SENATOR MILLER questioned the need for additional restrictions. He compared the situation to other retail businesses who resell products purchased from retailers. MR. URION clarified excise tax must be paid on alcoholic beverages and is paid by wholesalers. He explained the excise tax is only paid once, and not by retailers like COSTCO. SENATOR TAYLOR noted the non-Alaskan distributor who ships liquor into the state without paying the excise tax cannot be policed. The retailer who purchases that liquor will do so at a much cheaper price because the cost of the tax does not have to be taken into consideration. Number 390 SENATOR ADAMS suggested the deletion of Section 10 on page 5. Number 400 SENATOR GREEN asked for clarification of how gray market goods create market problems in other states. MR. URION replied in the contiguous states a wholesaler can transport goods from state to state easily. The problem is not as prevalent in Alaska, however there have been times when gray market goods have been transported into the state. He discussed quality control problems with such goods and the inability to remove those products from circulation when they are unsafe. SENATOR GREEN asked how CSSB 87(CRA) would prevent those problems. MR. URION explained it requires primary source distributors to register the names of the producers of goods. SENATOR TAYLOR commented the Washington State ABC Board determines which brands can be sold in the state, and the liquor stores are controlled by the state. SENATOR ADAMS questioned the fee structure in Amendment #2. MR. URION answered he determined the fee structure. SENATOR TAYLOR responded the committee had requested comparable fee calculations from other states. SENATOR ELLIS commented he supports the effective date change in Amendment #2 but preferred to wait for the fee structure information before taking action on that portion of the amendment. MR. SHARROCK noted Mr. Urion calculated the fee amounts to cover minimum administrative costs. SENATOR ELLIS stated he would like the fee comparisons to determine whether the fees are justifiable recompensation to the state. He asked that the comparisons include the total administrative costs to the ABC Board. SENATOR TAYLOR announced he would table Amendment #2. There being no objection, Amendment #2 was tabled. The committee discussed Amendment #3 (9-LS0673\F.2). SENATOR GREEN moved the adoption of Amendment #3. For purposes of discussion, SENATOR ELLIS objected. MR. AMBROSE noted Amendment #3 was submitted at the request of the Division of Elections. Number 478 MR. FORD discussed the intent of Amendment #3. It clarifies that local option language on a ballot contains a summary of the authority in question. This would define what option is being voted on. SENATOR TAYLOR asked if it clarifies the election process. MR. FORD responded it clarifies the ballot itself. SENATOR ELLIS removed his objection. SENATOR ADAMS objected for the purpose of discussion. He asked what happens when there are two competing petitions, one to impose a restriction, and the second to repeal that petition. MR. FORD stated CSSB 87(CRA) specifies that the first petition filed that is certified as meeting statutory requirements takes precedence (page 21, lines 11- 14). That petition must be voted on before a second petition can be filed. Number 515 SENATOR TAYLOR asked who the entity would be that determines certification. MR. FORD replied it would depend; if the election was municipal, it would be certified by the municipal clerk. SENATOR ADAMS questioned how a "dry" community would go "damp." He asked if a community would have to go from "dry" to "wet" before going "damp." MR. FORD explained it would be a one-step process. SENATOR ADAMS asked how often a petition can be filed. MR. FORD noted page 21 (subsection f) contains language which addresses time limitations. SENATOR ADAMS removed his objection, but stated he will look at subsection (f) on page 21 for possible amendment. There being no objection to the adoption of Amendment #3, the motion carried. Number 532 SENATOR ADAMS announced he was given a list of proposed amendments from the Department of Public Safety that he would present to the committee on Monday. SJUD - 3/22/95 SB 122 NO UNEMPLOYMENT COMP FOR DIRECT SELLERS SENATOR MILLER moved the adoption of CSSB 122(JUD) in lieu of the original bill. There being no objection, the Judiciary committee substitute was adopted. SHERMAN ERNOUF, legislative aide to Senator Kelly, testified on SB 122, which was introduced by the Senate Labor and Commerce Committee at the request of several groups of direct sellers. The purpose of SB 122 is to direct exempt sellers of consumer products from coverage under Alaska's unemployment compensation laws. SB 122 would resolve a long standing issue of contention between the Department of Labor and direct sellers. MR. ERNOUF discussed the two criteria required for exemption: the direct seller must be physically present in a prospective customer's home to sell or solicit a consumer product; and the direct seller must be compensated by sales, commissions, or by profit represented by the difference between the wholesale cost of the product and the final sale price. The committee substitute adds the word "remuneration" to cover other situations that develop. He added wholesalers who sell merchandise are not forced to pay unemployment compensation payments. He concluded by saying SB 122 is a narrowly tailored consensus approach to resolve a long standing problem. Number 571 SENATOR ADAMS asked if CSSB 122 (JUD) would have any impact, negative or positive, on the unemployment insurance (UI) trust fund. MR. ERNOUF replied the bill would affect such a small number of people, it would have no effect on the UI fund. DWIGHT PERKINS, representing the Department of Labor, stated the department does not believe CSSB 122 (JUD) will have a negative effective on the UI fund. Very few individuals have filed claims under this program. SENATOR ADAMS asked if it would affect unemployment insurance coverage. MR. PERKINS replied it would have no effect. SENATOR ADAMS moved, and asked unanimous consent, that CSSB 122 (JUD) be moved out of committee with individual recommendations. There being no objection, the motion carried. TAPE 95-14, SIDE B SJUD - 3/22/95 SB 85 1995 REVISOR BILL SENATOR MILLER moved the adoption of CSSB 85 (JUD) (Finley, 3/21/95) for discussion. SENATOR ADAMS objected and asked if the committee substitute removes Section 19. PAMELA FINLEY, Legislative Legal Services, reviewed the changes made to the Judiciary Committee substitute. The committee substitute does not contain Section 19 and includes the amendments labeled F1, F2, and F3. SENATOR ADAMS removed his objection. SENATOR MILLER moved CSSB 85(JUD) out of committee with individual recommendations. There being no objection, the motion carried. SJUD - 3/22/95 HB 9 DAMAGE TO PROPERTY BY MINORS SENATOR GREEN moved the adoption of SCSCSHB 9(JUD). Both Senators Ellis and Adams objected. WILDA WHITTAKER, legislative aide to Representative Therriault, sponsor of HB 9, testified. She explained changes made in the Senate Judiciary Committee substitute. The circumstances under which an individual could qualify to recover costs of an infraction committed by a minor is changed on line 22, page 2 through line 1, page 3. SENATOR TAYLOR asked if the only change from the original version was to delete the parenthetical language from line 22 on page 2, to page 3, line 1. MS. WHITTAKER answered affirmatively. Number 554 SENATOR ELLIS questioned the rationale for the change. SENATOR TAYLOR explained subsection (A) on page 2 is a limitation upon the ability to execute against the judgement debtor's permanent fund dividend and provides exceptions. It would allow a writ of execution be issued against the minor in a civil action to recover damages and limits that amount to $10,000. The deletion in the Senate Judiciary Committee substitute removes certain hurdles requiring the establishment that the state of Alaska had acted to declare the juvenile a delinquent, or that the juvenile was convicted of a criminal offense. SENATOR ELLIS asked if the rationale is based on the fact that obtaining the judgement is difficult to do. SENATOR TAYLOR clarified there are significant exemptions provided by law that exempt people from the enforcement of a writ of execution, i.e. the Homestead exemption. He noted an individual must earn $30,000 per year before his/her salary can be executed upon. Number 526 SENATOR ELLIS asked if a judgement is made against a minor for damages in civil court, a criminal judgement would not be required to attach restitution. SENATOR TAYLOR replied affirmatively. SENATOR GREEN questioned why the limit was placed at $10,000 and what provisions would be made for damage over that amount. MS. WHITTAKER replied the $10,000 figure was determined to be the 1994 equivalent of the $2,000 limit in the statute updated in 1967. SENATOR GREEN questioned whether restitution should cover actual costs. SENATOR ELLIS stated the measure regarding the emancipation of minors that passed last year might provide an incentive for a parent to emancipate a minor if the restitution costs were increased, to avoid taking responsibility. SENATOR GREEN felt the amount to be arbitrary but not capricious. SENATOR TAYLOR commented tort reform supporters would consider this measure important because it caps liability. SENATOR ADAMS questioned whether the language change on page 1, line 11, would include foster parents as a liable party. MS. WHITTAKER responded that foster parents would be exempt. SENATOR ADAMS asked who would pay for the damages. Debate over whether the state would be liable ensued. SENATOR ADAMS asked if a child broke a window in a neighbor's home while playing ball, whether the child's permanent fund dividend would be garnished to pay for the damages. SENATOR TAYLOR noted the act must be intentional or knowing. Number 460 SENATOR ELLIS asked if SCSCSHB 9(JUD) contains an explicit exemption for foster parents or juveniles in state custody. MS. WHITTAKER replied Section B of the current statute exempts state agencies or its agents from liability for the acts of unemancipated minors in its custody. SENATOR GREEN moved SCSCSHB 9(JUD) out of committee with individual recommendations. SENATOR ADAMS objected. The motion failed with Senators Green and Taylor voting "Yea," and Senators Ellis and Adams voting "Nay." Number 439 SJUD - 3/22/95 SJR 14 CONFIRMATION OF MEMBERS OF PUBLIC CORP SENATOR RICK HALFORD, sponsor of SJR 14, gave the following testimony. SJR 14 has been reviewed by the Senate Finance Committee but was returned to the Senate Judiciary Committee to create specific language to achieve the intent. Had the corporations that control close to $20 billion in state assets been envisioned at the time of statehood, a constitutional mechanism would have been devised to prevent confirmation overlap problems. He stated the question is how specific should constitutional language be. The language needs to clearly cover the public entities that control billions of dollars of state assets and provide the voters an opportunity to amend the constitution so that a check and balance system with regard to the boards and commissions is established. SENATOR TAYLOR discussed the need to keep the language sufficiently generic so as to encompass the public entities that currently exist and will be created in the future, and avoid the problem of providing a specific list of names that will be intentionally avoided by administrations in the future. Number 420 SENATOR HALFORD stated one possibility is to change the words "public corporation" to "entity" but it is not clear what agencies would be considered "entities." He suggested scheduling a work session with the Legislative Legal Services Division to refine the language. SENATOR ADAMS agreed with Senator Halford's statement about which agencies should be covered, and felt CFAB should be included, but he did not believe the list should include the smaller corporations. SENATOR HALFORD stated one consideration was to only include corporations that manage more than $50 million in state assets but that would not include CFAB. SENATOR HALFORD noted in an early draft, the addition of another section was considered, however he felt a constitutional amendment needs to be short, easily understood and self explanatory to gain voter approval. The Administration raised the argument that defining the assets as state assets might increase state liability for default by the entity that controls those assets. SENATOR TAYLOR suggested establishing a work session on record to review the measure and develop new language. SENATOR HALFORD suggested including Judge Stewart since he was a member of the Constitutional Convention. SENATOR HALFORD expressed concern that the Legislature approves all members of the Board of Barbers and Hairdressers, yet has nothing to do with the Permanent Fund Corporation Board, which has been replaced by the past two administrations. SENATOR TAYLOR announced he planned to set up a work session on SJR 14 within the next 10 days. SENATOR GREEN asked if the intent of SJR 14 is to provide legislative confirmation of members of public corporations and does not set up a kind of audit system. SENATOR HALFORD responded SJR 14 allows for legislative confirmation. He recommended the creation of overlapping terms, and the ability to discharge for cause also be included in law. Because the Constitution provides for legislative confirmation of heads of principle departments or regulatory or quasi-judicial agencies only, board members of agencies like the Alaska Railroad Corporation are not confirmed by the Legislature. He stated the boards of public corporations are usually comprised of commissioners as well as public members, therefore the composition of the board changes significantly with a change of administration. He noted the Permanent Fund Corporation Board has only one member that was on the last Board, although some members from the previous board were recently reappointed after being removed by the previous governor. SJUD - 3/22/95 HB 9 DAMAGE TO PROPERTY BY MINORS SENATOR MILLER moved SCSCSHB 9(JUD) out of committee with individual recommendations. There being objection a roll call vote was taken. The motion carried with Senators Miller, Green, and Taylor voting "Yea," and Senator Ellis voting "Nay." SENATOR TAYLOR adjourned the meeting at 2:50 p.m.