Legislature(1999 - 2000)

05/10/1999 02:25 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
              SENATE JUDICIARY COMMITTEE                                                                                        
                     May 10, 1999                                                                                               
                      2:25 p.m.                                                                                                 
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Robin Taylor, Chairman                                                                                                  
Senator Rick Halford, Vice-Chairman                                                                                             
Senator Dave Donley                                                                                                             
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Senator John Torgerson                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 114                                                                                                             
"An Act relating to impersonating a public servant."                                                                            
     -MOVED CSSB 114(JUD) OUT OF COMMITTEE                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 69(FIN) am                                                                                                
"An Act requiring certain reports or information from alcoholic                                                                 
beverage licensees that are also limited liability organizations;                                                               
relating to powers of employees of the Alcoholic Beverage Control                                                               
Board to investigate violations of certain criminal laws; relating                                                              
to regulation of alcoholic beverage licenses issued to limited                                                                  
liability organizations; relating to brewpub licenses; relating to                                                              
package store licenses; relating to a licensee's violation of laws                                                              
relating to alcoholic beverage licensing, sales, and distribution                                                               
and to imposition, monitoring, and enforcement of conditions                                                                    
imposed on alcohol beverage licensees that are recommended by a                                                                 
local governing body and that are required to be imposed on an                                                                  
alcohol beverage licensee unless the Alcoholic Beverage Control                                                                 
Board determines the recommended conditions are arbitrary,                                                                      
capricious, or unreasonable; relating to consumption of alcoholic                                                               
beverages on licensed premises; relating to the liability of a                                                                  
member of a limited liability organization who also holds an                                                                    
alcoholic beverage license; extending the termination date of the                                                               
Alcoholic Beverage Control Board to June 30, 2003; relating to                                                                  
residency requirements for obtaining an alcoholic beverage license;                                                             
and providing for an effective date."                                                                                           
     -MOVED CSHB 69(JUD) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 162                                                                                                             
"An Act relating to the rule against perpetuities, nonvested                                                                    
property interests, and powers of appointment; and providing for an                                                             
effective date."                                                                                                                
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
SENATE BILL NO. 163                                                                                                             
"An Act relating to a trustee's duties to inform and account to                                                                 
beneficiaries; relating to the revocation, modification,                                                                        
termination, reformation, construction, and trustees of trusts; and                                                             
relating to transfer restrictions in trusts."                                                                                   
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 165                                                                                                             
"An Act relating to the remedies available to judgment creditors                                                                
against limited liability company members and their assignees and                                                               
against limited partnership general and limited partners and their                                                              
assignees; and providing for an effective date."                                                                                
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
SENATE BILL NO. 166                                                                                                             
"An Act relating to the amendment and revocation of spouses'                                                                    
community property agreements and community property trusts; and                                                                
providing for an effective date."                                                                                               
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
SENATE BILL NO. 109                                                                                                             
"An Act relating to prohibited campaign contributions; and                                                                      
providing for an effective date."                                                                                               
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 114 - See Judiciary minutes dated 3-29-99 and 4-12-99.                                                                       
                                                                                                                                
HB 69  - No previous Senate action.                                                                                             
                                                                                                                                
SB 162 - See Judiciary Committee minutes dated 5-3-99.                                                                          
                                                                                                                                
SB 163 - See Judiciary Committee minutes dated 5-3-99.                                                                          
                                                                                                                                
SB 165 - No previous Senate action.                                                                                             
                                                                                                                                
SB 166 - No previous Senate action.                                                                                             
                                                                                                                                
SB 109 - See Judiciary minutes dated 4-19-99.                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Representative Norm Rokeberg                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska  99081-1182                                                                                                      
POSITION STATEMENT:  Sponsor of HB 69                                                                                           
                                                                                                                                
Geoff Larson                                                                                                                    
Alaskan Brewing Company                                                                                                         
5429 Shaune Drive                                                                                                               
Juneau, AK  99801                                                                                                               
POSITION STATEMENT:  Supports extending the ABC Board but has                                                                   
concerns about HB 69                                                                                                            
                                                                                                                                
Mark Staples, CEO                                                                                                               
Midnight Sun Brewing Company                                                                                                    
9660 Reliance                                                                                                                   
Anchorage, AK  99507                                                                                                            
POSITION STATEMENT:  Supports extending the ABC Board but has                                                                   
concerns about HB 69                                                                                                            
                                                                                                                                
Gary Klopper                                                                                                                    
717 W 3rd Ave                                                                                                                   
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Supports extending the ABC Board but has                                                                   
concerns about HB 69                                                                                                            
                                                                                                                                
Shawn Wendling                                                                                                                  
737 W 5th Ave                                                                                                                   
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Supports HB 69                                                                                             
                                                                                                                                
Chris Andrus                                                                                                                    
Glacier Brewhouse                                                                                                               
737 W 5th Ave                                                                                                                   
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Supports HB 69                                                                                             
                                                                                                                                
Larry Hackenmiller                                                                                                              
518 Farmers Loop Road                                                                                                           
Fairbanks, AK  99712                                                                                                            
POSITION STATEMENT:  Expressed concerns about HB 69                                                                             
                                                                                                                                
Karen Berger                                                                                                                    
Homer Brewing Company                                                                                                           
1562 Homer Spit Rd. #A                                                                                                          
Homer, AK  99603                                                                                                                
POSITION STATEMENT:  Supports the extension of the ABC Board but is                                                             
opposed to HB 69                                                                                                                
                                                                                                                                
Matt Jones                                                                                                                      
3300 Old Seward                                                                                                                 
Anchorage, AK  99507                                                                                                            
POSITION STATEMENT:  Supports HB 69                                                                                             
                                                                                                                                
Doug Griffin                                                                                                                    
Alcohol Beverage Control Board                                                                                                  
550 W 7th #350                                                                                                                  
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Answered questions about the ABC Board and HB                                                              
69                                                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-30, SIDE A                                                                                                              
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee meeting                                                             
to order at 2:25 p.m.  Present were Senators Halford, Donley,                                                                   
Ellis, and Taylor.  The first order of business to come before the                                                              
committee was SB 114.                                                                                                           
                                                                                                                                
          SB 114-IMPERSONATE POLICE/EMERGENCY VEHICLE                                                                           
                                                                                                                                
CHAIRMAN TAYLOR informed committee members that a committee                                                                     
substitute had been prepared (CSSB 114) that includes Senator                                                                   
Halford's amendments to Sections 3 and 4.                                                                                       
                                                                                                                                
SENATOR DONLEY moved to adopt CSSB 114(JUD), version G, dated                                                                   
4/23/99, as the working document of the committee.  There being no                                                              
objection, CSSB 114(JUD) was adopted.                                                                                           
                                                                                                                                
CHAIRMAN TAYLOR proposed an amendment (Amendment 1) to assure that                                                              
a public servant cannot use his or her title, uniform, badge, or                                                                
other identifying accouterment of office, in a political fashion.                                                               
                                                                                                                                
SENATOR HALFORD moved to adopt Amendment 1.                                                                                     
                                                                                                                                
CHAIRMAN TAYLOR explained Amendment 1 increases the penalty from a                                                              
violation to an offense.                                                                                                        
                                                                                                                                
SENATOR DONLEY asked if Amendment 1 applies to all government                                                                   
employees or to state government employees only.  CHAIRMAN TAYLOR                                                               
said he believes it applies to all government employees.  He added                                                              
that a city policeman could not have his picture taken wearing a                                                                
badge and then endorse a partisan political candidate with that                                                                 
photograph.                                                                                                                     
                                                                                                                                
SENATOR DONLEY expressed concern that Amendment 1 is too broad and                                                              
will be applied to situations for which it was not intended.                                                                    
                                                                                                                                
CHAIRMAN TAYLOR noted public servants who are elected to a partisan                                                             
public office are exempted from the provision in the following                                                                  
paragraph.  People who are not exempt are those elected to a non-                                                               
partisan office, such as the mayor of Juneau.  The mayor could not                                                              
hold a fundraiser at his home, using his title as mayor, for a                                                                  
partisan gubernatorial candidate.                                                                                               
                                                                                                                                
Number 135                                                                                                                      
                                                                                                                                
SENATOR ELLIS objected to the adoption of Amendment 1.  The motion                                                              
to adopt Amendment 1 carried with Senators Halford, Donley, and                                                                 
Taylor voting "yea," and Senator Ellis voting "nay."                                                                            
                                                                                                                                
SENATOR ELLIS informed committee members that Randy Smith, a                                                                    
constituent, expressed concern about language in the bill that                                                                  
makes a strong connection between municipal and local police                                                                    
department control and the activities of community patrols.  He                                                                 
noted that Mr. Smith was unable to testify at the last hearing.                                                                 
                                                                                                                                
CHAIRMAN TAYLOR asked if Senator Ellis worked with Mr. Smith on his                                                             
concern.  SENATOR ELLIS said he worked with all community patrols                                                               
that got back to him, however Mr. Smith did not get back to him                                                                 
until after action was taken, therefore his concerns were not                                                                   
satisfied.                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR asked if Mr. Smith suggested language to resolve                                                                
his concerns.                                                                                                                   
                                                                                                                                
Number 158                                                                                                                      
                                                                                                                                
SENATOR DONLEY pointed out that Mr. Smith's concerns revolve around                                                             
the fact that several years ago the Municipality of Anchorage (MOA)                                                             
refused to cooperate with, or organize, community patrols.  CSSB                                                                
114(JUD) contains the language, "organized by, or in cooperation                                                                
with."  When the MOA simply refused to cooperate, the citizens                                                                  
undertook organizing community patrols on their own.                                                                            
                                                                                                                                
SENATOR ELLIS thought the MOA has moved forward in that arena,                                                                  
however Mr. Smith remained concerned because he serves as the                                                                   
institutional memory for the whole effort.                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR pointed out the phrase, "organized by, or in                                                                    
cooperation with,"  begins on the bottom of page 1 and continues on                                                             
the top of page 2 of CSSB 114(JUD).                                                                                             
                                                                                                                                
SENATOR ELLIS suggested and moved the following language as                                                                     
Amendment 2, "of an organized community patrol within a community                                                               
or municipality."  He said that language does not require a direct                                                              
connection and that Mr. Smith's intent is to do no harm to                                                                      
community patrols.  There being no objection, the motion carried.                                                               
                                                                                                                                
Number 211                                                                                                                      
                                                                                                                                
SENATOR HALFORD moved CSSB 114 (JUD) from committee with individual                                                             
recommendations.  SENATOR ELLIS objected.  The motion carried with                                                              
Senators Halford, Donley, and Taylor voting "yea," and Senator                                                                  
Ellis voting "nay."                                                                                                             
                                                                                                                                
            HB  69-ALCOHOLIC BEVERAGE CONTROL BOARD                                                                             
                                                                                                                                
REPRESENTATIVE NORM ROKEBERG, sponsor, said HB 69 is an omnibus                                                                 
Alcohol Beverage Control (ABC) Board bill.  It extends the sunset                                                               
date to the year 2003.  HB 69 is consistent with the latest audit,                                                              
and the bulk of the bill places limited liability partnerships                                                                  
(LLPs) and limited liability corporations (LLCs) into statute at                                                                
the request of the Board.                                                                                                       
                                                                                                                                
SENATOR HALFORD asked what LLOs and LLPs are in terms of legal                                                                  
entities.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG explained "LLO" is an acronym used by the                                                               
legal drafter for limited liability organizations which encompasses                                                             
both LLPs and LLCs.                                                                                                             
                                                                                                                                
CHAIRMAN TAYLOR noted LLOs are like the old limited partnerships in                                                             
that they require a general managing partner.  He asked if                                                                      
liability still flows to someone, and whether LLO formation acts as                                                             
a further shield against liability in relation to the alcohol                                                                   
beverage control laws which require someone to be responsible.                                                                  
                                                                                                                                
Number 262                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG assumed the liability issue is taken up                                                                 
with the LLCs but not with the LLPs.  He added that the Legislature                                                             
adopted these forms of business organizations and has been                                                                      
incorporating them into applicable titles and chapters.  The ABC                                                                
board requested that they be adopted into its governing statutes.                                                               
                                                                                                                                
CHAIRMAN TAYLOR pointed out HB 69 sets up a triggering device which                                                             
requires notification to the ABC Board of the transfer of any                                                                   
ownership in excess of 10 percent of an organization.                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG said that requirement also applies to                                                                   
corporations.                                                                                                                   
                                                                                                                                
CHAIRMAN TAYLOR questioned whether HB 69 originally extended the                                                                
sunset date only.  REPRESENTATIVE ROKEBERG answered HB 69 reflects                                                              
a bill heard in the Senate Judiciary Committee last year.  Senator                                                              
Torgerson requested that the previous bill contain a provision                                                                  
covering the sales of hospitality packages of cruise ships and                                                                  
social events.  The LLO provisions were requested by the ABC Board.                                                             
He noted HB 69 is more omnibus in that regard.                                                                                  
                                                                                                                                
CHAIRMAN TAYLOR asked why the term "peace officers" is redefined in                                                             
HB 69 and who requested that change.                                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that amendment was adopted by the                                                                 
House Finance Committee at Senator Donley's request.                                                                            
                                                                                                                                
Number 302                                                                                                                      
                                                                                                                                
SENATOR HALFORD expressed concern that Section 2 gives the ABC                                                                  
Board the authority to grant any police powers it desires to its                                                                
peace officers, including the power to enforce laws beyond, and                                                                 
different from, gambling, prostitution, or illegal alcohol use or                                                               
sales.                                                                                                                          
                                                                                                                                
SENATOR DONLEY explained the actual powers are granted by the                                                                   
commissioner of the Department of Public Safety, but the ABC Board                                                              
may request that an officer's powers be expanded.  To date, the                                                                 
commissioner has authorized the ABC Board investigators to                                                                      
investigate gambling and prostitution.                                                                                          
                                                                                                                                
SENATOR HALFORD repeated his concern that Section 2 gives the                                                                   
commissioner and the ABC Board the authority to basically deputize                                                              
the investigators to do anything they want to do.                                                                               
                                                                                                                                
CHAIRMAN TAYLOR agreed it is broad, and said he would not object to                                                             
limiting the authority to activities the commissioner has                                                                       
authorized to date.                                                                                                             
                                                                                                                                
SENATOR DONLEY repeated Section 2 contains a safeguard in that both                                                             
the commissioner of DPS and the ABC Board must approve the                                                                      
expansion of powers.  He said Section 2 will conform the statutes                                                               
to the status quo.                                                                                                              
                                                                                                                                
SENATOR HALFORD noted the last deletion in Section 2 is unnecessary                                                             
for that purpose.                                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG said he would not object to retaining that                                                              
language.                                                                                                                       
                                                                                                                                
Number 364                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR asked if Section 5 will allow a brew pub license                                                                
owner to buy a beverage dispensary license and then sell both hard                                                              
liquor and beer on the premises.                                                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG noted the Legislature established a brew                                                                
pub license category in 1988 which requires the licensee to have a                                                              
beverage dispensary license.  Section 5 will allow the holders of                                                               
the "grandfathered" brewery-restaurant licenses, or tavern license                                                              
holders, to convert their licenses to a beverage dispensary license                                                             
to continue to get some of the benefits of a brewery under the                                                                  
statute.  Section 5 is the result of protracted negotiations                                                                    
between the "grandfathered" members who hold exempt licenses and                                                                
wish to expand their businesses but are prohibited from doing so                                                                
because of the tavern bill that passed a few years ago.  Both the                                                               
Moose's Tooth and the Glacier Brew House license holders would                                                                  
like, but are unable, to expand their businesses.  Those with                                                                   
exempt licenses will be able to turn them in and purchase, in a                                                                 
secondary market, a beverage dispensary license and then apply for                                                              
a brew pub license.  A brew pub license will allow the license                                                                  
owner to sell beer brewed at the pub at another licensed premise                                                                
owned by that licensee, and to sell the product to a wholesaler.                                                                
Those two changes are an attempt to satisfy the expansion needs of                                                              
the licensees as well as to maintain a consistent legislative                                                                   
policy to prohibit a tavern type situation.  Two of the three                                                                   
exempt license holders agree with this provision; one does not.                                                                 
                                                                                                                                
SENATOR HALFORD asked if Section 5 contains the "guts" of the bill.                                                             
                                                                                                                                
Number 410                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said it is the most controversial and                                                                   
important part of HB 69.  He noted such a policy is consistent and                                                              
will not harm anyone else in the industry.  It will allow the two                                                               
businesses mentioned to expand.  He disagrees that HB 69 will be an                                                             
anti-competition bill because although it changes the limit on the                                                              
brew pub license to 75,000 gallons per year, the limitation on the                                                              
existing licenses will not be affected because they are limited by                                                              
the zoning ordinances in Anchorage.                                                                                             
                                                                                                                                
SENATOR HALFORD asked how many licensees exist.  REPRESENTATIVE                                                                 
ROKEBERG answered there are four brew pub licenses.  Those                                                                      
licensees do not like this bill.                                                                                                
                                                                                                                                
SENATOR HALFORD asked if there are three exempt licenses.                                                                       
                                                                                                                                
REPRESENTATIVE HALFORD said only two opted to do it; one continues                                                              
to operate under a "grandfather" license.  The two want to expand                                                               
their businesses therefore they are willing to buy beverage                                                                     
dispensary licenses and become brew pubs.  To do so, they need to                                                               
sell a modest amount of their product to wholesalers, and to sell                                                               
the brew produced at their single premises to their expanded                                                                    
premises.                                                                                                                       
                                                                                                                                
SENATOR HALFORD asked if the expanded premise will have another                                                                 
license.  REPRESENTATIVE ROKEBERG said yes, and that it could                                                                   
either be a restaurant or beverage dispensary license, depending on                                                             
what is served.                                                                                                                 
                                                                                                                                
SENATOR HALFORD said in order to make this work, those licensees                                                                
would be categorized as brew pubs, and the brew pubs will be                                                                    
allowed to do more.  REPRESENTATIVE ROKEBERG said "exactly."  He                                                                
added some in the brewing industry have complained that this bill                                                               
will create additional competition, however he does not believe                                                                 
that the existing four brew pubs have the capacity to sell                                                                      
wholesale.                                                                                                                      
                                                                                                                                
SENATOR HALFORD asked if existing businesses could buy another                                                                  
license to expand their businesses.  REPRESENTATIVE ROKEBERG said                                                               
they cannot because the economic interest clause prohibits them                                                                 
from expanding.                                                                                                                 
                                                                                                                                
SENATOR HALFORD said the economic interest clause has been in                                                                   
existence for 40 years.  REPRESENTATIVE ROKEBERG said that is                                                                   
correct but it was expanded a few years ago to include the                                                                      
restaurant eating place license.                                                                                                
                                                                                                                                
SENATOR HALFORD said anything that has to do with liquor has to do                                                              
with money, and that he is trying to figure out what happens to the                                                             
value of licenses as they transfer back and forth.  He said it is                                                               
hard to level the playing field.                                                                                                
                                                                                                                                
Number 488                                                                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG stated the alcohol industry is the most                                                                 
highly regulated in the state, and the Legislature needs to be                                                                  
consistent in the way it manages that industry.  He pointed out a                                                               
grandfather licensee cannot sell his/her business or transfer the                                                               
license.                                                                                                                        
                                                                                                                                
SENATOR HALFORD said those licenses did not cost anywhere near the                                                              
current price of a license.                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said the criticism the committee will hear                                                              
from witnesses is that HB 69 will not allow brew pubs to compete                                                                
with breweries by selling on the secondary market through                                                                       
distributorships. However, brew pubs are not the same as breweries.                                                             
A brewery owner can sell to any other licensee, a retailer or a                                                                 
wholesaler, while a brew pub owner can sell only to a wholesaler.                                                               
The existing brew pubs do not have the capacity to sell to the                                                                  
secondary market and impact the breweries.                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR announced he would take teleconference testimony.                                                               
                                                                                                                                
Number 530                                                                                                                      
                                                                                                                                
GEOFF LARSON, President of the Alaskan Brewing Company, informed                                                                
committee members he began a small brewery 13 years ago that is now                                                             
the largest in the state.  He supports the extension of the                                                                     
termination date of the ABC Board and believes the extension is the                                                             
most important provision of HB 69.  A number of small brewers are                                                               
fearful of the provision that allows wholesale sales by brew pubs.                                                              
Although he will not be affected personally he expressed concern                                                                
that the change may create an unlevel playing field for small                                                                   
brewers who want to market their product at their pubs only.  He                                                                
believes HB 69 might treat all more fairly if Section 5 is removed,                                                             
however he supports the bill as its intent is to extend the ABC                                                                 
Board.                                                                                                                          
                                                                                                                                
Number 559                                                                                                                      
                                                                                                                                
The following participants testified via teleconference from                                                                    
Anchorage.                                                                                                                      
                                                                                                                                
MARK STAPLES, CEO of the Midnight Sun Brewing Company, agreed with                                                              
Mr. Larson that the extension of the ABC Board is very important                                                                
therefore HB 69 needs to pass.  He disagrees with Representative                                                                
Rokeberg's comment that HB 69 will do no damage to small breweries.                                                             
To assume that no damage will be done to his business by allowing                                                               
a few businesses to sell hard alcohol and beer and compete with him                                                             
in the wholesale dealer market is silly.  HB 69 does not level the                                                              
playing field.  Regarding the suggestion that this problem will                                                                 
regulate itself through zoning ordinances, Glacier Brew House has                                                               
been in violation of the zoning ordinance since it opened and the                                                               
zoning commission has looked the other way.                                                                                     
                                                                                                                                
GARY KLOPPER, majority owner of the Snow Goose Restaurant and                                                                   
Sleeping Lady Brewing Company, agreed HB 69 should pass so that the                                                             
ABC Board can continue.  He recounted that the original restaurant-                                                             
brewery concept was wonderful, however the liquor license holders                                                               
outlawed it several years ago.  The restaurant-brewery industry has                                                             
been a good one for Alaska and he favors trying to rebuild it.  He                                                              
stated that several of Representative Rokeberg's remarks were                                                                   
incorrect.  First, the only two licensees who agree with the                                                                    
provisions of HB 69 are the owners of the Glacier Brew House and                                                                
the Moose's Tooth.  Every other brewery in the state is against the                                                             
idea of competing with the wholesale market.                                                                                    
                                                                                                                                
TAPE 99-30, SIDE B                                                                                                              
                                                                                                                                
MR. KLOPPER continued.  For the owner of a brewery license,                                                                     
anything sold by the brewery produces income, and those sales are                                                               
its lifeblood.  An establishment that can sell hard liquor at a bar                                                             
and then get tap handles does so as a marketing tool.  Several                                                                  
small breweries have already lost tap handles to competing, larger                                                              
establishments for that exact reason.  The original statutes were                                                               
similar to the federal statutes and made a large distinction                                                                    
between beer and wine and hard liquor.  Blurring that distinction                                                               
creates a different ball game.                                                                                                  
                                                                                                                                
Number 577                                                                                                                      
                                                                                                                                
SHAWN WENDLING, head brewer at the Glacier Brew House, stated he                                                                
has worked as a brewer in four different states.  Each of those                                                                 
four states has made an effort to bring some parity to the liquor                                                               
market because sales can be quite lucrative.  He suggested the cost                                                             
of building a brewery certainly equals, if not outweighs, any                                                                   
licensing benefit the brewery may get.  That aside, HB 69 addresses                                                             
the parity problem by saying that a brew pub with a liquor license                                                              
is competing head-to-head with a majority of people dispensing beer                                                             
within the State of Alaska.  He supports HB 69 because it will                                                                  
create parity and because the down sides cited are nonexistent                                                                  
because of the cap.                                                                                                             
                                                                                                                                
CHRIS ANDRUS, Glacier Brew House co-owner, said he strongly                                                                     
supports HB 69.  This bill is the result of lengthy discussions                                                                 
between the ABC Board, ARBA and CHAR.  He worked diligently over                                                                
the past three years to get legislation passed that would allow him                                                             
to expand his business.  The sticking point during the negotiations                                                             
was that the beverage dispensary industry felt his type of business                                                             
should be required to have a beverage dispensary license.  He has                                                               
agreed to purchase one at a price of $125,000 to $150,000 but has                                                               
asked that he be able to sell some beer on the premise.  Brew pubs                                                              
are currently restricted from selling off premise.  He has been                                                                 
selling an ancillary amount of beer off premise - not for marketing                                                             
purposes - he sells it at the same price as anyone else in the                                                                  
market.  His goal is to open a second restaurant and sell his                                                                   
excess beer until sales at the second restaurant increase.  He                                                                  
expects his off-premise sales to diminish every year if HB 69                                                                   
passes.                                                                                                                         
                                                                                                                                
LARRY HACKENMILLER, owner of the Club Manchu, testified via                                                                     
teleconference from Fairbanks and expressed concern about the                                                                   
police powers granted in Section 2.  If Section 2 is enacted, ABC                                                               
investigators could issue speeding tickets.  Last year, through a                                                               
regulation change, the ABC Board allowed its investigators to carry                                                             
weapons and wear bullet-proof vests to arrest prostitutes and                                                                   
gamblers.  He questioned why weapons are necessary because if that                                                              
activity is a substantial risk to the community, the police would                                                               
be aware of it.  He asked committee members to reinsert the deleted                                                             
language on lines 25 - 27 which state that ABC investigators are                                                                
limited to situations pertaining to the governing, manufacture,                                                                 
barter, sale, or possession of alcoholic beverages within the                                                                   
state.  Without that language, an Alaska alcohol, tobacco and                                                                   
firearms group, consisting of armed personnel, will be created, and                                                             
they will require funding.                                                                                                      
                                                                                                                                
Number 475                                                                                                                      
                                                                                                                                
KAREN BERGER, owner of the Homer Brewing Company, made the                                                                      
following comments via teleconference.  She agrees 100 percent with                                                             
Mr. Larson that the ABC Board's termination date needs to be                                                                    
extended but she is opposed to HB 69.  As a production brewery                                                                  
license holder, she is unable to sell her product in the retail                                                                 
market in quantities above 5 gallons.  She disagrees with the                                                                   
sections in the bill that are a compromise with the brew pub                                                                    
license owners and allow them to sell to the wholesale market.                                                                  
                                                                                                                                
MATT JONES, co-owner of the Moose's Tooth, voiced support for HB                                                                
69.  Currently, a brew pub can only produce 75,000 gallons of beer                                                              
per year which equals about 2400 barrels per year.  His restaurant                                                              
business uses 1200 of the 2400 barrels per year.  He recently                                                                   
purchased the Denali Theater and plans to open a second restaurant                                                              
in that building.  Once the restaurant is open, he assumes the                                                                  
remaining 1200 barrels could be sold at it. He does not intend to                                                               
sell hard liquor but he will have to buy a beverage dispensary                                                                  
license.  Right now, he sells to seven tap handles in town.                                                                     
Continuing that cash flow while renovating his new restaurant is                                                                
very important to him.  If he were to have excess capacity beyond                                                               
what is sold in his own locations, HB 69 will require him to sell                                                               
to a distributor.                                                                                                               
                                                                                                                                
Number 413                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR asked Doug Griffin to respond to the concerns                                                                   
expressed about the expansion of police powers in Section 2.                                                                    
                                                                                                                                
DOUG GRIFFIN, ABC Board member, said he and other board members                                                                 
would not be opposed to restoring the deleted language in Section                                                               
2 to give it more definition. That language was deleted by the                                                                  
legislative drafters.                                                                                                           
                                                                                                                                
CHAIRMAN TAYLOR noted that language is on line 25 of page 3.                                                                    
                                                                                                                                
MR. GRIFFIN said the ABC Board does not wish its investigators to                                                               
have broad-based authority; the ABC Board wants to focus its                                                                    
limited resources on enforcing the alcoholic beverage laws in                                                                   
Alaska.                                                                                                                         
                                                                                                                                
CHAIRMAN TAYLOR asked Mr. Griffin if he wants the deleted language                                                              
to follow "AS 11.66.280."  MR. GRIFFIN said yes.                                                                                
                                                                                                                                
Number 382                                                                                                                      
                                                                                                                                
SENATOR DONLEY pointed out an earlier version of the bill contained                                                             
a provision requiring that the ABC Board be notified of violations                                                              
discovered by local police officers.  He asked if that provision                                                                
was included in this version and noted that it was recommended in                                                               
the last audit.  SENATOR DONLEY also asked why the title was                                                                    
written in such a way so that the subject of notification cannot be                                                             
taken up by the Senate.                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG said he relied on the legal drafters to                                                                 
provide a sufficient title.                                                                                                     
                                                                                                                                
Number 365                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR thought the notification issue may be covered in                                                                
the new Section 11 which covers public interest and its effect on                                                               
the transfer or sale of a license.                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG stated the notification provision is in                                                                 
Section 14.  CHAIRMAN TAYLOR asked if that provision accomplishes                                                               
what Senator Donley was asking about.                                                                                           
                                                                                                                                
SENATOR DONLEY stated two items in the sunset audit were not                                                                    
addressed in the House version of the bill, the first being                                                                     
improved communications between local police departments and the                                                                
ABC Board.                                                                                                                      
                                                                                                                                
MR. GRIFFIN responded the ABC Board did learn from the audit that                                                               
it was not getting notice of all violations on licensed premises                                                                
from the local police.  The ABC Board definitely supports that                                                                  
concept.  The ABC Board is in the process of drafting regulations                                                               
that will require reporting and tie the disbursement of license                                                                 
fees that it shares with municipalities to timely reporting of all                                                              
violations.  The ABC Board would not oppose adding that requirement                                                             
in statute, however the Board's primary concern is making sure the                                                              
bill passes.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG said the notification issue was discussed                                                               
with the ABC Board.  It was decided that such a requirement would                                                               
place an unfunded mandate on local police forces, and because                                                                   
regulations are being drafted to address the problem, it was                                                                    
dropped from the bill.                                                                                                          
                                                                                                                                
Number 317                                                                                                                      
                                                                                                                                
CHAIRMAN TAYLOR proposed to amend Section 2 to remove the brackets                                                              
and capitalization from the language on lines 25 through 27, thus                                                               
reinserting that language back in statute.                                                                                      
                                                                                                                                
SENATOR DONLEY noted he was unsure whether he supports that                                                                     
amendment because activities could occur for which DPS may want to                                                              
give ABC investigators more authority to investigate, such as drug                                                              
rings.                                                                                                                          
                                                                                                                                
SENATOR ELLIS agreed with Senator Donley therefore CHAIRMAN TAYLOR                                                              
withdrew his amendment.                                                                                                         
                                                                                                                                
SENATOR DONLEY stated he is very disappointed that the committee is                                                             
unable to address the notification issue identified in the audit                                                                
and that the title of the bill was written in such a way that the                                                               
sunset date and the membership of the ABC Board cannot be changed.                                                              
                                                                                                                                
SENATOR DONLEY moved CSHB 69(FIN)am from committee with individual                                                              
recommendations.  There being no objection, the motion carried.                                                                 
                                                                                                                                
CHAIRMAN TAYLOR adjourned the meeting at 3:44 p.m.                                                                              

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