Legislature(2019 - 2020)BELTZ 105 (TSBldg)
04/02/2019 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB83 | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 83 | TELECONFERENCED | |
| += | SB 52 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 2, 2019
1:31 p.m.
MEMBERS PRESENT
Senator Lora Reinbold, Chair
Senator Mia Costello, Vice Chair
Senator Chris Birch
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Click Bishop
COMMITTEE CALENDAR
SENATE BILL NO. 83
"An Act relating to the Regulatory Commission of Alaska;
relating to the public utility regulatory cost charge; relating
to the regulation of telecommunications; relating to exemptions,
charges, and rates applicable to telecommunications utilities;
relating to regulation of telephone services; and relating to
alternate operator services."
- MOVED SB 83 OUT OF COMMITTEE
SENATE BILL NO. 52
"An Act relating to alcoholic beverages; relating to the
regulation of manufacturers, wholesalers, and retailers of
alcoholic beverages; relating to licenses, endorsements, and
permits involving alcoholic beverages; relating to common
carrier approval to transport or deliver alcoholic beverages;
relating to the Alcoholic Beverage Control Board; relating to
offenses involving alcoholic beverages; amending Rule 17(h),
Alaska Rules of Minor Offense Procedure; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 83
SHORT TITLE: TELECOMMUNICATIONS REGULATION/EXEMPTIONS
SPONSOR(s): SENATOR(s) BIRCH
03/11/19 (S) READ THE FIRST TIME - REFERRALS
03/11/19 (S) L&C
03/26/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/26/19 (S) Heard & Held
03/26/19 (S) MINUTE(L&C)
04/02/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 52
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
SPONSOR(s): SENATOR(s) MICCICHE
02/11/19 (S) READ THE FIRST TIME - REFERRALS
02/11/19 (S) L&C, JUD, FIN
03/26/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/26/19 (S) Heard & Held
03/26/19 (S) MINUTE(L&C)
03/28/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/28/19 (S) Heard & Held
03/28/19 (S) MINUTE(L&C)
04/02/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CHRISTINE OCONNOR, Executive Director
Alaska Telecom Association
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
83.
SENATOR PETER MICCICHE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of SB 52.
EDRA MORLEDGE, Staff
Senator Peter Micciche
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
52.
ANNA BRAWLEY, Title 4 Project Review Coordinator
Senior Associate
Agnew Beck Consulting
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
52.
ERIKA MCCONNELL, Director
Alcohol and Marijuana Control Office, Department of Commerce,
Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
52.
TIFFANY HALL, Executive Director
Recover Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on SB 52.
ACTION NARRATIVE
1:31:40 PM
CHAIR LORA REINBOLD called the Senate Labor and Commerce
Standing Committee meeting to order at 1:31 p.m. Present at the
call to order were Senators Gray-Jackson, Costello, Birch, and
Chair Reinbold.
SB 83-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
1:32:08 PM
CHAIR REINBOLD announced that the first order of business would
be SENATE BILL NO. 83, "An Act relating to the Regulatory
Commission of Alaska; relating to the public utility regulatory
cost charge; relating to the regulation of telecommunications;
relating to exemptions, charges, and rates applicable to
telecommunications utilities; relating to regulation of
telephone services; and relating to alternate operator
services."
1:33:54 PM
At-ease.
1:35:16 PM
CHAIR REINBOLD reconvened the meeting.
1:35:22 PM
SENATOR GRAY-JACKSON referred to Section 9, on page 4, line 8,
which added language "or a local exchange carrier." She asked
whether local exchange carriers were regulated by
municipalities.
1:35:50 PM
CHRISTINE OCONNOR, Executive Director, Alaska Telecom
Association, Anchorage, answered that local exchange carriers or
landline providers are not currently regulated by
municipalities. She said that one municipal owned telephone
company, Ketchikan Public Utilities, is governed by their city
council.
SENATOR GRAY-JACKSON asked whether the bill would basically
address housekeeping issues.
MS. OCONNOR answered yes, that this bill would update statutes,
many of which were nearly 50 years old.
1:36:29 PM
CHAIR REINBOLD announced that public testimony had been
previously closed.
1:37:07 PM
SENATOR COSTELLO reviewed the fiscal note from the Department of
Commerce, Community and Economic Development (DCCED). She said
that SB 83 had no fiscal impact and regulation changes would be
adopted by December 31, 2023. The bill would establish a
universal service fund and requests that the RCA establish a
communication carrier section. The RCA anticipated implementing
these provisions with existing resources, she said.
1:38:04 PM
SENATOR BIRCH related his understanding that public testimony
had previously been opened and closed. He reported that a
similar bill was introduced last year. SB 83 would seek to
encourage investment and innovation in the telecommunication
industry by updating the statutes relevant to to the landline
and long distance services. This bill would provide a
comprehensive fix, one that has been needed for some time. He
said he appreciated the work the industry has put into this bill
over the past several years. He characterized it as a "good
bill."
1:38:56 PM
SENATOR BIRCH thanked his staff, Kim Skipper and Christine
O'Connor for their work on this bill.
1:39:52 PM
SENATOR COSTELLO moved to report SB 83, work order 31-LS0563\M,
from committee with individual recommendations and attached
fiscal note. There being no objection, SB 83 was reported from
the Senate Labor and Commerce Standing Committee.
1:40:09 PM
At-ease.
SB 52-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:42:26 PM
CHAIR REINBOLD reconvened the meeting and announced that the
final order of business would be SENATE BILL NO. 52, "An Act
relating to alcoholic beverages; relating to the regulation of
manufacturers, wholesalers, and retailers of alcoholic
beverages; relating to licenses, endorsements, and permits
involving alcoholic beverages; relating to common carrier
approval to transport or deliver alcoholic beverages; relating
to the Alcoholic Beverage Control Board; relating to offenses
involving alcoholic beverages; amending Rule 17(h), Alaska Rules
of Minor Offense Procedure; and providing for an effective
date."
1:42:45 PM
SENATOR PETER MICCICHE, Alaska State Legislature, Juneau, as
sponsor of SB 52, acknowledged that he had received some
responses from the Cabaret, Hotel, restaurant and Retailers
Association (CHARR), the Department of Commerce, Community and
Economic Development (DCCED), Alaska Berries, and responses to
the department related to license transfers.
1:44:01 PM
CHAIR REINBOLD said she would like to discuss the chart in
members' packets and issues that Alaska Berries raised. She
remarked that she was unfamiliar with Alaska Berries. She asked
whether the sponsor had received anything from CHARR.
1:45:41 PM
EDRA MORLEDGE, Staff, Senator Peter Micciche, Alaska State
Legislature, Juneau, on behalf of the sponsor, stated that she
had not received any recent official comments. She acknowledged
that the sponsor has had "back and forth" communications during
the stakeholder process.
CHAIR REINBOLD highlighted that the committee would like to
address issues that CHARR and Alaska Berries raised.
1:46:23 PM
ANNA BRAWLEY, Title 4 Project Review Coordinator, Senior
Associate, Agnew Beck Consulting, Anchorage, began a PowerPoint
on SB 52.
1:47:12 PM
MS. BRAWLEY turned to slide 18, "F-1. Adjust License Fees to
Reflect Current ABC Budgetary Needs."
? Update license fees according to privileges and
administrative costs of each, and collect sufficient
revenue to cover the ABC Board's required activities:
Administration of licenses & permits
Education about Title 4 and related regulations
Enforcement of Title 4 and related regulations
? ABC Board required to review license fees at least
every 5 years.
? See Appendix, Table 2 of the Title 4 Review report
for current license fees and proposed changes.
MS. BRAWLEY offered to continue to review policy changes
proposed in SB 52. This presentation would continue to outline
highlights of the bill, beginning with license fees. These
license fees are set in statute rather than regulation, which
was more typically done. Most of these fees were last updated in
the 1980s, she said. The Alcohol & Marijuana Control Office
(AMCO) is a receipts funded agency, which means that its budget
reflects an estimate of the revenue from license fees collected
annually. The resources available for enforcement and
administration of licensees is set by its funding level. This
bill would propose to increase fees and make them more
consistent across license types. For example, beverage
dispensary license or bar license fees are currently set at
$2,500 biennially whereas the biennial license fee for serving
beverages at restaurants is $600, at distilleries is $1,000 and
at wineries is $500. She referred members to Table 2 in the
Title 4 review report for details on current and proposed fees.
The bill would require the board to review these fees every five
years and make recommendations to the legislature for fee
changes.
1:49:24 PM
MS. BRAWLEY reviewed slide 19, "Proposed: More Accountability
for License Fees Allocated to Local Governments."
• Current Title 4 allows for local governments to
receive half of the license fees collected in their
area, intended for enforcement of Title 4 and related
ordinances.
• Reporting on these activities is required, but not
defined in statute. Some jurisdictions report
regularly, while others do not.
MS. BRAWLEY said that in current statute half the fees collected
are returned to the local government to cover local enforcement
and administration of licenses. This bill does not propose
changing that allocation, but reporting requirements would
become more consistent, which would allow the state to better
understand what local governments are doing to enforce Title 4,
she said.
1:50:17 PM
MS. BRAWLEY reviewed slide 20, "Population Limits: Current Title
4."
Population limits determine how many of each license
type may be issued in each community.
All other license types (bars, package stores, golf
courses, breweries, etc.) 1 per 3,000 residents.
Some licenses are exempt from population limits: bars
located in hotels or airports, restaurants issued for
public convenience, and licenses that serve tourists.
MS. BRAWLEY emphasized that this important concept was currently
in statute. The bill would not fundamentally change the policy
system for license, but it does make some small changes. She
said that population limits were set by the number of residents
in each community but were different for each license type. For
example, restaurants are allowed to have one license per 1,500
residents, but most other license types were allowed 1 per 3,000
residents. She acknowledged there were some exceptions to this,
which she would cover on the following slide.
She emphasized the importance of limits, since limiting the
amount of retail outlets for alcohol is considered one of the
"best practices" associated with reducing crime rates and
impacts on neighborhoods.
1:51:10 PM
MS. BRAWLEY reviewed slide 21, "Population Limits: Current Title
4."
• Some license types are exempt from population limits:
most exempt license types are designed to serve
tourists and travelers, such as hotels or outdoor
recreation lodges.
• They can be issued if other qualifications are met
(ex: minimum of hotel rooms).
MS. BRAWLEY reiterated that population limits are set by
community. Each city within a borough that has one or more
cities can determine how many of each license type may be issued
in each community. Typically, licenses cannot move between
boundaries. Typically, a hotel or lodge is exempt from
population limits, she said.
1:51:44 PM
MS. BRAWLEY reviewed slide 22, "Proposed: Convert Public
Convenience Licenses and Applications."
• Existing Public Convenience licenses would be
converted to regular Restaurant or Eating Place
Licenses (REPLs).
• Applications that have been completed as of the bill's
signing date would be converted to applications for
regular REPLs and could be approved by the ABC Board
outside the existing population limits.
She highlighted that this is relevant since some communities
have a small number of residents and qualify for a small number
of licenses. However, they may have an interest in serving non-
residents or residents visiting the region during the tourism
season or they have seasonal workers. One way to address this is
by issuing public convenience licenses. This process allows
applicants to petition the Alcoholic Control Board (ABC Board)
after having collected signatures from surrounding residents
requesting a license to be issued outside population limits. She
characterized this as a challenging process.
1:52:34 PM
SENATOR BIRCH said SouthCentral Alaska and the Lower 48 have
experienced a proliferation of sharing economies, such as a bed
and breakfast and vacation rentals by owner venues. He asked
whether these types of businesses would be affected by the bill.
MS. BRAWLEY answered that it would depend on whether the
establishment was serving the public, but that it would not
likely cover private activity.
1:53:54 PM
MS. BRAWLEY said the public convenience process has logistical
issues. It has the potential to allow for a proliferation of
licenses. It is not a consistent process since it depends on
individual applicants, so the board has no way to determine if
the signatures are valid. The sponsor has proposed three
replacements for the public convenience license application that
allow for local control and to give cities options for more
licenses, especially restaurant licenses. First, one option
would propose to convert the public convenience application to
full restaurant licenses. This would allow the license to be
transferable to a new owner or location whereas a public
convenience license is not. If someone was in the process of
applying, the applicant could complete the application for a
full restaurant license and not be penalized.
1:55:18 PM
MS. BRAWLEY turned to slide 23, "Proposed Seasonal REPL
Tourism."
? Seasonal restaurant license
? Available in smaller communities (< 40,000 pop.)
? Same operating requirements and privileges as full-
year restaurants (REPL)
? Number of licenses per community determined by
formula:
? Season defined as up to 6 months per year, in any
combination Example: May through September + 1
winter month
MS. BRAWLEY said a second proposal would be to create a new
Seasonal REPL license that could be operated for six months per
year. It would be available in smaller communities and provide
the same privileges as other restaurants. The number of licenses
issued would not be determined by residents but by a formula.
1:56:10 PM
MS. BRAWLEY reviewed slide 24, "Proposed: Local Government
Petition for Additional Restaurant Licenses."
MS. BRAWLEY reviewed the third process, in which local
government would petition for additional licenses. This option
was brought to the attention of stakeholders by the cities of
Soldotna and Wasilla. The local government would prepare a
petition to Alcoholic Beverage Control Board (ABC Board) to
request more restaurant licenses to be issued within its
jurisdictions. The number of restaurants must not be more than 1
to 1,500 with the new population included. The ABC Board would
consider the petition and determine the number of new licenses
to grant to the city. If the city did not obtain authority to
proceed, the entity could revise its application and bring it
back to the board. If the entity was granted the new licenses,
it would need to wait three year before the party could make
another petition. This would allow time for the new restaurants
to come online, she said.
1:57:58 PM
MS. BRAWLEY reviewed slide 25, "Proposed: Option to Relocate
Some Licenses from a Borough to a City."
• Current Title 4 allows relocation of a bar (BDL) from
a borough to a city within that borough.
• The bill proposes also allowing relocation of package
stores.
MS. BRAWLEY said current Title 4 allows for relocation of a bar
license (BDL) from a borough to within a city in that borough.
This would contemplate jurisdictions with small populations that
would like to concentrate those activities to a city within the
borough. This would also apply to a package store. For example,
if a borough has additional package stores that are not being
used, they could be moved to a city within the borough.
1:58:47 PM
MS. BRAWLEY reviewed slide 26, Proposed: Option to Relocate Some
Licenses from a Borough to a City.
• All eligible boroughs have more licenses issued than
population limits allow.
• Only the borough's licenses in excess of population limits
would be eligible for relocation into a city.
The goal would not be to "hollow out" the borough of the
licenses. However, currently there are more licenses for
beverage dispensaries and package stores than are allowed in
statute under those population limits. The table on slide 26
illustrates this, she said.
1:59:27 PM
CHAIR REINBOLD asked whether the bill has had any pushback on
this concept.
MS. BRAWLEY said this was discussed by the stakeholder group in
2016, with fairly broad agreement. She said the City of Wasilla
initially had concerns, but the provisions were developed with
the concerns that were shared.
CHAIR REINBOLD asked for further clarification on who is in the
stakeholder group.
SENATOR MICCICHE responded that the stakeholder list is in
members' packets. The communities asked for additional local
control. This was a direct response to the communities, he said.
He said that some communities would like to manage every aspect
of alcohol licensing. He said that he felt this was a fair
compromise to provide local control. He further explained that
the seasonal REPL license can "bank" licenses if the community
was interested in attracting a restaurant. It would not be
necessary to have a restaurant in mind at the time an
application was made. The community can reserve a couple of
licenses for that purpose.
2:01:35 PM
CHAIR REINBOLD asked whether anyone besides Wasilla expressed
concern.
MS. BRAWLEY answered no, not to her knowledge.
2:01:51 PM
MS. BRAWLEY reviewed slide 27, Proposed: Regulate Internet
Sales."
INT-1. Winery Direct Shipment License
? Create a license available to all U.S. (including
Alaska) wineries to ship orders of wine to Alaska
customers.
? Prohibit other online sales of alcohol not under
this license or the Package Store Shipping
endorsement.
INT-2. Collect Alaska Excise Tax for Internet Sales
? Require all out-of-state holders of a Winery Direct
Shipment license to pay the same excise tax on Alaska
orders.
INT-3. Board Approval of Common Carriers for Alcohol
Delivery
? Require all common carriers who transport deliver
alcohol directly to consumers in Alaska to be approved
by ABC Board.
MS. BRAWLEY explained that the next three slides cover a gap, by
regulating the online sales of alcohol. She said that three
proposals in the bill would help ensure oversight, confirm that
the sales are legal, and that the alcohol is delivered to a
responsible adult. Currently, in state businesses must obtain a
license and pay the state's alcohol taxes for liquor licenses,
but someone selling via the internet would not be held to the
same standard. The state does not currently know the identity of
the providers.
MS. BRAWLEY reviewed slide 28, "Proposed: Regulate Internet
Alcohol Sales," which allows wine to be shipped to homes. She
said that this essentially would allow out-of-state wineries to
fulfill sales from a customer in Alaska and have wine shipped to
their homes. Many out-of-state businesses are accustomed to this
process and have similar licenses or permits from other states.
She said that under the bill, the company must verify the
customer's age, must use an approved carrier, and must limit the
allowable amount that could be ordered per year to ensure that
it was for personal use. The order must be delivered to the
customer in person to verify that the person was an adult. The
company could not ship to a local option area.
2:03:58 PM
CHAIR REINBOLD recalled an earlier testifier. She asked whether
this was one of the measures to help prevent alcohol from being
sold via the internet to Alaskan youth.
MS. BRAWLEY answered yes.
CHAIR REINBOLD emphasized that it was important to further
regulate to ensure that youth do not have access to alcohol.
She further explained that all businesses that sell to Alaskans
would be required to pay the state's alcohol tax. The tax would
be applied to the destination.
2:05:24 PM
MS. BRAWLEY, in response to Chair Reinbold, said that it is not
possible to assess how many internet sales occur since the sales
are not tracked. She reported that the State of Idaho said it
had 700 permit holders.
CHAIR REINBOLD remarked that this provision could have the
potential to raise state revenue, increase sales, and protect
youth.
MS. BRAWLEY agreed.
2:06:20 PM
MS. BRAWLEY reviewed slide 29, "Proposed: Regulate Internet
Alcohol Sales."
• Common carriers must be approved by the ABC Board to
transport and deliver alcohol to consumers throughout
the state.
• Carriers must demonstrate that they have policies and
train employees to properly handle shipments of
alcohol.
She said that this third component would help ensure safe
alcohol delivery to adults in person and that alcohol is not
delivered to someone in a local option area. This would not
create a license or permit but would require that the board
review the policies of common carriers and publish a list of
approved carriers. This would not apply to deliveries to
businesses, only to consumers.
2:07:35 PM
MS. BRAWLEY reviewed slide 30, "Tracking Alcohol Orders in Local
Option Areas: Current Title 4."
Residents in local option communities that allow
importation of alcohol may order a limited amount of
alcohol each month for personal and non-commercial
use.
The monthly importation limit would be 12 gallons of
beer or one half-barrel keg or 24 liters of wine or 32
bottles.
She explained that package stores can currently ship to
customers, but they cannot do so through the internet. This bill
would allow them to do so. This bill would not change the local
option limits. The package store records each order and can
change the database to ensure limits are followed. The database
can be accessed by law enforcement, she said.
2:08:34 PM
CHAIR REINBOLD asked for further clarification on exceptions to
the limits, for example, for a special event such as a wedding.
MS. BRAWLEY deferred to the department.
2:09:17 PM
ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office,
Department of Commerce, Community, and Economic Development,
Anchorage, said she was not aware of any exceptions for special
events.
CHAIR REINBOLD asked whether a resident who wanted to use local
wines for a wedding would be permitted to do so.
MS. MCCONNELL said it would depend on the location of the
wedding, but typically they do not need to hold permits. In
further response to Chair Reinbold, she offered to research
whether a person can order above the limit for a special event
and respond back to the committee.
CHAIR REINBOLD remarked that the family wanted to buy wine from
a local winery in Homer.
2:11:04 PM
MS. BRAWLEY related her understanding that the limits would only
apply to dry communities and Homer is not a dry community so the
limits would not apply.
2:11:27 PM
MS. BRAWLEY reviewed slide 31, "Proposed: Publish Community
Level Data from Local Option Order Database."
In current Title 4, all data in the Local Option order
database is private and is deleted after 1 year.
The bill would keep individual order information
private but retain aggregate data for 10 years and
allow the ABC Board to publish annual total sales
volume by region or community.
This valuable information would be available to
communities and law enforcement to understand the flow
of alcohol into Local Option communities via legal
sales.
She said this information would also help communities address
the health and safety issues related to alcohol. The bill would
keep the community level data for 10 years, protect individual
order data, and require the Alcoholic Beverage Control Board
(ABC Board) to publish an annual report summarizing the amount
of alcohol that is ordered based on the existing data.
2:12:31 PM
MS. BRAWLEY reviewed slide 32, "Proposed: Revise Penalties for
Lesser Offenses."
• In current law, almost all violations of Title 4
are class A misdemeanors.
• When penalties are set high across the board and
perceived to be too strict for most offenses, law
enforcement is less likely to issue citations and
courts are less likely to pursue those cases.
• In the bill, many penalties would become minor
offenses. Serious violations, such as selling
alcohol without a license, allowing gambling on
the premises, or perjury on a license application
would remain misdemeanors or felonies, as they
are today.
This bill would retain class A misdemeanor penalties for serious
offenses, retaining current Title 4 felonies, including ones for
local option violations. This provision would also change many
penalties to minor offenses or violations to allow law
enforcement to more easily enforce penalties. For example,
during an inspection, law enforcement would issue a citation for
noncompliance issues. This would close some reporting loopholes
to better track violators, such as a licensee with a dozen
violations. It would help identify "bad actors" versus operators
who are generally responsible but may have an occasional ticket
for a violation. This would provide the board information to act
against a licensee during the renewal process or to suspend or
revoke the license for an egregious offense.
2:14:09 PM
MS. BRAWLEY reviewed slide 33, "Licensee Penalties for
Overserving an Adult or Serving a Minor."
• In current Title 4, a licensee or employee who
knowingly overserves an intoxicated adult or who
serves alcohol to a minor is guilty of a class A
misdemeanor.
• The bill would change the penalty for both
statutes to a minor offense with a $500 fine.
• In addition to the penalty to the person who
commits the violation, the owner of the license
would receive an administrative, non-criminal
penalty of $250. This alerts the owner that a
violation occurred, holds them immediately
accountable and encourages future compliance.
MS. BRAWLEY highlighted two examples of strengthening penalties
would hold licensees more immediately accountable for
overserving an adult or a minor on their premises. The licensee
would receive an administrative fine automatically from the
Alcoholic Beverage Control Board (ABC Board). This would provide
a signal to licensees to pay close attention to what happens on
their premises. Many owners may be out of state or they may not
be involved in the day-to-day operations so the employee or
manager may not disclose the incident immediately. This would
provide a communication loop but also give the licensee an
opportunity to train or discipline employees. Secondly, it would
provide a misdemeanor penalty if the licensee knowingly allows
this activity to occur on the premises.
2:15:22 PM
CHAIR REINBOLD related her understanding that this would change
the penalty for both statutes to a minor offense with a $500
fine. She asked for further clarification on the previous
penalty.
MS. BRAWLEY answered that it was currently a class A misdemeanor
for the employee and no penalty for the licensee except for
potential non-renewal of the license.
CHAIR REINBOLD asked for further clarification on what
constitutes a minor offense.
MS. BRAWLEY answered that a minor offense, which is listed as a
violation in statute, has a maximum of a $500 fine. This
provision would only apply to an employee who serves a minor or
overserves an adult. An individual who is not employed by a
licensee and serves an adult would still be subject to a class A
misdemeanor. She indicated the intent was to institute more
automatic enforcement. Some of the discussion with the alcohol
industry was that the misdemeanor penalties often require court
appearances or the necessity to hire an attorney and yet do not
necessarily result in an automatic accountability.
CHAIR REINBOLD suggested that this should be flagged for the
Department of Law to comment. She offered her belief that this
appeared to be a significant issue.
2:17:00 PM
SENATOR MICCICHE remarked that he agreed to this change because
enforcement was not issuing many citations or pursuing these
cases, in part, due to case overload. Thus, the behavior was not
being changed or corrected. This provision would fine the
license owner and provide a fairly immediate response. He
pointed out that the class A misdemeanor and class C felony
penalties would still be in place for more serious offenses.
MS. BRAWLEY agreed the Department of Law (DOL) should provide
its current position. She said she recalled that the DOL did not
have a specific objection to this.
2:18:11 PM
MS. BRAWLEY reviewed slide 34, "Proposed; Regulate Trade
Practices."
Some activities, known a trade practices, are illegal
in federal law: practices of alcohol manufacturers and
wholesalers to exert power over retailers' buying
decisions, or stopping them from buying competitors'
products.
Tied house
Partial ownership of retail license by a manufacturer,
to control what products are sold or exclude
competitors. Does not apply to 100 percent
manufacturer-owned licenses.
Exclusive outlet
Agreement between supplier and retailer to exclude
other retailers or suppliers.
Commercial bribery
Supplier pays bonus or provides merchandise in
exchange for exclusive arrangement not to purchase
other products.
Consignment sales
Supplier and retailer make deals to take back unsold
products.
MS. BRAWLEY explained that regulating trade practices was
especially important to the industry. These provisions would
protect the three-tier system by not allowing one tier to have
an undue influence on the other tiers. These illegal trade
practice provisions were originally brought up by wholesalers
and manufacturers. These provisions cover activities that are
illegal in federal law. Most, if not all, other states have
adopted these prohibitions into state law since limited federal
enforcement from the Tax and Trade Bureau occurs. She added that
the federal law does not cover beer. The prohibition of these
practices is intended to not put undue pressure on retailers
when they make buying decisions. For example, the exclusive
outlet provision relates to a buyer who would coerce a retailer
to say they would give them a better discount on their products
if the retailer does not sell the competitors' products. She
characterized these as anti-competitive practices that have been
an issue in the past. That is why these prohibitions have been
put in place in other states. This provides the state authority
to enforce the laws.
2:19:41 PM
MS. BRAWLEY reviewed slide 35, "Proposed: Require Keg
Registration."
• Reduces adults' incentive to legally purchase alcohol
and supply an underage drinking party.
• Kegs tagged with the purchaser's contact information can
be tracked if confiscated at an underage party or other
situation where minors are given access to alcohol.
• A person, not a licensee, possessing an untagged keg
containing alcohol could be fined.
• Modeled on existing Anchorage and Juneau ordinances.
She explained that keg registration addresses another public
health priority and is something already being practiced today
in Anchorage and Juneau. Keg registration identifies the buyer
on the keg and if the keg was confiscated in the presence of
underage drinkers, it can be legally traced back to the buyer.
She characterized it as a best practice provision. It provides
law enforcement with the tool to trace back the illegal alcohol.
SENATOR COSTELLO asked for further clarification on the penalty
for serving alcohol to underage minors.
MS. BRAWLEY answered that the current penalty is a class A
misdemeanor and it would not be changed under the bill.
2:21:09 PM
MS. BRAWLEY reviewed slide 36, "Proposed: Convert Existing
Licenses."
Existing manufacturer licenses will become two
licenses: one for production, one for retail sales.
She referred to the graphics on the final slide, which
illustrated the transition period. The bill would make a
significant number of changes to the licensing system. The
Alcoholic Beverage Control Board (ABC Board) and Alcohol &
Marijuana Control Office need time to implement changes and the
licensees and local government need time to understand the
changes. The effective date of the bill anticipates a 12-to-18-
month transition period to allow the board to write regulations,
notify licensees, and develop educational materials. A few
provisions, specifically public convenience license changes,
would become effective immediately to provide more restaurant
licenses. One provision would provide for conversion of
licenses. Most licenses would be renumbered, but other licenses
for manufacturers would split into two types of licenses. The
bill would also address applications in process.
2:22:34 PM
CHAIR REINBOLD related her understanding that some people are
concerned about fee increases.
MS. BRAWLEY agreed that some fees would increase for some
licenses. She related her understanding that the application
process would allow applicants to submit a unified application
process, but it may allow for more than one license type.
CHAIR REINBOLD recalled that license fees for Alaska Berries
would increase from $1,500 to $2,500. She asked why the fees
would increase that much.
MS. BRAWLEY answered that the rationale was to provide
additional resources for Alcohol & Marijuana Control Office
because the agency's budget is constrained by the amount of
license fees collected. She reported that many fees have not
been updated since the 1980s or since the license was created.
She directed attention to the table in the Title 4 report for
specific amounts. She offered her belief that based on inflation
from 1980 until the present time fees would triple. For example,
beverage dispensary license fees would be closer to $7,000 than
the proposed $2,500.
CHAIR REINBOLD expressed an interest in reviewing the fees. She
said that the fee changes would impact local businesses. She
further asked whether an audit has recently been conducted on
the Alcohol & Marijuana Control Office.
MS. MCCONNELL answered that AMCO had a sunset audit in 2017
related to the extension of the Alcoholic Beverage Control Board
(ABC Board). The last legislative session reviewed the sunset
audit.
CHAIR REINBOLD expressed an interest in hearing about any issues
raised during the audit at a future hearing.
2:25:26 PM
SENATOR MICCICHE offered that hundreds of licensees commented
during the stakeholder process on proposed fee increases. He
related that he was aware of one licensee who complained about
the license fee increases for wineries. However, overall the
vast majority of licensees provided significant support for the
changes. The bill would help businesses conduct their businesses
more efficiently. He said that the proposed changes would allow
the AMCO Board to be more responsive because of code
clarifications.
CHAIR REINBOLD remarked that it was pretty amazing that
licensees were not complaining about increases in license fees.
She indicated that the committee would be watching for that
healthy tension in this bill.
2:26:24 PM
SENATOR COSTELLO asked for further clarification on the Alcohol
& Marijuana Control Office budget. She asked what she would do
with the additional funds.
MS. MCCONNELL answered that currently the combined budget for
alcohol and marijuana oversight is $3.8 million. She submitted a
fiscal note that includes costs to replace the database, which
is the most significant need to implement changes in the bill.
Further, the fiscal note reflects costs for a long-term non-
permanent project manager for two years to help implement the
changes. She anticipated software fees and costs for outreach
and education in the outgoing years. She also contemplated
adding additional law enforcement resources.
SENATOR COSTELLO wondered if the database would speed up the
timeframe for license transfers for businesses.
MS. MCCONNELL acknowledged that was the goal, to improve
customer service and allow licensees to submit applications
through a website and be able to track them online. She
envisioned that it would speed up the process, but it would
depend on the software.
MS. BRAWLEY added that nothing in the bill directly addresses
marijuana. However, those fees were also reviewed. She explained
that those fees were set by regulation and most license fees
were $5,000 annually although a few smaller operator license
fees were set at $1,000.
SENATOR BIRCH asked for the split in fee revenue for marijuana
and alcohol.
MS. MCCONNELL recalled that AMCO receives approximately $2
million in revenue from alcohol and the marijuana revenues were
approximately $1.5 to $2 million. She reported that the
marijuana board just increased the license fees and the board
anticipates an increase in revenue in the next license renewal
period.
2:30:16 PM
MS. BRAWLEY said that concludes her presentation.
2:30:32 PM
CHAIR REINBOLD related her understanding that there were 140
stakeholders involved in the process.
MS. BRAWLEY agreed. She clarified that those were individuals
who were directly involved in stakeholder discussions, but it
does not reflect all of the licensees, members of trade
associations, and others who have not directly spoken to her
during this process.
CHAIR REINBOLD asked whether the stakeholder list was published.
She noted that the report was published on the website [at
Senate.labor.and.commerce@akleg.gov].
SENATOR MICCICHE directed attention to the appendix on pages 70-
77 of the Alaska Title 4 Review for the Alcoholic Beverage
Control Board, February 2019, for a list of the stakeholders and
organizations.
CHAIR REINBOLD remarked that the Title 4 review has been a long,
hard process. She wanted the public to know the stakeholders who
were involved. She said the list was very broad and included the
Alaska State Troopers, and the Alaska Mental Health Trust Board.
2:32:14 PM
SENATOR BIRCH echoed Chair Reinbold's comments. He said that
this process started in 2012. He read from the appendix on page
70,"The Steering Committee extends sincere appreciation for the
efforts of each individual and organization on this list to
carry this project forward." He said that this process spanned
seven years and a wide array of stakeholders has been involved.
He said that he was proud to support this. He said the bill was
presented very well and he appreciated the opportunity to
consider SB 52.
SENATOR MICCICHE said that the focus has been to involve every
interest group, including municipalities, communities, tribal
organizations, and the industry. Further, the primary focus has
been on public health and public safety while still supporting a
healthy industry, he said.
2:34:02 PM
CHAIR REINBOLD acknowledged that Ms. Brawley represented Agnew
Beck Consulting.
2:35:39 PM
TIFFANY HALL, Executive Director, Recover Alaska, Anchorage,
stated that she is a lifelong Alaskan. SB 52 is the culmination
of seven years of work. Members of the ABC Board started the
process because they recognized the dire need for revisions to
Title 4. The current statutes have some contradictory
provisions. The statutes are confusing for license holders and
for Alcohol & Marijuana Control Office.
She said that most of SB 52 reorders, redefines, and clarifies
current law. It also adds safety and health aspects.
MS. HALL related that Recover Alaska works to reduce excessive
alcohol use and its harmful effects throughout Alaska. Recover
Alaska is not an abstinence only organization, but advocates for
low-risk drinking. For some people that means zero alcohol use,
but many people can responsibly drink at moderate levels.
Recover Alaska has been working on the content of SB 52 for many
years, hand in hand with numerous public health and safety
organizations and industry throughout the process. She expressed
thanks for the opportunity to develop partnerships with
industry, such as Cabaret, Hotel, Restaurant and Retailers
Association (CHARR). For example, she worked with CHARR in
Anchorage during St. Patrick's Day "pub crawl." Many of the
venues offered non-alcoholic drinks because they recognized that
not everyone wants to drink alcohol at each stop. She pointed
out that the Narrows bar and Amalga Distillery partnered with
Recover Alaska during sobriety awareness month.
2:37:45 PM
MS. HALL said that Alaska struggles with alcohol issues. Alcohol
costs the state $1.84 billion every year in health care, lost
productivity, public safety, and early death. Alaska has higher
levels of treatment admissions per capita than the rest of the
country. Alaskans binge drink heavier and more often, have the
highest fetal alcohol spectrum disorder rates in the nation, and
Alaskans are dying at rates nearly three times as high as the
rest of the nation.
She directed attention to Article VII, Section 4 of Constitution
of the State of Alaska, which states that the legislature shall
provide for the promotion and protection of public health. She
acknowledged that the committee has heard the goal of SB 52 was
to ensure that Alaska has a high-functioning and well-regulated
alcohol industry, but it also addresses crime, safety, and
health problems related to alcohol.
2:38:22 PM
MS. HALL emphasized her comments were related to safety and
health.
SB 52 would limit youth access to alcohol, promote responsible
alcohol use, and reduce the harms of overconsumption. It would
hold businesses accountable if an intoxicated person is
overserved or if a minor is served, which will allow the ABC
Board to intervene sooner to ensure those businesses are taking
action to improve. It would allow license holders more financial
incentive to ensure their employees are properly trained.
MS. HALL stated that the bill would establish regulation of the
internet sales of alcohol. Currently, Alaska is one of few
states without any regulation in this area, which means that
alcohol can be shipped to dry zip codes or ordered by teenagers
and left on their doorsteps. Alaska would also collect license
fees and taxes, in addition to mandating identification be
verified when internet sales are delivered.
She offered her belief that the license fee increases would make
them more equitable. More importantly, this would provide
adequate funding for AMCO to provide additional education to
license holders, and more effectively conduct enforcement and
compliance checks. She reported that compliance checks have not
been done in the last three years due to a lack of funding.
Compliance checks would also help reduce both public health and
criminal-related issues.
2:39:51 PM
MS. HALL said that under current law, keg registration in
Anchorage and Juneau is required. These requirements have not
created an undue burden on the licensees or industry. She
characterized it as another evidence-based policy, which holds
adults who buy alcohol and furnish it to underage minors
accountable for their actions.
SB 52 would mandate training for every server prior to serving
alcohol to the public, which would close a loophole. The bill
would address population limits using creative solutions agreed
to by the alcohol industry and municipalities. She acknowledged
that concerns about these provisions were initially raised by
Soldotna and Wasilla. These communities were invited to attend
[stakeholder] meetings to discuss their concerns. In 2016,
stakeholders agreed on the three processes Ms. Brawley outlined
today. The initial provision in the bill would allow communities
to ask for additional licenses every ten years, which was
reduced to three years to address concerns communities had that
economic growth would be stymied. This change was adopted by the
stakeholders, she said.
MS. HALL offered her belief that population limits are one of
the most effective public health strategies to reduce diseases,
crime, and other harms associated with alcohol.
MS. HALL highlighted that these were the top issues for Recover
Alaska, but the entire bill works to create a more easily
understandable Title 4, which reduces the burden on both license
holders and the state. SB 52 would make it easier for licensees
and agencies to follow and easier to enforce. She said, "I
believe that the vast majority of people involved in alcohol in
our state have really good intentions and want to be positive,
safe operators. SB 52 will facilitate that."
2:42:00 PM
MS. HALL acknowledged that the language in SB 52 was full of
compromises. She remarked that if she were to write the bill
herself, it would be stronger in terms of public health and
safety and one written by industry or local municipalities would
lean in another direction.
She emphasized that SB 52 was nearly identical to the bill that
passed the Senate last year. That bill had full support from the
alcohol industry, public safety, local municipalities, and
public health. She said that this bill is the culmination of
substantial work and compromises by stakeholders. She
appreciated hearing from CHARR with their concerns.
MS. HALL said that during the seven-year process, stakeholders
worked to ensure that current business models were not removed.
She encouraged people to address issues that arose last year
related to manufacturers in other bills, not in SB 52.
MS. HALL expressed concern that the longer the state goes
without making the necessary revisions to Title 4, the more
frustrations will arise with the ABC Board and AMCO. They have
been directed to more closely follow statutes in board decision-
making, but it's incredibly difficult to follow current
conflicting statutes. She urged members to pass SB 52 this year
to assist business owners and license holders and to address the
public safety issues.
2:43:53 PM
SENATOR BIRCH said he has only been in the legislature for a few
years. He thanked her for her help and source of information on
these issues and the bill.
2:44:31 PM
CHAIR REINBOLD asked whether she had specific information on the
number of deaths from drunk drivers in Alaska.
MS. HALL recalled statistics that related 287 alcohol-related
deaths occur in Alaska per year, which was higher than deaths
caused by opioids, methamphetamine, and all other illicit
substances combined. She said that the mortality rate in the
nation is eight deaths per 100,000, but Alaska has a mortality
rate three times higher, or 22 per 100,000. However, the
incidence in the Alaska Native population is 56 per 100,000.
CHAIR REINBOLD expressed an interest in isolating the number of
deaths caused by drunk drivers, so she can report these figures
to her constituents and to justify the reason the legislature
was taking on such a large overhaul of Title 4.
[SB 52 was held in committee.]
2:47:00 PM
CHAIR REINBOLD reviewed upcoming committee announcements.
2:48:34 PM
There being no further business to come before the committee,
Chair Reinbold adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:48 p.m.
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