SENATE BILL NO. 210 "An Act relating to the manufacture and transportation of alcoholic beverages; relating to forfeitures of property for violations of alcoholic beverage laws; and relating to violations of alcoholic beverage laws." This was the first hearing for this bill in the Senate Finance Committee. HEATHER BRAKES, Staff to Senator Gene Therriault, the bill's sponsor, read the history and intent of the bill as specified in the Sponsor Statement. In 2004, Congress passed legislation recognizing that many rural communities and their residents "?face the highest alcohol abuse and family violence rates in the country." and establishing the Alaska Rural Justice and Law Enforcement Commission. The Commission released a Draft Interim Report in late 2005 that contained recommendations, including amendments to several provisions in Alaska Statutes. Senate Bill 210 changes current law to help law enforcement better protect communities that have chosen to limit the sale or possession of alcohol under local option laws. First, Senate Bill 210 strengthens current forfeiture provisions in statute by allowing seizure of alcohol transported by common carrier in violation of current law. Second, it authorizes the seizure of property determined to have been purchased or obtained through the proceeds of illegal importation or sale of alcohol and outlines procedures for a person claiming an interest in property that has been seized. SB 210 also defines "manufacture" of alcohol and provides consistency between statutes by amending the allowable quantities. While current statute prohibits the manufacture of alcohol in a community that has adopted a local option, it does not include a definition. The legislation also clarifies statutes relating to the presumption of possession for sale. These provisions provide clarity and assist law enforcement and communities in their continued interdiction efforts in damp or dry areas of the state. More than 100 communities in Alaska have chosen a local option to combat the problems associated with alcohol abuse and violence. SB 210 clarifies, strengthens, and brings uniformity to the state's alcohol and beverage control statutes to assist law enforcement and communities to fight the illegal importation of alcohol. Ms. Brakes noted that the bill would address inconsistencies in State Statutes retaining to the presumption of guilt, specifically that were a person to have in their possession more than 10.5 liters of alcohol, an intent to sell could be presumed. Ms. Brakes noted that, as specified on page eight of the Alaska State Troopers Alaska Bureau of Alcohol and Drug Enforcement 2004 Annual Drug Report [copy on file], "bootlegging is a very lucrative business in Rural Alaska." Page seven of the report specifies that 681 gallons of alcohol were seized in 2004. A graph on that page also depicts the number of alcohol related arrests conducted during the years 2002, 2003, and 2004. 10:25:54 AM Co-Chair Green understood that the provisions included in this legislation were based on the Alaska Rural Justice and Law Enforcement Commission's report. Ms. Brakes affirmed that the bill was based on determinations made in the Commission's Draft Report. 10:26:02 AM Senator Olson asked regarding the decision to lower the alcohol possession limit from the current 12 liter limit to 10.5 liters. 10:26:24 AM Ms. Brakes responded that the decision to specify 10.5 liters as the possession limit was made in order to have consistency in regulations. An existing separate section of State Statute specifies that the transportation of more than 10.5 liters of distilled spirits into a local option community would be a felony. Co-Chair Green understood therefore that lowering the possession limit would align that regulation with amounts specified in other State law. In response to a question from Senator Olson, Ms. Brakes confirmed that the 10.5 liter specification is included in other State law. 10:27:12 AM Senator Bunde asked for an example of what would constitute 10.5 liters, as alcohol is available in a variety of container sizes. DOUG GRIFFIN, Director, Alcohol Beverage Control Board, Department of Public Safety, testified via teleconference from an offnet site and stated that 10.5 liters of distilled spirits is the amount that a package store could legally ship to a person each month. This limit has been specified in State Statute for several years. 10.5 liters would equate to a case of six 1.75 liter bottles. Mr. Griffin continued that a case of twelve 750 milliliter (ML) bottles, or "fifths", would total nine liters. 10:28:48 AM Senator Bunde appreciated the information. It would assist in physically understanding the amounts being discussed. ED HARRINGTON, Captain, Alaska State Troopers, Department of Public Safety, testified via teleconference from an offnet site and noted that he was a member of the Alaska Rural Justice and Law Enforcement Commission and had participated in the development of the recommendations to change State Statutes. Captain Harrington informed the Committee that the Troopers Drug Unit had seized approximately 994 gallons of alcohol in 2005. That was a significant increase over 2004. The changes proposed in this bill would further assist law enforcement efforts to enforce the local option laws of "those communities that have elected to restrict the flow of alcohol to their communities". Senator Olson asked whether the proposed provisions would affect air taxi services that serve the communities. 10:30:21 AM Captain Harrington understood that the changes proposed in this bill would not affect air carriers. The effort would enable law enforcement officers to seize alcohol illegally transported on common carriers. That option has not always been available in the past. Subsequent court proceedings would transpire in regards to the forfeiture of the alcohol. Senator Olson stated that more "concrete" information would be desired in regards to whether air taxi service aircraft could be confiscated as a result of these provisions. Co-Chair Green asked whether this legislation would change existing regulations pertaining to "the transporter of the product". Captain Harrington understood that nothing in that regard would be altered. Any language in the bill pertaining to transportation would relate specifically to the transportation of alcoholic beverages transported by a common carrier. There was no intent to affect air taxi services that transport the alcohol to communities. While privately owned aircraft involved in the importation of alcoholic beverages have been seized, no common aircraft have been. 10:32:48 AM ANNE CARPENETI, Assistant Attorney General, Legal Services Section- Juneau, Criminal Division, Department of Law, affirmed Captain Harrington's remarks. "This bill does not change the definition of common carrier for our bootlegging statutes." 10:33:11 AM Senator Olson understood therefore that "a common carrier aircraft would not be confiscated even if they knowingly carry alcohol into the villages." Ms. Carpeneti stated that this bill would specifically allow "the alcohol on common carriers sent in violation of the bootlegging laws to be seized and forfeited." The bill would not "address the seizure of the aircraft itself". 10:33:46 AM Senator Olson acknowledged. Senator Olson asked for further explanation of language in Sec. 2(a)(6) page 3, line 3 that reads "or items of value purchased from the proceeds". (6) money, securities, negotiable instruments, or other things of value used in financial transactions or items of value purchased from the proceeds derived from actively prohibited under AS 04.11.010 or in violation of a local option adopted under AS 04.11.491. New Text Underlined 10:33:56 AM Ms. Carpeneti understood that the language would pertain to such things as snowmachines and other items that bootleggers might purchase with the proceeds of their operation. Senator Bunde asked what proof would be required in those cases. Ms. Carpeneti responded that like other situations, evidence would be required to support the claim that the item "was purchased with funds" generated from bootlegging operations. The burden of proof must be supported by a "preponderance of evidence in a civil action." In response to a comment from Senator Bunde, Captain Harrington affirmed that 994 gallons of alcohol from bootleg operations had been seized in 2005. Senator Bunde calculated that the bootleg profit generated from that amount of alcohol could amount to $300,000. Captain Harrington thought that would be correct. In order to better understand the profits made by bootleggers, Senator Bunde asked for examples of items that bootleggers might have purchased. 10:36:05 AM Captain Harrington communicated that in his experience, "it's fairly common for people that are involved in bootlegging in the Rural communities to be fairly wealthy by community standards." Active bootleggers typically spend "a lot of their money on conveyances" such as boats, snowmachines, jet skis, "and other more expensive toys". In a case in Kotzebue, an investigator followed a bootlegger from the airport where he loaded alcohol into a vehicle, then drove to a beach and loaded it into a boat to transport to a local option village. In that case, both the vehicle and boat were seized. When a search warrant was obtained, brand new snowmachines and other boats were found. Generally, the interview process would provide evidence that the person had used the proceeds from the bootlegging effort to purchase that equipment. Law enforcement officers could then seize those items for forfeiture in the court proceeding. 10:37:44 AM Senator Bunde asked for an estimate of the money that might have been generated by bootleg operations in the past year. 10:37:55 AM Mr. Harrington responded that drugs and alcohol totaling approximately one million dollars had been seized in 2004. He had no individual data specific to alcohol. 10:38:45 AM Senator Olson continued to question the language in Sec. 2(a)(6) pertaining to the process of seizing items purchased with the proceeds generated from bootlegging operations, specifically whether a person's house could be confiscated. Ms. Carpeneti regarded the seizing of a house as being "highly unlikely" unless it was "an extreme case where a bootlegger bought a house solely from money obtained from bootlegging profits." Evidence must be presented to prove that. No house has ever been confiscated. Senator Olson stated that the law in this regard, rather than the practicality of such a thing to occur, was the gist of his question. Continuing, he asked whether this legislation would allow for the confiscation of a $100,000 home that a person had purchased with the help of $10,000 generated from the person's bootleg operation. Ms. Carpeneti responded that she did not believe that that house could be confiscated. Senator Olson asked whether that opinion could be confirmed. Ms. Carpeneti expressed that the house would not be confiscated since bootlegging operations did not generate the majority of the funding used in the purchase. Senator Olson surmised however that the bill's language would allow for someone's house to be confiscated. Ms. Carpeneti opined that, rather than it allowing for the confiscation of the house, "it might allow for confiscation of an interest in the house". 10:40:28 AM Senator Bunde concluded that were a bootlegger with no other source of income to purchase a home, it might "be possible" that that home could be forfeited. Ms. Carpeneti expressed that evidence presented in the court proceedings would have to prove that "all that money that was used to purchase that house was derived from illegal transportation of alcohol". She could not recall this ever having happened. Senator Bunde remarked that were a person with no other source to purchase a snowmachine, that machine could be confiscated. Therefore, were a person with no other source of income to purchase a house, the house should be treated in the same manner. Co-Chair Green understood that the bill included new language through which a person whose possessions were subject to confiscation could respond and "lay out their case". Ms. Carpeneti affirmed. A civil lawsuit would be conducted in which the State must present burden of proof and the accused would be provided "the opportunity to make a defense". The case would be decided based on those facts. In other words, forfeiture would not be automatic. 10:42:25 AM Senator Olson voiced being uncomfortable with the broad powers presented in this legislation. 10:42:35 AM Senator Hoffman asked regarding the anticipated increase in convictions that might transpire as the result of this legislation. 10:42:57 AM Captain Harrington was hesitant to respond as that is an unknown. However, he allowed that the reduction of the possession limit to 10.5 liters might result in a few additional cases during the year. Overall, he thought that the increases would not be "substantial". Senator Hoffman stated that the purpose of his question was to determine whether this legislation would assist "in stemming the flow of alcohol to dry communities". Captain Harrington stated that lowering the possession limit to 10.5 liters is a benefit, as it "would clear up the confusion between law enforcement and the Department of Law and the citizens in general" because of the differences that exist in current Statutes. Captain Harrington informed the Committee that 750 ML bottles are the most commonly shipped size of distilled spirits. Reducing the allowable transportation limit from 12 liters to 10.5 liters would result in "essentially" a two bottle reduction. He did not anticipate this change to increase law enforcement arrest numbers. Therefore, the benefit of the legislation would be the removal of the confusion with the conflicting statutes. Senator Hoffman understood, therefore, while the bill would streamline statutes, it might only result in three or four more prosecutable cases. "The vast majority of the problem would still exist." Captain Harrington affirmed that while the bill would streamline statutes, it would result in fewer than "50 additional cases through the course of a year". Co-Chair Green pointed out that the language in Sec. 2(a)(6) is identical to language in AS 17.30.116, which pertains to drug forfeitures. 10:45:55 AM Senator Hoffman stated that he has been working on efforts to stem the flow of alcohol into communities since the 1980s, and that he would be supporting this legislation. Continuing, he stressed that there is "no silver bullet" through which to address the situation. The abuse of alcohol "is a major cause of problems in Rural Alaska". Co-Chair Green remarked "as with many substances that people abuse, all the efforts in the world don't necessarily address the heart of the problem which is the hearts of people and the minds of people to make better choices." Co-Chair Green asked Senator Olson whether he would desire to hold the bill in Committee in order to further address his concerns. 10:47:04 AM Senator Olson suggested that a conceptual amendment to exclude a person's primary residence from forfeiture be considered in regards to Sec. 2(a)(6). Ms. Carpeneti amended her earlier remarks to clarify that a process does currently exist in regards to the seizure of a person's residence due to a situation associated with a marijuana growing operation. As she was unaware of the outcome of that case, further information on that issue could be provided. Co-Chair Green ordered the bill HELD in Committee for further consideration. 10:49:16 AM