CS FOR HOUSE BILL NO. 299(FIN) "An Act relating to the authority of the director of the Alcoholic Beverage Control Board; extending the termination date of the Alcoholic Beverage Control Board; relating to the application of precedent to decisions of the Alcoholic Beverage Control Board; and providing for an effective date." 2:22:30 PM LAURA STIDOLPH, STAFF, REPRESENTATIVE ADAM WOOL, explained the bill. She indicated that HB 299 extended the sunset date for the Alcoholic Beverage Control (ABC) Board to June 30, 2022. Legislative Audit reviewed the activities of the ABC Board and determined the board was effectively serving the public by controlling the manufacture, barter, possession, and sale of alcoholic beverages in the state. She noted that two changes were made to the original bill in previous committees. She elucidated that one change related to the authority of the director of the Alcoholic Control Board, which prohibited the director from voting on a matter before the board. The other change repealed the statute related to the application of precedent for decisions made by the ABC Board. 2:23:32 PM Senator Stevens MOVED to ADOPT Amendment 1, 30-LS1281\U.4, Bruce, 4/14/18, (copy on file): Page 1, line 1, following "Act": Insert "relating to terms of office for members of the Alcoholic Beverage Control Board;" Page 1, following line 5: Insert a new bill section to read: "*Section. 1. AS 04.06.030 is amended by adding a new subsection to read: (d) A member who has served all or part of three successive terms on the board may not be reappointed to the board unless three years have elapsed since the person has last served on the board." Page 1, line 6: Delete "Section 1" Insert "Sec. 2" Renumber the following bill sections accordingly. Page 1, line 14: Delete "Section 2" Insert "Section 3" Co-Chair MacKinnon OBJECTED for discussion. Senator Stevens explained the amendment. He stated that it changed the terms of office on the Alcoholic Beverage Control Board. He pointed to subsection (d) and read the following: (d) A member who has served all or part of three successive terms on the board may not be reappointed to the board unless three years have elapsed since the person has last served on the board. Senator Stevens indicated that the provision "mirrored" the regulation for the Marijuana Control Board and the Regulatory Commission of Alaska (RCA), which operated under a similar limit. He believed that term limits were a "heathier" situation for boards and the amendment was not directed toward any specific board member. 2:24:24 PM AT EASE 2:24:33 PM RECONVENED 2:24:55 PM Co-Chair MacKinnon requested feedback from the ABC board regarding the amendment. 2:25:06 PM ROBERT KLEIN, CHAIR, ALCOHOL BEVERAGE CONTROL BOARD, ANCHORAGE (via teleconference), voiced that he supported all the provisions in HB 299 with the exception of the Section 3 repeal of AS.4.11.537. regarding Application of Precedent. He explained that the board was required to meet in each judicial district once per year. He believed that the geographic differences in the state were significant and that by not allowing the board to apply Title 4 to the unique situations in various communities and only adhere to precedent was not serving the public's interest well. He noted the problems related to alcohol sales and consumption in Bethel as an example of a unique situation the board would need to address soon. Co-Chair MacKinnon asked Mr. Klein to speak to the amendment. Mr. Klein disagreed with the term limit amendment and commented that he had served on the ABC board under 5 or 6 governors and felt that he offered a unique historical perspective. He wondered how the amendment served the public's interest. Co-Chair MacKinnon remarked that she valued his perspective and service on the board. 2:28:33 PM Co-Chair MacKinnon asked Ms. Stidolph whether the bill sponsor supported the amendment. Ms. Stidolph replied that Representative Wool supported the amendment. Co-Chair MacKinnon WITHDREW the OBJECTION. There being NO OBJECTION, Amendment 1 was ADOPTED. 2:29:41 PM Co-Chair MacKinnon offered that she had heard legislators relate concerns over how the Alcohol and Marijuana Control Office (AMCO) was interacting with individual business establishments and that the application of rules shifted and changed with every change in board leadership. She advised Mr. Klein of the "consternation" among legislators about the ABC board especially related to the issue of precedent. She informed Mr. Klein about a legal opinion related to the Application of Precedent and noted that three areas of concern were identified. She elaborated that one related to equal protection and due process concerns. The second item addressed the effect of repealing AS 04.11.537. She read from the Memorandum from Legal Services dated April 30, 2018 (copy on file): Equal protection and due process concerns. You asked whether AS 04.11.537 is unique to the ABC Board and whether AS 04.11.537 raises any constitutional problems. It appears that no similar provision exists in the statutes for any other board, including the Marijuana Control Board under AS 17.38. It is my opinion that this language could present due process and equal protection problems by allowing the ABC Board to treat similarly situated licensees differently and potentially give different punishments for similar violations. Effect of repealing AS 04.11.537. You also asked, if AS 04.11.537 were repealed, would the ABC Board have the flexibility to consider differences in location and changes in a community over time when issuing a decision on a license. In short, repealing AS 04.11.537 would not require the ABC Board to conform a current decision to a past action that presents different facts, such as factual differences that result from long periods of time or geographic location. However, if AS 04.11.537 were repealed, the ABC Board would need to distinguish a current decision from a past action that presents similar facts. You may wish to inquire with other boards in the state to determine what types of information these boards consider when conforming to or distinguishing a current decision from a past action. Application of AS 08.01.075(f). You asked whether the provision in AS 04.11.537 is contrary to the directive in AS 08.01.075(f), which requires a board to "seek consistency" in imposing a disciplinary sanction. The ABC Board is not subject to the requirements of AS 08.01.075(f), which only applies to the boards listed under AS 08.01.010. However, requiring a board to seek consistency under AS 08.01.075(f) reflects due process and equal protection principles and is ultimately a different policy from AS 04.11.537, which does not require consistency. If I may be of further assistance, please advise. 2:33:20 PM Co-Chair MacKinnon determined that the legislature was asking for the consistent application of rules on behalf of those being regulated. She requested a final comment from Mr. Klein. Mr. Klein understood the legal opinion and comments made by Co-Chair MacKinnon. He replied that the board endeavored to devise the best solution for a particular community. He related that when the board held the forthcoming meeting in Bethel it wanted to hear how the issue affected the city and villages that surrounded Bethel. The board would hear testimony from village elders. He maintained that restricting the board to precedent encumbered the actions of the board and he was not supportive of the repeal. Co-Chair MacKinnon related that she asked legislative legal whether AS 04.11.537. was unique to the ABC Board and whether the statute raised any constitutional problems. She read the response from memo previously cited: You requested an opinion regarding AS 04.11.537, which provides that the Alcoholic Beverage Control Board (ABC Board) is not required to conform to or distinguish a decision of the board from any action taken in the past on similar facts. Below is a brief response to your questions. Equal protection and due process concerns. You asked whether AS 04.11.537 is unique to the ABC Board and whether AS 04.11.537 raises any constitutional problems. It appears that no similar provision exists in the statutes for any other board, including the Marijuana Control Board under AS 17.38. It is my opinion that this language could present due process and equal protection problems by allowing the ABC Board to treat similarly situated licensees differently and potentially give different punishments for similar violations. Co-Chair MacKinnon offered that meting out different penalties for similar violations was the reason for the provision in Section 3. She asked for final comments. Mr. Klein responded that every action the ABC Board took was subject to judicial review. He thought the "test [of judicial review] would be applied if the board was causing harm." He reiterated that the provision prohibited the board from making situationally appropriate and beneficial decisions. He was certain the board would continue to experience situations that were never encountered previously, and it was the board's duty to craft a proper solution. Vice-Chair Bishop MOVED to REPORT SCS CSHB 299(FIN) out of committee with individual recommendations and accompanying fiscal note. There being NO OBJECTION, it was so ordered. SCS CSHB 299(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN 2(CED).