SB 194-CIVIL DAMAGES FOR ALCOHOL VIOLATIONS  1:32:25 PM CHAIR FRENCH announced the consideration of SB 194 and asked for a motion to adopt the new committee substitute (CS). SENATOR WIELECHOWSKI moved to adopt CS for SB 194, labeled 26- LS0895\S, as the working document. There being no objection, version S was before the committee. O.C. MADDEN, Director of Operations, Brown Jug, Inc., introduced himself. CHAIR FRENCH asked Mr. Madden how his business applies the statutes pertaining to civil penalties for alcohol violations and the affect they've had. MR. MADDEN reported that the Brown Jug has been using the civil penalty laws since 1998 to prevent underage drinking; they've proven to be very effective. In 1998 the Municipality of Anchorage enacted the laws and in 2001 they were enacted on the state level. He explained that when an underage person is caught trying to purchase alcohol he sends the minor a letter demanding payment. When he hears back, he offers some alternatives. The first option is to simply pay the $1,000 civil fine. The second option is to reduce the penalty to $300 if the minor agrees to complete a two-day alcohol education class and presentations by Mothers Against Drunk Driving (MAAD) and Standing Together Against Rape (STAR). Mr. Madden said that he uses the $300 as a bonus payment to the employee who caught the minor. This process rewards employees and gets the minors and their families in education and treatment programs, he said. 1:35:26 PM CHAIR FRENCH asked if Brown Jug's vigilant approach might be driving some underage buying to other stores. MR. MADDEN replied he doesn't speak for other retailers, but it does seem to be common knowledge among kids that if you're underage, Brown Jug is the last place you want to try to buy alcohol. SILVIA VILLAMIDES, Director, Anchorage CHAAR, stated that the civil penalty process has been important to CHAAR members. She said that when kids under age 18 are caught trying to buy alcohol their parents get involved, but it's more difficult to engage the kids over age 18. They ignore the demand letters and they move around leaving no forwarding address. She claimed that the law unfairly punishes licensees when minors enter the premises. She believes it should be the minor who is penalized. We do our best to go through training and licensing. "We don't want to serve young kids," she emphasized. 1:38:27 PM SENATOR COGHILL asked what reasonable costs might be assessed in addition to the civil penalty. MS. VILLAMIDES deferred to Mr. Madden. MR. MADDEN said he doesn't know if all attorney costs are reimbursed, but he does know that it's very time consuming to deal with the minors, their families, and the agencies that coordinate treatment. Since 1998 Brown Jug has dealt with about 2,100 kids. Most of the time that's spent on these cases is up front, before there's a suit or a judgment so there's no reimbursement for those costs. That's part of the reason that increasing the penalty to $1,500 is a good idea. SENATOR COGHILL thanked him for clarifying that increasing the civil penalty to $1,500 helps cover the cost of getting to a settlement. ED O'NEILL, President, Anchorage Responsible Beverage Retailers Association (ARBRA), said he's also with Brown Jug and he reiterates Mr. Madden's testimony. He asked the committee to keep in mind that kids today have a lot of money in their pockets so it's easy for them to skirt the $1,000 penalty without telling their parents. ARBRA is trying to inform licensees statewide so that they can take advantage of this provision, he said. 1:42:52 PM SENATOR COGHILL asked how many cases go to court and how many are settled out of court. MR. O'NEILL replied Anchorage CHAAR has negotiated 42 cases and has 15 court cases pending. He noted that Mr. Madden has been the most successful; he could teach other retailers to be similarly effective. CHAIR FRENCH asked how many enforcement actions are settled and how many go through a court proceeding to finality. MR. MADDEN said Brown Jug has been very successful at negotiating with minors and their parents. Reducing the penalty to $300 if the minor agrees to the educational component has proven effective and it doesn't bog down the courts. He noted that he has given classes on how to do this to licensees in Fairbanks, Nome, and Juneau. He would be happy to continue doing that in the future. SENATOR COGHILL said since most of these cases are negotiated rather than going to court, his concern is that increasing the limit could impose a barrier for people to defend themselves in court should they feel that need. MR. MADDEN clarified that the only minors they deal with are those that have been caught and identified on the licensed premises. Under the law this is both a criminal and a civil violation. The process after they identify the minor is to send a letter demanding payment under Alaska civil law. That step is necessary in order to move ahead with a civil action in court. They have discussions with the minor and make a determination about whether or not to drop the case or to move forward. When a case ends up in a small claims action, the first thing the court does is to assign a mediator to come up with a solution. That's why Brown Jug starts working on options once the minor responds to the demand letter. 1:47:30 PM SENATOR COGHILL asked if they call the troopers or police when they identify someone who is using a fraudulent ID. MR. MADDEN said yes; it's very well established. Some cases don't warrant moving forward, but sometimes they've caught minors more than once. "That's where having a $1,500 civil penalty would be an effective tool," he said. SENATOR WIELECHOWSKI asked what he thinks about the idea to expand this provision to include a penalty for people who are prohibited from purchasing alcohol. MR. MADDEN replied that's already on the books. He added that Representative Crawford has a bill to increase the civil penalty from $1,000 to $2,000 for persons with alcohol restricted IDs. SENATOR WIELECHOWSKI asked if he would support that in this bill. MR. MADDEN replied he supports the idea. 1:50:00 PM JERRY MCCUTCHEON, representing himself, described SB 194 as toothless legislation and a ruse for legislators to say that they acted to protect the public. He claimed that this is special legislation for Brown Jug because smaller retailers have neither the time nor the resources to take advantage of the law. CHAIR FRENCH closed public testimony and asked the sponsor to describe what the new Sections 5 and 6 do. SENATOR KEVIN MEYER, sponsor of SB 194, said his staff would explain the changes. Responding to the previous testimony, he explained that CHAAR undertakes the process for small businesses that don't have the time or resources to do so. He wouldn't object if the committee wants to include in this bill the increased penalty for persons trying to buy alcohol when they have an alcohol-restricted ID. 1:53:41 PM CHRISTINE MARASIGAN, Staff to Senator Kevin Meyer, told the committee that the changes in the CS were recommended by Legislative Legal Services to correct cross references in statute. CHAIR FRENCH asked the committee what it wanted to do about adding the provisions of Representative Crawford's bill to this one. SENATOR WIELECHOWSKI offered to bring the appropriate language. 1:55:25 PM CHAIR FRENCH held SB 194 in committee awaiting an amendment.