Legislature(2005 - 2006)CAPITOL 120

03/24/2006 01:00 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Scheduled But Not Heard
<Bill Hearing Rescheduled from 03/22/06>
<Bill Hearing Postponed to 03/29/06>
<Bill Hearing Postponed to 03/27/06>
HB 276 - BUSINESS LICENSE TOBACCO ENDORSEMENT                                                                                 
1:45:28 PM                                                                                                                    
REPRESENTATIVE  ANDERSON  announced  that   the  final  order  of                                                               
business  would  be HOUSE  BILL  NO.  276,  "An Act  relating  to                                                               
business license  endorsements for  tobacco products,  to holders                                                               
of  business license  endorsements for  tobacco products,  and to                                                               
the  employees   and  agents  of  holders   of  business  license                                                               
endorsements for tobacco  products."  [In members'  packets was a                                                               
proposed  committee  substitute  (CS)  for HB  276,  Version  24-                                                               
LS0855\L, Bannister, 3/23/06.]                                                                                                  
REPRESENTATIVE ANDERSON offered his  recollection that HB 276 was                                                               
held  over for  the purpose  of possibly  addressing some  of the                                                               
concerns expressed during the bill's last hearing.                                                                              
REPRESENTATIVE KOTT,  speaking as the sponsor,  indicated that he                                                               
and the interested  parties had been able to reach  some level of                                                               
consensus  between then  and now,  and  that his  staff would  be                                                               
explaining what that entailed.                                                                                                  
1:47:14 PM                                                                                                                    
MICHAEL O'HARE,  Staff to Representative Pete  Kott, Alaska State                                                               
Legislature, sponsor,  on behalf of Representative  Kott, relayed                                                               
that members'  packets include the proposed  committee substitute                                                               
(CS) for  HB 276,  Version 24-LS0855\L,  Bannister, 3/23/06.   He                                                               
characterized HB  276 as a  "business fairness bill,"  which will                                                               
increase the  financial penalties for  retailers who fall  out of                                                               
compliance with the prohibition  against selling tobacco products                                                               
to  minors.   He noted  that testimony  last year  indicated that                                                               
some felt that the current penalties weren't sufficient.                                                                        
1:49:20 PM                                                                                                                    
REPRESENTATIVE WILSON moved to adopt  the proposed CS for HB 276,                                                               
Version 24-LS0855\L, Bannister, 3/23/06, as the work draft.                                                                     
REPRESENTATIVE GRUENBERG objected for  the purpose of discussion,                                                               
asked for a description of  the changes encompassed in Version L,                                                               
and said he might also be  objecting to some of the provisions in                                                               
Version L.                                                                                                                      
MR. O'HARE noted  that members' packets also  contain a sectional                                                               
analysis  of   Version  L  by  Legislative   Legal  and  Research                                                               
The committee took an at-ease from 1:51 p.m. to 1:55 p.m.                                                                       
MR.  O'HARE,  after briefly  discussing  some  of the  provisions                                                               
contained  in both  Version L  and the  original bill,  indicated                                                               
that Version  L proposes  to insert  two "penalty  matrixes," one                                                               
applying   to  those   that  don't   comply   with  proposed   AS                                                               
43.70.075(t) regarding employee/agent  education, compliance, and                                                               
disciplinary programs, and  one applying to those  that do comply                                                               
with proposed AS 43.70.075(t).                                                                                                  
MR. O'HARE referred to proposed  AS 43.70.075(d) of Version L and                                                               
relayed  that  it  stipulates  that  at the  time  of  a  current                                                               
violation, if a person who  holds an endorsement is in compliance                                                               
with  proposed AS  43.70.075(t) and  has no  previous violations,                                                               
he/she will  no longer be  subject to an  endorsement suspension,                                                               
but may be  subject to a civil  penalty of at least  $300 but not                                                               
more than $750.                                                                                                                 
REPRESENTATIVE  ANDERSON  noted  that imposition  of  that  civil                                                               
penalty is not mandatory.                                                                                                       
REPRESENTATIVE KOTT  concurred, and mentioned that  the bill will                                                               
also provide  the hearing  officer in  a suspension  hearing with                                                               
more  discretion.   In response  to  a question,  he offered  his                                                               
understanding that currently  endorsement suspensions are invoked                                                               
2:02:04 PM                                                                                                                    
MR. O'HARE relayed  that under Version L, for  a second violation                                                               
within 24  months, the  endorsement holder may  be subject  to an                                                               
endorsement suspension  of up to 20  days and to a  civil penalty                                                               
of at least $500 but not  more than $1,000; for a third violation                                                               
within 24  months, the  endorsement holder may  be subject  to an                                                               
endorsement suspension  of up to 45  days and to a  civil penalty                                                               
of  at least  $1,000  but  not more  than  $2,500;  for a  fourth                                                               
violation  within  24  months,  the  endorsement  holder  may  be                                                               
subject to  an endorsement suspension of  up to 90 days  and to a                                                               
civil penalty  of at least $2,500  but not more than  $3,500; and                                                               
for a fifth  or more violation within 24  months, the endorsement                                                               
holder may  be subject to an  endorsement suspension of up  to 12                                                               
months and  to a civil  penalty of at  least $3,500 but  not more                                                               
than  $4,500.     In   response  to   a  question,   offered  his                                                               
understanding  that   when  calculating   the  number   of  prior                                                               
violations a holder might have,  each [retail] location is viewed                                                               
MR. O'HARE referred to proposed  AS 43.70.075(u) of Version L and                                                               
relayed  that  it  stipulates  that  at the  time  of  a  current                                                               
violation,  if  a person  who  holds  an  endorsement is  not  in                                                               
compliance  with proposed  AS 43.70.075(t)  and  has no  previous                                                               
violations, he/she  will no longer  be subject to  an endorsement                                                               
suspension, but  may be subject  to a  civil penalty of  at least                                                               
$500  but  not  more  than   $750.    Furthermore,  when  not  in                                                               
compliance with  proposed AS 43.70.075(t), an  endorsement holder                                                               
may be subject to an endorsement  suspension of up to 20 days and                                                               
to a  civil penalty of at  least $1,000 but not  more than $2,500                                                               
for  a  second violation  within  24  months; to  an  endorsement                                                               
suspension of up  to 90 days and  to a civil penalty  of at least                                                               
$2,500 but not  more than $3,500 for a third  violation within 24                                                               
months; to an endorsement suspension of  up to 12 months and to a                                                               
civil penalty of  at least $3,500 but not more  than $4,500 for a                                                               
fourth   violation  within   24  months;   and  to   a  permanent                                                               
endorsement suspension and to a  civil penalty of at least $5,000                                                               
for a fifth or more violation within 24 months.                                                                                 
MR. O'HARE referred  to the language on page 6,  lines 2-8, which                                                               
says  that when  making  a decision,  the  hearing officer  shall                                                               
consider whether  the person  is in  compliance with  proposed AS                                                               
43.70.075(t) on  or before  the date  the department  initiates a                                                               
proceeding  under proposed  AS  43.70.075(m); mitigating  factors                                                               
presented  by  the  person;  and  the scope  and  extent  of  the                                                               
person's   education, compliance, and disciplinary  program under                                                               
proposed AS 43.70.075(t)(2).                                                                                                    
[Representative  Anderson   turned  the   gavel  over   to  Chair                                                               
MR. O'HARE  then spoke about  proposed AS 43.70.075(p),  which is                                                               
unchanged  from the  original  bill, and  pertains  to the  civil                                                               
penalty  that may  be  imposed  for a  violation  of the  signage                                                               
requirements of  existing AS 43.70.075(f)  or for a  violation of                                                               
the   requirements   of   proposed  AS   43.70.075(t)   regarding                                                               
employee/agent education, compliance,  and disciplinary programs;                                                               
that penalty, also unchanged from  existing law, is not to exceed                                                               
$250 for each day of the  violation and may not exceed $5,000 for                                                               
each  violation.   In  conclusion,  he  remarked that  Version  L                                                               
promotes  employee/agent  education   regarding  the  selling  of                                                               
tobacco  products  to minors  and  removes  the automatic  20-day                                                               
suspension of an  endorsement for a first  offense, and mentioned                                                               
that  Alaska  currently  has  a high  compliance  rate  with  the                                                               
"Synar" requirements.                                                                                                           
REPRESENTATIVE ANDERSON  expressed favor with the  removal of the                                                               
automatic  20-day  suspension  of  an  endorsement  for  a  first                                                               
2:13:29 PM                                                                                                                    
ED SASSER  relayed that although  some of his concerns  have been                                                               
alleviated  via  Version  L,  he  is  still  concerned  that  the                                                               
language,   "up   to"   regarding  endorsement   suspensions   is                                                               
cumbersome and could  cause a fiscal note, and  he also questions                                                               
who besides the  endorsement holder will certify  that he/she has                                                               
an education, compliance, and disciplinary  program in effect for                                                               
his/her employees/agents.                                                                                                       
2:15:49 PM                                                                                                                    
RONALD  F. TAYLOR,  Coordinator,  Alcohol  Safety Action  Program                                                               
(ASAP), Prevention  and Early  Intervention Section,  Division of                                                               
Behavioral  Health   (DBH),  Department  of  Health   and  Social                                                               
Services   (DHSS),  said   that  [the   DHSS]  has   the  primary                                                               
responsibility   for   [administering]    the   state's   Tobacco                                                               
Enforcement  program.   The overall  goal of  this program  is to                                                               
reduce  youth  access to  tobacco  products,  and when  the  2003                                                               
changes in the law took  effect, Alaska dropped its noncompliance                                                               
rates from 30 percent down to  10 percent in a one-year period of                                                               
time,  and  currently  the  noncompliance rate  is  just  over  9                                                               
percent; therefore, those changes in  the law are working, and so                                                               
from a departmental standpoint, the  DHSS has a problem with this                                                               
attempt to change something that  is not only working but working                                                               
very well.                                                                                                                      
MR. TAYLOR  predicted that  if nebulous  language such  as, "may"                                                               
and "up to" is inserted into  this statute, it will take away the                                                               
effectiveness  of the  state's Tobacco  Enforcement program,  and                                                               
water down the statute in  terms of providing endorsement holders                                                               
with  the   certainty  that  a   penalty  will  be   imposed  for                                                               
noncompliance;  furthermore, from  a  statewide perspective,  the                                                               
overall  consistency  of  enforcement efforts  will  deteriorate.                                                               
He, too, spoke of the  concerns expressed by Mr. Sassar regarding                                                               
who   will  be   responsible  for   enforcing,  monitoring,   and                                                               
certifying  the education,  compliance, and  disciplinary program                                                               
requirements, and  regarding a  possible fiscal  note.   When the                                                               
aforementioned 2003 changes were  enacted, the legislature sent a                                                               
very loud and  clear message to the department that  it must do a                                                               
better job of  enforcement so as to have Alaska  be in compliance                                                               
with the "Synar amendment."                                                                                                     
MR.  TAYLOR said  that to  accomplish that  goal, the  department                                                               
looked at other states and  received federal technical assistance                                                               
in  order to  come into  compliance with  "Synar rates,"  and the                                                               
department  adopted   all  of  the   best  practices   that  were                                                               
recommended.  Now the department is  being told, via HB 276, that                                                               
this "best practice" program needs  to be watered down because it                                                               
is working too well.  However,  he remarked, "I think we all want                                                               
our  system to  operate  on the  basis of  best  practices."   He                                                               
suggested  that  when  looking  at  state's  Tobacco  Enforcement                                                               
program, one must  compare it with "the alcohol  program"; HB 276                                                               
is taking  a step  backward, similar  to what  was done  with the                                                               
alcohol  program.    For  example,   he  offered,  the  Alcoholic                                                               
Beverage  Control   Board  ("ABC   Board")  has   no  enforceable                                                               
penalties for business owners and,  because of this, the industry                                                               
in  Alaska has  a 29  percent  [underage] sale  rate in  February                                                               
alone  for  the  Kenai  Peninsula, even  though  all  clerks  are                                                               
required by law to receive training.                                                                                            
MR.  TAYLOR, with  regard to  tobacco  sales, said  that even  in                                                               
Montana, when that state began  to reduce penalties and take away                                                               
the  impact on  endorsements,  the [underage  sales] rates  crept                                                               
back up:   in 1999 the rate  went up 33 percent, in  2000 it went                                                               
up 37  percent, in  2001 it went  up 46 percent,  and in  2002 it                                                               
went  up 50  percent.    He predicted  that  should the  proposed                                                               
changes be  adopted, Alaska's  rates will go  back up  and Alaska                                                               
will not remain in compliance.                                                                                                  
2:21:09 PM                                                                                                                    
REPRESENTATIVE GRUENBERG  asked that  those figures  be presented                                                               
to the committee in writing.                                                                                                    
MR. TAYLOR agreed to do so.                                                                                                     
REPRESENTATIVE  WILSON  commented  on   the  good  job  that  Mr.                                                               
Taylor's  agency  did in  her  town  regarding reducing  underage                                                               
tobacco sales.                                                                                                                  
REPRESENTATIVE ANDERSON  asked Mr.  Taylor to  give consideration                                                               
to the  concept of  at least  eliminating the  20-day endorsement                                                               
suspension  for a  first violation,  and suggested  that when  an                                                               
endorsement is  suspended, it can  cost a business much  in terms                                                               
of both lost revenue and lost customer base.                                                                                    
MR. TAYLOR  concurred, though he  remarked that it's easy  to get                                                               
off track  on this issue  if one thinks  of the penalty  as being                                                               
imposed on the spot, but that's  just not true; currently, when a                                                               
citation  [for  noncompliance]  is  issued, the  penalty  is  not                                                               
automatically  imposed immediately.   Instead,  an administrative                                                               
hearing  has to  take  place.   And during  such  a hearing,  for                                                               
example, if  the citation is  against the store clerk  and he/she                                                               
is not found guilty, no  penalties are imposed on the endorsement                                                               
holder.  Furthermore,  an endorsement holder has the  right to go                                                               
through  the entire  administrative  hearing  process, which  can                                                               
take at least nine months, and  has an opportunity to present any                                                               
type  of defense.   He  said,  therefore, that  if the  purported                                                               
problem  is  one  of  due  process,  then  the  committee  should                                                               
consider  the  issue similarly  to  driving  under the  influence                                                               
(DUI)  violations wherein  the officer  issues  the citation  and                                                               
simply lets  the court sort out  issues of due process;  "we have                                                               
administrative and  judicial [processes]  in place  that actually                                                               
deal with due process issues."                                                                                                  
REPRESENTATIVE ANDERSON  reiterated his suggestion to  Mr. Taylor                                                               
that  he   give  consideration  to   the  concept  of   at  least                                                               
eliminating  the  20-day  endorsement   suspension  for  a  first                                                               
REPRESENTATIVE KOTT  asked Mr. Taylor  whether he's  attended any                                                               
of the administrative hearings.                                                                                                 
MR. TAYLOR  said he  hadn't, but  relayed that  one of  his chief                                                               
investigators  who has  attended such  hearings is  available for                                                               
REPRESENTATIVE KOTT  and REPRESENTATIVE GRUENBERG  indicated that                                                               
they'd   heard   that    the   endorsement   suspensions   happen                                                               
automatically,  without  endorsement   holders  being  given  the                                                               
opportunity to defend their endorsements against suspension.                                                                    
REPRESENTATIVE  KOTT  offered  his  belief  that  in  some  other                                                               
states, the  compliance rates are  higher than in Alaska  and yet                                                               
they don't  suspend an endorsement  on a first offense;  in light                                                               
of that,  how will eliminating the  20-day endorsement suspension                                                               
for  a  first   offense  have  a  dramatic   effect  on  Alaska's                                                               
compliance rates.                                                                                                               
2:27:32 PM                                                                                                                    
REPRESENTATIVE  ANDERSON surmised  that Mr.  Taylor's concern  is                                                               
that lessening  the penalties will encourage  endorsement holders                                                               
to lessen their training and supervision as well.                                                                               
MR.  TAYLOR  concurred.   With  regard  to Representative  Kott's                                                               
comments, he asked Representative Kott  whether he was looking at                                                               
the   overall   prevention   efforts   put  in   place   by   the                                                               
aforementioned states,  at the overall  culture of  those states,                                                               
and  at the  type of  cooperation  those states  have with  their                                                               
REPRESENTATIVE  KOTT indicated  that  he'd  not considered  those                                                               
aspects; instead,  he'd merely seen  the statistics  those states                                                               
sent  to the  federal government  in order  to qualify  for grant                                                               
money.   He  characterized the  current statute  as overreaching,                                                               
and posited that  cutting back on the penalties will  not have as                                                               
disastrous an  outcome as Mr.  Taylor fears, as evidenced  by the                                                               
statistics of other states.                                                                                                     
REPRESENTATIVE  GARA  asked Mr.  Taylor  whether  he has  seen  a                                                               
reduction in the number of kids who use tobacco products.                                                                       
MR.  TAYLOR  said he  thinks  a  reduction  has occurred  but  he                                                               
doesn't have the exact figures.                                                                                                 
REPRESENTATIVE  GRUENBERG  asked  for information  regarding  the                                                               
changes that  occurred in Montana's law  and enforcement methods,                                                               
as well as Montana's statistics  and the same type of information                                                               
about other states.                                                                                                             
MR.  TAYLOR  indicated that  he  would  attempt to  provide  that                                                               
2:32:08 PM                                                                                                                    
MICHAEL ELERDING,  President, Northern  Sales Company  of Alaska,                                                               
Inc.,  after relaying  that his  company is  in part  a wholesale                                                               
distributor  of tobacco  products, indicated  that he'd  provided                                                               
testimony in  support of HB 276  at the bill's last  hearing.  He                                                               
offered  his  belief  that  HB 276  will  improve  Alaska's  laws                                                               
pertaining to  enforcing the prohibition against  selling tobacco                                                               
products  to minors.   Tobacco  [retailers] in  the state  have a                                                               
special  social  responsibility  to  prohibit  tobacco  sales  to                                                               
underage persons,  and are  doing a good  job, he  opined, adding                                                               
that  since  2002, there  has  been  an aggressive  reduction  in                                                               
retail availability  of tobacco products  to minors.   The Alaska                                                               
legislature  and   the  administration  have  done   a  good  job                                                               
prohibiting tobacco sales to underage  persons with vigorous laws                                                               
and regulations; in that regard,  Alaska has some of the harshest                                                               
laws and  regulations, and has  the 4th highest rate  of taxation                                                               
on tobacco products in the  nation, behind only Rhode Island, New                                                               
Jersey, and Washington.                                                                                                         
MR. ELERDING pointed out, however,  that Alaska is the only state                                                               
in the union  that has a mandatory  20-day endorsement suspension                                                               
for a  first offense.  He  characterized this as a  denial of due                                                               
process,  and  offered  his understanding  that  a  retailer  who                                                               
employs a clerk  that has sold tobacco products to  a minor can't                                                               
offer  up  any  defense.    House  Bill  276  will  correct  this                                                               
deficiency,  he   remarked,  and  will  increase   the  financial                                                               
penalties for retailers found guilty  of selling tobacco products                                                               
to minors.   The bill will  provide an incentive to  retailers to                                                               
institute  aggressive and  rigorous staff  training programs,  by                                                               
having  reduced penalties  for  those retailers  that  do so;  he                                                               
posited  that trained  staff are  more likely  to refuse  to sell                                                               
tobacco  products  to  minors.    In  conclusion,  he  urged  the                                                               
committee to pass HB 276.                                                                                                       
MR. ELERDING, in  response to a question,  opined that suspension                                                               
of  a   retailer's  endorsement  can  change   customers'  buying                                                               
patterns  and thereby  reduce  a retailer's  customer  base.   In                                                               
response to another question, he  pointed out that the bill won't                                                               
affect  his company  because Northern  Sales  Company of  Alaska,                                                               
Inc., is  a wholesale distributor  and does not sell  directly to                                                               
REPRESENTATIVE GRUENBERG  noted that some people  are saying that                                                               
there is a due process  violation occurring under current law and                                                               
some say there is not.                                                                                                          
CHAIR   McGUIRE  and   REPRESENTATIVE  ANDERSON   suggested  that                                                               
remaining testifiers address the issue of due process.                                                                          
2:41:07 PM                                                                                                                    
SUZANNE   MEUNIER,   Director   of  Advocacy,   American   Stroke                                                               
Association, American  Heart Association, indicated that  she has                                                               
grave concerns  about HB 276,  specifically regarding  its threat                                                               
to  the lives  of  Alaskan children  and thus  to  the future  of                                                               
Alaska.     Alaska's   current  tobacco   enforcement  laws   are                                                               
reasonable,  effective, and  appropriate;  they have  effectively                                                               
curbed illegal  sales of tobacco  to minors; and  that translates                                                               
into  saved lives.   She  provided members  with the  DHSS's 2005                                                               
annual  report  entitled,  "Tobacco  Prevention  and  Control  in                                                               
Alaska, Preventing Addiction - Saving  Lives", and noted that the                                                               
graph on  page 2 illustrates  the reduction in smoking  by Alaska                                                               
high  school  students;  this report  further  documents  that  a                                                               
comprehensive  and  sustained   tobacco  prevention  and  control                                                               
program,  along with  enforcement, is  a critical  piece of  that                                                               
MS. MEUNIER  relayed that compliance  data for last  year confirm                                                               
that  only a  small  minority of  Alaska's  1,700 retail  tobacco                                                               
vendors are now  selling to minors; specifically,  better than 90                                                               
percent of Alaska's  tobacco retailers are getting  it right, and                                                               
they're  managing the  very serious  responsibility of  selling a                                                               
highly  addictive,  dangerous  product   -  tobacco.    She  then                                                               
referred to  a graph  produced by the  U.S. Department  of Health                                                               
and   Human   Services   (DHHS)   that   illustrated   what   she                                                               
characterized as a dramatic drop  in illegal sales to youth after                                                               
2002, when the  current enforcement law began to  have an effect.                                                               
Other statistics  speak to the fact  that in 1995, 29  percent of                                                               
Alaska's teens reported the  self-purchase of cigarettes, whereas                                                               
in 2003 only 13 percent did so.                                                                                                 
MS.  MEUNIER said  that now  is  not the  time to  roll back  the                                                               
state's tobacco  enforcement efforts.  In  conclusion, she turned                                                               
member's attention to four photographs  located on page 16 of the                                                               
aforementioned  annual report.    Those photos,  from a  counter-                                                               
marketing  youth prevention  advertisement entitled  "Still Can't                                                               
Quit",  are of  a young  man looking  at x-rays  of his  diseased                                                               
lungs, and are captioned:  "I'm  15 years old.  I started smoking                                                               
when I was 11."; "I'm addicted to  cigarettes.  I found out I was                                                               
hooked about 3  weeks after I started."; "Now I  have spots on my                                                               
lungs.   If I don't quit  smoking they can turn  to cancer."; "It                                                               
scares me - and I still can't quit smoking."                                                                                    
2:45:39 PM                                                                                                                    
MS.  MEUNIER,  in  response  to  questions,  indicated  that  her                                                               
organization's main goal with the  bill is to prevent minors from                                                               
obtaining tobacco,  and that it  would be  willing to look  at an                                                               
alternative proposal.                                                                                                           
REPRESENTATIVE GRUENBERG  suggested as an alternative  to the 20-                                                               
day suspension  [for a  first offense]  that they  simply require                                                               
that a portion of a  retailer's income go to health organizations                                                               
such as the one Ms. Meunier represents.                                                                                         
MS.  MEUNIER  offered her  belief  that  the bill,  as  currently                                                               
written, is taking the law back to  what was in place a few years                                                               
ago when  Alaska's noncompliance  rates were  so high;  the law's                                                               
current requirements regarding temporary  suspensions have had an                                                               
impact  and  are  working,  so  her fear  is  that  lowering  the                                                               
sanctions and penalties  will create a risk - a  risk too high to                                                               
take  - that  the state  will revert  back to  high noncompliance                                                               
rates.  In response to a question,  she said she did not know how                                                               
the boy  presented in the aforementioned  advertisement initially                                                               
acquired his cigarettes.                                                                                                        
REPRESENTATIVE KOTT  said he  doubts it  was through  a retailer,                                                               
given that an  11-year-old probably could not  have been mistaken                                                               
for  a   19-year  old.     He  asked  Ms.  Meunier   whether  her                                                               
organization  received any  of  the grant  money  that the  state                                                               
receives through the federal "arrangement."                                                                                     
MS. MEUNIER  explained that the  American Heart  Association does                                                               
not receive any federal, state, or [other] government funding.                                                                  
REPRESENTATIVE   KOTT  surmised,   then,  that   any  funds   her                                                               
organization  might  receive  through   a  change  such  as  just                                                               
suggested  by  Representative  Gruenberg  would go  a  long  ways                                                               
towards helping  it attain its  overall goal of  reducing smoking                                                               
among Alaskans.                                                                                                                 
MS. MEUNIER concurred.                                                                                                          
2:49:01 PM                                                                                                                    
REPRESENTATIVE GARA  suggested that  the question is  whether the                                                               
bill will affect the current  lower noncompliance rates if all of                                                               
the other efforts  to curb smoking among youth  are maintained to                                                               
the same degree.                                                                                                                
MS. MEUNIER said she is not sure whether that can be determined.                                                                
REPRESENTATIVE GARA  surmised that  it's possible that  the lower                                                               
noncompliance rates could be maintained  even with passage of the                                                               
MS. MEUNIER concurred,  but added that one can only  look at what                                                               
is  occurring under  current  law as  compared  to what  occurred                                                               
before passage  of the current law.   She remarked that  having a                                                               
comprehensive, sustained tobacco program  is the best practice as                                                               
recommended, and  so her organization  is seeking to  ensure that                                                               
such is implemented in Alaska,  and an enforcement aspect is part                                                               
of that and it's working.                                                                                                       
CHAIR McGUIRE  said she  is supportive of  all the  efforts being                                                               
made to curb  the number of smokers, and doesn't  want to see the                                                               
lower noncompliance  rates begin  to rise  again.   The question,                                                               
however,  is   whether  the   aforementioned  reduction   can  be                                                               
maintained without requiring a  20-day endorsement suspension for                                                               
a first offense.                                                                                                                
REPRESENTATIVE ANDERSON  asked Ms. Meunier to  consider the issue                                                               
from businesses' perspective.                                                                                                   
MS. MEUNIER,  after thanking members  for their  comments, opined                                                               
that it is  important to remember that better than  90 percent of                                                               
Alaska's  more than  1,700 retail  tobacco venders  are complying                                                               
with current law  - are getting it  right - and that  in order to                                                               
even  be convicted  of  a violation,  a retailer  has  to fail  a                                                               
compliance check, which  involves the young person  who is making                                                               
the purchase  on behalf of  the state actually disclosing  to the                                                               
retailer that he/she is underage.                                                                                               
2:56:43 PM                                                                                                                    
KIP  KNUDSON,   Manager,  Government  Relations,   Tesoro  Alaska                                                               
[Company],  testified  in  favor  of  HB  276,  adding  that  his                                                               
company, which operates convenience  stores in 16 western states,                                                               
favors  the language  in  Version  L.   He  said  that even  with                                                               
passage  of HB  276, Alaska  will still  have the  most stringent                                                               
tobacco prevention  laws of  any of the  states that  his company                                                               
operates in.   Tesoro Alaska  [Company], he remarked, has  a very                                                               
strong "no  underage tobacco sales" policy;  before employees are                                                               
allowed   to   sell   tobacco  products,   they   must   complete                                                               
orientation, be tested, and have  a passing score of 100 percent,                                                               
and  each  quarter  Tesoro  Alaska  [Company]  conducts  internal                                                               
compliance checks.                                                                                                              
MR.  KNUDSON  said  that  since  the  year  2000,  Tesoro  Alaska                                                               
[Company]  has  had  only  13 violations  among  its  31  Alaskan                                                               
convenience  stores,   but  there  has  been   no  difference  in                                                               
compliance rates  since current law  was put in place,  and there                                                               
have been  no second  time offenses.   When an  employee violates                                                               
the  company's  "no underage  tobacco  sales"  policy, he/she  is                                                               
terminated,  Mr. Knudson  explained,  adding  that the  company's                                                               
goals with regard to prohibiting  the sale of tobacco products to                                                               
minors are  similar to  those of  the American  Heart Association                                                               
and the legislature, though the  company would appreciate the law                                                               
being changed to somewhat buffer it.                                                                                            
REPRESENTATIVE  GRUENBERG asked  whether  his earlier  suggestion                                                               
would be preferable to the  current 20-day endorsement suspension                                                               
for a first offense.                                                                                                            
MR. KNUDSON  said that  as long  as the money  went to  the right                                                               
organizations, that  suggestion would  be preferable to  a 20-day                                                               
suspension and  would underpin  the company's  existing community                                                               
relations program.                                                                                                              
REPRESENTATIVE ANDERSON surmised that  if Tesoro Alaska [Company]                                                               
experiences a reduction in revenue, then  it might not be able to                                                               
continue contributing  to the community  to the same  degree that                                                               
it has been.                                                                                                                    
MR.  KNUDSON  acknowledged  that  such might  be  the  case,  but                                                               
relayed that  not having the  company's endorsement  suspended is                                                               
still the preferred option.                                                                                                     
3:03:35 PM                                                                                                                    
STEVEN    RUSH,   Director,    Corporate   Compliance,    Holiday                                                               
Stationstores,  Inc. ("Holiday"),  after mentioning  that Holiday                                                               
operates in 12 states, indicated  that he'd provided testimony in                                                               
support of  HB 276 at the  bill's last hearing.   Holiday entered                                                               
into Alaska's  marketplace in 2004  when it  acquired convenience                                                               
stores previously  owned and operated by  Williams Express, Inc.,                                                               
and since that time, Holiday has  been cited only three times for                                                               
alleged underage sale  of tobacco products to minors,  and two of                                                               
those  violations occurred  within  just a  couple  of months  of                                                               
acquiring its Alaskan  units, before Holiday had had  a chance to                                                               
fully  incorporate its  employee  training  program.   Currently,                                                               
Holiday has  a very comprehensive and  proprietary computer-based                                                               
training  program, among  other methods,  to train  its employees                                                               
regarding this  critical issue, and  since the  implementation of                                                               
this program, Holiday has only had one citation.                                                                                
MR. RUSH said he would be testifying  in support of HB 276.  With                                                               
regard to  the question of how  much revenue a retailer  can lose                                                               
during  a 20-day  endorsement suspension,  he said  that some  of                                                               
Holiday's units  could lose in  excess of $100,000  in collateral                                                               
sales for  that 20-day period,  thus it is critical  that Holiday                                                               
not be subject to an  endorsement suspension for a first offense.                                                               
On the  issue of due  process, he characterized [current  law] as                                                               
unconstitutional  because   during  the   administrative  hearing                                                               
process   for  a   20-day   endorsement   suspension,  under   AS                                                               
43.70075(m),  the hearing  officer  is limited  in  the types  of                                                               
information he/she  may consider  before making  a determination;                                                               
for example,  all the  hearing officer has  to consider,  and all                                                               
the state has to prove  is "the underlying criminal conviction of                                                               
the  sales  associate."    So  as soon  as  that  information  is                                                               
introduced, Holiday's liability is  automatic because the company                                                               
can't offer  any evidence that  would prove it was  not negligent                                                               
and so shouldn't be found responsible under the statute.                                                                        
MR.  RUSH  posited  that  that   underlying  conviction  acts  as                                                               
collateral  estoppel in  any subsequent  civil proceeding  on the                                                               
issue of culpability  of the retailer, and this  is what attaches                                                               
liability  and responsibility  to  the retailer;  he opined  that                                                               
this  is  blatantly unconstitutional.    He  referred to  a  1993                                                               
Alaska Supreme  Court case,  Spenard Action  Committee v.  Lot 3,                                                             
Block  1, Evergreen  Division,  902  P 2d  766,  and offered  his                                                             
belief that the  court held that a criminal conviction  of a non-                                                               
party  may not  be  admitted at  a subsequent  civil  trial as  a                                                               
evidence of the  facts on which the judgment rests.   With regard                                                               
to cases involving  tobacco sales to underage  persons, the sales                                                               
associate is  cited for an alleged  sale of tobacco and  within a                                                               
matter  of weeks  or days,  he/she usually  pleads guilty  to the                                                               
crime of negligent sale of tobacco to an underage individual.                                                                   
MR. RUSH pointed out that in such  a case, Holiday is not a party                                                               
to that action and  is given no notice of it,  but once the sales                                                               
associate is  convicted, that conviction  is used as  evidence in                                                               
an   administrative   hearing   regarding   suspension   of   the                                                               
endorsement to  prove the company's  guilt without  also allowing                                                               
the company  to offer any evidence  that it was not  negligent in                                                               
the handling  of the  tobacco product.   House Bill  276 corrects                                                               
the due process  problem, he remarked, by specifying,  on page 6,                                                               
that the  hearing officer shall consider  any mitigating factors,                                                               
and  whether  the [endorsement  holder]  was  in compliance  with                                                               
proposed  AS  43.70.075(t)  regarding  employee/agent  education,                                                               
compliance, and  disciplinary programs.   Holiday is  only asking                                                               
for   a  fair   hearing   and  the   ability   to  exercise   its                                                               
constitutional  right  to  present evidence  regarding  guilt  or                                                               
innocence, evidence that  it has made good  faith efforts towards                                                               
compliance with the law.                                                                                                        
3:12:21 PM                                                                                                                    
MR. RUSH,  in response to  a question, offered  his understanding                                                               
that there  have been  legal challenges  to the  current statute,                                                               
and that a ruling by the  Alaska Supreme Court on the due process                                                               
issue is pending.                                                                                                               
REPRESENTATIVE  GARA  asked  about the  Alaska  Superior  Court's                                                               
decision in that Alaska Supreme Court case.                                                                                     
MR.  RUSH  said  that  the Alaska  Superior  Court  affirmed  the                                                               
hearing   officer's   decision   that   the   statute   was   not                                                               
REPRESENTATIVE  GARA surmised,  then, that  it is  not absolutely                                                               
clear yet whether the current statute is unconstitutional.                                                                      
MR. RUSH  clarified that the  hearing officer had stated  that he                                                               
did not have the authority to rule on constitutionality.                                                                        
REPRESENTATIVE GARA  offered his  belief that although  a hearing                                                               
officer  can't  rule whether  a  statute  is constitutional,  the                                                               
Alaska Superior Court  can, and therefore his  assumption is that                                                               
the  Alaska Superior  Court, by  affirming the  hearing officer's                                                               
decision, was  saying that the  statute is  not unconstitutional.                                                               
Therefore, it  will be up  to Alaska  Supreme Court to  offer the                                                               
final judgment on  this issue.  His concern for  now, he relayed,                                                               
is  to ensure  that the  process is  fair, and  acknowledged that                                                               
they could  certainly come  up with something  that is  more fair                                                               
than the minimum the Alaska State Constitution requires.                                                                        
REPRESENTATIVE  GRUENBERG  said he  would  like  a copy  of  that                                                               
Alaska Superior Court  decision, and would like to  know how long                                                               
ago the case was submitted to  the Alaska Supreme Court, what its                                                               
status is, and whether oral argument has been presented yet.                                                                    
MR. RUSH clarified  that that case does not  involve his company;                                                               
offered his understanding that the name  of one of the parties is                                                               
Mendenhall Valley Tesoro,  that the matter has  been briefed, and                                                               
that  the   last  materials  were  submitted   in  December;  and                                                               
predicted that  there won't be  a decision by the  Alaska Supreme                                                               
Court for about 16 months.                                                                                                      
3:16:11 PM                                                                                                                    
REPRESENTATIVE  ANDERSON  provided  a   synopsis  of  Mr.  Rush's                                                               
MR. RUSH  concurred with Representative Anderson's  synopsis, and                                                               
offered that  Holiday simply wants  acknowledgment that  a 20-day                                                               
endorsement suspension for  a first offense is  bad public policy                                                               
because of  it severity on retail  businesses.  He added,  "We do                                                               
want the ability  to present evidence at the  hearing rather than                                                               
simply having  an unrelated proceeding and  conviction introduced                                                               
as evidence  of our  guilt when  we were  a not  a party  to that                                                               
proceeding  nor  were we  in  privity  with  the employee."    In                                                               
response  to a  question,  he  explained that  all  three of  the                                                               
aforementioned citations  against Holiday are under  appeal; that                                                               
the estimate  of how  much revenue  would be  lost was  simply an                                                               
estimate that  a store could  lose as much  as 25 percent  of its                                                               
income during  a 20-day suspension;  and that if Holiday  ends up                                                               
being  subject to  an  endorsement suspension  for  any of  those                                                               
cases, it  will only apply  to the  store at which  the violation                                                               
MR.  RUSH,   in  response  to   another  question,   offered  his                                                               
understanding that with regard to  a violation of the prohibition                                                               
of selling  alcohol to minors,  the state  has to prove  that the                                                               
license holder  knowingly, or  with criminal  negligence, allowed                                                               
the sale,  and characterized that  as a far higher  standard than                                                               
what  is being  applied with  regard  to tobacco  because, for  a                                                               
tobacco  sale,  the state  needn't  show  that the  retailer  was                                                               
negligent -  there is simply  the introduction of  the conviction                                                               
of the  sales associate as  evidence of the  endorsement holder's                                                               
guilt.   He again offered that  a solution to this  problem would                                                               
be to adopt HB 276.                                                                                                             
REPRESENTATIVE  GRUENBERG  opined  that the  holding  in  Spenard                                                             
Action  Committee clearly  indicates  that Holiday  would not  be                                                             
denied  due  process, and  that  nothing  in AS  43.70.075(m)  is                                                               
contrary to that holding.                                                                                                       
MR.  RUSH   pointed  out,  though,   that  the  language   in  AS                                                               
43.70.075(m) references the criminal  conviction of the employee,                                                               
which  the hearing  officer then  uses in  the civil  endorsement                                                               
proceeding to  determine whether  to hold the  endorsement holder                                                               
vicariously liable.                                                                                                             
REPRESENTATIVE  GRUENBERG  characterized   that  as  a  different                                                               
question than what  is presented in the  Spenard Action Committee                                                             
case; Mr.  Rush appears  to be raising  a question  regarding the                                                               
elements [used]  for suspension of  the endorsement,  rather than                                                               
an evidentiary question.                                                                                                        
MR.  RUSH  concurred,  but  explained  that  the  Spenard  Action                                                             
Committee  is the  most analogous  case  that he'd  been able  to                                                             
find.  He added:                                                                                                                
     In the  context of a  hearing, ... all that  happens is                                                                    
     the  State  of Alaska  shows  the  hearing officer  the                                                                    
     criminal conviction  of the sales  associate - it  is a                                                                    
     proceeding  to which  we are  not  a party  nor are  we                                                                    
     given  notice; that  conviction, in  and of  itself, is                                                                    
     sufficient for the adjudicator to  determine that we as                                                                    
     a license  endorsement holder  are guilty  of violating                                                                    
     our endorsement  and therefore the  resulting penalties                                                                    
     will be placed on us.                                                                                                      
REPRESENTATIVE  GRUENBERG   argued,  though,   that  that   is  a                                                               
different  issue,  one that  isn't  addressed  in Spenard  Action                                                             
Committee,  where  the  court  simply cited  a  federal  rule  of                                                             
evidence that  if a judgment of  guilty in a criminal  case which                                                               
follows proof  beyond a reasonable  doubt is to have  impact, the                                                               
impact should be by way  of collateral estoppel, not by admitting                                                               
the previous judgment.                                                                                                          
3:23:56 PM                                                                                                                    
TAMMY  GREEN,  Section  Chief,  Chronic  Disease  Prevention  and                                                               
Health Promotion  (CDPHP), Division of Public  Health, Department                                                               
of Health and  Social Services (DHSS), relayed  that the Division                                                               
of Public  Health thinks  that the current  law is  important and                                                               
has been  working, and so  would like  to see things  continue as                                                               
they have  been.   She noted  that nearly  all smoking  starts in                                                               
childhood, and  that of  the current  Alaska smokers,  78 percent                                                               
started  before the  age of  15, and  47 percent  [of those]  had                                                               
started by  the age of  12.  It is  relatively easy to  keep kids                                                               
from starting  to use tobacco  when one compares that  to helping                                                               
adults  quit  using  tobacco, she  opined,  adding  that  another                                                               
important  statistic   to  keep  in   mind  when  looking   at  a                                                               
comprehensive  approach to  the state's  tobacco program  is that                                                               
after the implementation  of the 2002 enforcement  law, the self-                                                               
purchase of  cigarettes by Alaska  youth dropped from  29 percent                                                               
to 13 percent.  This is  important.  Also, according to the Youth                                                               
Risk  Behavior Survey  (YRBS), youth  smoking dropped  from a  36                                                               
percent prevalence rate in 1995,  to a 19 percent prevalence rate                                                               
in  2003.   Again, the  Division  of Public  Health believes  the                                                               
current law is  working and is part of  the state's comprehensive                                                               
tobacco prevention and control program,  and therefore would like                                                               
to see this success continue and not be changed.                                                                                
3:25:46 PM                                                                                                                    
ROGER HAMES, President, Hames  Corporation, after mentioning that                                                               
his family-owned company  owns two retail grocery  stores and two                                                               
convenience  stores, relayed  that his  company supports  the law                                                               
prohibiting the  sale of  tobacco products  to minors,  and takes                                                               
this  issue  very  seriously,  having  instituted  an  aggressive                                                               
education program in  all of his stores and for  all of the sales                                                               
associates.   His  company tries  very hard  to be  a responsible                                                               
business,  following the  laws and  educating  its employees  and                                                               
reeducating  everyone constantly.   Current  law is  bad law,  he                                                               
opined,  and   contains  no   incentive  for   retailers  because                                                               
regardless  of what  kind of  a training  program is  instituted,                                                               
retailers  have   their  endorsement   suspended  with   a  first                                                               
MR. HAMES noted that his  company has experienced two suspensions                                                               
at  the  same  store  and  has another  suspension  pending.    A                                                               
suspension  essentially brings  a  business to  its  knees in  an                                                               
instant and  leaves it suffering tremendously,  particularly when                                                               
tobacco products  account for up to  20 percent of its  sales, as                                                               
is  the case  with his  convenience  stores.   What is  extremely                                                               
wrong with the picture current  law presents is that his business                                                               
is totally  at the mercy one  sales associate who made  the wrong                                                               
decision, for  whatever reason, but not  for a lack of  effort on                                                               
his  part;  it just  isn't  fair,  he  opined,  and is  just  the                                                               
opposite  of  a  business-friendly  law.   House  Bill  276  will                                                               
provide  a  powerful and  effective  alternative  to current  law                                                               
without  jeopardizing an  endorsement holder's  overall business.                                                               
He concluded by encouraging passage of HB 276.                                                                                  
REPRESENTATIVE  GARA   asked  Mr.  Hames  how   much  profit  the                                                               
suspensions cost him.                                                                                                           
MR.  HAMES said  that the  purchasing patterns  of his  customers                                                               
changed, but he hasn't yet  analyzed exactly how much revenue was                                                               
3:29:39 PM                                                                                                                    
MARGE  LARSON,  Chief  Executive  Officer  (CEO),  American  Lung                                                               
Association  of Alaska,  opined that  Version L  will effectively                                                               
prevent  the state  from imposing  meaningful sanctions  on those                                                               
businesses that  make illegal  tobacco sales  to children.   With                                                               
the ability  to sell  a deadly  addictive drug  necessarily comes                                                               
the responsibility to  ensure that tobacco products  are not sold                                                               
to  children.   A  relevant point  of current  law,  a point  not                                                               
changed  by HB  276, is  that the  first violation  has to  occur                                                               
within  a  24-month period,  and  it  is her  understanding,  she                                                               
relayed, that very few endorsement  holders receive more than one                                                               
citation on a license for a  given location.  So essentially, she                                                               
opined,  [Version L]  would  completely  revoke suspensions  from                                                               
current law.                                                                                                                    
MS.  LARSON  mentioned  that  in  a  meeting  the  American  Lung                                                               
Association of Alaska  had with Mr. Rush, he'd  made two specific                                                               
points, one  being that Holiday  and other  responsible retailers                                                               
ought to  be separated from  those retailers who did  not believe                                                               
in enforcing  the law regarding  the sale of tobacco  to underage                                                               
individuals, and  the other  being that the  current law  is more                                                               
stringent than it needs to be  to achieve "Synar compliance".  On                                                               
the latter point,  the American Lung Association  of Alaska would                                                               
argue that  although that  may be true,  Synar compliance  is not                                                               
sufficient to achieve  the outcome of reducing  tobacco use among                                                               
children, whereas  the current  law has made  a difference.   For                                                               
example,  between 1997  and 2003,  tobacco  use prevalence  among                                                               
youth  has  been  reduced  by   50  percent,  and  although  that                                                               
reduction  can't  be  entirely   attributed  to  the  enforcement                                                               
program - because  the enforcement program works  in concert with                                                               
tobacco  counter-marketing  media,  with  the  taxes  on  tobacco                                                               
products, and with prevention efforts -  it is not worth the risk                                                               
to remove  "one of  the legs  of that stool"  when the  health of                                                               
Alaska's children are  at stake.  So regardless  that current law                                                               
is not business friendly, it is a children's health law.                                                                        
3:32:30 PM                                                                                                                    
CHAIR McGUIRE indicated that public testimony would remain open                                                                 
and that HB 276 would be held over [with the motion to adopt                                                                    
Version L left pending].                                                                                                        

Document Name Date/Time Subjects