Legislature(2005 - 2006)CAPITOL 120

04/07/2006 01:00 PM House JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Moved HCS CSSB 298(JUD) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Moved CSHB 347(JUD) Out of Committee
Moved CSHB 276(JUD) Out of Committee
HB 276 - BUSINESS LICENSE TOBACCO ENDORSEMENT                                                                                 
2:54:33 PM                                                                                                                    
CHAIR McGUIRE  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."   [Left  pending from 3/24/06  was a  motion to                                                              
adopt the proposed  committee substitute (CS) for  HB 276, Version                                                              
24-LS0855\L, Bannister,  3/23/06, as  the work draft;  in members'                                                              
packets  was another  proposed committee  substitute  (CS) for  HB
276, Version 24-LS0855\S, Bannister, 3/31/06.]                                                                                  
REPRESENTATIVE  KOTT, speaking  as  the sponsor,  relayed that  in                                                              
the  proposed  CS,  Version  S,  Section  1  still  increases  the                                                              
penalty  to   $750  for  a  first   offense  but  now   allows  an                                                              
endorsement holder  to come before a hearing  officer, and Section                                                              
3 now contains the language pertaining to that hearing.                                                                         
2:56:11 PM                                                                                                                    
REPRESENTATIVE  ANDERSON  moved to  adopt  the proposed  committee                                                              
substitute  (CS)  for  HB  276,  Version  24-LS0855\S,  Bannister,                                                              
3/31/06, as the  work draft.  There being no objection,  Version S                                                              
was before the committee.                                                                                                       
2:57:20 PM                                                                                                                    
ROGER HAMES,  President,  Hames Corporation,  said simply  that he                                                              
supports  Version S  as being something  he can  live with  though                                                              
doing so will be difficult.                                                                                                     
2:57:59 PM                                                                                                                    
MICHAEL  ELERDING, President,  Northern Sales  Company of  Alaska,                                                              
Inc., simply urged passage of HB 276.                                                                                           
2:58:26 PM                                                                                                                    
CYNTHIA  DRINKWATER, Assistant  Attorney General,  Commercial/Fair                                                              
Business Section,  Civil Division  (Anchorage), Department  of Law                                                              
(DOL), relayed  that she  represents the  Department of  Commerce,                                                              
Community,  &  Economic  Development   (DCCED)  in  administrative                                                              
hearings held under  AS 43.70.075, and that she  would be speaking                                                              
to  three   issues.    First,  the   language  in  Version   S  is                                                              
potentially confusing.   For example, proposed  AS 43.70.075(d)(1)                                                              
says in  part, "after a  hearing under  (t) of this  section", and                                                              
the following  paragraphs  (2) through (4)  don't contain  similar                                                              
language,  but  proposed  AS  43.70.075(t)  says  in  part,  "this                                                              
subsection  governs the  imposition  ... of  the business  license                                                              
endorsement  suspension  and  civil  penalty  under  (d)  of  this                                                              
section".     Thus  there   is  some   confusion  regarding   when                                                              
subsection (t)  will apply  because it appears  to pertain  to all                                                              
of proposed AS 43.70.075(d).                                                                                                    
REPRESENTATIVE  KOTT, in  response  to questions,  clarified  that                                                              
the hearing  referred to in  AS 43.70.075(d)(1) should  only apply                                                              
for a first offense.                                                                                                            
REPRESENTATIVE GRUENBERG  made a motion  to adopt Amendment  1, to                                                              
change "(d)"  on page  2, line 27,  to "(d)(1)".   There  being no                                                              
objection, Amendment 1 was adopted.                                                                                             
MS. DRINKWATER  then referred  to the language  in Section  3 that                                                              
says the  notice must  inform the person  of, among  other things,                                                              
the  date and  time of  the hearing.   She  said this  requirement                                                              
will  prove difficult  because the  initial notice  goes out  from                                                              
the DCCED,  but the  hearing information  falls under  the purview                                                              
of the Office of Administrative Hearings.                                                                                       
3:05:08 PM                                                                                                                    
REPRESENTATIVE GRUENBERG  made a motion  to adopt Amendment  2, to                                                              
delete from  page 3, line  1, the words ",  and the date  and time                                                              
of the  hearing", and  place a  period after  the word  "imposed".                                                              
There being no objection, Amendment 2 was adopted.                                                                              
REPRESENTATIVE  WILSON suggested  adding language specifying  that                                                              
the hearing office shall set the date and time of the hearing.                                                                  
CHAIR McGUIRE characterized that as a conforming amendment.                                                                     
REPRESENTATIVE GRUENBERG  made a motion  to adopt Amendment  3, to                                                              
add  to page  3, line  2, after  the word  "determine", the  words                                                              
"the date and time of the hearing,".                                                                                            
CHAIR  McGUIRE pointed  out, however,  that notice  must still  be                                                              
given with regard to the date and time of the hearing.                                                                          
REPRESENTATIVE  GRUENBERG  restated  Amendment  3  and  called  it                                                              
conceptual:   "that the  [Office of  Administrative Hearings]  ...                                                              
would  set  the date  and  time  of  the hearing  and  notify  the                                                              
parties".   There being no  objection, Conceptual Amendment  3 was                                                              
MS. DRINKWATER  then remarked  that it  appears that the  proposed                                                              
change in  the statutory  framework will mean  that there  will be                                                              
an  increase in  the number  of hearings,  because retailers  will                                                              
have  every  incentive  to  request   a  hearing  since  there  is                                                              
discretion regarding  the amount of the civil  penalty and whether                                                              
a suspension  shall be imposed.   This will result in  an increase                                                              
in  attorney  and  hearing officer  time;  furthermore,  with  the                                                              
lengthier hearing  process and greater  number of items  that must                                                              
be  considered by  the hearing  officer,  proceedings will  become                                                              
more like  they were prior to  2002.  Such hearings  were lengthy,                                                              
multi-day  hearings   with  numerous  witnesses   and  documentary                                                              
evidence.   She  surmised,  therefore,  that costs  will  increase                                                              
because of these proposed changes.                                                                                              
3:08:55 PM                                                                                                                    
MICHAEL FORD, Alaska  Native Health Board (ANHB),  relayed that in                                                              
the ANHB's  view, the current  law is effective  and does  what it                                                              
is intended to do.   The ANHB recommends that  instead of allowing                                                              
for  an  optional  suspension, have  a  mandatory  suspension  but                                                              
reduce  the number  of days  for a  first offense  - for  example,                                                              
provide for  a mandatory 3-day suspension.   In this way,  the law                                                              
would still  have teeth, it  would still  act as a  deterrent, and                                                              
yet  retailers would  be given  some  relief.   In conclusion,  he                                                              
said he did  share some of  the concerns regarding Section  3, but                                                              
hopes that  those have now  been addressed via the  aforementioned                                                              
3:11:03 PM                                                                                                                    
MICHELLE TOOHEY,  Director, Public Relations &  Advocacy, American                                                              
Lung  Association of  Alaska, referring  to Version  S, said  that                                                              
although  education efforts  do  play a  constructive role,  their                                                              
value must not be overestimated.  She elaborated:                                                                               
     We  know that  businesses with  education programs  have                                                                   
     been  cited for  making illegal  sales.   These  illegal                                                                   
     sales are  plain evidence that  an education  program is                                                                   
     not  enough.     The  critical  factor  is   active  and                                                                   
     diligent management,  and that  means there needs  to be                                                                   
     meaningful  consequences  in the  case  of a  violation,                                                                   
     including  the first  violation.   The  compliance  data                                                                   
     shows  that once  predictable,  readily enforceable  and                                                                   
     meaningful  penalties were  put in  place under  current                                                                   
     law, illegal  sales dropped  dramatically.  The  various                                                                   
     proposals  that  have  been  advanced [thus]  far  -  as                                                                   
     HB 276  and  subsequent  drafts -  would  eliminate  the                                                                   
     certainty of  a meaningful penalty for illegal  sales in                                                                   
     the case of a first violation.                                                                                             
     Under  the  most current  CS,  Version  S, it  would  be                                                                   
     possible  for  a violation  to  occur  and there  be  no                                                                   
     penalty  whatsoever.     In  conclusion,  in   order  to                                                                   
     preserve the  effectiveness of the enforcement  program,                                                                   
     we  feel   strongly  that   some  meaningful  level   of                                                                   
     suspension  is essential to  maintain in  the case  of a                                                                   
     first  violation.  Businesses  that  elect to engage  in                                                                   
     the  sale of  tobacco  products  [have a  very]  serious                                                                   
     responsibility to  ensure that they do not  make illegal                                                                   
     sales  to  children.    Therefore,   the  American  Lung                                                                   
     Association  of Alaska  does not support  ... Version  S                                                                   
     as written  because it does  not include a  guarantee of                                                                   
     at least a  minimum suspension on first offense.   Thank                                                                   
3:13:23 PM                                                                                                                    
PATRICK  LUBY, Advocacy  Director,  AARP  Alaska,  said that  AARP                                                              
members come from  a generation that smoked freely,  and they know                                                              
the  terrible  health  and financial  consequences  of  all  those                                                              
cigarettes, adding,  "We don't want to see  anyone's grandchildren                                                              
start to  smoke."  The  AARP feels the State  is doing a  good job                                                              
in its enforcement  efforts, he relayed, noting that  the State is                                                              
using 15-  and 16-year-olds in  its compliance checks;  therefore,                                                              
if  a retailer  is  selling cigarettes  to  15- and  16-year-olds,                                                              
then he/she  should face  the consequences.   The AARP  recommends                                                              
that the  current system  be left  as is in  order to  help Alaska                                                              
continue to reduce youth smoking.                                                                                               
3:14:09 PM                                                                                                                    
RICHARD  MANDSAGER, M.D.,  Director, Central  Office, Division  of                                                              
Public Health,  Department of Health  and Social  Services (DHSS),                                                              
relayed that  David Kessler, former  commissioner of the  Food and                                                              
Drug Administration  (FDA), has  said, "Nicotine addiction  begins                                                              
when most  tobacco users  are teenagers, so  let's call  this what                                                              
it really  is -  a pediatric  disease."   Dr. Mandsager  said that                                                              
from the  DHSS's point  of view,  he would  echo comments  made by                                                              
Ms. Toohey and Mr.  Luby:  current law is working  and there needs                                                              
to  be some  minimum  mandatory suspension  for  a first  offense.                                                              
Enforcement  actions only  visit a small  percentage of  retailers                                                              
in any given year,  and so chances are small that  there will be a                                                              
second  visit  within  24  months; therefore,  if  there  isn't  a                                                              
mandatory suspension  of some  length for a  first offense,  it is                                                              
unlikely that  a license holder  will ever  get a suspension.   In                                                              
conclusion,  he urged the  committee to  maintain some  suspension                                                              
[period] for a first offense.                                                                                                   
DR. MANDSAGER,  in response to a  question, said that  a mandatory                                                              
suspension period should be at least three days.                                                                                
CHAIR  McGUIRE, after  ascertaining  that no  one  else wished  to                                                              
testify, closed public testimony on HB 276.                                                                                     
3:16:19 PM                                                                                                                    
REPRESENTATIVE  ANDERSON   made  a  motion  to   adopt  Conceptual                                                              
Amendment  4, to  have the  20-day  suspension apply  on a  second                                                              
The committee took an at-ease from 3:17 p.m. to 3:18 p.m.                                                                       
REPRESENTATIVE  ANDERSON,  in  response  to  questions,  clarified                                                              
that  Conceptual   Amendment  4  would  result  in   deleting  the                                                              
language  pertaining  to a  suspension  for  a first  offense  but                                                              
would  keep the language  pertaining  to the  hearing in order  to                                                              
address the  question of whether to  impose a civil penalty  for a                                                              
first  offense.   He also  indicated that  Conceptual Amendment  4                                                              
would  have  the  45-day  suspension   period  apply  on  a  third                                                              
offense, the 90-day  suspension period apply on  a fourth offense.                                                              
He said  he doesn't believe that  there should be  any restriction                                                              
of sales  on a first violation,  and that he doesn't  believe that                                                              
removing the  mandatory suspension for  a first offense  will have                                                              
any impact on compliance statistics.                                                                                            
CHAIR McGUIRE objected to Conceptual Amendment 4.                                                                               
REPRESENTATIVE  GARA mentioned  that the  House Finance  Committee                                                              
might  do more  work on  the bill,  and that  members could  still                                                              
attempt to change the bill on the House floor.                                                                                  
REPRESENTATIVE ANDERSON withdrew Conceptual Amendment 4.                                                                        
3:20:37 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG  made a  motion  to adopt  Amendment  5,                                                              
which read [original punctuation provided]:                                                                                     
     page 2 line 27 after "shall" insert                                                                                        
     ", upon request of either party,"                                                                                          
REPRESENTATIVE  GRUENBERG noted  that to save  costs and  time, it                                                              
may be that neither  party would request a hearing,  and Amendment                                                              
5  would provide  for  this.   In other  words,  if neither  party                                                              
requests a hearing, then a hearing need not be held.                                                                            
REPRESENTATIVE  KOTT agreed  that there  might be  a situation  in                                                              
which the  owner of  the business decides  he/she doesn't  want to                                                              
go through the hearing process.                                                                                                 
REPRESENTATIVE  GRUENBERG  remarked,  "They  could  submit  it  on                                                              
documentation and pleadings."                                                                                                   
CHAIR  McGUIRE   asked  whether  there  were  any   objections  to                                                              
Amendment 5.  There being none, Amendment 5 was adopted.                                                                        
3:22:07 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG  made   a  motion  to  adopt  Conceptual                                                              
Amendment  6, to  alter  Section  1 such  that  there  would be  a                                                              
mandatory minimum 3-day suspension period [for a first offense].                                                                
REPRESENTATIVE ANDERSON objected.                                                                                               
REPRESENTATIVE  GRUENBERG  in response  to  a question,  clarified                                                              
that Conceptual  Amendment 6 would  alter the language on  page 1,                                                              
lines 10-12 so that  it read in part, "may, after  a hearing under                                                              
(t) of  this section, suspend  the endorsement  for a period  of 3                                                              
to 20 days".                                                                                                                    
The committee took an at-ease from 3:23 p.m. to 3:24 p.m.                                                                       
REPRESENTATIVE  ANDERSON maintained  his  objection to  Conceptual                                                              
Amendment 6.                                                                                                                    
REPRESENTATIVE  GRUENBERG  remarked that  a  CS incorporating  the                                                              
adopted amendments will be forthcoming.                                                                                         
REPRESENTATIVE  KOTT  objected  to  Conceptual Amendment  6.    He                                                              
posited that by  stating a minimum suspension period  of 3 days, a                                                              
hearing officer  will be inclined to  always impose at  least a 3-                                                              
day suspension  period unless there  are also aggravating  factors                                                              
in a give case.                                                                                                                 
REPRESENTATIVE GARA  expressed a preference for dealing  with this                                                              
issue  on the  House  floor, after  the bill  has  been heard  and                                                              
perhaps changed in the House Finance Committee.                                                                                 
REPRESENTATIVE GRUENBERG withdrew Amendment 6.                                                                                  
3:27:44 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG moved to  report the proposed  committee                                                              
substitute  (CS)  for  HB  276,  Version  24-LS0855\S,  Bannister,                                                              
3/31/06,   as   amended,   out  of   committee   with   individual                                                              
recommendations  and the accompanying  fiscal notes.   There being                                                              
no  objection,   CSHB  276(JUD)   was  reported  from   the  House                                                              
Judiciary Standing Committee.                                                                                                   
CHAIR McGUIRE concluded by saying, "I cannot stress enough that                                                                 
the movement of this bill today in no way endorses anybody's                                                                    
personal opinion on the bill."                                                                                                  

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