HOUSE BILL NO. 125 "An Act moving the Alcoholic Beverage Control Board to the Department of Commerce, Community, and Economic Development and relating to duties of that department; and providing for an effective date." 2:50:47 PM Representative Mike Hawker presented HB 125. He explained the concerns of the ABC board and the manner in which it had been operating. The Legislative Audit and Budget Committee had a sub-committee review the administration of the ABC Board. The committee recommended, for administrative purposes only, the ABC Board would be better housed in the Department of Commerce, Community and Economic Development (DEC) rather than the Department of Public Safety. Co-Chair Stoltze commented on the lengthy public testimony regarding this proposed public policy change. 2:55:08 PM JEFF JESSEE, CHIEF EXECUTIVE OFFICER, ALASKA MENTAL HEALTH TRUST, DEPARTMENT OF REVENUE, referred to the Mental Health Trust backup material provided. He understood why it might make sense to move the ABC Board to the DEC and recounted some of the deficiencies and behaviors found with the board, but he wanted to relate additional information. The ABC Board is a regulatory and quasi-judicial agency for the control of the manufacture, barter, possession and sale of alcoholic beverages in the state. He questioned if licensees of a legal product were being given the degree of respect and consideration expected of professional enforcement of these very important public safety rules and regulations. Data was researched on how the ABC employees were treating the licensees. He referred to two charts (copies on file) showing the results of a survey passed out by Director Giffords. The survey indicates that the satisfaction with the Licensing Process and staff as well as the enforcement process and staff. He referenced two opinion pieces (copies on file) published in the Anchorage Daily News. The article's 'opinion indicated that the police were not as qualified as the Teaching Alcohol Professionals (TAP) in observing or determining if a person was drunk on a liquor licensed property. The allegations that the police force was only interested in making arrests without regard to whether it was a good arrest that would hold up in court. Mr. Jesse disputed this opinion and believed police officers are faced with assessing intoxication on a regular basis. He believed comments such as those were at the heart of the dispute on how much enforcement is appropriate in this area. He referenced article, "Effort to reduce drunken driving deaths is succeeding" Mike Mew, copy on file) that he considered a very measured carefully constructed response. Police Chief Mews stated that the police department does not want people over served liquor in order to bring down the epidemic of domestic violence and sexual assault. Excessive intoxication in bars often leads to additional DUIs and other criminal behavior outside of the bar. He emphasized the public safety interests in enforcing these laws. If the mission of the ABC Board was to treat licensees with respect, dignity, and efficiency in a knowledgeable professional way, the board meets that standard. 3:02:06 PM Mr. Jesse referenced paper, "Alaska Alcohol vs. Tobacco Sales to Minors" (copy on file) showing that alcohol monitoring is done by the ABC Board and tobacco monitoring is performed by the Department of Health and Social Services. Co-Chair Stoltze stated for the record that the referenced handouts were prepared by the Mental Health Trust. Mr. Jessee continued that although statistics reflect improvements in the rate of illegal sales to minors; it is still at twice the rate of illegal tobacco sales to minors. He questioned the disparity and found two relevant points. In the area of alcohol compliance, unlike tobacco, the current practice is that the ABC Board brings prospective underage buyers into the board room and the board votes if they can determine who is 21 years or older. Co-Chair Stoltze noted that this was more ABC Board testimony. Mr. Jesse responded that the issue of underage drinking, stopping the consequences of underage drinking, and excessive adult drinking is a core-prevention issue. He noted that unlike in tobacco, when an illegal alcohol sale is made to a minor, in first offense case, there is no certain consequence to the licensee but the penalty falls exclusively on the employee who made the sale. With tobacco sales to a minor, there is an automatic twenty day suspension of the tobacco license. He cited the paper, "Analysis of strategies designed to reduce sales of alcohol and tobacco to underage persons: A preliminary report" Alaska Alcoholic Beverage Control Board, Marny Rivera, Khristy Parker, January 19, 2012" (copy on file.) He referenced page 28-29, with Recommendations and Conclusions: Enforcement Efforts. He believed if the laws were not going to be changed, there was no difference in moving the board out of the Department of Public Safety and into the Department of Commerce, Community and Economic Development. He stressed the issue was a law enforcement issue. 3:07:09 PM Co-Chair Thomas responded that his observation showed that city law enforcement handled most drinking related issues and the legislature has no jurisdiction over local authorities. He cited that if the local police officers are not properly trained there is nothing the legislature can do. The legislature only has authority over state troopers. 3:09:47 PM Representative Neuman remarked that is was not just an enforcement issue, but many policy issues, including commerce. 3:11:12 PM ELLEN GANLEY, VICE CHAIR, ALCOHOL BEVERAGE CONTROL BOARD, DEPARTMENT OF PUBLIC SAFETY, contended that the earlier move of the ABC Board from the Department of Revenue to the Department of Public Safety was very positive. She noted a level of cooperation and sharing of resources that had not been there before. Moving the board to the Department of Commerce will be counterproductive. The liquor industry is not like other industries in Alaska; it is about alcohol and the problems it causes throughout the state. She stressed the best way to deal with the problem was through enforcement. The University of Alaska study and their recommendations were based on best practices that work. She reported that in the last couple of years the curve of alcohol abuse in Alaska is rising. Co-Chair Stoltze asked if Ms. Ganley was a public member of the board. Ms. Ganley replied she was. 3:15:39 PM Vice-chair Fairclough requested the number of complaints on enforcement officers that had been received by the ABC Board in the past few months. Ms. Ganley responded that the board had not received any complaints. 3:16:26 PM DALE FOX, PRESIDENT AND CEO OF ALASKA CABARET, HOTEL, RESTAURANT, AND RETAILERS ASSOCIATION (CHARR), thanked the committee and the Legislative, Budget and Audit Committee for hearing many hours of testimony. After thorough consideration, the Legislative Budget and Audit Committee concluded that the ABC Board should be located in the commerce department and that the move does not change or restrict the important enforcement responsibilities or abilities. He was proud of a survey conducted by the Substance Abuse and Mental Health Service Administration that rated Alaska retailers as the best in nation in refusing service to underage drinkers. Alaska is one of only six states that provide alcohol training for all people involved with serving alcohol. Whenever a problem is seen in educating the 25,000 in the industry, a new tool is developed to do a better job. He stressed the importance of people serving alcohol to know and follow the rules. The Department of Public Safety has a dominant tool of arrest and citations. Surveys show that underage drinking is a significant state problem. 3:20:57 PM Mr. Fox listed sources where underage individuals can obtain alcohol: home, relatives, older friends, internet, etc. The industry takes responsibility of their part in educating. He believed enforcement was logical and needed to keep licensees on their toes. The difficulty is making sure 25,000 people are educated and aware at all times. He believed education combined with reasonable enforcement is the best solution. He saw nothing in the move to the DEC that would diminish the enforcement effort. 3:24:46 PM Representative Joule asked how the people in the industry determine who to ask for identification. Mr. Fox responded that the law clearly states that anyone who looks under 30 should be checked. Representative Joule noted that when purchasing tobacco, he is asked for identification every time. He suggested that those who serve alcohol might consider such an action. 3:26:27 PM Representative Neuman introduced a constituent from Talkeetna who had some issues with the board. His situation involves forty-five employees and several million dollars in investment. SASSAN MOSSANEN, GENERAL MANAGER, DENALI BREWING COMPANY TALKEETNA, AK, AND PRESIDENT OF THE GOVERNMENTAL AFFAIRS COMMITTEE FOR THE BREWERS ASSOCIATION OF ALASKA related a meeting of the Brewers Association discussing HB 125 and all members voted unanimously in support of HB 125. It is important to recognize that the Ms. Gifford's 18 percent survey return speaks for itself. He stressed that the brewing industry works vigilantly not to encourage the abuse of alcohol. He noted his issue revolved around the board's lack of understanding licensing rules. There needs to be collaboration between industry and enforcement. When the agency responsible for licensing is not familiar with the rules, it creates a difficult operating environment. The brewing industry seeks the help of the community and takes their role in serving alcohol very seriously. Representative Neuman gave some background about Mr. Mossanen's issues with the ABC Board on the regulatory, not enforcement side. Mr. Mossanen asked to expand his business opportunities to have a restaurant with his brewery. He applied to the ABC Board and received a temporary permit, obtained over a million dollars in private industry investment, and built a new facility. The day before the final license was due; Mr. Mossanen was informed by Ms. Gifford that according to Alaska Statutes an individual who owns a brewery license cannot own a restaurant license. Mr. Mossanen acted in good faith when they received permission to go ahead with their business plan. Now they are waiting to see if ABC Board approves the license so they may continue business. If the license is not approved, the business will lose everything. Representative Newman stressed that this should be a commerce issue, not enforcement. 3:34:03 PM Co-Chair Stoltze appreciated framing the issue with the example. 3:34:56 PM ROBIN JEFFERY, OWNER, ROBIN'S LANDING, BIG LAKE, AK, feared that when the ABC board first moved to the Department of Public Safety, that law enforcement would be on the bartenders and servers who make the judgment calls. She believed that the industry does not need help, but it is the people who frequent bars that need educating. She believed it would be a step backward if the board was moved to the Department of Commerce. She believed the board should be moved to the Department of Health and Social Services. She believed the Department of Health and Social Services could reach more people who suffer from addiction problems. 3:41:05 PM Co-Chair Stoltze reiterated that Ms. Jeffery wanted the board moved to the Department of Health and Social Services. Ms. Jeffery agreed it was important to move the board from the Department of Public Safety to the Department of Health and Social Services. 3:41:59 PM PATRICK HAYES, CHAIRMAN, MEETING THE CHALLENGE, indicated that if the board moved to the Department of Commerce there could be a reduction of oversight and enforcement which could lead to an increase in underage drinking. Meeting the Challenge opposed the bill. Representative Doogan requested information on the Meeting the Challenge organization. Mr. Hayes explained that the Meeting the Challenge campaign was an organization of individuals who are in recovery from alcoholism and drug addiction and received their treatment from state funded substance abuse treatment facilities. Representative Wilson noted that even if the board was moved into commerce, public safety would still have the responsibility to uphold the statues on underage drinking. Mr. Hayes did not know who would be in charge of enforcing the laws, but assumed the ABC Board was responsible for the oversight. Representative Wilson pointed out if the Department of Public Safety does not do their job, it would not make any difference into which department the board is moved. MATT FELIX, DIRECTOR, NATIONAL COUNCIL ON ALCOHOLISM, reviewed why the ABC Board was in the Department of Public Safety. The board originally was in the Department of Revenue in order to produce tax revenue after statehood. Taxation of alcohol was a significant revenue stream for Alaska. It presented a problem that allowed a ratio of licenses per population that was double most states. A federally funded commission recommended that the ABC Board take a more enforcement stance to deal with the surge of alcohol and drug abuse problems. He acknowledged the value of enforcement to deal with the problem. He voiced his lack of support for the bill. He recognized the struggle to get the ABC Board to enforce Title IV properly and part of this was achieved by moving it into the Department of Public Safety. 3:51:02 PM JAN WRENTMORE, OWNER, RED ONION SALOON, SKAGWAY (via teleconference), supported the bill. Hotels, bars and restaurants governed by the liquor license law make up the state's hospitality industry and are one of the state's strongest sectors of the economy. Public safety is a component of the hospitality industry. In small rural communities there are no state troopers and the enforcement of Title IV is handled well by local police. She did not believe it would make a difference whether enforcement was under Department of Public Safety or the Department of Commerce, Community and Economic Development. Under the Department of Public Safety (DPS) she has seen the Anchorage staff struggle to give adequate support to the licensing component of the industry. She believed the DPS should not be the agency in charge of the issue. The licensing component of the industry should be put into an agency experienced with these issues. Co-Chair Stoltze agreed that the liquor industry is one of the most convoluted bodies of laws in the state. He appreciated the testimony related to the complexity of the licensing aspect on the commerce side. 3:56:03 PM BRAD JOHNSON, MEMBER, ALASKA ASSOCIATION OF CHIEFS OF POLICE, FAIRBANKS (via teleconference), spoke in opposition to the legislation. The association felt that the ABC Board was currently in the best position under the Department of Public Safety. Alcohol is a major public safety issue contributing to the majority of crimes in the state, including domestic violence. The ABC Board has inherent law enforcement responsibilities that could not be readily accomplished outside of the law enforcement arena and within an administrative division of state government. The ABC Board relies on local law enforcement to implement the enforcement of Title IV. He urged the committee to consider not passing the legislation. Vice-chair Fairclough wondered how the role of public safety would change if the administrative structure was changed to the DEC. Mr. Johnson noted a program that worked closely with the board in Title IV enforcement in Fairbanks. He believed that was possible because of the professional relationship with the board. He did not believe this cooperation would be the same if the board was under a different department. Co- Chair Stoltze asked whether cooperation would be an inadequacy in Mr. Johnson's department or an inadequacy in other departments. Mr. Johnson did not believe it was an inadequacy, but a change in how investigators are viewed as members of law enforcement versus not members of law enforcement. He stressed the difficulty in the working relationship with representatives of other departments who are attempting to perform a law enforcement mission that are not actually tasked with a law enforcement mission. 4:00:50 PM Vice-chair Fairclough remarked that the industry has indicated that the Department of Public Safety tends to be heavy-handed in their approach. The current system lacks the educational arm to help businesses improve. Mr. Johnson informed he could only speak from his own experience with members of the board and their local employees. His own perspective is that there might have been issues in the past but he believed that Ms. Gifford has actively worked toward changing that reputation and experiences. 4:02:27 PM MARK MEW, CHIEF OF POLICE, ANCHORAGE POLICE DEPARTMENT (via teleconference), pointed out that Title IV alcohol enforcement is occasionally performed working with the ABC Board on the details. Co-Chair Stoltze interjected that the bill was scheduled since the beginning of session. Mr. Mew continued that periodic enforcement is beneficial for Anchorage, especially in preventing drunken driving, sexual assault and domestic violence. He noted the department's close work and training with the ABC Board and the prosecutors who try the cases. He stressed the good working relationship with the ABC Board and would like to see that positive work continue. He does not want to see the effectiveness of the ABC Board reduced. 4:07:19 PM Representative Wilson wondered if Mr. Mew's department would stop working with the ABC Board if it moved into commerce. Mr. Mew indicated the department would still work with the board. 4:07:49 PM BOB WINN, OWNER, LA MEX RESTAURANT, ANCHORAGE (via teleconference), supported the bill. He did not believe that enforcement would be lowered by the movement. He stressed that licensees need more counseling support and believed the Department of Commerce would provide the needed administrative support. HB 125 was HEARD and HELD in Committee for further consideration.