HB 132-LIQUOR LICENSE APPLICANT CHECK/TRAINING Number 0060 CHAIR MURKOWSKI announced that the committee would take up HOUSE BILL NO. 132, "An Act relating to the possession or distribution of alcohol in a local option area; requiring liquor license applicants to submit fingerprints for the purpose of conducting a criminal history background check, and relating to the use of criminal justice information by the Alcoholic Beverage Control Board; providing for a review of alcohol server education courses by the Alcoholic Beverage Control Board every two years; and providing for an effective date." Number 0150 REPRESENTATIVE ROKEBERG, Alaska State Legislature, speaking as the chair of the House Judiciary Standing Committee, which sponsored HB 132 by request, said the bill was requested by three different groups: the Office of the Attorney General brought the bootlegging provisions; the Alcoholic Beverage Control Board (ABC Board) brought the criminal justice information records on fingerprinting; and the Cabaret Hotel & Restaurant Retailers Association (CHARR) brought the techniques in Alcohol Management (TAM) training [requirement] change from [every] three years to [every] two years. REPRESENTATIVE ROKEBERG said he was distressed with the proposed fiscal notes and looked forward to testimony on them. Number 0263 HEATHER NOBREGA, Staff to Representative Norman Rokeberg, Alaska State Legislature, speaking as committee aide for the House Judiciary Standing Committee, said there are four bootlegging provisions in the bill. The first one reduces the amount of alcohol by half that a person may possess in a restricted community with the presumption that the person possesses the alcohol with the intent to sell it. MS. NOBREGA stated that the second provision reduced the amount of alcohol by half that a package store may send to a person in a calendar month in a community that has restricted the sale of alcohol. The third provision changes the penalty for the illegal sale or transportation of alcohol to a local option community by reducing the amount of alcohol by half; [alcohol] illegally sent to a community qualifies as a class C felony. MS. NOBREGA explained that the fourth provision requires a package store within 50 air miles of a local option community to keep a record of each sale in excess of the amount of alcohol that may be sent to an individual in a local option community in a calendar month. And failure to keep these records is a violation, she pointed out. Number 0397 MS. NOBREGA referred to a map that her office brought to the meeting to assist committee members. She explained that the map shows what would be considered a 50-mile radius, showing which communities are affected and the package stores that need to keep records. She explained that a local option community has quite a few options when restricting alcohol: a complete ban on the sale of alcohol; a "community-license-only option"; a ban on the sale and importation of alcohol; a ban on possession; and the "package-store-license-only community." Number 0490 MS. NOBREGA went on to explain the fingerprinting portion of the bill. The bill requires a liquor-license applicant to submit his or her fingerprints to the ABC Board for a national criminal history background check. The board will be required to submit fingerprints to the Department of Public Safety to obtain a report of criminal justice information, and will allow the department to submit fingerprints to the Federal Bureau of Investigation (FBI) for a national criminal check. The FBI requires that the state mandate this in the statutes before accepting fingerprints for a national background check. MS. NOBREGA stated that the third section [of the bill] would change the TAM educational course from [being required] every three years to every two. Number 0579 DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section-Juneau, Criminal Division, Department of Law, commented that the provisions related to bootlegging were ideas adopted by the Criminal Justice Assessment Commission ("C-JAC"), a commission created in 1997 to study prison overcrowding. He explained that one of the spin-offs from that has been [to look at] alcohol abuse, which is the number-one social problem in Alaska relating to prison crowding. MR. GUANELI said C-JAC was composed of representatives from all criminal justice agencies in the executive branch, the executive director of the [Alaska] Judicial Council, members of the judicial branch, and members from the legislative branch. Among the issues that [C-JAC] came up with were the ones to address issues involving bootlegging. Cutting the presumptive amounts makes it easier to enforce laws involving liquor with the intent to sell. Number 0719 MR. GUANELI stated that keeping track of people who buy large amounts of liquor in and around local option areas is a tool for law enforcement to effectively enforce the laws. These are modest changes to the bootlegging laws, he remarked, and this alone would not be enough to address the problems involving bootlegging. More enforcement resources are needed. MR. GUANELI referred to the fiscal note and said it might have been large in order to provide for enforcement resources; however, the state was fortunate, within the last couple of weeks, to be awarded a federal grant. The state troopers were awarded $1.4 million to deal with bootlegging cases; some of that money has been sub-granted to the Department of Law for prosecutors. He said those additional resources will provide for investigators and prosecutors, along with the new tools provided in this bill to make some inroads regarding the problems of bootlegging in rural Alaska. Number 0835 MR. GUANELI said that he had a list of the [affected] package stores, which was provided by the ABC Board; he made it available to the committee. It appears that the largest cities affected with package-store licensees are in Fairbanks, Cordova, Valdez, and Sitka, he noted, because they are within 50 air miles [of local option communities]. It is a tool for directing enforcement efforts. MR. GUANELI relayed that cracking down on bootlegging is extraordinarily difficult. Bootleggers generally have a clientele that they know; it's not like drug dealers who often sell to anyone who comes up with enough money. Getting undercover agents to go in and make purchases of bootleg liquor is a difficult thing, but getting some sense of where large purchases of alcohol are being made may help focus efforts. These are small steps in the right direction, he remarked. Number 0986 MR. GUANELI, responding to a question about record keeping for package-store licensees within the 50-mile radius [of a local option community], said [record keeping is only required] for sales above 6 liters of distilled liquor, 12 liters of wine, or 6 gallons or more of malt beverages. These are the same presumptive levels that apply in the other statutory changes, where the law will presume, if one lives in an area where the sale of alcohol has been banned and a person has that amount, that there is intent to sell. MR. GUANELI, responding to a question about how much those liquor levels equate to, said about 10 six-packs [of beer] would get a person close to the six-gallon limit, which is about two and a half cases of beer. MR. GUANELI said anything over that limit would be written down, along with [the purchaser's] name and address. Anything purchased two weeks before the Fourth of July would probably be discounted, he added. He said patterns of purchases over time would be looked at, and he surmised that "they" would be focusing efforts on residents from rural villages who buy at package stores and take it into the village. Number 1192 MR. GUANELI explained that the real problem is not so much the beer, but the distilled hard liquor. He said $75 a bottle is not a high price to pay in a lot of villages, and in many villages it is much higher than that. He said it doesn't take long to make a good living when a person is buying a bottle of booze for $7 to $10 [at a package store], and selling it for $75. MR. GUANELI referred to the report from C-JAC and said this was one of many [proposed suggestions] made by the commission on a variety of topics; these are the ones relating to bootlegging. REPRESENTATIVE MEYER asked for a list of the businesses that will be impacted. He said perhaps CHARR would comment on this, since he thought it would be putting a burden on businesses, because additional records would have to be kept. He asked about the origin of the 50-mile radius. MR. GUANELI explained that the recommendation by C-JAC was for a 100-mile radius; however, in reviewing that and looking at the map, it was determined that it would reduce the impact on package stores by cutting it down to 50 miles, for those that are fairly close to local option [communities]. He explained that the federal money received for enforcement is not directly tied to this, so if this bill doesn't pass, the federal money will still be available. REPRESENTATIVE MEYER said he thought the fiscal notes [$112,800 from the Department of Corrections, and over $200,000 from the Public Defender Agency,] were "steep," but he wondered if that amount was [sufficient] because catching bootleggers out in rural Alaska is difficult. Number 1369 MR. GUANELI said from the public defender's standpoint, "they" were probably reacting to the amount of money the Department of Law has been sub-granted from [the Department of] Public Safety, which is $500,000 this year. He said "our" intent is to put an attorney, a paralegal, and a secretary in Bethel, where a large amount of this activity occurs, and also to put an attorney and perhaps a secretary in Anchorage because "we" believe that a lot of the really large sales occur in Anchorage and then the alcohol is shipped to rural Alaska on planes and through the mail. There needs to be someone in Anchorage to work with federal inspectors to get search warrants to search the mail. He said there is cooperation with the federal government, but someone is needed in Anchorage to do some of this work. He thought the public defender was reacting to that [with the fiscal note]. As a result of more state troopers, there are going to be more cases and more deterrence, he remarked. Number 1520 REPRESENTATIVE KOTT asked if it is legal in Alaska to ship alcoholic beverages to someone who has called the [order] in; he said he was told that it couldn't be done. MR. GUANELI replied that he thought it could be done unless the person lives in a "dry" area. Responding to a question about someone living in a "damp" community being restricted on how much alcohol could be acquired from a package store, Mr. Guaneli answered affirmatively. However, he deferred the question to the ABC Board for specific enforcement [specifics] involving the statutes and regulations. Number 1610 REPRESENTATIVE KOTT said if that is indeed the case, couldn't that person who is acquiring the shipment go to multiple package stores and get the same thing? He said he would think that it would be somewhat of an "administrative nightmare," and asked if that wouldn't offer an opportunity for that person to go to another person and ask him or her to purchase [alcohol on his or her behalf]. He asked if there was a prohibition built into the system today that wouldn't allow this. MR. GUANELI commented that people would find ways around the law. If someone wants to get a big "store" of liquor, and the only way that it can be done is by going to multiple stores, it could happen. He said [the purchaser] may even buy less than the threshold amount so his or her name doesn't get written down, but at least [the legislation] will make it more difficult. It is a matter of drawing a line between someone who, every once in a while, purchases that amount that will last a fairly long time, versus those doing it on a regular basis. Number 1803 REPRESENTATIVE KOTT asked if [package-store owners] would keep a running tally to track when someone exceeds the monthly limit, which would then trigger a report. MR. GUANELI referred to Section 2 of the bill, which limits the amount that may be shipped. He said some sort of running tally would be required, but deferred the question to the ABC representatives. If there is a monthly [limit], then there has to be some kind of record kept of how much is shipped to that area in a month. He said under current law, there are some records being kept, and this is simply an amendment to the current law. REPRESENTATIVE KOTT asked if there could be some kind of exception put into the statute that would allow for large purchases of alcohol for special occasions. Number 1969 MR. GUANELI replied that the crime is selling liquor or possessing it with the intent to sell, but mere possession is not a crime; in order to prove that crime, one of the ways is by the amount of liquor in one's possession, giving rise to a presumption that there is intent to sell. [Reference was made to Section 1, AS 04.11.010(c).] REPRESENTATIVE KOTT asked, "So, in a damp community like Bethel, I could fly back and forth from Anchorage and bring as much as I want and warehouse it in my home for my own personal use, as long as I didn't sell it." MR. GUANELI said he believed that to be correct. He said it is not a crime in Bethel to possess [alcohol]. When asked if any presumption can be rebutted by the evidence, he responded that presumptions in the law allow a jury to come to certain conclusions, which can be rebutted. He used the example of drunk driving. He said if a person has a blood-alcohol [level] of .10 or above, that person is presumed to be under the influence; however, the jury might disregard that based on other evidence. Number 2135 MR. GUANELI explained a case in which a person had around 100 gallons of hard liquor in a compartment on a boat coming up the Yukon River. This person was prosecuted for possession with the intent to sell; the amount in question, the 100 gallons, was so much, and there was other evidence to indicate that sales were involved. The defense was that the person was bringing the alcohol for a wedding, however, and the person was let off. That is the type of defense that is impossible for the state to beat, he said. If there is any question, "we" don't even go after cases like that. That is where law enforcement has to focus investigative efforts on the sellers, the people making a huge amount of money selling liquor in areas where it results in death and destruction. REPRESENTATIVE CRAWFORD said there are several things in [the bill] that concern him. He asked if it wouldn't be a "boon" to someone who is 51 air miles out of a dry community, or a boon to Anchorage. He said when he worked at Merrill Field, planes on numerous occasions were being loaded with cases of vodka. If this is just done with a 50-mile limit, the crime will move around. Number 2215 MR. GUANELI agreed that this could happen. The idea of writing down sales within the 50-mile radius is to deter people from buying large amounts of liquor in areas where it is a really quick, easy trip to a dry community. People who buy large amounts are forced into Anchorage, which from an investigative standpoint may be preferable because there are more investigative resources in Anchorage. REPRESENTATIVE CRAWFORD referred to keeping the records for a year. He said it doesn't address what happens if the person were to lose these records, and Section 3 looks "fairly onerous" for legitimate businesses. MR. GUANELI said he would be open to hearing comments from people in the industry as to what this additional record keeping would do to them; his sense is that keeping adequate records is part of what one is used to doing. With these kinds of cases, it has to be recognized that it is a serious problem with serious consequences, and that some additional record-keeping burden is not too much to ask for an industry that makes a large amount of profit on a product that causes such havoc in certain parts of the state. Number 2343 REPRESENTATIVE CRAWFORD referred to the criminal justice information records. He said it is a substantial process for the people applying for a [liquor] license, and he asked why "we" want to know all of that [information]. MR. GUANELI deferred the question to the ABC representative. In general, he explained, fingerprints are required to get records from across the nation, and without fingerprints "we" are limited to records just in Alaska's criminal history record system. If one is dealing with a licensee who may have had problems out of state, one wouldn't know [without going through this process]. As with a lot of programs in Alaska, there is a trend to require fingerprints to check records from throughout the country. He said he wasn't sure exactly what the concern was. CHAIR MURKOWSKI, switching gears, asked if the postal inspector has the needed [resources] to check and see if shipments are going out to the dry or damp communities. Number 2446 MR. GUANELI said he didn't know the answer. The specific topic of the inspector general's role in stopping alcohol has been the subject of a number of discussions within Alaska, and possibly as far as Washington, D.C., through U.S. Senator Stevens' office. There has been some concern that the process for getting search warrants and federal cooperation was more burdensome than it needed to be, he said, and there has been some improvement in the cooperative efforts. He said he could find out how well "they" are staffed. TAPE 01-34, SIDE B [A portion of the tape was inaudible.] REPRESENTATIVE HALCRO said if he gets caught selling, he's already violated the law regardless of what he has. Instead of setting arbitrary limits, what about having some sort of registration for a person receiving liquor through the mail - providing a point of registration? He said to him it seems to be a questionable effort that arbitrary limits are going to be set and that there is this presumption when there are ways around the limits. And, in some instances, there is a good justification of why a person would have more than the limit requires. He said he is looking for another way that this could be enforced without getting people caught in some kind of unnecessary trap. Number 2370 MR. GUANELI responded that the idea mentioned of having a central distribution site where liquor coming into the community has to go first, and requiring a person to register to get it, is [an idea] that has a lot of merit. It was considered by the ABC Board as a possible regulation that might be adopted. Number 2344 LINDA KESTERSON, Assistant Attorney General, Natural Resources Section, Civil Division (Anchorage), Department of Law, said it was adopted; however, no community has ever used it. She added that it might have been used in Fort Yukon, but she deferred the question to the director of the ABC Board. REPRESENTATIVE HALCRO asked if it was just an optional tool for communities. MS. KESTERSON replied that it is a regulation, not in statute. Responding to a question about the existing statutes that address provider liability for someone who provides [alcohol] to someone living in a dry community, she said if there is a ban on importation [in a community], a package store wouldn't be allow to ship alcohol into that dry community. She further explained that the package-store owner who sold in a wet community to someone taking the [alcohol] into a dry community wouldn't have liability. The liability would come in when there is a shipment; however, coming into an area that has no restrictions on sale, there is no liability on the owner of a package store for what the purchaser does with that alcohol. Number 2215 MS. KESTERSON said the limitations are for written orders or the new provision that would be added by this bill if a package store is within 50 air miles of a local option community; then there would be the requirement of keeping track of those sales. However, the liability of the package store [owner] would be the failure to keep the record; the bootlegging [liability] would be on the person actually selling [the alcohol]. REPRESENTATIVE HALCRO asked if there is any additional liability or responsibility that [the legislature] could [enact] to make sure that not only [is the package-store owner] keeping track of the records, but that the owner is also just as liable as the person selling it. He said the enabler statute makes the [enabler] liable to some degree, and he asked if there is connection that could be made with the sellers of alcohol. MS. KESTERSON responded that this bill doesn't provide for that, and she deferred the question back to Mr. Guaneli. REPRESENTATIVE ROKEBERG asked for clarification that there are prohibitions against mailing or selling [alcohol] to dry communities. Number 2146 MS. KESTERSON replied affirmatively, but said that is different. She said there is an existing provision that requires keeping track of written orders when one is shipping into a restricted community, and there are penalties against the licensee for violating that provision. REPRESENTATIVE HALCRO said he agrees with the concept and intent [of the legislation]. He asked: In addition to requiring those package stores within a 50-mile radius of a dry or restricted community to [keep records of alcohol purchases above the set amount], could it be said that if a person comes into one of those package stores and presents his or her state license, as is required, and if this person has an address from one of these [restricted] communities, [there could be] an automatic notification system that would let [the community know that this person purchased alcohol]? Number 2013 MR. GUANELI replied that it is a record-keeping problem and [package-store owners] are not really set up to do that; it would require a person to look at everybody's driver's license and ascertain where someone resides to make that type of distinction. REPRESENTATIVE HALCRO noted that the bill, page 2, Section 3, already requires that [a package-store owner] check a government-issued identification card ("ID") with a photograph; then a person needs to keep a written record for a year. Therefore, the bill already requires that a person note who is buying it and where he or she is from. MR. GUANELI responded that if a person buys less than the amount set forth in the bill, then Section 3 dealing with record keeping doesn't kick in. REPRESENTATIVE HALCRO clarified that he was talking about those people who buy over that amount. Number 1947 MR. GUANELI stated that it puts more pressure on the package- store owner to know what communities are restricted. He pointed out that for written orders "we" have a list of people that can't be sold to, those that have been convicted of bootlegging. He said there are other means of having a "red flag" list of notification too; however, he recognized that there could be something along those lines. REPRESENTATIVE HAYES asked how many troopers would be needed to do this properly. Number 1865 MR. GUANELI responded that the federal grant that the state troopers got is sufficient to provide five additional state troopers and two lawyers, which will go along with the ones already dedicated to alcohol interdictions. He said there are three or four already doing it; there will be a fairly sizable unit for the state troopers; however, it does have to deal with cases all over the state, mostly Western and Northern Alaska. The federal funding is only for a year, and "we" will continue to go for this funding and try to get it every year; however, there is no guarantee that this will be the case. All "we" know for sure is that the money is available for this year. REPRESENTATIVE ROKEBERG said he is concerned because he didn't realize that Fairbanks would be inside the "net." He asked if Minto, which is a dry community, is connected by road to Fairbanks. Number 1770 ALIVA "STEVE" DUNNAGAN, Lieutenant, Alaska State Troopers, Department of Public Safety (DPS), via teleconference, clarified that Minto is connected to Fairbanks by road, and is within 50 air miles of the Fairbanks International Airport. He said there is also a liquor store in Manley Hot Springs, which is close to Minto, and that the community is an "all-option-ban-sales- possession" village. REPRESENTATIVE ROKEBERG said he is concerned about the statement that it would be better if all of the major purchasing were concentrated in the Anchorage wholesale or retail market, because of the burden added to businesses. "We've" discussed some of the problems that revolve around that, he remarked, and said he has a little bit of a problem including Fairbanks in this. He mentioned that there is a growing drug problem in rural Alaska, and asked if this was discussed in C-JAC. MR. GUANELI said it was not specifically considered. "We" are finding that there is a bit of an increase of harder drugs in rural Alaska, and efforts have been focused on the Anchorage International Airport to stop it at the place where it is most likely to come into Alaska, thereby preventing it from getting a foothold elsewhere. He recognized it as a potential problem, but said that getting a handle on alcohol is really the primary consideration. Number 1560 REPRESENTATIVE HAYES said it sounds as if this is really a pilot project because the grant is just for one year, and funding for continuation [is not assured]. With a different administration coming on in two years, this may not even be a focus, he said, and asked what would happen if the funding was not there after the first year. MR. GUANELI responded that the approach of this administration has been to focus efforts on rural Alaska, to solve some of the problems, with alcohol being a primary one. "We've" done our best to apply for whatever non-state general funds possible, and were successful in getting those. If this program works, "we" would hope that further federal funding would be forthcoming. He said he wasn't certain that it was completely accurate to characterize it as a "pilot project." Number 1453 REPRESENTATIVE MURKOWSKI explained that the committee has focused exclusively on the bootlegging component of the bill. The other two components will be considered on Thursday [March 22, 2001]. BLAIR McCUNE, Deputy Director, Public Defender Agency (PDA), Department of Administration, via teleconference, offered comments about the fiscal note that [the PDA] presented in the bill. He said "we" thought about the increased bootlegging effort early on, and just recently the Department of Law and Public Safety got funding to work on this anti-bootlegging effort. Most of these cases will be brought in state court in rural locations, and funding and resources to respond to the law enforcement efforts would be needed. A lot of these cases have defense attorneys appointed by the court, and [the PDA] is responsible for them. Number 1329 MR. McCUNE said as far as the policy is concerned, there was a complete and interesting discussion about the effects of reducing the [alcohol] levels. One thing that "we" brought up at the C-JAC meetings was that there may be some unintended consequences. The decision to go wet, damp, or dry is a local option decision made by the local community. [The public defender] caseloads drop when communities decide to go damp or dry. He said there would be concern about an unintended consequence if the presumptive levels got too low. If someone in Bethel is concerned about staying under those levels and may make a trip to Anchorage once or twice a year, that person might be tempted to reverse the damp local option and go to a wet local option, which would end up causing quite a few more problems. Number 1231 MR. McCUNE referred back to the question about the legality of shipping alcohol to a person in a local option community. He said he thought it was illegal to mail, but not illegal to ship though an airfreight service. He added that the point-of- registration idea is in AS 04.11.491(f). REPRESENTATIVE ROKEBERG asked Mr. McCune if he has a full-time attorney, paralegal, and support [staff person], and what the caseload is anticipated to be. He said he had a feeling that the bill is being "loaded" for another person because the caseload is already terrible. MR. McCUNE said it is a valid criticism of the fiscal note, but said "we" are most concerned with the impact of the increased enforcement and funding that other agencies are going to have. He said he hasn't tried to get an exact caseload, but remarked that it is just the amount of work that (indisc.) $1.4 million in increased enforcement efforts could end up costing "us." He said the $209,000 [outlined in the fiscal note] is a little conservative. He pointed out that it isn't to "load up" the bill because [the PDA] is really strapped now; it is anticipating the enforcement efforts that are going to be affecting [the PDA]. Number 1092 REPRESENTATIVE ROKEBERG asked what an average caseload is now for one of his attorneys. MR. McCUNE said national standards are about 400 new misdemeanors a year for a misdemeanor lawyer, and about 150 felonies per year. He said [the PDA] is way over that with 19,000 new cases per year, with about 68 lawyers. LIEUTENANT DUNNAGAN commented that he agrees with Mr. Guaneli that the steps that this bill takes are fairly modest to reduce illegal alcohol possession and consumption in rural Alaska. It is a complicated issue. Speaking from his Bush experience, he said it is very easy to tell when a large shipment of alcohol comes into one of these villages because for the next day or two, the Village Public Safely Officer (VPSO) and the Alaska State Troopers are inundated with calls, [ranging] from domestic violence and suicide to missing persons, because the alcohol came in and turned the village upside down. Number 0973 LIEUTENANT DUNNAGAN explained that having a reporting requirement in communities close to villages that have this kind of option would be very helpful for law enforcement. [Law enforcement would] be able to query those liquor stores after a two- or three-day session when a village has received a large shipment to find out who was buying it, and could focus efforts. LIEUTENANT DUNNAGAN recounted a situation a couple of years ago in Minto, where a large shipment of alcohol came in. Somehow, a 15-year-old child got a hold of alcohol and drank to excess, crawled up underneath a house, and froze to death. He said it is hard to determine who brought [the alcohol into the village], but with the new requirement, [the DPS] will be able to do that much more efficiently. He explained that bootleggers don't care about the age or identity of the people they sell to; the only thing that they care about is the money generated from the sales. Number 0863 REPRESENTATIVE ROKEBERG asked Lieutenant Dunnagan about the federal grant and the added troopers. He asked for the number of bootlegging cases prosecuted now, the conviction rate, and that which is anticipated under the new grant and manpower. LIEUTENANT DUNNAGAN responded that the number [prosecuted] in Fairbanks in a given year is probably only ten bootlegging cases that [the DPS] submits. He said he didn't have the statewide number, but by adding five state troopers to that particular enforcement area, there would be an increase in the number of cases that [the DPS] would be able to put together, especially if cooperative efforts were developing with federal postal regulators and so forth. He said he would be happy to find and provide that information to the committee prior to the next meeting. REPRESENTATIVE ROKEBERG asked that all of the agencies coordinate fiscal notes, since it appeared that they hadn't had a chance to do that yet. He asked Mr. Guaneli to assist with that. MR. GUANELI said he would see what he could do. [HB 132 was held over.]