SB 234-ALCOHOLIC BEVERAGE CONTROL BD    3:23:43 PM CHAIR OLSON announced that the first order of business would be CS FOR SENATE BILL NO. 234(FIN), "An Act relating to the voting procedures of the Alcoholic Beverage Control Board; allowing the Alcoholic Beverage Control Board to release information contained in the statewide database of alcohol purchases and shipments to the person who purchased the alcohol or to whom the alcohol was shipped; relating to the access of persons under 21 to premises where alcoholic beverages are sold, served, or consumed; extending the termination date of the Alcoholic Beverage Control Board; and providing for an effective date." 3:24:29 PM JOSH APPLEBEE, Staff, Senator Kevin Meyer, Alaska State Legislature, stated that AS 04.06.010 established the Alcoholic Beverage Control Board (ABC Board). The Division of Legislative Budget and Audit described this board is "a work in progress." The division conducted three audits in the past seven years. This is a board that needs additional attention. The auditors recommended a one-year extension, but would like to come back next year with a more comprehensive extension bill. The changes contained in the committee substitute add three additional provisions to the bill. The auditor recommended removing the executive director's authorization to cast a tie-breaking vote. The executive director is not an appointee and the board had recommended that the person not have the ability to vote on policy matters. The second change would allow the subject of the database to have access to the information collected about him/her or any business listed. The third change repeals the provision that removes the use of underage persons in compliance checks. He anticipated hearings would be held during the legislative interim and a more comprehensive bill would be introduced next year. 3:27:12 PM REPRESENTATIVE LYNN asked for clarification on the use of "underage persons" for compliance check. MR. APPLEBEE explained that the Senate Finance Committee inserted the two provisions that repealed statutory language pertaining to the ABC Board's use of underage persons in undercover operations. The committee did not believe that it was proper to use underage persons to purchase alcohol. REPRESENTATIVE LYNN related that it is also not proper for law enforcement to lie, but they sometimes must lie during covert operations in order to perform their duties. He asked how compliance checks could occur for selling alcohol to underage persons unless an underage person attempts to buy alcohol. 3:28:40 PM REPRESENTATIVE NEUMAN moved to adopt the proposed House committee substitute (CS) for SB 234, labeled 26-LS1350\P, Bullard, 4/13/10, as the work draft. There being no objection, Version P was before the committee. 3:29:30 PM KONRAD JACKSON, Staff, Representative Kurt Olson, Alaska State Legislature, on behalf of the House Labor and Commerce Standing Committee, explained the changes contained in the proposed House committee substitute (HCS). The HCS deletes Section 4, which read: AS 04.16.049(f) and 94.16.060 (f) are repealed. MR. JACKSON explained that by repealing the two statutes the effect will be to allow investigators to use underage persons for investigations of underage purchases of alcohol. In response to Representative T. Wilson, he referred to page 2, line 25, of the CSSB 234(FIN) for the citation. 3:31:16 PM CHAIR OLSON explained that a problem arose when an underage person was asked for identification and the server kept the person's driver license. He recalled that "a scene was made" by the officer in an attempt to obtain the license back. He related his understanding that the matter has been resolved administratively and it was not likely that any additional problems would occur. 3:31:50 PM REPRESENTATIVE NEUMAN asked when a business serves alcohol, whether anyone under the age of 21 can be in the establishment. 3:33:50 PM SHIRLEY GIFFORD, Alcoholic Beverage Control Board (ABC Board), Department of Public Safety (DPS), answered that allowing underage persons in businesses that serve alcohol is acceptable, so long as the person is with his/her parent since parents have the right to do so, unless the underage person has a health or safety issue. She related that the two statutes that were deleted in Version P. She explained that AS 04.16.049(f) and 94.16.060 (f), provide authority to peace officers since some local agencies conduct compliance check and allow them to employ underage person to assist them. Otherwise, it would be illegal for them to attempt to purchase alcohol, she stated. 3:35:18 PM REPRESENTATIVE NEUMAN restated his question, asking whether a person under 21 years of age must be with his/her parent if they are in a business such as a pizza parlor that serves beer or wine. MS. GIFFORD offered that the ABC Board issues restaurant designation permits and persons under the age of 21 are allowed in the restaurant. The establishments apply for restaurant permit, submit floor plans and indicate how they plan to operate prior to the ABC approves the permit. REPRESENTATIVE NEUMAN said it was not clear in the bill and he was only concerned about unintended consequences. MS. GIFFORD referred to AS 04.16.049 (f), which read: (f) A person under 21 years of age does not violate this section if the person enters or remains on premises licensed under this title at the request of a peace officer, if the peace officer accompanies, supervises, or otherwise observes the person's entry or remaining on premises, and the purpose for the entry or remaining on premises is to assist in the enforcement of this section. MS. GIFFORD related that statute addresses the person under 21 years of age that assists a police officer for compliance checks. She stated that AS 04.16.09 and AS 04.16.060 provide more detail about when persons under the age of 21 can be on premises where alcohol is served. 3:38:09 PM MS. GIFFORD, in response to Representative Lynn, explained the statutes provide some leeway to allow parents, guardians, and spouses to accompany children. Additionally, the ABC Board has developed a form for use by teachers or chaperones that allow students to eat in restaurants. She stated that after a game, a teacher or coach frequently will take the team to a pizza place. She affirmed the statute does allow for those types of events. 3:39:24 PM REPRESENTATIVE T. WILSON asked whether the 11 ABC Board employees are located in areas around the state. MS. GIFFORD replied yes. She offered that the ABC Board has one investigator assigned in Fairbanks, one in Juneau, and the rest of the employees reside in Anchorage. In further response to Representative T. Wilson, she stated that before a license is issued an inspection is required. In the event that the ABC Board's staff is not available, an Alaska State Trooper (AST) or local law enforcement person will assist in the inspection. REPRESENTATIVE T. WILSON referred to the signage on premises for establishments that are interested in a permit to sell alcohol. She asked for clarification on who posts the signage. MS. GIFFORD responded that the ABC Board counts on the local governing body to assist with compliance. The statutes provide that local police and local governing bodies must help enforce the statutes and regulations. In instances in which the local authorities assist, the ABC Board will refund or return licensing fees to the local body. She characterized the relationship of the ABC Board with local governing bodies as "a very good close working relationship." 3:41:32 PM REPRESENTATIVE T. WILSON related her understanding that the Fairbanks North Star Borough has always assumed the Alcoholic Beverage Control Board (ABC) posts notices in Fairbanks. MS. GIFFORD related that the ABC Board has a good working relationship with the Fairbanks North Star Borough. She asked if Representative T. Wilson was referring to the requirement for a business to post notices in the city hall, the U.S. Post Office, and the location three weeks in advance of acquiring a liquor license. REPRESENTATIVE T. WILSON agreed. She related an instance that was problematic involving a pizzeria. MS. GIFFORD offered to look into the specific situation. 3:42:56 PM PAT DAVIDSON, Legislative Auditor, Division of Legislative Audit, Alaska State Legislature, explained the Division of Legislative Audit conducted its audit and recommended the ABC Board be extended for four years, until June 30, 2014. There were some improvements in some of the administrative deficiencies, but some of the issues were not resolved. Therefore, the auditors recommended a shorter timeframe for the sunset review. The auditors acknowledged a new executive director was hired in January 2009 and while most of the improvements had been made, some deficiencies remained. The ABC Board had not yet established a quantifiable and objective enforcement goal. The auditors found a dominance of compliance check activities in the areas where the investigators were located. The geographic location should not be the driver for enforcement, she stated. An enforcement plan should be a well thought out plan, which was one of the auditor's recommendations She identified some administrative deficiencies the auditors found, including poor recordkeeping and licensing procedures, lack of reconciliation, insufficient training for the data entry staff resulted in errors that "crept in," and the board lacked insufficient procedures to ensure accuracy and completeness of the information recorded in the Board's Restricted Alcohol Purchasers Statewide Data Base. 3:45:38 PM MS. DAVIDSON, in response to Representative Buch, agreed that the updated status on the outstanding recommendations for the ABC Board would be available to the legislature at the beginning of the session. 3:46:20 PM ADRIENE ACTIVE, Community Liaison, United Way of Anchorage, stated that she is currently working on a Substance Abuse Mental Health Services Administration Grant. She works as a liaison for four partners, including United Way, Southcentral Foundation, Cook Inlet Tribal Council, and the Municipality of Anchorage (MOA) to specifically reduce access and demand and increased resiliency of alcohol use among youth in Anchorage. She oversees recipients, including Volunteers of America, who has implemented an environmental strategy, a grass roots advocacy group in Anchorage to reduce access of alcohol for minors. She related that she is in the second grant year and part of the strategy is to conduct compliance checks and "shoulder tap" programs since the practice reduces demand and access. She mentioned she is beginning to enter a contract with the ABC Board to increase the number of the compliance checks in Anchorage. She offered her belief that the funding includes $15,000 for one additional officer outside Anchorage. She related that an important part of the grant is to reduce alcohol use by minors in Anchorage. 3:49:10 PM KIANA ACTIVE, Volunteer, United Way of Anchorage, stated that she works on compliance check operations. She advocated for continuing compliance checks since kids can go to restaurants, liquor stores, and bars and buy alcohol. She stated that she is 18 and has been served a Corona at a restaurant, but the wait staff removed it after checking her identification three separate times. She stated that it is important for kids and teens not to have alcohol because it "kills their brain" or impairs their behavior. She said that kids are not ready to drink alcohol. 3:50:23 PM ANNA SAPPAH, Executive Director, Alaska Addiction Professionals Association; Board Member, Governor's Advisory Board on Alcoholism & Drug Abuse, stated that she serves as a Beneficiary Member on the Governor's Advisory Board on Alcoholism & Drug Abuse. She stated that she is deeply concerned about discontinuing compliance checks on establishments that sell alcohol, which directly contradicts Alaska's plan to reduce underage drinking. 3:51:30 PM ANNE CARPENETI, Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law (DOL), said the Department of Law supports the committee substitute which deletes the two sections. She explained that compliance checks have made a huge difference in reducing alcohol from being served to minors in the state. 3:52:05 PM ELLEN GANLEY, Vice-Chair, Public Member, Alcoholic Beverage Control Board (ABC Board), Department of Public Safety (DPS), stated that the ABC Board opposes the elimination of compliance checks. Compliance checks, which are funded from federal grant monies, have made a huge difference in how alcohol is not served to minors in the state. At the time the compliance checks began the failure rate was significantly higher. In 2009, 787 licensees successfully passed the compliance checks, which represented 87 percent of the checks performed last year. She offered her belief that continued compliance checks and regular enforcement will keep the ABC Board moving towards reaching its goal of 95 percent compliance. The compliance checks are part of a larger statewide effort to prevent underage drinking. The state plan to reduce underage drinking is a joint effort by 12 statewide agencies and associations. In fact, the state plan recommends that compliance checks be increased rather than eliminated. Underage drinking is a problem in all states, although the numbers in Alaska are "turning in an encouraging direction." The Alaska Youth Risk Behavior Survey shows that in 1995, 47.5 of the teens who completed survey had consumed alcohol in the last 30 days. In 2009, that dropped to 33 percent. Alaska leads the nation with the lowest percentage of youth who purchase their own alcohol. She stated that the ABC Board does not think that compliance checks are the only reason for the changes. The changes in key behaviors are the result of many groups working together, she stated. Compliance checks have resulted in alcoholic beverage licensees regularly checking identification and not selling to underage Alaskans. She urged members to not eliminate the ABC Board compliance checks. 3:55:03 PM REPRESENTATIVE BUCH asked for her opinion on the section of the bill that removes the ability of the executive director to vote. MS. GANLEY responded that she did not view this as a problem. She related that in some instances, a situation may arise that could delay the ABC Board's decision, but she believed the board could work around it. She commented that the need for a tie- breaking vote does not often happen. 3:55:51 PM LARRY HACKENMILLER, General Manager, Alaska Cabaret, Hotel, Restaurant, and Retailers Association (CHARR), stated that he was unsure of the success rate for the sting operations or the decrease in violations. He explained that one of the most famous impacts is the civil fine imposed on minors who enter premises where alcohol is sold. He offered his belief that civil fines have had the greatest impact on minor consumption in package stores or on-premise location. He referred to the Senate version of the bill, Version E. He related his understanding that during a sting operation, a liquor premise typically has kept the identification card and subsequently sues the minor. He stated that CHARR has increased membership awareness on the importance of checking identification cards. He said he does not understand the need for compliance checks. Normally during a compliance check or a sting, law enforcement identifies a problem area, which is generally based on numerous reports of illegal activity. He reported that Fairbanks does not have any instances, or has few instances, of minors arrested on premises. He stated that the odds are down to ten percent. He stated that licensees are aware of the compliance checks. He said, "This industry basically is not against anything that has to do with keeping underage people from drinking, but if we thought there was a great problem in it our local law enforcement would be on top of it." 3:58:41 PM REPRESENTATIVE T. WILSON recalled the incidence rate on sales of alcohol to underage persons. She asked for clarification that the incidence of actual sales to underage persons was one in ten times. MR. HACKENMILLER related his understanding that the "failure rate" was ten percent. He asked whether the state is interested in making criminals of employees or in reducing minor consuming. 3:59:28 PM LYNN COOK, Public Member, Alcoholic Beverage Control Board (ABC Board), Department of Public Safety (DPS), asked the committee not to remove the compliance checks from the statutes. She offered her belief compliance checks have curbed underage drinking and if they are not performed that the statistics for underage drinking would likely increase. She remarked that Alaska has one of the highest rates of substance abuse in the U.S. She urged members to retain the compliance checks for businesses where alcohol is sold. 4:00:59 PM CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on SB 234. CHAIR OLSON withdrew his objection. 4:01:21 PM REPRESENTATIVE LYNN asked whether someone involved in assisting in an underage sting operation was sued, and if so, if that matter was resolved. MS. GIFFORD answered she was unsure. She offered her belief that lawsuit Mr. Hackenmiller referenced related to an underage person being fined. REPRESENTATIVE LYNN wanted to ensure civil liability protection for any person who assists a peace officer. REPRESENTATIVE HOLMES stated that she read the specific statutory references. She explained that the two subsections that were deleted in Version E of the bill are the sections that protect the underage person who participates in the sting. She suggested that if the committee adopted Version P, that the youth participating in stings would be protected. 4:03:16 PM REPRESENTATIVE NEUMAN moved to report the proposed House committee substitute (CS) for SB 234, labeled 26-LS1350\P, Bullard, 4/13/10, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, the HCS SB 234(L&C) was reported from the House Labor and Commerce Standing Committee. 4:04:06 PM The committee took an at-ease from 4:04 p.m. to 4:06 p.m. 4:06:15 PM