SENATE CS FOR CS FOR HOUSE BILL NO. 149(JUD) "An Act relating to controlled substances regarding the crimes of manslaughter and misconduct involving a controlled substance; relating to the manufacture of methamphetamine and to the sale, possession, and delivery of certain substances and precursors used in the manufacture of methamphetamine; relating to listing certain anabolic steroids as controlled substances; relating to the listing of property that constitutes an illegal drug manufacturing site; amending Rule 41, Alaska Rules of Criminal Procedure; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Green asked whether the bill's sponsor or any Committee Member desired to comment on the bill pursuant to the beginning of public testimony. The response was in the negative. She noted that she had been unable to be in attendance during the previous day's hearing on the bill. 5:04:35 PM Co-Chair Wilken noted that the primary focus of the previous day's discussion pertained to the logbook issue. "The retailer's standpoint" of that issue would be provided today. This would be helpful in "filling in some of the blanks". 5:05:39 PM GLENN PETERSON, District Manager - Anchorage District, Carrs/Safeway Grocery Store, introduced himself. JASON MOLTON, Loss Prevention Director, Seattle Division, Carrs/Safeway, applauded the State's efforts to address the "very difficult problem" of methamphetamine addiction in the State. Prior to being Carrs/Safeway's Loss Prevention Director for the states of Washington, Oregon, Idaho, and Alaska, he had spent 30 years as a Special Agent with the Federal Bureau of Investigation (FBI). He is "accurately aware" of the growing "problems faced by retailers as the result of methamphetamine (meth) addiction". He is "very attuned" to the issue at hand due to his experience at Carrs/Safeway and his appointment to the Washington State Governor's Council on Substance Abuse and his membership on a variety of Washington countries' Methamphetamine Task Forces. 5:07:46 PM Mr. Molton voiced strong support for the increased penalties associated with meth abuse proposed in the bill; particularly for those who show "reckless disregard for young children" by subjecting them to meth use in their home or residence. Mr. Molton informed the Committee that two years prior, Carrs/Safeway took responsibility, as "a good corporate citizen", by removing, without regulatory directive, "high theft pseudoephedrine products", such as Sudafed, from its store shelves. Empty packages were placed instead on the over-the-counter medicine aisle. A person desiring to purchase that product would take that package up to the customer service counter where a store employee would provide the product to them. A three-box purchase limit was also implemented. Mr. Molton shared that this could also be characterized as an act of self-defense as many of these products were targets of shoplifters. This action has assisted the store in curbing its losses, and the belief is that the action has also assisted in reducing the precursor of methamphetamine availability. Mr. Molton noted that Carrs/Safeway is also the largest corporate sponsor of Meth Watch in Washington and Montana, and posters promoting Meth Watch are displayed in all four states in which the store operates. The belief is that the corporation's actions in regard to both Meth Watch and the removal of the products from store shelves have helped to reduce the meth problem in the state of Washington. At one time Washington had "the dubious honor of having the most meth labs in the country" with a reported high of 1,886 labs. That number was reduced to 1,339 in the year 2004 and 261 meth labs have been reported to date in 2005. Mr. Molton disclosed however, that the cost of meth in Washington has remained constant or is slightly lower than it was a few years ago. Therefore, it must be assumed that the net affect of the action has not changed the overall situation since price "is based on the supply and demand theory of economics". Mr. Molton directed Members to view the questdiagnostic.com website, which depicts that "there has been an extreme increase" each year "in the number of methamphetamine users who are being tested in the workplace". "The problem continues unabated." Another indicator of the growing use of meth in the state of Washington and possibly the State of Alaska "too, were the figures checked", is the increasing number of people who are receiving treatment through the federal or State aid such as Medicaid. People as young as fourteen have been treated for meth addiction. The most recent statistics available for the state of Washington indicate that in the year 2003, 12,000 individuals were treated for Meth addiction. 5:12:09 PM Mr. Molton warned that Meth addiction, unlike cocaine or heroin addiction, could not be successfully treated in a 30-day treatment program. Meth addiction treatment is a difficult and long-term process. "It is like a barbed hook hooked into the mouth of the person; they simply can't get over it." Mr. Molton shared that another indicator of meth usage is drug test submissions. Tracking of Washington law enforcement drug test submissions indicate that approximately 46-percent test positive for meth. Cocaine is second at 26 percent. All the other drugs are in the single digits. Meth is "clearly the drug of choice … its the drug most frequently encountered by law enforcement" in Washington. He anticipated that similar statistics would apply to Alaska. 5:13:31 PM Mr. Molton informed the Committee that Carrs/Safeway has prepared comments in regards to HB 149. The State of Washington Governor's Council on Substance Abuse identified three key elements to be addressed in the effort against meth abuse: prevention; treatment; and law enforcement and justice. "It is a three-legged stool." HB 149 is an "excellent bill" in regards to the law enforcement and justice component; however, absent the prevention and treatment components the State would encounter difficulties. A lot of people would be incarcerated, but there would be "no ability to fund treatment and no ability to preclude them from getting into the problem" due to a lack of prevention funding. Mr. Molton noted that a copy of the State of Washington Governor's Council on Substance Abuse recommendations [copy not provided] had been provided to Co-Chair Wilken. The report might provide guidance to the State of Alaska. 5:14:55 PM Mr. Molton made specific suggestions to language in the bill. One suggestion would be that the language in Sec. 3(d)(3) on page four, beginning on line nine that would allow certain entities such as lodges to possess more than nine gram of pseudoephedrine, be amended to include such things as "boat orders". Carrs/Safeway and other retailers routinely handle orders from boats in fishing fleets that exceed the allowable 24-gram limit. 5:16:08 PM Co-Chair Green asked whether Carrs/Safeway ships to Rural areas as well. Mr. Peterson affirmed. Co-Chair Green asked whether orders shipped to Rural areas might also exceed the limit restriction. Mr. Peterson confirmed that such orders often exceed the limit. Co-Chair Green understood therefore that the Rural order scenario could be likened to the boat order situation. 5:16:40 PM Mr. Peterson agreed. He noted that often times, boat orders are received from vessels that spend months at sea. Mr. Molton pointed out that an area that might not have been discussed is relation to this bill is the consideration of the fact that the three crimes of methamphetamine production and use, identity thief, and mail thief "are inseparability connected". He informed that the majority of the time "that a search warrant is executed at the Meth production facility", such things as false identification and counterfeit checks or information to support such crimes are discovered. 5:17:36 PM To that point, Mr. Molton explained that the current record keeping system used by most major retailers is referred to as the point of sale system. It utilizes a scanner to scan each item in the sale, and, at the end of the transaction, money in the form of cash, a credit card, a debit card, a gift card, an EBT card, or a check is tendered as payment. The entirety of the transaction data is stored in a computer and is available for retrieval in the retailer's database for a period of ninety days. However, with extra effort, information could be retrieved for as long as five years. Stores also utilize digital closed circuit television and camera surveillance to record the entrance/exit, aisle, and checkout counter activity in its stores. It is possible that the store could access a record of the person entering the store, choosing items off the shelf, purchasing the items, and exiting the store. 5:19:33 PM Mr. Molton opined that the logbook process being proposed is unnecessary; "it is redundant", and would be an expense to retailers. No "useful purpose beyond" the information that is already maintained by stores "in the normal course of business" would be provided. Stores currently comply with subpoenas and search warrants on a regular basis, and "voluntarily provide closed circuit television evidence routinely to law enforcement upon request". In addition, such things as vehicle license plate numbers of people suspected of buying "precursors for the use of methamphetamine" are also provided to law enforcement officers through the Carrs/Safeway's Meth Watch Program. These activities would continue. Mr. Molton stated that another objection to the log is in regard to the information that would be required. It is anticipated that in order for the log to be helpful, its information must "be sortible in some fashion". As learned from his FBI experience, sortible fields of information should include the purchaser's last name, first name, middle initial, date, type and quantity of the item, the amount of the transaction as well as the employee conducting the transaction. This activity would extend the amount of time required to complete the transaction beyond the typical transaction time of less than 30 seconds. In addition, each city in Alaska could impose its own requirements. Further compounding the burden that would be placed on a store is the fact that each state could establish differing requirements. The state of Oklahoma requires that the logbook information be transmitted electronically. This would require additional hardware and database programs. Administration of the program across the State of Alaska and from state-to-state could be tedious to comply with. 5:22:30 PM Mr. Molton observed that when such rules are enacted, someone must be responsible for verifying such things as whether retailers are maintaining the logs properly or are not selling more than the allowed quantities. He asked whether consideration has been provided to the imposition of penalties for non-compliance. Mr. Molton stated that Carrs/Safeway has "conservatively calculated" that the cost of implementing the logbook system in its 25 stores would incur $250,000 in labor costs. Other costs would be associated with training efforts. Additional costs would be incurred were electronic data transmission required. Mr. Molton reiterated the support for the proposed "stiffening of the sentences" associated with this issue. 5:24:09 PM Mr. Molton concluded his remarks by stating that the store would like to work further with Representative Ramras and Senator Guess in regards to the logbook issue. 5:24:23 PM Co-Chair Green voiced appreciation for the "enlightening" testimony. Co-Chair Green asked the percentage of the State's population that might be served by major retailers with similar scanning systems to that utilized by Carrs/Safeway. 5:25:06 PM Mr. Peterson expressed that it is likely that all major retailers in the State's metropolitan areas utilize such systems. The systems are available in its stores in communities such as Dutch Harbor and Nome. It is questionable whether small village retailers utilize such systems. Co-Chair Green clarified that the gist of her question was to determine how much redundancy might be incurred by the implementation of the logbook. Some Members are concerned about the logbook section of the bill. "We want to be sure we get this on its way, but have it in a condition that is acceptable for all of us. We certainly want to work with the sponsor as well." Senator Olson asked whether other alternatives to the log have been considered in the desire to track purchases. Mr. Molton shared that programs such as the Meth Watch program are being utilized in the State of Washington. When an individual is observed repeatedly visiting the store and purchasing meth lab materials such as pseudoephedrine, batteries, acetone, and coffee filters, it is an alert that a meth lab might be functioning. In that case, law enforcement personnel would be notified and information such as license plate numbers and names and pictures of the individuals would be provided. Were a subpoena or a search warrant delivered, the store would provide the information contained in the store's files relating to the transaction. This "is a very viable alternative to the log". Co-Chair Wilken thanked the gentlemen for their testimony. Continuing he asked, with the exception of the "boat orders" and the log issue, whether other sections of bill were acceptable. Mr. Molton stated that other sections of the bill were acceptable. The penalty "enhancements", specifically the ones relating to the endangerment of those under the age of 18, "are commendable". Senator Stedman shared that some pharmacies in his district have also voiced concern about the log, specifically in regards to how it would be maintained and the time that would be involved in that process. While pharmacists are supportive of the direction of the legislation, there is concern about its affect on "small mom and pop" stores that might not have a sophisticated point of sale system. 5:28:54 PM Co-Chair Green again thanked the Carrs/Safeway representatives for their insight on the matter. Continuing, she invited the Department of Law and the bill's sponsor to join the discussion in order to develop a compromise in regard to the log section of the bill. She reiterated that several Members have voiced concern about that issue. Co-Chair Green, voicing an understanding of the intent of the log requirement, asked whether methods such as the aforementioned Carrs/Safeway Meth Watch program have been considered as alternatives to that requirement. 5:30:12 PM DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section, Criminal Division, Office of the Attorney General, Department of Law stated that the bill would only require that the purchase of the specified products must be logged. While other states, including the state of Washington, require the logging of other "suspicious transactions", such burden would not be imposed on retailers by this bill. Carrs/Safeway operates stores in other states whose requirements are more labor intensive than those being proposed in HB 149. It should be noted that the restrictions imposed by other states "have been effective". This legislation is viewed as "a reasonable accommodation". 5:31:49 PM Co-Chair Green understood that Mexico is one of the greatest sources of the finished meth product. While the import of the product, which is contributing to its usage, is not being addressed in bill, such importation might be the reason that meth use in other states is not being reduced even though such efforts have been made. Mr. Guaneli noted that Interstate 5 (I-5), which transits from Mexico through the states of Washington, Oregon and California, is difficult for law enforcement officers to monitor. Thankfully, I-5 does not transit to Alaska. Alaska State Troopers would be appreciative were the results of this legislation to mirror the reduction in meth production that has occurred in other states that have adopted similar legislation. Such legislation would provide them the ability to concentrate on other sources such airports and the mail. 5:33:11 PM JANE PEARSON, Staff to Representative Jay Ramras, the bill's sponsor, informed the Committee that Representative Ramras "is in favor of the logs". Representatives of the Department of Public Safety should be provided an opportunity to speak to the reasons for their support of the logs. Mr. Guaneli spoke to the importance of the logbooks. He noted that language in Sec. 6(a), page six, beginning on line 13 makes the purchase or possession of more than nine grams of the identified drugs within a 30-day period, a crime. Absent the logbook, "positive proof of such action" would be difficult to prosecute. Tips from the store or from other Meth users would be insufficient. The log entries are important to the "overall effectiveness" of the bill. Mr. Guaneli restated his May 4, 2005 comments to the Committee regarding the fact that the logbooks would be "an effective deterrent", as people who purchase pseudoephedrine to provide to meth manufacturers are often users themselves and, as a result, become paranoid and would not desire to use identification. The logbook requirement "would make a difference". 5:35:46 PM Mr. Guaneli voiced being uncertain as to what Carrs/Safeway "is proposing "in exchange" for the log books. While their stores do have cameras, the information that could be provided by them is unclear. "Even if you have cameras showing people coming into the store and showing people going up to the counter; unless you can really tie that to a specific transaction; tie that to a specific amount; tie that to a specific person, its going to be maybe interesting information but not anything that can really be used by an investigator to pursue it further." Mr. Guaneli stated that another point he had made in the May 4th hearing is that before the state of Iowa enacted their pseudoephedrine legislation, an Iowa university had conducted a survey to gauge public reaction to it. The result was " overwhelmingly" public support for the identification and signature requirements as well as the purchase quantity limitations. The public "understood the importance of doing so". Given that there is both public and law enforcement support of such legislation would identify the action as "an important step". Mr. Guaneli opined that the bill's sponsor has endeavored to be responsive to retail industry concerns. The specification of a logbook termination date would provide an opportunity to review the success of the effort. The fact that the Department of Public Safety would be required to establish the logbook guidelines would provide retailers another opportunity to provide input. Mr. Guaneli stated that while there are many large retailers who have sophisticated point of sale technology, many small stores might not. The logbook being proposed, "was chosen" because it would provide a uniform method of collecting information that would work for both small and large stores. Similar logbook provisions have worked well in other states and should work well in Alaska. Co-Chair Wilken characterized this as being a good bill. "A lot of work has gone into it … by a lot of different authors." The implementation of many of its provisions would do some good; however, he voiced concern about the logbook issue. While he respected Mr. Guaneli's remarks, he also heard the concerns raised by retailers. Therefore, in an effort to move the bill forward, he suggested that the logbook language be removed from the bill. The bill's sponsor could work with retailers over the Interim to determine how to make the logbook "less intrusive". "Even if that weren't to happen", such an event as a "reverse sunset" might eventually occur in that, while the provisions of the bill might be having an affect, Legislators might choose at some point to include the logbook as a means to further enhance the effort. Co-Chair Wilken stated he would support the bill were the log provisions removed. Not "enough work" has been conducted in regards to its affect on either large or small retailers or consumers. There is also a question as to the level of benefit that would be provided by the log and whether it might also be an invasion of privacy. Co-Chair Green doubted whether the bill would move forward were the logbook language included. Perhaps another component of the bill could "be strengthened in exchange" for the logbook's removal. 5:40:57 PM To that point, Co-Chair Green suggested that language in Sec. 11 (a) page nine beginning on line 16 could be changed to read as follows. (a) A wholesaler, manufacturer, or distributor of products containing ephedrine, pseudoephedrine, or phenylpropanolamine, or their salts, isomers, or salts of isomers, or iodine or crystal iodine, has an affirmative duty to report to a law enforcement agency or offices suspicious purchases, shall keep complete records of all transactions involving those products, including the names of all parties involved in the transaction, the date of the transaction, and the amount of the drug products involved. The records shall be kept readily retrievable for inspection by law enforcement officers and separate from all other invoices or records of transactions not involving those products and shall be maintained for one year, or a shorter period of time established by the Department of Public Safety by regulation, and must allow for inspection of the records by law enforcement officers. Co-Chair Green also suggested that language in Sec. 11 (d) page ten lines 19 through 21 could be "strengthened as a reporting standard". Mr. Guaneli agreed that there was an opportunity to strengthen that language; however, that determination could be made via regulations adopted by the Department of Public Safety. The Department could outline what would constitute a suspicious purchase that "would then trigger some reporting". Co-Chair Green asked whether current language in Sec. 11 on pages nine and ten of the bill would provide the Department of Public Safety sufficient "leeway in making those kinds of requirements". Mr. Guaneli conveyed that the Legislative Review Committee carefully assesses the specifics of language that provides agencies the authority to adopt administrative regulations" and when it is not "crystal clear, agencies are criticized for doing so". Specific regulation making authority" language could be included in the bill. 5:43:25 PM Mr. Guaneli expressed that Co-Chair Wilken's idea of some kind of "reverse sunset" is an interesting idea. The question would be whether it would be "the desire to have this matter come before the Legislature again or" at a specified time in the future, the Commissioner of the Department of Public Safety might "certify that there has not been any significant reduction in the diversion of pseudoephedrine from legitimate sources to the manufacturers of methamphetamine", and that action would allow for the adoption of logbooks at that point. 5:44:05 PM Mr. Guaneli continued therefore that the question is whether the desire would be for the Legislature to revisit the legislation in, for example, a year or whether some sort of certification by the Department of Public Safety would suffice. Co-Chair Green interjected that rather than the Legislative action being to preordain anything, it would simply provide for a review of the process, by a date certain. Mr. Guaneli acknowledged. Co-Chair Green stated that rather than this being a decision made solely by the Committee, Representative Ramras, Senator Guess and others should be involved in the discussion. Language in written form should be developed for further consideration. Mr. Guaneli affirmed that he would "work in that direction". Co-Chair Green ordered the bill HELD in Committee. 5:45:02 PM