6009-S

AN ACT Relating to the malt beverage commission; amending RCW 66.44.800 and 66.28.040; adding a new section to chapter 66.12 RCW; adding a new chapter to Title 15 RCW; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature declares that:

(1) Marketing is a dynamic and changing part of Washington agriculture and business economy and a vital element in expanding the state economy.

(2) The sale in the state and export to other states of malt beverages made in the state contribute substantial benefits to the economy of the state and provide a large number of jobs and sizeable tax revenues.

(3) The production of hops and the production of malt beverages in the state is an important segment of Washington agriculture that has potential for greater contribution to the economy of the state if it undergoes healthy development.

(4) The general welfare of the people of the state will be served by healthy development of the activities of growing and processing hops, which development will improve the tax bases of local communities in which agricultural land and processing facilities are located, and obviate the need for state and federal funding of local services. The industries are therefore affected with the public interest.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Beer producer" or "malt beverage producer" means any person or other entity licensed under Title 66 RCW, to produce within the state, beer or malt beverage, and who produces under one hundred thousand barrels of beer annually per location.

(2) "Commission" means the Washington malt beverage commission.

(3) "Director" means the director of agriculture or the director's duly appointed representative.

(4) "Department" means the department of agriculture.

(5) "Person" includes any individual, firm, corporation, trust, association, partnership, society, or any other organization of individuals.

(6) "Hop grower" means a person who has a commercial production of hops.

(7) "Producer" means any person or other entity licensed under Title 66 RCW to produce within the state malt beverages.

(8) "Eastern Washington" means that portion of the state lying east of the Cascade mountain range.

(9) "Western Washington" means that portion of the state lying west of the Cascade mountain range.

(10) "Beer" and "malt beverage" for the purposes of this section are as defined in RCW 66.04.010.

(11) "Grain grower" means a person, or other entity that grows grain that is subsequently malted for the use in the making of beer.

(12) "Malt producer" means a person, or other entity that purchases grain from a grower or dealer, with the intent of processing it so that it can be used in the production of beer.

NEW SECTION. Sec. 3. (1) There is created an agricultural commodity commission to be known and designated as the Washington malt beverage commission. The commission shall be composed of eleven voting members; seven voting members shall be malt beverage producers, one voting member shall be a grain grower, one voting member shall be a hop grower, one voting member shall be a malt producer, and one voting member shall be a wholesaler licensed under RCW 66.24.250. Of the malt beverage producer members, at least three shall be located in western Washington and at least three shall be located in eastern Washington.

(2) The director of agriculture, or the director's designee, shall serve as an ex officio, nonvoting member.

(3) Seven voting members of the commission constitute a quorum for the transaction of any business of the commission.

(4) Each voting member of the commission shall be a citizen, and resident of this state and over the age of twenty-one years. Each voting member, except the member holding position eleven, must be or must have been engaged in that phase of the industry that he or she is appointed to represent, and must during his or her term of office derive a substantial portion of income therefrom, or have a substantial investment in the growing of hops, growing of grain, producing of malt, or the production of beer as an owner, lessee, partner, or a stockholder owning at least ten percent of the voting stock in a corporation engaged in the production; or the manager or executive officer of such a corporation. These qualifications apply throughout each member's term of office.

NEW SECTION. Sec. 4. The appointive voting positions on the commission shall be designated as follows: The malt beverage producers shall be designated positions one, two, three, four, five, six, and seven; the grain grower shall be designated position eight; the hop grower shall be designated position nine; the malt producer shall be designated position ten; and the wholesaler shall be position eleven. The member designated as filling position one shall be a person producing over the largest volume of beer annually, not to exceed one hundred thousand barrels per location per year. The member designated as position one shall be the sole representative, directly or indirectly, of the producer eligible to hold position one and in no event shall that producer directly or indirectly control more than fifty percent of the votes of the commission.

The regular terms of office shall be three years from the date of appointment and until their successors are appointed. However, the first terms of the members appointed upon July 1, 1995, shall be as follows: Positions one, six, and eleven shall terminate July 1, 1998; positions two, four, seven, and nine shall terminate July 1, 1997; and positions three, five, eight, and ten shall terminate July 1, 1996.

NEW SECTION. Sec. 5. The director shall appoint the members of the commission. In making such appointments of the voting members, the director shall take into consideration recommendations made by the malt beverage producers the persons recommended for appointment as members of the commission. In appointing persons to the commission, the director shall seek to ensure as nearly as possible a balanced representation on the commission that would reflect the composition of the malt beverage producers throughout the state as to amount of malt beverage produced.

The appointment shall be carried out immediately subsequent to July 1, 1995, and members so appointed as set forth in this chapter shall serve for the periods set forth for the original members of the commission under section 4 of this act.

In the event a position on the commission becomes vacant due to resignation, disqualification, death, or for any other reason, the unexpired term of the position shall immediately be filled by appointment by the director.

Each member of the commission shall be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 6. Obligations incurred by the commission and liabilities or claims against the commission shall be enforced only against the assets of the commission in the same manner as if it were a corporation and no liability for the debts or actions of the commission shall exist against either the state of Washington or any subdivision or instrumentality thereof or against any member, officer, employee, or agent of the commission in his or her individual capacity. The members of the commission, including employees of the commission, shall not be held responsible individually or any way whatsoever to any person for errors in judgment, mistakes, or other acts, either of commission or omission, as principal, agent, person, or employees, except for their own individual acts of dishonesty or crime. No such person or employee shall be held responsible individually for any act or omission of any other members of the commission.

NEW SECTION. Sec. 7. The powers and duties of the commission include:

(1) To elect a chair and such officers as the commission deems advisable. The officers shall include a treasurer who is responsible for all receipts and disbursements by the commission and the faithful discharge of whose duties shall be guaranteed by a bond at the sole expense of the commission. The commission shall adopt rules for its own governance, which shall provide for the holding of an annual meeting for the election of officers and transaction of other business and for such other meetings as the commission may direct;

(2) To do all things reasonably necessary to effect the purposes of this chapter. However, the commission shall have no legislative power;

(3) At the pleasure of the commission, to employ and discharge managers, secretaries, agents, attorneys, and employees and to engage the services of independent contractors as the commission deems necessary, to prescribe their duties, and to fix their compensation;

(4) To receive donations of beer from breweries for promotional purposes;

(5) To receive beer or cash or in-kind contributions from breweries and beverage industry associations;

(6) To engage directly or indirectly in the promotion of Washington beer, including without limitation the acquisition in any lawful manner and the dissemination without charge of beer, which dissemination shall not be deemed a sale for any purpose and in which dissemination the commission shall not be deemed a beer producer, supplier, or manufacturer of any kind or the clerk, servant, or agent of a producer, supplier, or manufacturer of any kind. Such dissemination shall be for agricultural development or trade promotion, which may include promotional hosting and shall in the good faith judgment of the commission be in aid of the marketing, advertising, or sale of beer, or of research related to such marketing, advertising, or sale;

(7) To acquire and transfer personal and real property, establish offices, incur expense, enter into contracts (including contracts for creation and printing of promotional literature, which contracts shall not be subject to chapter 43.78 RCW, but which shall be cancelable by the commission unless performed under conditions of employment which substantially conform to the laws of this state and the rules of the department of labor and industries). The commission may create such debt and other liabilities as may be reasonable for proper discharge of its duties under this chapter;

(8) To maintain such account or accounts with one or more qualified public depositaries as the commission may direct, to cause moneys to be deposited therein, and to expend moneys for purposes authorized by this chapter by drafts made by the commission upon such institutions or by other means;

(9) To cause to be kept and annually closed, in accordance with generally accepted accounting principles, accurate records of all receipts, disbursements, and other financial transactions, available for audit by the state auditor;

(10) To create and maintain a list of producers and to disseminate information among and solicit the opinions of producers with respect to the discharge of the duties of the commission, directly or by arrangement with trade associations or other instrumentalities;

(11) To employ, designate as agent, act in concert with, and enter into contracts with any person, council, commission, or other entity for the purpose of promoting the general welfare of the malt beverage industry and particularly for the purpose of assisting in the sale and distribution of Washington beer in domestic and foreign commerce, expending moneys as it may deem necessary or advisable for such purpose and for the purpose of paying its proportionate share of the cost of any program providing direct or indirect assistance to the sale and distribution of Washington beer in domestic or foreign commerce, employing and paying for vendors of professional services of all kinds;

(12) To sue and be sued as a commission, without individual liability for acts of the commission within the scope of the powers conferred upon it by this chapter; and

(13) To serve as a liaison with the liquor control board.

NEW SECTION. Sec. 8. The commission shall create, provide for, and conduct a comprehensive and extensive research, promotional, and educational campaign as crop, sales, and market conditions reasonably require. It shall investigate and ascertain the needs of producers, conditions of markets, and degree of public awareness of products, and take into account the information adduced thereby in the discharge of its duties under this chapter.

NEW SECTION. Sec. 9. The commission shall adopt as major objectives of its research, promotional, and educational campaign such goals as will serve the needs of producers, which may include, without limitation, efforts to:

(1) Establish Washington beer as a major factor in markets everywhere;

(2) Promote Washington breweries as tourist attractions;

(3) Encourage favorable reporting of Washington beer and breweries in the press throughout the world;

(4) Establish the state in markets everywhere as a major source of premium beer;

(5) Encourage favorable legislative and regulatory treatment of Washington beer in markets everywhere; and

(6) Foster economic conditions favorable to investment in the production of Washington beer.

NEW SECTION. Sec. 10. (1) Except as provided in subsection (2) of this section, the vote of each of the voting members of the commission shall be weighted as provided by this subsection for the transaction of any of the business of the commission. The total voting strength of the entire voting membership of the commission shall be eleven votes. The vote of position one shall be equal to the lesser of the following: Five and one-half votes; or eleven votes times the percentage of the beer produced in the state that is produced by the person filling position one. The percentage shall be based upon the amount of beer produced in the previous calendar year and shall be rounded to the nearest ten percent. The remaining votes of the membership of the commission shall be divided equally among the remaining members of the commission.

(2) In the event that the percentage of beer produced by the producer represented by position one falls below twenty-five percent of the beer produced in this state, the weighted voting mechanism provided for in subsection (1) of this section shall cease to be effective. In that case, the voting shall be based on one vote per position.

NEW SECTION. Sec. 11. The commission shall cause a list to be prepared of all Washington beer producers from any information available from the department. This list shall contain the names and addresses of all persons who produce beer within this state and the amount (by barrellage) of malt beverage produced during the period designated by the commission. A qualified person may, at any time, have his or her name placed upon the list by delivering or mailing the information to the commission. This list shall be corrected and brought up to date in accordance with evidence and information available to the commission on or before December 31st of each year. For all purposes of giving notice and holding referendums, the list on hand, corrected up to the day next preceding the date for issuing notices or ballots as the case may be, is, for purposes of this chapter, deemed to be the list of all producers entitled to notice or to assent or dissent or to vote.

NEW SECTION. Sec. 12. (1) Pursuant to approval by referendum in accordance with section 13 of this act, commencing on July 1, 1996, there shall be levied, and the commission shall collect, upon all beer produced within this state an annual assessment of one dollar per barrel of beer produced, to be paid by the producer, up to thirty thousand barrels per location.

(2) The commission shall recommend rules to the director prescribing the time, place, and method for payment and collection of this assessment.

(3) After considering any recommendations made under subsection (2) of this section, the director shall adopt rules, in accordance with chapter 34.05 RCW, prescribing the time, place, and method for the payment and collection of the assessment levied under this section and approved under section 13 of this act.

NEW SECTION. Sec. 13. (1) For purposes of determining beer producer participation in the commission and assessment under section 12 of this act, the director shall conduct a referendum among all beer producers within the state. The requirements of assent or approval of the referendum will be held to be complied with if at least fifty-one percent by numbers of producers replying in the referendum vote affirmatively. The referendum shall be conducted on or before September 15, 1995.

(2) If the director determines that the requisite assent has been given, the director shall direct the commission to put into force the assessment in section 12 of this act.

(3) If the director determines that the requisite assent has not been given, the director shall direct the commission not to levy the assessment provided in section 12 of this act. If the requisite assent has not been given, the commission shall not continue to specifically foster the interests of beer producers.

NEW SECTION. Sec. 14. The commission shall deposit moneys collected under section 12 of this act in a separate account in the name of the commission in any bank that is a state depositary. All expenditures and disbursements made from this account under this chapter may be made without the necessity of a specific legislative appropriation. None of the provisions of RCW 43.01.050 apply to this account or to the moneys received, collected, or expended as provided in sections 11 through 15 of this act.

NEW SECTION. Sec. 15. A due and payable assessment levied in such specified amount as determined by the commission under section 12 of this act constitutes a personal debt of every person so assessed or who otherwise owes the assessment, and the assessment is due and payable to the commission when payment is called for by the commission. If a person fails to pay the commission the full amount of the assessment by the date due, the commission may add to the unpaid assessment an amount not exceeding ten percent of the assessment to defray the cost of enforcing its collection. If the person fails to pay any such due and payable assessment or other such sum, the commission may bring a civil action for collection against the person or persons in a court of competent jurisdiction. The action shall be tried and judgment rendered as in any other cause of action for a debt due and payable.

NEW SECTION. Sec. 16. This act shall be liberally construed to effectuate its purposes.

Sec. 17. RCW 66.44.800 and 1987 c 452 s 17 are each amended to read as follows:

(1) Nothing contained in chapter 15.88 RCW shall affect the compliance by the Washington wine commission with this chapter.

(2) Nothing contained in sections 1 through 16 of this act shall affect the compliance by the Washington malt beverage commission with this chapter.

Sec. 18. RCW 66.28.040 and 1987 c 452 s 15 are each amended to read as follows:

Except as permitted by the board under RCW 66.20.010, no brewer, wholesaler, distiller, winery, importer, rectifier, or other manufacturer of liquor shall, within the state, by himself, his or her clerk, servant, or agent, give to any person any liquor; but nothing in this section nor in RCW 66.28.010 shall prevent a brewer, wholesaler, winery, or importer from furnishing samples of beer, malt beverages, or wine to authorized licensees for the purpose of negotiating a sale, in accordance with regulations adopted by the liquor control board, provided that the samples are subject to taxes imposed by RCW 66.24.290 and 66.24.210; nothing in this section shall prevent the furnishing of samples of liquor to the board for the purpose of negotiating the sale of liquor to the state liquor control board; nothing in this section shall prevent a brewery, winery, or wholesaler from furnishing beer or wine for instructional purposes under RCW 66.28.150; nothing in this section shall prevent a winery or wholesaler from furnishing wine without charge to a not-for-profit group organized and operated solely for the purpose of enology or the study of viticulture which has been in existence for at least six months and any wine so furnished shall be used solely for such educational purposes, provided that the wine furnished shall be subject to the taxes imposed by RCW 66.24.210; nothing in this section shall prevent a brewer from serving beer or malt beverages without charge, on the brewery premises; nothing in this section shall prevent donations of wine for the purposes of RCW 66.12.180; and nothing in this section shall prevent a domestic winery from serving wine without charge, on the winery premises.

NEW SECTION. Sec. 19. A new section is added to chapter 66.12 RCW to read as follows:

The Washington malt beverage commission created under section 3 of this act may purchase or receive donations of malt beverages from breweries and may use such malt beverages for promotional purposes. Malt beverages furnished to the commission under this section that is used within the state is subject to the taxes imposed under RCW 66.24.290. No license, permit, or bond is required of the Washington malt beverage commission under this title for promotional activities conducted under sections 1 through 16 of this act.

NEW SECTION. Sec. 20. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 21. Sections 1 through 16 of this act shall constitute a new chapter in Title 15 RCW.

NEW SECTION. Sec. 22. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.