BILL REQ. #:  S-1013.1 

Read first time 01/28/2003.   Referred to Committee on Commerce & Trade.

     AN ACT Relating to the privatization of liquor sales; amending RCW 66.08.150; and adding a new chapter to Title 66 RCW.

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

NEW SECTION.  Sec. 1   The legislature intends for the franchising of the retail sale of liquor to result in a system that is more efficient than public sector retailing. Therefore, the legislature intends to initiate a pilot project to close a portion of the state's liquor retail stores, to monitor the impact of the store closures on state revenues, and to consider closing more state liquor stores in the future if the initial store closures yield benefits for the state.

NEW SECTION.  Sec. 2   For the purposes of this chapter and RCW 66.08.150, the following definitions apply unless the context clearly requires otherwise.
     (1) "Board" means the liquor control board.
     (2) "Franchise" means a business that has been granted a franchise agreement by the board to sell spirits, wine, and beer in original packaging for off-premises consumption.
     (3) "Franchise area" means an area surrounding a liquor store closed pursuant to section 4 of this act in which spirits would not be reasonably available for sale to persons following closure of the state liquor store. Franchise areas are to be determined by the board with the input of the task force for each state liquor store that is closed.
     (4) "Franchise agreement" means approval by the board to operate a franchise pursuant to this chapter and RCW 66.08.150.
     (5) "Franchise agreement holder" means a person who has been granted a franchise agreement pursuant to this chapter and RCW 66.08.150.
     (6) "Task force" means the task force on liquor franchises established in this chapter.

NEW SECTION.  Sec. 3   (1) A task force on liquor franchises is created to advise the board as it implements the liquor franchise system. The task force membership shall consist of:
     (a) One member from each caucus of the senate, appointed by the president of the senate;
     (b) One member from each caucus of the house of representatives, appointed by the speaker of the house of representatives;
     (c) One representative of city governments, appointed jointly by the president of the senate and the speaker of the house of representatives;
     (d) One representative of county governments, appointed jointly by the president of the senate and the speaker of the house of representatives;
     (e) A representative of the liquor control board. The board shall cooperate with the task force and provide technical expertise and staffing as the task force may reasonably require.
     (2) The task force shall choose its cochairs from among its membership.
     (3) Each nonlegislative member of the task force is eligible to be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060. All expenses of the task force, including travel, shall be paid jointly by the senate and the house of representatives.
     (4) The task force shall:
     (a) Assist the board in determining which state liquor stores to close, giving due consideration to the expiration of state liquor store leases;
     (b) Assist the board in determining appropriate franchise areas for the liquor stores that will be closing;
     (c) Create guidelines for the board regarding how to balance the interests of small, medium, and large volume retailers within the newly created franchise areas;
     (d) Assist the board in developing criteria other than bid amounts for the awarding of franchise agreements within franchise areas;
     (e) Monitor the impact of the franchise system on the communities in which franchises are placed. These impacts are to be determined by the task force, and may include: Underage access to alcohol, consumption rate of alcohol, the impact of revenue to the state, traffic accidents and fatalities related to alcohol use, and crimes related to alcohol use;
     (f) Make a recommendation to the legislature by December 31, 2007, on whether the franchise system should be expanded, kept at its current level, or discontinued and replaced by the former state liquor store system.

NEW SECTION.  Sec. 4   (1) Notwithstanding any other provision of law, the board is directed to implement the closure of twenty-five state liquor stores by December 31, 2005. When determining which state liquor stores to close, the board must give due consideration to the timing of the expiration of liquor store leases, as well as input from the task force. A state liquor store may not be closed unless at least one franchise exists in the franchise area covered by the liquor store, or unless the task force determines that reasonable alternative access is available to persons who previously purchased spirits from the state liquor store that is closing.
     (2) The board must determine appropriate franchise areas for each state liquor store that is closed, giving due consideration to recommendations from the task force.
     (3) The board shall accept bids for franchise agreements, and shall award franchise agreements to applicants based upon the amount of the bid and other criteria to be specified by the task force, as well as input gained from cities, counties, towns, schools, churches, and public institutions pursuant to RCW 66.24.010. The board must collect information from incorporated cities and towns regarding acceptable locations for liquor franchises within their boundaries. The board must not locate liquor franchises in any locations that have not been deemed acceptable by cities and towns.
     (4) The board may award up to three franchise agreements within each franchise area. In awarding franchise agreements, the board shall strive to achieve a balance between the interests of small, medium, and large volume franchises.
     (5) All bids for a franchise agreement may be rejected by the board if the board determines that the highest bid is inadequate, in which event the board shall begin anew the bidding process for that franchise agreement.
     (6) The term of franchise agreements is four years. Upon the expiration of a franchise agreement, a new bidding round for franchise agreements will begin.
     (7) The board may adopt rules to carry out the provisions of this chapter and RCW 66.08.150. These rules must include, but are not limited to, determining the days and hours that franchises can sell liquor, and the proper display of liquor in a franchise, including procedures for the location of liquor in the franchise during times when liquor is prohibited from being sold. Procedures for the display of liquor are the same for contract agency stores and franchises.

NEW SECTION.  Sec. 5   Nothing in this chapter and RCW 66.08.150 shall be construed to eliminate liquor vendors as referenced in RCW 66.08.050, also known as contract agency stores, or to obligate liquor vendors to place bids for their stores.

NEW SECTION.  Sec. 6   (1) In addition to other provisions of law, it is unlawful for any franchise agreement holder, agent, or employee on the franchise agreement holder's premises to:
     (a) Sell or offer for sale any liquor other than from the original package or container;
     (b) Sell or offer for sale spirits for less than the state liquor store price for the spirits;
     (c) Sell, give away, or permit the sale, gift, or procurement of any liquor for or to any person under twenty-one years of age;
     (d) Sell, give away, or permit the sale, gift, or procurement of any liquor for or to any person apparently intoxicated;
     (e) Permit the consumption of any spirits, strong beer, or alcohol on the premises by any person;
     (f) Alter, change, or misrepresent the quality, quantity, or brand name of any liquor with the intent to defraud;
     (g) Permit any person under twenty-one years of age to sell or give liquor to any other person, except to assist a cashier who is twenty-one years of age or older; or
     (h) Purchase or otherwise obtain liquor in any manner or from any source other than that specifically authorized in this title.
     (2) Violations of any provision of this chapter or any rule adopted by the board, or any false statement concerning any material fact, or omission of any material fact in submitting an application for a franchise agreement or for a renewal of a franchise agreement or in any hearing concerning the suspension or revocation of a franchise agreement, or the commission of any of the acts declared in this chapter to be unlawful, is subject to disciplinary action by the board, including suspension or revocation of the franchise agreement. No fees paid for the franchise agreement will be refunded. The board shall develop rules to implement and enforce this subsection and may assess an administrative penalty for violations.
     (3) Nothing in this chapter or any rule of the board prevents or prohibits any franchise agreement holder from employing any person who is at least eighteen years of age to serve in any franchise, or from having such a person assist a person twenty-one years of age or older who handles, sells, or delivers spirits, strong beer, or alcohol under this chapter.

Sec. 7   RCW 66.08.150 and 1989 c 175 s 122 are each amended to read as follows:
     (1) The action, order, or decision of the board as to any denial of an application for the reissuance of a permit ((or)), license, or franchise agreement or as to any revocation, suspension, or modification of any permit ((or)), license, or franchise agreement shall be an adjudicative proceeding and subject to the applicable provisions of chapter 34.05 RCW.
     (((1))) (2) An opportunity for a hearing may be provided an applicant for the reissuance of a permit ((or)), license, or franchise agreement prior to the disposition of the application, and if no such opportunity for a prior hearing is provided then an opportunity for a hearing to reconsider the application must be provided the applicant.
     (((2))) (3) An opportunity for a hearing must be provided a permittee ((or)), licensee, or franchise agreement holder prior to a revocation or modification of any permit ((or)), license, or franchise agreement and, except as provided in subsection (((4))) (5) of this section, prior to the suspension of any permit ((or)), license, or franchise agreement.
     (((3))) (4) No hearing shall be required until demanded by the applicant, permittee, ((or)) licensee, or franchise agreement holder.
     (((4))) (5) The board may summarily suspend a license ((or)), permit, or franchise agreement for a period of up to thirty days without a prior hearing if it finds that public health, safety, or welfare imperatively require emergency action, and incorporates a finding to that effect in its order; and proceedings for revocation or other action must be promptly instituted and determined.

NEW SECTION.  Sec. 8   Sections 1 through 6 of this act constitute a new chapter in Title 66 RCW.