HOUSE BILL REPORT
ESB 6661
As Passed House - Amended:
March 1, 2006
Title: An act relating to establishing the Washington beer commission.
Brief Description: Establishing the Washington beer commission.
Sponsors: By Senators Rasmussen, Esser, Jacobsen, Schoesler and Kohl-Welles.
Brief History:
Economic Development, Agriculture & Trade: 2/17/06, 2/22/06 [DPA].
Floor Activity:
Passed House - Amended: 3/1/06, 95-3.
Brief Summary of Engrossed Bill (As Amended by House) |
|
|
|
|
HOUSE COMMITTEE ON ECONOMIC DEVELOPMENT, AGRICULTURE & TRADE
Majority Report: Do pass as amended. Signed by 22 members: Representatives Linville, Chair; Pettigrew, Vice Chair; Kristiansen, Ranking Minority Member; Appleton, Bailey, Blake, Buri, Chase, Clibborn, Dunn, Grant, Haler, Holmquist, Kilmer, Kretz, McCoy, Morrell, Newhouse, Quall, Strow, P. Sullivan and Wallace.
Minority Report: Do not pass. Signed by 1 member: Representative Skinner, Assistant Ranking Minority Member.
Staff: Meg Van Schoorl (786-7105).
Background:
Agricultural commodity commissions and boards may be established in Washington law
either under individual chapters or as part of enabling acts covering multiple commodities.
Commodity commissions perform a variety of functions, including advertising, sales
promotion, research, and education, related to a particular commodity.
Currently, 24 commodity commissions are established under Washington law. Six were
created under their own individual chapters: apple; dairy products; fruit; beef; tree fruit
research; and wine. Six were created under the 1955 Commodity Commission Enabling Act
and have their own chapters under the Washington Administrative Code (WAC): potato;
seed potato; bulb; wheat; fryer; and barley. The remaining 12 were created under the 1961
Commodity Commission Enabling Act and have their own chapters under the WAC: hop;
dry pea and lentil; mint; blueberry; alfalfa seed; red raspberry; cranberry; strawberry;
asparagus; Puget Sound salmon; canola and rapeseed; and turfgrass seed.
Depending upon industry priorities, some commissions perform primarily marketing
programs; some perform only research programs; some commissions perform both. The
majority of the commissions' funding derives from mandatory producer assessments. Their
annual budgets range from $12,000 to $6.1 million.
In recent years, there have been numerous court challenges nationwide objecting to
commodity commissions' use of mandatory assessments for advertising and market
promotion programs. The lawsuits have centered on allegations that such programs infringe
upon First Amendment rights to free speech by mandating that producers pay assessments to
fund generic advertising with which they may disagree.
In 2003, a court challenge brought against the Washington Apple Commission resulted in
legislation to restructure commodity commission statutes in terms of governance, speech, and
oversight of commission activities, budget and programs.
Summary of Amended Bill:
Public Interest
The production and proper promotion of Washington beer is in the public interest and is vital
to the state's economic well-being because it provides jobs, tax revenues and other benefits to
the state and local communities. This chapter is only one part of a comprehensive scheme to
regulate production and marketing of Washington beer. This chapter is enacted in the
exercise of the police powers of the state to protect the health, peace, safety and general
welfare of its citizens.
Speaking on Behalf of the Washington State Government
The Legislature charges the Washington Beer Commission (Commission), with oversight by
the Director of the Department of Agriculture (Department), to speak on behalf of the
Washington government with regard to the marketing and promotion of
Washington-produced beer.
Establishing the Beer Commission
Creation of the Commission requires that a referendum be conducted by the Department and
approved by a specified number of affected producers. A "producer" is any person or other
entity licensed under Title 66 RCW to produce beer within the state and who produces less
than 100,000 barrels of beer annually per location. An "affected producer" is any producer
subject to this chapter. The referendum procedure is initiated when the Director of the
Department (Director) is petitioned to implement the chapter and determine producer
participation and the assessment. Procedural requirements for the petition and for the
referendum are specified in section 5 of the bill. If the Director determines that the
referendum has been approved, he or she will appoint Commission members within 60 days
and will direct the Commission to initiate the producers' assessment. If the Director
determines that the referendum has not been approved, he or she will take no further action to
implement or enforce the chapter.
Commission Members
The Commission will have seven voting members, including six producers and the Director.
The Director will appoint the producer members of the Commission, taking into
consideration recommendations made by a statewide craft brewing association or other
affected producers. The Director will seek balanced representation on the Commission on
the basis of beer produced and geographic location. Qualifications for Commission
membership, procedures relating to transacting Commission business, terms, appointments,
and reimbursement of expenses are described in sections 4 and 6 of the bill.
Commission Responsibilities
Among the Commission's responsibilities detailed in Section 8 are:
The Commission must submit to the Director for approval any plans, programs, and projects
concerning advertising, promotion and education, market research and development. The
Director must review the advertising or promotion program to ensure that no false claims are
made. The Commission must also submit for the Director's approval its proposed research
plan, its commodity-related education and training plan, and budget.
The Commission must reimburse the Department for all costs incurred to carry out the
chapter.
Research, Promotional, Educational Program
The Commission may create and conduct a comprehensive and extensive research,
promotional and education campaign. The campaign must take into account the needs of
producers, market conditions, and public awareness. Research goals may include efforts to:
Donations and Promotional Hosting
The Commission may purchase or receive donations of beer or malt beverages from any
brewery worldwide and use them for promotional purposes. Beer and malt beverages
furnished and used in-state are subject to beer and wine taxes. No liquor license, permit or
bond is required of the Commission for authorized promotional activities. Commission
expenditures for agricultural development, trade promotion, and promotional hosting must be
approved by the Commission as specific line items at its annual public budget hearings.
Obligations of the Commission
Obligations incurred by the Commission and other liabilities or claims against the
Commission will be enforced only against the assets of the Commission. No liability for the
debts or actions of the Commission will exist against the state, its subdivisions and
instrumentalities, or individual members, employees or agents of the Commission or the
state.
Assessments
An annual assessment of 10 cents per barrel of beer produced, up to 10,000 barrels per
location, is levied upon beer produced by an affected producer. The assessment is a personal
debt of each producer assessed. The consequences for lack of payment are described in
section 16 of the bill. The Commission must adopt rules for payment and collection of the
assessment. The assessment of an individual affected producer may be reduced based upon
in-kind contributions to the Commission. Moneys collected will be deposited into a separate
account in a state depositary. Expenditures from the account may be made without specific
legislative appropriation.
Disclosure
Certain agricultural business records, Commission records, and Department records relating
to the Commission and producers are exempt from public disclosure. These are further
identified in sections 25 and 26 of the bill. Some records may be shared between the
Department and the Commission, or used in a suit or administrative hearing involving this
chapter.
Enforcement
County and state law enforcement officers, the Liquor Control Board and its enforcement
agents, and Department employees will enforce the chapter.
Beer Festivals
The Tied House law (Chapter 66.28.010 RCW) is amended to allow the Brewers Guild to
hold a special occasion license and conduct up to six beer festivals until July 1, 2007.
Appropriation: None.
Fiscal Note: Not requested.
Effective Date of Amended Bill: The bill takes effect 90 days after adjournment of session in which bill is passed, except section 26 which reinstates prior law related to exemptions from public disclosure for agriculture and livestock information, after a scheduled expiration and takes effect July 1, 2006.
Testimony For: (In support) Having a Beer Commission will enable us to raise awareness
about the Washington beer industry within and outside our state. We have a premiere
hop-growing region that supplies hops to beer manufacturers worldwide. Our state was the
cradle of micro-breweries, and we continue to be innovators of new beer styles and designs.
We want to parallel what the Wine Commission has done. Because a Senate bill died at
cut-off that would have allowed the Brewers Guild to hold up to six festivals before July 1,
2007, we would like to amend the House supplemental budget with the same language. The
Liquor Control Board and bill proponents have agreed to the language so that the Beer
Commission and Brewers Guild are not holding beer festivals at the same time.
(With technical amendments) We need two technical amendments adding definitions of
"department" and "director."
Testimony Against: None.
Persons Testifying: (In support) T.K. Bentler, Janelle Pritchard, and Roger Bialous,
Washington Brewers Guild.
(With technical amendments) Mary Beth Lang, Washington Department of Agriculture.