BILL REQ. #:  H-3073.1 

Prefiled 01/06/14. Read first time 01/13/14.   Referred to Committee on Government Accountability & Oversight.

     AN ACT Relating to preventing theft of alcoholic spirits from licensed retailers; amending RCW 66.08.030 and 66.08.050; and adding a new section to chapter 66.28 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 66.28 RCW to read as follows:
     (1) Subject to the procedural requirements of subsection (2) of this section, the board is authorized to regulate spirits retailers licensed under RCW 66.24.630 for the purpose of reducing the theft of spirits from the premises of such retailers. A regulation may include, but is not limited to, the imposition of the following requirements on licensees who are experiencing unacceptable rates of theft as determined by reference to standards established by the board by rule:
     (a) At the request of the board, participation in one or more consultations with an authorized representative of the board and pertinent law enforcement agencies to discuss and analyze spirits theft issues;
     (b) At the request of the board and in accordance with its directions, provide a written audit accurately documenting theft related losses of spirits inventory;
     (c) The implementation of inventory control and/or other recordkeeping system designed to reveal and track spirits theft problems;
     (d) The structural modification or relocation of the areas where spirits are displayed or stored;
     (e) The installation of adequate in store security systems; and
     (f) The employment of a sufficient number of trained staff for the purpose of monitoring display, checkout, and storage areas.
     (2) The regulatory provisions authorized under subsection (1) of this section are subject to the following procedural steps and requirements:
     (a) If a state or local law enforcement agency obtains information indicating that a licensee is experiencing an unacceptable rate of spirits theft, it must notify the board. Upon the notification, the board must inform the licensee of the alleged theft problem and may demand that the licensee participate in a consultation process involving a representative of the board, the licensee, and the pertinent law enforcement agency. The licensee's participation in the consultation is mandatory and the licensee is entitled to at least thirty days notice by the board. At any time during the initial or follow-up consultation process, the board may request that the licensee provide a written audit accurately documenting theft related losses of spirits from its inventory. In the event a licensee fails to attend or otherwise cooperate in the initial or subsequent consultations, or provide the written audit as requested by the board, the board is authorized to suspend the licensee's spirits retail license until such time as the retailer is in compliance with the requirements of this subsection (2)(a).
     (b) At the consultation, the board and the law enforcement agency must provide the licensee with any information or evidence pertinent to the law enforcement agency's allegation that the retailer has an unacceptably high spirits theft rate. The licensee must be provided with a reasonable opportunity to respond and present evidence, and, if necessary, the consultation can be continued at the discretion of the board to allow adequate time for the licensee to prepare such response.
     (c) At the conclusion of the initial consultation process, if the board finds that the licensee has an unacceptably high spirits theft rate, it may develop a corrective action plan outlining the remedial measures that must be taken by the licensee pursuant to subsection (1) of this section. In developing the plan, the board should seek the assistance of law enforcement authorities and make a concerted effort to obtain voluntary participation in the plan by the licensee. At every step in the consultation and corrective action plan process, the board is encouraged to work with the licensee in a cooperative manner and, where possible, to strive for voluntary agreements with the licensee. However, in the absence of licensee cooperation or agreement, the board is authorized to unilaterally develop and enforce a corrective action plan as authorized under this section. Once the plan is finalized, it must be filed with the board and a copy provided to the licensee either personally or through certified mail.
     (d) Not more than thirty days after the filing and service of the original corrective action plan, the board must schedule one or more follow up consultations with the licensee. The purpose of these consultations is to review the licensee's performance with respect to the requirements of the corrective action plan and to generally assess the licensee's progress in addressing spirits theft issues. If the licensee is following the corrective action plan but spirits theft remains unacceptably high, then the board and the licensee may review and revise the plan as deemed necessary by the board. Following the filing of a revised plan, the board may schedule one or more follow-up consultations at its discretion.
     (e) During the review process set forth in (d) of this subsection, if the board finds that the licensee has failed to comply with the requirements of the original or revised corrective action plan the board may:
     (i) Demand that the licensee take remedial steps so as to be compliant with the corrective action plan and schedule an additional follow-up consultation at the board's discretion; or
     (ii) If the licensee's noncompliance is deemed to be willful, suspend the retailer's spirits retail license for a period to be determined by the board by rule.
     (f) If a licensee remains consistently noncompliant with the original corrective action plan and any revised plans for a period of at least nine months, then the board is authorized to suspend or revoke the licensee's spirits retail license.
     (3) The board is granted the rule-making authority necessary to implement and enforce the provisions of this section.

Sec. 2   RCW 66.08.030 and 2012 c 2 s 204 are each amended to read as follows:
     The power of the board to make regulations under chapter 34.05 RCW extends to:
     (1) Prescribing the duties of the employees of the board, and regulating their conduct in the discharge of their duties;
     (2) Prescribing an official seal and official labels and stamps and determining the manner in which they must be attached to every package of liquor sold or sealed under this title, including the prescribing of different official seals or different official labels for different classes of liquor;
     (3) Prescribing forms to be used for purposes of this title or the regulations, and the terms and conditions to be contained in permits and licenses issued under this title, and the qualifications for receiving a permit or license issued under this title, including a criminal history record information check. The board may submit the criminal history record information check to the Washington state patrol and to the identification division of the federal bureau of investigation in order that these agencies may search their records for prior arrests and convictions of the individual or individuals who filled out the forms. The board must require fingerprinting of any applicant whose criminal history record information check is submitted to the federal bureau of investigation;
     (4) Prescribing the fees payable in respect of permits and licenses issued under this title for which no fees are prescribed in this title, and prescribing the fees for anything done or permitted to be done under the regulations;
     (5) Prescribing the kinds and quantities of liquor which may be kept on hand by the holder of a special permit for the purposes named in the permit, regulating the manner in which the same is kept and disposed of, and providing for the inspection of the same at any time at the instance of the board;
     (6) Regulating the sale of liquor kept by the holders of licenses which entitle the holder to purchase and keep liquor for sale;
     (7) Prescribing the records of purchases or sales of liquor kept by the holders of licenses, and the reports to be made thereon to the board, and providing for inspection of the records so kept;
     (8) Prescribing the kinds and quantities of liquor for which a prescription may be given, and the number of prescriptions which may be given to the same patient within a stated period;
     (9) Prescribing the manner of giving and serving notices required by this title or the regulations, where not otherwise provided for in this title;
     (10) Regulating premises in which liquor is kept for export from the state, or from which liquor is exported, prescribing the books and records to be kept therein and the reports to be made thereon to the board, and providing for the inspection of the premises and the books, records and the liquor so kept;
     (11) Prescribing the conditions and qualifications requisite for the obtaining of club licenses and the books and records to be kept and the returns to be made by clubs, prescribing the manner of licensing clubs in any municipality or other locality, and providing for the inspection of clubs;
     (12) Prescribing the conditions, accommodations, and qualifications requisite for the obtaining of licenses to sell beer, wines, and spirits, and regulating the sale of beer, wines, and spirits thereunder;
     (13) Specifying and regulating the time and periods when, and the manner, methods and means by which manufacturers must deliver liquor within the state; and the time and periods when, and the manner, methods and means by which liquor may lawfully be conveyed or carried within the state;
     (14) Providing for the making of returns by brewers of their sales of beer shipped within the state, or from the state, showing the gross amount of such sales and providing for the inspection of brewers' books and records, and for the checking of the accuracy of any such returns;
     (15) Providing for the making of returns by the wholesalers of beer whose breweries are located beyond the boundaries of the state;
     (16) Providing for the making of returns by any other liquor manufacturers, showing the gross amount of liquor produced or purchased, the amount sold within and exported from the state, and to whom so sold or exported, and providing for the inspection of the premises of any such liquor manufacturers, their books and records, and for the checking of any such return;
     (17) Providing for the giving of fidelity bonds by any or all of the employees of the board. However, the premiums therefor must be paid by the board;
     (18) Providing for the shipment of liquor to any person holding a permit and residing in any unit which has, by election pursuant to this title, prohibited the sale of liquor therein;
     (19) Prescribing methods of manufacture, conditions of sanitation, standards of ingredients, quality and identity of alcoholic beverages manufactured, sold, bottled, or handled by licensees and the board; and conducting from time to time, in the interest of the public health and general welfare, scientific studies and research relating to alcoholic beverages and the use and effect thereof;
     (20) Seizing, confiscating and destroying all alcoholic beverages manufactured, sold or offered for sale within this state which do not conform in all respects to the standards prescribed by this title or the regulations of the board. However, nothing herein contained may be construed as authorizing the liquor board to prescribe, alter, limit or in any way change the present law as to the quantity or percentage of alcohol used in the manufacturing of wine or other alcoholic beverages;
     (21) Monitoring and regulating the practices of license holders as necessary in order to prevent the theft and illegal trafficking of liquor.

Sec. 3   RCW 66.08.050 and 2012 c 2 s 107 are each amended to read as follows:
     The board, subject to the provisions of this title and the rules, must:
     (1) Determine the nature, form and capacity of all packages to be used for containing liquor kept for sale under this title;
     (2) Execute or cause to be executed, all contracts, papers, and documents in the name of the board, under such regulations as the board may fix;
     (3) Pay all customs, duties, excises, charges and obligations whatsoever relating to the business of the board;
     (4) Require bonds from all employees in the discretion of the board, and to determine the amount of fidelity bond of each such employee;
     (5) Perform services for the state lottery commission to such extent, and for such compensation, as may be mutually agreed upon between the board and the commission;
     (6) Accept and deposit into the general fund-local account and disburse, subject to appropriation, federal grants or other funds or donations from any source for the purpose of improving public awareness of the health risks associated with alcohol consumption by youth and the abuse of alcohol by adults in Washington state. The board's alcohol awareness program must cooperate with federal and state agencies, interested organizations, and individuals to effect an active public beverage alcohol awareness program;
     (7) Monitor and regulate the practices of licensees as necessary in order to prevent the theft and illegal trafficking of liquor;
     (8) Perform all other matters and things, whether similar to the foregoing or not, to carry out the provisions of this title, and has full power to do each and every act necessary to the conduct of its regulatory functions, including all supplies procurement, preparation and approval of forms, and every other undertaking necessary to perform its regulatory functions whatsoever, subject only to audit by the state auditor. However, the board has no authority to regulate the content of spoken language on licensed premises where wine and other liquors are served and where there is not a clear and present danger of disorderly conduct being provoked by such language or to restrict advertising of lawful prices.