Huge HB 1070 Changes Hooch Laws

One of the biggest pre-filed bills in the hopper is House Bill 1070, the Department of Revenue’s requested revision of our alcohol laws. 133 sections, over 18,000 words… uff da! Who’s going to read all that?

Let’s try it, section by section. I’ll bold the parts that seem to matter, but check me: if I misinterpret simple style and form changes or removal of redundancy as a major change, or if I label something “Minor edit” that actually makes a big difference in statute, let me know!

(Of course, as I’m typing this list, it occurs to me someone will amend HB 1070, or maybe even hoghouse it, and all this numbering will go for naught. But are not all of our achievements transient?)

1. Revise definitions in the alcohol title:
   1. Strike distiller and solicitor.
   2. Strike “uncle, aunt, nephew, niece, brother-in-law, sister-in-law, father-in-law, mother-in-law, son-in-law, or daughter-in-law” from the definition of relative… which narrowing appears to allow non-immediate family members to do things like, say, apply for a liquor license without having to answer for an uncle or brother-in-law who got his license revoked (see SDCL 35-2-20).
   3. Change the definition of wine from “any liquid either commonly used, or reasonably adapted to use, for beverage purposes, and obtained by the fermentation of the natural sugar content of fruits or other agricultural products containing sugar and containing not less than one-half of one percent of alcohol by weight but not more than twenty-four percent of alcohol by weight” to “beverage made from the fermentation of grapes, grape juice, other fruit bases, or honey, with or without adding alcoholic beverages; without rectification, except for the purpose of fortification; and contains not less than one-half percent and not more than twenty-four percent alcohol by volume.
2. Minor edit.
3. Allow a dispenser (doctor, dentist, veterinarian…) to transport or store any alcoholic beverage “purchased for a bona fide scientific or medicinal purpose”… thus stopping troopers from confiscating Dr. McCoy’s Romulan ale.
4. Strike provision in SDCL 33-1-5.5 allowing municipalities and counties to “permit the sale of alcoholic beverages on publicly owned property or property owned by a nonprofit corporation if it is during a special event for which a temporary license has been issued pursuant to § 35-4-124.” The language stricken here appears to be redundant with the special-event statute, SDCL 35-4-124, so really, no change.
5. Clarify that you aren’t breaking the law if drink hooch at a licensed special event.
6. Strike from SDCL 35-1-8 distributor, which term appears not to be defined in the alcohol title.
7. Clarify that licensees must store hooch in bonded warehouses; strike language allowing the Secretary of Revenue to promulgate rules allowing alternate storage in localities with no such bonded warehouse.
8. Strike redundant definitions of SDCL 35-1-9.2, because the definitions in SDCL 35-1-1 ought to apply to everything in Title 35.
9. Minor edit.
10. Minor edit.
11. Clarify that applications from a “retail on premises manufacturer, wine carrier, or direct shipper” go to the Secretary of Revenue for review, just like other hooch apps.
12. Minor edit.
13. Among minor edits, clarify that license application fees go to the general fund, not the state treasury.
14. Replace the words wherein and specify (alas!), and commit a grammar error by replacing constitute with is. (I get the thought: changing “The application and license issued on the application constitute a contract…” with “The application and license issued on the application is* a contract…” may signify that we view the application and the license issued thereupon as a single unit. However, the grammatical subject of the sentence is two things; the verb must reflect that two-ness by being plural, just like, “My wife and I are a happy couple.”)
15. Minor edit.
16. Minor edit.
17. Minor edit, including the replacement of the august “At the time and place so fixed,…” with “At the hearing,….”
18. Minor edit.
19. Strike an apparently redundant line about transfers of ownership or location or applications from licensees who’ve broken the law going to the Secretary of Revenue for review… redundant since, per Section 11 above and SDCL 35-2-1.1, every application goes to the Secretary.
20. Replace premise with premises (fixing an error not spotted since its drafting in 2007!).
21. Minor edit.
22. Minor edit.
23. Add SDCL 35-4-124 special-event exception to SDCL 35-2-6.3 requirement that licensees solely own or lease the premises where they peddle their demon rum.
24. Strike distiller and solicitor language made obsolete by Section 1.
25. Strike the requirement that “No licensee may permit any person to become intoxicated on the premises described on the license.” But see Section 85, which moves this provision elsewhere!
26. Repeal SDCL 35-2-6.7, which sets conditions for hotels and motels to hold alcohol licenses. This repeal and another (Section 53) appear to make way for SDCL 35-4-11.2 to control licenses for hotel-motel-convention facilities.
27. Minor edit.
28. Strike solicitor and dispenser.
29. Strike requirement that wholesaler purchasing remaining inventory to make complete report of that purchase to the Secretary.
30. Strike a reference to SDCL 37-10A-1, a niggly little bit of the Trade Regulation title that prohibits selling alcohol below cost and that should be under the Alcoholic Beverages title (and will be, once we pass Section 110).
31. Strike provision allowing multiple sales to minors within 48 hours of the start of a compliance check to count as a single violation. 
32. Strike Department of Revenue’s obligation to annually notify license holders of programs to train employees to prevent sales to minors. The Department will still maintain a list of those programs on its website.
33. So as not to abuse Section 31, limit the state to conducting one compliance check per 48-hour period.
34. Minor edit.
35. Minor edit.
36. Removes a line saying “Any person may file with the secretary a duly verified complaint as to any such violation by any such licensee.” However, this seems a minor edit, since it leaves in place language saying that the Secretary of Revenue shall investigate if he/she receives information of a violation… and I’d contend that by not specifying where that information might come from, the remaining language leaves the door open for anyone to provide such information (because, unlike the State-Tribal Relations committee, we citizens don’t need statute to tell us we can do something!).
37. I think it’s minor, but hey! Committee! Make sure striking the reference to SDCL 1-25-1 doesn’t close hearings on actions on licenses!
38. Make revocation of a license effective immediately upon service of notice, not ten days later.
39. Make suspension of a license effective immediately upon service of notice, not 24 hours after.
40. Minor edit.
41. Minor edit.
42. Clarifies rules for referenda on licenses.
43. Minor edit.
44. Minor edit.
45. Minor edit.
46. Strike solicitor, dispenser, wholesaler of malt beverage, malt beverage package, light wine, and off-sale package wine licenses.
47. Strike SDCL 35-4-2.1, which is redundant with SDCL 35-4-81.
48. Strike provision allowing municipality to liquidate its alcohol holdings as it sees fit upon termination of its license… which appears to simply make municipalities subject to the same liquidation rules as every other license holder under SDCL 35-2-9.
49. Strike the July–June timeframe for licenses (Section 70 moves the same language elsewhere).
50. Drop distinction of wholesale licenses by type of hooch sold.
51. Minor edit.
52. Minor edit.
53. Helps Section 26 fold hotel rules into one statute.
54. Minor edit.
55. Allows off-sale licensees to operate within improvement districts.
56. Makes this change which puzzles me: “The number of off-sale licenses may not be less than the total number of licenses allowable or issued as of July 1, 1981, and that have never been revoked or not reissued.”
57. Strikes solicitor.
58. Applies the same change as Section 56 to the minimum number of on-sale licenses.
59. Strikes a provision including licenses issued to improvement districts before July 1, 2000, in the calculation of licenses a county may issue.
60. Minor edit.
61. Repeals authority of municipality to issue on-sale license to dog track… which doesn’t matter, since we don’t have any dog tracks, do we? Also repeals line saying dog track alcohol license doesn’t count toward municipality’s license limit.
62. Like Section 59, strikes reference to licenses issued improvement districts  before July 1, 2000.
63. Minor edit.
64. Repeals grandfather clause for clubs holding licenses prior to July 1, 1971.
65. Minor edit.
66. Minor edit.
67. Minor edit; replaces liquors with alcoholic beverages.
68. Minor edit.
69. Minor edit (premise -> premises again!)
70. Clarifies dates of licenses.
71. Strikes distiller license provision.
72. Minor edit.
73. Strikes distiller license provision.
74. Replaces distiller with manufacturer.
75. Strikes distiller.
76. Strikes malt beverage wholesale provision.
77. Minor edit.
78. Strikes distiller.
79. Strikes dispenser.
80. Minor edit.
81. Strikes malt beverage provision.
82. Strikes distiller, solicitor, etc., adds wine carrier.
83. Minor edit.
84. Minor edit.
85. Tacks the requirement (stricken by Section 25) that a licensee not allow anyone to get drunk on the licensee’s premises onto the SDCL 35-4-78 requirement that licensees not sell to obviously intoxicated people. (That’s also the statute that says licensees aren’t civilly liable for folks who do get drunk.)
86. Gives off-sale licensees the same obligation as on-sale licensees not to let minors “loiter on the licensed premises or to sell, serve, dispense, or consume alcoholic beverages.” Interestingly, this section also strikes the exception allowing licensees who do more non-alcohol business than alcohol business to have employees aged 18–20 sell, serve, or dispense hooch. But wait…
87. Strikes the same exclusion as Section 86 for off-sale licensees. In other words, these two sections mean employees selling or serving hooch must be 21 or older. But wait…
88. Puts the language about 18–20-year-old employees serving alcohol in on-sale and off-sale establishments making less than 50% of their gross on hooch into a nice, neat statute of its own.
89. Strikes statute allowing bars to let minors in if they put up a wall, fence, rope, or other physical barrier to keep minors out of the drinking area.
90. Change the law barring hooch sales on Sundays, on Memorial Day, and on Christmas Day from a statewide mandate to a local option. Right now, local governments can opt out of the Sunday and Memorial Day bans.
91. Minor edit, keeping the statewide ban on selling hooch between 2 a.m and 7 a.m.
92. Strike provision banning non-retailer purchases of “any alcoholic beverage in a package.”
93. Strike requirement that wholesaler purchasing distilled spirits file a verified affirmation statement with the Department of Revenue.
94. Strike requirement that owners of brands of distilled spirits file price statements.
95. Strike requirement that brand owners file schedules of prices and discounts, package capacity, age and proof, and other information.
96. Strike $100/case penalty for violations of those to-be-repealed distilled spirit/brand statements.
97. Strike provision making those to-be-repealed distilled spirit/brand statements confidential.
98. Minor edit.
99. Minor edit.
100. Minor edit.
101. Update “current fair market value” of on-sale license to look at most recent sale price, not most recent sale price “between January 1, 2003, and January 1, 2008.”
102. Similarly update timeframe language for reporting amount paid for licenses.
103. Strike requirement that restaurants and grocers (more specifically, anyone making more than 50% of gross on food sales) holding alcohol licenses display their hooch “in one area which is separated by a physical barrier from the rest of the establishment.”
104. Strike same one-area/barrier requirement for persons, corporations, and entities making less than 50% of gross on alcohol sales.
105. Strike malt beverage reference made obsolete by other sections of this bill.
106. Include farm winery licensees among those to whom local governments may issue temporary (fifteen days, max) special on-sale win and off-sale package win licenses.
107. Clarify language allowing civic, charitable, educational, fraternal, and veterans organizations to sell donated and legally purchased hooch. (I think Section 107 still stops the VFW and hockey league from selling moonshine.)
108. Minor edit.
109. Minor edit.
110. Clean-up for Section 30!
111. Minor edit.
112. Minor edit.
113. Changes reference to “occupational tax” to “alcohol excise tax”.
114. Minor edit.
115. Strikes apparently redundant statute on calculating the alcohol excise (neé occupational) tax.
116. Strike references to dispenser and malt beverage.
117. Strike distiller, clarify alcohol excise tax.
118. Strike occupational tax, make other minor edits.
119. Minor edit.
120. Minor edit (looks like it’s changing the penalty for late filing or payment of hooch tax, but really just refers to another statute with the same effect, thus ensuring uniformity in case other statutes are amended).
121. Minor edit.
122. Minor edit.
123. Strike provision allowing the Secretary to revoke the solicitor licenses of anyone working for an out-of-state seller or shipper who fails to provide required reports… since this bill strikes the solicitor category from existence.
124. Minor edit.
125. Strike from definition of municipalities who get a share of the alcoholic beverage fund unincorporated platted towns that have a post office and unincorporated platted municipalities within an organized township that had a post office as of July 1, 1980. (This could be a big deal, if there are any outposts clinging to their hooch licenses thanks to a a current or erstwhile post office. Examples, anyone?)
126. Minor edit.
127. Minor edit.
128. Strike “but not limited to” from the list of discriminatory and unfair practices against which the Secretary may promulgate rules (see SDCL 35-10-1(6) for that list).
129. Strike SDCL 35-10-5, which says that paying any federal tax on alcohol-related business activities proves that the payer better have a South Dakota hooch license
130. Strike SDCL 35-10-6, a similar statement which says displaying a hooch ad (or even, as I read the statute, a sign saying, “Free beer!”) proves that the individual displaying the sign better have a hooch license.
131. Minor edit.
132. Minor edit (another erasure of that august word forthwith).
133. Minor edit.

Uff da! I count 55 minor edits and only 34 sections that seem on first reading to portend some at least small effect on how we do hooch business in South Dakota. I don’t even drink, let alone sell drink, so I can’t claim to understand the exact workings or impact of each of these 133 sections. The Department of Revenue says they are working on a House Bill 1070 cheat sheet to help us distinguish the minor edits from the substantive changes. Expect that document at HB 1070’s first hearing, by which time I guarantee a minority of the House Commerce and Energy Committee will have read, let alone digested, all 18,000+ words of this bill.