House Committee on Business Affairs and Labor (04/07/2010)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:	04/07/2010	ATTENDANCE

Time:	10:39 AM to 05:51 PM	Balmer	X
		Bradford	X
Place:	HCR 0112	Casso	X
		Kerr A.	*
This Meeting was called to order by		Liston	X
	Representative Rice	Middleton	X
		Priola	X
This Report was prepared by		Soper	X
	Christie Lee	Stephens	X
		Gagliardi	X
		Rice	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB10-166 SB10-176 HB10-1394 HB10-1397 HB10-1279		Amended, Referred to the Committee of the Whole Referred to the Committee of the Whole Amended, Referred to the Committee of the Whole Postponed Indefinitely Amended, Referred to Finance

10:39 AM -- Senate Bill 10-166

Representatives Riesberg and Sonnenberg, co-prime sponsors, presented Senate Bill 10-166 concerning the authority of the Executive Director of the Department of Personnel to enter into lease-purchase agreements. Current law prohibits most state agencies from entering into lease purchase agreements for real property where the total payments exceed $500,000 unless specifically authorized by a bill other than the Long Bill or a supplemental appropriations bill. This bill allows the executive director of the Department of Personnel and Administration to enter into such agreements if certain conditions are met. It is recommended by the Capital Development Committee.

The streamlined process would only be available if the total cost of the lease-purchase is less than what would be paid in rent. In addition, the lease purchase agreement must be approved by the Governor's Office of State Planning and Budgeting and the Capital Development Committee.

Moneys appropriated to state agencies for rent are to be transferred to the newly-created Lease-Purchase Servicing Account within the Capital Construction Fund and used to make the lease-purchase payments. If private tenants are in a lease-purchase building, any rent they pay is credited to the newly-created Lease-Purchase Rental Cash Fund.

10:44 AM -- Mary Wickersham, representing the Colorado State Treasurer's Office, testified in support of the bill and talked about the strike below.

10:45 AM -- Lisa Esgar, Deputy Director, Governor's Office of State Planning and Budgeting, testified in support of the bill.


BILL:	SB10-166
TIME:	10:47:43 AM
MOVED:	Gagliardi
MOTION:	Moved amendment L.004 (Attachment A). The motion passed without objection.
SECONDED:	Middleton
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

10:48 AM

Representative Sonnenberg gave a closing remark to the bill.


BILL:	SB10-166
TIME:	10:48:53 AM
MOVED:	Soper
MOTION:	Moved to refer Senate Bill 10-166, as amended, to the Committee of the Whole. The motion passed 11-0.
SECONDED:	Priola
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

10:49 AM -- Senate Bill 10-176

Representative Gagliardi, prime sponsor, presented Senate Bill 10-176 concerning the requirements for inclusion of a professional nurse on the advanced practice nurse registry. Under current law, a nurse with special skills or training may be included in the advanced practice nurse (APN) registry. This bill modifies terms to refer to a nurse's "role and population focus" instead of a nurse's "specialty area." The State Board of Nursing will determine the appropriate graduate degrees nurses are required to complete before inclusion on the registry. Professional nurses may also obtain inclusion on the registry by endorsement if he or she:

has practiced as a recognized APN in another state for at least two of the last five years; or
holds a national certification in the appropriate "role and population focus" and possesses an appropriate graduate degree, as determined by the board.

10:52 AM -- Charlie Hebeler, representing the Colorado Nurses Association, testified in support of the bill. She talked about the history of advanced practice nurses and the statute the bill is amending.


BILL:	SB10-176
TIME:	10:57:26 AM
MOVED:	Gagliardi
MOTION:	Moved to refer Senate Bill 10-176 to the Committee of the Whole. The motion passed 11-0.
SECONDED:	Casso
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

10:57 AM -- House Bill 10-1394

Representative Rice, prime sponsor, presented House Bill 10-1394 concerning professional liability insurance policies issued to construction professionals. The Colorado Court of Appeals ruled in its 2009 decision (General Security Indemnity Company of Arizona v. Mountain States Mutual Casualty Company) that complaints in construction defect cases that only allege poor workmanship do not meet the definition of an occurrence that triggers a duty to defend in a commercial general liability policy (CGL). This bill defines property damage, including poor workmanship, as an occurrence that would trigger a CGL policy claim.

For the purposes of guiding pending and future actions in interpreting liability insurance policies issued to construction professionals, the bill imposes the following rules of contract construction to guide a court in such cases:

a court should presume that: compliance with a construction professional's objective, reasonable expectations are intended; the entire policy is to be effective and read as a whole; a just and reasonable result is intended; ambiguity in a policy is to be construed in favor of coverage; a result that renders a part of coverage illusory is not intended; and the work of a construction professional that results in property damage is an accident unless the property damage is intended and expected by the insured;
when weighing conflicting provisions, the court should construe the contract to favor coverage; and
the insurer bears the burden of proving that a policy provision limits or bars coverage.

The bill prohibits a professional liability insurer from excluding or limiting coverage of acts arising before the policy was issued unless the insured knows of defects that have a likelihood to subject the insurer to damages and fails to disclose this to the insurer. Finally, the bill states that an insurance policy that conflicts with this provision is unenforceable. Representative Rice distributed the following amendments:

Amendment L.001 (Attachment B);
Amendment L.002 (Attachment C); and
Amendment L.003 (Attachment D).

11:01 AM -- Scott Sullan, Attorney, and Dennis Polk, Attorney, testified in support of the bill. Mr. Sullan explained the need for the bill and talked about the court case ruling. He talked about the effects lack of insurance can have on home builders and homeowners.

11:08 AM

Mr. Polk talked about the types of clients he represents, including contractors and builders. He said the bill would eliminate costly litigation and gave an example of a case that has been in litigation for years. Mr. Polk explained that these types of cases need to go through federal district court which can take anywhere from four to six years. He showed some examples of advertisements from insurance companies.

11:16 AM -- Cathleen Heintz, representing the law firm Hall and Evans, testified against the bill. She talked about the complexity of insurance coverage in the construction industry and gave some examples of commercial general liability coverage and types of incidents it covers and the types it does not, including faulty workmanship. She said the bill takes the issue too far in the opposite direction and would cover all faulty workmanship.

11:29 AM

Representative Balmer gave some comments on the bill and asked for some suggestions from the witnesses regarding what the legislature can do to fix this issue. Ms. Heintz responded. Representative Soper asked whether contractors consider lawsuits when they begin a project. Ms. Heintz responded. Representative Middleton asked whether Ms. Heintz is supporting the bill or not. Ms. Heintz explained that she would be in favor of the bill if it were to be amended. Representative Rice asked the witness to explain specifically what they would like to see changed.

11:40 AM -- Jeff Ruebel, representing himself as a civil lawyer, testified against the bill and talked about the various clients that he represents, including claimants and the home builders. He said he opposes the bill in its current form because he wants to make sure there is not an overcorrection in the legislation. Mr. Ruebel explained that the insurance should not cover the faulty work, but should cover the damages that result from the faulty work. He said he would like to see the bill delayed so the parties can all come together and solve the problems the bill is looking to address. Representative Bradford said she senses immediacy with this issue and asked Mr. Ruebel to clarify a time frame and the issues he would like to continue to work on. He said an agreement hasn't been reached on the contractor's work and faulty work. He said another issue he had was with the reasonable expectation doctrine.

11:48 AM

Representative Rice stated that these issues should continue to be worked out, but the bill should continue to move through the process. Representative Balmer asked about the underwriting of construction defect insurance. Representative Liston commented on Amendment L.001. Representative Rice stated that all of the parties have an interest in solving this issue and getting the bill passed. Representative Balmer asked Representative Rice to explain who has worked on this bill. Representative Rice responded. Representative Balmer talked about the concerns the insurance companies have with the bill and asked whether the trial lawyers are in support. Representative Rice responded.

11:58 AM -- Dave Davia, representing the Association of General Contractors and the Colorado Association of Mechanical and Plumbing Contractors, testified in support of the bill with the amendments.

12:00 PM

Mr. Sullan and Mr. Polk returned to the table to explain the amendments.


BILL:	HB10-1394
TIME:	12:01:41 PM
MOVED:	Rice
MOTION:	Moved amendment L.001, (Attachment B), as amended by L.003 (Attachment D). The motion passed without objection.
SECONDED:	Casso
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB10-1394
TIME:	12:13:09 PM
MOVED:	Rice
MOTION:	Moved amendment L.003 (Attachment D), which amends Amendment L.001. The motion passed without objection.
SECONDED:	Casso
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB10-1394
TIME:	12:14:07 PM
MOVED:	Rice
MOTION:	Moved amendment L.002 (Attachment C). The motion passed without objection.
SECONDED:	Casso
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

12:14 PM


BILL:	HB10-1394
TIME:	12:15:25 PM
MOVED:	Rice
MOTION:	Moved to refer House Bill 10-1394, as amended, to the Committee of the Whole. The motion passed 11-0.
SECONDED:	Casso
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

01:37 PM -- House Bill 10-1397

Representative Peniston, prime sponsor, presented House Bill 10-1397 concerning the requirement that employers provide employee-earned paid sick time to their employees. She talked about other countries that require paid sick time. Representative Peniston explained that after talking to the interested parties, she has decided to postpone the bill indefinitely to allow more time to talk with all the parties. Representative Soper talked about his experience working in an industry where there was no paid sick leave.


BILL:	HB10-1397
TIME:	01:42:44 PM
MOVED:	Middleton
MOTION:	Moved to postpone House Bill 10-1397 indefinitely. The motion passed 11-0.
SECONDED:	Gagliardi
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	Yes
	Rice	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

01:43 PM -- House Bill 10-1279

Representative McFadyen, prime sponsor, presented House Bill 10-1279 concerning the ownership of a license to sell alcohol beverages at retail and allowing a grocery store to apply to transfer ownership and change location of a retail liquor store license and to convert the retail liquor store license to a liquor-licensed drugstore license. Beginning January 1, 2011, grocery stores may apply to state and local licensing authorities for conversion of a retail liquor store license to a liquor-licensed drugstore license. A grocery store business may obtain an unlimited number of licenses to operate in multiple locations. The new license allows a grocery store to sell full-strength beer, wine, and hard liquor. Conditions of the conversion include:

the retail liquor store and the grocery store must be within the jurisdiction of the same local licensing authority;
the grocery store obtaining the license may not be located within 1,000 feet of another retail liquor store within the jurisdiction of the same local licensing authority; and
at the time of application, the grocery store must provide evidence that its revenue from food sales during the prior 12 months have been at least 51 percent of its total revenue.

The grocery store would pay an application fee to both the state licensing authority and the local licensing authority. The local license fee for a transfer of ownership, change of location, and conversion of class of license may not exceed $5,000.

01:54 PM

Representative McFadyen explained that the bill lays out a process not a mandate. The bill gives all the power to the retail liquor store and it is up to them whether they would like to sell their license or not. Representative McFadyen displayed a poster board with a map showing retail liquor stores operating in the neighborhood of liquor-licensed grocery stores and provided a hard copy of the map to the committee (Attachment E). She also talked about a diagram illustrating the 1,000 foot radius required under the bill.

02:01 PM -- Dan Clayton, Real Estate Director, Denver Division, Safeway, testified in support of the bill. He talked about states that have similar laws to the one outlined in House Bill 10-1279 and how they work. Mr. Clayton talked about instances in other states where the grocery store and the liquor store were unable to come to an agreement and thus the liquor store continues to stay in business. He also talked about the situation where Safeway has bought out lease agreements as well.

02:07 PM

Representative Casso asked about Wyoming and whether they have the 1,000 foot rule. Mr. Clayton explained they do not have the 1,000 feet rule, just a limit on the number of licenses. Representative Stephens asked about the sale of alcohol to minors and how Safeway prevents that from happening. Mr. Clayton explained that later testimony will cover that issue. Representative Liston asked some questions about the other states' laws regarding the proximity of stores and whether a store owner can wait and negotiate to sell years down the road. Representative Kerr asked whether Safeway owns the land where their stores reside. Mr. Clayton said they do own about 50 percent of the land where their stores reside. Representative Kerr asked what protections there are for the liquor stores who are leasing their space from the grocery store. Mr. Clayton said the adjacent retailers usually own their land and explained that a sale only occurs if both parties agree. Representative Liston asked what protections the liquor store will have during negotiations. Mr. Clayton responded.

02:16 PM -- David Reitz, representing Safeway, testified in support of the bill and talked about his experience working in the liquor enforcement business in Colorado as well. He said the bill allows a current liquor retail licensee to transfer its license to a grocery store if both parties agree and puts in place a thousand foot barrier, which came from the City and County of Denver's zoning laws for liquor stores. Mr. Reitz brought up the public safety issues that were brought up by the Liquor Enforcement Division, including preventing the sale to minors. He talked about his involvement in preventing the sale to minors in grocery stores. Mr. Reitz talked about an amendment that would require employees to be 21 in order to sell alcohol. He directed the committee to the page that talks about rules to prevent the sale of alcohol to minors contained in Attachment E. He also talked about the number of sale-to-minor violation hearings there were in 2009.

02:27 PM

Representative Balmer asked about the current grocery stores that have liquor licenses in the state and the number of violations there have been at those stores. Mr. Reitz responded and responded to Representative Balmer who asked how long 18 year-olds have been able to serve alcohol. Representative Stephens asked a question regarding the age of those selling the alcohol. Mr. Reitz explained that the average age of clerks selling alcohol in Virginia, which has the 21-year-old requirement, is 35. Representative Liston asked about liquor enforcement regarding the sale to minors. Mr. Reitz explained the sale to minor compliance check protocol. Representative Liston asked what happens to the clerk who violates the law. Mr. Reitz said some will terminate the employee and some will not, and explained it is about 50-50. In addition, the clerk typically faces a $500 fine and is required to go through a liquor class.

02:36 PM -- David Spohr, representing Safeway, testified in favor of the bill. He talked about the craft beer industry in Oregon and their success at grocery stores in that state. Representative Liston asked about a number of e-mails he received from the craft brewers that state they would not be able to sell their product in the grocery stores or that they would sell too much and then drive them all out of business. He also asked who makes the decision of what types of products are sold in each store. Mr. Spohr says he is the ultimate decider, but he receives input from employees at the stores too.

02:53 PM -- Eric Lucero, representing Safeway, testified in support of the bill. Mr. Lucero talked about the store's system and its checks for identification and age when a consumer buys alcohol. He said they must ask for identification from every consumer that purchases alcohol no matter what their age. Representative Liston asked whether the liquor section of the Safeway that currently sells liquor in Colorado is closed off at night. Mr. Lucero said the liquor store is open from 8 a.m. to midnight and showed a picture of the store that can be found in Attachment E. He also talked about the training store employees must complete before they can work as a checker and sell liquor. Representative Liston asked who is able to check out liquor. Mr. Lucero responded. Representative Bradford asked who has access to the Thank You stickers at Safeway showing you purchased an item. Mr. Lucero responded.

A couple of letters of support for Safeway stores were distributed (Attachment F).

03:05 PM -- Laura Harris, representing the Liquor Enforcement Division, Department of Revenue, was available to respond to questions and addressed the fiscal note. Representative Liston asked some questions, as did Representative Balmer regarding the fact that grocers can buy liquor in bulk and put the liquor stores at a disadvantage.

03:11 PM -- Mike Laur, representing the Beer Drinker's Guide to Colorado, testified against the bill. He said their mission is to promote craft beer in Colorado. Mr. Laur talked about craft brewers' negotiations with large stores, like grocery stores, to stock their beer and that they are asked to go through the corporate office.

03:26 PM -- Ron Vaughn, representing Argonaut Wine and Liquor, testified against the bill and distributed a handout that included pictures of various grocery store liquor sections (Attachment G). He listed a number of issues he has with the bill. He talked about some ballot initiatives that have failed similar to the bill and prior years' legislation concerning liquor. Representative McFadyen clarified that this bill differs from the bill she carried last year. Representative Middleton commented on other states that sell liquor in grocery stores and their preventative measures. Representative Stephens asked Mr. Vaughn whether he has met with local law enforcement about his concerns.

03:36 PM -- Jeanne McEvoy, representing the Colorado Licensed Beverage Association, testified against the bill. Ms. McEvoy talked about safety and read from a poll regarding the consumers' preference regarding the sale of alcohol in grocery stores. She read some additional statistics from ACNielsen regarding alcohol. Ms. McEvoy addressed the amendments as well.

03:51 PM -- Laura Long, representing Bristol Brewing Company, testified against the bill and said the bill will hurt the craft brewing industry in Colorado. Representative Balmer asked Ms. Long if the bill passes, whether she would be interested in selling her product to the grocery stores or not. Ms. Long responded. A discussion ensued on grocery stores selling local craft breweries' beers. Representative Liston asked why the grocers do not carry her beer now and whether it is due to the fact that they are unable to sell full strength beer. Ms. Long said the negotiations she attempted to make with the grocery stores were made in anticipation of the bill passing last year. Representative Rice weighed in and explained the issues the craft brewers were expressing. Representative Priola also commented. A discussion ensued regarding craft brewers.

04:06 PM -- Pat Karns, representing himself as a distiller, testified against the bill and talked about the number of regulations placed on distilleries.

04:11 PM -- Rajiv Shukla, representing Village Square Liquor, testified against the bill.

04:14 PM -- Mark Thomas, representing liquor store owners, testified against the bill in its current form and suggested possible amendments that he believes would improve the bill.

04:19 PM -- Alan Lewis, representing Vitamin Cottage, also known as Natural Grocers, testified against the bill. He talked about the effects the bill would have on small businesses.

04:25 PM -- Grant Bauer, representing Western Distributing, testified against the bill and distributed a picture of the back of a grocery store where stock is held (Attachment H). He talked about how easy it is to walk into the back of a store where the stock is, including liquor. He talked about the effects the bill would have on wholesalers. Mr. Bauer explained that from a wholesale side, the bill is dangerous to youth and society, will cause wholesalers to reduce employees and salaries, and will eliminate many varieties of great brands. Representative Stephens asked a question about the liquor stores that would remain in business under the bill. Mr. Bauer responded.

04:37 PM -- Tong H. Kim, representing himself as the owner of Bonny Hy-Land Liquor, testified against the bill and talked about the prior year bills that have been attempted.

04:42 PM -- Tefery Brhame, representing himself as a liquor store owner in Commerce City, testified against the bill. He talked about the negative effects the bill would have on his business.

04:46 PM -- Alem Syoyam, representing himself, testified against the bill and said the prior witnesses covered most of his testimony but wanted to add a couple of points. He said the large grocers do not need help from the legislature, the small liquor stores do.

04:49 PM -- Russ Wright, who provides security for Liquor Mart in Boulder, testified against the bill and talked about his experience with discouraging sales to minors at a Safeway. He said he feels clerks are not aggressive enough to enforce the identification requirements and gave some examples of situations he has observed.

04:54 PM -- Bob Moody, representing the International Council of Shopping Centers and NAIOP, the Commercial Real Estate Development Association, testified against the bill. Representative Priola asked a question regarding the consumer traffic through stores now and under the bill.

05:01 PM -- Dan Kim, representing himself as a liquor store owner and others who were present room, testified against the bill and talked about other states that allow grocery stores to sell liquor.

05:03 PM -- Mulugeta Gessesse, representing himself, testified against the bill and talked about the effects it will have on small liquor stores.

05:09 PM

Representative McFadyen talked about Amendment L.001 and Representative Priola added that Amendment L.001 is included in Amendment L.002 (Attachment I).


BILL:	HB10-1279
TIME:	05:10:57 PM
MOVED:	Priola
MOTION:	Moved amendment L.002 (Attachment I). The motion passed 8-3.
SECONDED:	Stephens
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	No
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	No
	Rice	No

Not Final YES: 8 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:20 PM

Representative Casso distributed a handout from Mothers Against Drunk Driving (Attachment J). He discussed Amendment L.003, which would require clerks who sell alcohol to be 21 years of age (Attachment K).


BILL:	HB10-1279
TIME:	05:31:07 PM
MOVED:	Casso
MOTION:	Moved amendment L.003 (Attachment K). The motion passed 10-1.
SECONDED:	Stephens
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	No
	Rice	Yes
Not Final YES: 10 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:35 PM

Representative McFadyen gave some closing remarks on the bill. Representative Gagliardi expressed her concerns with the bill. Representative Stephens also gave some remarks on the bill. Representative Soper also commented on the bill and mirrored Representative Gagliardi's comments. Representative Liston and Representative Kerr also commented on the bill as well. Representative Priola clarified the amendments that were adopted. Representative Rice commented on the bill as well and talked about the current liquor licensing system.


BILL:	HB10-1279
TIME:	05:49:56 PM
MOVED:	Casso
MOTION:	Moved to refer House Bill 10-1279, as amended, to the Committee on Finance. The motion passed 6-5.
SECONDED:	Balmer
		VOTE
	Balmer	Yes
	Bradford	No
	Casso	Yes
	Kerr A.	No
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	No
	Stephens	Yes
	Gagliardi	No
	Rice	No
Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:51 PM

The committee adjourned.