(1) Among other things, contains any false or deceiving statement, or which in any way misleads the general public * **

skipping two paragraphs—

*** disparages the product of any competitor; or is in any way obscene, indecent or offensive to morals.

But this applies to licensees. It does not apply to communications media. That is section 2-107 of the ABC regulations.

Mr. MULTER. So that carriers of advertising who testified before this committee last year that the existing statute made them guilty of a crime for carrying the advertising or placing the advertising were wrong?

Mr. KNEIPP. If they had reference to the act of May 29, 1916, that does say that:

It shall be unlawful for any person to ***

picking out the appropriate language

*** display or exhibit to the public any false, untrue, or misleading statement, representation or advertisement with the intent to sell, barter, or exchange any goods, wares, or merchandise or anything of value.

It seems to me questionable as to whether the communications medium could be charged with that offense, if somebody else caused the advertisement to be placed in the newspaper or whatever.

Mr. MULTER. So if it is questionable, at least we would not find fault with the newspapers or the other advertising medium or agencies if they relied on their counsel's advice that this criminal statute does apply to them?

Mr. KNEIPP. Again, it is a matter of opinion, sir.

Mr. MULTER. There is no doubt it would no apply under H.R. 684. Mr. KNEIPP. At least subsection (c) would cover that point But subsection (a) covers ground that is already covered by existing law, and I think that subsection (b) is covered by section 17 of existing law in carrying out section 2-107 of the regulations.

Mr. HUDDLESTON. Mr. Chairman.

Mr. MULTER. Mr. Huddleston.

Mr. HUDDLESTON. It is not clear to me just what the import of subsection (c) of this bill, H.R. 684, amounts to.

I am having difficulty understanding just what the liability of the mass communications media would be in the event they failed to disclose the name and post office address of the manufacturer, packer, or distributor or seller who caused the dissemination of the advertising. The penalty assessed in this bill is revocation or suspension of license. And that is the only penalty assessed in the bill.

Now, what penalty would be assessed against the communications media who refused to disclose this information as to who was responsible for having them run the ad?

Mr. MULTER. I think you put your finger on an important defect in the drafting of this H.R. 684. I think, originally as drawn, it related to the criminal statutes by reference, and therefore this was tied right into that section. But in eliminating reference to the criminal statute, it did not make clear that this was intended to be an exception from the criminal statute.

Mr. HUDDLESTON. Yes.

Mr. MULTER. I think this needs amendment accordingly if it is to be enacted.

21-065-63- -3

Mr. KNEIPP. Mr. Chairman, may I speak to that point?
Mr. MULTER. Surely.

Mr. KNEIPP. I believe and I am working purely from memory now that there is a section in the 1901 District Code, and I believe I may be wrong-but I think it is about section 920 of the 1901 codethat provides where no penalty is prescribed by an act of Congress, then there shall be a penalty; and, as I recall, I think it is $5,000 or a year in jail, or both. It is a rather severe penalty that is of general application where no specific penalty is provided.

And I can check that point and furnish staff with a citation to it. But I think it is about section 920 of the act of March 3, 1901.

Mr. HUDDLESTON. Certainly those maximum penalties in that general statute would be excessive, and we would have to, in consideration of this legislation, bear an amendment that would bring it in line with the offense.

Mr. KNEIPP. Shall I proceed with H.R. 2036?

Mr. MULTER. Yes, please.

Mr. KNEIPP. And I wonder if I might, Mr. Chairman, in connection therewith, offer for the record a copy of the bill forwarded by the Commissioners to the House of Representatives on February 4, 1963, together with their report on their letter of transmittal? Their bill was introduced in the Senate as S. 852, and it would contain the section 4 that apparently has been inadvertently omitted from S. 852. And so, if I may, I would rather speak to that bill, or along with S. 852. And if I may, I would like to offer that for the record, Mr. Chairman.

Mr. MULTER. Without objection, it will be made part of the record. (The bill and letter of transmittal follow :)

A BILL To amend the District of Columbia Alcoholic Beverage Control Act

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (c) of section 3 of the District of Columbia Alcoholic Beverage Control Act approved January 24, 1934 (48 Stat. 319), as amended (§ 25-103 (c), D.C. Code, 1961 edition), is amended by striking ", other than champagne".

SEC. 2. Subsections (j) and (n) of section 3 of such Act approved January 24, 1934 (§ 25-103 (j) and (n), D.C. Code, 1961 edition) are amended by striking "the chief source of revenue" and inserting in lieu thereof “a substantial source of the revenue".

SEC. 3. Section 7 of such Act approved January 24, 1934 (§ 25-107, D.C. Code, 1961 edition) is amended by striking so much thereof as reads "to prescribe the hours during which beverages may be sold and to forbid the sale on Sundays; but the Commissioners shall not authorize the sale by any licensee, other than the holder of a retailer's license, class E, of any beverages on Sundays other than light wines and beer, and any such sale is hereby prohibited”, and inserting in lieu thereof "to prescribe the hours during which alcoholic beverages may be sold and to prohibit the sale of any or all alcoholic beverages on such days as the Commissioners determine necessary in the public interest".

SEC. 4. Subsection (g) of section 11 of such Act approved January 24, 1934 (§ 25-111 (g), D.C. Code, 1961 edition) is amended by striking the fifth, sixth, and seventh sentences of such subsection and inserting in lieu thereof the following:

"In the case of restaurants and hotels, said spirits, beer, and wine shall be sold or served only (1) to persons seated at public tables or at bona fide lunch counters, (2) to persons in an enclosed or screened-off area in any such restaurant or hotel set aside for the accommodation of persons waiting to be seated at public tables, and (3) to assemblages of more than six individuals in a private room when such room has been previously ap

proved by the Board. In the case of hotels, said alcoholic beverages may also be sold and served in the private room of a registered guest."

SEC. 5. Section 14 of such Act approved January 24, 1934, as amended (§ 25– 115, D.C. Code, 1961 edition), is amended by adding at the end thereof the following new subsection:

"(e) Each corporation licensed under the authority of this Act shall, within five business days from the date on which there is any change in its officers or directors, in writing notify the Board of such change. Such written notification shall state the name and address of the new officer or director, and the name of the officer or director replaced by the new officer or director, if any. Each new officer or director shall be subject to a determination by the Board that he is of good moral character and generally fit for the trust to be in him reposed."

SEC. 6. Section 18 of such Act approved January 24, 1934 (§ 25-119, D.C. Code, 1961 edition) is amended by striking "not more than $10" each time such phrase appears, and inserting in lieu thereof "not more than such amount as the Commissioners may from time to time by regulation establish”.

SEC. 7. Section 19 of such Act approved January 24, 1934 (§ 25-120, D.C. Code, 1961 edition) is amended by striking "not more than $10" each time such phrase appears, and inserting in lieu thereof "not more than such amount as the Commissioners may from time to time by regulation establish”.

SEC. 8. Section 26 of such Act approved January 24, 1934 (§ 25-126, D.C. Code, 1961 edition) is amended (a) by inserting in the second sentence after "served" the phrase "within the District"; (b) by inserting after such second sentence the following: "Without the District, but not more than twenty-five miles distant from the United States Capitol Building, such summons shall be served by a United States Marshal or his deputy."; and (c) by striking "United States District Court for the District of Columbia" and inserting in lieu thereof "United States District Court for the district in which such witness resides".

SEC. 9. Nothing in this Act shall be construed so as to affect the authority vested in the Board of Commissioners of the District of Columbia by Reorganization Plan Numbered 5 of 1952 (66 Stat. 824). The performance of any function vested by this Act in the Board of Commissioners or in any office or agency under the jurisdiction and control of said Board of Commissioners may be delegated by said Board of Commissioners in accordance with section 3 of such plan.

SEC. 10. This Act shall take effect sixty days after its approval.

FEBRUARY 4, 1963.

Hon. JOHN W. MCCORMACK,

The Speaker, House of Representatives,
Washington, D.C.

MY DEAR MR. SPEAKER: The Commissioners of the District of Columbia have the honor to submit herewith a draft bill to amend the District of Columbia Alcoholic Beverage Control Act.

On March 29, 1962, the Commissioners appointed a 15-member, special Citizen Committee To Conduct a Cooperative Study of the ABC System in the District of Columbia, under the chairmanship of Mrs. Henry Gichner. This special committee was assigned the mission of conducting a cooperative study of all aspects of the ABC system in the District of Columbia, including regulations, policies, organization, enforcement practices, and other related matters, and to focus its study on (a) the public interest in terms of both the economic and social factors bearing upon the sale and consumption of alcoholic beverages in the District of Columbia, and (b) the District government's interest and responsibility in terms of administering and enforcing the ABC Act and the regulations promulgated under the authority of such act. On August 21, 1962, the special committee submitted a report to the Commissioners setting forth a number of proposals, including several amendments of the ABC Act. After considering the committee report, the Commissioners directed that the attached draft bill be prepared for the purpose of amending the ABC Act in certain respects.

The primary purpose of the bill is to improve the administration of the District of Columbia ABC Act. However, there is also some need to change the act so as to better meet the needs of the residents of and visitors to the District

of Columbia, particularly in respect to the manner of the sale and the serving of alcoholic beverages. Experience has demonstrated that District law contains features which tend to inconvenience or embarrass visitors to the District of Columbia who encounter legal restrictions on the service of alcoholic beverages that may differ from the practices with which they are familiar, such as, for example, the requirement that no distilled spirits shall be sold after midnight on Saturday, nor shall champagne be sold on Sunday. The draft bill is designed to make it possible to bring District law more nearly into conformity with the usual practices in those States of the United States which permit the sale and service of alcoholic beverages.

The first section of the draft bill amends subsection (c) of section 3 of the act so as to strike the phrase ", other than champagne". This phrase, appearing in the final sentence of such subsection, has the effect of excluding champagne from the category of light wines; i.e., wines containing 14 percent or less of alcohol by volume. The presence of this phrase in the last sentence of subsection (c) of section 3 has two principal effects-(1) it prevents the sale of champagne on Sunday, and (2) it precludes a class D licensee, i.e., one authorized to sell beer and light wines for consumption on the premises where sold, from selling champagne. The Commissioners see no reason why champagne, which they are informed contains 14 percent or less of alcohol by volume, should be discriminated against in the present law, and they recommend that this provision of law be changed so as to provide for the sale of champagne as a light wine.

The second section of the bill amends section 3(j) defining the word "hotel," and section 3(n) defining the word "restaurant." Each of these definitions presently requires that the Alcoholic Beverage Control Board shall, prior to issuing a license for the sale and service of alcoholic beverages, first find that "the chief source of revenue" to be derived from the operation of a restaurant or hotel dining room is to be from the preparation, cooking, and serving of meals and not from the sale of beverages. This requirement creates a certain amount of difficulty in the administration of the act. It is virually impossible for the operator of a restaurant or hotel dining room to guarantee that his patrons will purchase more food, measured in monetary terms, than beverages, measured in like terms. The proprietor of any such establishment may be ready, willing, and able to provide food to his patrons, but some patrons may not desire to purchase food and in lieu thereof limit their purchases principally to alcoholic beverages. It is possible that the chief source of revenue of some establishments is from the sale of alcoholic beverages. While the Commissioners recognize that the character of a hotel dining room or a restaurant rests upon the service of food, they nevertheless question whether the present language of the act, providing that the service of food shall constitute "the chief source of revenue," is a reasonable provision. Accordingly, they recommend that in lieu of this phrase in sections 3(j) and 3(n) of the act there be inserted the phrase "a substantial source of the revenue", so as to allow the ABC Board some latitude in connection with determining whether an establishment for which application has been made for a license under the act may be considered as possessing the requisite character of a restaurant or hotel dining room, as the case may be.

Section 7 of the act authorizes the Commissioners to make rules and regulations to carry out the purposes of the act. The second paragraph of this section authorizes the Commissioners "to forbid the sale [of alcoholic beverages] on Sundays; but the Commissioners shall not authorize the sale by any licensee, other than the holder of a retailer's license, class E, of any beverages on Sundays other than light wines and beer, and any such sale is hereby prohibited." The effect of the foregoing language is to prohibit the sale of distilled spirits after midnight on Saturday night and all day Sunday. The Commissioners consider such a prohibition to be unreasonable. Saturday night is customarily considered throughout the United States to be a night for general relaxation. The Commissioners believe that it would be to the advantage of the community and to the convenience of the patrons of establishments licensed under the act if the Commissioners were given authority to prescribe the hours during which alcoholic beverages may be sold and to prohibit the sale of any or all alcoholic beverages on such days as the Commissioners determine necessary in the public interest. Such authority in the Commissioners would provide them with sufficient flexibility to deal with problems arising from time to time with respect to the hours during which alcoholic beverages may be sold, such as, for example, when New Year's Day happens to fall on a Sunday, or other occasions when Saturday night is the occasion of a celebration of some kind.

Until May 31, 1962, the District of Columbia ABC Act provided that no distilled spirits could be served at food counters although beer and wine could be so served. With the enactment of the act approved May 31, 1962 (Public Law 87-470), it became possible for restaurants to serve distilled spirits at food counters as well as at public tables. However, the authority contained in this act does not extend to hotels. Accordingly, under the ABC Act as it now stands (with certain exceptions not here germane), restaurants are authorized to serve distilled spirits both at public tables and at food counters, while hotels may serve such spirits only at public tables. The Commissioners believe this to be discriminatory, and, accordingly, they recommend that section 11(g) of the act be amended so as to treat restaurants and hotels equally with respect to the serving of distilled spirits.

The proposed amendment has another purpose. One of the effects of the act of May 31, 1962, is to cast into doubt the authority of restaurants to serve distilled spirits, beer, and wine "to assemblages of more than six individuals in a private room when such room has been previously approved by the Board." The proposed amendment of section 11(g) clarifies this point by specifying that restaurants, as well as hotels, may sell and serve spirits, beer, and wine to assemblages of more than six individuals in an approved private room.

Section 14 of the act requires the Alcoholic Beverage Control Board to ascertain that the officers and directors of a corporation which has made application for licensing under the act are "of good moral character and generally fit for the trust to be in [them] reposed." The act does not, however, require that the same determination be made of officers and directors of corporations who become such after the application for license has been approved. The Commissioners recommend, therefore, that section 14 of the act be amended so as to require that each corporation licensed under the authority of the act shall, within 5 days after any change of an officer or director is made, notify the Board in writing thereof and each such new officer or director then becomes subject to a determination by the Board that he is of good moral character and generally fit for the trust to be in him reposed, in like manner as those persons who were officers and directors of a corporation at the time application for license was made.

Section 18 of the act prohibits a manufacturer of beverages from loaning or giving any money to any wholesale or retail licensee, or selling, renting, loaning, or giving to such licensee, any equipment, furniture, fixtures, or property, or any service, subject to a proviso that "with the prior approval of the Board, a manufacturer may sell, give, rent, or loan to a wholesale or retail licensee any service or article of property costing such manufacturer not more than $10.” The section also provides that no wholesale or retail licensee shall receive or accept any loan or gift of money from a manufacturer of beverages or acquire any property or service from him, also subject to a proviso that a wholesale or retail licensee "may purchase, rent from, borrow or receive by gift from such manufacturer any service or article of property costing such manufacturer not more than $10." The Commissioners consider the foregoing $10 limitation unrealistic, particularly when they consider that this figure was established some 29 years ago. They believe it would be more appropriate if the Commissioners were given authority to establish by regulation the dollar amount of property or services to be made available to licensees. Accordingly, the Commissioners recommend that both in section 18 and in section 19, where a similar situation exists, the phrase "not more than $10" be stricken and in lieu thereof there be inserted "not more than such amount as the Commissioners may from time to time by regulation establish". This language, the Commissioners believe, will provide them with flexibility in establishing the maximum dollar amount of property or services which may be furnished by a manufacturer to a wholesale or retail licensee, or by a wholesaler to a retail licensee.

Section 26 of the act authorizes the Commissioners, through the ABC Board "to summon any person before it to give testimony on oath or affirmation, or to produce all books, records, papers, documents, or other legal evidence as to any matter affecting the operation of this Act and any member of said Board shall have the power to administer all oaths and affirmations for the purposes of the administration of this Act. Such summons may be served by any member of the Metropolitan Police Department."

From time to time, however, it has been necessary for the ABC Board to issue summons to persons outside the District of Columbia who may have knowledge