of some condition into which the Board desires to make inquiry. Under the foregoing language, the Board is without power to issue a summons to any such person. The Commissioners recommend that the language quoted above be amended by inserting "within the District" after "served", and be followed by the sentence: "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." Further, to insure obedience to any such summons issued for the attendance of a witness who resides outside the District of Columbia, the Commissioners propose that the U.S. district courts for the districts immediately outside the boundaries of the District of Columbia be given the same authority with respect to compelling obedience to a summons issued by the ABC Board as is presently exercised by the U.S. District Court for the District of Columbia. This would be accomplished by striking “United States District Court for the District of Columbia" where such language presently appears in section 26 of the act, and inserting in lieu thereof "United States District Court for the district in which such witness resides". The final two sections of the draft bill, sections 9 and 10, coordinate changes made by the bill with the provisions of Reorganization Plan No. 5 of 1952, and provide that the act take effect 60 days after its approval in order to permit time for the adoption of such regulations as may be necessary as a result of the enactment of the bill. The Commissioners believe that the proposed changes in the District of Columbia ABC Act, as set forth in the attached bill, will improve the administration of the act, permit of greater flexibility in its application, and, most important of all, improve the conditions under which alcoholic beverages are sold and served both to District residents and to visitors to the District of Columbia. In view of the foregoing, the Commissioners strongly urge the enactment of the attached draft bill. Yours very sincerely, WALTER N. TOBRINER, President, Board of Commissioners of the District of Columbia. Mr. MULTER. That bill, as you say, was sent up in February of this year? Mr. KNEIPP. Yes, sir. Mr. MULTER. It has not been introduced on the House side? Mr. KNEIPP. It has not been introduced on the House side; no, Mr. Chairman. Mr. SCHWENGEL. Are you introducing an amended version of S. 852? Mr. KNEIPP. Well, I would like to put it this way, Mr. Schwengel. It is a complete version. S. 852 omits a section 4. If you will look at the bill, you will see it has section 3, and then it skips to section 5, and there is a section 4 that is rather important to the hotel and restaurant industry. Mr. SCHWENGEL. And you are putting that into the record? Mr. SCHWENGEL. All right, fine. Mr. KNEIPP. Now, shall I proceed with S. 2036, Mr. Chairman? Mr. MULTER. If you will, please. Mr. KNEIPP. Do you want me to; in view of your admonition from the beginning of the hearing, do you wish me to discuss it thoroughly or just merely state the Commissioners have offered an adverse report on the bill? The two-well, three main objections are the fact that it establishes an independent statutory Alcoholic Beverage Control Board, which runs counter to the policy of the Congress and the practice over the last 10 years with respect to vesting authority in the Commissioners rather than in any subordinate agency or independent agency. The Commissioners also object to the false advertising provision in H.R. 2036 and to the provision relating to the prohibition against selling below cost. I think those are the three primary points that they object to, although they object to a number of others. They also make a number of recommendations, and these recommendations are those in part contained in S. 852, or in the draft bill that I have offered for the record this morning. These recommendations are designed to do a number of things, primarily to improve the Alcoholic Beverage Control Act. Section 2 of the bill I have offered for the record today-well, perhaps I had better start with the first section. Mr. MULTER. Suppose at this point we make part of the record the report dated June 7, 1963, which is addressed to Chairman McMillan and over the signature of Mr. Walter N. Tobriner. (The report referred to follows:) Hon. JOHN L. MCMILLAN, Chairman, Committee on the District of Columbia, JUNE 7, 1963. MY DEAR MR. MCMILLAN: The Commissioners of the District of Columbia have for report H.R. 2036, 88th Congress, a bill to revise the District of Columbia Alcoholic Beverage Control Act. In a H.R. 2036 represents a comprehensive effort to revise the District of Columbia Alcoholic Beverage Control Act approved January 24, 1934 (48 Stat. 310; title 25, ch. 1, D.C. Code, 1961 ed.). In form the bill amends the existing law in its entirety, inserting therein a number of new provisions which, according to the viewpoint of the various classes of persons interested in the Alcoholic Beverage Control Act, improve the administration and application of the act. few instances the Commissioners are of the view that from the standpoint of the general public, the changes proposed to be made in the bill do, in fact, improve it. However, the sum total of the bill, in the view of the Commissioners, is that it is detrimental to the public at large, to various segments of the alcoholic beverage industry itself, and to other segments of the business community of the District of Columbia. In the interest of concentrating on the major aspects of the bill both as they may truly improve the administration and the application of the act and as they may be detrimental to the public, the Commissioners will, in this report, confine their comments to the more important aspects of the bill and refrain from making formal comment on provisions intended to clarify or to restate existing law. For ease of reference, this report will refer to some of the 39 sections of the proposed new act, as set forth in the first section of the bill, as "section 3," "section 4," and so on, to "section 38," without qualification, while sections 2 and 3 of the bill, appearing on pages 69, 70, and 71, will be qualified by the phrase "of the bill" whenever such qualification is necessary to distinguish these last-mentioned sections from similarly numbered sections of the proposed new act. The Commissioners note that in the definitions of "club," "hotel," "restaurant," and "tavern" in section 3, there are substituted for the present requirement that the sale of food shall constitute "the prime source of revenue" or "the chief source of revenue" the requirement that the use of space in such establishments for the sale of food shall result in a "reasonable amount of revenue." The Commissioners in general favor this change in the belief that the present requirement that the sale of food shall constitute a "prime source of revenue" or a "chief source of revenue" is difficult of determination and consequently of administration. They feel, however, that the words "substantial source" would provide a more feasible standard that the phrase "reasonable amount." Should existing law be amended so as merely to require that the sale of food shall constitute a "substantial source of the revenue" the Commissioners believe that this requirement will make it easier for the Alcoholic Beverage Control Board to administer the act, inasmuch as under such a requirement it would be necessary for the Board only to make a determination that the operator of the licensed premises relies to a considerable extent on the sale of food as a source of revenue, as indicated by his raw food purchases and by the staff and facilities he maintains for the preparation and serving of such food. The Commissioners believe that if a licensee devotes a proportionately low amount of his resources to the purchases of raw food and either maintains no staff and facilities for the preparation and serving of such food, or only a relatively small staff and facilities for this purpose, it could be an indication that the licensed premises is not a "club," "hotel," "restaurant" or "tavern" within the meaning of the act. The Commissioners note, incidentally, that regardless of whether the phrase "reasonable amount of the revenue" or "substantial source of the revenue" be used in the definitions of "hotel" and "restaurant," the words "and not from the sale of alcoholic beverages" should be stricken in line 21 on page 5 and line 20 on page 6 as not being appropriate to the sense of the two definitions. The Commissioners strongly object to section 4, since the section creates a statutory independent agency within the Government of the District of Columbia. The Commissioners believe that any such effect is contrary to the intent of Reorganization Plan No. 5 of 1952 (66 Stat. 824), under which the functions of the Alcoholic Beverage Control Board created by section 4 of the existing law were vested in the Commissioners, with authority to delegate such functions to such officer or agency as they might desire. Pursuant to the authority contained in Reorganization Plan No. 5, the Commissioners established the present District of Columbia Alcoholic Beverage Control Board (Reorganization Order No. 35, G.F. 25-100, C.O. 302, 853/14, June 16, 1953). The existing Board operates under the supervision and control of the Commissioners, who are the officials of the District of Columbia responsible for the administration of the Alcoholic Beverage Control Act. The Commissioners desire to maintain the existing relationship as between themselves and the Board established by them. They strongly object to any provision in the proposed new act which would create a new independent Alcoholic Beverage Control Board to replace the Board established by the Commissioners, and particularly do they object to vesting in any such independent board the function of making rules and regulations "to facilitate and insure the collection of taxes [on alcoholic beverages]" (line 13 on p. 11), when section 2 of the bill (p. 69) specifically prohibits the Commissioners from divesting the Board of this function for the purpose of performing it themselves. The Commissioners are of the view that they, rather than any component agency of the Government of the District of Columbia, should have the controlling voice in making rules and regulations relating to taxation of alcoholic beverages, and accordingly they must strongly object to so much of the proposed new act and of the bill as may operate to deprive them of this function. Section 6 provides for an appeal to the Commissioners from an adverse Board action in the case of the reissuance, revocation, or suspension of a license, and an appeal to the District of Columbia Court of Appeals from an adverse action by the Commissioners. The Commissioners question the consistency of this procedure, in view of the fact that other provisions of the act indicate that the Board established by section 4 is an independent, autonomous agency. Accordingly, the Commissioners consider it undesirable, as the bill is presently drawn, for them to be made a part of the appellate process, and recommend that if the bill be enacted in its present form appeals from all actions of the Board shall lie directly to the Court of Appeals. Section 7 in its first two subsections authorizes the Board to prescribe rules and regulations to carry out the purposes of the act and to control the alcoholic beverage industry generally. Consistent with their objection to the entire scheme of the proposed new act, the Commissioners are of the view that this authority should be vested in them, rather than in an independent board. The Commissioners note, incidentally, that subsection (b) of section 7 provides 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." Subject to their overriding objection to the establishment of a statutory board and considering the desirability of vesting the regulation-making authority in them, the Commissioners are of the view that this is a desirable change, inasmuch as it affords some flexibility to meet special situations which may arise from time to time. Accordingly, they favor the objective of this provision of the proposed new act. The Commissioners question the feasibility of the requirements of subsection (d) of section 7, prohibiting the granting of a class A retailer's license "for any premises located within 500 feet of any premises holding such class of license on the same street or avenue." While this provision would preclude the issuance of a class A retailer's license to a new establishment to be located within the distance of approximately one city block from an already established licensee on the same street or avenue, it would not preclude the issuance of such a license to a new licensee immediately around the corner and only a few feet distance from the established licensee. To this extent, therefore, the provision seems inaptly drawn. The Commissioners note that subsection (e) of section 7 authorizes the making of regulations relating to a number of problems which from time to time have caused difficulty in connection with the administration of the Alcoholic Beverage Control Act. To the extent that the numbered paragraphs in subsection (e) would operate to alleviate problems which have arisen from time to time, the Commissioners consider them desirable, subject, however, to their specific objections concerning the making of regulations by the Board. Existing law (subsec. (k) of sec. 11) provides for the issuance of a "solicitor's license," enabling the holder of such a license on behalf of a named vendor to offer for sale to or solicit orders from licensees for the sale of an alcoholic beverage. An individual who represents more than one vendor must have a solicitor's license for each such vendor. The advantage of the solicitor's license authorized by existing law, the Commissioners are informed, is that a person having another type of license under the act may utilize the services of a solicitor in purchasing directly from the manufacturer. This procedure would appear to be of benefit to the general public. However, paragraph numbered "(12)" of section 11 of the proposed new act, appearing in the bill in lines 21 through 23 on page 25 and lines 1 through 3 on page 26, authorizes the issuance of a solicitor's license only for the solicitation of orders from licensees for the sale of any alcoholic beverage "on behalf of the wholesaler licensed under this act whose name appears on or upon such license and whom the solicitor represents." This means, of course, that a retailer no longer would be able to buy directly from the manufacturer through a solicitor. The Commissioners object to this proposed change in the bill as not being in the public interest. Section 14 requires the Alcoholic Beverage Control Board to ascertain that the principal officers and directors of a corporation which has made application for licensing are "of good moral character and generally fit for the trust to be in [them] reposed." This section 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 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 shall then become 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. In order to carry out this recommendation the Commissioners suggest the insertion, between lines 9 and 10 on page 34 of the bill, of the following 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, notify the Board in writing 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." Section 18 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 an exception 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 $15." 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 an exception that a wholesale or retail licensee "may purchase from, rent from, borrow or receive by gift from such manufacturer any service or article of property costing such manufacturer not more than $15." The Commissioners consider the foregoing $15 limitation unrealistic. 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 in section 18, and also in section 19, where a similar situation exists, the phrase "not more than $15" 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. The Commissioners note that in section 23, beginning in line 8 of page 44 and generally extending through line 16 on page 48, the proposed new act includes the alcoholic beverage taxing provision contained in section 4 of the act approved September 14, 1961 (Public Law 87-238; 75 Stat. 510). The Commissioners also note, however, that while section 4 of the act of September 14, 1961, has been incorporated in its entirety, section 5 of such act of September 14, 1961, has not been so included. This section added to section 23 of existing law the following subsection: "(g) The Commissioners are authorized to require that the immediate container of each beverage subject to tax under this Act contain the license number of each licensee who sells or offers for sale such beverage. Such license number must be affixed at the time of display or sale of said spirits by the retailer. This subjection shall not apply to spirit containers of less than two ounces." This provision of existing law authorizes the Commissioners to require that the immedate containers of distilled spirits be stamped with the license number of the licensee at the time he displays or sells the beverage in such immediate containers. This requirement, in the view of the Commissioners, is of assistance in law enforcement and they desire to be able to continue to require licensees to stamp their license numbers on individual containers of alcoholic beverages prior to the display or sale of such beverages. Accordingly, the Commissioners recommend that the above-quoted subsection (g) of section 23 of existing law, as added by section 5 of the act of September 14, 1961, be inserted between lines 16 and 17 on page 48 of H.R. 2036. The subsection (g) which the Commissioners have recommended be inserted in the bill, as set forth in the preceding paragraph, should not be confused with a subsection (g) presently contained in the proposed new section 23. This subsection (g), appearing in lines 17 through 25 on page 48 and lines 1 through 4 on page 49, reads as follows: "(g) The Commissioners may provide that "(1) no tax shall be levied or collected under this section on any alcoholic beverage imported into the United States by the head of a foreign diplomatic or consular mission for his personal or official use, and "(2) no tax shall be levied or collected under this section on any alcoholic beverage purchased by the head of a foreign diplomatic or consular mission for his personal or official use from a holder of a wholesaler's license under this Act, if such beverage is withdrawn from a customs bonded warehouse which is under the supervision of the Secretary of the Treasury and is located on the premises of such licensee." The Commissioners have consistently taken the position that the heads of foreign diplomatic or consular missions should not be exempted from District of Columbia taxes on alcoholic beverages purchased by them for their personal or official use, whether such beverages are imported into the United States directly or are withdrawn from a customs bonded warehouse. However, if any such exemption from tax should be requested by the Secretary of State as being in the best interests of the United States in connection with its conduct of foreign affairs, then the Commissioners would not interpose any objection to the granting of such an exemption. Assuming, therefore, that the provision in the bill here being discussed has been recommended by the Secretary of State as being in the best interests of the United States, the Commissioners would have no objection to its enactment by the Congress except to the extent that the application of the provision is discretionary with the Commissioners. If, in fact, such beverages |