Mr. MULTER. Yes. Mr. KNEIPP (continuing). Whether the Commissioners or the Board should fix the hours rather than have them fixed by statute. It permits of some degree of flexibility. It permits them to take care of special situations, such as New Years falling on Sunday and that sort of thing. Mr. MULTER. Do they indicate that they would rather the Commissioners as such have this authority to fix the hours rather than a board? Mr. KNEIPP. Yes, Mr. Chairman. All the way through their report they emphasize that all of this authority, regulation-making authority, administrative authority, should be placed in the Commissioners, with authority to delegate to their agent, just as they have done right now. The Alcoholic Beverage Control Board is their creature. They established it 11 years ago, and delegated the necessity authority to that Board. And they desire to continue that relationship. Mr. MULTER. This, then, requires a matter of determination by the Congress of the principle. If the principle should be continued that it be a subservient Board and the Commissioners have the full authority, then, of course, they should have the full right to do this. On the other hand, if we determine it should be an independent Board, then, of course, it cannot be independent if somebody else is going to make the rules and regulations for them. Mr. KNEIPP. The section 4 of the Commissioners' bill offered today amends subsection (g) of section 11 of the Alcoholic Beverages Control Act so as to provide for service of alcoholic beverages. It is a restatement of existing law insofar as the service of alcoholic beverages at food counters and public tables is concerned. The purpose of section 4 of the bill offered by the Commissioners is to restore the situation to what it was prior to the recent amendment of the act in the course of which there was an inadvertent change in the law that had the effect of precluding restaurants from serving alcoholic beverages to assemblages of more than six individuals in a private room. The hotels continue to have that, but the restaurants inadvertently were adversely affected by the recent amendment in subsection (g) of section 11. The language in H.R. 2036 is somewhat different from that offered by the Commissioners. It appears in the print beginning in line 6 and running down through about line 18. Mr. MULTER. On what page? Mr. KNEIPP. On page 22. I think the sense of both the Commissioners' language and the language in lines 6 through 18 on page 22 of the bill is substantially the same. If I am in error, I will probably be corrected before the hearing is over. But I think both of them do about the same thing, and that is restore the situation, as far as the private room is concerned, to what it was prior to the amendment in the last session of that Congress. Mr. MULTER. It puts the restaurants and hotels in the same category. Mr. KNEIPP. Yes. It treats them exactly alike; whereas, now there are some differences in the treatment afforded restaurants and hotels. Mr. MULTER. It does not seek to change the law as amended in the last session? Mr. KNEIPP. No. At least it does not seek to go back to where the law was before the amendment in the last Congress. Mr. MULTER. Yes. Mr. KNEIPP. Section 5 of the Commissioners' bill is not contained in H.R. 2036. And the purpose of section 5 of the Commissioners' bill is merely to require that there be notification given of any change in the officers or directors of a corporate licensee. So that those officers and directors can be subjected to the same determination that is required of the officers and directors of an applicant with respect to a determination by the Board that each such officer and director is of good moral character and generally fit for the trust to be in him reposed. And the Commissioners in their report asked that H.R. 2036 be amended to include this language. Mr. MULTER. I wonder if that goes far enough? Should we not also include the stockholder? A new applicant must show not only that his officers and directors are proper persons to get a license or to operate a licensee's premises but also the stockholders, the owners of the corporation. Mr. KNEIPP. Mr. Chairman, the proposals contained in the draft bill I offered at the hearing today were based in large part on the study made by a citizens' committee under the chairmanship of Mrs. Isabel Gichner. And I think that the Commissioners considered those recommendations of that committee, they considered whether this should be extended to stockholders; and, as I recall it, I believe that they rejected the idea that stockholders likewise should be subjected to this determination, and limited it to officers and directors only of corporate licensees. Mr. MULTER. What is the thinking with reference to that? After all, the stockholders are the owners. The directors and officers are merely the operators or managers. The stockholders are the owners. Now, if a racketeer or known felon came in and made an application through a corporation, the stock of which was owned by him, would a license be granted to him or to his corporation? Mr. KNEIPP. I would hate to have to answer that, Mr. Chairman. I wonder if I might Mr. MULTER. I would like to have the ABC Board answer that for us. I am sure that in every State of the Union, under this act a person convicted of a felony or a person who is known to be of ill repute would disqualify his corporation from getting a license, even if he owned only a minority interest of the stock. Mr. KNEIPP. I cannot answer that offhand, Mr. Chairman. May I check that out, please? Mr. MULTER. Please. Mr. KNEIPP. Proceeding to section 6 of the Commissioners' bill, and section 7, I will handle those together. That is directed to the same problem that the H.R. 2036 is directed to, beginning on page 39 and carrying over to line 8 on page 42. Under the law, there is a provision that a manufacturer of alcoholic beverages in section 18 shall not give or loan any money to any wholesale or retail licensee, or sell, rent, loan, or give to such licensee any 21-065-63 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. KNEIPP. Yes, Mr. Schwengel. 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. 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. In a 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 equipment, furniture, fixtures, or property, or give or sell any service to such licensee, except 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 in existing law. And a similar provision with respect to the wholesaler-retailer relationship appears in section 19 with this $10 limitation. The bill raises that $10 limitation to $15. The Commissioners feel that even $15 is an unrealistic amount. They realize that as time goes on the value of money changes and, accordingly, in order to allow them to deal with the situation on a more flexible basis than is possible when there is a flat dollar amount fixed by law, they suggest that section 18 of the act and section 19 both be amended by striking the phrase "not more than $10" each time the phrase appears, and inserting in lieu thereof not more than such amount as the Commissioners may from time to time by regulation establish. This would permit of some degree of flexibility in the handling of this problem. Section 8 of the Commissioners' bill is not covered in H.R. 2036. Section 8 of their bill would allow the Alcoholic Beverage Control Board to serve summonses on witnesses outside the District of Columbia but not more than 25 miles from the U.S. Capitol Building, with such summons to be served by the U.S. Marshal or his deputy; and in the event the summons of the Board should not be obeyed, then the Board could ask the U.S. district court for the district in which the witness resides, whether it is in Maryland or Virginia, to enforce obedience to the summons of the Alcoholic Beverage Control Board. This is designed to allow issuance of summonses to witnesses who live outside the boundaries of the District of Columbia-in the suburbs, of which a great many do, I presume, and instead of limiting the issuance of summonses only to the territorial limits of the District of Columbia. And this, the Commissioners believe, will allow the Board to secure the testimony of witnesses bearing on some citation brought under the act. Mr. MULTER. So far as the number of miles is concerned, what are the provisions of similar statutes for the District of Columbia? Mr. KNEIPP. The recent act increasing the jurisdiction of the municipal court and renaming it the District of Columbia court of general sessions has a-well, as I am sure the chairman knows-has a provision for 100 miles in it. I think it was the intent that that be made 25 miles. And I believe it is being treated just that way. And so in effect this proposed section 8 would extend to the Alcoholic Beverage Control Board a similar limitation; that is, allow it to issue summonses to witnesses living outside the District but not more than 25 miles distant from the U.S. Capitol Building. Mr. MULTER. It is your opinion as Corporation Counsel that that restriction is not too limited? Do you believe that that is sufficient? Mr. KNEIPP. I really cannot answer that, Mr. Chairman, from my own knowledge. It would seem to me that it would have to be answered by the Board as to whether on occasion they need to have a |