The Daily Item, Sunbury, PA

News

December 16, 2007

Complex regulations

Beer sales go to Supreme Court

In early 2004, convenience-store chain Sheetz announced plans to sell beer at one of its 195 Pennsylvania locations.

But about three years passed before a single customer was allowed to purchase brew at the store in Altoona, Blair County.

And since February, beer sales have twice been halted and then resumed as Sheetz has found itself embroiled in a legal fight that has reached the state Supreme Court.

While the battle directly impacts only a fraction of Pennsylvania's beer drinkers, it serves as a prime example of the complexity of the state's alcohol regulations -- a system in which any proposed change is sure to ignite a firestorm of controversy.

"The case points out a system in Pennsylvania that is much different from almost any other state in the union," said Mike Cortez, Sheetz vice president and general counsel.

While there are many varieties of beer-sales licenses in Pennsylvania, consumers mainly buy from three types of establishments. Each has its own set of rules set by the state:

n Beer distributors sell by the case but cannot currently offer beer in smaller quantities such as a six-pack.

n Businesses with "restaurant liquor licenses" -- for instance, a bar or restaurant -- can sell beer, wine and liquor. But only beer may be offered as a carry-out purchase, and these licensees can sell nothing larger than a 12-pack.

Requirements for these establishments include serving food to the public in a space that measures at least 400 square feet and has accommodations for at least 30 people.

n Businesses with "eating place malt beverage" licenses are allowed to sell only beer; consumers cannot purchase more than two six-packs or a 12-pack at a time.

These facilities also must sell food and have room for at least 30 people, though the total space requirement is decreased to 300 square feet.

Because of this strict setup, the beer-license system has fostered a host of interest groups that, as a matter of financial survival, must zealously guard their respective share of the market.

So it is no surprise that a bill that recently passed a state Senate committee is generating plenty of feedback.

The proposal would allow beer distributors to sell packages as small as a six-pack. Also, other licensees would be able to offer up to three six-packs -- or previously unavailable 18-packs -- to a single carry-out customer.

While that sounds like a relatively small shift, the bill is opposed by trade associations representing nearly all sectors of the beer industry.

They cite varying and, in some cases, complex reasons for their concern. And they maintain that they support liquor-law reform if it happens fairly and in the proper context.

But in the end, the debate boils down to economics.

For instance, Pennsylvania Tavern Association members are not interested in allowing distributors to jump into the six-pack and 12-pack market.

"We just don't need this kind of competition," said Amy Christie, the association's executive director.

"We supply over 100,000 jobs a year to Pennsylvania." Christie said the association also is disappointed that the bill does not give licensees more flexibility in terms of where they must buy their beer.

Currently, taverns and restaurants can purchase only from one designated distributor -- and not necessarily the closest or lowest-priced distributor.

Pennsylvania Malt Beverage Distributors Association, which represents beer distributors, certainly would like its members to be able to sell beer in smaller quantities.

But the group also opposes the Senate bill, in part because it would allow other licensees to sell an 18-pack -- just six brews shy of the cases now available only through distributors.

"We feel that would be another tool that would be used against the distributors," association President David Shipula said.

Pennsylvania Beer Wholesalers Association, a group made up of larger "importing distributors" that sell beer to regular distributors, also does not support the bill.

That leads state Rep. Robert Donatucci to one conclusion.

"Everybody's mad," said Donatucci, a Philadelphia Democrat who leads the House Liquor Control Committee.

"So the way I look at it is," he said, "it must be a good consumers bill." It is unclear whether the Senate bill can win approval from a majority of Pennsylvania's lawmakers. But Donatucci contends that, one way or another, change is on the way.

"We've got to do something that makes beer sales in Pennsylvania more consumer-friendly," he said.

But how friendly is too friendly?

That is the central question in the Sheetz battle, with some arguing that the corporation is attempting to expand beer sales into the convenience-store market.

"We don't think that beer should be sold at a convenience store. There are minors in there, children of all ages in there," said the Rev. Gary Dull, an Altoona pastor who in 2004 collected nearly 7,000 petition signatures in an attempt to halt Sheetz's plans.

"I run into people all the time who say they have stopped going to Sheetz because of the beer issue," Dull said.

The Malt Beverage Distributors Association voiced its opposition by taking Sheetz to court. The case focuses on one specific legal question.

Sheetz says it never intended to allow customers to drink in the Altoona store. But the distributors association claims Sheetz's eating place malt beverage license requires the corporation to allow on-site beer consumption.

Otherwise, Shipula said, "it's obvious to us that (Sheetz) wants to act more like beer distributors than restaurants." Pennsylvania Liquor Control Board officials see things much differently.

The board approved Sheetz's license and has backed the convenience-store chain. In fact, the PLCB does not believe the Sheetz beer license is a groundbreaking or precedent-setting matter. The corporation, officials say, simply built a facility that complied with regulations set forth in the eating place malt beverage license.

Furthermore, PLCB spokesman Nick Hays said a few Pennsylvania grocery stores already can sell beer. That includes a Pocono-area Weis Market that has an eating place malt beverage license.

And there are six applications for restaurant liquor licenses pending from the Wegmans supermarket chain.

Weis, Wegmans or any other market interested in offering alcohol must follow current PLCB licensing regulations, Hays said. As long as they do, he said, "there is no rule that says a grocery store cannot sell beer." Still, some contend that granting such licenses leaves Pennsylvania teetering on the edge of a slippery slope.

More access to alcohol leads to more alcohol consumption, likely among youths, they say.

"After reviewing the plans implemented in other states, it is evident that alcohol is being provided by some underage employees to other underage friends," said Stephen Erni, executive director of the Pennsylvania DUI Association.

"While we certainly respect state government's desire for convenience of customers, this is bad public-health policy," Erni said. "The state has already established a bad precedent with increased (liquor) stores and store hours." While supporters of expanded beer sales cite surveys indicating that the public wants more convenience, the distributors association commissioned a poll with a different result.

Released in October, the poll said 54.6 percent of those interviewed said expanded access to carryout beer leads to an "increase in the rates of underage drinking or other alcohol-related problems." When it comes to beer sales, Shipula said, convenience cannot trump public safety.

"We have a controlled system for a reason -- to protect the public," he said.

Sheetz administrators scoff at the notion that their stores or clerks would contribute to alcohol problems.

"Sheetz sells beer in every other state in which we do business," Cortez said. "And we do it very responsibly." The Sheetz case is likely to continue for some time, as will the legislative debate over who can sell six packs.

In Pennsylvania, liquor-law change happens slowly and usually involves compromises.

Dave Worst, a manager at Johnstown beer distributor Little Beverage, is well aware of that.

The state in 2005 began allowing distributors to open on Sundays, a policy that has worked well for Worst's customers.

"It's actually turned out to be a decent day for us," he said.

But the law also mandated that distributors close no later than 11 p.m.

on weekdays, curtailing standard business hours at Little Beverage.

That still does not sit well with some customers who regularly show up later.

"We get that every weekend, guaranteed, and usually once or twice a week, too," Worst said.

On the store's main entrance hangs a sign that encapsulates the ongoing struggle between convenience for beer consumers and governmental regulation:

"New state law forces us to close at 11 p.m. daily," the sign says.

"We're sorry for the inconvenience. Please contact your local legislator with complaints."

n Mike Faher is a reporter with The (Johnstown, Pa.) Tribune-Democrat. He can be reached at mfaher@tribdem.com.

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