STATE GOVERNMENT

Governor Holds Off on Signing 'Alcopops' Legislation

By Lisa Rein
Washington Post Staff Writer
Friday, April 25, 2008

A last-minute push yesterday by public health advocates and groups fighting drunken driving persuaded Maryland Gov. Martin O'Malley to reconsider signing legislation that would classify increasingly popular fruity malt liquor drinks as beer.

The bill was the focus of a major lobbying effort by the national liquor industry, which persuaded lawmakers to override a recent opinion from Attorney General Douglas F. Gansler (D) that the sweet drinks, dubbed "alcopops" by some, are distilled spirits that should be taxed more heavily and that they should be sold only in liquor stores. The measure, which would allow the beverages to continue to be sold as lower-taxed beer in convenience stores, passed the House and Senate by wide margins.

But public health and road safety advocates and the national leader of Mothers Against Drunk Driving pleaded with O'Malley (D) yesterday to veto the bill, saying the drinks are heavily marketed to young women, are too accessible to underage people and should be distributed as narrowly as possible.

The legislation was pulled moments before a 10 a.m. ceremony at which O'Malley signed into law 115 bills passed by the General Assembly during the 90-day session that ended this month.

Among them was a package of aggressive measures that promote energy efficiency and conservation. A deal giving 1.1 million electricity customers in the Washington-Baltimore area a one-time $170 credit and other rate relief also became law, the result of a legal settlement the O'Malley administration reached with Constellation Energy Group over rising rates.

Restrictions on shoreline development, the governor's top environmental priority during the session, were also signed. And the governor approved a bill that designates the administration's BayStat program to distribute $25 million to help clean up the Chesapeake Bay. The fund, passed during a special legislative session in November, was cut in half, a casualty of a tight budget.

The Constellation deal ends two years of wrangling over a 72 percent spike in Baltimore Gas and Electric customers' bills when rate caps imposed as Maryland deregulated its electricity market began to be lifted in 2006. Under the settlement, BGE customers will get a one-time credit and relief from obligations to cover the estimated $1.5 billion cost to decommission the Calvert Cliffs nuclear plant when it shuts down in 2034.

"This is the first win consumers have had in a long time on this front," O'Malley said.

The conservation measures set a goal of a 15 percent reduction in statewide energy use by 2015. Utility companies, including Pepco, must come up with aggressive programs to encourage customers to use less power.

Another new law divides a fund of power industry payments between rate relief and efficiency programs. The fund will be financed by $140 million in expected fees on plant owners who will have to purchase credits to release carbon dioxide. Customers across the state are expected to receive a $1.28 credit on their monthly bills, with more for low-income families. Power supplies will include more renewable sources such as wind and solar under another new law.

"These bills will reduce consumers' bills, keep our lights on and diversify our energy supply," said Malcolm Woolf, the state's energy administrator.

The alcopops controversy began when Gansler determined that the drinks, sold in dozens of flavors, are distilled spirits and should be taxed and sold as such -- at a higher rate than beer and only in liquor stores. The industry disputes the characterization and sought legislation that would require the state to continue to allow the drinks to be sold as beer.

Beer is taxed at 9 cents a gallon, compared with $1.50 a gallon for distilled spirits, liquor manufacturers said yesterday.

"What this bill does is maintain the status quo," said Gary Galanis, spokesman for the Norwalk, Conn., company Diageo, which has the largest share of the flavored drinks market. A veto "would do nothing but penalize responsible Marylanders who enjoy the drinks at summer barbecues," he said.

But after the plea from bill opponents, O'Malley said he would weigh whether the state should collect more revenue, by taxing the beverages at the higher rate, and "whether we should be taking extra care to restrict their sale or push them away from the reach of underage drinkers."

It was unclear whether O'Malley would sign the bill, veto it or allow it to become law without his signature, making it effective next month.

Gansler called the drinks "unequivocally not beer."

"They are no more beer than hot chocolate is," he said. "What they failed to account for is the amount of funerals that will result from this becoming law."


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