BILL ANALYSIS Ó
Bill No: AB
593
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 593 Author: Quirk
As Amended: May 24, 2013
Hearing Date: June 25, 2013
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
AB 593 makes the following substantive modifications to the
Alcoholic Beverage Control (ABC) Act:
1)Adds a new provision to the ABC Act that requires the
department to evaluate its onsite license review process
for restaurants that are bona fide eating places in order
to implement a more expedited licensing process. Also,
requires ABC to prepare and submit a one-time report to
the Legislature, due on or before 12/31/2015, relative to
the license review process.
2)Exempts an applicant for an on-sale or off-sale license
from an existing requirement to publish a notice of the
application in a newspaper of general circulation in the
city in which the premises are situated if they are also
required to provide specified notices via mail of
application for licenses, including retail licenses and
transfer of licenses.
3)Permits the ABC to reject license protests it determines
are "invalid or unreasonable." Also, provides that
"invalid or unreasonable" protests include, but are not
limited to, examples determined, and made available to
the public, by the ABC in a manner the ABC deems
appropriate for the protest process.
4)Requires that a protest submitted by a person other than
an employee of the ABC or a public officer must be
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submitted by an individual, rather than by a petition
signed by multiple individuals.
EXISTING LAW
Existing law establishes the Department of ABC and grants
it exclusive authority to administer the provisions of the
ABC Act in accordance with the laws enacted by the
Legislature. This involves licensing individuals and
businesses associated with the manufacture, importation and
sale of alcoholic beverages in this state and the
collection of license fees or occupation taxes for this
purpose.
Existing law provides that protests against the issuance of
a liquor license may be filed with ABC. The law permits
the ABC to reject protests, except protests made by a
public agency or public official or protests made by the
governing body of a city or county, if it determines the
protests are false, vexatious, frivolous, or without
reasonable or probable cause at any time prior to a
hearing.
Existing law requires any hearings held on a protest,
accusation, or petition for a license to be held at
specified locations and to be conducted in accordance with
specified administrative procedures. Also, the law
requires certain applicants for on-sale or off-sale
licenses to have a notice of the application published, as
provided.
Existing law requires the ABC to notify the appropriate
sheriff, chief of police, district attorney, city or county
planning agency, and legislative body of an application for
the issuance or transfer of a liquor license, and prohibits
the ABC from issuing or transferring a license until at
least 30 days after such notices are provided. Existing
law also authorizes the ABC to extend that 30-day period
for a period not to exceed 20 days if a proper written
request is made by any local law enforcement agency.
Existing law requires ABC to deny an application for a
license if issuance of the license would result in or add
to an undue concentration of licenses in a particular area;
unless the local governing body finds that it would serve
the public convenience or necessity, as defined.
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Existing law provides that ABC may revoke a license for a
third violation of selling to and consumption by a person
under 21 years of age, which occurs within any 3-year
period. Existing law provides for the suspension or
revocation of an alcoholic beverage license, when a
licensee fails to take reasonable steps to correct
objectionable conditions on the licensed premises or on any
public sidewalk abutting a licensed premises, as provided,
after specified notice from the district attorney, city
attorney, or a county counsel. The law provides that a
hearing for a violation, as specified, shall be held within
60 days of an accusation being filed.
Existing law defines an "on-sale" license as authorizing
the sale of all types of alcoholic beverages: namely, beer,
wine and distilled spirits, for consumption on the premises
(such as at a restaurant or bar). An "off-sale" license
authorizes the sale of all types of alcoholic beverages for
consumption off the premises in original, sealed
containers.
BACKGROUND
ABC is vested with the exclusive authority to license and
regulate the manufacture, distribution and sale of
alcoholic beverages within California and ABC has the
authority to suspend, revoke or deny a license if it
determines that granting or continuance of the license
would be contrary to public welfare or morals. All ABC
decisions may be appealed to the ABC Appeals Board, a
three-member body appointed by the Governor, subject to
Senate confirmation.
Currently there are approximately 80,000 alcoholic beverage
licenses throughout the state. This includes both
"on-sale" and "off-sale" establishments that sell beer and
wine, and "on-sale" and "off-sale" general licensees that
also sell distilled spirits. ABC is required to
investigate both the applicant and the premises for which a
license is applied in order to determine if the public
would be adversely affected by the issuance of the license.
These investigations include an evaluation of the moral
character of the applicant and the suitability of the
proposed premises.
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ABC must deny an application for a license if issuance
would create a law enforcement problem or if issuance would
result in, or add to, an undue concentration of licenses in
the area where the license is desired. For liquor stores
and other specified retail licenses, however, ABC is
permitted to issue a license if the respective local
government determines that public convenience or necessity
would be served by granting the license.
State law caps the number of new "on and off-sale" general
licenses issued by ABC, at one for every 2,500 inhabitants
of the county where the establishment is located (2,000:1
for on-sale licenses). If no licenses are available from
the state due to the population restrictions, those
individuals interested in obtaining a liquor license may
purchase one from an existing licensee, or a broker on
behalf of the licensee, for whatever price the market
bears.
Currently, there are restrictions on the issuance of
licenses in areas of undue concentration of retail
licenses. ABC is responsible for setting conditions for
the safe operation of these new licenses. Current law
permits ABC to place reasonable operating conditions upon
retail licensees if grounds exist for denial of a license.
Operating conditions may cover any matter relating to the
conduct of the business or the condition of the premises
including, but not limited to, restrictions on hours of
sale, hiring of security guards, limitations on types and
strengths of beverages sold, and conduct of the licensee.
A protest can be made at any time within 30 days of any of
the following: (a) the first date of posting the premises
with the notice of intention to sell alcoholic beverages;
(b) the first date of posting the premises with the notice
of application for ownership change; and, (c) the date of
mailing the notice of application to residents within 500
feet of the proposed premises. If a valid protest is made
to the issuance of a license, usually a protest hearing
will be held. In 2012, ABC received 2,759 protest letters.
From those letters, 414 license applications were
protested. Protested applications generally take a few
months or longer to complete.
If a retail license application has been protested and ABC
has recommended approval of the license, ABC may issue an
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Interim Operating Permit upon the applicant's written
request. If an application is withdrawn because of a
protest being filed, an applicant may not re-file an
application at the same premises for one year, and all
protests remain valid for one year against any subsequent
applications filed by other persons at the premises.
Purpose of AB 593 : The author of AB 593 states that the
goal of this measure is to give ABC more discretion to
prioritize their efforts while allowing applicants to
participate in a process that is as efficient as possible.
Thus, AB 593 allows ABC to define what constitutes an
invalid or unreasonable protest with respect to a license
application. By providing clarity as to which type of
protests will be considered valid, the author seeks to
reduce the workload of the ABC by giving it discretion to
not respond to "unreasonable" protests.
Additionally, this measure requires all public protests to
be submitted individually and limited to one signee. The
author maintains this will assist the ABC in meeting its
obligation to contact protesters directly, as opposed to
those cases where only a list of names on a petition is
available.
Furthermore, this measure eliminates a requirement for
applicants to publish notification in regional print media
in those cases where individual notifications are already
being mailed directly to area residents. Once again, the
author maintains that this change in the law is intended to
help simplify the application process for certain
applicants who have multiple notification requirements.
Arguments in Support: Proponents contend that quite often
starting a new business such as a small specialty store or
a large chain restaurant can be overwhelming and
challenging due to the plethora of laws, inspections and
licenses that are needed prior to opening. Proponents
claim that this measure would help mitigate the cumbersome
application process by lessening the regulatory burden and
streamlining the ABC licensing process while maintaining
public input.
Arguments in Opposition: Opponents reference the fact that
excise tax rates on alcoholic beverages have not been
adjusted by the Legislature since 1992 and view this fact
as a give-away to the industry with no cost-recovery to
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state and local coffers. Opponents believe, at a minimum,
excise taxes should be adjusted automatically for inflation
to help pay for monitoring the expansion of licensees.
Opponents view this measure as yet another example of
legislation that would make it even more unlikely that a
concerned community would have the time or resources to
successfully oppose the granting of an alcoholic beverage
license they believe would negatively impact the health and
safety of their neighborhoods. Additionally, opponents are
concerned that AB 593 would allow the ABC to arbitrarily
reject any protests it determines are invalid or
unreasonable and allow signed protest letters only from
individuals and deny organizations that advocate for public
health and safety the ability to submit signed petitions
from coalitions or groups of concerned citizens.
Furthermore, opponents are of the opinion that this measure
concentrates too much policy making for statewide standards
in the hands of ABC, which they claim "has no public
commission that advises it, and no elected leader."
Staff Comments: Over the years, local governments have
often petitioned the Legislature for greater authority to
directly regulate establishments that sell alcoholic
beverages (e.g., restricting the hours of operation of
problem premises, or limiting the sale of certain products
such as fortified wines or high alcohol content malt
beverages). Much of this activity has been centered on
local government's use of zoning laws and conditional use
permits that place operating conditions on new businesses
that sell alcohol. While current law prohibits ABC from
issuing a new license in an area not locally zoned for that
type of business activity, those establishments in
existence prior to any local zoning action are
"grandfathered" and therefore beyond the reach of the local
government, a source of contention for local governments.
Historically, the alcoholic beverage industry and retailers
have opposed ceding to local government any measure of the
state's exclusive authority to regulate alcohol. The
industry has advocated that matters relating to the
regulation of alcohol should be determined at the state
level, as opposed to an assortment of local regulations,
which may vary from local jurisdiction to local
jurisdiction.
PRIOR/RELATED LEGISLATION
SB 825 (Committee on Governmental Organization), Chapter
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68, Statutes of 2009. Made clarifying and conforming
changes to an existing provision of law pertaining to
notification requirements and the submission of protests to
ABC.
SB 415 (Oropeza), 2009-2010 Session. Would have expanded
the eligibility list of local government officials who may
request an extension of time to review the issuance of
transfer of an alcoholic beverage license and lengthened
the existing extension period from 20 to 30 days. (Vetoed
by Governor)
AB 2893 (Hancock), Chapter 254, Statutes of 2008.
Authorized ABC to also impose conditions that it determines
reasonable on license transfers regarding the presence of
the license transferor on the licensed premises without
lawful business, as defined, if that license transferor was
cited with multiple violations of the ABC Act when in
possession of the license.
SB 148 (Scott), Chapter 625, Statutes of 2006. Among other
things, provided additional bases for the suspension or
revocation of an ABC license, when a licensee fails to take
reasonable steps to correct objectionable conditions on the
licensed premises or on any public sidewalk abutting a
licensed premises, as provided, after specified notice from
the district attorney, the city attorney, or a county
counsel.
AB 2296 (Leno), Chapter 345, Statutes of 2004. Among
other things, authorized ABC to reject protests it
determines to be frivolous and established procedures to be
followed in cases in which the department recommends that a
license be issued, notwithstanding that one or more
protests have been accepted by ABC.
AB 624 (Oropeza), Chapter 931, Statutes of 2001. Among
other things, permitted ABC to take into account
neighboring crime statistics in the area of the site of the
establishment when transferring a license. Also, extended
the time period local entities have to respond to the
notice of a new or transferred license and required the
notification of local property owners adjacent to the site.
AB 1092 (Lowenthal), Chapter 499, Statutes of 1999.
Authorized ABC to place reasonable restrictions upon retail
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licenses or any licensee in the exercise of retail
privileges if ABC adopts conditions requested by a local
governing body.
SUPPORT: As of June 21, 2013:
California Chamber of Commerce
California Restaurant Association
National Federation of Independent Business
OPPOSE: As of June 21, 2013:
Alcohol Justice and California Council on Alcohol Problems
FISCAL COMMITTEE: Senate Appropriations Committee