BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 593 (Quirk) - Department of Alcoholic Beverage Control
          
          Amended: May 24, 2013           Policy Vote: GO 10-0
          Urgency: No                     Mandate: No
          Hearing Date: August 12, 2013                           
          Consultant: Maureen Ortiz       
          
          This bill does not meet the criteria for referral to the  
          Suspense File.
          
          
          Bill Summary:  AB 593 requires the Department of Alcoholic  
          Beverage Control (ABC) to evaluate its onsite license review  
          process for restaurants that are bona fide eating places in  
          order to implement a more expedited licensing process, and  
          report to the Legislature by December 31, 2015.  The bill also  
          will permit the department to reject protests that it determines  
          are invalid or unreasonable.

          Fiscal Impact: 

              One-time costs to the ABC of up to $120,000 for rule making  
              relating to unreasonable protests, potentially offset by  
              future workload reductions
              (Special Fund).

          According to the department, the required evaluation regarding  
          the onsite license review process for restaurants is already  
          included in its annual report to the Legislature, therefore, the  
          ABC will not incur any additional costs due to that provision in  
          AB 593.

          Background:  The ABC is vested with the exclusive authority to  
          license and regulate the manufacture, distribution and sale of  
          alcoholic beverages within California and has the authority to  
          suspend, revoke or deny a license if it determines that the  
          granting or continuance of the license would be contrary to  
          public welfare or morals.  All of the ABC decisions may be  
          appealed to the ABC Appeals Board, a three-member body appointed  
          by the Governor.

          Currently there are approximately 80,000 alcoholic beverage  








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          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 licenses that also sell distilled  
          spirits.  The 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.

          Currently, there are restrictions on the issuance of licenses in  
          areas of undue concentration of retail licenses.  The 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 the  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 review and process.

          The ABC may 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.  

          Proposed Law:  AB 593 makes the following substantive  
          modifications to the Alcoholic Beverage Control Act:

          1)   Requires the ABC to evaluate its onsite license review  








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          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 transfers of licenses.

          3)  Permits the ABC to reject license protests it determines the  
          protest to be "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 submitted by an  
          individual, rather than by a petition signed by multiple  
          individuals. 

          Staff Comments: The goal of AB 593 is to give the ABC more  
          discretion to prioritize its efforts while allowing applicants  
          to participate in a process that is as efficient as possible.    
          AB 593 allows the 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, AB 593 requires all public protests to be  
          submitted individually and limited to one signee in order to  
          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.

          Lastly, AB 593 eliminates a requirement for applicants to  
          publish notification in regional print media in those cases  
          where individual notifications are already being mailed directly  








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          to area residents.  This is intended to help simplify the  
          application process for certain applicants who currently have  
          multiple notification requirements.