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 AB 593 (Quirk) Page 1 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 AB 593 (Quirk) Page 2 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 AB 593 (Quirk) Page 3 to area residents. This is intended to help simplify the application process for certain applicants who currently have multiple notification requirements.