BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 593
Author: Quirk (D)
Amended: 8/26/13 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/25/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, De León,
Galgiani, Hernandez, Lieu, Padilla
NO VOTE RECORDED: Correa
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/12/13
AYES: De León, Gaines, Hill, Lara, Steinberg
NO VOTE RECORDED: Walters, Padilla
ASSEMBLY FLOOR : 76-0, 5/29/13 - See last page for vote
SUBJECT : Alcoholic beverages: Department of Alcoholic
Beverage Control
SOURCE : Author
DIGEST : This bill makes changes to the Alcoholic beverage
Control Act (ABC Act) including (1) exempting an applicant for
on-sale or off-sale licenses from existing publication
requirements, as specified; (2) requiring the Department of
Alcoholic beverage Control (ABC) by January 1, 2016, to
promulgate regulations regarding responding to protests filed
under specified provisions; and (3) specifying requirements for
submitting a protest.
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Senate Floor Amendments of 8/26/13 delete provisions of the bill
(1) requiring 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 (2) requiring
that ABC define what constitutes an invalid or unreasonable
protest with respect to a license application. The amendments
also require ABC to promulgate regulations, by January 1, 2016,
with respect to such protests.
ANALYSIS :
Existing law:
1.Establishes the 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.
2.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.
3.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.
4.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. 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.
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5.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.
6.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 three-year period. 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 premise, as provided,
after specified notice from the district attorney, city
attorney, or a county counsel. Provides that a hearing for a
violation, as specified, shall be held within 60 days of an
accusation being filed.
7.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.
This bill makes the following substantive modifications to the
ABC Act:
1.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.
2.Requires the ABC to promulgate regulations, by January 1,
2016, regarding responding to alcoholic beverage license
protests.
3.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.
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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.
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
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these new licenses. Existing 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: (1) the first date of posting the premises with the
notice of intention to sell alcoholic beverages; (2) the first
date of posting the premises with the notice of application for
ownership change; and (3) 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 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, 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).
SUPPORT : (Verified 8/28/13)
California Chamber of Commerce
California Restaurant Association
National Federation of Independent Business
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OPPOSITION : (Verified 8/28/13)
Alcohol Justice
California Council on Alcohol Problems
ARGUMENTS IN SUPPORT : The author's office states that this
bill will give ABC more discretion to prioritize their efforts
while allowing applicants to participate in a process that is as
efficient as possible, thus, allowing 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, this bill will reduce the
workload of the ABC by giving it discretion to not respond to
"unreasonable" protests. Additionally, this bill requires all
public protests to be submitted individually and limited to one
signee. The author's office 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 bill 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. The author's office
maintains that this change in the law is intended to help
simplify the application process for certain applicants who have
multiple notification requirements.
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 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
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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."
ASSEMBLY FLOOR : 76-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Jones, Jones-Sawyer, Levine, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, John A. Pérez
NO VOTE RECORDED: Holden, Linder, Yamada, Vacancy
MW:ej 8/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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