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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