BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 593| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. CONTINUED AB 593 Page 2 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. CONTINUED AB 593 Page 3 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. CONTINUED AB 593 Page 4 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 CONTINUED AB 593 Page 5 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 CONTINUED AB 593 Page 6 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 CONTINUED AB 593 Page 7 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 **** END **** CONTINUED