BILL ANALYSIS Ó AB 593 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 593 (Quirk) As Amended August 26, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |76-0 |(May 29, 2013) |SENATE: |37-0 |(September 3, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: G.O. SUMMARY : 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. The Senate amendments : 1)Delete provisions of the bill 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. 2)Require that ABC define what constitutes an invalid or unreasonable protest with respect to a license application. 3)Require ABC to promulgate regulations, by January 1, 2016, with respect to such protests. EXISTING LAW : 1)Establishes 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. Existing law permits ABC to reject protests, except protests made by a public agency, public official, or governing body of a city or county, it determines to AB 593 Page 2 be false, vexatious, or without reasonable or probable cause. 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 specified applicants for on-sale or off-sale licensees 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 prohibit the ABC from issuing or transferring a license until at least 30 days after these notices are provided. Existing law 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. 5)Restricts ABC from issuing an off-sale beer and wine license if the applicant's premise is located in a city or county where the number of retail off-sale beer and wine licenses exceeds one license for each 2,500 inhabitants. If the applicant's premise is located in a city and county, the ratio is one license for every 1,250 inhabitants. If no licenses are available due to the population restrictions, anyone interested in obtaining a liquor license must purchase one from an existing licensee. 6)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. 7)Provides 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 36-month period. This provision shall not be construed to limit the department's authority and discretion to revoke a license prior to a third violation when the circumstances warrant that penalty. 8)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 premises, as provided, after specified notice from the district attorney, city attorney, or a county counsel. Specifies that a hearing for a violation, as AB 593 Page 3 specified, shall be held within 60 days of an accusation being filed. AS PASSED BY THE ASSEMBLY , this bill made various changes to the ABC Act. FISCAL EFFECT : 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). According to ABC, 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 the bill. COMMENTS : This bill, as amended in the Senate is consistent with Assembly actions. Purpose of the bill : 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 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 AB 593 Page 4 and streamlining the ABC licensing process while maintaining public input. Alcohol oversight : 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. 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 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 AB 593 Page 5 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. Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0002270