BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING


          AB  
          2082 (Campos)


          As Amended  April 13, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Governmental    |13-4 |Gray, Alejo, Bonta,   |Bigelow, Linder,    |
          |Organization    |     |Campos, Cooley,       |Maienschein,        |
          |                |     |Cooper,               |Steinorth           |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gipson,               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Jones-Sawyer, Levine, |                    |
          |                |     |Salas, Waldron        |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |15-5 |Gonzalez, Bloom,      |Bigelow, Chang,     |
          |                |     |Bonilla, Bonta,       |Jones, Obernolte,   |
          |                |     |Calderon, Daly,       |Wagner              |
          |                |     |Eggman, Gallagher,    |                    |








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          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |McCarty, Holden,      |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Authorizes the Director of the Alcoholic Beverage  
          Control (ABC) to temporarily suspend, limit, condition, or take  
          other action upon, any license by emergency order prior to any  
          hearing when, in the opinion of the department, the action is  
          urgent and necessary to protect against an immediate threat to  
          health or safety.  This bill would, among other things related  
          to the issuance and application of an emergency order, a  
          licensee or person or entity against whom the emergency order  
          has been issued may petition for relief from the order by  
          written argument, as specified.  Specifically, this bill:



          1)States that the Director may temporarily suspend, limit,  
            condition, or take other action upon, any license issued, as  
            specified, by emergency order prior to any hearing when, in  
            the opinion of ABC, the action is urgent and necessary to  
            protect against an immediate threat to health or safety. 



          2)Maintains the emergency order may suspend, limit, condition,  
            or take other action in relation to the license of one or more  
            persons in an operation without affecting other individual  
            licensees. 











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          3)Provides the emergency order shall set forth the grounds upon  
            which it is based, including a statement of facts constituting  
            the alleged emergency necessitating the action. 



          4)States the emergency order shall be effective immediately upon  
            issuance and service upon the licensee or any agent of the  
            licensee.  ABC shall serve the licensee with the emergency  
            order, a copy of available discovery, and other relevant  
            evidence in possession of the department, including, but not  
            limited to, affidavits, declarations, and any other evidence  
            upon which the ABC relied in issuing the emergency order.  ABC  
            shall notify the licensee of the licensee's right to petition  
            for relief. 



          5)Provides that once the emergency order has been served, a  
            licensee, person, or entity against whom the emergency order  
            has been issued may petition for relief from the order by  
            written argument. 



          6)States if a petition for relief is filed, using a  
            preponderance of the evidence standard; the director shall  
            modify or vacate the emergency order if either: 



             a)   There is a reasonable probability that the licensee will  
               prevail in the accusation. 



             b)   The likelihood of immediate threat to the health or  
               safety in not sustaining the emergency order does not  
               outweigh the likelihood of injury to the licensee in  








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               sustaining the emergency order. 



             c)   ABC shall respond, in writing, to a petition for relief,  
               by either sustaining, modifying, or vacating the emergency  
               order, within three business days of receipt of the  
               petition.  If ABC does not sustain or modify the emergency  
               order within three business days of receipt of the  
               petition, the emergency order shall be dissolved.



             d)   The emergency order shall remain effective until further  
               order of the ABC or disposition at an accusation  
               proceeding. 



             e)   ABC shall file an accusation against the licensee with  
               any additional, available pertinent discovery that was not  
               provided to the licensee at the time the emergency order  
               was issued       within five business days after the  
               issuance of an emergency order. 



             f)   The licensee or person or entity against whom the  
               emergency order has been issued and served is entitled to a  
               hearing.  If a hearing is requested, it shall commence  
               within 10 business days of the received date of the Notice  
               of Defense. 



             g)   A licensee is not precluded from proceeding directly to  
               a full evidentiary hearing on an accusation without first  
               petitioning ABC for relief. 









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             h)   At the accusation hearing, the administrative law judge  
               shall issue a verbal decision that sustains or vacates the  
               emergency order.  A proposed decision by an administrative  
               judge on the accusation shall be prepared for the  
               director's review within 10 business days after the  
               submission of the hearing. 


          EXISTING LAW:  



          1)States ABC has the exclusive power, in accordance with laws  
            enacted, to license and regulate the manufacture, importation  
            and sale of alcoholic beverages in this State.  It also has  
            the power for good cause to deny, suspend or revoke any  
            specific alcoholic beverage license. (California Constitution  
            Article XX, Section 22) 



          2)Provides ABC is headed by a Director, whose function is to  
            supervise the manufacture, distribution and sale of alcoholic  
            beverages in such a number as to fulfill the public policy and  
            legislative purpose of the ABC Act. 



          3)Authorizes ABC to investigate potential violations of the ABC  
            Act.  Authorizes the Director of the department to bring an  
            action to enjoin a violation or the threatened violation of  
            the act, and provides for a hearing process held on a protest,  
            accusation, or petition for a license. 



          4)Provides that the ABC may place reasonable conditions upon any  








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            licensee in certain situations, including, but not limited to,  
            the following:  where grounds exist for the denial of an  
            application for a license or where a protest against the  
            issuance of a license has been filed; where findings are made  
            by the ABC which would justify suspension or revocation of the  
            license, and imposition of the conditions is reasonably  
            related to those findings; where findings are made by the ABC  
            that the licensee has failed to correct objectionable  
            conditions within a reasonable period of time.  Provides  
            further that the ABC may suspend or revoke a license for  
            failure to take reasonable steps to correct objectionable  
            conditions, as described.  (Business and Professions (B&P)  
            Code Sections 23800, 24200, and 24200.1.) 



          5)Authorizes ABC, in its discretion, to suspend or revoke any  
            license to sell alcoholic beverages if it shall determine for  
            good cause that the continuance of such license would be  
            contrary to the public welfare or morals.  ABC may use a range  
            of progressive and proportional penalties.  This range will  
            typically extend from Letters of Warning to Revocation.   
            Higher or lower penalties may be recommended based on the  
            facts of individual cases where generally supported by  
            aggravating or mitigating circumstances. 



          6)Provides if an accusation is filed against a licensee, the  
            licensee is entitled to have a public hearing on the  
            accusation to present a defense against the charges made.  The  
            hearing will be presided over by an Administrative Law Judge  
            of the Administrative Hearing Office.  At the hearing, the  
            licensee is entitled to the issuance of subpoenas to compel  
            the attendance of witnesses and materials and may be  
            represented by counsel (but not at public expense), may  
            present relevant evidence and may cross-examine all witnesses.  
             The Administrative Law Judge makes a proposed decision, which  
            is filed with the ABC Director. (Government Code Sections  








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            11500-11528) 



          7)Provides generally that the ABC shall deny an application for  
            a license if the issuance or transfer of the license would  
            tend to create a law enforcement problem or add to undue  
            concentration of licenses, unless issuing the license would  
            serve a public convenience or necessity.  Defines "undue  
            concentration" in terms of a specified ratio of licensed  
            premises-to-population within a census tract or a  
            crime-reporting district in which the reported crime rate  
            exceeds the crime rate of the entire local law enforcement  
            jurisdiction by more than 20%.  (B&P Code Sections 23958 and  
            23958.4.)



          8)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. 



          9)States the California Gambling Control Commission may issue  
            any emergency orders against an owner licensee or any person  
            involved in a transaction requiring prior approval that the  
            division deems reasonably necessary for the immediate  
            preservation of the public peace, health, safety, or general  
            welfare, as specified.


          FISCAL EFFECT:   According to the Assembly Appropriations  
          Committee, minor and absorbable costs to ABC.  The new authority  
          granted to ABC would be used in extreme cases and would conform  
          to ABC's existing operations.








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          COMMENTS:  



          Purpose of the bill:  The author's office notes this bill would  
          provide the Director of ABC with the authority to suspend a  
          business' alcohol license in the case of an emergency that  
          threatens the health and safety of the public.  To do so, the  
          Director must produce an emergency order with a statement of  
          facts containing the alleged emergency, any relevant evidence  
          upon which the department relied in issuing the emergency order,  
          and a notice of the licensee's right to petition for relief. 



          The author states this bill also allows the licensee to petition  
          for relief from the order by written argument, to which the  
          department must respond within three business days with a  
          document sustaining, modifying, or vacating the emergency order.  
           If the licensee or entity against who the emergency order has  
          been issued requests a hearing, it will be granted within 10  
          business days of the received date of the Notice of Defense. 



          The author points out "In San Jose, we have seen many cases of  
          violent crime and murder in relation to bars that double as  
          'bikini bars' or strip clubs.  The illegal operations in these  
          bars may go unpunished for weeks or even months, while the  
          police department and local ABC officials build a case against  
          them.  Even under urgent situations, like repeated violent  
          crimes happening, local officials have their hands tied and must  
          let the businesses continue operation.  Even worse, many times  
          these establishments are run by the same group of business  
          partners/family members who merely transfer the alcohol license  
          amongst each other when the business is finally shut down.  The  
          author notes that the San Jose Police Department has had success  








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          in dealing with and shutting down these establishments, but  
          their authority is still lacking." 



          The author believes this bill will be a tool that can be used,  
          with caution, when residents face dangerous circumstances  
          because of problem businesses.  This bill was drafted in close  
          collaboration with local and statewide ABC officials, as well as  
          San Jose Police Department officials.  Currently, the San Jose  
          Chief of Police can immediately suspend an entertainment license  
          of a business in the case of an emergency, but this practice is  
          only applicable within the city's "entertainment zone." Law  
          enforcement and ABC have their hands tied when the same  
          emergency situations happen anywhere outside that zone.  This  
          bill also takes into consideration the current abilities of the  
          Department of Consumer Affairs, the Department of Public Health  
          and the Bureau of Gambling Control (see 9) in Existing Law) as  
          examples of how to craft the ability to suspend licenses in  
          cases of emergencies, while ensuring that licensees have  
          necessary protections and the right to due process. 



          Background:



          State v. Local Control of Alcohol Policy:  Much to local  
          government's frustration, both the state Constitution and the  
          ABC Act generally prohibit local governments from regulating the  
          sale of alcoholic beverages within their jurisdictions.   
          Exacerbating this sentiment is the perception that ABC is  
          under-funded and understaffed with less than 200 enforcement  
          agents available to police the almost 70,000 retail licenses in  
          the state.  Further compounding this situation is the inability  
          of ABC to receive any funding increases.  The ABC is a special  
          fund department that receives funding from fees imposed upon  
          alcoholic beverage licensees. 








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          Over the years, local governments have often petitioned the  
          Legislature for greater authority to directly regulate  
          establishments that sell alcohol (e.g., restricting the hours of  
          operation of problem premises, or limiting the sale of certain  
          products such as fortified wines or high alcohol content malt  
          beverages).  Much of this activity has been centered on local  
          government's use of zoning laws and conditional use permits that  
          place operating conditions on new businesses that sell alcohol.   
          While current law prohibits the ABC from issuing a new license  
          in an area not locally zoned for that type of business activity,  
          those establishments in existence prior to any local zoning  
          action are "grandfathered" and therefore beyond the reach of the  
          local government - a source of contention for local governments.  




          Historically, the alcohol industry and retailers have opposed  
          ceding to local government any measure of the state's exclusive  
          authority to regulate alcohol.  The industry has advocated that  
          matters relating to the regulation of alcohol should be  
          determined at the state level, as opposed to an assortment of  
          local regulations, which may vary from local jurisdiction to  
          local jurisdiction.



          Disorderly house law:  A disorderly house is a licensed premises  
          that disturbs the neighborhood or is maintained for purposes  
          that are injurious to the public morals, health, convenience or  
          safety.  For example, a licensed outlet that 1) disturbs the  
          neighborhood with noise, loud music, loitering, littering,  
          vandalism, urination or defecation by patrons, graffiti, etc.;  
          or 2) has many crimes ongoing inside, such as drunks, fights,  
          assaults, prostitution, narcotics, etc. The licensed premise  
          includes the parking lot.  Any licensee, or employee of any  








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          licensee, who keeps or permits such a disorderly house is guilty  
          of a misdemeanor, and the license is subject to disciplinary  
          action. (B&P Code Sections 25601 and 24200) 



          Penalty for selling an alcoholic beverage to a minor or  
          permitting a minor to consume an alcoholic beverage in an  
          on-sale premises:  The law requires the suspension of a license  
          for a second or subsequent violation within a 36-month period.   
          The law also authorizes the revocation of a license for a third  
          violation within a 36-month period.  ABC may revoke a license  
          prior to a third violation when the circumstances warrant it.  
          (B&P Code Section 25658.1) 



          In support:  Writing in support, Alcohol Justice (formerly Marin  
          Institute) states, "The state already suffers more than $38  
          billion dollars in alcohol-related harm and over 10,000  
          alcohol-related deaths annually.  This bill will help safeguard  
          public health and safety and reduce the number of problem  
          alcohol retailers in California."  



          Also writing in support, The California Council on Alcohol  
          Problems states, "quite frankly, we were a little shocked to  
          learn that the ABC Director currently lacks the authority to do  
          what this reasonable bill authorizes, which is to be able to  
          suspend the alcohol license of a business if the department  
          deems that there is an urgent or immediate threat to the health  
          and safety of the public.  The bill assures due process rights  
          to the licensee."



          There is no opposition on file. 









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          Prior legislation:  AB 2151 (Jones) of 2008, was vetoed by the  
          Governor.  AB 2151 added provisions to the ABC Act for the  
          purpose of assisting local governments in their effort to  
          control the issuance and transfer of liquor licenses. 



          AB 2893 (Hancock), Chapter 253, Statutes of 2008.  Grants ABC  
          the authority to impose restrictions on retail license transfers  
          in instances where the license transferor has been cited for  
          multiple violations of the ABC Act during his/her ownership of  
          the license. 



          SB 148 (Scott), Chapter 625, Statutes of 2006.  Among other  
          things, provided additional bases 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 any public sidewalk  
          abutting a licensed premise, as provided, after specified notice  
          from the district attorney, city attorney, or a county counsel. 



          AB 624 (Oropeza), Chapter 931, Statutes of 2001.  Permitted ABC  
          to take into account neighboring crime statistics in the area of  
          the site of the establishment when transferring an alcohol  
          license.  Furthermore, extended the time local entities have to  
          respond to the notice of a new or transferred license and  
          require the notification of local property owners around the  
          site. 



          AB 1092 (Lowenthal), Chapter 499, Statutes of 1999.  Authorized  
          ABC to place reasonable restrictions upon retail licenses or any  








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          licensee in the exercise of retail privileges if ABC adopts  
          conditions required by a local governing body. 



          AB 2897 (Caldera), Chapter 630, Statutes of 1994.  Among other  
          things, granted ABC the authority to deny an application for a  
          license if issuance would tend to create a law enforcement  
          problem, or would result in or add to an undue concentration of  
          licenses.  In addition, provided that a license may be issued if  
          the local governing body of the area in which the applicant  
          premises are located determines that public convenience or  
          necessity would be served by the issuance. 



          AB 463 (Tucker), Chapter 627, Statutes of 1994.  Authorized ABC  
          to suspend or impose new conditions on a licensee who has failed  
          to correct "reasonable conditions" as noticed by a local  
          official. 



          AB 2742 (Lee), Chapter 629, Statutes of 1994.  Made a series of  
          changes relating to ABC licensing and standards, including 1)  
          establishing general operating standards with respect to the  
          licensed premise of retailers of alcoholic beverages, 2)  
          providing that the current 30-day review process shall be  
          extended by 20 days to give the local jurisdictions more  
          authority and opportunity for related input, 3) requiring ABC to  
          notify the entity or official in writing as to why they  
          recommend that a license be issued after a protest has been made  
          by an entity or official, as specified, and 4) providing  
          additional regulation of a licensee, as specified. 
                                             



          Analysis Prepared by:                                             








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                          Eric Johnson / G.O. / (916) 319-2531  FN:  
          0002892