BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 2082 Hearing Date: 6/28/2016
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|Author: |Campos |
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|Version: |6/22/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverages: licenses: emergency orders
DIGEST: This bill adds a new section of law to the Alcoholic
Beverage Control (ABC) Act that grants the Director of ABC the
authority, by emergency order, to temporarily suspend, limit, or
condition any license that authorizes the consumption of alcohol
on the premises of the licensee, except as specified, prior to
any hearing when, in the opinion of the director, the action is
urgent and necessary to protect against an immediate threat to
health or safety that is reasonably related to the operation of
the licensed business.
ANALYSIS:
Existing law:
1)Establishes the Department of ABC and grants it exclusive
authority to administer the provisions of the ABC Act in
accordance with 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)Authorizes ABC to investigate potential violations of the ABC
Act and grants the director authority 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,
AB 2082 (Campos) Page 2 of ?
or petition for a license.
3) Provides that the ABC may place reasonable conditions upon
any licensee in certain situations, including, but not limited
to, the following: (a) 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; (b) 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; and, (c) where findings are made by
the ABC that the licensee has failed to correct objectionable
conditions within a reasonable period of time. Furthermore,
the law provides that the ABC may suspend or revoke a license
for failure to take reasonable steps to correct objectionable
conditions, as described.
4)Authorizes ABC, in its discretion, to suspend or revoke any
license to sell alcoholic beverages if it determines 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, as specified.
5)Provides that 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
11500 to 11528)
6)Generally provides 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. The law 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%.
AB 2082 (Campos) Page 3 of ?
7)Requires that notice of an application for a license be
conspicuously posted on applicant premises and requires ABC to
notify various local officials in the jurisdictions in which
the premise is located that an application has been received.
The law also sets out procedures by which public agencies or
public officials may protest the issuance of a license.
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.
This bill:
1)Authorizes the Director of ABC, by emergency order, to
temporarily suspend, limit, or condition any license, as
defined, prior to any hearing when, in the opinion of the
director, the action is urgent and necessary to protect
against an immediate threat to health or safety that is
reasonably related to the operation of the licensed business.
2)Defines "license" to mean a license issued pursuant to this
subdivision that authorizes consumption of alcohol on the
premises of a licensee, excluding the licensed premises of
production of a winery, brewery, or distillery.
3)Provides that if an immediate threat to health or safety is
alleged, direct evidence of the threat must be presented to
the director prior to the issuance of an emergency order
pursuant to this section. Also, provides that the standard in
any subsequent evidentiary hearing shall be whether the
licensee "knew" about the threat.
4)Defines "direct evidence" to mean police reports, citations
from the relevant local civil authority, photographs, and
video footage provided by law enforcement or another public
official acting in his/her official capacity.
5)Defines "immediate threat to health or safety" to mean the
trafficking or dealing of controlled substances, prostitution,
human trafficking, gambling, or violence involving great
AB 2082 (Campos) Page 4 of ?
bodily injury or death that occurs on the licensee's premises.
6)Provides that the emergency order must set forth the grounds
upon which it is based, including a statement of facts
constituting the alleged emergency necessitating the action.
7)Stipulates that the emergency order shall be effective
immediately upon issuance and service upon the licensee or any
agent of the licensee.
8)Provides that ABC shall serve the licensee with the emergency
order, a copy of available discovery, and other relevant
evidence in its possession, including but not limited to,
affidavits, declarations, and any other direct evidence. The
ABC must also notify the licensee of his/her right to petition
for relief.
9)Provides that once the emergency order has been served, a
licensee may petition for relief from the order by written
argument. If a petition for relief is filed, using a
preponderance of the evidence standard, the director must
modify or vacate the emergency order if either:
a) The ABC has determined that the evidence is not
substantial enough to prevail in a hearing or ABC has
acknowledged an error on its behalf.
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
sustaining the emergency order.
10)Requires ABC to respond, in writing, to a petition for
relief within three business days. If the ABC does not
sustain or modify the emergency order within three days of
receipt of the petition, the order must be dissolved.
11)Provides that the emergency order shall remain effective
until further order of the ABC or disposition at an
accusation proceeding.
12)Provides that the licensee is entitled to a hearing and if a
hearing is requested, it must commence within 10 business
days, as specified. Also, permits a hearing to be conducted
electronically.
AB 2082 (Campos) Page 5 of ?
13)Provides that nothing in this section precludes a licensee
from proceeding directly to a full evidentiary hearing on an
accusation without first petitioning the ABC for relief.
14)Authorizes a licensee to bring a cause of action seeking
damages against a local civil authority, law enforcement, or
another public official acting in his or her official
capacity, if the licensee can establish that the direct
evidence offered to ABC to support the existence of an
immediate threat to health or safety was false and presented
with malicious intent.
Background
ABC in brief. The enactment of the 21st Amendment to the U.S.
Constitution in 1933 repealed the 18th Amendment and ended the
era of Prohibition. Accordingly, states were granted the
authority to establish alcoholic beverage laws and
administrative structures to regulate the sale and distribution
of alcoholic beverages. In California, this responsibility was
originally entrusted to the State Board of Equalization. In
1955, however, the State Constitution was amended to shift this
responsibility to the newly established Department of Alcoholic
Beverage Control (ABC).
The intent in establishing the ABC was to create a governmental
organization which would ensure strict, honest, impartial, and
uniform administration and enforcement of the state's liquor
laws. The ABC was vested with the exclusive authority to
license and regulate the manufacture, distribution and sale of
alcoholic beverages within California. The 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. The law requires notice of violation
and a hearing at which a licensee can defend itself, as well as
a right to an appeal to the ABC Appeals Board, a 3-member body
appointed by the Governor, subject to Senate confirmation.
ABC licensing. There are currently more than 88,000 alcoholic
beverage licenses throughout the state - this includes both
on-sale and off-sale establishments which sell beer and wine,
and on-sale and off-sale general licensees that are authorized
to sell distilled spirits, including beer and wine. The ABC is
required to investigate both the applicant and the premises for
AB 2082 (Campos) Page 6 of ?
which a license is applied to determine if the public would be
adversely affected by the license issuance. These
investigations include an evaluation of the moral character of
the applicant and the suitability of the proposed premises.
The 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, the ABC is authorized 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-sale and off-sale general
licenses issued by the 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 people interested in
obtaining a liquor license may purchase one from an existing
licensee, for "whatever price the market bears."
State v. local control of alcohol policy. Over the years, local
governments have often petitioned the Legislature (see "related
legislation") 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 generally "grandfathered" and therefore beyond the
reach of the local government - a source of contention for local
governments.
Purpose of AB 2082. According to the author's office, large
cities throughout the state (e.g., Los Angeles, San Francisco,
and San Jose in particular) have witnessed an increase in
illegal activity surrounding alcohol-serving establishments.
The author's office contends that illegal activities in such
businesses may go unpunished for weeks or even months, while
local law enforcement and ABC officials build a case against the
AB 2082 (Campos) Page 7 of ?
business establishment. Even in urgent situations, such as gang
related crimes or human trafficking, local authorities have
their hands tied in the short-term and must let the businesses
continue operation. Furthermore, these establishments may be
run by the same group of business partners or family members who
merely transfer the alcohol license amongst each other when
authorities are finalizing the process of shutting down the
business.
The author's office states that the San Jose Police Department
has had success in dealing with and shutting down these
establishments, but their authority is still lacking. For
example, the 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." The Department of Consumer Affairs, the
Bureau of Gambling Control, and the Department of Public Health
also have the authority to pull licenses or close businesses
swiftly if they are found to be engaged in illegal activities
that endanger the health and safety of individuals.
The author's office believes this bill will be a tool that can
be used, with caution, when residents face dangerous
circumstances because of problem businesses. The author's
office notes that this bill was crafted in close collaboration
with the San Jose Police Department and other local and
statewide officials. In addition, the author's office claims
that at least 10 other states have broad authority to suspend
alcohol licenses in cases of emergency.
In summary, the author's office states that this bill will
provide the Director of ABC with the authority to suspend an
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 ABC
relied in issuing the emergency order, and a notice of the
licensee's right to petition for relief. The author states this
bill allows the licensee to petition for relief from the order
by written argument.
Comments. Currently, the director of ABC has broad authority to
suspend and revoke an alcoholic beverage license - such an
action requires notice of violation and allows for a hearing at
which a licensee can defend itself as well as a right to an
AB 2082 (Campos) Page 8 of ?
appeal. This bill will allow the ABC, by emergency order, to
"immediately" suspend, limit, or condition a license (wineries,
breweries and distilleries are excluded) when there is
sufficient evidence documenting that the licensee "knew" there
was human trafficking, drug dealing, prostitution, or violence
occurring in their business. Once the emergency order has been
served, the licensee may petition for relief by written
argument, to which ABC must respond within three business days
with a document sustaining, modifying, or vacating the emergency
order. If a hearing is requested by the licensee it must begin
within 10 business days after ABC's receipt of the Notice of
Defense.
Prior/Related Legislation
AB 2151 (Jones, 2008) among other things, would have granted ABC
the authority to deny the issuance or transfer of an off-sale
retail license where the department determines that the issuance
or transfer of the license will contribute to conditions of
blight, as provided. (Vetoed by Governor)
AB 2893 (Hancock, Chapter 253, Statutes of 2008) granted 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 basis 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, this bill extended the time local
entities have to respond to the notice of a new or transferred
license and required 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
AB 2082 (Campos) Page 9 of ?
licensee in the exercise of retail privileges if ABC adopts
conditions requested 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: (a)
establishing general operating standards with respect to the
licensed premise of retailers of alcoholic beverages; (b)
providing that the existing 30-day review process shall be
extended by 20 days to give the local jurisdictions more
authority and opportunity for related input; (c) requiring the
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, (d) providing
additional regulation of a licensee, as specified.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
Alcohol Justice
California Alcohol Policy Alliance
California Council on Alcohol Problems
California Police Chiefs Association
Eden Youth and Family Center
FreeMUNI - San Francisco
Friday Night Live Partnership
Institute for Public Strategies
Koreatown Youth and Community Center, Los Angeles
League of California Cities
AB 2082 (Campos) Page 10 of ?
Los Angeles Drug & Alcohol Policy Alliance
Lutheran Office of Public Policy - California
Partnership for a Positive Pomona
Paso por Paso, Inc.
Pueblo y Salud, Inc.
San Rafael Alcohol & Drug Coalition
Saving Lives Drug & Alcohol Coalition
SF DogPAC
The Wall Las Memorias Project
UCEPP Social Model Recovery Systems
Youth for Justice.
OPPOSITION:
CalSmallBiz
Taxpayers for Improving Public Safety
ARGUMENTS IN SUPPORT: Proponents state that "while the
Department of ABC has exclusive authority to revoke the alcohol
license of problem retailers, it lacks the ability to act
swiftly when alcohol-serving establishments are found to be
involved in severe illegal acts. AB 2082 closes a problematic
enforcement gap by allowing ABC to address problem liquor stores
and bars within the timeframe expected by the neighborhoods
housing these licensees."
Proponents also note that "the state already suffers more than
$38 billion dollars in alcohol-related harm and over 10,000
alcohol-related deaths annually. Proponents believe this bill
will help safeguard public health and safety and reduce the
number of problem alcohol retailers in California."
ARGUMENTS IN OPPOSITION: Opponents state that this bill is
"fraught with constitutional concerns and relies upon arbitrary
determinations, not the least of which are an unclear standard
of evidence, due process violations based upon a subjective
standard of threat to health or safety, and taking punitive
action against a licensee without regard to any presumption of
innocence. In effect, this bill requires the accused to
disprove their guilt in order to avoid punishment. The issuance
of an 'emergency action' by the Director of ABC relies upon mere
allegations (police report, citation, photos) which need not be
vetted by any finding of fact or formal proceedings."
AB 2082 (Campos) Page 11 of ?
Additionally, opponents argue that "current law already allows
local authorities and law enforcement to file complaints against
a licensee with the ABC which is then required to hold a hearing
within 60 days if the allegations are deemed to be urgent.
Perhaps instead of eliminating the due process rights of the
accused, the author may consider reducing the timeframe in which
a hearing must be held from 60 to 45 or 30 days."