BILL ANALYSIS
AB 2296
Page 1
Date of Hearing: April 12, 2004
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Jerome Horton, Chair
AB 2296 (Leno) - As Amended: April 1, 2004
SUBJECT : Alcoholic beverages: issuance of liquor licenses:
protests
SUMMARY : Requires an individual who protests the issuance of an
alcohol license, to additionally file for a hearing on their
issues in order for them to be considered prior to the issuance
of a license. Specifically, this bill :
1)Repeals in the case of a protest of the issuance of a license
to engage in the sale of alcoholic beverages that a hearing
shall be held not more than 60 days after receipt of the
protest by the State Office of Administrative Hearings and
instead would establish procedures to be followed in cases in
which the Department of Alcoholic Beverage Control
(ABC/Department) recommends that a license be issued,
notwithstanding that one or more protests have been accepted
by ABC.
2)Provides that if, after investigation, ABC recommends that a
license be issued, with or without conditions, notwithstanding
that one or more protests have been accepted by the
department, the department shall notify the applicant and all
protesting parties whose protests have been accepted in
writing of its determination.
3)Provides that any person who has filed a timely verified
protest that has been accepted, may request that the
Department conduct a hearing on the issue or issues raised in
the protest. The request shall be in writing and shall be
filed with ABC within 15 calendar days of the date the
Department notifies the protesting party of its determination.
4)Specifies that at any time prior to the issuance of the
license, ABC may, in its discretion, accept a late request for
a hearing upon a showing of good cause. Any determination of
the Department pursuant to this subdivision shall not be an
issue at the hearing nor grounds for appeal or review.
5)Specifies that if a timely request for a hearing is filed with
AB 2296
Page 2
ABC, the Department shall schedule a hearing on the protest.
The issues to be determined at the hearing shall be limited to
those issues raised in the protest or protests of the person
or persons requesting the hearing.
6)Provides that if no request for a hearing is filed with the
Department, any protest or protests shall be deemed withdrawn
and ABC may issue the license without any further proceeding.
EXISTING LAW :
1)Constitutionally provides "that the State of California . . .
shall have the exclusive right and power to license and
regulate the manufacture, sale, purchase, possession, and
transportation of alcoholic beverages within the State...".
(Article XX, Section 22, State Constitution).
2)Establishes the ABC to provide strict, honest, impartial, and
uniform administration of the liquor laws throughout
California.
3)Provides that after filing an application to engage in the
sale of any alcoholic beverage at any premises, notice of
intention to so commence shall be posted in a conspicuous
place at the entrance to the premises. The applicant shall
notify ABC of the date when such notice is first posted. No
license shall be issued for the premises until the notice has
been so posted for at least 30 consecutive days.
4)Requires ABC to notify the local sheriff, chief of police,
district attorney and local legislative body regarding an
application for the issuance or transfer of a liquor license,
and no action can take place for at least 30 days after this
notification. ABC may extend the 30-day period specified in
the preceding sentence for a period not to exceed an
additional 20 days, upon the written request of any local law
enforcement agency that states proper grounds for extension.
5)Provides that protests against the issuance of a liquor
license may be filed with ABC.
6)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 be false, vexatious, or without
reasonable or probable cause.
AB 2296
Page 3
7)Permits a protestant whose protest has been rejected to file
an accusation with ABC, in which case the Department is
required to hold a hearing, as specified.
8)Requires, in the case of a protest of the issuance of a liquor
license, that a hearing be held not more than 60 days after
the receipt of the protest by the State Office of
Administrative Hearings.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill: According to the author, protests filed
against new license applicants by competing businesses,
neighbors, and others can have an impact on meritorious projects
for months simply by filing a protest with ABC. At times,
protesters simply do not appear at the hearing that they have
demanded. While this ultimately results in the dismissal of
their protest, the applicant, their attorneys and the ABC must
nonetheless prepare for hearing (including witnesses, subpoenas,
experts, etc.) and pay for all the costs in preparation for the
hearing. The ABC not only pays for the time of its attorneys
and investigators, it must also pay for a courtroom, a court
reporter, and a full day of time for an Administrative Law
Judge. These costs are typically in the tens of thousand of
dollars, which is a serious drain on the resources of all
involved. This bill establishes a simple confirmation that
protester's plan to actually attend a hearing, which will reduce
waste in the hearing process.
Background: ABC is vested with exclusive authority, in
accordance with laws enacted, to license and regulate the
manufacture, distribution, and sale of alcoholic beverages
within California. ABC also has the power for good cause 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 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
AB 2296
Page 4
these new licenses. Current 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 2003, ABC
received 7,394 protest letters. From those letters, 846 license
applications were protested. If an application is protested, a
protested application can take up to 95 days or longer to
complete.
If a retail license application has been protested and the
Department 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 refile 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.
Some grounds for protest or denial of a license are: (a)
Applicant is not qualified. For example, the applicant
falsified his application, has a disqualifying police record,
has a record of chronic insobriety, is not the true owner, or is
not at least 21 years of age, and/or (b) Premises is not
suitable. For example the premises is too close to a school,
church, hospital, playground, nonprofit youth facility or
residence and would disturb the facility or resident; the
premises is located in a high-crime area and does not serve
public convenience or necessity; the applicant does not have
legal tenancy; the license would create a public nuisance;
zoning is improper for alcohol sales. License conditions are
special restrictions placed on a license. Conditions may limit
the hours of alcohol sales, the type of entertainment allowed or
other aspects of the business. Conditions may eliminate the
AB 2296
Page 5
need to deny a license or may cause a protestant to withdraw his
protest.
ABC Comments: ABC notes that current law requires the
Department to conduct hearings on protested license applications
unless the protest is rejected (as false, vexatious or without
reasonable or probable cause) or the protesting party or parties
withdraw their protests. Many times, hearings are scheduled,
and both the Department and the applicant expend considerable
time and resources preparing documents and witnesses, yet the
protesting party does not show up, resulting in dismissal of the
protest and issuance of the license. ABC staff states that AB
2296 would authorize the Department to give notice to protestors
that license issuance is recommended over their protests, with
or without conditions, and would place the burden on the
protesting parties to request a hearing. If no hearing is
requested, the protests shall be deemed withdrawn and the
Department may issue the license without further proceedings.
Arguments in support: The California Grocers Association (GCA)
states that this bill will streamline the alcoholic beverage
license protest process. While many protest complaints are
legitimate and speak to serious community concerns, a great of
them are either a way to stifle competition or are just plain
frivolous. The sponsor further notes that this bill is a good
first step in clarifying and defining the protest process for
both the licensee and the protester.
The San Francisco Late Night Coalition (SFLNC) states that while
the public should have a right to protest venues if they oppose
them, protesters should be responsible enough to inform ABC of
their intentions to participate in a hearing before an
Administrative Law Judge. SFLNC believes that while many of the
protest complaints are legitimate and speak to serious community
concerns, many of them do not have merit, and in many instances
the individual who filed the complaint does not show up for the
hearing. A frivolous protest does nothing more than waste time,
money, and resources of the department as well as the venues
being protested against.
Prior/related legislation: AB 1092 (Lowenthal) Chapter 499,
Statutes of 1999. Permits ABC to place reasonable restrictions
on specific alcoholic beverage licenses if the Department
develops conditions requested by a local governing body.
AB 2296
Page 6
AB 624 (Oropeza) Chapter 931, Statutes of 2001. Among other
things, extended from 30 days to 40 days the time period local
governments have to review applications for alcoholic beverage
licenses in high crime districts. Also, authorized ABC, in
considering an alcoholic beverage license application, to take
into account adjacent crime reporting districts if the applicant
premises are located within 100 feet of the boundaries of any
adjacent district.
REGISTERED SUPPORT / OPPOSITION :
Support
California Grocers Association (Sponsor)
California Retailers Association
Family Winemakers of California
San Francisco Late Night Coalition
7-Eleven, Inc.
Opposition
None on file.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531