BILL ANALYSIS
Bill No: AB
2296
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Edward Vincent, Chair
2003-2004 Regular Session
Staff Analysis
AB 2296 Author: Leno
As Amended: June 9, 2004
Hearing Date: June 15, 2004
Consultant: Steve Hardy
SUBJECT
Alcoholic beverages: Protest of the issuance of liquor
licenses
DESCRIPTION
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),
recommends that a license be issued, notwithstanding that
one or more protests have been accepted by ABC.
2.Permits the ABC to reject protests it determines to be
frivolous, in addition to other described conditions.
3.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.
AB 2296 (Leno) continued
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4.Provides that any person who has filed a verified protest
in a timely fashion as specified, that has been accepted
as described, 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.
5.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.
6.Specifies that if a timely request for a hearing is filed
with 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.
7.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.
8.Provides that if the person filing the request for a
hearing fails to appear at the hearing, the protest will
be deemed withdrawn.
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 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.
AB 2296 (Leno) continued
Page 3
EXISTING LAW
Existing law under the state constitution 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).
Existing law establishes the Department of Alcoholic
Beverage Control to provide strict, honest, impartial, and
uniform administration of the liquor laws throughout
California.
Existing law provides that after filing an application to
engage in the sale of any alcoholic beverage at any
premises, notice of intention to begin operation will 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.
Existing law 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.
Existing law provides that protests against the issuance of
a liquor license may be filed with ABC as specified.
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 be
false, vexatious, or without reasonable or probable cause.
Existing law permits a protestant whose protest has been
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rejected to file an accusation with ABC, in which case the
Department is required to hold a hearing, as specified.
Existing law 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 receipt of the protest by the State
Office of Administrative Hearings.
BACKGROUND
The author is carrying this measure on behalf of the
California Grocers Association. 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 would establish a simple confirmation that
protesters plan to actually attend a hearing, which will
reduce waste in the hearing process.
The 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
AB 2296 (Leno) continued
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the safe operation of 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 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.
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; or zoning is improper for alcohol
sales. License conditions are special restrictions placed
on a license. Conditions may limit the hours of alcohol
AB 2296 (Leno) continued
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sales, the type of entertainment allowed or other aspects
of the business. Conditions may eliminate the need to deny
a license or may cause a protestant to withdraw his
protest.
ABC which is neutral on this bill, 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.
Additionally, the 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.
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, many 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.
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SUPPORT: California Grocers Association (Sponsor)
7-Eleven, Inc.
San Francisco Late Night Coalition
Family Winemakers of California
California Retailers Association
NEUTRAL: Department of Alcoholic Beverage Control
OPPOSE: None registered as of 6/11/04
FISCAL COMMITTEE: Senate Appropriations
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