BILL ANALYSIS
AB 1798
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
AB 1798 (Evans) - As Amended: April 5, 2010
SUBJECT : Alcoholic beverages: Alcoholic Beverage Control
Appeals Board: tied-house restrictions.
SUMMARY : Makes a minor clarifying change, as well as code
maintenance changes, to existing provisions of the Alcoholic
Beverage Control Act (Act) in order to reduce paperwork
requirements of the Department of Alcoholic Beverage Control
(ABC). In addition, increases from 60 to 75 days the period
upon which the Appeals Board must enter its order after the
filing of an appeal. Specifically, this bill :
1)Retains the requirement that the winegrower, or the officer,
director, or agent of the winegrower meet the specified
conditions regarding the sale or furnishing of wine under the
circumstances described above, but would eliminate the
requirement that statements describing these conditions be
made pursuant to an undertaking approved by the department.
2)Requires the Alcoholic Beverage Control Appeals Board (Appeals
Board) to enter its order within 75 days after the filing of
an appeal.
EXISTING LAW :
1)Existing provisions of the Act, known as "tied-house"
restrictions, generally prohibit a winegrower from having an
ownership interest in an on-sale alcoholic beverage license,
with limited exceptions. Among other exemptions, existing law
exempts from the tied-house restrictions any licensed
winegrower who meets specified conditions, including that the
winegrower, or his or her officer, director, or agent, enters
into an undertaking, approved by the Department of Alcoholic
Beverage Control, that makes specified statements regarding
the sale or furnishing of wine by the winegrower, or any
officer, director, or agent of the winegrower.
2)Establishes in state government an Appeals Board, of which the
members are appointed and serve as provided in the
Constitution, and receive an annual salary.
AB 1798
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3)Provides that an appeal must be filed at the Appeals Board
office within 40 days from the date of the ABC decision.
However, if ABC's decision states it is to be "effective
immediately," an appeal must be filed within 10 days after the
date of ABC's decision. Documents not filed within the time
limits are untimely and cannot be accepted by the Appeals
Board.
4)Specifies that no decision of the ABC shall become effective
during the period in which an appeal may be filed and the
filing of an appeal shall stay the effect of the decision
until such time as a final order is made by the Appeals Board.
5)Provides that the review by the Appeals Board of a decision by
ABC shall be limited to specified questions.
6)Provides that the Appeals Board is required to enter its order
within 60 days after the filing of an appeal.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of this bill: According to the author, this bill
attempts to address a growing concern by the alcohol industry,
law enforcement, and citizens of California relating to the time
frame upon which an appeal is rendered by the Appeals Board.
The Appeals Board has been faced with a substantial increase in
caseload, which has resulted in a backlog of appeals. ABC's
enforcement activities have increased in response to legislative
mandates to curtail underage drinking, which has lead to more
rulings and, in turn, the number of appeals to the Appeals Board
has increased. The author is concerned with the length of time
it is taking to process the appeals. In many cases, it has been
reported that it is taking up to 12 to 18 months before the
Appeals Board renders a final order. The author is concerned
with the current appeals time frame because while the case is
being reviewed the "bad apples" continue to operate which
troubles law enforcement and residents within the community.
The author believes that it is essential that the Appeals Board
be held to better accountability relating to meeting specific
timelines specified in current law.
The author further adds that with the increase in industry
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license fees (Wesson and Oropeza, Chapter 488, Statues of 2001)
there should be sufficient funds within the Appeals Board budget
to maintain the staffing levels necessary to expedite
appeals in a more diligent manner. This measure is necessary to
ensure that the principles of the appeals process within the ABC
Act are preserved and upheld as they relate to a licensee's
right of due process.
The bill also makes a change to current law by retaining the
requirement that the winegrower meet specified conditions
regarding the sale or furnishing of wine under the circumstances
as described but would eliminate the requirement that statements
describing these conditions be made pursuant to an "undertaking
approved by ABC."
Additionally, this measure makes other minor technical changes
to this section of law. In summary, these changes are intended
to streamline, simplify and provide for a more conforming
tied-house exception without materially impacting its effect.
Background : The Appeals Board provides quasi-judicial
administrative review of decisions of the ABC. The questions
that may be considered by the Appeals Board are limited by the
California Constitution and by statute.
The Appeals Board is made up of three members appointed by the
Governor. Funding for the Appeals Board comes entirely from a
surcharge on all ABC license renewals. All Appeals Board
activities, staff functions, and budget expenditures are
directed toward the review and finalization of appeals. The
Appeals Board conducts 10 hearings throughout the year in both
Northern and Southern California.
The Appeals Board determines appeals solely on the record of ABC
and any briefs filed by the parties. No additional evidence may
be received by the Appeals Board. However, the parties to
appeals may present oral argument during the Appeals Board's
monthly hearings. The Appeals Board issues written decisions
with orders affirming, reversing, and/or remanding ABC
decisions. Judicial review of the Board's order may be obtained
by filing a petition for writ of review with the California
Supreme Court or the Court of Appeal.
The timely issuance of orders by the Appeals Board is a critical
part of the state's regulation of the alcoholic beverage
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industry and enforcement of the ABC Act. When an appeal is
filed, any action by the ABC on its decision is stayed until the
appeal is concluded by a final order of the Appeals Board.
During the appeal period, a license that is subject to the
appeal may not be suspended or revoked; in the case of an
application for a license, the ABC may not issue or transfer the
license while the process is in effect.
The number of new appeals filed with the Appeals Board on
average is around 200 cases per year. A majority of the cases
reviewed by the Appeals Board relate to alcohol sales to minors.
According to the Appeals Board, approximately 3 % of the sales
to minor cases or approximately 17% of the overall cases are
reversed or partially reversed.
Prior legislation : AB 1245 (Torrico) of 2007-2008 Regular
Session. Would have required the Alcoholic Beverage Control
Appeals Board to enter its order within 75 days after the filing
of an appeal. (Passed off the Assembly floor 75-0 but was a gut
and amend in the Senate)
SB 359 (Rainey) Chapter 529, Statutes of 1997. Modified an
existing tied-house exception that permits a licensed winegrower
to hold an ownership interest in an on-sale license, if certain
conditions are met, to include a winegrower who has a wholesale
license to sell wine only.
SB 1376 (Thompson) Chapter 318, Statutes of 1994. Among other
things, created a tied-house exception applicable to winegrowers
owning restaurants or bed and breakfast inns, provided certain
conditions are met.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531