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SB-440 Applications for licenses: procedural requirements.(2021-2022)

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Date Published: 01/03/2022 02:00 PM

Amended  IN  Senate  January 03, 2022


Senate Bill
No. 440

Introduced by Senator Dodd
(Principal coauthor: Senator Hertzberg)

February 16, 2021

An act to amend Sections 10089.5 and 10089.13 of, and to add Sections 10089.315 and 10089.316 to, the Insurance Code, and to add Chapter 4 (commencing with Section 3298) to Part 6 of Division 1 of the Public Utilities Code, relating to natural disasters, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. Section 23961 of the Business and Professions Code, relating to alcoholic beverage control.


SB 440, as amended, Dodd. Earthquake and wildfire loss mitigation. Applications for licenses: procedural requirements.
The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law limits the amount of on- and off-sale general licenses that may be issued per county and establishes procedural requirements concerning the issuance and transfer of those licenses, including a requirement that the department hold a drawing to determine the priority for consideration when there are more applicants for licensure than available licenses, as provided.
This bill would require the department to conduct those drawings through a live video feed.

(1)Existing law establishes the Wildfire Fund to pay eligible claims arising from a covered wildfire. Existing law specifies the funding sources for the Wildfire Fund, which include contributions from electrical corporations and revenues generated from a specified charge imposed on the ratepayers of an electrical corporation. Existing law creates the California Catastrophe Response Council to oversee the Wildfire Fund Administrator and the California Earthquake Authority (CEA) with regard to any administrative or support services the CEA may provide to the Wildfire Fund. Existing law requires the Wildfire Fund Administrator to carry out the duties related to the operation, management, and administration of the Wildfire Fund, as approved by the council. Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

This bill would require the Wildfire Fund Administrator, the Office of Emergency Services, and the Office of Energy Infrastructure Safety to create the California Wildfire Residential Loss Mitigation Program as a joint powers authority. The bill would require that program to provide mitigation against wildfire risk, including a grant program to assist qualifying owners to retrofit their structures to protect against wildfire or to create a defensible space around their structures. The bill would establish the Wildfire Loss Mitigation Fund as a continuously appropriated subaccount in the Wildfire Fund to fund the program. Because the bill would create a continuously appropriated fund, the bill would make an appropriation. The bill would require the council to annually set aside 5% or $10,000,000, whichever is less, of the Wildfire Fund’s investment income for deposit in the Wildfire Loss Mitigation Fund. Because certain of these provisions would be codified in the Public Utilities Act and would require action by the commission, a violation of which would be a crime, the bill would impose a state-mandated local program.

(2)Under existing law, the CEA is authorized to transact insurance as necessary to sell policies of basic residential earthquake insurance. Existing law establishes the California Earthquake Authority Fund, a continuously appropriated fund. Existing law requires the CEA to set aside in each calendar year, an amount equal to 5% of investment income accruing on the CEA’s invested funds, or $5,000,000, whichever is less, to fund the establishment and operation of an Earthquake Loss Mitigation Fund, which is a subaccount in the California Earthquake Authority Fund.

This bill would create the Mitigation and Contingent Capital Expense Reserve Fund within the California Earthquake Authority Fund. The bill would require the CEA to pay into the new fund an annual contingent capital expense equal to 2% of the amount of claim-paying capacity available to and actually relied upon by the authority for the preceding calendar year that is based upon and supported by the authority’s ability to impose the assessment authorized above. Under the bill, money in the fund would be periodically disbursed to the Earthquake Loss Mitigation Fund and the Wildfire Loss Mitigation Fund.

(3)Existing law establishes a capital structure for the CEA, with several sources of financing. Existing law generally makes all moneys and invested assets held in the California Earthquake Authority Fund “available capital,” which is the first source of financing used to pay earthquake claims and claim expenses. Existing law authorizes the CEA to issue and sell investment grade revenue bonds and assess participating insurance companies if claims and claim expenses paid by the CEA due to earthquake events exhaust specified sources of capital.

If claims and claim expenses paid by the CEA due to earthquake events exhaust the CEA’s existing funding sources, this bill would require the CEA to determine, and the commissioner to instruct all assessing insurers to collect, an assessment on assessable insurance policies, which include specified types of insurance policies, but exclude, among other policies, life, health, and earthquake insurance policies. The bill would require the amount of the assessment to be determined by the CEA in its sole discretion, but would limit the amount of an assessment on an individual assessable insurance policy in a year to not more than 2% of the annual insurance premium for that policy and would limit the duration of the assessment to no more than 10 consecutive years. The bill would also require the CEA, if existing funding sources are exhausted, to sell investment grade revenue bonds, issue or secure other debt financing, or both, in amounts to be determined by the CEA. The proceeds from the assessment would be used solely to repay the bonds or other debt authorized by the bill, plus specified costs. By creating and adding a new mandatory source of funding for a continuously appropriated fund, the bill would make an appropriation.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(5)This bill would declare that it is to take effect immediately as an urgency statute.

Vote: TWO_THIRDSMAJORITY   Appropriation: YESNO   Fiscal Committee: YES   Local Program: YESNO  

The people of the State of California do enact as follows:


 Section 23961 of the Business and Professions Code is amended to read:

 (a)  (1)  If, at the conclusion of the period prescribed by the department for the filing of applications for issuance or transfer of on-sale general licenses or off-sale general licenses in any county in its notice of intention to receive applications therefor published pursuant to Sections 23821 and 24070, the department finds that there are more applicants for the particular type of license than there are licenses available for issuance or transfer under Sections 23821 and 24070 the department shall, within 60 days following the conclusion of said period, conduct a drawing to determine the priority in which all of such applications filed with it shall be considered. No more than one such drawing shall be made in any county in any one year, and no person will be entitled to more than one opportunity to participate in such a drawing in any county with respect to an application for issuance or transfer of any one type of license. The number drawn by any applicant shall indicate the priority to be given to the consideration of the application but shall not insure the issuance of a license by the department.
(2) In order to participate in the drawing, an applicant shall pay a fee in an amount equal to the fee for licenses identified in paragraph (2) of subdivision (a) of Section 23320. Any participant that does not file a formal application shall receive a refund of the fee less a service charge of one hundred dollars ($100). Any participant that files a formal application and whose application is thereafter denied or withdrawn is entitled to the refund specified in Section 23320.
(b) If a drawing is not conducted as provided in subdivision (a) of this section, applications for issuance of original on-sale general licenses and off-sale general licenses in a county or transfer of the licenses into the county shall be made and considered as otherwise provided in this article.
(c) No person shall be qualified to participate in such a drawing unless such applicant is a resident of California for at least 90 days prior to the drawing. Prior to the issuance of any license, pursuant to such a drawing, the applicant shall present proof of such residency status. A corporation incorporated in a state other than California, but registered with the Secretary of State to do business in California for 90 days, shall be deemed to have satisfied the residency requirement for the purpose of this section.
(d) The department shall advertise, in connection with a drawing conducted pursuant to this section, that participation in such a drawing is available only to California residents.
(e) The department shall conduct the drawing through a live video feed.