BILL ANALYSIS
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|Hearing Date:June 9, 2008 |Bill No:AB |
| |844 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC
DEVELOPMENT
Senator Mark Ridley-Thomas, Chair
Bill No: AB 844Author:Berryhill
As Amended:May 29, 2008 Fiscal: Yes
SUBJECT: Junk dealers & recyclers: nonferrous material.
SUMMARY: Requires junk dealers and recyclers to comply
with additional recordkeeping and identification procedures
and new payment restrictions when purchasing nonferrous
materials, as defined; authorizes a local governing body to
adopt and enforce laws that provide consumer protections
greater than those in state law regulating junk dealers and
recyclers.
NOTE : This measure is before the Committee for
reconsideration. This measure with Author's amendments
failed in Committee by a vote of 3-3 on June 25, 2007.
Existing law:
1)Defines "junk" as any and all secondhand and used
machinery and all ferrous (containing iron) and
nonferrous (excludes iron) scrap metals and alloys,
including any and all secondhand and used furniture,
pallets, or other personal property, excluding livestock.
2)Provides that "scrap metals and alloys" includes, but is
not limited to, materials and equipment commonly used in
construction, agricultural operations and electrical
power generation, railroad equipment, oil well rigs,
nonferrous materials, stainless steel, and nickel which
are offered for sale to any junk dealer or recycler, but
does not include scrap iron, household generated waste,
or aluminum beverage containers, as defined.
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3)Defines "junk dealer" as any person engaging in the
business of buying, selling and dealing in junk; any
person purchasing, gathering, collecting, soliciting, or
procuring junk; or, any person operating, carrying on,
conducting, or maintaining a junk yard or place where
junk is gathered together and stored or kept for
shipment, sale or transfer.
4)Defines "recycler" as any processor, recycling center, or
noncertified recycler, as defined, who buys or sells
scrap metal that constitutes "junk."
5)Requires every junk dealer and every recycler to maintain
a written record of each sale or purchase made in the
course of his or her business. The record must include
the place and date of the sale; the name, driver's
license number and state of issue, and the license plate
number and state of issue of any motor vehicle used in
transporting the junk; the name and address of each
person to whom the junk is sold and that person's motor
vehicle license number; a description of the junk
purchased or sold; and, a statement indicating that the
seller owns or is authorized to sell the junk.
6)Requires every junk dealer and recycler to preserve the
written record required by Item # 5) above for at least
two years.
7)Allows for periodic inspection by any officer holding a
warrant, any person appointed by the sheriff or any
county or appointed by the head of the police department
of any city, or any officer holding a court order
directing him or her to examine the record or property.
8)Specifies that any person who makes or causes to be made
any false or fictitious statement regarding the written
record required in Item # 5) above, is guilty of a
misdemeanor, and any junk dealer or recycler who fails to
keep the written record as required in Item # 5) above,
or who refuses to provide the written record when
properly requested or destroys the written record, is
guilty of a misdemeanor and provides increased fines and
penalties for knowing or willful violations.
9)Specifies procedures to be followed by any peace officer
who has probable cause to believe that property in the
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possession of the junk dealer or recycler is stolen
including, in lieu of seizing the property, placing a
hold on the property for a specified period.
10)Exempts from the requirements above, secondhand
furniture merchants, pawnbrokers, secondhand car dealers,
persons selling new tires or batteries and taking in part
payment used articles of the same kind, secondhand oil
well supply and equipment dealers, and secondhand
clothing merchants and ragpickers.
11)Exempts also persons who buy or sell junk acquired in
any business other that that of a junk dealer, purchases
of scrap metal by check issued to the company which owns
the scrap metal, and scrap metal purchased or received
from another junk dealer which already has a written
record.
This bill:
1)Defines "nonferrous material" as copper, copper alloys,
stainless steel, or aluminum but excludes beverage
containers, as defined.
2)Prohibits a junk dealer or recycler from providing
payment for nonferrous material unless, in addition to
meeting all the written record requirements specified in
Item # 5) above, meets the following requirements:
a) The payment for the material is made by check; the
check may be collected by the seller on the third
business day after the date of the sale.
b) The junk dealer or recycler obtains one of the
following from the seller and preserves it for two
years:
i) A photograph or video of the seller, a copy of
a valid driver's license or a state or federal
government-issued identification card, and a copy of
a gas or electric utility bill addressed to the
seller, as specified;
ii) A copy of a valid driver's license of the
seller containing a photograph and address of the
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seller;
iii) A copy of a state or federal government-issued
identification card containing a photograph and
address of the seller.
c) The junk dealer or recycler obtains a photograph of
the nonferrous material being purchased and preserves
the photograph for two years.
3)Exempts sales of nonferrous material from the
requirements of Item # 2) under "This Bill" above, if the
junk dealer or recycler receives all of the following
information:
a) The name, physical business address, and business
telephone number of the seller's business;
b) The business license number or tax identification
number of the seller's business;
c) A copy of the valid driver's license of the person
delivering the nonferrous material on behalf of the
seller to the junk dealer or recycler.
4)Exempts sales of nonferrous material from the
requirements of Item # 2) under "This Bill" above, if the
material has a value of not more than $10 and the primary
purpose of the transaction is the redemption of beverage
containers, as specified.
5)Provides that upon conviction of any person for the theft
of, or of any junk dealer or recycler for the sale of,
property that has been placed on hold, as specified, the
court shall order the defendant to pay the victim for
both the value of the material stolen and the reasonable
collateral damage caused by the theft.
6)Provides that the law relating to junk dealers shall not
prevent a local governing body from adopting and
enforcing laws that provide greater consumer protections.
FISCAL EFFECT: The Assembly Appropriations Committee
analysis, dated May 31, 2007, cites potential
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non-reimbursable costs to local government for enforcement,
offset to some extent by fine revenues.
COMMENTS:
1.Purpose and Background. This measure is sponsored by the
California Farm Bureau (CFB) and the California State
Sheriffs' Association (CSSA). The CFB indicates that
over $6 million worth of metal was reported stolen in the
eight Central Valley counties in 2006. According to the
Author, the Agricultural Crime Technology and Operations
Network Project reports a 100% increase in metal theft
incidents in 2005, and a 400% increase in thefts in 2006.
Irrigation pumps are commonly targeted by thieves for
their copper wire and because of copper's high value.
(An article in the Fresno Bee, dated May 6, 2007, noted
that copper prices have increased 400% and aluminum
prices have more than doubled in the last five years.)
CFB claims that some farmers have had the same pumps
targeted repeatedly and that the cost of repairing a pump
ranges from $1,000 to $3,000, not accounting for
additional damage caused when the thief removes copper
wire from the irrigation pump or the harm to crops that
go without water.
A March 14, 2007, an article in the Los Angeles Times,
"Building Sites Leave Copper Thieves Well-Connected,"
points out how thieves' appetites for methamphetamines
have fueled the growing problem of copper and other
metals being stolen from telephone and power lines,
construction sites, power generators, air conditioning
units on top of schools, and irrigation pipes, among
other sources. CFB asserts that this problem is a
statewide problem and needs a statewide fix and that this
measure will "achieve a long lasting solution to the
problem by making it more difficult for criminals to sell
stolen metal."
The Author states the list of victims includes farmers that
are having copper wires and pipes stripped from farm
equipment, utility companies that are seeing lines cut
and stripped of copper wire, construction companies that
are losing wire and pipe, and schools, churches, and
businesses that are having the wire from air conditioning
units stolen.
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There is also a serious threat to public safety when phone
lines are cut, since 911 calls cannot be made, burglar
alarms cannot function, and hospitals are affected.
Brass couplings are being stolen from fire hydrants
rendering them useless when firefighters are unable to
connect, according to the Author.
According to the Author, law enforcement agencies around
the state have concluded from arrests made that the
common denominator among metal thieves is that they are
drug users looking for quick, easy money to feed their
habit. By requiring all purchases by junk dealers and
recyclers of the specified metals to be paid by check
with a 3-day holding period will not only create a paper
trail of the transaction but will also make metal theft
less appealing to those looking to obtain quick cash to
purchase drugs. Also the photo requirement and requiring
the address and copy of the seller's identification will
act as a deterrent and will assist law enforcement in
their investigations.
The Author also indicates that the bill will leave local
government ordinances intact and locals will retain their
right to supplement with local ordinances where
necessary.
2.Related Legislation. SB 691 (Calderon) requires junk
dealers and recyclers to comply with additional
recordkeeping requirements and new payment restrictions
when purchasing nonferrous materials (i.e., copper,
copper alloys, stainless steel, and aluminum, excluding
beverage containers). That bill establishes a single
statewide standard and prohibits any local government or
state agency from adopting reporting, identification, or
payment requirements for transactions by junk dealers or
recyclers involving nonferrous material. The bill
failed passage on the Assembly Floor and was granted
reconsideration. The bill is currently in the Assembly
Rules Committee.
SB 447 (Maldonado) requires a junk dealer or recycler to
report information about each sale or purchase of junk to
the chief of police of the city or the sheriff of the
county in which the junk dealer or recycler purchased the
junk, in the same manner as required by a secondhand
dealer or coin dealer, as specified. That bill passed
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the Business and Professions Committee on January 14,
2008 on a 5-2 vote. It is now set to be heard in
Assembly Business and Professions for June 10, 2008.
AB 1778 (Ma) prohibits a junk dealer or recycler from
providing payment for newspaper or California Refund
Value (CRV) containers valued at more $50 or more unless
certain requirements are met including payment by check,
and copies of the seller's identification, as specified
which must be retained for two years. That bill has also
been referred to the Senate Business, Professions and
Economic Development Committee to be heard on June 16,
2008.
AB 2289 (Ruskin, Chapter 461, Statutes 2006) required
businesses that recycle, shred, or destroy plastic bulk
merchandise containers, prior to purchasing five or more
containers, to obtain proof of ownership from the seller
and verify his or her identity.
3.Arguments in Support. Pacific Gas and Electric Company
(PG&E) is in support of this measure and indicates that
theft of copper and other alloys from their facilities,
junction boxes, poles, and other areas poses a serious
public safety problem for PG&E and its customers, not to
mention the cost impacts in order to replace stolen
material. PG&E states that annually as a result of
theft, PG&E suffers millions of dollars in damages, which
ultimately increases costs to all customers. PG&E is
extremely concerned that current financial incentives, as
a result of high copper prices, and weaker reporting and
payment guidelines for junk dealers and recyclers create
an environment that promotes the purchase and selling of
stolen material.
Southern California Edison (SCE) strongly supports the
passage and states that scrap metal theft when aluminum
and copper are stripped from substations, power lines and
lighting creates a safety concern for workers, and has
severe cost implication for ratepayers. Peace Officers
Research Association of California (PORAC) emphasizes the
public safety impact of metal theft when materials like
highway guardrails, city street manhole covers, cut
telephone and cable wires are stolen.
Liberty Mutual Group is in support of this measure and
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indicates that their policyholders have filed an
increasing number of claims in which thieves have stolen
large amounts of copper from their homes or place of
business, and over the past 23 months, one of its
subsidiaries incurred approximately $3.6 million of
losses due to stolen copper and other non-ferrous
materials, a $157,000 per month average. Similarly, the
Association of California Insurance Companies (ACIC)
believes the bill will help to stem the huge increases in
metal theft that have occurred in California in recent
years and particularly targets those substantial
transactions which may at the outset suggest illegal
acquisition of the materials.
California Building Industry Association (CBIA) cites
instances where copper pipes have been ripped out of the
walls of model homes, and community signs have been
stolen, recovered and then stolen again for their copper
content.
Sempra Energy believes that requiring junk dealers and
recyclers to make better information available to law
enforcement, requiring deferred payment for metal sold to
recyclers, and requiring restitution from convicted metal
thieves, will lead to improvement in detection and
arrests, and ultimately to a reduction in this type of
crime.
4.Injunction Against Fresno County Ordinance. A
significant issue in the current discussion is the
appropriateness and validity of local junk dealer
ordinances that are more restrictive than the state law.
Recently, the Fresno County ordinance was the subject of
legal action by scrap metal dealers. Ultimately, the 5th
Appellate Court affirmed the Fresno Superior Court's
Order granting a preliminary injunction prohibiting the
county from enforcing certain portions of the county's
ordinances regulating scrap metal dealers because the
ordinances are preempted by state law.
The ordinances require junk dealers to provide to the
sheriff on a weekly basis invoices describing in detail
all transactions, to hold materials for five days after a
transaction is reported to the sheriff, and pay by check
mailed to the seller after a three-day hold. The
Appellate Court's Order stated, "The ordinances
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impermissibly attempt to govern the purchase and sale of
scrap metal, a subject comprehensively regulated by state
law. As the trial court concluded, the ordinances
duplicate and contradict state law and concern an area
fully occupied by state law; the ordinances are therefore
preempted." The Order further stated: "Because the
ordinances regulate in a more restrictive manner the very
conduct regulated in state law, the ordinances
impermissibly conflict with state law."
5.Policy Issue : Should This Measure Preempt Local
Governments From Enforcing A Current Ordinance That May
Provide More Stringent Requirements? The bill as
recently amended provides that nothing in the law
relating to junk dealers shall prevent a local governing
body from adopting and enforcing laws that provide
greater consumer protections.
This is distinct from the bill's prior form when it was
heard in this Committee on June 25, 2007. At that time
the bill would have prohibited a city, county or state
agency from adopting any reporting, identification, or
payment requirements for transactions by junk dealers or
recyclers involving nonferrous material; and any
ordinance or resolution adopted by a city or county could
not be inconsistent with the requirements of the bill.
This language was placed in the bill in the Assembly
Appropriations Committee.
The Author indicated that it was not his intent to affect
current local ordinances that may deal with this issue,
and that in some instances certain counties have more
restrictive and stringent requirements regarding the
identification of those selling nonferrous material, the
form of payment and the holding period, and what
reporting and information should be provided by the junk
dealer or recycler. As an example, the Author cites
Fresno County (see Comment # 5, above) where the local
ordinance allows only payment by check with a waiting
period; and there are no exceptions like this bill
provides. According to the Author, counties which have
ordinances that may be considered more restrictive or
stringent are Fresno, Stanislaus, Tulare, Kern, Madera
and Kings County, and possibly Los Angeles and San
Francisco.
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As the bill was previously before the Committee, the
California Chapter of the Institute of Scrap Recycling
Industries (ISRI), Sun-Lite Metals and Atlas Iron & Metal
Company indicated they would be opposed to this measure
if there were changes to the preemption language, or more
importantly, if the preemption language was deleted from
the bill entirely.
As argued by opponents, the fundamental purpose for
addressing the problem on an exclusive statewide basis is
to create a unified statewide program that puts all
recyclers and all local governments on an even playing
field. To do otherwise will create a harmful,
competitive imbalance in both the intrastate and
interstate commodities markets as they relate to scrap
metals.
At the June 25, hearing, the bill with Author's amendments
to remove the preemption language failed passage in
Committee by vote of 3-3 and was granted reconsideration.
As the bill is now before the Committee, it contains
language which explicitly states that it does not preempt
local laws that provide greater consumer protections.
NOTE: Double-referral to Environmental Quality Committee
(second.)
SUPPORT AND OPPOSITION:
Support:
California Farm Bureau Federation (Sponsor)
California State Sheriffs' Association (Sponsor)
Association of California Insurance Companies
Azusa Utility Board/City Council
Agricultural Council of California
California Association of Pest Control Advisers
California Association of Winegrape Growers
California Building Industry Association
California Cable Telecommunications Association
California Central Valley Flood Control Association
California Chapter of the American Fence Contractors
Association
California Citrus Mutual
California Fence Contractors Association
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California Professional Firefighters Association
California State Firefighters Association
City of Beaumont
City of Bellflower
City of Concord
City of Costa Mesa
City of Fairfield
City of Fullerton
City of Lakewood
City of Napa
City of Novato
City of Pittsburg
City of Vista
City of Walnut Creek
Desert Water Agency
East Valley Water District
Eastern Municipal Water District, Perris
El Dorado Irrigation District
Engineering Contractors Association
Flasher/Barricade Association
Fresno County Farm Bureau
Golden State Builders Exchange
Greater Riverside Chambers of Commerce
Imperial Irrigation District
Inland Action
Kern County Water Agency
League of California Cities
Liberty Mutual Group
Marin Builders Exchange
Modesto Irrigation District
Pacific Gas and Electric Company (PG&E)
Peace Officers Research Association of California
Pittsburg Police Department
Riverside County District Attorney, Rod Pacheco
Riverside County Farm Bureau, Inc
Riverside County Sheriff, Stanley Sniff, Jr.
San Bernardino County Board of Supervisors
San Diego County Board of Supervisors
Sempra Energy
Southern California Edison
Valley Ag Water Coalition
Opposition :
Californians Against Waste
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California Chapter of the Institute of Scrap Recycling
Industries (ISRI)
Several individuals
Consultant: G. V. Ayers