BILL ANALYSIS Ó AB 1583 Page 1 Date of Hearing: April 17, 2012 ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION Mary Hayashi, Chair AB 1583 (Roger Hernandez) - As Amended: April 9, 2012 SUBJECT : Bulk merchandise pallets. SUMMARY : Prohibit junk dealers and recyclers from purchasing or receiving bulk merchandise pallets, as defined, marked with an indicia of ownership, as defined, from anyone except the indicated owner, unless specified information is provided. Specifically, this bill : 1)Prohibits junk dealers or recyclers from purchasing or receiving bulk merchandise pallets marked with an indicia of ownership from any person or entity other than the indicated owner. 2)Authorizes a junk dealer or recycler to purchase or receive bulk merchandise pallets if the seller is not the indicated owner, only if the seller or transferor provides a receipt verifying his or her current ownership or a document indicating that he or she is authorized by the owner to sell or transfer the merchandise pallets, as specified, and requires the junk dealer or recycler to maintain copies of these documents shall as part of the written record of the transaction. 3)Requires a junk dealer or recycler to make payment for a single transaction involving five or more bulk merchandise pallets marked with indicia of ownership by mailed check or by cash or check collected by the seller after three business days, as specified. 4)Makes the obliteration of the indicia of ownership on a merchandise pallet punishable under provisions of law guarding against grand and petty theft, as specified. 5)Requires a person or entity purchasing or transporting plastic bulk merchandise containers who is in the business of recycling, shredding, or destruction of plastic bulk merchandise containers, or is in the business of transporting plastic bulk merchandise containers for those purposes, to AB 1583 Page 2 obtain a proof of ownership record or bill of lading and other identifying information from the person selling or delivering 5 or more containers, and to retain this information, as specified. 6)Defines the following terms: a) "Indicia of ownership" to mean words, symbols, or registered trademarks printed, stamped, etched, attached, or otherwise displayed on the exterior surface of the merchandise pallet that reasonably identifies the owner; b) "Bulk merchandise pallets" to mean plastic or wood containers, carriers, or holders used by a manufacturer or distributor for bulk transport of merchandise to wholesale or retail outlets. 7)Makes technical and conforming changes. EXISTING LAW : 1)Authorizes junk dealers and recyclers, as defined, to sell and purchase junk, which includes secondhand and used furniture, pallets, or other personal property, as specified. 2)Requires junk dealers and recyclers to maintain written records of specified information, and makes a violation of the recordkeeping requirements a misdemeanor. 3)Defines a merchandise pallet as a wooden or plastic carrier or container of specified size, used by a manufacturer or distributor to transport merchandise to retail outlets, which has a notice permanently affixed to it identifying the owner of the pallet and providing other specified information. 4)Prohibits and makes it a crime for an unauthorized person, as defined, to possess a merchandise pallet or for a person other than its owner to obliterate the identification notice on a pallet. 5)Requires any person or entity purchasing plastic bulk merchandise containers who is in the business of recycling, shredding, or destruction of plastic bulk merchandise containers, as defined, to obtain a proof of ownership record and other identifying information from a person selling 5 or AB 1583 Page 3 more containers, and to retain the required record for a specified time. A violation of these provisions is a misdemeanor. FISCAL EFFECT : Unknown COMMENTS : Purpose of this bill . According to the author, "Theft of merchandise pallets is becoming a serious problem for food and beverage manufacturers and distributors. Higher scrap values paid recyclers of the resins typically used in pallets is a major factor in these thefts. "AB 1583 will ensure businesses in California stop losing their property, it applies to all merchandise pallets, not only to plastic ones used for milk, eggs, and beverages; making sure people do not make a profit out of stolen wood and plastic pallets." Background . This bill prohibits junk dealers and recyclers from purchasing or receiving bulk merchandise pallets, as defined, marked with an indicia of ownership, as defined, from anyone except the indicated owner, unless the seller or transporter provides proof of ownership. Support . The sponsor of this bill, MillerCoors writes in support, "Pallet theft has become a serious and growing problem for manufacturers and distributors of food and beverage products. As the scrap value of the plastic resins used in bulk merchandise pallets has soared on higher demand for recycled products, thefts of pallets have increased exponentially in a manner not dissimilar from the wave of thefts of copper wire and other metals. According to Shelly Jones, a lead detective for the office of the Los Angeles County Sheriff, pallet thefts in the San Gabriel Valley alone cost local business nearly $10 million annually, MillerCoors typically pays approximately $30 per pallet and estimates its nationwide losses from pallet theft to be in the tens of millions of dollars per year. While the vast majority of junk dealers and recyclers are law-abiding, the evidence from several recent law enforcement actions suggests that some junk dealers and recyclers are still not doing enough to assure that sellers of scrap materials verify their identity and show proof of ownership or lawful possession. AB 1583 Page 4 "?we believe Ýthis bill] will give law enforcement significant additional tools to combat pallet thefts and help deter pallet theft by cutting off the ability of thieves to easily turn stolen pallets into immediate cash. In this regard, we note that legislation passed in 2007 ÝSB 520 (Governmental Organization Committee), Chapter 349, Statutes of 2007] to impose similar requirement son junk dealers and recyclers purchasing aluminum alloy and stainless steel beer kegs has been effective in reducing the incidence of these thefts. Opposition . The California Chapters of the Institute of Scrap Recycling Industries (ISRI) writes in opposition, "ISRI is sympathetic to the concerns of the dairy, bakery, and soft drink industries on this subject. Prior to California passing the current law relating to the purchasing of plastic merchandise containers, ISRI created a 'Do No Buy List' for its members which contained plastic bulk merchandise containers as a forbidden item. We understand that these industries realize significant financial loss each year on these items. However, ISRI members have been working with them to lessen their loss. Furthermore, we must point out that supermarkets and other locations where the bread trays, milk crates, and soda trays are left outside and unsecure are feeding right into the hands of thieves. ISRI believes that if the diary, bakery, and soft drink industries are seriously concerned about the thefts of the merchandise containers, those industries would have a contractual agreement with the stores in which they sell their products to make sure the merchandise containers are kept in a secure location. "Frankly, the problem is not the sufficiency of the current law; it is the lack of judicial enforcement of the current law. Simply stated, few local police agencies have the desire to redirect their scarce resources to enforce the merchandise container laws. This is not an issue of substantive law. This is an issue where dairy, bakery, and soft drink industries need to make sure the supermarkets in which their products are sold keep the merchandise containers in a secure location." Previous legislation . SB 520 (Governmental Organization Committee), Chapter 349, Statutes of 2007, prohibits junk dealers or recyclers from purchasing or receiving aluminum beer kegs with marks indicating ownership, unless the kegs are being provided directly by the owner. AB 1583 Page 5 REGISTERED SUPPORT / OPPOSITION : Support MillerCoors (sponsor) California Grocers Association California Nevada Soft Drink Association California Police Chiefs Association Downey Distribution/Manufacturing Center of the Coca-Cola Bottling Company of Southern California Coca-Cola Refreshments Intelligent Global Pooling Systems Los Angeles County District Attorney's Office Opposition California Chapters of the Institute of Scrap Recycling Industries Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916) 319-3301