BILL ANALYSIS Ó
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|Hearing Date:June 25, 2012 |Bill No:AB |
| |1583 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 1583Author:Roger Hernández
As Amended: June 15, 2012Fiscal: Yes
SUBJECT: Bulk merchandise pallets.
SUMMARY: Prohibits junk dealers and recyclers from purchasing or
receiving bulk merchandise pallets, as defined, marked with indicia of
ownership, as defined, from anyone except the indicated owner, unless
specified information is provided.
Existing law:
1)Regulates junk dealers and recyclers and defines "junk" as
secondhand and used machinery and all ferrous (containing iron) and
nonferrous (excludes iron) scrap metals (as defined) and alloys,
including any and all secondhand and used furniture, pallets, or
other personal property, excluding livestock. (Business and
Professions Code (BPC) § 21600)
2)Requires junk dealers and recyclers to keep a written record of all
junk sales and purchases for at least two years and requires the
written information to be reported to the chief of police or
sheriff, as specified, and makes it a misdemeanor to make a false or
fictitious statement in the written record. The written record must
include: (BPC § 21606)
a) The place and date of the transaction.
b) The name, driver's license number and state of issue, and the
license plate number and state of issue of any vehicle used in
transporting the junk.
c) The name and address of each person to whom the junk is sold
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and that person's vehicle license number.
d) A description of the junk purchased or sold.
e) A signed statement indicating that the seller owns or is
authorized to sell the junk.
3)Defines "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. (BPC § 22750)
4)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 merchandise pallet. (BPC § 22753)
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 five or more containers, and to retain the
required record for one year from the date do purchase or delivery,
as specified. Makes a violation of these provisions a misdemeanor.
(BPC § 22755)
This bill:
1)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.
2)Prohibits a junk dealer or recycler from purchasing or receiving bulk
merchandise pallets marked with indicia of ownership from any person
or entity other than the indicated owner.
3)Authorizes a junk dealer or recycler to purchase or receive bulk
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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,
and requires the junk dealer or recycler to maintain copies of these
documents as part of the written record of the transaction.
4)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 where the seller is not the indicated
owner by mailed check or by cash or check collected by the seller
after three business days.
5)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.
6)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 obtain a proof of ownership record
or bill of lading and other identifying information from the person
selling or delivering five or more containers, and to retain this
information, as specified.
7)Makes technical and conforming changes.
FISCAL EFFECT: The Assembly Appropriations Committee analysis dated
May 2, 2012, cites negligible, non-reimbursable costs for prosecution
and/or incarceration, offset by fine revenue, for misdemeanor
violations of provisions associated with obliterating the indicia of
ownership on a merchandise pallet.
COMMENTS:
1.Purpose. This bill is sponsored by MillerCoors (Sponsor) to prohibit
junk dealers and recyclers from purchasing or receiving bulk
merchandise pallets marked with indicia of ownership from anyone
except the indicated owner, unless the seller or transporter
provides proof of ownership. The Author contends that AB 1583 will
ensure businesses stop losing their property because the legislation
applies to all merchandise pallets, not only to plastic ones used
for milk, eggs, and beverages.
2.Background. While much of the recent focus of the efforts to curb
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the recycling of stolen goods has been upon metal theft, the Sponsor
indicates that there are significant problems with the theft of
plastics. The Sponsor states the following regarding the existing
problems with the theft of plastic pallets:
"Despite current requirements on junk dealers and recyclers when
purchasing merchandise pallets, theft of merchandise pallets is
becoming a serious problem for food and beverage manufacturers
and distributors. Higher scrap values paid recyclers of the
plastic resins typically used in pallets is a major factor in
these thefts. Replacing a pallet can cost approximately $30 and
total losses are estimated in the millions of dollars.
"In December of 2011, the L.A. County Sheriff investigators
recovered $1.3 million in stolen plastic containers, boxes, and
crates. According to lead detective Shelley Jones from the
Sheriff's Industry Substation, stolen plastic pallets cost
businesses in the San Gabriel Valley alone nearly $10 million
annually. Sheriff's officials said the recovered property was
part of a complex web of organized crime operating nationally
and internationally that deals in stealing, recycling, and
reselling trademarked plastic containers.
"AB 1583 tightens and clarifies existing laws relative to
purchase of merchandise pallets, adding a prohibition on
purchasing or receiving pallets marked with indicia of ownership
unless the seller can prove lawful ownership or possession.
When the seller is not the indicated owner, payment must be made
by check mailed to the address on the seller's photo ID or by
cash after the third business day. The bill also expands
current law to require that persons who transport bulk
merchandise containers for the purpose of shredding, recycling,
or destroying, whether or not they are a junk dealer or
recycler, also obtain or carry proof of ownership or lawful
possession."
3.Related Legislation: In 2007, the Senate Governmental Organization
Committee authored SB 520 (Chapter 349, Statutes of 2007) which
added BPC § 21609.5 to prohibit 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.
According to the Sponsor, AB 1583 is designed to enact similar
provisions regarding plastic merchandise pallets.
AB 1508 (Carter, 2012) revises the exemption on the sale of
nonferrous materials with a value under $20 from certain payment
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restrictions by requiring the majority of the transaction be for the
redemption of beverage containers and prohibiting the redemption of
materials made of copper or copper alloys, as specified. This bill
is set for hearing June 25, 2012 in this Committee.
AB 2003 (Torres, 2012) requires junk dealers and recyclers to
provide payment to sellers of nonferrous material by mailed check
only, as specified. This bill failed passage in this Committee on
June 18, 2012.
AB 2298 (Ma, 2012) authorizes an appointee of the head of a county
agriculture commission to inspect written records of sales and
purchases by junk dealers or recyclers. This bill is set for
hearing on June 26 in Senate Public Safety Committee.
SB 1387 (Emmerson, 2012) prohibits a junk dealer or recycler from
possessing manhole covers, backflow devices, and fire hydrants
without written certification on the letterhead of the public agency
or utility that owns or previously owned that material. Failure to
comply with this provision would result in a criminal fine of up to
$3,000. This bill has been referred to the Assembly Public Safety
Committee for hearing.
SB 1045 (Emmerson, 2012) provides that any junk dealer or recycler
who possesses a fire hydrant, a fire department connection, as
specified, or a backflow device or connection to that device or part
of that device without a prescribed written certification, from the
agency or utility owning or previously owning the material is liable
to the agency or utility for the wrongful possession of that
material. This bill is awaiting hearing in the Assembly.
4.Arguments in Support. California Beer and Beverage Distributors
state that in recent years, California beer distributors have
experienced a higher frequency in the theft of pallets used in the
delivery of beer. AB 1583 de-incentivizes the theft of pallets
which are a costly and crucial element in the transportation and
distribution of beer.
California Grocers Association believes 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.
California Nevada Soft Drink Association states: "Many bottlers are
continuing to experience substantial financial loss in the theft and
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misappropriation of plastic pallets and shells used in the delivery
of beverage products to retailers. We believe this is occurring on
a large scale where these shells are sold to plastic re-processors
and ground into plastic flake. This requires bottlers to replace
these expensive items and defeats the environmental goal to reuse
these items in the delivery of our products."
California Retailers Association (CRA) states that in a slumping
economy, organized retail crime has been on the rise causing
retailers to do all that they can to minimize their losses. The
theft of merchandise pallets is an ongoing problem and an area of
potentially significant financial loss for CRA's members. With the
increased value of resin, merchandise pallet theft has become a
highly lucrative business for thieves. AB 1583 would serve as a
deterrent to pallet thieves and would minimize the frequency of
these crimes, according to CRA.
Writing in support, Rockview Farms indicates that it purchases nearly
450,000 milk crates annually at a cost of more than $1.7 million,
and police reports and investigations have found that milk crates
and plastic pallets are stolen and sold illegally to junk
dealers/recyclers who then grind the plastic containers into chips
to be resold for a lesser price.
Safeway Inc. states: "Theft of merchandise pallets has become a
serious problem for Safeway. We manufacture and distribute our own
products as well as operate retail facilities and have noticed that
higher scrap values paid recyclers for he resins typically used in
pallets is a major factor in these thefts. AB 1583 will ensure that
Safeway will stop losing our property as it applies to all
merchandise pallets, including our plastic and wood pallets."
5.Oppose Unless Amended. The California Chapters of the Institute of
Scrap Recycling Industries (ISRI) has taken an "oppose unless
amended" position on the bill. Although ISRI indicates that it
supports many provisions in the bill, it believes that the proposed
BPC § 21609.7 is unnecessary in that it is duplicative of current
law. Specifically, ISRI points out that BPC §§ 22750 and 22755(b)
provide "any person or entity purchasing plastic bulk merchandise
containers, who is in the business of recycling, shredding, or
destruction of plastic bulk merchandise containers, shall obtain a
proof of ownership record from a person selling five or more plastic
bulk merchandise containers that shows that the person selling the
containers has lawful possession or ownership of the containers, and
shall also verify the seller's identity by a driver's license or
other government-issued photo identification." It further states
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that "any person who violates the provisions of this section is
guilty of a misdemeanor." ISRI argues that the duplicate provisions
should be removed from the bill since the existing law relating to
the purchasing of plastic bulk merchandise containers is clearly
sufficient.
ISRI further opposes the amendments to BPC § 21609.7(c) and 22755(c)
which provide that payment may only be made by check and only after
the third business day. ISRI points out that this requirement was
established for the sale or purchase of non-ferrous metals (copper,
aluminum, etc.). The Legislature imposed the requirement, which
ISRI supported, because the theft of non-ferrous metals poses a
health and safety issue. "However, the recycling of merchandise
containers is not a health and safety issue it is a proof of
ownership issue. If a recycler has an authorization letter or a
contract with the owner of the merchandise containers, we believe
payment of said containers should be left up to the parties at hand.
Once that ownership has been established, why would the Legislature
want to interject itself on a legitimate transaction?" As amended
on June 15, 2012, AB 1583 deleted the payment provision in section
22755(c), but the same payment language is still found in section
21609.7(c), and ISRI would ask that it also be removed from the
bill.
Ultimately ISRI argues that 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."
SUPPORT AND OPPOSITION:
Support:
MillerCoors (Sponsor)
California Beer and Beverage Distributors
California Grocers Association
California Nevada Soft Drink Association
California Police Chiefs Association
California Retailers Association
Coca-Cola Refreshments
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Dairy Institute
Downey Distribution/Manufacturing Center of the Coca-Cola Bottling
Company of Southern California
Intelligent Global Pooling Systems
Los Angeles County District Attorney's Office
Los Angeles County Sheriff's Department
Rockview Farms
Safeway Inc.
Oppose Unless Amended:
California Chapters of the Institute of Scrap Recycling Industries
Opposition:
None on file as of June 20, 2012
Consultant:G. V. Ayers