BILL ANALYSIS Ó SB 1045 Page 1 SENATE THIRD READING SB 1045 (Emmerson) As Amended August 16, 2012 Majority vote SENATE VOTE :37-0 JUDICIARY 10-0 ----------------------------------------------------------------- |Ayes:|Feuer, Wagner, Atkins, | | | | |Dickinson, Gorell, Huber, | | | | |Jones, Monning, | | | | |Wieckowski, Chesbro | | | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Establishes civil liability upon junk dealers and recyclers for the possession of specified metal fixtures owned by a public agency. Specifically, this bill : 1)Provides that any junk dealer or recycler who possesses a fire hydrant, fire department connection (including brass fittings and parts), manhole cover or lid, or backflow device or connection to that device (collectively, "prohibited metal items") without a written certification from the agency or utility owning or previously owning the material, shall be liable to the agency or utility for the wrongful possession of that material, except as provided. 2)Provides that the above written certification shall be on the agency's or utility's letterhead and shall certify both that the agency or utility has sold the material described or is offering the material for sale, salvage, or recycling, and that the person possessing the certification or identified in the certification is authorized to negotiate the sale of that material. 3)Requires a junk dealer or recycler to notify the appropriate law enforcement agency by the end of the next business day upon discovery that he or she has unknowingly taken possession of any prohibited metal items as part of a load of otherwise non-prohibited materials without the written certification required by this bill. SB 1045 Page 2 4)Provides that written confirmation, as defined, of notice to the appropriate law enforcement agency shall relieve the junk dealer or recycler of liability to the public utility or other agency for the possession of prohibited metal items owned or previously owned by the utility or agency. 5)Provides that the liability of the junk dealer or recycler for wrongful possession is for the actual damages incurred by the agency or utility, including the value of the material, the cost of replacing the material, labor costs, and the costs of repairing any damage caused by the removal of the material. Further requires an award of exemplary damages of three times the actual damages incurred by the agency or utility, unless the court decides that extenuating circumstances do not justify such an award. 6)Establishes that nothing in this act is intended to create a basis for liability on the part of a junk dealer or recycler to third parties for damages or injuries arising from the theft of prohibited metal items, as specified above. 7)Make specified legislative findings, including, among other things, that theft of fire hydrants, manhole covers, and backflow devices has significantly increased in recent years and represents very substantial health and safety issues. EXISTING LAW : 1)Defines "junk" as any and all secondhand and used machinery and all ferrous and nonferrous scrap metals and alloys, including any and all secondhand and used furniture, pallets, or other personal property, other than livestock, or parts or portions thereof. 2)Defines "junk dealer" as any person engaged in the business of buying, selling and dealing in junk, any person purchasing, gathering, collecting, soliciting or traveling about from place to place procuring junk, and 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. 3)Requires junk dealers and recyclers to keep a written record of all sales and purchases made in the course of his or her business, and preserve such records for at least two years SB 1045 Page 3 after making the final entry of purchase or sale of junk, with failure to comply punishable as a misdemeanor. 4)Requires junk dealers and recyclers to specify certain information in the written record, including: a) A description of the item or items of junk purchased or sold, including the item type and quantity, and identification number, if visible. b) A statement indicating either that the seller of the junk is the owner of it, or the name of the person he or she obtained the junk from, as shown on a signed transfer document. 5)Requires junk dealers and recyclers to report the information in the written record to the chief of police or the sheriff on a daily basis or on the first working day after receipt or purchase of the junk, as specified. FISCAL EFFECT : None COMMENTS : This bill seeks to establish specified civil liability for junk dealers or recyclers for possession of a fire hydrant, fire department connection, manhole cover, or backflow device-all of which are metal fixtures typically owned by public utilities or agencies that potentially pose public health or safety concerns if stolen or improperly removed. According to the author: Metal theft has devastated both public and private property and has harmed critical public infrastructure, making it difficult to deliver essential utilities to customers. Moreover, the theft of certain metal devices can seriously threaten public health and safety. While several laws have been enacted to curb metal theft, it is still prevalent throughout California. SB 1045 seeks to address the metal theft epidemic and provide cities, counties, special districts and private utility companies with the tools they need to recover costs and impose stiff civil penalties on thieves and recyclers who violate the law. This bill focuses on deterring the theft of three particular SB 1045 Page 4 metal items that protect public safety: fire hydrants and connections, manhole covers, and backflow devices. As explained by the Irvine Ranch Water District in its letter of support: These are large, easily identifiable items that typically are not found in possession by a member of the general public. Individuals have been severely injured falling down manholes where the cover was stolen. Automobiles have been damaged driving over open manholes. Stolen backflow devices leave potable water sources vulnerable to cross-contamination, and stolen fire hydrants render properties defenseless to fire. Additionally, the act of stealing these items often results in significant damage to both the public and private properties from which these articles are stolen. Under this bill, a junk dealer or recycler who possesses one of these specified metal items is liable for wrongful possession only if the proper written certification from the agency or utility that owns or previously owned the material was not obtained. The bill requires the written certification to be on the agency's or utility's letterhead and that it specify both that: 1) the agency or utility has sold the material described or is offering the material for sale, salvage, or recycling; and 2) that the person possessing the certification or identified in the certification is authorized to negotiate the sale of that material. This requirement is intended to relieve a junk dealer or recycler from the responsibility of determining whether a particular item in question is stolen or not because such items will simply not be eligible for recycling without the required certification. As recently amended, the bill further clarifies the responsibilities of a junk dealer or recycler who discovers that he or she has unknowingly taken possession of a prohibited metal items as part of a load of otherwise non-prohibited materials without the written certification required by this bill. In that case, the bill requires the junk dealer or recycler upon discovery of its possession of such items to notify the appropriate law enforcement agency of that fact by the end of the next business day. The bill provides that after written confirmation of the notice is received from law enforcement, the junk dealer or recycler shall then be relieved of liability to the public utility or other agency for the possession of those SB 1045 Page 5 prohibited metal items owned or previously owned by the utility or agency. Under this bill, a junk dealer or recycler in violation of these provisions would be liable to the agency or utility owning or previously owning the prohibited material for actual damages incurred by the agency or utility, including the value of the material, the cost of replacing the material, labor costs, and the costs of repairing any damage caused by the removal of the material. The award of actual damages is directed at making the agency or utility whole again by compensating it for its losses. On the other hand, the bill allows for the award of exemplary (i.e., punitive) damages in the amount of three times the actual damages incurred by the agency or utility, unless the court decides that extenuating circumstances do not justify such an award. This preserves some discretion to be exercised by the court to withhold exemplary damages in cases where, for example, the court finds the junk dealer or recycler took exceptional steps to comply and should not be punished despite a violation having occurred. The availability of exemplary damages should provide a strong disincentive to junk dealers and recyclers to complete a sale for the prohibited items under this bill when there is any doubt about the legitimate right of the seller to possess such items as evidenced by the required written certificate. The bill also clarifies that nothing in this act is intended to create a basis for liability on the part of a junk dealer or recycler to third parties for damages or injuries arising from the theft of prohibited metal items. Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334 FN: 0004919