BILL ANALYSIS �
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|Hearing Date:June 10, 2013 |Bill No:AB |
| |841 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 841Author:Torres
As Amended:April 10, 2013 Fiscal:No
SUBJECT: Junk dealers and recyclers: nonferrous materials: payment.
SUMMARY: Requires junk dealers and recyclers to provide payment to
sellers of nonferrous material by mailed check only , as specified.
Existing law:
1)Regulates junk dealers and recyclers and defines "junk" as secondhand
and used machinery and all ferrous (containing iron) and nonferrous
(not containing 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. 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 or other
specified identification, 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
and that person's vehicle license number.
d) A description of the junk purchased or sold.
e) A statement, verified by signature, indicating that the seller
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owns or is authorized to sell the junk.
3)Makes it a misdemeanor to make a false or fictitious statement in the
written record.
(BPC � 21606 (b))
4)Requires the written information to be reported to the chief of
police or sheriff, as specified. (BPC � 21606 (c))
5)Requires junk dealers and recyclers to do the following when buying
nonferrous (not containing iron) materials: (BPC Section 21608.5
(a))
a) Pay by cash or check mailed to the seller or collected by the
seller on or after the third business day after the sale. The
seller may have the check mailed to an alternative address, but
not a post office box, if the seller identifies that location by
a driver's license or identification card, and a gas or electric
utility bill addressed to the seller at the alternate address
with a payment due date no more than two months prior to the date
of sale.
b) Obtain a clear photograph or video of the seller.
c) Obtain a copy of the driver's license of the seller containing
a photograph and address or a copy of a state or federal
government-issued identification card with a photograph and
address of the seller.
d) Obtain a clear photograph or video of the material being sold.
e) Preserve the information for at least two years from the date
of sale.
f) Obtain a thumbprint of the seller, as proscribed by the
Department of Justice.
6)Makes an exemption from the requirement to pay by cash or check
mailed or collected on the third business day after the sale, if
during the prior three months, the dealer completes five or more
transactions a month (on separate days) with the seller. (BPC �
21608.5 (b))
7)Provides that the delayed payment requirement does not apply if the
junk dealer or recycler receives or has on file the seller's: (BPC
� 21608.5 (c))
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a) Name, physical business address, business telephone number.
b) The business license number or tax identification number.
c) A copy of the valid driver's license of the person delivering
the material on behalf of the seller.
8)Provides an exemption from the payment restrictions and the
requirement to collect identification information (described in 5, 6
and 7, above) when the nonferrous (except for copper or copper
alloy) material's value does not exceed $20 in a single transaction,
when the majority of he transaction is to redeem beverage
containers. (BPC � 21608.5 (d))
This bill: Requires junk dealers and recyclers to provide payment to
sellers of nonferrous material by mailed check only, as specified.
FISCAL EFFECT: This bill has been keyed "non-fiscal" by Legislative
Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the Author in order to strengthen
the capacity of law enforcement to prevent copper theft by requiring
recyclers to issue check payments for copper recycling.
The Author further states:
The copper crime wave continues to be a problem not only in
California, but across the nation. According to a report from
the National Insurance Crime Bureau (NICB), thefts of copper and
other metals have increased 81 percent, driven by rising prices
for the stolen recyclables. A total of 25,083 theft claims of
copper, bronze, brass and aluminum were submitted in the three
years ending Dec. 31, 2011. Ninety-six percent of the thefts
were copper. California ranks 4th in the nation generating the
most metal theft insurance claims with 1,348. The theft of
metal from homes, utilities and public areas has negative
effects on families, public safety, business and agriculture.
2.Background. Metal theft has become increasingly popular within the
last decade and the theft of copper, aluminum, fire hydrants,
manhole covers, and backflow devices in particular are on the rise,
and represent a significant health and safety concern to the public.
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According to an April 2, 2012 Sacramento Bee article, "The cost of
addressing the crime wave has likely surpassed $1 million over the
past year. Officials with the city's Department of Transportation
think they'll have to spend another $2 million over the next year
repairing streetlights damaged by thieves." Over a New Year's
weekend in 2011, 50 manhole covers were stolen from the streets of
Sacramento. Cities, counties, and special districts are taking
different approaches to address metal theft. Eastern and Municipal
Water Districts have issued $500 rewards for citizens who turn in
thieves. Anaheim Public Utilities has issued a customer alert on
their website asking residents to take precautions to protect their
backflow devices. The City has further indicated that residents may
wish to increase patrol and install video surveillance devices in
order to protect their devices.
The rise in recycled metal prices has increased the demand for such
items. Metal theft has been well documented in California. The Los
Angeles Times reported an individual stealing 45 fire hydrants
within the Inland Empire. Investigators of the incident reported,
"The theft of metal to sell as scrap, such as copper wiring, bronze
fixtures and iron from construction site, is common, especially
during a prolonged economic slump."
3.Increases in Metal Theft. Forbes Magazine (May 2012) indicated that
the National Insurance Crime Bureau (NICB) reported that as metal
prices rise, the number of reported thefts of metals such as copper,
bronze, brass and aluminum also rise. In fact, domestic and
international law enforcement agencies saw increased numbers of
metal thefts in the years leading up to the economic downturn in
2008. Construction sites, churches, cemeteries, transportation,
farm equipment and homes are just some of the targets of thieves who
strip the metal and then sell it to scrap dealers in order to net
quick cash.
Forbes Magazine further indicated that critical infrastructure is at
risk. The NICB gave the example of a recent theft of copper wiring
which blacked out runway approach lights at the Modesto, California
regional airport.
A report of insurance claims related to metal thefts spanning 2009
to 2011 identified an 81% increase from 2006 to 2008. The majority
of total claims (96.1%) pertained to the theft of copper, the NICB
said. Some 55% of the claims were on commercial or business
insurance policies, while 45% were on personal policies. In the
report, California ranked fourth, nationally in the number of metal
theft claims behind Ohio, Texas and Georgia.
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4.Enforcement Concerns. Dramatic increases in metal theft have
sparked numerous legislative actions over the past decade. However,
enforcement of such provisions has not proven to be effective due to
fiscal constraints on local law enforcement. Resident Deputy
Sheriff Jim Currie of the Solano County Sheriff's Office reported
that incidents of metal theft seem to be rising in Rio Vista:
"We've got some things in place to help step up our surveillance,
but like other agencies, we've cut back on people and patrol time.
Our Sheriff is addressing that right now, but it has been rough with
the budget situation the way it is."
It appears that the consensus of thought seems to be that the real
problem with metal theft is not the shortcomings in existing law,
but rather the lack of resources to enforce the law. During this
time of extreme challenges to state and local revenues and the
corresponding budget shortfalls, the ability to enforce the existing
law seems to be the greatest challenge to solving the metal theft
problem for local and state law enforcement.
1.Previous Related Legislation. AB 2003 (Torres, 2012), this was an
identical measure which would have required junk dealers and
recyclers to provide payment to sellers of nonferrous material by
mailed check only, as specified. ( Status : AB 2003 failed passage
in this Committee on June 18, 2012.)
AB 1508 (Carter, Chapter 531, Statutes of 2012) revised the
exemption on the sale of nonferrous materials with a value under $20
from certain payment 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.
AB 1583 (Roger Hernandez, Chapter 300, Statutes of 2012) prohibited
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.
SB 1045 (Emmerson, Chapter 393, Statutes of 2012) established civil
liability for a 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.
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SB 1387 (Emmerson, Chapter 656, Statutes of 2012) prohibited 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 previously owned that material.
Failure to
comply with this provision would result in a criminal fine of up to
$3,000.
AB 316 (Carter, Chapter 317, Statutes of 2011) provided that every
person who steals, takes, or carries away copper materials which are
of a value exceeding $950 is guilty of grand theft, punishable by a
fine not exceeding $2,500, imprisonment in a county jail not
exceeding one year, or by both that fine and imprisonment, or by
imprisonment in a county jail or the state prison not exceeding 16
months, or 2 or 3 years and a fine not to exceed $10,000, as
specified.
SB 627 (Calderon, Chapter 603, Statues of 2009) required a core
recycler, that accepts, ships, or sells used catalytic converters to
maintain specified information regarding the purchase and sale of
the catalytic converters for not less than 2 years. Prohibited a
core recycler from providing payment for a catalytic converter
unless the payment is made by check, and the check is mailed or
provided no earlier than 3 days after the date of sale.
AB 1778 (Ma, Chapter 733, Statutes of 2009) required recyclers to
obtain identifying information of individuals who bring in more than
$50 worth of CRV recyclables and newspapers. AB 1778 also required
that payments of $50 or more be made by check.
SB 447 (Maldonado, Chapter 732, Statutes of 2008) required scrap
metal dealers and recyclers to report what materials are being
scraped at their facilities and by whom on a daily basis.
AB 844 (Berryhill, Chapter 731, Statutes of 2008) required recyclers
to hold payment for three days, check a photo ID and take a
thumbprint of anyone selling scrap metals. Also required any person
convicted of metal theft to pay restitution for the materials stolen
and for any collateral damage caused during the theft.
SB 691 (Calderon, Chapter 730, Statutes of 2008) required junk
dealers and recyclers to take thumbprints of individuals selling
copper, copper alloys, aluminum and stainless steel. SB 691 also
required sellers to show a government identification and proof of
their current address. Recyclers who violated the law faced
suspension or revocation of their business license and increased
fines and jail time.
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2.Current Related Legislation This Session. AB 485 (Calderon) requires
a junk dealer or recycler upon application for or renewal of a
weighmaster license to submit additional specified information
regarding its junk dealer or recycler business to the Department of
Food and Agriculture; requires the Department to make a thorough
investigation of the information submitted on that application
within 90 days; requires the Department to revoke a junk dealer or
recycler's weighmaster license if the information submitted in the
application is materially inaccurate; requires a junk dealer or
recycler applying for a weighmaster license to pay an additional fee
to the Department for the administration and enforcement of these
provisions. ( Status : This bill was heard and unanimously approved
by this Committee on April 22, and is currently pending referral in
the Assembly.)
SB 757 (Berryhill) makes conforming changes to authorize a junk dealer
or recycler buying newspaper or CRV containers, as specified above,
to accept as valid seller identification a passport from any country
or a Matricula Consular issued by Mexico; specifies that the term
"secondhand dealer" does not include a junk dealer. ( Status : This
bill was heard and unanimously approved by this Committee on April
22, and is currently pending referral in the Assembly.)
AB 909 (Gray) establishes a Metal Theft Task Force Program to help
local law enforcement to to help local law enforcement deter,
investigate, and prosecute metal theft and related metal theft
crimes. ( Status : This bill is currently pending referral in the
Senate.)
AB 801 (Brown, 2013) requires dealers and recyclers to obtain specified
information before providing payment for nonferrous materials marked
with an indicia of ownership, as defined, and would further require
that this information be retained as part of the written record of
purchases. ( Status : This is a two year bill in the Assembly
Business, Professions and Consumer Protection Committee.)
3.Arguments in Support. AT&T states that it in 2008, it was part of a
group of stakeholders, staff and legislators who crafted significant
reforms in the law covering junk dealers and recyclers. The reforms
required junk dealers and recyclers to obtain identification and
photos of sellers of scrap metals and photos of the metals being
sold, and prohibited payment for
3 days. This delay was aimed at discouraging drug addicts who were a
big part of the problem because they were stealing and selling metal
items in order to obtain quick cash. However, these reforms still
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allowed for payment by cash as well as by check. AT&T writes that
this measure eliminates the ability to pay by cash and requires the
check for payment be mailed to the scrap seller's address, and will
further discourage metal thieves, while not impacting legitimate
sellers and recyclers of scrap metals.
The California Farm Bureau Federation , states that in 2008, AB 844
included a few loopholes that limited its effectiveness. However,
the current measure eliminates cash payments, which was the original
intent of AB 844. Many drug addicts steal metal to obtain quick
cash to feed their habit, and the Farm Bureau believes that
requiring payments be made by check will help to address this issue.
The California State Sheriffs Association argues AB 841 will end the
ease with which metal thieves are able to trade stolen products for
quick cash, thereby providing law enforcement with additional tools
to combat metal theft.
The County of San Bernardino (County) supports the bill stating that
incidents of metal theft in the County have left schools without
power, rendered telephone service unavailable, hindered the resale
of vacant homes stripped of air conditioning units and forced youth
organizations to cancel night activities because there were no field
lights. It cost hundreds of thousands of dollars to repair damage
caused by metal theft and the crime has also created public safety
and nuisance issues. The County contends that the bill will provide
a security enhancement to assist law enforcement in tracking,
catching and deterring metal thieves.
The Friant Water Authority notes that the bill would take an important
step toward eliminating a loophole that exists in current statutes
intended to address the metal theft epidemic, and provide an
important deterrent to the crime, by clearly providing that payment
for sales of nonferrous materials to junk dealers and recyclers may
ONLY be made by check, which is a more readily traceable monetary
transaction than a cash transaction.
The Metropolitan Water District of Southern California (Metropolitan)
indicates that between 2006 and 2008, copper grounding cables were
stolen from 500 of Metropolitan's electrical towers in the desert.
Financial and staff resources that would otherwise be directed to
other priorities and facility needs are being redirected to replace
and repair stolen property that has been affected by metal theft
incidents. According to Metropolitan, the bill will provide a
necessary deterrent in requiring that payment for nonferrous
material be made by check only and mailed to the seller's address.
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PacifiCorp writes in support and indicates that, as a regional utility,
high prices for copper, aluminum, and stainless steel have fueled a
significant increase in metal theft crimes across the country.
PacifiCorp has experienced over $221,000 in losses from metal theft
in 2012 and in the first quarter of 2013 over $96,000 in losses.
PacifiCorp states, "Not only does metal theft pose a financial
problem to the company but more importantly, it is a safety hazard,
thieves are entering high-voltage areas and approaching live wire,
leading to electrocutions, accidents and creating dangerous
conditions of utility employees working in the area. Utilities in
the region have reported fatalities from attempted metal theft."
4.Arguments in Opposition. The West Coast Chapter of the Institute of
Scrap Recycling Industries (ISRI) argues that the bill would undo an
important provision of California's metal theft statute.
Specifically, they argue that it would eliminate the ability of
customers to return to a recycler to receive payment by check or
cash after waiting for three business days since the transaction
took place. Current law states that payment may not be made for a
period of three days. The ISRI argues that the rationale for the
three day waiting period is to provide law enforcement plenty of
time to determine if an item has been stolen or not. ISRI believes
that rather than deterring criminals from fencing stolen nonferrous
metals to outlaw recyclers, the bill will drive legitimate business
away from the law abiding recyclers. ISRI states the bill does
nothing to assist law enforcement in stopping nonferrous metal theft
stating that "?representatives of law enforcement have already
stated on several occasions that the problem is not having enough
laws on the books, it is the severe shortage of resources that
prevents the police from enforcing those laws." ISRI indicates that
the lack of law enforcement resources was emphasized in the Los
Angeles Times article, "Illegal Scrap Yards in California a
Burgeoning Problem" (August 2012).
ISRI believes the bill will make matters even worse because it will
harm legitimate recyclers and possibly drive good customers to the
"rogue" recyclers who will ask no questions and pay cash on the
spot. ISRI argues that the bill is predicated on the erroneous
assumption that the current identification procedure and waiting
period are, in and of themselves, ineffective.
Finally, ISRI points out that on April 22, 2013, the BP&ED Committee
unanimously approved SB 485 (Calderon) which provides resources to
enforce the current metal theft laws; a bill based upon the premise
that what is needed in the scrap recycling industry is enforcement
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resources, not new constraints on recyclers and legitimate sellers
of scrap metals.
Californians Against Waste (CAW) in opposition states, "A 2011 survey
from FDIC found that 7.8 percent of Californians do not have bank
accounts. The percentage skyrockets to 25 percent for the
lowest-income Californians. According to the report, 18.2 percent
of African Americans and 16.7 percent of Hispanics do not have bank
accounts. For these Californians, getting paid by check generally
means having to utilize a check cashing operation and paying over a
percentage of their earnings." CAW further contends, "Independent
scrapers work hard for low pay in salvaging operations that benefit
California's economy and environment. Scrap metal left
[un-recycled] costs public agencies and private companies millions
and undermines support for recycling."
SUPPORT AND OPPOSITION:
Support:
AT&T
California District Attorneys Association
California Farm Bureau Federation
California State Sheriffs Association
County of San Bernardino
Friant Water Authority
Metropolitan Water District of Southern California
PacifiCorp
San Bernardino County Sheriff-Coroner
Opposition:
West Coast Chapter of the Institute of Scrap Recycling Industries
Californians Against Waste
Consultant:G. V. Ayers