BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 841|
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THIRD READING
Bill No: AB 841
Author: Torres (D)
Amended: 4/10/13 in Assembly
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 8-0, 6/10/13
AYES: Lieu, Emmerson, Block, Corbett, Galgiani, Hernandez,
Hill, Yee
NO VOTE RECORDED: Padilla, Wyland
ASSEMBLY FLOOR : 57-16, 4/18/13 - See last page for vote
SUBJECT : Junk dealers and recyclers: nonferrous materials:
payment
SOURCE : Author
DIGEST : This bill requires junk dealers and recyclers to
provide payment to sellers of nonferrous material by mailed
check only, as specified.
ANALYSIS :
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,
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excluding livestock.
2. Requires junk dealers and recyclers to keep a written record
of all junk sales and purchases for at least two years; makes
it a misdemeanor to make a false or fictitious statement in
the written record; and requires the written information to
be reported to the chief of police or sheriff, as specified.
3. Specifies requirements that junk dealers and recyclers must
meet when buying nonferrous (not containing iron) materials.
4. 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.
5. Provides that the delayed payment requirement does not apply
if the junk dealer or recycler receives or has on file the
seller's name, physical business address, business telephone
number, business license number or tax identification number,
and a copy of the valid driver's license of the person
delivering the material on behalf of the seller.
6. Provides an exemption from the payment restrictions and the
requirement to collect identification information for the
purchase of nonferrous (except for copper or copper alloy)
material having a value not exceeding $20 in a single
transaction, when the majority of the transaction is to
redeem beverage containers.
This bill requires junk dealers and recyclers to provide payment
to sellers of nonferrous material by mailed check only, as
specified.
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.
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
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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."
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,
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Texas and Georgia.
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.
Comments
According to the author's office, this bill will strengthen the
capacity of law enforcement to prevent metal 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 33,775 theft claims of copper, bronze, brass and
aluminum were submitted in the four years ending Dec. 31, 2012.
Ninety-six percent of the thefts were for copper alone.
California ranks 3rd in the nation generating the most metal
theft insurance claims with 1,888. Since January, 49 bills have
been introduced in 23 states. Eighteen (18) states have passed
bills on metal theft in the past two years. Seven (7) states
have adopted check payment systems recently for metal recycling
(Florida, Georgia, Iowa, Louisiana, Maine, Nebraska, South
Carolina). The theft of metal from homes, utilities and public
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areas has negative effects on families, public safety, business
and agriculture."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/11/13)
Association of California Insurance Companies
Association of California Water Agencies
AT&T
California District Attorneys Association
California Farm Bureau Federation
California Police Chiefs Association
California State Association of Counties
California State Sheriffs' Association
Chino Police Department
County of San Bernardino
Friant Water Authority
League of California Cities
Los Angeles County District Attorney's Office
Metropolitan Water District of Southern California
Nationwide
Ontario Police Department
Pacific Gas and Electric Company
PacifiCorp
San Bernardino County Sheriff-Coroner
Southern California Edison
Verizon
OPPOSITION : (Verified 6/11/13)
Californians Against Waste
West Coast Chapter of the Institute of Scrap Recycling
Industries
ARGUMENTS IN SUPPORT : AT&T states that 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
three days. This delay was aimed at discouraging drug addicts
who were a big part of the problem because they were stealing
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and selling metal items in order to obtain quick cash. However,
these reforms still allowed for payment by cash as well as by
check. AT&T writes that this bill "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 (Berryhill, Chapter 731) "included a few loopholes that
limited its effectiveness. AB 841 (Torres) eliminates cash
payments, which was the original intent of AB 844. Many drug
addicts steal metal to obtain quick cash to feed their habit.
Requiring payments be made by check will help to address this
issue."
The California State Sheriffs Association argues this bill 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 states 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 this bill will "provide a security enhancement to assist
law enforcement in tracking, catching and deterring metal
thieves."
The Friant Water Authority notes that this bill will "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 indicates
that between 2006 and 2008, copper grounding cables were stolen
from 500 of its electrical towers in the desert. "Financial and
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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 the District, this 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."
PacifiCorp indicates that "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."
ARGUMENTS IN OPPOSITION : The West Coast Chapter of the
Institute of Scrap Recycling Industries (ISRI) argues that this
bill will undo an important provision of California's metal
theft statute. Specifically, they argue that it will 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. Existing 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, this bill will drive legitimate business away
from the law abiding recyclers. ISRI states this 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).
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ISRI believes this 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 this 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 Senate
Business, Professions and Economic Development 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 resources, not new constraints on recyclers and
legitimate sellers of scrap metals.
Californians Against Waste (CAW) 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."
ASSEMBLY FLOOR : 57-16, 4/18/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Daly,
Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez,
Gordon, Gray, Hall, Roger Hern�ndez, Jones-Sawyer, Levine,
Medina, Mitchell, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Perea, V. Manuel P�rez, Quirk, Quirk-Silva,
Rendon, Salas, Skinner, Stone, Ting, Torres, Waldron, Weber,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Ch�vez, Dahle, Donnelly, Beth Gaines, Grove, Harkey,
Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Morrell,
Patterson, Wagner, Wilk
NO VOTE RECORDED: Bigelow, Conway, Gorell, Hagman, Holden,
Lowenthal, Vacancy
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MW:d 6/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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