BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 2220 (Daly) - Private security services: private patrol  
          operators.
          
          Amended: August 5, 2014         Policy Vote: BP&ED 8-0; PS 7-0
          Urgency: No                     Mandate: Yes
          Hearing Date: August 11, 2014                           
          Consultant: Jolie Onodera       
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: AB 2220 authorizes, effective July 1, 2016, a  
          licensed Private Patrol Operator (PPO), as defined, to be the  
          registered owner of a firearm, and establishes procedures for a  
          PPO to assign its firearms to its employees who are licensed to  
          carry firearms. This bill also requires, as a condition of  
          licensure, a PPO to have on file with the Department of Consumer  
          Affairs (DCA), a liability insurance policy and workers'  
          compensation insurance coverage for its employees, as specified.

          Fiscal Impact: 
              One-time costs to the Department of Justice (DOJ) of about  
              $1 million (Special Fund*) to enhance the registration  
              database and update forms to accommodate the new fields for  
              PPO designation, offset by an undetermined level of fee  
              revenue.
              Ongoing workload to the DOJ Bureau of Firearms of about  
              $500,000 (Special Fund*) for investigations, inspections,  
              and the processing of forms, offset by the authority to  
              charge fees. 
              Ongoing costs of about $175,000 (Special Fund**) to the DCA  
              for enforcement of the insurance requirements and the  
              registration process for assigning firearms. DCA  
              investigations would be initiated based on complaint  
              allegations of uninsured PPO operations, and ongoing  
              workload resulting from inspections for compliance by PPOs.  
              Costs would be offset in minor part by citation revenue of  
              less than $10,000 annually.
              Likely minor non-reimbursable local enforcement costs  
              offset to a degree by fine revenue for misdemeanor  
              violations by security guards for failure to return an  
              assigned firearm as required under the provisions of this  








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              measure. 

          *DROS Special Account - staff notes the DROS Special Account is  
          operating at a structural deficit with a projected 2014-15  
          year-end balance of $1.3 million.
          **Private Security Services Fund

          Background: Private patrol operators (private security  
          companies) are licensed and regulated by the DCA, Bureau of  
          Security and Investigative Services (BSIS). Possession and use  
          of firearms by PPO employees (security guards) is specifically  
          regulated. Under current law, companies are not authorized to be  
          the legal owner of a firearm (with the exception of assault  
          weapons), and it has been indicated that PPOs are utilizing the  
          existing provisions of law that allow for firearms to be  
          infrequently loaned to a person known to the owner, as a means  
          of providing firearms to employees. 

          Pursuant to Penal Code § 27880, firearms may be loaned between  
          persons who are personally known to each other subject to  
          specified requirements including that the loan must be for a  
          lawful purpose, the loan must not exceed 30 days, the individual  
          being loaned the firearm must have a valid handgun safety  
          certificate (if the firearm is a handgun), and the loan is  
          infrequent, meaning less than six transactions per calendar year  
          for handguns. To the extent PPOs are switching firearms every 30  
          days between firearm-certified employees is not only  
          administratively burdensome but also potentially not in the best  
          interests of public safety.

          The provisions of this bill seek to alleviate the burdensome  
          administrative process utilized by PPOs and make an exception to  
          the normal firearms ownership laws by authorizing PPOs to be the  
          legal owner of a firearm and assign that firearm to an employee,  
          who would be the registered owner. 

          Proposed Law: This bill authorizes, effective July 1, 2016, a  
          licensed PPO to be the registered owner of a firearm, if the PPO  
          is registered with the DOJ. This bill establishes procedures for  
          PPOs to assign its firearms to its employees who are licensed to  
          carry firearms. This bill:
              Defines PPO as a private patrol operator licensed pursuant  
              to Chapter 11.5 of the Business and Professions Code.
              Requires the DOJ to modify the DROS form to record the PPO  








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              as the purchaser and registered owner of the firearm.
              Requires the DOJ to modify the DROS form to require the PPO  
              to designate a "firearms custodian" for the firearm owned by  
              the PPO. The firearms custodian shall possess a valid  
              firearm qualification permit issued by the DCA.
              Requires the DOJ to prescribe a Certificate of Assignment  
              (COA). The COA may include fields that are in the DROS form  
              and will be used to identify the PPO employee assigned to a  
              PPO-owned firearm.
              Requires security guards who receive a firearm pursuant to  
              a COA to possess a valid firearm qualification permit.
              Authorizes the DOJ to charge reasonable fees for the  
              implementation of this program to the PPO's and deposit  
              those fees in the DROS account.
              Authorizes fees collected and deposited into the DROS  
              account to be used for expenditure by the DOJ, upon  
              appropriation by the Legislature, for the purposes of this  
              bill.
              Requires that if the PPO loses its license or goes out of  
              business, the PPO must, within 30 days and unless otherwise  
              prohibited by law, complete new DROS forms for all PPO-owned  
              firearms and transfer those firearms to a new owner.
              Requires that a security guard shall, within 48 hours of  
              the PPO's request, for any reason, or within 48 hours of  
              separation of employment or revocation of the firearm  
              qualification card, return the firearm to the PPO. 
              Includes codified legislative findings and declarations.
              Revises the coverage amount PPOs are required to maintain  
              as a condition of licensure that provides minimum limits of  
              insurance of $1 million for any one loss or occurrence  due  
              to bodily injury, including death, or property damage, or  
              both.
              Requires PPOs to keep copies of the insurance policy and  
              certificate of workers' compensation coverage for its  
              employees on file with the BSIS as a condition of licensure.
              Provides that a duly appointed peace officer is exempt from  
              the requirements of requalifying on the range and passing  
              the written examination for the purposes of renewing a  
              firearms qualification card, as specified.

          Related Legislation: SB 385 (Block) 2013 was substantially  
          similar to this measure. This bill was held on the Suspense File  
          of this Committee.









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          AB 811 (Hall) 2011 was similar to this measure and provided for  
          a registration and assignment process for firearms for PPOs.  
          This bill was referred to but not provided a hearing in the  
          Assembly Committee on Public Safety. 

          Staff Comments: According to the DCA, there are approximately  
          2,700 licensed PPOs in the state. It is estimated that firearm  
          permits have been issued to approximately 38,700 security  
          guards. The DOJ will incur significant one-time and ongoing  
          costs to carry out the provisions of this bill. It is estimated  
          that DOJ would incur one-time costs of about $1 million (DROS  
          Special Account) to enhance the firearm registration database  
          and revise the DROS form as required to accommodate the new PPO  
          designation. Ongoing workload to the Bureau of Firearms is  
          projected of about $500,000 (DROS Special Account) for  
          investigations and inspections. 

          This bill provides that the DOJ shall charge a fee not to exceed  
          the reasonable costs to the department for filing and processing  
          a COA, and for the costs incurred in enforcing the provisions of  
          this article, including, but not limited to, entering  
          information obtained pursuant to this article into the DOJ's  
          Automated Firearms System and other databases as deemed  
          necessary by the department. The ability for the DOJ to recover  
          its implementation and operational costs associated with this  
          measure would be dependent on the fee level established and  
          charged, which at the time of this analysis, has not been  
          determined by the DOJ. 


          Staff notes the DROS Special Account is structurally imbalanced  
          (with annual expenditures of about $31 million offset in part by  
          revenues of about $23 million), with an estimated year-end  
          balance of $1.3 million. To the extent the fees charged and  
          collected do not fully offset the costs of implementation,  
          ongoing administration, and enforcement of the provisions of  
          this bill, another fund source, potentially the General Fund,  
          would be needed to support the ongoing costs of this bill.


          The DCA has indicated ongoing costs of about $175,000 (Special  
          Fund) associated with the workload created from this bill,  
          including the insurance documentation requirements and the  
          registration for assigning PPO-registered firearms. The BSIS  








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          assumes investigations would be initiated based on complaint  
          allegations of uninsured PPO operations, as well as ongoing  
          workload resulting from inspections for compliance by PPOs. The  
          BSIS anticipates initiating random inspections of approximately  
          60 PPOs annually, which would include field visits of PPOs to  
          review and copy firearm records, obtaining DOJ records and  
          comparing with PPO records, addressing deficiencies and  
          assessing violations, developing investigation reports, and  
          preparing educational letters or citations.