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 AB 2220 (Daly) Page 1 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 AB 2220 (Daly) Page 2 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. AB 2220 (Daly) Page 3 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 AB 2220 (Daly) Page 4 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.