BILL ANALYSIS Ó
Bill No: AB
2313
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2313 Author: Nestande
As Proposed to be Amended: June 10, 2014
Hearing Date: June 10, 2014
Consultant: Art Terzakis
SUBJECT
Metal Theft
DESCRIPTION
AB 2313 creates, until December 31, 2020, the Metal Theft
Task Force (MTTF) Program (Program), administered by the
Office of Emergency Services (OES) to provide grants to
local law enforcement agencies to investigate and prosecute
metal theft and related recycling crimes. Specifically,
this bill:
1)Establishes the MTTF Fund (Fund) within the State
Controller's Office (SCO) and provides that moneys in the
Fund are continuously appropriated to OES for operation
of the Program. The Fund is to consist of deposits from
the federal government, industry, private sources, and
from fees collected pursuant to this bill.
2)Stipulates that no General Fund moneys shall be deposited
into the Fund or used to start up, implement, or support
the continuing administration of the bill's provisions.
3)Provides that the Program is intended to ensure that
local law enforcement and district attorneys are equipped
with the necessary personnel and tools to successfully
combat metal theft and related recycling crimes, which
include, but are not limited to, all of the following
offenses:
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a) The theft of metals, including, but not limited to,
nonferrous metals;
b) The purchase and recycling of stolen metals,
including, but not limited to, recycled metal beverage
containers, by recyclers;
c) The transportation of stolen metals from this state
to another state, as well as, the transportation of
stolen metals from another state to this state;
d) Illegal recycling operations.
4)Requires OES to assess a fee of up to 1% of the purchase
price for each junk sale involving the sale of scrap
metals or alloys and requires the fee to be collected by
junk dealers and recyclers at the time of sale, and
submitted to the SCO for deposit into the Fund. (Also,
makes it explicit that transactions between junk dealers
and recyclers, auto dismantlers, pawn brokers and coin
dealers are not subject to the fee.)
5)Requires OES to develop procedures and specific
guidelines for the selection of agencies to receive
grants and that priority be given to applicant agencies
in areas with high rates of reported metal thefts.
6)Requires each agency that has been awarded a grant under
the Program during the previous funding cycle, upon
reapplication for funds to OES in each successive year,
to submit a detailed accounting of moneys received and
expended in the immediately preceding year, as specified.
7)Requires agencies receiving Program funding to submit an
annual report to OES, as specified. Also, requires OES
to regularly review the effectiveness of the Program in
deterring, investigating, and prosecuting metal theft and
related recycling crimes and submit a report to the
Legislature and Governor that is based on the reports
submitted to OES by the agencies.
8)Additionally, requires OES, no later than December 31,
2019, to submit a final comprehensive report to the
Legislature on the status and progress of the Program, as
specified.
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9)Provides for OES to deduct its actual and necessary
administrative costs; makes it explicit that the Program
shall not be implemented until OES determines there are
sufficient moneys in the Fund; and, sunsets the
provisions on December 31, 2020.
EXISTING LAW
Existing law prohibits as grand theft, except as specified,
the taking of money, labor, or real or personal property
with a value more than $950. Existing law also provides
that every person who steals, takes, or carries away copper
materials, including, but not limited to, copper wire,
copper cable, copper tubing, and copper piping, where the
value exceeds $950 is guilty of grand theft. Furthermore,
existing law punishes the grand theft of copper by a fine
not exceeding $2,500, by imprisonment in the county jail up
to one year, or by both that fine and imprisonment; or by
imprisonment under realignment and a fine not exceeding
$10,000.
Existing law provides that every person who is a dealer in
or collector of junk, metals, or secondhand materials, or
the agent thereof, and who buys or receives any wire,
cable, copper, lead, solder, mercury, iron, or brass which
he or she knows or reasonably should know is ordinarily
used by or ordinarily belongs to a railroad or other
transportation, telephone, telegraph, gas, water, or
electric light company, or a county, city, city and county,
or other political subdivision of this state engaged in
furnishing public utility service, without using due
diligence to ascertain that the person selling or
delivering the same has a legal right to do so is guilty of
stolen property and punishes such offense as an alternate
misdemeanor/felony by imprisonment, a fine of not more than
$1,000, or both that fine and imprisonment.
Existing law 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.
Existing law provides that "scrap metal and alloys"
includes, but is not limited to, materials and equipment
commonly used in construction, agricultural operations and
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electrical power generation, railroad equipment, oil well
rigs, nonferrous materials, stainless steel, and nickel
which are offered for sale to any junk dealer or recycler,
but does not include scrap iron, household generated waste,
or aluminum beverage containers.
Existing law defines a "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.
Existing law exempts purchases of scrap metal from another
junk dealer who already has a written record of a previous
sale of the scrap metal, and purchases of scrap metal where
the payment is made by check to the company that owns the
scrap metal being purchased from the requirement that a
junk dealer or recycler maintain a written record of all
sales and purchases.
Existing law requires that every junk dealer and every
recycler in this state must keep a written record of all
sales and purchases made in the course of his or her
business and that they preserve the written record for at
least two years after making the final entry of any
purchase or sale of junk or scrap metals and alloys.
Existing law requires the Governor and the Office of
Emergency Services (OES) to prepare for and mitigate the
effects of emergencies in the state.
Existing law, the California Emergency Services Act,
requires the Director of OES to coordinate the emergency
activities of all state agencies during an emergency. It
also requires OES to coordinate the activities of all state
agencies relating to preparation and implementation of the
State Emergency Plan, which are the response efforts of
state and local agencies and the integration of federal
resources into state and local response and recovery
operations.
Existing law also requires OES to administer a
comprehensive statewide domestic violence program to
establish a targeted or directed program for the
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development and establishment of domestic violence service
in currently unserved and underserved areas, and
establishes a grant program administered by OES for the
distribution of financial and technical assistance to
domestic violence shelter service providers for this
purpose.
BACKGROUND
Purpose of AB 2313: According to the author's office,
metal theft continues to grow in California, despite
numerous laws passed to combat it. The unfortunate reality
of metal theft is that the cost of repairing the damage
done by thieves is often exponentially higher than the
value of the scrap metal. Businesses, non-profits, schools
and government agencies have all been victims.
The author's office states that AB 2313 would create the
Metal Theft Task Force within OES which would distribute
grants to the areas most affected by metal theft for
prosecution and investigation efforts. These funds would
be generated by a 1% fee on payments received by sellers
of scrap metal when brought to recycling centers. The
author's office estimates that the fee could generate
between $35 million to $70 million a year for law
enforcement to investigate metal thefts and prosecute
recycling centers that are knowingly accepting stolen
metals.
The author's office emphasizes that AB 2313 places a high
priority on shutting down illegal operators which are the
main conduits for selling stolen metals and diverting
legitimate business from lawful recycling centers.
Arguments in Support: Proponents note that despite
significant efforts to address metal theft, private
businesses, local governments, farmers, municipal
utilities, and water districts continue to be plagued by
significant levels of metal theft which is a serious and
costly crime that crosses jurisdictional boundaries and
often time involves sophisticated networks of criminals and
illegitimate recyclers. The issue of copper theft and
other metals from public and private property has resulted
in millions of dollars in damages. Not only does this crime
create public safety problems, but metal theft has economic
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impacts across industry lines and presents serious
logistical issues for local governments. As such,
proponents believe it is appropriate to establish a grant
program designed to enhance the capacity of local law
enforcement and prosecutors to deter, investigate, and
prosecute metal theft and related recycling crimes.
Arguments in Opposition: Opponents contend that AB 2313 is
unnecessary, duplicates an existing enforcement program and
places an undue burden on an industry that has been making
significant investments in doing its part to address this
issue. Opponents point out that with the passage of SB 485
(Calderon), Chapter 518/2013, AB 2313 is neither necessary
nor relevant. Opponents claim that SB 485 of last year is
working very efficiently - it has provided an effective
enforcement process which is operated by the Division of
Measurement Standards, within the California Department of
Food and Agriculture, and enforced by the county sealers
who are public safety officers under the law. The scrap
metal industry currently pays for one hundred percent
(100%) of this program. Furthermore, opponents emphasize
there is no need to impose a new tax on the industry when
the basic concerns of the bill have already been addressed.
Opponents believe the fee in AB 2313 is nothing more than
a tax on all customers of the recycling industry, even
those who deal in recyclable materials that are outside of
the scope of the bill. They reference the 1997 Sinclair
Paint Case in which the California Supreme Court
established that a "fee" must be related to the special
burden it purports to address and alleviate. Otherwise the
fee is nothing more than a tax established for the purpose
of generating overall revenue for the state.
Staff Comments: The author intends to offer amendments in
Committee on June 10, 2014 which will make certain changes
to the grant reporting requirements - these were at the
request of OES. Additional amendments are intended to
clarify that pawn dealers are not subject to the 1% fee
contained in the bill. Also, the author plans to exempt
licensed auto dismantlers from the fee due to the extensive
regulatory requirements that are a condition of their
license and due to the fact that recycled metals make up a
large part of their business model. Furthermore, the
amendments will delete the requirement that 65% of each
grant be dedicated to the investigation and prosecution of
unlicensed junk dealers. The proposed amendments are
reflected in this analysis.
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PRIOR/RELATED LEGISLATION
SB 485 (Calderon), Chapter 518, Statutes of 2013. Required
a junk dealer or recycler to submit additional information
regarding its junk dealer business to the Department of
Food and Agriculture (CDFA) when applying for a
weighmaster's license or a renewal license. Also, required
the CDFA to complete an investigation of the information on
the application or renewal within a specified period of
time and revoke the license if the information submitted in
the application or renewal is materially inaccurate. In
addition, increased the fees that junk dealers or recyclers
pay for each fixed location and sunset these provisions on
January 1, 2019.
AB 909 (Gray), 2013-14 Session. Would have required the
Department of Justice, on and after January 1, 2015, to
establish a Metal Theft Task Force Program to provide
grants to applicant regional task forces for the purpose of
providing local law enforcement and district attorneys the
resources needed to target metal theft and related metal
recycling crimes regionally. Also, would have established
the Metal Theft Task Force Fund and specified that the
program will not be implemented until the Department of
Finance determines that sufficient funding has been
deposited in the fund to implement the program and funds
have been made available upon appropriation of the
Legislature. (Vetoed by the Governor - message stated
"this bill creates a new enforcement effort without
identifying a funding source. Today I signed SB 485, which
does provide a funding source for greater enforcement
within the existing infrastructure. More can certainly be
done, but let's build on a stable funding base.")
SB 757 (Berryhill), 2013-14 Session. Would make conforming
changes to authorize a junk dealer or recycler buying
newspaper or California Redemption Value (CRV) containers
to accept as valid seller identification, a passport from
any country or a Matricula Consular issued by Mexico.
Also, would clarify that the term "secondhand dealer" does
not include a junk dealer. (Placed on Assembly floor
inactive file)
SB 1045 (Emmerson), Chapter 393, Statutes of 2012. Among
other things, provided that any junk dealer or recycler who
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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 is liable to the agency or
utility for the wrongful possession of that material.
SB 1387 (Emmerson), Chapter 656, Statutes of 2012. Among
other things, prohibited a junk dealer or recycler from
possessing a manhole covers, backflow devices, and fire
hydrants, or any reasonably recognizable parts of these
items, without written certification on the letterhead of
the entity that owns or previously owned that material.
SB 447 (Maldonado), Chapter 732, Statutes of 2008.
Required junk dealers or recyclers to report certain
information daily, or on the first working day after
receipt or purchase of property, on forms approved or
provided by the Department of Justice, all tangible
personal property which he/she has purchased, taken in
trade, taken in pawn, accepted for sale on consignment, or
accepted for auctioning, to the chief of police or to the
sheriff.
SB 691 (Calderon), Chapter 730, Statutes of 2008. Required
junk dealers and recyclers to comply with additional
recordkeeping requirements and new payment restrictions
when purchasing nonferrous materials (i.e., copper, copper
alloys, stainless steel, and aluminum, excluding beverage
containers).
AB 844 (Berryhill), Chapter 731, Statutes of 2008. Enacted
new restrictions on the purchase of copper, aluminum,
stainless steel, brass, and bronze by junk dealers and
recyclers in response to the rise in metal theft.
SUPPORT: As of June 6, 2014:
Allied Riverside County Chiefs of Police and Sheriff
Beaumont, City of
Blythe Police Department
California District Attorneys Association
California Farm Bureau
California Municipal Utilities Association
California Park and Recreation Society
California Police Chiefs Association
California State Sheriffs' Association
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Coachella Valley Association of Governments
Coachella Valley Economic Partnership
Coachella Valley Water District
Contra Costa County District Attorney's Office
Desert Fresh, Inc.
Desert Sands Unified School District
Desert Valley Builders Association
Eastern Municipal Water District
General Patton Memorial Museum
Hemet/San Jacinto Valley Chamber of Commerce
Indio Chamber of Commerce
Indio Police Department
Metropolitan Water District of Southern California
Riverside County Board of Supervisors
San Bernardino County Sherriff's Office
San Francisco City and County District Attorney
San Jacinto Mayor Alonzo Ledezma
OPPOSE: As of June 6, 2014:
AB&I Foundry
Action Sales & Metal Company
Atlas Pacific Corporation
Benda Tool/A&B Die Casting
C. Hammond Construction Company
C & H Machine, Inc.
Californians Against Waste
California Die Casting
California Metals Coalition
California Metal-X
CASS Inc.
CASTCO Corporation
CLA-VAL Company
Cleveland Wrecking Company
Consolidated Precision Products Corporation
Custom Gear & Machine
Dayton Rogers Manufacturing Company
DBW Metals Recycling
D.C. Metals & Recycling
Diversified Tool & Die
East County Economic Development Council
Fenico Precision Castings, Inc.
General Foundry Service Corporation
Globe Iron Foundry, Inc.
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Helfrich Tool & Die Corporation
Heraeus Precious Metals North America LLC
Institute of Scrap Recycling Industries (West Coast
Chapter)
International Union of Operating Engineers, Local 39
Interplex Nascal Inc.
Jack Engle & Co.
J & W Auto Wreckers
Joseff-Hollywood
Ken Walt Die Casting Corporation
Kilroy's
Lodi Iron Works, Inc.
MIM Metals Inc.
Montague Company
Montclair Bronze Inc.
Op-Syn Consulting
Pacific Corrugated Pipe Company
Pacific Steel Casting Company
Rangers Die Casting Company
Research Tool & Die Works
Risco Inc.
SA Recycling
Schnitzer Steel Industries
SIMS Metal Management
OPPOSITION: (continued)
SKS Die Casting & Machining, Inc.
Standard Metals Recycling
Strategic Materials Corporation
Techni-Cast Corporation
Technikon
Thorock Metals, Inc.
United States Pipe & Foundry Company, LLC
Vista Metals Corporation
Waterjet West Inc.
West Coast Protective League
WestFab Manufacturing Inc.
And, numerous private individuals involved in the industry
DUAL REFERRAL: Senate Public Safety Committee
FISCAL COMMITTEE: Senate Appropriations Committee
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