BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 777 (Calderon) - Public safety: fireworks.
          
          Amended: May 15, 2013           Policy Vote: GO 10-0, Gov&Fin  
          6-0
          Urgency: No                     Mandate: Yes
          Hearing Date: May 23, 2013      Consultant: Marie Liu
          
          SUSPENSE FILE.

          
          
          Bill Summary: SB 777 makes various changes to the law regarding  
          the sale of fireworks, including the treatment of seized  
          fireworks for resale and destruction. 

          Fiscal Impact: 
              Unknown costs, likely in the hundreds of thousands of  
              dollars (General Fund) to the State Fire Marshal for data  
              collection and analysis.
              One-time costs of approximately $550,000 Hazardous Waste  
              Control Account (special fund/General Fund) to DTSC for  
              regulations and lost fee revenue.
              Ongoing costs of approximately $480,000 Hazardous Waste  
              Control Account to DTSC ongoing training and ongoing lost  
              fee revenue.
              Unknown revenues from the sale of seized revenues, of which  
              at least 65% must be given to the locals.

          Background: The State Fireworks Law establishes comprehensive  
          rules governing the use, manufacture, import, export, and sale  
          of fireworks.  The law defines "dangerous fireworks" and "exempt  
          fireworks." "Safe and sane" fireworks are any fireworks which do  
          not come within the definition of "dangerous fireworks" or  
          "exempt fireworks."

          State law requires various entities, including the State Fire  
          Marshal (SFM), to seize certain prohibited fireworks and  
          requires an authority that seizes fireworks to notify the SFM of  
          the seizure and provide specified information.  The law requires  
          the SFM to dispose of, fireworks, and specifies procedures for  
          disposing of dangerous fireworks. Seized fireworks are  
          considered hazardous waste.








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          The law authorizes the SFM to license retailers to sell  
          certified "safe and sane" fireworks from June 28 to July 6 each  
          year, unless otherwise prohibited by local ordinance.   
          Currently, about 290 California communities permit the sale and  
          use of state-approved fireworks each 4th of July.

          The State Fireworks Law authorizes the State Fire Marshal to  
          issue a wholesaler's license to allow the sale and  
          transportation of all types of fireworks to licensed retailers,  
          or retailers operating under a permit, licensed public display  
          operators, and other licensed wholesalers in California.

          The State Fire Marshal must establish and collect original and  
          annual renewal fees for fireworks licenses.  The fees cannot  
          exceed the amount necessary to cover the SFM's administrative  
          and enforcement costs


          Proposed Law: This bill would create a fireworks sell-back  
          program by January 1, 2015. Specifically, this bill would:
              Require the SFM to establish regional collection centers  
              for the purposes of receiving safe and sane fireworks and  
              federally approved consumer fireworks seized by local  
              authorities.
              Allow the transfer of seized fireworks to regional  
              collection centers while being declared a hazardous material  
              instead of a hazardous waste.
              Requires a third party testing entity permitted by the SFM  
              to make a determination along with the SFM and the  
              Department of Toxic Substances Control (DTSC) as to whether  
              any seized fireworks are commercially viable or hazardous  
              waste.
              Require DTSC to remove any fireworks deemed hazardous waste  
              for treatment under state and federal hazardous waste laws.
              Allow commercially viable seized fireworks to be repackaged  
              and sold to a state licensed fireworks importer and exporter  
              or wholesaler. 
              Allow SFM to enter into an agreement with local authorities  
              to allocate at least 65% of the revenues generated from the  
              sale of seized fireworks to that local authority.
              Require the SFM and DTSC to train local fire and law  
              enforcement personnel regarding the buy-back program. The  
              SFM would also be required to develop and publish necessary  








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              training and guidance to local agencies that seize,  
              transport, and treat seized fireworks.
              Require DTSC to develop and publish guidelines for the  
              proper handling of fireworks that are hazardous materials  
              and hazardous waste and to define "commercially viable" for  
              the purpose of this program.

          This bill would also require the SFM to issue one-time licenses  
          for the retail sale of safe and sane fireworks from December  
          26th to January 1 annually.

          This bill would require a seller of fireworks to pay a fee to a  
          local government a pro rata portion of actual and reasonable  
          costs to the locals for activities related to the sale and use  
          of fireworks.

          This bill would exempt seized fireworks declared as hazardous  
          from DTSC's hazardous waste facilities fees.

          This bill would also require the SFM to collect and analyze data  
          relating to fire, damages, seizures, arrests, and firework  
          disposal issues caused by fireworks by January 1, 2015.

          Related Legislation: 
             SB 1468 (Calderon, 2012) which would have allowed New Year's  
              fireworks sales each year from 2013 through 2017, died in  
              the Assembly.

             AB 1295 (Bermudez, 2005), which would have allowed New  
              Year's fireworks sales and used fee revenues to pay for  
              disposal costs associated with seized fireworks, died in the  
              Assembly Appropriations Committee.

             AB 1371 (V. Manuel Perez, 2011), which would have allowed  
              New Year's fireworks sales and authorized local governments  
              to impose permit fees, died in the Assembly Governmental  
              Organization Committee.

          Staff Comments: Staff notes that the Governor's May revise  
          included a budget change proposal for $500,000 of General Fund  
          monies to help pay for disposal of seized fireworks by the SFM.  
          Additionally, the Governor proposed trailer bill that would  
          allow local agencies to sell seized fireworks without going  
          through the state.








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          DTSC estimates that establishing five regional collection  
          centers, training, and inspection costs would cost approximately  
          $200,000 ongoing. Training for local fire and law enforcement  
          would be another $130,000. There would also be one-time costs to  
          develop regulations for safe handing, transport, and storage of  
          seized fireworks would cost approximately $100,000.

          Additionally, since the regional collection facilities would be  
          exempt from any hazardous waste facility fees, approximately  
          $450,000 would be lost in fee revenue the first fiscal year,  
          plus $150,000 annually. 

          DTSC costs would be paid for through the Hazardous Waste Control  
          Account. However, staff notes that there are no excess revenues  
          in this fund currently so DTSC would either need to raise its  
          fees or receive a General Fund appropriation to fund the  
          activities associated with this bill.

          Currently there is no regular funding mechanism to deal with  
          disposal of seized fireworks. This bill attempts to address this  
          issue by generating additional revenue (and potentially more  
          seized product) by allowing the sale of fireworks for New Year's  
          Day. This bill would also generate revenues to the locals and  
          the state by allowing the sale of seized fireworks back to the  
          wholesalers. Presumably wholesalers would only participate in  
          this buyback if the costs of the seized and repackaged fireworks  
          are cheaper than new fireworks. However, the seized fireworks  
          must be sold at a high enough prices to cover the state and  
          local costs with seizing, transporting, testing, and reselling  
          the fireworks, especially since the bill exempts seized  
          fireworks from DTSC's hazardous waste fee, which is designed to  
          cover DTSC's regulatory activities. The bill is silent on who  
          would set the price of the resale seized fireworks. Staff  
          believes that it is unclear whether the firework sales would  
          generate enough revenues to offset the costs of the sell-back  
          program.

          This bill does not create a reimbursable mandate.













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