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. SB 777 (Calderon) Page 1 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 SB 777 (Calderon) Page 2 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. SB 777 (Calderon) Page 3 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. SB 777 (Calderon) Page 4