BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 777| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 777 Author: Calderon (D) Amended: 5/29/13 Vote: 21 SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 4/23/13 AYES: Wright, Nielsen, Calderon, Cannella, Correa, De León, Galgiani, Hernandez, Lieu, Padilla NO VOTE RECORDED: Berryhill SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 5/1/13 AYES: Wolk, Knight, DeSaulnier, Emmerson, Hernandez, Liu NO VOTE RECORDED: Beall SENATE APPROPRIATIONS COMMITTEE : 5-0, 5/23/13 AYES: De León, Hill, Lara, Padilla, Steinberg NO VOTE RECORDED: Walters, Gaines SUBJECT : Fireworks SOURCE : American Promotional Events, Inc. DIGEST : This bill creates a fireworks sell-back program; allows for licenses to sell fireworks during the week before New Year's Day; allows local governments to impose permit fees on fireworks retailers; requires data collection related to fireworks; exempts people transporting fireworks pursuant to a valid permit or license from specified sanctions; enacts fireworks-related program evaluation and performance measurement requirements; and specifies how revenues from seized fireworks CONTINUED SB 777 Page 2 are shared between the state and a seizing local authority. Senate Floor Amendments of 5/29/13 (1) specify that a seizing local authority retains ownership of fireworks that are transferred to a regional collection center and that revenues received from the sale of those fireworks belong to the seizing local authority; (2) delete language requiring the State Fire Marshal (SFM) to allocate revenues from seized fireworks; (3) clarify that revenues are shared pursuant to an agreement which must allocate no less than 65% of the revenues to the authority with the balance going to the state; and (4) remove the appropriation from this bill. ANALYSIS : Existing law: 1.Establishes comprehensive rules governing the use, manufacture, import, export, and sale of fireworks. 2.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." 3.Requires various entities, including the 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. 4.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. This bill amends state law governing fireworks. Specifically, this bill: 1. Requires the SFM, by January 1, 2015, to establish regional collection centers to receive "safe and sane" fireworks and federally approved consumer fireworks seized by local authorities. The collection centers must be located throughout the state in locations determined by the SFM. SB 777 Page 3 2. Allows a local authority or the SFM to transfer seized "safe and sane" fireworks and federally approved fireworks to a regional collection center, which are to remain under the ownership of the seizing local authority. Requires that fireworks transferred to a regional collection center must be deemed "hazardous material" until the SFM, the Department of Toxic Substances Control (DTSC), and a recognized third-party testing entity makes a determination regarding the fireworks' commercial viability. 3. Allows the SFM to permit a recognized third-party testing entity to determine, with the SFM and DTSC, whether any seized fireworks are either commercially viable or hazardous waste. Any firework deemed commercially viable may be repackaged by the SFM or the SFM's designee, including a state licensed fireworks importer or exporter, a wholesaler purchasing the product pursuant to state law, the recognized third-party testing authority, or a licensed hazardous materials or hazardous waste hauler. Requires the removal of any product, deemed not commercially viable by the SFM, DTSC, and third-party testing authority, from the regional collection center by the SFM or the SFM's designee and transported and disposed of within 72 hours of the determination in accordance with all federal and state hazardous waste laws regulations. 4. Requires the SFM to authorize a state-licensed fireworks importer and exporter to purchase fireworks deemed to be commercially viable from the SFM. Revenue received from the sale belongs to the seizing authority. 5. Allows the SFM to enter into an agreement with a local authority to share revenue from the sale of fireworks. Allocates no less than 65% of the revenues to that local authority with the balance going to the state. 6. Defines "recognized third-party testing entity" as an independent testing entity recognized by the Federal Consumer Product Safety Commission as an acceptable testing entity for consumer fireworks. 7. Provides that, upon purchase of fireworks, a state-licensed fireworks importer and exporter or wholesaler shall accept full liability for any damage done by the fireworks and the SB 777 Page 4 state shall be indemnified. 8. Requires fireworks stored at a regional collection center to be subject to specified state laws and national guidelines; and prohibits fireworks from being stored at a collection center for more than 90 days. 9. Deems the regional collection centers to be exempt facilities under specified provision of state law. 10.Requires the SFM and DTSC to train local fire and law enforcement personnel on the bill's requirements and to develop, publish, and provide guidance and training to local agencies that seize, collect, transport, store, and treat seized fireworks. 11.Requires the DTSC to develop and publish guidelines for the implementation of this bill that includes, but is not limited to, the following specific areas: (a) standards for the proper handling, transport, and storage of fireworks that are hazardous materials; (b) standards for the proper handling, transport, and disposal of fireworks that are hazardous waste; (c) a determination of the type of facility that qualifies as a regional collection center; and (d) a definition of "commercially viable" that ensures that fireworks that should be disposed of as waste are not resold. 12.Requires the SFM, after January 1, 2015, to issue separate one-time retail licenses authorizing the retail sale of "safe and sane" fireworks within California from 9 a.m. on December 26 to 11:59 p.m. on January 1 of the following year, inclusive. 13.Allows the governing body of a charter city, city, county, fire district, or city and county that adopts an ordinance or resolution authorizing fireworks sales to adopt an ordinance or resolution requiring each applicant receiving a permit to pay a fee to the charter city, city, county, fire district, or city and county. 14.Requires that the pro rata share of the costs must be determined using gross sales as shown on each permittee's sales and use tax return for the applicable period. Prohibits the pro rata share of costs from exceeding 7% of SB 777 Page 5 the gross sales of the fireworks sold in the charter city, city, county, fire district, or city and county during the applicable period. A cost recovery ordinance or resolution in effect on or before January 1, 2015, may supersede these requirements. 15.Requires the SFM, no later than January 1, 2015, to collect and analyze data relating to fires, damages, seizures, arrests, administrative citations, and fireworks disposal issues caused by the sale and use of both dangerous illegal fireworks and "safe and sane" fireworks, as provided. 16.Specifies that laws requiring the Department of Motor Vehicles to suspend the commercial license of a person transporting dangerous fireworks do not apply to a person with a specified, valid license or permit issued pursuant to the State Fireworks Law. 17.Adds a severability clause providing that if any provisions of this bill or its application is held invalid pursuant to the federal Resource Conservation and Recovery Act, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. Background As of last year, there were 290 communities in California that permitted the sale and use of state-approved fireworks each 4th of July. Sellers are first required to obtain a license, good for one year, from the SFM and pay associated fees to the state. Local jurisdictions may include an administrative fee related to the processing of permits and a percentage of gross sales collected by the jurisdiction. This is generally used for education, over-time staffing, enforcement duties and other fireworks related additional activities. Fireworks stands are generally run by non-profit groups such as battered women's shelters, service clubs (such as Rotary), Boy Scouts and Girl Scout troops, PTAs, Little Leagues, and other local organizations. If an organization is selling "safe and sane" fireworks without a permit the individual or organization could face a significant fine and possible criminal charges. SB 777 Page 6 City requirements for fireworks sale permits vary slightly from city to city, but each applicant generally has to comply with the same basic requirements. The non-profit organization must obtain designation as a certified, legal non-profit from the State of California; pay a city permit fee and a sales booth inspection fee for building and safety, and SFM compliance; pay an additional annual SFM fee; show proof of insurance with various amounts of coverage in case of property damage or injury in the vicinity of the sales booth; obtain a sales site, usually in a strip mall or other commercial location; take delivery of the sales booth; attend a meeting with city officials to learn of any annual municipal code updates or city council policy changes relating to the sale of legal fireworks; obtain a seller's permit from the Board of Equalization for required sales tax collection; and take delivery of the product, supply a supply a sales staff to sell the product and determine the price they will charge for the product. The SFM determines which fireworks are legal. The "safe and sane" varieties carry an official SFM seal. Everything else is classified dangerous and illegal. Reportedly, law enforcement agencies confiscate an average of about 40,000 pounds of illegal fireworks every year. The SFM is responsible for collecting and disposing of unsafe fireworks. Because these fireworks contain perchlorates, they must be disposed in a manner that meets environmental regulations. Existing law requires the SFM to dispose of "dangerous fireworks" within 60 days upon receiving notification from the local jurisdictions that seized them. Cal/EPA enforcement action against SFM . In early 2012, the DTSC commenced an administrative enforcement action against the SFM for improper storage and disposal of seized fireworks. The two state agencies reached a consent agreement which among other things required the SFM, by a date certain, to collect the fireworks from the local jurisdictions and promptly destroy them. Since the consent decree was entered into between the two agencies, DTSC has allowed the SFM to do emergency burns of these confiscated fireworks in the City of Devore. By late Summer 2012, they had destroyed approximately 100,000 pounds. They have estimated that, based upon SFM seizure forms, an additional 90,000 pounds still remain in bunkers throughout California. SB 777 Page 7 FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: Unknown costs, likely in the hundreds of thousands of dollars (General Fund) to the SFM for data collection and analysis. One-time costs of approximately $550,000 Hazardous Waste Control Account (special fund/General Fund) to DTSC for regulations which may be offset by hundreds of thousands of dollars in fee revenue. Ongoing costs of approximately $480,000 Hazardous Waste Control Account to DTSC ongoing training which may be offset in low hundreds of thousands of dollars in fee revenue. Unknown revenues from the sale of seized revenues, of which at least 65% must be given to the locals. SUPPORT : (Verified 5/28/13) American Promotional Events, Inc. (source) 020 Squad Club American Cancer Society / Relay for Life American Legion Post #832 Annunciation Dance Support Antelope Band Boosters Antelope Road Christian Fellowship Atkinson Youth Services Bella Vista High Band Boosters Beta Omega Phi Bradshaw Christian School Breakfast Optimist Club Buena Park First Church of the Nazarene California Association of Non Profits Calvary Evangelism Center Camellia Assembly #108 Capital Christian Center Capitol Strokers Century Chapel C.M.E Chicano Correctional Workers Association of Sacramento Church of the Harvest SB 777 Page 8 Cibara Shrine Motor Corps Clovis High Instrumental Music Program College Glen Little League Cosumnes Oaks High School Wolfpack Booster Club Cristo Rey High School Crosspointe Church E. Clampus Vitus El Camino Cross Country El Camino High School Football El Shaddai World Evangelism Elk Grove Elks Lodge Elk Grove Piranhas Enlightened Minds Group Inc. First Apostolic Church First Gospel Assembly of Sacramento Florin High School Band Boosters Florin High School Pigskin Boosters Florin Historical Society Fort Sutter Racing Pigeon Club Friends of Families Golden State Lions Club Greater Sacramento Urban League Hmong Christian Church Hope United Methodist Church International Life Saving Jesuit High Boosters Club Job's Daughters Bethel #291 Job's Daughters International Bethel #292 Kennedy High School Athletic Boosters Kennedy High School Athletics/Activities Kennedy Marching Band Knights of Columbus #3668, #4443, #4964, #6922, and #11236 Ladies of Charity Liberty Ministries Light of the World Living Hope Christian Center Love Inc. Macedonia Baptist Church Manna Ministries McClatchy High School Music Boosters Mesa Verde High School Boosters Modified Motorcycle Association of Elk Grove Mustard Seed Faith Ministries Natomas JR Nighthawks SB 777 Page 9 New Life Community Church New Life Worship Center North Natomas Little League Paradise Baptist Church Peace Presbyterian Church People of Purpose Pleasant Grove High School Athletics Rancho Cordova Methodist Men's Program Riverside Wesleyan Church Robla Education Foundation Rosemont High School Music Boosters Rosemont Little League Sac Town Swim Team Sacramento Consolidated Charities Sacramento Dream Center Sacramento High Athletic Booster Club Sacramento Raiders Youth Organization Sacramento Sheriff Toy Project Sacramento Warlords Sacramento Youth Band Sheldon High School Boys Basketball Shepherd of Life Missionary Smooth Sports Association Soledad Apostolic Church South Sacramento Aglow St. Francis Cross Country St. Jude Christian Tabernacle St. Luke's Lutheran Church St. Mary Queen of Apostles Council #12555 St. Mary's Episcopal Church St. Philip The Apostle Sun Grove Community Church Thrive Church Thunderballs Bowling Club Tri Counties Blue Star Moms United Apostolic Church United IU Mien Community V.F.W. #8985 Vernon Police Officer's Benefit Association Vietnam Committee on Scouting Viet Nam Vets/Legacy Vets Motorcycle Club Wall Youth Foundation Zodiac Stars of Sacramento OPPOSITION : (Verified 5/28/13) SB 777 Page 10 Orange County Fire Authority ARGUMENTS IN SUPPORT : According to the author's office, this bill not only addresses and presents the consensus solution for the dangerous, illegal fireworks disposal problem facing the State of California and local jurisdictions, but it also permits communities throughout the state to decide for themselves if they wish to allow the sale and use of SFM safe and sane fireworks for the period between Christmas and New Year's. This bill preserves local control and, at the same time, assists in raising the necessary funds to assist state and local fire and law enforcement agencies to have the critical financial resources to deal with the enforcement, education, fire operation, suppression and training activities surrounding both illegal fireworks and safe and sane fireworks used in their communities. Local jurisdictions could generate roughly an additional $4.9 million in new fee revenue for the 4th of July each year and over $1 million for the New Year's period. This bill will allow nonprofit organizations throughout the state an additional opportunity to raise critical dollars to fund critical programs in their community utilizing a 100% consignment fundraising tool. As has been shown by recent testimony of fire officials throughout the state, it will also provide a safe alternative and deterrent to use of illegal fireworks in communities throughout California on New Year's Eve. Proponents state that nonprofit organizations are in need of additional avenues of funding beyond those which are currently employed, if they are to continue to meet the critical needs and programs that are funded in their communities. This bill will "provide local communities the option of allowing the sale and use of State Fire Marshal-Approved Safe and Sane Fireworks during the New Years' Eve holiday as well as to assist the State Fire Marshal and local jurisdictions in their efforts to control and dispose of illegal fireworks." ARGUMENTS IN OPPOSITION : The Orange County Fire Authority writes, "We agree that enforcement and disposal of seized fireworks is an ongoing problem. We cannot support expanding the sale period of fireworks to the New Year's holiday as a means or condition of addressing that existing problem. SB 777 will increase the number of firework related incidents, deaths, SB 777 Page 11 and injuries. Our personnel will see greater exposure during what is already a hectic and increased period of calls for many public safety agencies. The bill seeks to address this issue by authorizing the limited recoupment via fees on retail sellers of fireworks. However, the conditions for calculating those fees based on gross sales and a "pro rata" share of increased agency costs are so stringent that agencies would not be able to collect these fees. MW:ej 5/29/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****