BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2059


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2059 (Eduardo Garcia) - As Amended May 3, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill, until January 1, 2020, allows an exemption from  
          current law's three-day payment restrictions if the junk dealer  
          or recycler obtains a surety bond, as specified.


          FISCAL EFFECT:


          Costs to the California Research Bureau to conduct a study of  
          the impact of this bill's change are estimated at $25,000 GF. 










                                                                    AB 2059


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          COMMENTS:


          1)Purpose.  According to the author, this bill would reduce  
            diversion of scrap metal to the black market.  The West Coast  
            Chapter of the Institute of Scrap Recycling Industries, the  
            sponsor of this bill, states diversion both hurts businesses  
            and reduces accountability of scrap metal sales.  They note  
            potential sellers who wish to receive immediate cash payments  
            may sell to illegitimate, black market buyers who are  
            unregulated and pay them immediately.  They indicate this  
            undermines the intent of current law to reduce metal theft.


          2)Background.  Metal theft has been recognized as a problem  
            nationwide. It causes economic harm to individuals, businesses  
            and governments and results in insurance claims, which raise  
            premium costs.  To stem its rise, AB 844 (Berryhill), Chapter  
            731, Statutes of 2008, imposed additional recordkeeping  
            requirements and payment restrictions on junk dealers and  
            recyclers when purchasing nonferrous materials like copper and  
            aluminum.  Among other provisions, it restricted payment to a  
            check mailed to the seller, or a cash or check payment that  
            can be collected by the seller three days after the date of  
            sale (the so-called three-day payment rule).  


            This bill would exempt a junk dealer or recycler from the  
            three-day rule if the junk dealer or recycler carries a surety  
            bond of at least $100,000, covering the business entity  
            including all of its locations, to cover the cost of loss to  
            the verifiable owner of stolen scrap metal purchased by the  
            junk dealer or recycler and the cost to local law enforcement  
            for investigating the theft.



          3)Support and Opposition. The sponsor, West Coast Chapter of the  
            Institute of Scrap Recycling Industries, and the California  








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            Association of Mutual Water Companies support this bill.



            This bill has been amended and current opposition is unclear.  
            The California Farm Bureau is no longer opposed.  Several  
            groups wrote in opposition to the previous version of the bill  
            which did not include a sunset and report.  The California  
            State Sherriff's Association questions how the bond would be  
            accessed for reimbursement.  Groups representing contractors  
            believe the elimination of the three-day payment requirement  
            runs contradictory to the effort to reduce crimes related to  
            metal theft. 





          4)Staff Comments. In order to be useful to assess the impact of  
            this bill, the required study could include specific  
            requirements related to the outcomes to be studied, data  
            requirements, and potentially requirements for relevant  
            entities to comply with requests for data in order to complete  
            a study, if applicable.   



          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081


















                                                                    AB 2059


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