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.
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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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