BILL ANALYSIS Ó AB 2059 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2059 (Eduardo Garcia) - As Amended May 3, 2016 ----------------------------------------------------------------- |Policy |Business and Professions |Vote:|12 - 2 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 AB 2059 Page 3 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 Page 4