BILL ANALYSIS Ó
AB 2059
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ASSEMBLY THIRD READING
AB
2059 (Eduardo Garcia)
As Amended May 3, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Business & |12-2 |Salas, Brough, Bloom, |Baker, Chávez |
|Professions | |Campos, Dahle, Dodd, | |
| | |Eggman, Gatto, | |
| | |Holden, Jones, | |
| | |Eduardo Garcia, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |19-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Patterson, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Jones, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood | |
AB 2059
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SUMMARY: Exempts junk dealers and recyclers from the three-day
payment restrictions if the junk dealer or recycler obtains a
surety bond, as specified, requires a study to be conducted on
the impact of the bond, and sunsets the provision authorizing
the exemption for the bond on January 1, 2020. Specifically,
this bill:
1)Authorizes a junk dealer or recycler to provide payment to a
seller by check or cash before the three-day waiting period
expires if the junk dealer or recycler carries a surety bond
in the minimum amount of $100,000, covering the business at
large, including all locations, which must be maintained
exclusively to cover the cost of loss to the verifiable owner
of stolen scrap metal proved to be purchased by the junk
dealer or recycler.
2)States that the recoverable loss to the verifiable owner of
the stolen scrap metal must be the damages specified in the
Civil Code, and further states that the reimbursement for the
value of stolen scrap metal is in no way to be treated under
law as an admission of culpability by the junk dealer or
recycler to any criminal activity involved in the alleged
theft of the scrap metal.
3)Requires on or before June 1, 2019, the California Research
Bureau (CRB) to provide a report to the Legislature on the
impact of the bond on efforts to reduce metal theft.
4)Sunsets the provision authorizing the exemption for the bond
on January 1, 2020.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, costs to the California Research Bureau to conduct a
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study of the impact of this bill's change are estimated at
$25,000 General Fund.
COMMENTS:
Purpose. This bill is sponsored by the West Coast Chapter of
the Institute of Scrap Recycling Industries. According to the
author, "this measure would bring about a fair and reasonable
alternative to current recycling laws without jeopardizing the
efforts to stop illegal transfers of nonferrous metals. In
fact, this bill promises to make serious inroads in stopping
black market recycling."
Background. Current Junk Recycling Requirements. AB 844
(Berryhill), Chapter 731, Statutes of 2008 imposed additional
recordkeeping requirements and payment restrictions on junk
dealers and recyclers when purchasing nonferrous materials.
Junk dealers and recyclers are currently prohibited from buying
nonferrous materials unless the buyer obtains a copy of the
seller's driver's license, a photograph or video of the material
being purchased, and a thumbprint of the seller. Additionally,
payment is restricted 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. Junk dealers and recyclers are also
required to follow strict guidelines regarding the retention of
records, payment for materials, the photography or video of
items being purchased, and the collection of identification and
thumbprints of sellers, among others. The payment restrictions
are exempted for individuals redeeming nonferrous materials with
a value less than $20 in a single transaction, when the primary
purpose of the transaction is the redemption of beverage
containers, or if the junk dealer and seller completed five or
more transactions per month.
However, other exemptions exist. Under current law, if a seller
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does routine business with a junk dealer or recycler (i.e., at
least five separate transactions on five or more separate days a
month with the same junk dealer or recycler for three separate
months), the three-day payment requirement does not apply.
Additionally, if a seller has an established relationship with a
junk dealer or recycler and has provided the name, physical
business address, and business telephone number of the seller's
business, business license number or tax identification number
and a copy of the driver's license of the person delivering the
nonferrous material on behalf of the seller, he or she will be
exempt from the check-by-mail-only payment requirement, among
other provisions. This bill would exempt a junk dealer or
recycler from the three day requirement 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 of investigating the theft.
In addition, this bill sunset the exemption for the bond on
January 1, 2020 and requires the CRB to conduct a review on the
impact of the bond on efforts to reduce metal theft.
Nonferrous Metal Recycling Industry. According to the Institute
of Scrap Recycling Industries (ISRI), Inc., nonferrous (or not
iron-based) metals are among the few materials that do not
degrade or lose their chemical or physical properties in the
recycling process. Because of this, these metals have the
capacity to be recycled a nearly infinite number of times.
Nonferrous materials include copper, copper alloys, stainless
steel, or aluminum (but not beverage containers, as defined in
the California Public Resources Code).
In addition, the ISRI notes that in the United States (U.S.),
the value of the nonferrous scrap industry approached $40
billion in 2014. In terms of volume, nonferrous scrap materials
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make up a small percentage of the total quantity of material
recycled in the U.S., but by value they account for more than
half of the total earnings of the scrap recycling industry. In
2014, the U.S. exported nearly $11 billion worth of nonferrous
scrap to more than 85 countries. Those figures represent a
decrease from 2012, where the value of the scrap industry was
reported to be $50 billion while the United States exported $14
billion to more than 90 countries.
Legislative Trend in California. Since the enactment of AB 844,
there have been a number of measures introduced and signed into
law with the intent of decreasing metal theft. In the 2013-2014
legislative session, there were seven bills introduced to curb
the purported rise in metal theft. Of those seven, two were
signed into law, two were vetoed by the Governor, two died in
the Assembly Committee on Business, Professions and Consumer
Protection, and one was amended to address and unrelated topic.
Both SB 485 (Calderon), Chapter 518, Statutes of 2013 and AB
2312 (Nestande), Chapter 608, Statutes of 2014 placed new
requirements on junk dealers and recyclers and were either
sponsored or supported by the West Coast Chapter of the
Institute of Scrap Recycling Industries, the sponsor of this
bill. SB 485 required a junk dealer or recycler to submit
additional information regarding its junk dealer business and
increased the fees that junk dealers or recyclers must pay for
each fixed location in an effort to reduce the number of
non-compliant dealers, and hopefully deter fraudulent
transactions and decrease the sale of stolen metal property. AB
2312 required a junk dealer or recycler to request to receive
metal theft alert notifications from an Internet-based theft
alert system.
This bill does not eliminate the current payment restrictions,
but provides an additional exemption to the payment restrictions
for those junk dealers or recyclers who obtain a surety bond
(minimum of $100,000) to cover the cost of loss to the
verifiable owner of stolen scrap metal. In addition, this bill
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specifies that if a junk dealer or recycler must reimburse a
verifiable owner of the loss, it shall not be treated as an
admission of culpability by the junk dealer or recycler for
criminal activity.
Metal Theft. National Insurance Crime Bureau. In 2013, The
National Insurance Crime Bureau (NICB) released a report
regarding metal theft, which stated, "thieves have been willing
to go to almost any length to obtain the metal. They have
stripped sheets of metal from building rooftops, stolen memorial
decorations from cemeteries, ripped apart air conditioners for
the copper coils within, and stripped homes and buildings of
wiring and piping? The thieves can endanger the safety of
themselves and those in the surrounding community, and weaken
the infrastructure vital to our everyday lives. Unoccupied
buildings have exploded due to gas lines being stolen, stretches
of highway have been left dark after thieves stole wiring from
utility poles, and tornado warning sirens have been rendered
inoperable due to wiring being stolen? Regardless of the motive,
the damage caused by such thefts is often several times the
value of the metal stolen, leaving the victims with hefty repair
costs which are then often passed on to insurance companies."
(Metal Theft Claims and Questionable Claim Referrals from
January 1 2010 to December 31, 2012, April 19, 2013, NICB).
However, the NICB released an updated report which finds that
insured metal theft claims in 2014 were down 8% from 2012
levels. "In 2012, a total of 13,731 metal theft claims were
processed. The number dropped to 13,632 in 2013 and decreased
again in 2014 to 12,630-a decline of 8% from 2012. During this
three-year period, 39,993 insurance claims for the theft of
copper, bronze, brass or aluminum were handled-38,985 of them
(98%) involving copper. When the number of metal theft claims
per month and monthly average copper prices are compared, the
number of claims filed is found to have a
statistically-significant correlation with the price of copper."
(Metal Theft Claims and Questionable Claim Referrals from
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January 1, 2012 through December 31, 2014, July 15, 2015, NICB).
Legislative Trends Nationally. Metal theft is not unique to
California and has been recognized as a problem by numerous
states. As a result of legislative action in the United States,
the Council of State Governments (CSG) conducted a study in
2014, Scrap Metal Theft: Is Legislation Working for States?,
which aimed to review the effectiveness of metal theft
legislation across the nation. As noted in that study, the rise
of metal theft triggered some form of legislation in all 50
states. Many of the legislative remedies included similar
frameworks to California laws such as identification
requirements for sellers, payment restrictions, and strict
record retention requirements for junk dealers and recyclers.
However, when the CSG began its statewide analysis,
comprehensive data was not available from the states because 1)
the sources of data were insufficient to determine the accurate
rate of metal theft; 2) no state tracks the number of metal
thefts; and, 3) at the local level, the quality and accuracy of
the accessible data is unknown and could not be used to explain
state trends. The CSG report states, "although a number of
states have focused on metal theft, such as creating task forces
designed to study metal theft trends, and possible legislative
solutions, no state collects comprehensive data on metal theft."
Analysis Prepared by:
Elissa Silva / B. & P. / (916) 319-3301 FN:
0003019
AB 2059
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