BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2459


                                                                    Page  1


          Date of Hearing:  April 12, 2016
          Counsel:               Gabriel Caswell


                         ASSEMBLY COMMITTEE ON PUBLIC SAFETY


                       Reginald Byron Jones-Sawyer, Sr., Chair





          AB  
                    2459 (McCarty) - As Introduced  February 19, 2016




          SUMMARY:  Imposes duties and responsibilities upon firearms  
          retailers as specified.   Specifically, this bill:  


          1)Permits the Department of Justice (DOJ) to impose a civil fine  
            of up to $500 against firearms dealers for a breach of  
            specified prohibitions.  Additionally, provides for a fine of  
            up to $2,000 for breaches when the licensee previously  
            received written notification from the DOJ regarding the  
            breach and failed to take corrective action, or the DOJ  
            determines that the licensee committed the breach knowingly or  
            with gross negligence.  


          2)Prohibits, commencing January 1, 2018, a firearms dealer  
            license from designating a building that is a residence, as  
            defined, as a building where the licensee's business may be  
            conducted. 


          3)Provides that the provisions of this bill would not preclude  
            or preempt a local ordinance that places additional or more  
            stringent requirements on firearms dealers regarding where the  








                                                                    AB 2459


                                                                    Page  2


            business of the licensee may be conducted.


          4)Requires a licensee to ensure that its business premises are  
            monitored by a video surveillance system that, among other  
            requirements, visually records and archives footage of the  
            following:  


             a)   Every sale or transfer of a firearm or ammunition, in a  
               manner that makes the facial features of the purchaser or  
               transferee clearly visible in the recorded footage; 


             b)   All places where firearms or ammunition are stored,  
               displayed, carried, handled, sold, or transferred; 


             c)   The immediate exterior surroundings of the licensee's  
               business premises; and 


             d)   All parking areas owned or leased by the licensee.


          5)Specifies that the video footage must be maintained and stored  
            for not less than 5 years.  


          6)Requires, commencing January 1, 2018, a licensee to obtain a  
            policy of commercial insurance that insures the licensee  
            against liability for damage to property and for injury to or  
            death of any person as a result of the theft, sale, lease or  
            transfer or offering for sale, lease or transfer of a firearm  
            or ammunition, or any other operations of the business and  
            business premises, in the amount of $1,000,000 per incident,  
            as specified. Provides that these provisions would not  
            preclude or preempt a local ordinance that places additional  
            or more stringent requirements on firearms dealers regarding  
            insurance pertaining to the licensee's business.










                                                                    AB 2459


                                                                    Page  3


          EXISTING LAW:  


          1)States that, in general and subject to exceptions, the  
            business of a firearms licensee shall be conducted only in the  
            buildings designated by the business license;  (Pen. Code §  
            26805, subd. (a).) 

             a)   Provides an exception that a person licensed, as  
               specified, may take possession of firearms and commence  
               preparation of registers for the sale, delivery, or  
               transfer of firearms at any gun show or event if the gun  
               show or event is not conducted from any motorized or towed  
               vehicle. A person conducting business shall be entitled to  
               conduct business as authorized at any gun show or event in  
               the state, without regard to the jurisdiction within this  
               state that issued the license provided the person complies  
               with all applicable laws, including, but not limited to,  
               the waiting period specified, and all applicable local  
               laws, regulations, and fees, if any;  (Pen. Code § 26805,  
               subd. (b)(1).)

             b)   Provides an exception for a person licensed as specified  
               may engage in the sale and transfer of firearms other than  
               handguns, at specified events, subject to the prohibitions  
               and restrictions contained in those sections;  (Pen. Code §  
               26805, subd. (c)(1).)

             c)   Provides an exception for a person licensed, as  
               specified, who may also accept delivery of firearms other  
               than handguns, outside the building designated in the  
               license, provided the firearm is being donated for the  
               purpose of sale or transfer at an auction or similar event  
               specified;  (Pen. Code § 26805, subd. (c)(2).)

             d)   Provides that a firearm may be delivered to the  
               purchaser, transferee, or person being loaned the firearm  
               at one of the following places:  (Pen. Code § 26805, subd.  
               (d).) 

               i)     The building designated in the license;









                                                                    AB 2459


                                                                    Page  4


               ii)    The places specified as express exemptions; and

               iii)   The place of residence of, the fixed place of  
                 business of, or on private property owned or lawfully  
                 possessed by, the purchaser, transferee, or person being  
                 loaned the firearm.

          2)Provides a person conducting specified firearms business shall  
            publicly display the person's license issued, or a facsimile  
            thereof, at any gun show or event, as specified in this  
            subdivision.  (Pen. Code § 26805, subd. (b)(2).)

          FISCAL EFFECT:  


          COMMENTS: 


          1)Author's Statement:  According to the author, "As a local  
            elected official, I authored successful measures to crack down  
            on illegal gun and ammunition sales.  As a State  
            Assemblymember, I am proud to author AB 2459, which I believe  
            will have a strong impact statewide in the effort to keep guns  
            out of the wrong hands."



          2)Background:  According to the background submitted by the  
            author, "Law Enforcement has limited resources to oversee the  
            more than 2,300 licensed gun dealers in our state. A 2010  
            Washington Post report found that, due to limited staffing,  
            ATF could only inspect gun dealers once per decade on average.  
            These limitations, combined with weak state and federal laws  
            related to gun dealers, allow many bad actor gun dealers to  
            evade accountability.



            "A New York Times article 'How They Got Their Guns,' brought  
            to light the fact that since 2009, 15 mass shooting were  
            committed with legally purchased firearms.  This discredits  
            the notion that only illegal firearms are used in the  








                                                                    AB 2459


                                                                    Page  5


            commission of these heinous acts.   A study by the Bureau of  
            Alcohol, Tobacco and Firearms, found that 60% of legally  
            purchased weapons found at crime scenes came from 1% of gun  
            dealers.  Later studies have estimated that 90% of legally  
            purchased guns used in the commission of a crime were from 5%  
            of gun dealers.  In 2014, 2,935 Californians were killed by  
            firearms.   

            "Many of these gun sales were so called 'straw sales' whereby  
            a person prohibited from purchasing a gun uses a third party,  
            often a family member or friend, to legally purchase the gun.   
            These sales are legal on paper, but when recorded becomes  
            obvious that the purchaser has no interest in purchasing the  
            gun for themselves.  Video recording is a common practice in  
            all types of retail and provides safety and security for both  
            store employees and customers.

            "In two academic studies, undercover researchers found that at  
            least 20% of California gun dealers were willing to conduct an  
            illegal 'straw purchase;' even when the dealer knew the gun  
            would be used by a prohibited person. Though these  
            transactions are a leading source of guns used during crimes,  
            they often appear legal on paper without security cameras to  
            visibly capture the sale. California gun dealers also reported  
            1,797 firearms 'missing' from their inventories from  
            2012-2015. Without security cameras monitoring dealers'  
            premises and sales counters, law enforcement has few tools to  
            investigate whether these firearms were misplaced, stolen, or  
            illegally trafficked to criminals.

            "Another source of legally purchased guns are residential  
            dealers, which are licensed dealers who sell weapons out of  
            their homes.  To date, over 60 cities and counties in  
            California have banned this practice, recognizing the  
            potential for abuse and lack of adequate oversight."

          3)Content of the Bill:  This proposed legislation basically  
            implements four changes to existing law for the stated  
            purposes of cutting down on straw purchases in California.  


             a)   Imposition of Civil Fines for Violations of Rules  








                                                                    AB 2459


                                                                    Page  6


               Related to Grounds for Forfeiture of a License to Sell  
               Firearms:  The bill proposes new fines related to  
               violations of rules imposed upon licensees.  The fines  
               suggested are up to a $500 civil fine for simple  
               violations, and up to $2,000 fines for violations when the  
               licensee previously received written notification from the  
               DOJ regarding the breach and failed to take corrective  
               action, or the DOJ determines that the licensee committed  
               the breach knowingly or with gross negligence.  The grounds  
               for forfeiture include a wide range of conduct, including  
               the following:  properly displayed license, proper delivery  
               of a firearm, properly displaying firearms, prompt  
               processing of firearms transactions, posting of warning  
               signs, safety certificate compliance, checking proof of  
               California residence, safe handling demonstrations,  
               offering a firearms pamphlet, and many more.  


             b)   Requiring Gun Dealers to Install Security Cameras to  
               Monitor and Videotape their Premises and Sales: The sponsor  
               and author have indicated that the requirement to install  
               video surveillance cameras in businesses that sell firearms  
               will discourage straw purchases and illegal activities.   
               The fact that purchasers and sellers are being recorded  
               while sales are being conducted will arguably shed light on  
               transactions.  Retailers are opposed because it places an  
               overly-burdensome expense on the business to maintain a  
               security camera system, and retain and store the footage  
               captured.  The footage must be maintained for not less than  
               five years.  Additionally, the American Civil Liberties  
               Union objects to this provision on grounds of a violation  
               of privacy.  


             c)   Prohibiting Gun Dealers from Selling Weapons from their  
               Homes: The author's intent in this provision is to push  
               firearms transactions into lawful places of business, where  
               they are more likely to be legitimate.  The sponsor  
               believes that by permitting the sale of firearms from a  
               private residence that illegal transactions such as straw  
               purchases are much more likely.   There is a legislative  
               history to this provision.  AB 988 (Lowenthal), of the  








                                                                    AB 2459


                                                                    Page  7


               1999-2000 Legislative Session stated that no licenses to  
               sell firearms could be granted to sell firearms out of  
               residential buildings.  AB 22 (Lowenthal), of the 2001-2002  
               Legislative Session, prohibited the retail sale of firearms  
               from a residential dwelling with specific exceptions.  Both  
               bills failed passage on the Senate floor.  This bill would  
               cover specialty gun smiths, and those concerns were brought  
               up in the prior legislative sessions in which this  
               provision was considered.  


             d)   Requiring Gun Dealers to Carry Liability Insurance:  
               According to the sponsor, 31 localities have enacted this  
               provision of law (including San Francisco and Los Angeles).  
                Gun dealers would be required to carry insurance of at  
               least a million dollars to insure them for their liability  
               for damage to property and for injury to or death of any  
               person as a result of the theft, sale, lease or transfer or  
               offering for sale, lease or transfer of a firearm or  
               ammunition, or any other operations of the business and  
               business premises.   The Federal "Protection of Lawful  
               Commerce in Arms Act" (PLCAA) is a  United States  law which  
               protects  firearms  manufacturers and  dealers  from being held  
               liable when crimes have been committed with their products.  
               However, both manufacturers and dealers can still be held  
               liable for damages resulting from defective products,  
               breach of contract, criminal misconduct, and other actions  
               for which they are directly responsible in much the same  
               manner that any U.S. based manufacturer of  consumer  
               products  is held responsible. They may also be held liable  
               for  negligence  when they have reason to know a gun is  
               intended for use in a crime.


          4)Argument in Support:  According to The Law Center to Prevent  
            Gun Violence, "On behalf of the Law Center to Prevent Gun  
            Violence, I strongly urge you to support AB 2459 (McCarty),  
            legislation the Law Center is co-sponsoring to help ensure  
            that firearms dealers operate responsibly in California.   
            Founded by lawyers after an assault weapon massacre at a San  
            Francisco law firm in 1993, the Law Center provides legal  
            expertise in support of gun violence prevention to federal,  








                                                                    AB 2459


                                                                    Page  8


            state, and local legislators nationwide.  


            "AB 2549 would bring increased security, transparency, and  
            accountability to gun sales in California by requiring gun  
            dealers to comply with a set of responsible business practices  
            and by authorizing DOJ to fine irresponsible dealers for  
            illegal conduct.  


            "ATF data confirms that firearms dealers are the leading  
            source of guns on the black market, responsible for 'nearly  
            half of the total number of trafficked firearms' uncovered in  
            ATF investigations.  Though stolen firearms are also a major  
            source of black market guns, 4.5 times as many are obtained  
            from gun dealers as are stolen from any source.  According to  
            ATF, gun dealers' 'access to large numbers of firearms makes  
            them a particular threat to public safety when they fail to  
            comply with the law.'  On average, ATF trafficking  
            investigations implicating a gun dealer involved over 350  
            black market guns per investigation, and over 550 guns in  
            cases in which the dealer was the sole trafficker.  In the  
            wrong hands, every one of those weapons poses a significant  
            threat to public safety.


            "Unfortunately, federal law enforcement has limited resources  
            to oversee the more than 2,300 licensed gun dealers in our  
            state.  A 2010 Washington Post investigation found that, due  
            to limited staffing, ATF could only inspect gun dealers once  
            per decade on average.  These limitations, combined with weak  
            state and federal dealer laws, allow too many bad apple gun  
            dealers to evade accountability for allowing dangerous people  
            to access deadly weapons.  Although California has enacted  
            some laws to regulate gun dealers, stronger oversight is  
            necessary to help law enforcement detect and prevent gun  
            dealer practices that endanger our communities.   


            "Numerous California cities and counties have already enacted  
            laws to promote responsible gun sales.  AB 2459 would extend  
            these best practices statewide by: 








                                                                    AB 2459


                                                                    Page  9




               1.     "Requiring gun dealers to sell weapons out of  
                 commercial storefronts instead of their homes.  Existing  
                 law permits gun dealers to sell large firearm inventories  
                 out of private residences, locations that are more  
                 accessible to children and burglars but less accessible  
                 to law enforcement oversight than commercial storefronts.  
                  Home-based dealers threaten the safety and character of  
                 their communities, as neighbors and local law enforcement  
                 are often unaware that significant quantities of weapons  
                 are flowing in and out of their residential streets.  As  
                 a 2012 Pinole City Council Planning Commission concluded,  
                 "The safety of residents in close proximity to home-based  
                 firearm and ammunition sales poses concerns about the  
                 negative influence of such home occupations on children,  
                 the possible increase in violence and/or criminals in  
                 residential neighborhoods, trafficked firearms, and the  
                 frequency of federal and state inspections to adequately  
                 regulate these business operations once established." In  
                 upholding Lafayette's residential dealer ban, a  
                 California Appeals Court similarly noted that, "because  
                 dealerships can be the targets of persons who are or  
                 should be excluded from possessing weapons, it is  
                 reasonable to insist that dealerships be located away  
                 from residential areas[.]"  California law generally  
                 prohibits individuals from operating liquor  
                 establishments out of a private residence, and restricts  
                 the use of residential property by businesses ranging  
                 from barbers and cosmetologists to funeral parlors.   
                 Businesses that sell deadly weapons to the public should  
                 be held to a similar standard.  Fifty-nine cities and  
                 counties in California have already enacted laws  
                 specifically prohibiting residential gun dealers and 58  
                 others have enacted generally applicable laws that  
                 indirectly do the same.


               2.     "Requiring gun dealers to install security cameras  
                 to monitor their premises and sales. This provision would  
                 help detect and prevent theft and illegal conduct and  
                 curb the flow of guns to the black market.  In two  








                                                                    AB 2459


                                                                    Page  10


                 academic studies, undercover researchers found that at  
                 least 20% of California gun dealers were willing to  
                 conduct an illegal 'straw purchase,' even when dealers  
                 knew the gun was being purchased for a prohibited person  
                 such as a felon.  Though straw purchases are a leading  
                 source of crime guns, they often appear legal on paper  
                 without security cameras to visibly capture the sale.   
                 California gun dealers also reported 1,797 firearms  
                 'missing' from their inventories from 2012-2015.  Without  
                 security cameras monitoring dealers' premises and sales  
                 counters, law enforcement has few tools to investigate  
                 whether these firearms were misplaced, stolen, or  
                 illegally trafficked to criminals. Five local governments  
                 in California have already enacted this type of law and  
                 responsible businesses regularly install and maintain  
                 security camera footage without significant cost or  
                 administrative burden.


               3.     "Requiring gun dealers to carry liability insurance.  
                  This provision would help ensure that people injured by  
                 negligent conduct receive compensation for their  
                 injuries.  To be clear, this provision would not create  
                 any new liability for gun dealers, just as a law  
                 requiring drivers to carry car insurance does not create  
                 liability for roadway accidents.  However, this bill  
                 would ensure that a gun dealer would be covered for valid  
                 claims if the business is found civilly liable for  
                 negligence under existing law, in cases ranging from a  
                 slip-and-fall in the dealer's store to an employee's  
                 negligent sale of a firearm to a visibly drunk or  
                 unstable individual.  Because insurance is generally  
                 cheaper for responsible businesses, just as car insurance  
                 is cheaper for good drivers, this requirement would also  
                 incentive responsible behavior over time. Thirty-one  
                 localities in California have already enacted this law.


               "Finally, AB 2459 would provide DOJ with discretion to fine  
               gun dealers for violations of the law without permanently  
               revoking a dealer's license to sell firearms.  Under  
               existing law, DOJ's enforcement powers are essentially  








                                                                    AB 2459


                                                                    Page  11


               all-or-nothing: when it discovers a significant legal  
               violation, DOJ must either revoke a dealer's license or let  
               the dealer continue to operate.  As a result, too many  
               irresponsible dealers face no accountability for illegal  
               conduct; conversely, gun dealers may also fear that they  
               will lose their license based on correctable errors.  This  
               bill would provide DOJ with tools to craft a more balanced  
               approach to incentivize compliance and improve public  
               safety. 


               "AB 2459 is consistent with the Second Amendment. Although  
               gun lobbyists frequently argue that any and all gun safety  
               laws violate the Second Amendment, legislation like AB 2459  
               is clearly constitutional.  When the Supreme Court  
               recognized an individual Second Amendment right in District  
               of Columbia v. Heller, Justice Scalia made clear in writing  
               for the Court that 'nothing in [the Court's] opinion should  
               be taken to cast doubt on . . . laws imposing conditions  
               and qualifications on the commercial sale of firearms.'   
               This legislation proposes to do just that, placing common  
               sense qualifications on the commercial sale of firearms by  
               requiring gun dealers to comply with a set of responsible  
               business practices. As such, these requirements are  
               consistent with the Second Amendment.  See Teixeira v.  
                                                             County of Alameda, 2013 U.S. Dist. LEXIS 36792, *15-18  
               (N.D. Cal. 2013) (rejecting a Second Amendment challenge to  
               an Alameda County law regulating the location of firearms  
               dealers).


          1)Argument in Opposition:  According to The Firearms Policy  
            Coalition, "AB 2459 (McCarty) is a measure that will  
            jeopardize public safety by shutting down a significant  
            portion of the businesses that serve as agents of the state,  
            providing the only lawful means in California to conduct  
            firearms transactions.


            "This measure seeks to completely outlaw the lawful business  
            operations of Federal Firearms Licensees who do not operate  
            out of a traditional commercial facility. AB 2459 does this by  








                                                                    AB 2459


                                                                    Page  12


            pre-empting all cities, counties and their respective zoning,  
            planning and business license and revenue ordinances. By  
            defying California's traditional local control doctrine, AB  
            2459 robs over 500 local elected bodies of their ability to  
            decide what is best for their communities.


            "This measure also mandates retailers to use security cameras  
            down to a level of nuance that is disturbing in its Orwellian  
            fascination with completely lawful and moral activities,  
            requiring the constant recording of 'All places where firearms  
            or ammunition are stored, displayed, carried, handled, sold,  
            or transferred, including, but not limited to, counters,  
            safes, vaults, cabinets, shelves, cases, and entryways.' 


            "AB 2459 also requires that the customers face be clearly  
            recorded. These are the same customers who have already  
            provided a Firearm Safety Certificate (or License to Carry),  
            proof of residence, valid government photo identification and  
            submitted to one the nation's most stringent background  
            checks. How does recording the facial features of the most  
            already positively identified customers of any industry in the  
            nation serve the public interest? 

            "The additional data storage requirement is also vexing.  
            Storing high quality data from potentially hundreds of camera  
            angles on-site for 5 years minimum (and up to 10) may require  
            the consultation or employ of technology professionals and  
            hundreds or thousands of hard drives in order to comply with  
            this bizarre mandate that seeks to make the state a voyeur in  
            every nook and cranny of a firearms store. 



            "Should a staffer pick up and move a box of ammunition without  
            Big Brother catching every pixel, the retailer will be  
            punished by the state. While it may sound perverse to film  
            your own staff who have been vetted by the employer and the  
            California Department of Justice, AB 2459 demands that all  
            lawful, moral and mundane activity be recorded at the  
            retailer's expense---'for transparency.' 








                                                                    AB 2459


                                                                    Page  13





            "Requiring that retailers potentially violate their lease  
            agreements by placing camera equipment outside of buildings or  
            in parking lots may not be feasible for all retailers, but  
            it's unlikely they will be able to comply with AB 2459 at any  
            rate. 

            "The final portion of the measure is difficult to articulate  
            our opposition to, given it mandates a product that does not  
            exist. AB 2459 mandates a form of insurance-- a policy that  
            covers the criminal acts of second, third and fourth parties,  
            even if the retailer is in fact the victim of a crime, such as  
            theft or kidnapping. While an amazing fantasy put in print for  
            trial lawyers, even they know that should it ever exist, it  
            would immediately put all insurers and retailers alike out of  
            business. 

            "To summarize, AB 2459 is a clear case of 'be careful what you  
            wish for.' The retailers and small businesses that AB 2459  
            seeks to either outlaw or run out of the state are the ONLY  
            means for over 38 million Californians to comply with the  
            state's overwhelmingly complex firearms laws. By eliminating  
            trusted local businesses either by prohibition or by  
            outrageous mandates, the demand for over 1 million firearms  
            annually in California will not go with them. When there is a  
            dearth of available options, the market will find other  
            avenues. 

            "Firearms retailers are agents of the state, who process  
            private party transactions (often at a loss) in accordance  
            with state law, to serve the state's interest in conducting  
            background checks and firearms registration. By shutting them  
            down, the state risks being unable to adequately service the  
            million of firearms lawfully transacted annually in California  
            and therefore risks a self-created black market. 

            "We therefore urge the Chair and the committee to reject this  
            measure that usurps local control and harms the state's public  
            safety interests."









                                                                    AB 2459


                                                                    Page  14


          2)Prior Legislation:


             a)   AB 988 (Lowenthal), of the 1999-2000 Legislative  
               Session, stated that no licenses to sell firearms could be  
               granted to sell firearms out of residential buildings.   
               Failed passage on the Senate Floor.  


             b)   AB 22 (Lowenthal), of the 2001-2002 Legislative Session,  
               prohibited the retail sale of firearms from a residential  
               dwelling with specific exceptions.  Failed passage on the  
               Senate Floor. 


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Law Center to Prevent Gun Violence (sponsor)


          California Chapters of the Brady Campaign to Prevent Gun  
          Violence


          Cleveland School Remembers 


          Coalition Against Gun Violence


          Courage Campaign  


          Friends Committee on Legislation of California










                                                                    AB 2459


                                                                    Page  15


          Laguna Woods Democratic Club  


          Physicians for Social Responsibility (SF Bay Area) 


          Rabbis Against Gun Violence 


          Violence Prevention Coalition 


          Women Against Gun Violence 


          Youth Alive 




          Opposition


          American Civil Liberties Union


          California Association of Federal Firearms Licensees  


          California Pawnbroker's Association 


          California Sportsman's Lobby 


          Crossroads of the West Gun Shows 


          Firearms Policy Coalition 


          National Rifle Association








                                                                    AB 2459


                                                                    Page  16




          National Shooting Sports Foundation 


          Outdoor Sportsmen's Coalition of California 


          Safari Club International  
            
          Analysis Prepared  
          by:              Gabriel Caswell / PUB. S. / (916) 319-3744