BILL ANALYSIS Ó SB 468 Page 1 Date of Hearing: July 7, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair SB 468(Hill) - As Amended July 1, 2015 SENATE VOTE: 28-7 SUBJECT: Bureau of Security and Investigative Services: licensees. SUMMARY: Subjects the Bureau of Security and Investigative Services (Bureau) to review by the appropriate committees of the Legislature by January 1, 2020, and makes various changes to provisions in the Alarm Company Act, Locksmith Act, Private Investigator Act, Private Security Services Act, Proprietary Security Services Act, and Collateral Recovery Act to improve the oversight, enforcement and regulation by the Bureau of licensees under each Act. EXISTING LAW: 1)Establishes the Bureau within the Department of Consumer Affairs (DCA). (Business and Professions Code (BPC) § 6980.1) 2)Establishes the following Acts: a) Alarm Company Act (BPC § 7590) b) Locksmith Act (BPC § 6980) SB 468 Page 2 c) Private Investigator Act (BPC § 7512) d) Private Security Services Act (BPC § 7580) e) Proprietary Security Services Act (BPC § 7574) f) Collateral Recovery Act (BPC § 7500) 3)Requires applicants for a firearms permit to meet the following requirements: a) The applicant is a licensee, a qualified manager of a licensee, or a registered uniformed security guard. b) A certified firearms training instructor has certified that the applicant has successfully completed a written examination prepared by the Bureau and training course in the carrying and use of firearms approved by the Bureau. c) The applicant has filed with the Bureau a classifiable fingerprint card, a completed application for a firearms permit on a form prescribed by the Bureau, dated and signed by the applicant, certifying under penalty of perjury that the information in the application is true and correct. d) The Bureau has determined, after investigation, that the carrying and use of a firearm by the applicant, in the course of his or her duties, presents no apparent threat to the public safety, or that the carrying and use of a firearm by the applicant is not in violation of the Penal Code. SB 468 Page 3 4)Requires armed guards applying for a Bureau issued firearms permit to submit a second set of fingerprints to the Department of Justice (DOJ) to obtain a DOJ Firearm Eligibility Determination before consideration of a firearms permit from the Bureau. (BPC § 7583.23(c)) 5)Specifies that any institution, firm, or individual seeking the Bureau's certification as a firearms training facility must complete an application that includes: the name and location of the entity, the places, days, and times the course will be offered, an estimate of the minimum and maximum class size, the location and description of the range facilities, and the names and certificate numbers of the Bureau-certified firearms training instructors who will teach the course. (BPC § 7585.3) 6)States that applicants that wish to obtain a firearms qualifications card must complete a course of training in the carrying and usage of firearms according to the standards of the Bureau's "Firearms Training Manual", which includes: the moral and legal aspects of firearms usage, firearms nomenclature and maintenance, weapon handling and shooting fundamentals, emergency procedures, and prequalification range training. Applicants are also required to take a qualification course of fire which includes: range safety and procedures, demonstration and dry firing, practice rounds, and qualification firing. (BPC §§ 7585 and 7585.6) 7)Requires Private Patrol Operators to maintain an accurate and current record of all firearms and deadly weapons in the possession of the licensee or any employee while he or she is on duty. (BPC § 7583.2) 8)Requires Private Patrol Operators to deliver to the Director a written report describing fully the circumstances surrounding the discharge of any firearm, or physical altercations, as SB 468 Page 4 specified, with a member of the public while on duty, by a licensee or any officer, partner, or employee of a licensee while acting within the course and scope of his or her employment within seven days after the incident. Authorizes the Director to investigate any report to determine if any disciplinary action is necessary. (BPC § 7583.2) 9)Specifies that any person registered as a security guard or patrol person shall deliver to the Director of the DCA a written report describing fully the circumstances surrounding any incident involving the discharge of any firearm in which he or she was involved while acting within the course and scope of his or her employment, within seven days of the incident and requires specified information to be provided on the form provided by the Director. (BPC § 7583.4) 10)Exempts California peace officers from Bureau firearms training courses if he or she has successfully completed a course of study in the use of firearms. (BPC § 7583.22) 11)States that a private investigator (PI) must possess a valid Bureau firearms qualification card on his or her person while carrying a firearm during the course of an investigation. (BPC § 7542) 12)States that every agreement, including, but not limited to, lease agreements, monitoring agreements, and service agreements, as well as all labor, services, and materials to be provided for the installation of an alarm system, must be in writing. (BPC § 7599.54) THIS BILL: SB 468 Page 5 13)Subjects the Bureau to review by the appropriate committees of the Legislature. 14)Beginning July 1, 2017, requires each applicant for a firearms permit or renewal permit to undergo a psychological evaluation by a licensed psychologist, or his or her designee, the purpose of which is to assess the applicant's psychological capability to exercise appropriate judgment, restraint, and self-control. a) Requires the licensed psychologist, or his or her designee, to employ whatever psychological measuring instruments or techniques deemed necessary to render a professional opinion. b) If the applicant does not pass the assessment or falls outside the range of acceptable results set by the provider of the assessment, requires the certified firearms training facility, upon request by the applicant, to forward the response data to a psychologist licensed by the Board of Psychology for evaluation. c) Authorizes the applicant to choose the licensed psychologist and bear the costs of the evaluation. If the applicant seeks employment with, or is employed by, a licensee that has an established and approved process for the Minnesota Multiphasic Personality Inventory (MMPI) or other psychological evaluation, authorizes the applicant to choose to submit the response data to a licensed psychologist chosen by the licensee. Authorizes a licensee employing this process to bear the costs of the evaluation. d) Requires the psychologist to forward a written psychological evaluation, on a prescribed form prescribed, to the Bureau within 15 days of the evaluation, even if the applicant is found to be psychologically at risk. SB 468 Page 6 e) Authorizes the Bureau to utilize the results of the psychological evaluation, which shall include assessment measures used and the reason for their inclusion, for up to six months from the date of the evaluation after which the applicant shall be reexamined. f) Prohibits a person who has been found psychologically at risk in the exercise of appropriate judgment, restraint, or self-control from reapplying for a permit until one year from the date of being found psychologically at risk. g) Authorizes the Bureau to decide if the applicant shall be administered an additional psychological evaluation instrument after the discharge of a firearm, as specified, in order to retain the firearms permit. h) Exempts from this requirement peace officers, federal law enforcement officers, and security guards applying for a renewal firearms permit whose employer verifies that the applicant has been employed for at least five years in an armed position during which the applicant has not had a firearms incident or violent incident, as specified. 15)Requires both a security guard and his or her employer to submit a written report to the Director of the DCA of any incident involving the discharge of a firearm while he or she is on duty. 16)Requires the Bureau to conduct inspections of all firearms training facilities in this state within 90 days after issuance of a certificate to ensure compliance with applicable Bureau requirements, rules, and regulations. Authorizes the Bureau to conduct inspections prior to the issuance of the certificate, and requires the Bureau to maintain a program of random and target inspections of facilities to ensure compliance with applicable laws. 17)Exempts Federal Law Enforcement Officers from Bureau SB 468 Page 7 firearms, power to arrest, and baton training requirements if he or she has already completed a course of study for each. 18)Clarifies that private investigators who wish to carry a concealed firearm must obtain and have on their person while carrying out an investigation, both a Bureau issued firearms permit as well as a Concealed Carry Weapons (CCW) permit. 19)Requires agreements entered into on or after January 1, 2016, that contain an automatic renewal provision ("evergreen" clause) to include a separate and clear disclosure advising the consumer that the agreement he or she is entering into contains an automatic renewal provision, as specified. 20)Updates the fine and citation structure for violations of provisions in the Alarm Company Act, Private Investigator Act, Private Security Services Act, and Collateral Recovery Act, as specified. FISCAL EFFECT: According to the Senate Appropriations Committee analysis dated May 28, 2015, this bill will result in the following costs: BSIS costs of approximately $300,000 annually, and 3 PY of enforcement staff, to conduct compliance inspections of firearms training facilities. BSIS costs of approximately $131,000 annually, and 2 PY of licensing staff, to process psychological examinations submitted with Firearm Permit applications. Prevents expenditures of approximately $12.1 million, supporting 51.4 PY, and the collection of approximately $12.1 million in fee revenues, beyond January 1, 2020. Unknown penalty and fine revenue gains. SB 468 Page 8 COMMENTS: Purpose. This bill is sponsored by the author. According to the Author, "This bill is necessary to extend the sunset date of the [BSIS] in order to ensure continued oversight of alarm companies and their employees, locksmiths, private investigators, private security services, proprietary security services, and repossessors." Background. The Bureau currently licenses about 380,000 companies and employees serving in the areas of alarm services, locksmith services, private investigation, private security, repossession, and firearm and baton training. Based on the past three fiscal years, the Bureau issues an average of 1,900 company licenses, 71,000 employee registrations, and 12,000 Bureau firearm permits. On average, the Bureau renews 9,500 company licenses, 105,000 employee registrations, and 11,500 Bureau firearm permits each year. Specifically, the Bureau regulates the following Acts: 1) Alarm Company Act; 2) Locksmith Act; 3) Private Investigator Act; 4) Private Security Services Act; 5) Proprietary Security Services Act; and 6) Collateral Recovery Act. The following are some of the major issues pertaining to the Bureau along with background information concerning the particular issue. Recommendations were made by Committee staff regarding the particular issue areas which needed to be addressed. Sunset Review of the Bureau. Currently there is no sunset date established for the Bureau or the six Acts which the Bureau regulates. The 2015 Sunset Hearing was the Bureau's first Sunset Review. The Bureau and DCA appear committed to working SB 468 Page 9 collaboratively with the Legislature and the Committees to find solutions moving forward in the regulation of this important industry and thus should have the opportunity to address new and existing issues raised within the Bureau as well as from the Committees. This bill will subject the Bureau to review by the appropriate policy committees of the Legislature by January 1, 2020, in order to address the issues raised within the Bureau and by the appropriate policy committees. Mental Health Evaluations for Armed Guards. Currently, California does not require mental health examinations for armed guards. All applicant types, with the exception of proprietary private security employers, must submit their fingerprints to the Federal Bureau of Investigation and DOJ for a criminal background check. Guards who apply for a Bureau Firearm Permit must submit a second set of fingerprints to obtain a DOJ Firearm Eligibility Determination. The DOJ Firearm Bureau then advises the Bureau whether the individual may possess or is prohibited from possessing a firearm based on the applicant's prior criminal past or history of mental instability. In addition, Bureau staff checks the Bureau's application and enforcement databases for any possible prior disciplinary actions, citations issued, or investigations related to the applicant. The application database is where Bureau enforcement staff would note an application hold. However, there is no national database for disciplinary actions for the industries under the Bureau's purview. Although it is true that the DOJ will alert the Bureau of an applicant's past restraining orders, suicide attempts, and psychiatric holds, there are some individuals that may have existing psychological and mental health issues and may not be getting the mental health resources they should be receiving. The DOJ only alerts the Bureau if there are reports filed against the applicant, but does not look into the applicant's mental health background or past history due to HIPPA and patient privacy issues. SB 468 Page 10 Part of the Bureau's process of investigation is initiated through media reports. There have been numerous reports by the Center for Investigative Reporting that have highlighted that the current process is not sufficient in addressing the mental health needs and resources that armed guards need. There are already many states that require some criteria for mental health evaluations for their armed guards. Oklahoma, New Mexico, Delaware, and Pennsylvania all require applicants applying to be a licensed armed guard to pass a mental health examination. This bill's provisions are modeled after Oklahoma's requirement for a form to be submitted prior to licensure. South Carolina, Massachusetts, and Maine also require applicants to sign a form authorizing regulators to check their mental health records. There is also currently a petition to have federal standards for mandatory training, mental health evaluations, reporting of records, and a national database of armed guards and their gun usage. As a result of public safety concerns on the mental stability of individuals working as armed guards, this bill will require applicants to undergo a psychiatric evaluation. According to the author, "We would rather be proactive rather than reactive to a situation involving the discharge of a firearm, especially in regards to the public safety and these individuals who are often placed in high stress and confrontational situations." Mandatory Reporting Requirements. The Bureau is not required by law to collect reports of shooting incidents involving armed guards. However, entities overseeing the actions of licensed armed guards are required to submit these reports. There is no legal basis for the Bureau to collect reports of firearms incidents involving arms guards. SB 468 Page 11 The Private Security Act requires security guards and their licensed employer to report an incident within seven days of the incident occurring. The process of reporting an incident of an altercation with an armed guard begins with a Report of Incident Form (RIF). After an RIF is submitted an investigation can be initiated. The Bureau will also initiate an investigation if it receives information regarding an incident from law enforcement, a complaint, or a media article. After an investigation has been completed the Bureau can file both an administrative action and forward the case to the local District Attorney for potential criminal actions. If no criminal charges are pressed, then the licensee involved in the incident is subject to have their license revoked or suspended. If criminal charges are pressed, the Bureau will place a hold on the license until that license expires. The Bureau continues to pursue administrative action against the guard even if the convicted person is incarcerated, to revoke the license. Administrative action by the Bureau is made public on the Bureau's website upon the filing of an accusation by the Attorney General's Office. It is unknown how many incidents that meet the criteria for reporting are not reported to the Bureau since this is a process that depends upon self-reporting. However, if an incident rises to the level of a licensee, qualified manager, or registrant being arrested, the Bureau should receive a subsequent arrest report from the DOJ. Specifically, the number of guard shooting incidents is currently unknown because of this self-reporting system and because the current Consumer Affairs System (CAS) does not categorize reports based on the type of incident. There is currently no consolidated database at the Bureau that can supply quantifiable information as to the incident type in which a report was filed. In the Bureau's response to the 2015 Sunset Report, the Bureau states, "Because of the inability of the Bureau's current enforcement system to uniquely capture data on firearm SB 468 Page 12 incidents, the Bureau recently began manually tacking the violent incident reports and identified 54 from July 1, 2014 to March 1, 205, of which 24 related to firearm discharges by an armed guard. Of these 24 cases, 11 are closed (two are pending issuance of a citation and nine involved no violation). Based on the information gathered in the investigation on the remaining 13 cases, the Bureau anticipates pursuing disciplinary action on six." As a result of issues that have been raised about the effectiveness of the self-reporting process for firearms discharge incidents, this bill requires submission to the Director of the DCA of a firearms incident report by both the individual involved in the discharge incident as well as his or her employer. Firearms Training Facilities Oversight. Any institution, firm, or individual seeking the Bureau's certification as a firearms training facility must complete an application that includes: 1) the name and location of the entity; 2) the places, days, and times the course will be offered; 3) an estimate of the minimum and maximum class size; 4) the location and description of the range facilities; and 5) the names and certificate numbers of the Bureau-certified firearms training instructors who will teach the course. In addition, each owner or principal of the training facility business must complete a Bureau personal identification application form, pay the specified certification fee, and submit fingerprints. The initial and continued education firearms training course offered by a Bureau-certified firearms training facility must comply with the content and format specified in the Bureau's Firearms Training Manual. However, the firearm training facility is not required to provide its specific course materials to the Bureau for approval. SB 468 Page 13 A Bureau-certified firearm or baton training facility, or Bureau-approved school that provides training to private proprietary security officers (PPSOs) or security guards does not need to be approved by the Bureau of Private Postsecondary Education (BPPE) in order to obtain the Bureau's certification or approval, unless BPPE's law requires that they be approved. The Bureau refers institutions to BPPE to verify their exemption from BPPE's law. There is no statutory requirement for the Bureau to inspect the approved schools and firearm/baton training facilities; however, the Bureau has the discretionary authority to do so. The Bureau carried out a firearm training facility pilot program in Fiscal Year 2012-13 and conducted 15 inspections, but due to staff and workload issues, the inspections were discontinued. However, the firearm/baton training facilities and approved trainers are inspected as part of an investigation in response to a complaint. The Bureau has the statutory authority to suspend or revoke a firearm/baton training school's certification for violations of the law. Also, the Bureau has the ability to cancel the approval of an approved trainer. As a result of issues that have been raised about the comprehensiveness of firearms training facilities in providing adequate training to licensees who pursue a Bureau Firearm Permit, this bill will require the Bureau to conduct inspections of all firearms training facilities in the state of California to ensure compliance with applicable Bureau requirements, rules, and regulations. Training Exemptions for Federal Law Enforcement Officers. The Private Security Services Act exempts specified peace officers from the firearm training required as a condition for issuance of the Bureau's Firearms Permit. Peace officers are already required to complete firearms training through their employing agency, hence the exemptions from the training required for issuance of the Bureau's Firearms Permit. California does not recognize Federal Law Enforcement Officers as California peace officers. Therefore, any Federal Law Enforcement Officer would SB 468 Page 14 not qualify for the same exemptions mentioned above that California peace officers would be eligible to receive even though they are also already required to complete firearms training through their employing agency. This bill will exempt Federal Law Enforcement Officers from Bureau firearms, power of arrest, and baton required training courses if he or she has already completed a course of study in each of these subjects. This will make requirements and exemptions for Federal Law Enforcement Officers consistent with requirements and exemptions for California peace officers, whose prior training has been determined as sufficient for licensure. Concealed Carry for PIs. Currently, the BPC does not prohibit PIs from carrying a concealed weapon while carrying out an investigation covered by the Private Investigator Act. However, there is some concern about the transmittal of information from the Bureau to licensees that a PI with a CCW permit may not carry that concealed weapon while carrying out an investigation covered by the Private Investigator Act. This bill clarifies that PIs who wish to carry a concealed firearm may do so if he or she possesses both a Bureau Firearm Permit and a CCW permit while carrying out an investigation. Evergreen Clause Disclosure. Currently, Alarm Companies are exempt from specific disclosure requirements regarding automatic renewal provisions in their contracts, known as "Evergreen Clauses". This clause in the contract allows for automatic renewal of the monitoring portion of the contract unless the customer cancels the contract in writing by the date indicated in the contractual agreement. The Bureau has stated that it receives approximately 70 complaints per year related to Evergreen Clauses, which comprises 40% of all alarm company complaints received. Since these complaints involve a contractual agreement, the Bureau states that is it frequently limited in what it can do for the consumer. This bill requires alarm companies to give their customers specific disclosure about any automatic renewal provisions in their contracts. SB 468 Page 15 Cite and Fine Updates. The Bureau issues citations and fines as a means to encourage compliance with the laws and regulations of the six acts within the Bureau's oversight authority. Citations are issued for the less egregious violations because the primary intent is to encourage compliance as opposed to pursuing actions to revoke or suspend licensure. This bill updates the fine and citation structure for violations of provisions in the Alarm Company Act, Private Investigator Act, Private Security Services Act, and Collateral Recovery Act in order to help the Bureau better encourage compliance with existing laws and regulations. Current Related Legislation. SB 177 (Wiekowski) of the current legislation session, extends the authorization of the Bureau to issue an alarm company operator license to a limited liability company (LLC) until January 1, 2019. STATUS: This bill is in the Assembly Appropriations Committee. AB 281 (Gallagher) of the current legislation session, establishes a Collateral Recovery Disciplinary Review Committee (DRC) within the Bureau to review a request of a licensee to contest an administrative fine or to appeal the denial of a license; authorizes licensed repossessors to display a printout of their registration or a screenshot of their registration from the Bureau's website; and makes other clarifying changes. STATUS: This bill is in the Senate Appropriations Committee. AB 921 (Jones) of the current legislative session, establishes a Private Investigator Disciplinary Review Committee (DRC) within the Bureau to review a request of a licensee to contest an administrative fine or to appeal the denial of a license, and authorizes an applicant applying for an original license or renewal of a license as a private investigator to put his or her email address on the application at his or her discretion. SB 468 Page 16 STATUS: This bill is in the Senate Appropriations Committee. AB 1042 (Cooper) of the current legislative session, expands the definition of a proprietary private security officer (PSO) by requiring only one of the two specified criteria to be met and includes examples of a PSO's duties that are likely to involve interacting with the public. STATUS: This bill is in the Senate Labor and Industrial Relations Committee. AB 1097 (Holden) of the current legislative session, authorizes alarm companies to distribute contracts to customers by electronic means, as specified. STATUS: This bill is in the Senate Judiciary Committee. POLICY ISSUES: In response to concerns raised by licensed repossessors relating to violations of the Act regarding the use of an alias, the author may wish to specify instead that licensees may be fined for using a business name other than the name under which the license is issued. In addition, the author may wish to restore the Bureau's ability to issue a notice of warning for a violation, rather than automatically imposing a fine, as specified. The author may also seek to clarify that licensees may be fined only for falsifying, rather than merely altering, an inventory. In addition, based on concerns that some of the fine increases were too high, the author may wish to consider reducing the fine amount for failing to file a required report to one hundred dollars and delete the fee increase for specified violations. The author may also wish to specify, for purposes of firearms permits, that if a firearms permit is denied, that the denial of the permit shall be conducted in accordance with the SB 468 Page 17 Administrative Procedures Act. The author may also wish to clarify that exempt federal law enforcement officers are those defined in federal law who have successfully completed a course of study in the exercise of the power to arrest. The author may also wish to consider extending the amount of a time the Bureau has to inspect certified firearms training facilities from 90 to 120 days to help the Bureau implement this new requirement, and clarify that in addition to providing notice of noncompliance to the facility, the Bureau may issue a citation or take other disciplinary actions for violations. In addition, the author may wish to increase fine amounts for violations of alarm agents for failing to carry registration from $100 to $150. Lastly, the author may wish to clarify that the evergreen disclosure shall also include an acknowledgement of notification to be signed and dated by the consumer. AMENDMENT(S): 1)On page 4, line 29, strike:aliasand insert: a business name other than the name under which the license is issued 2)On page 4, line 30, strike:The fine shall beand insert At the bureau's discretion, the bureau shall issue a notice of warning or a fine of 3)On page 6, line 19, strike:or alteration4)On page 8, line 36, strike:two hundred fifty dollars ($250)and insert: one hundred dollars ($100) SB 468 Page 18 5)On page 9, line 19, strike:fifty dollars ($50)and insert: twenty five dollars ($25) 6)On page 10, line 33, add new subdivisions: (b) If a firearms permit is denied, the denial of the permit shall be in writing and shall describe the basis for the denial. The denial shall inform the applicant that if he or she desires, they may request a hearing in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code if he or she wishes to contest the denial and if a hearing is not requested, engaging in rehabilitation actions as specified by the Bureau does not constitute an admission of the violation charged. (c) The hearing shall be requested of the director within 30 days following notice of the issuance of the denial. However, no hearing shall be granted to an individual who is otherwise prohibited by law from carrying a firearm. 7)Specify that federal law enforcement officers are those who are "as defined in subsection (c) of Section 926B of Title 18 of the United States Code who have successfully completed a course of study in the exercise of the power to arrest." 8)On page 18, line 19, strike90and insert 120 9)On page 18, line 32, insert In addition to the notice, the bureau may issue a citation or take other disciplinary action for violations of applicable laws and regulations. SB 468 Page 19 10)On page 28, line 13, insert The disclosure shall include an acknowledgement of notification to be signed and dated by the consumer. An acknowledgement of notification with an original signature is required for an automatic renewal provision to be legally valid. REGISTERED SUPPORT: None on file. REGISTERED OPPOSITION: None on file. Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301