BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Isadore Hall, III Chair 2015 - 2016 Regular Bill No: SB 677 Hearing Date: 4/28/2015 ----------------------------------------------------------------- |Author: |Mendoza | |-----------+-----------------------------------------------------| |Version: |4/6/2015 | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Felipe Lopez | | | | ----------------------------------------------------------------- SUBJECT: Public safety: fireworks DIGEST: This bill authorizes, beginning January 1, 2017, the sale of safe and sane fireworks during the week preceding New Year's Day and makes numerous changes to the state laws governing fireworks sales and disposals. ANALYSIS: Existing law: 1)Requires various entities, including the State Fire Marshal (SFM), to seize certain prohibited fireworks. 2)Requires an authority that seizes fireworks to notify the SFM of the seizure and provide specified information. 3)Requires the SFM to dispose of the fireworks and requires dangerous fireworks to be disposed of according to specified procedures. 4)Provides that if dangerous fireworks are seized pursuant to a local ordinance that provides for administrative fines or penalties and these fines or penalties are collected, the local government entity collecting the fines or penalties shall forward 65% of the collected moneys to the State Controller for deposit in the State Fire Marshal Fireworks Enforcement and Disposal Fund. SB 677 (Mendoza) Page 2 of ? 5)Requires the SFM to acquire and use statewide mobile dangerous fireworks destruction units to collect and destroy dangerous fireworks from local and state agencies. 6)Authorizes the retail sale of safe and sane fireworks from June 28 to July 6, annually, pursuant to a license issued by the SFM, unless otherwise prohibited or regulated by law or ordinance. 7)Requires the Department of Motor Vehicles (DMV) to suspend the commercial license of a person transporting dangerous fireworks as specified. 8)Provides that the Department of Finance has general powers of supervision over all matters concerning the financial and business policies of the state. This bill: 1)Authorizes, beginning January 1, 2017, the sale of certified safe and sane fireworks from 9 a.m. on December 26 to 11:59 p.m. on January 1 of the following year pursuant to a license issued by the SFM, if authorized by a charter city, city, county, fire protection district, or city and county ordinance or resolution that may also restrict the hours of use of those fireworks. 2)Authorizes a charter city, city, county, fire protection district, or city and county that adopts an ordinance or resolution authorizing the sale of safe and sane fireworks to require each applicant receiving a permit to pay a fee to the charter city, city, county, fire protection district, or city and county of a pro rata portion of the actual and reasonable costs incurred by the charter city, city, county, fire protection district, or city and county for, among other things, processing and issuing fireworks permits, inspection of fireworks stands, public awareness and education campaigns regarding the safe and responsible use of safe and sane fireworks, and related fire operation and suppression efforts, as specified. The bill specifies that the pro rata portion of those costs shall be based on a percentage of the permittee's sales and use tax returns for the applicable permit period, not to exceed 7% of the gross sales of the fireworks sold, except that a cost recovery ordinance or resolution in effect SB 677 (Mendoza) Page 3 of ? on or before January 1, 2015, would be authorized to supersede that provision. 3)Authorizes the SFM to permit a state licensed fireworks importer or exporter or wholesaler to purchase any fireworks the SFM, the Department of Toxic Substances Control (DTSC), and a recognized third party testing entity, as defined, deem to be commercially viable, from the SFM. 4)Requires any revenue received from the sale to belong to the seizing local authority and would authorize the SFM to enter into a revenue sharing agreement with that local authority, as provided. 5)Requires the DTSC to develop and publish guidelines for the implementation of these provisions, as provided. 6)Requires the local government to forward 25% of the collected moneys from seized fireworks to the State Controller. 7)Requires seized fireworks to be managed by the SFM, the authority seizing any fireworks, or the authority's contract designee, by either disposing or repurposing the fireworks, as provided. 8)Deletes the SFM's authority to acquire and use statewide mobile dangerous fireworks destruction units to collect and destroy dangerous fireworks from local and state agencies. 9)Requires, on or before January 1, 2017, the SFM to collect and analyze data relating to fires, damages, seizures, arrests, administrative citations, and fireworks disposal issues caused by the sale and use of both dangerous illegal fireworks and safe and sane fireworks, as provided. 10) Requires on or before January 1, 2018, the SFM to identify and evaluate methods to track all containers containing dangerous fireworks coming into California ports that are to be shipped in or out of the state, as provided. 11) Requires the SFM to, on or before January 1, 2019, adopt regulations relating to dangerous fireworks tracking and providing for an annual charge to be paid by all holders of an importer's and exporter's license who import dangerous fireworks into the state. The bill requires the amount of SB 677 (Mendoza) Page 4 of ? the charge to be determined based on the volume of product and number of containers imported into the state by the licensees, and payment of this charge would be a condition of an importer's and exporter's license. 12) Requires the DMV to suspend the commercial license of a person transporting dangerous fireworks, as specified. The bill clarifies that these provisions do not apply to a person with a valid license or permit under the State Fireworks Law, as specified. 13) Requires, for purposes of monitoring the budgets of the Department of Forestry and Fire Protection and the DTSC, as those budgets relate to programs regarding fireworks, the director to create a plan for modifying budget process to increase efficiency and focus on accomplishing program goals relating to fireworks. The bill requires the plan to include certain content, including ways to ensure transparency about program goals, outcomes, and funding. Background Purpose of the Bill: According to the author, any fireworks not designated "safe and sane" are considered to be illegal in the State of California. As a result, there are fireworks seized in California that are legal to be sold in other states per federal regulations. The author points out that fireworks are being seized by many different agencies throughout the state and that they are all faced with the problems inherent to the seizure of illegal fireworks. SB 677 solves the illegal fireworks crisis in California by allowing local governments to recover the costs associated with the seizure and disposal of illegal fireworks. Policy Considerations: According to the author the stated goal of the bill is to solve the issue of the illegal fireworks crisis in California, however the bill currently allows for an additional week of fireworks sales for the week prior to New Year's Day. This additional week of sales could be viewed to be counterintuitive to the overall goal of the bill. This additional week has the possibility to dramatically SB 677 (Mendoza) Page 5 of ? increase the amount of seized fireworks by local jurisdictions. While the bill does specify that a local ordinance would have to be adopted before sales could commence, this alone does not solve the issue. Realistically you could have neighboring communities-- one allowing sales and the other prohibiting-- where one of the communities is legally selling fireworks and those fireworks are then being transported to the neighboring community where sales are illegal and could be seized, thus increasing the problem. In addition, though an argument can be made that allowing the sale of fireworks curbs the sale of illegal fireworks, data from the SFM's office seems to contradict that point. According to the SFM the seizures of illegal fireworks usually begin around March with an increase in seizures towards the 4th of July period of the year. If legal fireworks sales truly curb the sale of illegal fireworks, then why does the number of illegal fireworks being seized increase dramatically during the 4th of July period? The committee may therefore wish to strike out the language of the bill dealing with sales of fireworks during the week preceding New Year's Day to ensure that the bill would not be compounding the issue of the fireworks disposal in California while at the same time trying to solve the problem. Seized Fireworks in California: The California Health and Safety Code requires the SFM to dispose of "dangerous fireworks" within 60 days upon receiving notification from the local jurisdictions that seized them. These seized fireworks range from unpackaged improvised devices, to fireworks that are legal to be sold in other states, as well as safe and sane fireworks that have been seized in any part of the state that does not permit the sale. According to the SFM the seizures of these fireworks have been increasing each year and begin to occur around March with an uptick in interdictions moving towards the 4th of July period of the year. The SFM estimates that there are roughly 384,000 pounds of seized dangerous and illegal fireworks located throughout the State awaiting disposal. Of that, 220,000 pounds sit in the physical possession of the SFM in controlled containers at 10 locations around the state, 164,000 pounds sit in local government controlled sites. Los Angeles County has the largest stored quantity at approximately 90,000 pounds currently stored. SB 677 (Mendoza) Page 6 of ? In the past, the approach for disposal has been by the burning of unpackaged fireworks under an emergency burn permit issued by the DTSC or by shipping fireworks in their original federally approved packaging for out of state disposal. The SFM did receive a one-time appropriation from the Toxic Substance Control Account of $1.5 million in the 2014-15 fiscal year to fund disposal of illegal fireworks. It is believed that this appropriation is sufficient to reduce the current stockpile located within SFM controlled storage sites to zero by the end of the current fiscal year. There is no funding available to address the illegal fireworks held in local government facilities. Firework Sales: Current law authorizes the retail sale of safe and sane fireworks from June 28 to July 6 annually pursuant to a license issued by the SFM, unless otherwise prohibited or regulated by law or ordinance. As of April 2012, there were 290 communities in California that permitted the sale and use of state-approved fireworks each 4th of July. Sellers are first required to obtain a license, good for one year, from the SFM and pay associated fees to the state. Local jurisdictions may include an administrative fee related to the processing of permits and a percentage of gross sales collected by the jurisdiction. This is generally used for education, over-time staffing, enforcement duties and other fireworks related additional activities. Fireworks stands are generally run by non-profit groups such as battered women's shelters, service clubs (such as Rotary), Boy Scout and Girl Scout troops, PTAs, Little Leagues, and other local organizations. If an organization is selling safe and sane fireworks without a permit the individual or organization could face a significant fine and possible criminal charges. City requirements for fireworks sale permits vary slightly from city to city, but each applicant generally has to comply with the same basic requirements. The non-profit organization must obtain designation as a certified, legal non-profit from the State of California; pay a city permit fee and a sales booth inspection fee for building and safety, and SFM compliance; pay an additional annual SFM fee; show proof of insurance with SB 677 (Mendoza) Page 7 of ? various amounts of coverage in case of property damage or injury in the vicinity of the sales booth; obtain a sales site, usually in a strip mall or other commercial location; take delivery of the sales booth; attend a meeting with city officials to learn of any annual municipal code updates or city council policy changes relating to the sale of legal fireworks; obtain a Seller's Permit from the Board of Equalization (BOE) for required sales tax collection; and take delivery of the product, supply a sales staff to sell the product and determine the price they will charge for the product. The SFM determines which fireworks are legal. The "safe and sane" varieties carry an official SFM seal. Everything else is classified dangerous and illegal. It has been reported, that law enforcement agencies confiscate an average of about 40,000 pounds of illegal fireworks every year. The SFM is responsible for collecting and disposing of unsafe fireworks. Because these fireworks contain perchlorates, they must be disposed in a manner that meets environmental regulations. Fireworks Related Injuries: In 2010 the National Fire Protection Association released a study titled, "Fireworks-Related Injuries, Deaths and Fires," which found that in 2010, 8,600 fireworks-related injuries were treated in U.S. hospital emergency rooms. In addition, the study found that in 2010, an estimated 15,500 fires were started by fireworks in the United States. These fires resulted in an estimated eight civilian deaths, 60 civilian injuries and $36 million in direct property damage. According to the study, "the risk of fire death relative to usage shows fireworks to be more risky per hour of usage than cigarettes. On Independence Day in a typical year, more than twice as many U.S. fires are reported than on any other day. Fireworks account for two out of five of those fires, more than any other cause of fires. The trend in fireworks-related injuries has been mostly in the range of 8,300 to 9,800 per year since 1996, except for spikes in 2000, primarily due to celebrations around the advent of a new millennium." In addition, the study found that 83% of emergency room fireworks injuries involved fireworks that Federal regulations permit consumers to use. Sparklers, fountains, and novelties alone accounted for 43% of emergency room fireworks injuries. SB 677 (Mendoza) Page 8 of ? This study implies that any increase in fireworks use, whether legal or not, would only increase the number of fireworks related injuries and fires. With the State of California facing such a significant drought, any increase of fires would only exacerbate the problem. Double-referral: The bill was previously passed by Senate Governance and Finance Committee with a vote of 4-2. Prior/Related Legislation SB 777 (Calderon), 2013-2014 Legislative Session. The bill would have created a fireworks sell-back program administered by the SFM and would have authorized the state to issue licenses for retail sales of fireworks during the week before New Year's Day. The bill was amended to deal with an unrelated issue area. SB 1468 (Calderon), 2011-2012 Legislative Session. The bill would have authorized the sale of specified fireworks between Christmas and New Year's Day in 2014-15 and 2015-16. Also would have permitted limited recovery of specified costs by local governments, and provided for a two-year fireworks data collection effort to be funded by voluntary contributions from the fireworks industry. (Held in Assembly Appropriations Committee) AB 1295 (Bermudez), 2005-2006 Legislative Session. The bill would have allowed New Year's fireworks sales and used fee revenues to pay for disposal costs associated with seized fireworks. (Held in Assembly Appropriations Committee) AB 1371 (V. Manuel Perez), 2011-2012 Legislative Session. The bill would have allowed New Year's fireworks sales and authorized local governments to impose permit fees. (Held in Assembly Governmental Organization Committee) SB 839 (R. Calderon), Chapter 563, Statutes of 2007. The bill would have revised the penalties for possession and transportation of dangerous fireworks, as specified. SB 839 established a fund from the proceeds of all fines and fees collected in relation to dangerous fireworks violations with those funds earmarked for enforcement of dangerous fireworks law. SB 677 (Mendoza) Page 9 of ? AB 476 (De La Torre), 2007-08 Legislative Session. The bill would have increased the fines for violating state fireworks laws from $1,000 to not less than $2,000 and not more than $5,000, and authorized the impounding of vehicles used to transport "dangerous fireworks" by SFM. (Held in Assembly Appropriations) AB 2310 (Torrico), 2005-06 Legislative Session. The bill would have reduced the penalty for personal use of prohibited fireworks, as defined, from a misdemeanor to an infraction, subject to a citation and a $200 civil penalty, a portion of that penalty to be transferred to the SFM for disposal of fireworks and a portion to remain with the local fire protection agency for administrative costs. (Failed on the Senate Floor) AB 1295 (Bermudez), 2005-006 Legislative Session. The bill would have authorized the sale of fireworks from December 26 through January 1 each year and established the SFM Dangerous Fireworks Management Fund. (Held in Assembly Appropriations Committee) AB 923 (Chavez), 2005-06 Legislative Session. The bill would have authorized the sale of fireworks from December 26 to January 1 and creates the SFM Dangerous Fireworks Management Fund for the deposit of surcharges assessed on the sale of fireworks to pay for the disposal costs of seized fireworks. (Never heard in Assembly Governmental Organization Committee) AB 2090 (Miller), Chapter 363, Statutes of 1998. The bill would have authorized the SFM to license the sale of fireworks from December 26, 1999 through January 1, 2000 in order to celebrate the millennium. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT: American Promotional Events, Inc. OPPOSITION: California Fire Chiefs Association California Taxpayers Association SB 677 (Mendoza) Page 10 of ? ARGUMENTS IN SUPPORT: According to American Promotional Events, the SFM is unable to consistently perform its statutory duty and the money that it has received from the federal government is gone. They argue that SB 677 represents a serious, fireworks industry funded effort to stop the influx of illegal fireworks into California. ARGUMENTS IN OPPOSITION: The California Fire Chiefs Association (Cal Chiefs) has taken an "oppose unless amended" position on the bill. The Cal Chiefs are requesting that language pertaining to the sale of fireworks during the New Year eve period be remove from the bill. They argue that adding additional sales period will only exacerbate the collection, storage and disposal of both safe and sane and dangerous fireworks. The California Taxpayers Association (CalTax) states that the bill distorts the nature of a license fee. CalTax argues that a charge imposed by a state or local government may only cover the staff time and actual costs necessary to produce a license. CalTax concludes that the charge authorized by this bill goes beyond the costs of issuing a license by funding educational campaigns and fire response services.