BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           SB 677           Hearing Date:     4/28/2015
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          |Author:    |Mendoza                                              |
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          |Version:   |4/6/2015                                             |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Felipe Lopez                                         |
          |           |                                                     |
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          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. 







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          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  








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            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  








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               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  








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          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.  








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          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  








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          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. 








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          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.









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          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








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          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.