BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1280 (Hill)
Hearing Date: 08/25/2011 Amended: 08/15/2011
Consultant: Jolie Onodera Policy Vote: Public Safety 6-0,
Judiciary 4-1
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BILL SUMMARY: AB 1280 would repeal existing statutory provisions
for over-the-counter sales of pseudophedrine and related
products and replace them with new purchase limits consistent
with federal law and require the electronic tracking of
purchases. Specifically, this bill:
1) Limits the retail sale of pseudophedrine to 3.6 grams
per transaction and 9 grams in any 30-day period;
2) On and after July 1, 2012, requires pseudophedrine
retailers to transmit specified purchase information to the
National Precursor Log Exchange (NPLEx) to determine if the
proposed sale violates purchasing restrictions;
3) Provides that a violation of either the sales limits or
required procedures for a pseudophedrine transaction is a
misdemeanor, as specified;
4) Provides that upon execution of a memorandum of
understanding (MOU) between the Department of Justice (DOJ)
and the National Association of Drug Diversion
Investigators (NADDI), NADDI shall supply NPLEx data to DOJ
on a weekly basis and provide law enforcement with
real-time access to the data;
5) States neither the DOJ or any other state agency shall
bear any cost for the development, installation, or
maintenance of the system;
6) Requires the State Board of Equalization (BOE) to notify
retailers of the reporting requirements by April 1, 2012;
and,
7) Sunsets these provisions on January 1, 2018.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
MOU with NADDI Significant cost pressure to DOJ General
for oversight and periodic system
audits if MOU executed
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Notification to retailers Minor, absorbable costs to
BOEGeneral
Loss of sales tax revenue Unknown; potential revenue loss
due General
to reduced taxable sales
New misdemeanors Unknown; non-reimbursable local law
Localenforcement costs offset to a degree
by fine revenue
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STAFF COMMENTS: SUSPENSE FILE.
This bill would repeal existing statutory provisions for
over-the-counter sales of pseudophedrine and other
methamphetamine precursor products and replace them with sales
limits consistent with federal law and new procedures to record
sale transactions. This bill would, on and after July 1, 2012,
require retailers to immediately transmit information regarding
the sale of pseudophedrine and related products to NPLEx, a
privately funded out-of-state electronic monitoring system
administered by NADDI for the purpose of determining whether the
sale would be in violation of established sales limits.
Retailers would be required to store pseudophedrine products in
a locked cabinet or behind the counter, require purchasers to
present valid photo identification, and record specified
information in NPLEx at the time of the transaction.
This bill states that the requirements are contingent upon the
NPLEx system being available to retailers in the State without a
charge for accessing the system. Further, this bill provides
that the DOJ and authorized law enforcement will not be charged
for use of the system. According to the Consumer Healthcare
Products Association (CHPA), "Manufacturers fully fund NPLEx so
there is no charge to retailers, states, or law enforcement."
NADDI currently provides NPLEx at no cost to states (there are
currently 19 states utilizing electronic tracking via NPLEx) as
funding for the electronic monitoring system comes from the
manufacturers of pseudophedrine and related products.
This bill states that should the DOJ execute a MOU with NADDI
AB 1280 (Hill)
Page 2
governing access, NADDI shall forward transaction records in
NPLEx to DOJ on a weekly basis and provide real-time access to
NPLEx information through an online portal to law enforcement in
the State as authorized by the DOJ. The monitoring system's
security program would be required to comply with FBI standards
and could be audited once a year by the DOJ. Further, law
enforcement access to the system would be recorded using a
unique access code for each individual, and each user's history
would be required to be maintained and could be audited by the
DOJ.
Although the costs for developing, installing, and maintaining
the system will be supported by NADDI, there would be
substantial cost pressure to the DOJ for oversight if a MOU was
executed. It is unknown to what extent providing authorization
to law enforcement "as authorized by the DOJ" to access the
database would incur additional workload on the DOJ. The receipt
of weekly transaction data and the authority to audit each
user's access history as well as the monitoring system's
security program would also create significant additional cost
pressure to the DOJ. Appriss, a private company headquartered in
Louisville, Kentucky, would provide the software and house the
service in its data center. Given the database would not be
directly under DOJ oversight but serviced by an out-of-state
company, periodic audits of the effectiveness and use of the
system would most likely be required and could incur significant
costs.
The State Board of Equalization (BOE) would be required to
notify all retailers of the requirement to submit transactions
to NPLEx no later than April 1, 2012. The BOE has indicated
notification to approximately 175,000 retailers would be
completed through a combination of electronic and paper notices,
the majority of which would receive electronic notification. The
BOE estimates costs associated with the provisions of this bill
would be minor and absorbable.
To the extent the provisions of this bill successfully prohibit
sales of pseudophedrine and related products in excess of the
prescribed amounts could result in lost sales tax revenue of an
unknown amount. According to the CHPA, sales tax revenue on
these products is estimated at $4 million in 2010. It is unknown
what percentage of sales would be impacted, but a 5 percent
reduction in sales would result in a tax revenue impact of
$200,000.
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This bill would provide that a violation of either the sales
limits or required reporting procedures for a pseudophedrine
transaction is a misdemeanor, punishable on a first conviction
by a fine of up to $1,000, a jail term of up to six months, or
both. Upon a subsequent conviction, the maximum jail term is one
year and the maximum fine is $10,000. By creating a new crime,
this bill would create a state-mandated program and would result
in non-reimbursable local law enforcement costs, offset to a
degree by fine revenue.
Prior Legislation. AB 1455 (Hill) 2010 would have enacted an
electronic database substantially similar to the database
proposed in this measure. AB 1455 was held in the Senate
Committee on Judiciary due to privacy concerns.