BILL ANALYSIS �
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|Hearing Date:June 25, 2012 |Bill No:AB |
| |1508 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 1508Author:Carter
As Amended: MAY 10, 2012Fiscal: No
SUBJECT: Junk dealers and recyclers: nonferrous materials.
SUMMARY: Revises the exemption from the requirement to collect seller
information and delay payment for three days, for the sale of
nonferrous materials with a value under $20, to require that the
majority of the transaction must be to redeem beverage containers, and
excludes redemption of copper or copper alloys from that exemption.
Existing law:
1)Regulates junk dealers and recyclers and defines "junk" as
secondhand and used machinery and all ferrous (containing iron) and
nonferrous (excludes iron) scrap metals (as defined) and alloys,
including any and all secondhand and used furniture, pallets, or
other personal property, excluding livestock. (Business and
Professions Code (BPC) � 21600)
2)Provides that "scrap metals and alloys" includes, but is not limited
to, materials and equipment commonly used in construction,
agricultural operations and electrical power generation, railroad
equipment, oil well rigs, nonferrous materials, stainless steel, and
nickel which are offered for sale to any junk dealer or recycler,
but does not include scrap iron, household generated waste, or
aluminum beverage containers , as defined. (BPC � 21600)
3)Requires junk dealers and recyclers to keep a written record of all
junk sales and purchases for at least two years; requires the
written information to be reported to the chief of police or
sheriff, as specified; and makes it a misdemeanor to make a false or
fictitious statement in the written record. The written record must
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include: (BPC � 21606)
a) The place and date of the sale.
b) The name, driver's license number and state of issue, and the
license plate number and state of issue of any vehicle used in
transporting the junk.
c) The name and address of each person to whom the junk is sold
and that person's vehicle license number.
d) A description of the junk purchased or sold.
e) A signed statement indicating that the seller owns or is
authorized to sell the junk.
4)Requires junk dealers and recyclers to do the following when buying
nonferrous (not containing iron) materials: (BPC Section 21608.5
(a))
a) Pay by cash or check mailed to the seller or collected by the
seller on the third business day after the sale. The seller may
have the check mailed to an alternative address, but not a post
office box, if the seller identifies that location by a driver's
license or identification card, and a gas or electric utility
bill addressed to the seller at the alternate address with a
payment due date no more than two months prior to the date of
sale.
b) Obtain a clear photograph or video of the seller.
c) Obtain a copy of the driver's license of the seller containing
a photograph and address or a copy of a state or federal
government-issued identification card with a photograph and
address of the seller.
d) Obtain a clear photograph or video of the material being sold.
e) Preserve the information for at least two years from the date
of sale.
f) Obtain a thumbprint of the seller, as proscribed by the
Department of Justice.
5)Makes an exemption from the requirement to pay by cash or check
mailed or collected on the third business day after the sale, if
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during the prior three months, the dealer completes five or more
transactions a month (on separate days) with the seller. (BPC �
21608.5 (b))
6)Provides that the delayed payment requirement does not apply if the
junk dealer or recycler receives or has on file the seller's: (BPC
� 21608.5 (c))
a) Name, physical business address, business telephone number.
b) The business license number or tax identification number.
c) A copy of the valid driver's license of the person delivering
the material on behalf of the seller.
7)Provides an exemption from the payment restrictions and the
requirement to collect identification information (described in
Items #4, #5 and #6, above) when the nonferrous material's value
does not exceed $20 in a single transaction, when the primary
purpose is to redeem beverage containers under the California
Beverage Container Recycling and Litter Reduction Act. (BPC �
21608.5 (d))
This bill:
1)Modifies that exemption described in 7, above, to apply when the
majority of the transaction is for the redemption of beverage
containers.
2)Excludes the redemption of materials made of copper or copper alloys
from that exemption.
3)Makes a technical change to delete an obsolete operative date.
FISCAL EFFECT: None. This bill has been keyed "non-fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the San Bernardino County
Sheriff's Department (Sponsor) to close a loophole in current law
where individuals can receive cash for copper, when bundled with
other recycled materials such as beverage containers.
The Author indicates that in 2008, when Governor Schwarzenegger signed
Assembly Bill 844, which stiffened penalties and procedures for
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recycling companies when receiving scrap materials, that law
enforcement saw a dramatic decrease in metal thefts. However,
according to the Author, the legislation provided a loophole in the
enforcement of this law, providing that if the primary purpose of
the transaction is for redeeming CRV (cans, bottles and plastic),
individuals are able to redeem cash for their scrap metals if it
remains under $20.
An example of what was intended with this provision is if a person
cleans up their garage and has a small bag of aluminum cans and an
extension cord he wants to get rid of, he can scrap the materials
for under the $20 threshold and get paid in cash immediately.
However, this loophole has resulted in increased metal thefts,
according to the Author, who states:
"According to the San Bernardino County Sherriff s Department,
metal thefts have increased again to almost the same level it
was prior to the passage of AB 844 because metal thieves became
aware of this loophole. In order to obtain quick cash, thieves
use pieces stolen from buildings and infrastructure to sell to
recycling companies, while combining their materials with
aluminum cans. Therefore, it is hard to determine the seller's
primary purpose because thieves began packaging their stolen
metal into $20 increments.
"Individuals have discovered that if they keep the material
weight to under the $20 limit, or get a friend to scrap the
materials, they can be paid in cash without having the required
three day hold on transactions with check. AB 1508 would
prevent individuals from receiving any cash for copper when
bundled with other recycled materials such as bottles and cans."
2.Background. Metal theft has become increasingly popular within the
last decade and the theft of copper, aluminum, fire hydrants,
manhole covers, and backflow devices in particular are on the rise,
and represent a significant health and safety concern to the public.
According to an April 2, 2012 Sacramento Bee article, "The cost of
addressing the crime wave has likely surpassed $1 million over the
past year. Officials with the city's Department of Transportation
think they'll have to spend another $2 million over the next year
repairing streetlights damaged by thieves." Over a New Year's
weekend in 2011, 50 manhole covers were stolen from the streets of
Sacramento. Cities, counties, and special districts are taking
different approaches to address metal theft. Eastern and Municipal
Water Districts have issued $500 rewards for citizens who turn in
thieves. Anaheim Public Utilities has issued a customer alert on
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their website asking residents to take precautions to protect their
backflow devices. The City has further indicated that residents may
wish to increase patrol and install video surveillance devices if
they wish to further protect their devices.
The rise in recycled metal prices has increased the demand for such
items. Metal theft has been well documented in California. The Los
Angeles Times reported an individual stealing 45 fire hydrants
within the Inland Empire. Investigators of the incident reported,
"The theft of metal to sell as scrap, such as copper wiring, bronze
fixtures and iron from construction site, is common, especially
during a prolonged economic slump."
3.Metal Theft Increases. Forbes Magazine (May 2012) states that the
National Insurance Crime Bureau (NICB) reports that with metal
prices rising, so have the number of reported thefts of metals such
as copper, bronze, brass and aluminum. In fact, law enforcement
agencies across the U.S. and around the world had seen increased
numbers of metal thefts in the years leading up to the economic
downturn in 2008. Construction sites, churches, cemeteries,
transportation, farm equipment and homes are just some of the
targets of thieves who strip the metal and then sell it on to scrap
dealers to net themselves some quick cash.
Forbes further indicates that critical infrastructure is at risk.
The NICB gives the example of a recent theft of copper wiring which
blacked out runway approach lights at the Modesto, California
regional airport.
A report of insurance claims related to metal thefts covering
2009-2011 identifies an 81% increase from 2006-2008. The majority
of total claims (96.1%) pertained to the theft of copper, the NICB
said. Some 55% of the claims were on commercial or business
insurance policies, while 45% were on personal policies. In the
report, California ranked fourth, nationally in the number of metal
theft claims behind Ohio, Texas and Georgia.
4.Enforcement Concerns. Dramatic increases in metal theft have
sparked numerous legislative actions over the past decade. However,
enforcement of such provisions has proven not to be as effective due
to fiscal constraints in local law enforcement. Deputy Sheriff Jim
Currie of the Solano County Sheriff's Office reports that metal
theft is picking up: "We've got some things in place to help step
up our surveillance, but like other agencies, we've cut back on
people and patrol time. Our Sheriff is addressing that right now,
but it has been rough with the budget situation the way it is."
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It appears that a consensus of thought seems to be that the real
problem with metal theft is not so much shortcomings in the existing
law, but the lack of resources to enforce the law. During this time
of extreme challenges to state and local revenues and the
corresponding budget shortfalls, the ability to enforce the existing
law seems to be the greatest challenge to solving the metal theft
puzzle for local and state law enforcement efforts.
5.Recycling Beverage Containers. The current exemption that this bill
addresses is the provision that allows a recycler to give cash
immediately if the primary purpose is to redeem beverage containers
and any nonferrous metals redeemed have a value of less than $20.
This exemption was made so that individuals who recycle their cans
and bottles could also recycle a small amount of other scrap metal
they might have at the same time without having to furnish detailed
identification and waiting three days for payment.
The Legislature enacted the Beverage Container Recycling and Litter
Reduction Act (Act) in 1986 in response to the need to reduce litter
and establish a beverage container recycling system in California.
The Act set forth in Division 12.1 (commencing with Section 14500)
of the Public Resources Code, authorized the creation of the
Division of Recycling within the Department of Conservation to
administer these litter reduction and recycling efforts. In January
2010, the program was moved into the new Department of Resources
Recycling and Recovery (CalRecycle). Beverage containers covered
under the act are subject to California Redemption Value (CRV),
which is 5 cents for containers less than 24 ounces, 10 cents for
containers 24 ounces or larger. According to CalRecycle, since the
program began in 1987, due to the CRV cash incentive, 272 billion
aluminum, glass, and plastic beverage containers have been recycled.
Californians bought more than 20 billion carbonated and
noncarbonated CRV-eligible drinks in aluminum, glass, plastic and
bi-metal containers in 2011. More than 16.7 billion of those
containers were recycled, saving natural resources, conserving
energy and extending the life of our landfills.
In California, distributors that sell eligible beverage containers to
retailers make California redemption payments to CalRecycle. The
cost of these payments is passed on to consumers at the point of
sale. Consumers are paid California Refund Value (CRV) when they
return empty beverage containers to certified recycling centers.
6.Related Legislation:
AB 2003 (Torres, 2012) requires junk dealers and recyclers to
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provide payment to sellers of nonferrous material by mailed check
only, as specified. This bill failed passage in this Committee on
June 18, 2012.
AB 1583 (Roger Hernandez, 2012) prohibits junk dealers and recyclers
from purchasing or receiving bulk merchandise pallets, as defined,
marked with an indicia of ownership, as defined, from anyone except
the indicated owner, unless specified information is provided. This
bill is set for hearing on June 25 in this Committee.
AB 2298 (Ma, 2012) authorizes an appointee of the head of a county
agriculture commission to inspect written records of sales and
purchases by junk dealers or recyclers. This bill is set for
hearing on June 26 in Senate Public Safety Committee.
SB 1387 (Emmerson, 2012) prohibits a junk dealer or recycler from
possessing manhole covers, backflow devices, and fire hydrants
without written certification on the letterhead of the public agency
or utility that owns or previously owned that material. Failure to
comply with this provision would result in a criminal fine of up to
$3,000. This bill has been referred to the Assembly Public Safety
Committee for hearing.
SB 1045 (Emmerson, 2012) provide that any junk dealer or recycler
who possesses a fire hydrant, a fire department connection, as
specified, or a backflow device or connection to that device or part
of that device without a prescribed written certification, from the
agency or utility owning or previously owning the material is liable
to the agency or utility for the wrongful
possession of that material. This bill is awaiting hearing in the
Assembly.
AB 1778 (Ma, Chapter 733, Statutes of 2008) prohibited a junk dealer
or recycler from providing payment for newspaper or California
Refund Value (CRV) containers unless payment is made by check and
the dealer or recycler obtains and retains certain identifying
information, and exempted single transactions with payments of less
than $50 for newspaper, and less than $100 for CRV containers.
AB 316 (Carter, Chapter 317, Statutes of 2011) provided that every
person who steals, takes, or carries away copper materials which are
of a value exceeding $950 is guilty of grand theft, punishable by a
fine not exceeding $2,500, imprisonment in a county jail not
exceeding one year, or by both that fine and imprisonment, or by
imprisonment in a county jail or the state prison not exceeding 16
months, or 2 or 3 years and a fine not to exceed $10,000, as
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specified.
AB 1778 (Ma, Chapter 733, Statutes of 2009) required recyclers to
obtain identifying information of individuals who bring in more than
$50 worth of CRV recyclables and newspapers. AB 1778 also required
that payments of $50 or more be made by check.
SB 447 (Maldonado, Chapter 732, Statutes of 2008) required scrap
metal dealers and recyclers to report what materials are being
scraped at their facilities and by whom on a daily basis.
AB 844 (Berryhill, Chapter 731, Statutes of 2008) required recyclers
to hold payment for three days, check a photo ID and take a
thumbprint of anyone selling scrap metals. Also required any person
convicted of metal theft to pay restitution for the materials stolen
and for any collateral damage caused during the theft.
SB 691 (Calderon, Chapter 730, Statutes of 2008) required junk
dealers and recyclers to take thumbprints of individuals selling
copper, copper alloys, aluminum and stainless steel. Also required
sellers to show a government identification (ID) and proof of their
current address. Recyclers who violated the law faced suspension or
revocation of their business license and increased fines and jail
time.
SB 627 (Calderon, Chapter 603, Statues of 2009) required a core
recycler, that accepts, ships, or sells used catalytic converters to
maintain specified information regarding the purchase and sale of
the catalytic converters for not less than 2 years. Prohibited a
core recycler from providing payment for a catalytic converter
unless the payment is made by check, and the check is mailed or
provided no earlier than 3 days after the date of sale.
AB 85 (Berryhill, Chapter 78, Statutes of 2009) corrected technical
errors in the laws related to junk dealers and recyclers.
1.Arguments in Support. Southern California Edison (SCE) states that
theft of nonferrous materials can translate into much more than loss
and inconvenience for utilities - thieves pose a risk to grid
reliability and put themselves at risk of physical injury or death.
SCE believes that increased requirements for transactions involving
nonferrous materials will help to deter such crimes.
California Municipal Utilities Association (CMUA) supports the bill
stating that metal theft has impacted many CMUA member agencies,
costing many thousands of dollars to replace the materials and in
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some cases, creating public safety hazards. While some laws have
been passed to curb metal theft, clearly additional measures are
needed to protect ratepayer dollars and public safety.
City of Roseville writes in support: "As a city that proudly owns its
own utilities and maintains water and wastewater delivery
infrastructure, Roseville has experienced metal thefts first hand,
which have caused service interruptions to our utility customers,
and which cost our ratepayers thousands of dollars to replace and
repair infrastructure that has been destroyed by thieves. Theft of
copper components not only creates service delivery issues but also
can affect critical infrastructure that delivers water for fire
emergencies.
The Metropolitan Water District of Southern California , San Diego
County Water Authority and Placer County Water Agency believes that
AB 1508 will create a necessary deterrent through a more stringent
transaction process. San Juan Water District states: "Metal theft
increases costs and creates an added burden on staff resources.
These costs are ultimately paid by our customers." Irvine Ranch
Water District , supports revising the exemptions related to the sale
of nonferrous materials to clarify current law, and believes that
the bill will close the existing enforcement loopholes.
Liberty Mutual Group and Golden Eagle states that the issue of copper
theft is very important for its policyholders. Liberty Mutual
insures commercial and residential properties in California, which
are often targets of these thefts, and believes that AB 1508 would
stop individuals from receiving cash for any recycled nonferrous
material such as copper.
2.Support if Amended. The California Chapters of the Institute of
Scrap Recycling Industries (ISRI) has a "support if amended"
position on the bill. ISRI indicates that it initially was in
opposition to the bill. However the amendment made in Assembly
Business, Professions and Consumer Protection Committee that
provided that the majority of the transaction must be for the
redemption of beverage containers and not non-ferrous material,
caused ISRI to remove their opposition. ISRI states that later it
removed its support position when amendments where made which
excluded copper from this section of law. ISRI requests that the
bill be amended to remove the amendments made on May 10, 2012 from
the bill.
ISRI remarks that the law enacted in 2008 (AB 844 Berryhill) was
carefully crafted after long hours of discussion, and provides for
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one of the most comprehensive statutory structures in the nation to
combat the theft of non-ferrous recyclable material. "The problem
with the current law is not a lack of thoughtful crafting or
sufficient statutory muscle, but the dire lack of judicial
enforcement. Simply stated, few local police agencies have the
desire to redirect their scarce resources to enforce the metal theft
laws. This has become a budgetary issue and not issue of
substantive law."
3.Recommended Author's Amendment. Committee staff notes a correcting
amendment which needs to be made to the provision of law amended by
this bill. The bill refers to the "redemption" of nonferrous
material, and to the "redemption" of beverage containers under the
California Beverage Container Recycling and Litter Reduction Act.
While it is appropriate to refer to the "redemption" of beverage
containers, this is the only place in the Business and Professions
Code which refers to the "redemption" of nonferrous material. In
fact, the Beverage Container Recycling and Litter Reduction Act
defines "redemption" and "redeem" to mean the return to a recycling
center or location of an empty beverage container for a refund of at
least the refund value (Public Resources Code � 14522.5).
Furthermore, the section amended by the bill refers to practices of
junk dealers and recyclers as it relates to the purchase of
nonferrous materials. Therefore, staff recommends the following be
adopted as an Author's amendment:
On page 3, revise lines 32 through 40 as follows:
(d) (1) This section shall not apply to the redemption purchase
of nonferrous material having a value of not more than twenty
dollars ($20) in a single transaction, when the majority of the
transaction is for the redemption of beverage containers under
the California Beverage Container Recycling and Litter Reduction
Act, as set forth in Division 12.1 (commencing with Section
14500) of the Public Resources Code.
(2) Materials made of copper or copper alloys shall not be
redeemed purchased under this subdivision.
SUPPORT AND OPPOSITION:
Support:
San Bernardino County Sheriff (sponsor)
Irvine Ranch Water District
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Southern California Edison
California Municipal Utilities Association
City of Roseville
The Metropolitan Water District of Southern California
San Juan Water District
Placer County Water Agency
San Diego County Water Authority
Liberty Mutual Group and Golden Eagle
Support if Amended:
California Chapters of the Institute of Scrap Recycling Industries
Opposition:
None on file as of June 20, 2012
Consultant:G. V. Ayers