BILL ANALYSIS �
-----------------------------------------------------------------------
|Hearing Date:June 11, 2012 |Bill No:AB |
| |2003 |
-----------------------------------------------------------------------
SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 2003Author:Torres
As Introduced: February 23, 2012 Fiscal:No
SUBJECT: Junk dealers and recyclers: nonferrous materials payment.
SUMMARY: Requires junk dealers and recyclers to provide payment to
sellers of nonferrous material by mailed check only , as specified.
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)Junk dealers and recyclers must keep a written record of all junk
sales and purchases for at least two years. The written record must
include: (BPC � 21606)
a) The place and date of the transaction.
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 statement, verified by signature, indicating that the seller
AB 2003
Page 2
owns or is authorized to sell the junk.
3)Makes it a misdemeanor to make a false or fictitious statement in
the written record.
(BPC � 21606 (b))
4)Requires the written information to be reported to the chief of
police or sheriff, as specified. (BPC � 21606 (c))
5)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.
6)Makes an exemption from the requirement to pay by cash or check
mailed or collected on the third business day after the sale, if
during the prior three months, the dealer completes five or more
transactions a month (on separate days) with the seller. (BPC �
21608.5 (b))
7)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))
AB 2003
Page 3
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.
8)Provides an exemption from the payment restrictions and the
requirement to collect identification information (described in 5, 6
and 7, above) when the nonferrous material's value does not exceed
$20 in a single transaction, when the primary purpose is to redeem
beverage containers.
This bill: Requires junk dealers and recyclers to provide payment to
sellers of nonferrous material by mailed check only, as specified.
FISCAL EFFECT: None. This bill has been keyed "non-fiscal" by
Legislative Counsel.
COMMENTS:
1. Purpose. This bill is sponsored by the Author in order to assist
law enforcement in catching copper thieves by requiring recyclers
to issue check payments for metal recycling. Regarding the need
for the bill, the Author states that the current law is not strong
enough to serve as a deterrent to metal thieves seeking a quick
payday for stolen metals. The Author contends that metal bandits
can easily exchange their stolen bounty for quick cash, and
believes that this bill will deter illegitimate metal recyclers
seeking to turn stolen metal into a quick windfall by requiring
check only payments.
The Author further states:
"The copper crime wave continues to be a problem not only in
California, but across the nation. According to a report from
the National Insurance Crime Bureau (NICB), thefts of copper and
other metals have increased 81 percent, driven by rising prices
for the stolen recyclables. A total of 25,083 theft claims of
copper, bronze, brass and aluminum were submitted in the three
years ending Dec. 31, 2011. Ninety-six percent of the thefts
were copper. California ranks 4th in the nation generating the
most metal theft insurance claims totaling 1,348. The theft of
AB 2003
Page 4
metal from homes, utilities and public areas has negative
effects on families, public safety, business and agriculture and
is costing businesses and taxpayers millions of dollars.
The Author further cites the following recent incidents of metal
theft:
In May, 2012 metal thieves left Marshal Middle School in
Pomona in the dark after stripping the school of electrical
wires.
In the City of Chino recently, metal thieves removed 26
air conditioning units from mall rooftops, banks, a school and
churches causing several thousands of dollars in damages.
At a Southern California Edison substation in San
Bernardino a man was found on fire and severely shocked. Up to
14,000 Edison customers lost power. The man later died from
his injuries. Tools were recovered at the scene. The police
suspect the man was trying to steal wire from the substation.
1.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
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
AB 2003
Page 5
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. Resident Deputy
Sheriff Jim Currie of the Solano County Sheriff's Office reported
that incidents of metal theft seem to be picking up in Rio Vista:
"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."
It appears that the 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.Related Legislation:
AB 2003
Page 6
AB 1508 (Carter, 2012) revises the exemption on the sale of
nonferrous materials with a value under $20 from certain payment
restrictions by requiring the majority of the transaction be for the
redemption of beverage containers and prohibiting the redemption of
materials made of copper or copper alloys, as specified. This bill
is awaiting hearing in this Committee.
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 awaiting hearing 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 has been referred
to Senate Public Safety Committee for hearing.
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 Business,
Professions and Consumer Protection Committee for hearing.
SB 1405 (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 has been referred to the
Assembly Judiciary Committee for hearing.
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
specified.
AB 1778 (Ma, Chapter 733, Statutes of 2009) required recyclers to
AB 2003
Page 7
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. California Farm Bureau Federation (Farm
Bureau) writes in support and states that "California farmers and
ranchers lose millions of dollars annually to metal theft and the
damage it causes. For that reason Farm Bureau sponsored
legislation in 2008 to give law enforcement additional tools to
combat metal theft. Unfortunately, this legislation (AB 844 of
2008) included a few loopholes that limited its effectiveness. AB
2003 (Torres) eliminates cash payments, which was the original
intent of AB 844. Many drug addicts steal metal to obtain quick
cash to feed their habit. Requiring payments to be made by check
will help to address this issue."
Southern California Edison (SCE) writes in support that theft of
AB 2003
Page 8
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, including payment by check only,
will help prevent such crimes.
The California Association of Sanitation Agencies (CASA) writes in
support of elimination the "cash option" states that CASA member
agencies have been targeted numerous times by thieves who break
into facilities to steal valuable materials in order to sell them
to junk dealers and recyclers. CASA states that a member agency
reported in one instance, that a group of thieves stole buried
electrical conduits from a pump station on two consecutive nights.
The agency was forced to use a generator to power the facility.
Another member agency reported having manhole covers and backflow
devices stolen (most likely for scrap) resulting in huge water
losses and damage to the surrounding area until the water could be
shut off. CASA believes the bill will eliminate a loophole in the
law that allows bad actors to sell stolen scrap metal to junk
dealers and recyclers without any accountability.
The Pomona City Counsel states the that City of Pomona has incurred
significant costs for the replacement and/or repair of City assets
including utility covers, electrical wiring, valve assemblies and
even ball field bleachers that were stolen for their scrap value.
Pomona believes the bill would assist law enforcement by improving
the ability to track payments made to recyclers of metal materials.
The Los Angeles County District Attorney's Office , argues the bill
will help combat metal theft by eliminating a thief's ability to
turn stolen metal into quick cash by requiring payment by check,
and help track payments from metal recyclers by requiring payment
by check.
Pacific Gas and Electric Company (PG&E) states that while the purchase
price and operational costs to replace stolen wire is many times
that of the scrap values, the danger to the public is significant.
Reliability and public safety have been jeopardized when someone
attempts to steal power equipment. Lives are placed in danger due
to the loss of power, including: hospitals, 911 phone systems,
traffic signals and railroad crossing controls.
Eastern Municipal Water District (EWMD) indicates that it has spent
over $200,000 in the last year for the repair and replacement of
items lost to of metal theft. EWMD indicates that damage from such
AB 2003
Page 9
thefts results in hundreds or thousands of dollars in damage, while
the thieves only receive a minimal amount in exchange for the
materials sold for recycling.
2.Arguments in Opposition. The Institute of Scrap Recycling Industries
(ISRI) argues that the bill would undo an important provision of
California's metal theft statute. Specifically, it would eliminate
the ability of customers to return to a recycler to receive payment
by check or cash after waiting for three business days since the
transaction took place. Current law states that payment may not be
made for a period of three days. The ISRI argues that the rationale
for the three day waiting period is to provide law enforcement
plenty of time to determine if an item has been stolen or not.
Also, there are many customers who do not have checking accounts and
without being able to receive payment by cash this proposed change
in law would subject them to the enormous check cashing fees
administered by banks and check cashing companies. The ISRI argues
that the manner of payment was thoroughly discussed with all
stakeholders when drafting the current metal theft laws.
The ISRI notes that when AB 844 (Berryhill) became law in 2008, it did
so as a result of long hours of discussion and negotiation by all
the stakeholders, including the recycling industry. It set forth
one of the most comprehensive statutory structures in the nation to
help prevent the theft of nonferrous recyclable material within the
state, and did so without making the business of nonferrous metal
recycling so restricted as to eliminate it as a business altogether.
The ISRI states: "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."
SUPPORT AND OPPOSITION:
Support:
Association of California Insurance Companies
AT&T
California Association of Sanitation Agencies
California District Attorneys Association
California Farm Bureau Federation
Eastern Municipal Water District
Los Angeles County District Attorney's Office
AB 2003
Page 10
Nationwide
Pacific Gas and Electric Company
Pomona City Counsel
Southern California Edison
Verizon
Opposition:
Institute of Scrap Recycling Industries
Consultant:G. V. Ayers