Existing law authorizes a licensing authority of a city, county, or city and county to issue a license to sell firearms at retail within their respective jurisdictions, to a person who meets certain eligibility requirements including the possession of a valid federal firearms license and a certificate of eligibility issued by the state Department of Justice. Existing law prescribes certain requirements for these licensees regarding the display of the license, the display of firearms, the posting of certain notices and warnings, the storage of inventory, the sales of firearms, and other related requirements. Existing law authorizes the Department of Justice or local licensing authorities to inspect the place of business of a licensee and provides grounds for forfeiture of a license.

This bill would authorize the Department of Justice or local authorities to impose a civil fine for a violation of certain firearms licensing requirements committed by a licensed firearms dealer, and an increased fine and suspension or revocation of the license for subsequent violations within a specified time period. dealer.

Existing law authorizes a licensing authority of a city, county, or city and county to issue a license to sell firearms at retail within their respective jurisdictions, to a person who meets certain eligibility requirements including the possession of a valid federal firearms license and a certificate of eligibility issued by the state Department of Justice. Existing law prescribes certain requirements for these licensees regarding the display of the license, the display of firearms, the posting of certain notices and warnings, the storage of inventory, the sales of firearms, and other related requirements. Existing law authorizes the Department of Justice or local licensing authorities to inspect the place of business of a licensee and provides grounds for forfeiture of a license.

This bill would authorize the Department of Justice or local authorities to impose a civil fine for a violation of certain firearms licensing requirements committed by a licensed firearms dealer, and an increased fine and suspension or revocation of the license for subsequent violations within a specified time period.

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 736 (Gipson) - Firearms: dealer licensing

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 736 would allow the Department of Justice (DOJ) or local authorities, as specified, to impose a civil fine for a violation of certain firearms licensing requirements committed by a licensed firearms dealer.

Fiscal Impact:

• The Department of Justice anticipates annual ongoing costs of $248,000 (special fund*) to retain one Associate Governmental Program Analyst and one retired annuitant Deputy Attorney General IV to handle all administrative hearings and appeals statewide pertaining to this bill.

The potential workload associated with this bill is unknown due to the uncertain number of violations that would be discovered, how many of those violations would be cited with a civil penalty or lead to a license removal, how many instances would require a court action, and if actions are appealed. Costs would be offset to a degree by the award and collection of civil fines.

• Unknown costs to the court to adjudicate actions brought to impose civil fines or remove licenses from firearms dealers.

*Dealers’ Record of Sales Account

Background:

Under existing law, a city or county is authorized to issue a license to sell firearms within their respective jurisdictions to a person who meets certain eligibility requirements including the possession of a valid federal firearms license and a certificate of eligibility issued by DOJ. Existing law prescribes certain requirements for these licensees regarding the display of the license, the display of firearms, the posting of certain notices and warnings, the storage of inventory, the sales of firearms, and other related requirements. The Department of Justice or local licensing authorities may inspect the place of business of a licensee for compliance and provides grounds for forfeiture of a license.

Proposed Law:

This bill would provide that in addition to, or in lieu of, the removal of a dealer from the centralized licensee list or the forfeiture of the license, DOJ or the licensing authority is allowed to impose a civil fine on a dealer under the following circumstances:

• The dealer has received notification from DOJ or the local authority regarding a violation of specified provisions of law and has failed to take corrective action as required within the time specified in the notice.
• The dealer has knowingly or with gross negligence violated specified provisions of law.

The Attorney General, a district attorney, or a city attorney may bring a court action to impose the fine or any other authority granted by this measure.

This bill would provide for the imposition of graduated fines as follows:

• A civil fine of $500 for the first violation.
• A civil fine of $1,000 for a second violation occurring within five years of a previous violation for which a fine was imposed.
• A civil fine of $5,000 for a third or subsequent violation occurring within five years of a previous violation for which a fine was imposed.

Prior Legislation:

AB 2459 (McCarty, 2016) would have, among other things, allowed DOJ to impose civil fines substantially similar to this bill on firearm retailers, as specified. AB 2459 failed passage in the Assembly Committee on Privacy and Consumer Protection.

Recommended Amendments: The civil fine that DOJ and local authorities are allowed to impose pursuant to subdivision (a) of Penal Code section 26723 created by this bill implies that the fine could be imposed administratively. Subdivision (b)(4) of that section allows for the specified attorneys to bring an action in court to impose the civil fine. There appears to be some ambiguity in the language as to if the civil fine is to be imposed by the court or if it could be done administratively. The author may wish to address this ambiguity, along with specifying where the fine should be deposited if it could be imposed administratively.

-- END --

SENATE COMMITTEE ON PUBLIC SAFETY

Senator Nancy Skinner, Chair

2017 - 2018 Regular

Bill No: AB 736 Hearing Date: July 11, 2017

Subject: Firearms: Dealer Licensing

HISTORY

Source: Law Center to Prevent Gun Violence

Prior Legislation: AB 2459 (McCarty), 2016, failed Assembly Privacy Committee

Support: California Chapters of the Brady Campaign to Prevent Gun Violence

Opposition: Firearms Policy Coalition; Gun Owners of California; National Shooting Sports Foundation

Assembly Floor Vote: 49 - 29

PURPOSE

The purpose of this bill is to impose graduated civil fines on firearms dealers for violations of specified firearms business regulations.

Existing law specifies grounds for forfeiture of a license to sell firearms. Provides for forfeiture of a license for violations of the following provisions related to the sale of firearms: (Pen. Code, § 26800.)

• Rules related to the location of a licensee's business, types of firearms, and acceptance of delivery;
• Regulations related to the display of the license;
• Requirements for the delivery of a firearm by a dealer;
• Rules related to the display of handguns, imitations handguns, and where advertisements are prohibited;
• Rules related to the prompt processing of firearms transactions;
• Regulations regarding the required posting of warnings;
• Rules related to the delivery of firearms and the valid firearm safety certificates;
• Regulations about proof of California residence;
• Requirement that recipients are required to perform safe handling;
• Requirement to offer a firearm pamphlet;
• Prohibition of collusion by a licensee;
• Rule regarding the posting of charges and fees;
• Prohibition against misstatement of government fees; and
• Rules about inventory and reports of loss or theft.

This bill provides that in addition to, or in lieu of, the removal of a firearms dealer from the list of licensed persons or the forfeiture of a firearms dealer license, the California Department of Justice (DOJ), or the licensing authority in a jurisdiction that has adopted an inspection program, may impose a civil fine on a dealer under the following circumstances:

• When the dealer has received notification from the department or local authority regarding a violation of specified firearms dealer regulations and has failed to take corrective action as required within the time specified in the notice; and
• The dealer has knowingly or with gross negligence violated a specified firearms dealer regulation.

This bill specifies the amount of the civil fine authorized shall be as follows:

• For a first violation, a civil fine of five hundred dollars ($500);
• For a second violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of one thousand dollars ($1,000); and
• For a third or subsequent violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of five thousand dollars ($5,000).
  

Existing law provides that DOJ may inspect dealers to ensure compliance with specified firearms provisions. (Pen. Code, § 26720, subd. (a).)

Existing law specifies that DOJ may assess an annual fee, not to exceed one hundred fifteen dollars ($115), to cover the reasonable cost of maintaining the list of persons licensed to sell firearms at retail, including the cost of inspections. (Pen. Code, § 26720, subd. (b).)

Existing law states that dealers whose place of business is in a jurisdiction that has adopted an inspection program to ensure compliance with firearms law shall be exempt from that portion of the department's fee that relates to the cost of inspections. The applicant is responsible for providing evidence to the department that the jurisdiction in which the business is located has the inspection program. (Pen. Code, § 26720, subd. (c).)

Existing law states that, in general and subject to exceptions, the business of a firearms licensee shall be conducted only in the buildings designated by the business license: (Pen. Code § 26805, subd. (a).)

Existing law provides an exception that a person licensed, as specified, may take possession of firearms and commence preparation of registers for the sale, delivery, or transfer of firearms at any gun show or event if the gun show or event is not conducted from any motorized or towed vehicle. A person conducting business shall be entitled to conduct business as authorized at any gun show or event in the state, without regard to the jurisdiction within this state that issued the license provided the person complies with all applicable laws, including, but not limited to, the waiting period specified, and all applicable local laws, regulations, and fees, if any; (Pen. Code § 26805, subd. (b)(1).)

Existing law provides an exception for a person licensed as specified may engage in the sale and transfer of firearms other than handguns, at specified events, subject to the prohibitions and restrictions contained in those sections; (Pen. Code § 26805, subd. (c)(1).)

Existing law provides an exception for a person licensed, as specified, who may also accept delivery of firearms other than handguns, outside the building designated in the license, provided the firearm is being donated for the purpose of sale or transfer at an auction or similar event specified; (Pen. Code § 26805, subd. (c)(2).)

Existing law provides that a firearm may be delivered to the purchaser, transferee, or person being loaned the firearm at one of the following places: (Pen. Code § 26805, subd. (d).)

• The building designated in the license;
• The places specified as express exemptions; and
• The place of residence of, the fixed place of business of, or on private property owned or lawfully possessed by, the purchaser, transferee, or person being loaned the firearm.

Existing law provides a person conducting specified firearms business shall publicly display the person's license issued, or a facsimile thereof, at any gun show or event, as specified in this subdivision. (Pen. Code § 26805, subd. (b)(2).)

This bill provides that the Attorney General, a district attorney, or a city attorney may bring an action to impose a civil fine or other action against a firearms retailer.

COMMENTS

1. Need for This Bill

According to the author:

The number of gun dealers in the state has significantly grown in recent years and they are subject to infrequent inspections and oversight. Federal law enforcement inspects gun dealers once per year on average. Because of their access to a huge quantity of weapons, corrupt and negligent gun dealers are a significant source of guns sold on the illegal market. The Department of Justice should have the ability to fine and reprimand gun dealers that are out of compliance with the law without either taking no action, or revoking their license and drive them out of business.

2. Imposition of Fines in Lieu of Forfeiture of Dealer License

This bill proposes new fines related to violations of rules imposed upon licensees. The fines suggested are up to a $500 civil fine for simple violations, and up to $5,000 fines for violations when the licensee previously received written notification from DOJ regarding the breach and failed to take corrective action, or DOJ determines that the licensee committed the breach knowingly or with gross negligence. The grounds for forfeiture include a wide range of conduct, including the following: properly displayed license, proper delivery of a firearm, properly displaying firearms, prompt processing of firearms transactions, posting of warning signs, safety certificate compliance, checking proof of California residence, safe handling demonstrations, offering a firearms pamphlet, and many more.

3. Intermediate Penalties

Under current law DOJ or equivalent agency may only permanently revoke a dealer's license for a violation of regulations placed on firearms dealers for things as simple as posting needed warnings, or as serious as not properly checking for safety certificate compliance. This bill would allow for intermediate sanctions in the form of graduate fines as penalties. These intermediate sanctions would allow for less severe penalties than a permanent revocation of the dealer's license.

4. Limited Resources to Oversee Gun Sales

Law enforcement has limited resources to oversee the more than 2,300 licensee in our state. A 2010 Washington Post report found that, due to limited staffing, the federal Bureau of Alcohol, Tobacco and Firearms (ATF) could only inspect gun dealers once per decade on average. A recent New York Times investigative report, “How They Got Their Guns,” found that, since 2009, 15 mass shootings were committed with legally purchased firearms. A study by ATF found that 60% of legally purchased weapons found at crime scenes came from 1% of gun dealers. Later studies have estimated that 90% of legally purchased guns used in the commission of a crime were from 5% of gun dealers. In 2014, 2,935 Californians were killed by firearms.

5. Argument in Support

According to the California Chapters of the Brady Campaign to Prevent Gun Violence:

AB 736 seeks to provide needed enforcement tools for addressing licensed firearm dealer violations. Under existing law, gun dealers must meet certain requirements regarding the display, sale or storage of firearm, the display of their license and the posting of specified notices and warnings. Currently, the only recourse for violating these requirements is the permanent revocation of a dealer’s license through a lengthy procedure. This all-or-nothing approach is unworkable as license revocation is an extreme measure that is seldom used for lesser violations, but a dealer with significant violations can continue to engage in firearm transactions during the protracted revocation process.

AB 736 will address this problem by providing intermediate and escalating enforcement actions against licensed firearm dealers. Specifically, the bill would enable the Department of Justice, a district attorney, or a city attorney to impose a civil fine of $500 for the first violation, a $1,000 civil fine and a 30-day suspension of license for a second violation within five years, and a $5,000 civil fine and permanent revocation of license for a third or subsequent violation within five years.

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has been grossly underfunded for years and the problem will likely become worse under the Trump administration and current Congress. A Washington Post investigation in 2010 found that, as a result of inadequate staffing, ATF was able to inspect less than 10% of FFL’s in 2009 and, on average, dealers are inspected only once a decade.^[1] In light of this deficiency, California needs more enforcement tools that can be applied in a timely matter. An incremental approach, such as the civil fine and penalty structure outlined in AB 736, provides opportunities for correction, as well as appropriate levels of accountability and consequence.

The California Brady Chapters support our state’s strong gun laws, including the regulations imposed on licensed firearm dealers. We believe these laws have contributed to the steep decline in California’s firearm death rate since 1993. To the extent that better compliance is fostered through incremental, appropriate and certain legal consequences, even more lives may be saved. The California Brady Chapters are pleased to support AB 736 and respectfully ask for your AYE vote.

6. Argument in Opposition

According to the National Shooting Sports Foundation:

Generally, such violations are inadvertent record keeping or operating errors by a retailer or retailer's employee, and there is no intent to commit a violation.

Most California firearms dealers are small businesses that could not withstand the imposition of civil fines for violations, no matter how minor, as proposed in AB 736.

There is legitimate concern that governmental entities seeking revenue could use the provisions of AB 736 to augment their funding. One only needs to review the past abuses of the asset forfeiture laws to understand why allowing the unconstrained imposition of civil fines for violations of licensing provisions, even if very minor, in a matter of substantial concern.

The primary effect of AB 736 would be to harm lawful firearms retailers by decreasing their net revenue, thus making fewer funds available for business operations.

As a result, their businesses would suffer, many could not continue to support the same number of employees, applicable sales and income tax revenue to the state and local governments would be less, and California's reputation of being anti-business would continue to grow.

-- END –

1. Sari Horwitz and James V. Grimaldi, ATF’s Oversight Limited in Face of Gun Lobby, Wash. Post, Oct. 26, 2010, at http://www.washingtonpost.com/wp-dyn/content/article/2010/10/25/AR2010102505823.html?sub=AR. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 736

Author:(Gipson)

As Amended Ver:March 27, 2017

Majority vote

SUMMARY: Imposes graduated civil fines on firearms dealers for violations of specified firearms business regulations. Specifically, this bill:

1. Provides that in addition to, or in lieu of, the removal of a firearms dealer from the list of licensed persons or the forfeiture of a firearms dealer license, the California Department of Justice (DOJ), or the licensing authority in a jurisdiction that has adopted an inspection program, may impose a civil fine on a dealer under the following circumstances:
   1. When the dealer has received notification from the department or local authority regarding a violation of specified firearms dealer regulations and has failed to take corrective action as required within the time specified in the notice; and
   2. The dealer has knowingly or with gross negligence violated a specified firearms dealer regulation.
2. Specifies the amount of the civil fine authorized shall be as follows:
   1. For a first violation, a civil fine of $500;
   2. For a second violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of $1,000; and
   3. For a third or subsequent violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of $5,000.
3. Provides that the Attorney General, a district attorney, or a city attorney may bring an action to impose a civil fine or other action against a firearms retailer.

EXISTING LAW:

1. Specifies grounds for forfeiture of a license to sell firearms. Provides for forfeiture of a license for violations of the following provisions related to the sale of firearms:
   1. Rules related to the location of a licensee's business, types of firearms, and acceptance of delivery;
   2. Regulations related to the display of the license;
   3. Requirements for the delivery of a firearm by a dealer;
   4. Rules related to the display of handguns, imitations handguns, and where advertisements are prohibited;
   5. Rules related to the prompt processing of firearms transactions;
   6. Regulations regarding the required posting of warnings;
   7. Rules related to the delivery of firearms and the valid firearm safety certificates;
   8. Regulations about proof of California residence;
   9. Requirement that recipients are required to perform safe handling;
   10. Requirement to offer a firearm pamphlet;
   11. Prohibition of collusion by a licensee;
   12. Rule regarding the posting of charges and fees;
   13. Prohibition against misstatement of government fees; and
   14. Rules about inventory and reports of loss or theft.
2. Provides that DOJ may inspect dealers to ensure compliance with specified firearms provisions.
3. Specifies that DOJ may assess an annual fee, not to exceed $115, to cover the reasonable cost of maintaining the list of persons licensed to sell firearms at retail, including the cost of inspections.
4. States that dealers whose place of business is in a jurisdiction that has adopted an inspection program to ensure compliance with firearms law shall be exempt from that portion of the department's fee that relates to the cost of inspections. The applicant is responsible for providing evidence to the department that the jurisdiction in which the business is located has the inspection program.

FISCAL EFFECT: According to the Assembly Appropriations Committee, annual ongoing costs in the $250,000 range to DOJ to track violations and to conduct administrative hearings when the violations are challenged.

Potential increase in fines and penalties revenue; the civil fine for the first violation is $500, $1,000 for second violation that occurs within five years of the first violation, $5,000 for the third or subsequent violation that occurs within five years of a previous violation.

COMMENTS: According to the Author, "The number of gun dealers in the state has significantly grown in recent years and they are subject to infrequent inspections and oversight. Federal law enforcement inspects gun dealers once per year on average. Because of their access to a huge quantity of weapons, corrupt and negligent gun dealers are a significant source of guns sold on the illegal market. The Department of Justice should have the ability to fine and reprimand gun dealers that are out of compliance with the law without either taking no action, or revoking their license and drive them out of business."

Analysis Prepared by: Gabriel Caswell / PUB. S. / (916) 319-3744 FN: 0000574

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 736

Author:(Gipson) – As Amended Ver:March 27, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill imposes graduated civil fines on firearms dealers for violations of specified firearms business regulations, in addition to, or in lieu of, the removal of a firearms dealer from the list of licensed persons by the Department of Justice (DOJ).

FISCAL EFFECT:

Annual ongoing costs in the $250,000 range to DOJ to track violations and to conduct administrative hearings when the violations are challenged.

Potential increase in fines and penalties revenue; the civil fine for the first violation is $500, $1,000 for second violation that occurs within five years of the first violation, $5,000 for the third or subsequent violation that occurs within five years of a previous violation.

COMMENTS:

1. Background. Current law provides for forfeiture of a firearms license dealer for violations of the specific provisions/regulations related to the sale of firearms, such as display of the license, posting of charges, inventory reports, etc. The DOJ is authorized to inspect dealers to ensure compliance with specified firearms provisions.

Under current law, DOJ or an equivalent agency may only permanently revoke a dealer's license for a violation of regulations placed on firearms dealers for things as simple as posting needed warnings, or as serious as not properly checking for safety certificate compliance.

1. Purpose. The author believes DOJ should have the ability to fine and reprimand gun dealers that are out of compliance with the law without either taking no action, or revoking their license and drive them out of business.

AB 736 allows for intermediate sanctions in the form of graduate fines as penalties. These intermediate sanctions allow for less severe penalties than a permanent revocation of the dealer's license.

1. Support. The California Chapters of the Brady Campaign to Prevent Gun Violence points out the current all-or-nothing approach is unworkable as license revocation is an extreme measure that is seldom used for lesser violations, but a dealer with significant violations can continue to engage in firearm transactions during the protracted revocation process.
2. Opposition. According to the National Shooting Sports Foundation, "Most California firearms dealers are small businesses that could not withstand the imposition of civil fines for violations, no matter how minor, as proposed in AB 736.”
3. Prior Legislation: AB 2459 (McCarty), of the 2015-2016 Legislative Session, would have imposed duties and responsibilities upon firearms retailers as specified (including civil fines substantially similar to this bill). AB 2459 failed passage in the Assembly Privacy and Consumer Protection Committee.
   

Analysis Prepared by: Pedro Reyes / APPR. / (916) 319-2081

Date of Hearing:

Counsel: Gabriel Caswell

ASSEMBLY COMMITTEE ON PUBLIC SAFETY

Reginald Byron Jones-Sawyer, Sr., Chair

ABPCA Bill Id:AB 736

Author:(Gipson) – As Amended Ver:March 27, 2017

SUMMARY:

Imposes graduated civil fines on firearms dealers for violations of specified firearms business regulations. Specifically, this bill:

1. Provides that in addition to, or in lieu of, the removal of a firearms dealer from the list of licensed persons or the forfeiture of a firearms dealer license, the California Department of Justice (DOJ), or the licensing authority in a jurisdiction that has adopted an inspection program, may impose a civil fine on a dealer under the following circumstances:
   
   1. When the dealer has received notification from the department or local authority regarding a violation of specified firearms dealer regulations and has failed to take corrective action as required within the time specified in the notice; and
      
   2. The dealer has knowingly or with gross negligence violated a specified firearms dealer regulation.
      
2. Specifies the amount of the civil fine authorized shall be as follows:
   
   1. For a first violation, a civil fine of five hundred dollars ($500);
      
   2. For a second violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of one thousand dollars ($1,000); and
      
   3. For a third or subsequent violation that occurs within five years of a previous violation for which a fine was imposed pursuant to this section, a civil fine of five thousand dollars ($5,000).
      
3. Provides that the Attorney General, a district attorney, or a city attorney may bring an action to impose a civil fine or other action against a firearms retailer.

EXISTING LAW:

1. Specifies grounds for forfeiture of a license to sell firearms. Provides for forfeiture of a license for violations of the following provisions related to the sale of firearms: (Pen. Code, § 26800.)
   
   1. Rules related to the location of a licensee's business, types of firearms, and acceptance of delivery;
      
   2. Regulations related to the display of the license;
      
   3. Requirements for the delivery of a firearm by a dealer;
      
   4. Rules related to the display of handguns, imitations handguns, and where advertisements are prohibited;
      
   5. Rules related to the prompt processing of firearms transactions;
      
   6. Regulations regarding the required posting of warnings;
      
   7. Rules related to the delivery of firearms and the valid firearm safety certificates;
      
   8. Regulations about proof of California residence;
      
   9. Requirement that recipients are required to perform safe handling;
      
   10. Requirement to offer a firearm pamphlet;
       
   11. Prohibition of collusion by a licensee;
       
   12. Rule regarding the posting of charges and fees;
       
   13. Prohibition against misstatement of government fees; and
       
   14. Rules about inventory and reports of loss or theft.
       
2. Provides that DOJ may inspect dealers to ensure compliance with specified firearms provisions. (Pen. Code, § 26720, subd. (a).)
   
3. Specifies that DOJ may assess an annual fee, not to exceed one hundred fifteen dollars ($115), to cover the reasonable cost of maintaining the list of persons licensed to sell firearms at retail, including the cost of inspections. (Pen. Code, § 26720, subd. (b).)
   
4. States that dealers whose place of business is in a jurisdiction that has adopted an inspection program to ensure compliance with firearms law shall be exempt from that portion of the department's fee that relates to the cost of inspections. The applicant is responsible for providing evidence to the department that the jurisdiction in which the business is located has the inspection program. (Pen. Code, § 26720, subd. (c).)
   
5. States that, in general and subject to exceptions, the business of a firearms licensee shall be conducted only in the buildings designated by the business license: (Pen. Code § 26805, subd. (a).)
   
   1. Provides an exception that a person licensed, as specified, may take possession of firearms and commence preparation of registers for the sale, delivery, or transfer of firearms at any gun show or event if the gun show or event is not conducted from any motorized or towed vehicle. A person conducting business shall be entitled to conduct business as authorized at any gun show or event in the state, without regard to the jurisdiction within this state that issued the license provided the person complies with all applicable laws, including, but not limited to, the waiting period specified, and all applicable local laws, regulations, and fees, if any; (Pen. Code § 26805, subd. (b)(1).)
      
   2. Provides an exception for a person licensed as specified may engage in the sale and transfer of firearms other than handguns, at specified events, subject to the prohibitions and restrictions contained in those sections; (Pen. Code § 26805, subd. (c)(1).)
   3. Provides an exception for a person licensed, as specified, who may also accept delivery of firearms other than handguns, outside the building designated in the license, provided the firearm is being donated for the purpose of sale or transfer at an auction or similar event specified; (Pen. Code § 26805, subd. (c)(2).)
      
   4. Provides that a firearm may be delivered to the purchaser, transferee, or person being loaned the firearm at one of the following places: (Pen. Code § 26805, subd. (d).)
      
      1. The building designated in the license;
         
      2. The places specified as express exemptions; and
         
      3. The place of residence of, the fixed place of business of, or on private property owned or lawfully possessed by, the purchaser, transferee, or person being loaned the firearm.
6. Provides a person conducting specified firearms business shall publicly display the person's license issued, or a facsimile thereof, at any gun show or event, as specified in this subdivision. (Pen. Code § 26805, subd. (b)(2).)

FISCAL EFFECT:

Unknown

COMMENTS:

1. Author's Statement: According to the author, "The number of gun dealers in the state has significantly grown in recent years and they are subject to infrequent inspections and oversight. Federal law enforcement inspects gun dealers once per year on average. Because of their access to a huge quantity of weapons, corrupt and negligent gun dealers are a significant source of guns sold on the illegal market. The Department of Justice should have the ability to fine and reprimand gun dealers that are out of compliance with the law without either taking no action, or revoking their license and drive them out of business."
   
2. Imposition of Civil Fines for Violations of Rules Related to Failures of a Firearms Dealer to Follow Mandated Regulations: This bill proposes new fines related to violations of rules imposed upon licensees. The fines suggested are up to a $500 civil fine for simple violations, and up to $5,000 fines for violations when the licensee previously received written notification from DOJ regarding the breach and failed to take corrective action, or DOJ determines that the licensee committed the breach knowingly or with gross negligence. The grounds for forfeiture include a wide range of conduct, including the following: properly displayed license, proper delivery of a firearm, properly displaying firearms, prompt processing of firearms transactions, posting of warning signs, safety certificate compliance, checking proof of California residence, safe handling demonstrations, offering a firearms pamphlet, and many more.
3. Intermediate Penalties: Under current law DOJ or equivalent agency may only permanently revoke a dealer's license for a violation of regulations placed on firearms dealers for things as simple as posting needed warnings, or as serious as not properly checking for safety certificate compliance. This bill would allow for intermediate sanctions in the form of graduate fines as penalties. These intermediate sanctions would allow for less severe penalties than a permanent revocation of the dealer's license.
4. Limited Resourced to Oversee Gun Sales: Law enforcement has limited resources to oversee the more than 2,300 licensee in our state. A 2010 Washington Post report found that, due to limited staffing, the federal Bureau of Alcohol, Tobacco and Firearms (ATF) could only inspect gun dealers once per decade on average. A recent New York Times investigative report, “How They Got Their Guns,” found that, since 2009, 15 mass shootings were committed with legally purchased firearms. A study by ATF found that 60% of legally purchased weapons found at crime scenes came from 1% of gun dealers. Later studies have estimated that 90% of legally purchased guns used in the commission of a crime were from 5% of gun dealers. In 2014, 2,935 Californians were killed by firearms.
5. Argument in Support: According to the California Chapters of the Brady Campaign to Prevent Gun Violence, "AB 736 seeks to provide needed enforcement tools for addressing licensed firearm dealer violations. Under existing law, gun dealers must meet certain requirements regarding the display, sale or storage of firearm, the display of their license and the posting of specified notices and warnings. Currently, the only recourse for violating these requirements is the permanent revocation of a dealer’s license through a lengthy procedure. This all-or-nothing approach is unworkable as license revocation is an extreme measure that is seldom used for lesser violations, but a dealer with significant violations can continue to engage in firearm transactions during the protracted revocation process.

"AB 736 will address this problem by providing intermediate and escalating enforcement actions against licensed firearm dealers. Specifically, the bill would enable the Department of Justice, a district attorney, or a city attorney to impose a civil fine of $500 for the first violation, a $1,000 civil fine and a 30-day suspension of license for a second violation within five years, and a $5,000 civil fine and permanent revocation of license for a third or subsequent violation within five years.

"The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has been grossly underfunded for years and the problem will likely become worse under the Trump administration and current Congress. A Washington Post investigation in 2010 found that, as a result of inadequate staffing, ATF was able to inspect less than 10% of FFL’s in 2009 and, on average, dealers are inspected only once a decade.^[1] In light of this deficiency, California needs more enforcement tools that can be applied in a timely matter. An incremental approach, such as the civil fine and penalty structure outlined in AB 736, provides opportunities for correction, as well as appropriate levels of accountability and consequence.

"The California Brady Chapters support our state’s strong gun laws, including the regulations imposed on licensed firearm dealers. We believe these laws have contributed to the steep decline in California’s firearm death rate since 1993. To the extent that better compliance is fostered through incremental, appropriate and certain legal consequences, even more lives may be saved. The California Brady Chapters are pleased to support AB 736 and respectfully ask for your AYE vote."

1. Argument in Opposition: According to the National Shooting Sports Foundation, "Generally, such violations are inadvertent record keeping or operating errors by a retailer or retailer's employee, and there is no intent to commit a violation.

"Most California firearms dealers are small businesses that could not withstand the imposition of civil fines for violations, no matter how minor, as proposed in AB 736.

"There is legitimate concern that governmental entities seeking revenue could use the provisions of AB 736 to augment their funding. One only needs to review the past abuses of the asset forfeiture laws to understand why allowing the unconstrained imposition of civil fines for violations of licensing provisions, even if very minor, in a matter of substantial concern.

"The primary effect of AB 736 would be to harm lawful firearms retailers by decreasing their net revenue, thus making fewer funds available for business operations.

"As a result, their businesses would suffer, many could not continue to support the same number of employees, applicable sales and income tax revenue to the state and local governments would be less, and California's reputation of being anti-business would continue to grow."

1. Prior Legislation: AB 2459 (McCarty) of the 2015-2016 Legislative Session, would have imposed duties and responsibilities upon firearms retailers as specified (including civil fines substantially similar to this bill). AB 2459 failed passage in the Assembly Privacy and Consumer Protection Committee.
   

REGISTERED SUPPORT / OPPOSITION:

Support

Law Center to Prevent Gun Violence (Sponsor)

California Chapters of the Brady Campaign to Prevent Gun Violence

Opposition

Gun Owners of California

National Shooting Sports Foundation

Analysis Prepared by:

Gabriel Caswell / PUB. S. /

1. Sari Horwitz and James V. Grimaldi, ATF’s Oversight Limited in Face of Gun Lobby, Wash. Post, Oct. 26, 2010, at http://www.washingtonpost.com/wp-dyn/content/article/2010/10/25/AR2010102505823.html?sub=AR. ↑