Usually that's because they contain a steel core and damage their targets or target holders worse than lead.
Unfortunately, sometimes ammo is lead core with a steel jacket and will stick to a magnet.
Also, the steel in normal steel core ammo isn't hardened steel or "armor piercing". I've read many cases where rangemasters have used the excuse that they don't allow AP rounds, even though that's not the case.
As for steel making sparks. There are some rocks, such as flint, that will spark when struck with steel. So in the highly flammable state of Kalifornia, I can understand that stance.