I may be wrong (a common thing) but I believe California declares any bullet with anything other than lead or copper anywhere in its construction is "armor piercing".
CA's law actually specifies intent:
"Armor-Piercing Bullets
It is unlawful for any person to manufacture, sell, or knowingly possess or transport handgun
ammunition designed primarily to penetrate metal or armor. (Penal Code §§ 12320, 12321.)
Handgun ammunition means ammunition principally for use in pistols, revolvers, and other
firearms capable of being concealed upon the person, as defined in subdivision (a) of section 12001,
notwithstanding that the ammunition may also be used in some rifles. (Penal Code § 12323(a).)
Handgun ammunition designed primarily to penetrate metal or armor means any ammunition,
except a shotgun shell or ammunition primarily designed for use in rifles, that is designed primarily
to penetrate a body vest or body shield. (Penal Code § 12323(b).)
Body vest or shield means any bullet-resistant material intended to provide ballistic and trauma
protection for the wearer or holder. (Penal Code § 12323(c).)
Exceptions
The prohibition against possessing, manufacturing, etc., armor piercing ammunition does
not apply to the following (Penal Code § 12322):
• Specified members of the military while on duty and engaged within the scope of
their duties.
• Any police agency or forensic laboratory.
• Persons who hold valid permits issued pursuant to Penal Code section 12305.
• The possession of handgun ammunition designed primarily to penetrate metal or
armor by a person who found the ammunition, if he or she is not prohibited from
possessing firearms or ammunition pursuant to section 12021, 12021.1 or paragraph
(1) of subdivision (b) of section 12316 of this code or section 8100 or 8103 of the
Welfare and Institutions Code and is transporting the ammunition to a law
enforcement agency for disposition according to law."
So, since .223 Remington/5.56 NATO is "primarily designed for use in a shotgun or rifle," it doesn't apply. But you can be sure that if the BATFE pulls off this fiasco, then the state DOJ here in the PRK will be sure to back them up to the hilt.