BILL ANALYSIS
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|Hearing Date:April 27, 2009 |Bill No:SB |
| |627 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: SB 627Author:Calderon
As Amended:April 13, 2009Fiscal: Yes
SUBJECT: Vehicles: catalytic converters: junk dealers
SUMMARY: Requires core recyclers and recyclers to comply with
additional recordkeeping and identification procedures and new
payment restrictions when purchasing catalytic converters, as
defined.
Existing law, the Business and Professions Code:
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.
2)Defines "recycler" as any processor, recycling center, or noncertified
recycler, as defined, who buys or sells scrap metal that
constitutes "junk."
3)Requires junk dealers and recyclers to maintain a written record of
each sale or purchase made in the course of his or her business.
The record must include the place and date of the transaction; the
name, driver's license number and state of issue, and the license
plate number and state of issue of any motor vehicle used in
transporting the junk; the name and address of each person to whom
the junk is sold and that person's motor vehicle license number; a
description of the junk purchased or sold; and, a statement
indicating that the seller owns or is authorized to sell the junk.
Specifies that any person who makes or causes to be made any
false or fictitious statement regarding the written record is
guilty of a misdemeanor. Requires the written information to be
reported to the chief of police or sheriff, as specified.
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4)Requires every junk dealer and recycler to preserve the written record
for at least two years.
5)Authorizes the periodic inspection by any officer holding a warrant,
any person appointed by the sheriff or any county or appointed by
the head of the police department of any city, or any officer
holding a court order directing him or her to examine the record
or property.
6)Prohibits payment for nonferrous material unless the junk dealer or
recycler, does the following:
a) Makes payment by 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,
other than a post office box, if the junk dealer or recycler
obtains a copy of 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 sale date.
b) Obtains a clear photograph or video of the seller.
c) Obtains a copy of the valid driver's license of the seller
containing a photograph and address or a copy of a state or
federal government-issued identification card containing a
photograph and address of the seller.
d) Obtains a clear photograph or video of the material being
purchased.
e) Preserves the information for at least two years from the
date of sale.
f) Obtains thumbprint of the seller, as proscribed by the
Department of Justice.
7)Establishes fines and punishments for non-compliance in record keeping
and disclosure requirements:
a) For a first offense, a fine of not less than $1000, or
imprisonment for 30 days, or both fine and imprisonment;
b) For a second offense, a fine of not less than $2000, or
imprisonment for 30 days, or both fine and imprisonment. In
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addition, the court may order the defendant to stop engaging in
the business of a junk dealer or recycler for up to 30 days
c) For a third or subsequent offense, a fine of not less than
$4,000, or imprisonment for six months, or both fine and
imprisonment. In addition, the court shall order the defendant
to stop engaging in the business of a junk dealer or recycler
for not less than one year.
Existing law, the Vehicle Code:
1)Defines "automobile dismantler" as any person not otherwise
expressly excluded, as specified, who is engaged in the business
of buying, selling, or dealing in vehicles required to be
registered under the Vehicle Code, including non-repairable
vehicles, for the purpose of dismantling the vehicles, who buys or
sells the integral parts and component materials of those
vehicles, in whole or in part, or deals in used motor vehicle
parts.
2)Requires persons seeking to operate an automobile dismantler
business to apply for and procure a license or temporary permit
from the Department of Motor Vehicles (DMV). The law authorizes
DMV to refuse to issue, suspend or revoke a license or permit for
violations of the Vehicle Code, as specified.
This bill:
1)Establishes definitions for proposes of the bill:
a) "Core recycler" is a person or business that buys used
individual catalytic converters, transmissions, or other parts
previously removed from a vehicle; and specifies that a person
or business that buys a vehicle containing these parts is not a
core recycler.
b) "Recycler" has the same meaning as set forth in the Business
and Professions Code (see Existing law # 2), above).
2)Requires a recycler or core recycler who accepts a catalytic
converter for recycling to maintain a written record that
contains:
a) The place and date of each sale or purchase.
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b) The name, valid driver's license number and state of issue,
or California-issued identification number, of the seller of
the catalytic converter and the vehicle license number,
including state of issue of a motor vehicle used in
transporting the catalytic converter to the recycler's or core
recycler's place of business.
c) A description of the catalytic converters purchased or sold,
including the item type and quantity, and identification
number, if any.
d) A statement indicating either that the seller is the owner
of the catalytic converter, or the name of the person from whom
he or she has obtained the catalytic converter, including the
business, if applicable, as shown on a signed transfer
document.
3)Requires a recycler or core recycler who sells or ships used
catalytic converters to other recyclers or smelters to retain
information on the sale that includes:
a) Name and address of the buyer, or one receiving the
catalytic converters.
b) Number of catalytic converters being sold or shipped.
c) Amount that paid for the catalytic converters in the
transaction.
d) Date of the transaction.
4)Prohibits payment for a catalytic converter unless the recycler or
core recycler, does the following:
a) Makes payment by check mailed to the seller or collected by
the seller on the third business day after the sale. If the
seller is a business, the check may be mailed to the business
address, or the seller that is a business may receive immediate
payment. The seller may have the check mailed to an
alternative address, other than a post office box, if the
recycler or core recycler obtains a copy of 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 not more than two months prior to the sale date.
b) Obtains a clear photograph or video of the seller.
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c) Obtains a copy of the valid driver's license of the seller
or seller's agent containing a photograph and address or a copy
of a state or federal government-issued identification card
containing a photograph and address of the seller or seller's
agent.
d) Obtains a clear photograph or video of the catalytic
converter.
5) Requires the recycler or core recycler to maintain the
information collected for at least two years, and make it
available for inspection by local law enforcement upon demand.
6) Imposes a misdemeanor (crime) penalty for a person who:
a) Makes or causes to be made a false or fictitious statement
regarding any information required under the bill.
b) Violates the requirements of the bill.
7) Provides that the above requirements do not apply to coin
dealers or automobile dismantlers, as defined under the Vehicle
Code.
8) Specifies that upon conviction, a person who knowingly and
willfully violates the requirements of the bill shall be punished
as follows:
a) For a first conviction, by a fine of $1,000.
b) For a second conviction, by a fine of not less than $2,000.
In addition to the fine, the court may order the defendant to
cease engaging in the business of a recycler or core recycler
for up to 30 days.
c) For a third and subsequent conviction, by a fine of not less
than $4,000. In addition to the fine, the court shall order
the defendant to cease engaging in the business of a recycler
or core recycler for not less than one year.
FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by Legislative
Counsel.
COMMENTS:
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1.Purpose. This bill is sponsored by the Author, who states that
catalytic converters are being stolen from cars and recycled for
the valuable metals inside. Current law does not lay out
requirements for buyers or sellers of used catalytic converters.
Further, recyclers of automotive "systems" (i.e. Core recyclers)
are not specially defined in current law and therefore such
recyclers have not interpreted current law as including them.
The Author states that catalytic converter theft has reached
epidemic proportions. Parking lots and cars left on the street or
in driveways are vandalized by thieves that cut off catalytic
converters. The thieves then take the converters to recyclers as
the metals inside the converters, such as platinum and rhodium,
are valuable and offer high pay from recyclers, according to the
Author.
The Author indicates that this bill seeks to discourage thieves from
this practice by placing several restrictions and requirements on
recyclers who accept catalytic converters for recycling purposes.
The Author states that the bill also defines "core recyclers" who
recycle vehicle systems such as transmissions in order to make
sure that such core recyclers are included in the provisions of
the bill.
2.Background. Newspapers across the country have reported on the
catalytic converter epidemic. People have often had their
catalytic converters removed from their cars repeatedly, and from
their own driveway.
In 2008, the Legislature passed SB 691 (Calderon) and AB 844
(Berryhill) to increase identification requirements for sellers
coming into recyclers with scrap metal. Further, these bills
restricted how payments can be made and increased the penalties
for dishonest recyclers.
This bill follows this same model by adding restrictions and
identification requirements to sellers of catalytic converters.
This measure mandates that all businesses that accept used
catalytic converters for recycling purposes must gather necessary
information from sellers.
3.Prior Legislation. SB 691 (Calderon, Chapter 730, Statutes of
2008) and SB 844 (Berryhill, Chapter 731, Statutes of 2008) are
identical provisions which require junk dealers and recyclers to
comply with additional recordkeeping and identification procedures
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and new payment restrictions when purchasing nonferrous materials,
as defined. These bills were enacted in response to the massive
increase of metal theft in California in recent years. This
measure essentially mirrors those provisions, and likewise
requires:
a) Additional Identification for sellers and a disclosure
of where materials came from.
b) Risk of fines or convictions for recyclers caught
violating this law.
c) Check-only transactions with a 3-day wait for
non-business sellers.
SB 447 (Maldonado, Chapter 732, Statutes of 2008) requires a junk
dealer or recycler to report information about each sale or
purchase of junk to the chief of police of the city or the sheriff
of the county in which the junk dealer or recycler purchased the
junk, in the same manner as required by a secondhand dealer or
coin dealer, as specified.
AB 1778 (Ma, Chapter 733, Statutes of 2008) prohibits a junk
dealer or recycler from providing payment for newspaper valued at
$50 or more or California redemption value (CRV) containers valued
at $100 or more unless certain requirements are met including
payment by check or electronic transfer, and copies of the
seller's identification, which must be retained for two years.
4.Why are Catalytic Converters Being Stolen? Catalytic converters
are devices that reduce pollution-causing emissions. Since 1975,
all vehicles produced in the United States must have a catalytic
converter as part of the exhaust system. Some vehicles may have
more than one catalytic converter. The precious metals inside act
as catalysts; when hot exhaust enters the converter, a chemical
reaction occurs that renders toxic gases, such as carbon monoxide
and hydrocarbons, into less harmful emissions.
Stolen catalytic converters are sold to scrap yards from $50 to
$150, and when the current prices for precious metals are
considered one can easily understand the demand. Rhodium sells
for roughly $9,500 an ounce, while platinum pays at about $2,000.
Meanwhile, victims of catalytic converter theft are left to deal
with the aftermath. There's the hassle of a vehicle that can't be
safely driven, and the impact that has on the victim's life.
There's the high expense of having it towed to a local repair
shop, and replacement of catalytic converters can run anywhere
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from $300 to $3,000, depending on the make and model of the
vehicle.
5.What Thieves Look For. According to insurance company and
industry publications, vehicles that sit higher from the ground,
such as trucks, pick-ups and SUVs, are particularly vulnerable to
catalytic converter theft because thieves can slide underneath
without having to jack up the vehicle to gain access to the
converter. With just a few cuts of a battery-powered saw, the
converter can often be removed in less than a minute.
Thieves typically look for vehicles that are parked for prolonged
periods of time in large lots, such as shopping centers, mass
transit commuter lots or company parking lots. "Corporate fleets
are particularly vulnerable, because thieves can hit multiple
vehicles in a single location," says Mike Ekiss, Associate Vice
President of Farm/Agribusiness and Loss Control for Nationwide
Insurance, "And if that happens, it can shut down a business for
days."
In the City of Riverside, the Police Department indicates that
statistics show that more than 90% of the victim vehicles are
1990s-era model Toyota trucks or SUV's. "Thefts are occurring 24
hours a day on any day of the week. According to reports,
apartment complex parking lots are a popular location for thieves
to seek out victims."
6.Recent News Articles. The Sacramento Bee states that California
Highway Patrol officials report that catalytic converter thefts
are rampant statewide. Although a number of arrests have been
made, thefts continue to increase.
In an article focusing on catalytic converter theft across the
nation, USA Today states that California has become a hot spot,
especially in the Sacramento and San Francisco areas. Thieves
sometimes steal vehicles and abandon them after removing the
converters.
7.Core Recyclers. This bill defines "core recyclers" as a person or
business that buys used, individual catalytic converters,
transmissions, or other parts previously removed from a vehicle;
and specifies that a person or business that buys a vehicle
containing these parts is not a core recycler. Typically in
automotive parts transactions, to ensue that as many parts get
recycled as possible, a core charge may be added to the price of
some parts, then the core charge is refunded to the customer when
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the original part is returned within an allotted timeframe. The
term "core" stands for "cash on receipt of exchange." It usually
refers to the basic elements of a part that can be rebuilt or
recycled. It is common for core charges to be required when
buying brake shoes, or brake pads, break master cylinders,
starters, alternators, transmissions, engine blocks, and other
parts.
The Author's staff indicates that "core recycler" is included in the
bill because there are a number of people that have not
interpreted current law as including them in the provisions which
relate to junk dealers or recyclers, and so they do not follow the
information collection, and payment requirements that are placed
upon recyclers. By defining core recyclers, the Author is seeking
to close another loophole in the current system.
8.Policy Issue : Should these provisions be placed in the Business
and Professions Code? As introduced, the bill would have
prohibited a recycler or junk dealer from accepting a catalytic
converter unless they are also licensed as an automobile
dismantler. Since the laws which license and regulate automobile
dismantlers are located in the Vehicle Code (Division 5, Chapter
3, commencing with Section 11500), as initially drafted, it was
appropriate to cast the bill's provisions within that Code.
However, the April 13, 2009 amendments remove the requirement to
be licensed as an automobile dismantler. The provisions relating
to scrap metal and junk dealers are appropriately located in the
Business and Professions Code. Therefore consistency would
indicate that the bill's current provisions should be recast into
the Business and Professions Code.
Staff recommends that the bill be amended to recast the current
provisions into the Business and Professions Code.
9.Possible Future Amendments. According to the Author's office,
amendments may be made to this bill as it moves through the
legislative process, after it leaves this Committee. Currently,
the Author is waiting on more detailed data from law enforcement
about where stolen catalytic converters are coming from, i.e.
muffler shops, individual thieves, dismantlers, etc. According to
the Author's office, recycler transactions with licensed
automobile dismantlers may be exempted from many of the reporting
requirements in the bill if the data from law enforcement supports
this amendment. I
If this bill is substantially amended, the Committee should reserve
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the right to pull this bill back into Committee for hearing on any
new amendments.
SUPPORT AND OPPOSITION:
Support :
None received as of April 22, 2009
Opposition :
None received as of April 22, 2009
Consultant:G. V. Ayers