BILL ANALYSIS Ó
AB 1858
Page 1
Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 1858
(Santiago) - As Introduced February 10, 2016
SUBJECT: Automobile dismantling: task force
SUMMARY: Requires the Department of Motor Vehicles (DMV) to
establish an Unlicensed Automobile Dismantling Task Force
comprised of representatives of DMV, the State Board of
Equalization (BOE), and the California Environmental Protection
Agency (CalEPA). Specifically, this bill:
1)Requires DMV to establish an Unlicensed Automobile Dismantling
Task Force comprised of representatives of DMV, BOE, and
CalEPA.
2)Directs the task force to investigate the occurrences of
underground, unlicensed automobile dismantling in violation of
existing law, including resulting tax evasion and
environmental damage.
3)Requires the task force to report to the Legislature by March
1, 2018 on specified information, including:
a) The number of leads or complaints received by the task
AB 1858
Page 2
force;
b) The number of complaints investigated and complaints
that resulted in a civil action or criminal prosecution;
c) Recommendations for modifying, eliminating, or
continuing the task force's activities; and,
d) Recommendations for statutory or regulatory changes, or
both, needed to better allow for enforcement against
unlicensed automobile dismantlers.
1)Establishes a sunset date of January 1, 2019.
EXISTING LAW:
1)Defines an "automobile dismantler," as a person who dismantles
three or more personal vehicles within any 12-month period,
and prohibits any person from acting as an automobile
dismantler without first having procured a license or
temporary permit issued by DMV.
2)Requires an applicant for an auto dismantler's license to
provide DMV with information as to his or her character,
honesty, integrity, and reputation, as DMV may consider
necessary.
3)Requires an applicant for a new license or the renewal of a
license to submit all of the following information as part of
the application, if the applicant is required by other
provisions of law to have the following permits, numbers, or
plans:
AB 1858
Page 3
a) BOE resale permit number;
b) Identification number issued by the CalEPA;
c) A statement indicating that the applicant has either
filed an application for a stormwater permit or is not
required to obtain a stormwater permit;
d) A statement indicating that the applicant has either
filed a hazardous materials business plan or is not
required to file that plan; and,
e) The tax identification number assigned by the Franchise
Tax Board (FTB).
4)Requires the Department of the California Highway Patrol (CHP)
to inspect vehicles previously declared a total loss during
the dismantling process when such vehicles are later presented
to DMV for registration after reconstruction.
5)Establishes a number of task forces for a variety of purposes.
FISCAL EFFECT: Unknown
COMMENTS: Existing law requires an automobile dismantler to
meet certain standards when applying for a license from DMV,
including compliance with a number of environmental and standard
taxation requirements. An automobile dismantler must hold a
valid license from DMV in order to legally conduct business.
Dismantlers process end-of-life vehicles by properly removing,
recycling, or disposing of unused gasoline, and other fluids and
AB 1858
Page 4
chemicals, and ensuring that remaining metal and parts that
cannot be resold are properly recycled. The disposal and
recycling methods are consistent with the requirements imposed
by the environmental permits a dismantler must obtain prior to
being licensed by DMV. Automobile dismantlers are also required
to submit paperwork to DMV related to dismantled vehicles and,
as with other businesses, pay taxes to the state. Other
agencies regulating dismantlers include CHP, which, as part of
CHP's statutory charge to prevent and deter economic automobile
theft, is specifically required to inspect vehicles that have
been written off as a total loss for insurance purposes and
dismantled when those vehicles are later reconstructed and
presented to DMV for registration as revived salvage vehicles.
According to the author, 30% of end-of-life vehicles in
California, or 360,000 vehicles per year, are being acquired and
processed by unlicensed and unregulated dismantlers,
representing nearly 2 million tires and 2 million gallons of
hazardous fluids annually. These transactions occur outside the
existing legal and regulatory framework for automobile
dismantlers, meaning unlicensed dismantlers are not necessarily
complying with the environmental and tax requirements imposed on
licensed dismantlers.
The author contends that the drop in the number of licensed
dismantlers in California from 1,236 to 1,072 in the past 5
years is attributable to the lower costs and ease of
transactions associated with operating as an unlicensed
dismantler. For example, an unlicensed dismantler can offer
vehicle components for sale online, without complying with the
restrictions placed on licensed dismantlers operating out of a
physical storefront. The author states that the consequences of
the operation of unlicensed dismantlers includes "lack of
compliance with DMV dealer and dismantler laws, illegal dumping
and disposal of vehicles, improper hazardous waste handling,
cash-only transactions and employee payments, non-payment of
sales and income taxes, car thefts, violations of worker safety
AB 1858
Page 5
protections, lack of ADA compliance an violations of advertising
laws." The State of California Auto Dismantlers Association
(SCADA), the co-sponsor of this bill, estimates the amount of
sales tax that is uncollected by the state at $100 million
annually.
This bill would direct DMV to establish an Unlicensed Automobile
Dismantling Task Force for the purposes of investigating the
occurrences of underground, unlicensed automobile dismantling in
violation of existing law, including resulting tax evasion and
environmental damage. The author intends to make the issue of
unlicensed dismantling a priority for DMV, BOE, and CalEPA in
order to determine how extensive and harmful the practice truly
is.
Previous legislation: AB 576 (V. Manuel Pérez), Chapter 614,
Statutes of 2013, established a pilot program to create the
"Revenue Recovery and Collaborative Enforcement Team" consisting
of specified agencies to collaborate in combating criminal tax
evasion associated with the underground economy. The Tax
Recovery and Criminal Enforcement Task Force is required to
submit a report to the Legislature by December 1, 2017, on the
number of complaints received by the task force and cases
investigated or prosecuted as a result of task force
collaboration.
AB 805 (Fuentes), Chapter 475, Statues of 2009, required DMV to
investigate and verify all the information submitted on an
application for an automobile dismantler's original or renewal
license.
REGISTERED SUPPORT / OPPOSITION:
AB 1858
Page 6
Support
Honorable Jerome E. Horton, Member, Board of Equalization
(Co-Sponsor)
State of California Auto Dismantler's Association (Co-Sponsor)
Association of Deputy District Attorneys
Association of Los Angeles Deputy Sheriffs
Automotive Recyclers Association
California Association of Code Enforcement Officers
California Association of Environmental Health Administrators
California Auto Dismantlers Recyclers Alliance
California Coastkeeper Alliance
Coalition for Clean Air
LKQ Corporation
Los Angeles Police Protective League
AB 1858
Page 7
Riverside Sheriffs Association
Opposition
None on file
Analysis Prepared by:Justin Behrens / TRANS. / (916) 319-2093