BILL ANALYSIS Ó
AB 1858
Page 1
ASSEMBLY THIRD READING
AB
1858 (Santiago)
As Amended May 27, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Transportation |16-0 |Frazier, Linder, | |
| | |Baker, Bloom, Brown, | |
| | |Chu, Daly, Dodd, | |
| | |Eduardo Garcia, | |
| | |Gomez, Kim, Mathis, | |
| | |Medina, Melendez, | |
| | |Nazarian, O'Donnell | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood | |
| | | | |
AB 1858
Page 2
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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), and directs the task force to investigate and
report to the Legislature by March 1, 2018, on the occurrences
of unlicensed automobile dismantling in violation of existing
law, including resulting tax evasion and environmental damage.
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 certain BOE, CalEPA, and Franchise Tax Board
(FTB) identification numbers and other specific environmental
and taxation-related information as part of the application,
if the applicant is required by other provisions of law to
have those specific permits, numbers, or plans:
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.
AB 1858
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5)Establishes a number of task forces for a variety of purposes.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)The DMV indicates it would redirect three
investigative/supervisory staff to prepare and execute cases,
receive training, oversee the task force, and report to the
Legislature. BOE and CalEPA would similarly redirect existing
investigative staff.
2)To the extent the task force reduces unlicensed dismantler
activity, there would be increased state and local tax
revenues.
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
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.
AB 1858
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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 five
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
protections, lack of [Americans with Disabilities Act]ADA
compliance an[d] 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.
AB 1858
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Please see the policy committee analysis for full discussion of
this bill.
Analysis Prepared by:
Justin Behrens / TRANS. / (916) 319-2093 FN:
0003185