BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1858 (Santiago) - Automobile dismantling:  task force
          
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          |Version: August 1, 2016         |Policy Vote: T. & H. 10 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 1858 would require the Department of Motor Vehicles  
          (DMV) to collaborate with specified state entities until January  
          1, 2020 to review and coordinate enforcement and compliance  
          activity related to unlicensed, unregulated, and underground  
          automobile dismantling activities.  The bill would require a  
          report to the Legislature on those activities and any  
          recommendations by January 1, 2019.


          Fiscal  
          Impact:  
           DMV costs of $390,000 in 2017-18 and 2018-19, and $195,000 in  
            2019-20, and 3 PY of investigator staff to prepare and execute  
            cases and collaborate with other specified departments.   
            (Motor Vehicle Account).

           Additional one-time DMV costs of approximately $85,000 for  
            investigator staff training and equipment and to establish an  
            advertised telephone hotline for soliciting referrals from the  







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            public on unlicensed activity.  There could be additional  
            ongoing costs related to the hotline, depending on call  
            volumes.  (Motor Vehicle Account)

           Potential staffing costs for the Board of Equalization (BOE),  
            the California Environmental Protection Agency (CalEPA), the  
            Department of Toxic Substances Control (DTSC), the State Water  
            Resources Control Board (SWRCB), the Department of Resources  
            Recycling and Recovery (CalRecycle), and the California Air  
            Resources Board (CARB) to provide enforcement and resources  
            for the investigation and reporting of illegal auto  
            dismantling activities.  Depending on current enforcement  
            levels, this bill could impose costs ranging from absorbable  
            up to $150,000 annually per affected state entity until 2020.   
            For instance, BOE, CalEPA, and SWRCB all indicate absorbable  
            costs, while CARB estimates the need for an additional PY of  
            staff at a cost of $154,000.


          Background:  An automobile dismantler must hold a valid license from DMV in  
          order to legally conduct business.  An applicant must provide  
          DMV with information relating to his or her "character, honesty,  
          integrity, and reputation, as the department may consider  
          necessary,"  in addition to certain identification numbers  
          related to the BOE, CalEPA, and Franchise Tax Board, as well as  
          indication of whether stormwater and other specified permits are  
          required and have been acquired.
          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 must be consistent with the requirements  
          imposed by the environmental permits a dismantler is required to  
          obtain prior to licensure with the DMV.


          The auto dismantling industry has experienced a decline in  
          licensed activity over the past decade, part of which could be  
          attributable to an increase in unlicensed dismantling  
          activities.  Unlicensed activities can have negative  
          environmental and public health impacts, and may include illegal  
          dumping and disposal of hazardous materials, regulatory fee and  
          tax avoidance, violations of vehicle export laws, and  
          trafficking in stolen property.








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          Proposed Law:  
            AB 1858 would require DMV to collaborate with BOE, CalEPA,  
          DTSC, SWRCB, CalRecycle, and CARB until January 1, 2020 to  
          review and coordinate enforcement and compliance activity  
          related to unlicensed, unregulated, and underground automobile  
          dismantling activities.  Specifically, this bill would:
           Require the collaborating state entities to provide  
            enforcement and necessary resources to DMV for the  
            investigation and reporting of unregulated activities.
           Authorize DMV, with the partner entities, to collaborate and  
            solicit information from other federal, state, and local  
            enforcement agencies with jurisdiction over illegal automobile  
            dismantlers.
           Require DMV, in consultation with the partner entities, to  
            establish a public outreach effort for soliciting referrals  
            from the public, including an advertised telephone hotline  
            lead, referral form, and other methods to identify and report  
            unlicensed activity.
           Require DMV, on or before January 1, 2019 and in collaboration  
            with the partner entities, to submit a report to the  
            Legislature that includes the following:
               o      The number of unlicensed dismantlers investigated  
                 and the number of investigations resulting in an  
                 administrative or civil enforcement action, or criminal  
                 prosecution.
               o      Any identified statutory or regulatory gaps for  
                 investigating and prosecuting unlicensed dismantlers.
               o      Information on how vehicles are acquired by  
                 unlicensed dismantlers, and the places and types of  
                 facilities where unlicensed activities occur.
               o      A summary of the barriers to adequate and efficient  
                 enforcement of environmental, tax, and licensing statutes  
                 and regulations against unlicensed dismantlers.
               o      Proposed strategies for bringing unlicensed  
                 dismantlers into compliance through assistance,  
                 education, training, or other identified methods.
               o      Recommendations for modifying, eliminating, or  
                 continuing the coordinated enforcement and compliance  
                 activities specified in this bill.
               o       Recommendations for any statutory or regulatory  
                 changes needed to enhance enforcement against unlicensed  
                 dismantlers.








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           Sunset the provisions of the bill on January 1, 2020. 




          Staff  
          Comments:  The author and sponsors estimate that as many as 30  
          percent of the end-of-life vehicles are being processed through  
          unlicensed and unregulated automobile dismantlers.  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.  This bill  
          is intended to enhance compliance through multi-agency  
          collaboration of efforts to investigate, enforce, and report on  
          unlicensed activities.


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