BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1858 (Santiago) - Automobile dismantling: task force ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 1, 2016 |Policy Vote: T. & H. 10 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- 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 AB 1858 (Santiago) Page 1 of ? 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. AB 1858 (Santiago) Page 2 of ? 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. AB 1858 (Santiago) Page 3 of ? 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. -- END --