CASE STUDY
State Association at Work ... with the Law SCADA works with the Unlicensed Automobile Dismantling Task Force to shut down illegal operators.
C
alifornia legislature’s Bill AB-238 extends the sunset for three years on the Unlicensed Automobile Dismantling Task Force established in 2016 by AB-1858 (Santiago).
AB-1858 required the establishment of a multi-agency task force to review and coordinate enforcement and compliance activity related to unlicensed and unregulated automobile dismantling, including resulting environmental and public health impacts, tax evasion that is occurring as a result of this activity, and the lack of enforcement. The task force, since named Vehicle Dismantler Industry Strike Team (VDIST), is compromised of the Department of Motor Vehicles, the California Environmental Protection Agency, the State Water Resources Control Board, the Department of Toxic Substances Control, the Department of Resources Recycling and Recovery, the California Air Resources Board and the Department of Tax and Fee Administration.
Background Auto dismantlers are small businesses that are
occupationally licensed by the Department of Motor Vehicles to properly process End-Of-Life-Vehicles (ELVs). These processes include, but are not limited to, removing and properly recycling or disposing of unused gasoline, brake fluid, engine oil, transmission fluid, catalytic converters, antifreeze, tires, mercury switches, lead acid batteries and freon. They are also required to document and complete DMV paperwork and remit required taxes to the state. Auto dismantlers are regulated by over a dozen local, state and federal environmental, worker safety, tax and public safety agencies. Upon completion of the environmental and DMV processes and requirements, the auto dismantler removes any reusable parts and sells them as a cost-effective option to auto body and repair shops and to the general public. Unsold parts and the rest of the vehicle are then properly recycled and disposed of following strict environmental and DMV guidelines and regulations.
The Problem The underground economy in California continues to
be a huge dilemma facing the auto recycling industry. It is estimated that at least 30 percent of all end-of-life vehicles are being processed through a thriving underground economy of unlicensed and unregulated auto dismantlers. These mostly cash-only businesses do not face the same DMV licensing requirements, environmental regulatory requirements, insurance obligations, work place safety requirements and tax
Automotive Recycling
payment liability as required by law for licensed dismantlers. The result is these bad actors enjoy a sizeable competitive advantage over the good actors when purchasing vehicles at salvage pools, insurance auctions and from the public. The consequences of the these circumstances and limited
enforcement activity has led to a growing lack of compliance with DMV dealer and dismantler laws, illegal dumping and disposal of vehicles, lack of compliance with storm water permitting requirements, 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 ADA compliance and violations of advertising laws. Many of these violations and associated harm are occurring in California’s most vulnerable and under- served communities.
By the Numbers Of the 28 million registered vehicles in California, approxi-
mately 1.2 million are disposed of annually. These can be vehicles that get old and worn out, break down and aren’t worth fixing, or vehicles that are damaged beyond economical repair. The 30% of vehicles that disappear into the underground
economy and are not accounted for totals approximately 360,000 vehicles each year. Based on known revenue generated from the licensed dismantling industry, the annual lost revenue to the underground economy is estimated at $1.5 billion dollars annually. Of that lost revenue, $100 million is sales tax that goes uncollected.
March-April 2019 // 53
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