Unlicensed auto dismantlers are hiding in plain sight

Automobiles in a wrecking yard awaiting dismantling. (Photo: 1Roman Makedonsky, via Shutterrstock)

Imagine a business that is unregulated and not held accountable for the improper handling of hazardous materials and fluids that make their way into our drinking water and the waterways that support our wildlife. Then consider that these cash-only businesses fail to provide their employees with a safe working environment or fair wages, accept stolen goods and do not pay taxes.

Such businesses do not operate in the shadows like chop shops. They can be found almost anywhere in California, in most business directories and frequently in underserved communities.

By all accounts this underground economy could be twice as big as anyone can imagine.

Today, there are over 28 million registered vehicles in California and approximately 1.2 million are disposed of annually when they get old or damaged beyond repair. However, each year over 30% or 360,000 vehicles simply disappear into California’s underground economy of unlicensed auto dismantlers.

The size and extent of this underground market is simply astonishing, and so are the consequences. The revenue lost to those who operate licensed businesses is estimated at $1.5 billion dollars annually and of that loss, over $100 million in tax revenue is lost to local government. For California’s auto dismantling industry, it is putting far too many of them out of business. In 2000, there were 1,552 licensed dismantlers in California.  Today, the number has declined 39% to 951, even as the number of vehicles has increased in a state that has the most vehicles in the country. 

Given this reality, the California Department of Motor Vehicles (DMV) established the first in the nation multi-agency strike team to combat this growing epidemic.  Since 2017 the DMV successfully raided 824 unlicensed operations before its “Unlicensed Auto Dismantling Industry Strike Team” (VDIST) program expired on December 30, 2019.

By all accounts this underground economy could be twice as big as anyone can imagine. So, it is with good fortune that Assemblymember Miguel Santiago (D– Los Angeles) has introduced Assembly Bill 238, legislation that extends the strike team, given its impact on the environment and public health risks to people of all races, color, national origin, income status and location. 

Santiago’s view that this is a matter of environmental justice is shared by a large and diverse group of stakeholders, including environmentalists, employers, local government, labor, law enforcement and social justice organizations.

We are hopeful that Governor Gavin Newsom agrees, given his goal of having 1.5 million electric vehicles on the road by 2025. As these electric cars reach the end of life, this Administration needs a strong, vibrant and regulated industry in place to safely process hazardous batteries and car parts. Otherwise this toxic problem will become a crisis as the underground economy of unlicensed auto dismantlers grows larger than the small businesses who play by the rules and remain committed to safeguarding the public and our environment.

Ed’s Note:
Sean Bothwell is the executive director of the California Coastkeeper Alliance. Gary Umphenou is president of the State of California Auto Dismantlers Association.

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