HB 118-CATALYTIC COVERTERS: SALE/POSSESSION  3:12:28 PM CHAIR SHAW announced that the next order of business would be HOUSE BILL NO. 118, "An Act relating to the sale and possession of used detached catalytic converters; and establishing the crime of possession, sale, or purchase of a used detached catalytic converter." 3:13:11 PM REPRESENTATIVE DELENA JOHNSON, Alaska State Legislature, prime sponsor, presented HB 118. She paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: Since the beginning of the pandemic, the theft of catalytic converters from vehicles has soared. Auto insurers are publishing warnings as they process millions of dollars in losses. In between the years of 2019 and 2022, the National Insurance Crime Bureau (NICB) had seen a catalytic converter theft spike of over 1,200%. According to the NICB, in 2019, only 3,389 catalytic converter thefts were reported nationwide. In 2020, the reported number spiked to 14,433. In 2021, the number went up to 65,400, and in 2022, the numbers skyrocketed up to 153,000 reported stolen converters. It is important to note that these numbers only come from reported policyholders' claims. These numbers are considered very underreported for two reasons; 1) the amount of people without car insurance who cannot file a claim; and, 2) if a police report was made before the insurance claim, it was officially documented under missing car parts, not specific to catalytic converter theft. Thirty-two states have adopted or amended laws to combat catalytic converter theft, and 11 more states are anticipated to at least introduce legislation to combat thefts, by requiring identifying information for anyone trying to sell used catalytic converters. House Bill 118 gives statutory authority to Alaska law enforcement to charge and prosecute individuals unlawfully possessing used catalytic converters. It also requires businesses and individuals purchasing used catalytic converters to document and maintain information about persons possessing and selling used catalytic converters to said business. 3:15:31 PM SAVAYA BIEBER, Staff, Representative DeLena Johnson, Alaska State Legislature, gave introductory remarks on HB 118, on behalf of Representative Johnson, prime sponsor. She stated that the bill would add statutory language to require scrap metal dealers to register with the Department of Public Safety (DPS) prior to purchasing a used detached catalytic converter. Should the bill pass, scrap metal dealers would be required to maintain a paper or electronic record of transactions that included time, location, and proof of an in-person transaction. Scrap metal dealers would be required to keep record of the registry for five years, she added. Furthermore, dealers would be required to make their records available to law enforcement during regular business hours. 3:17:21 PM CHAIR SHAW opened invited testimony. 3:17:34 PM TREVOR STEFANO, Owner, CSI Protect AK, gave invited testimony on HB 118. He reported that Oregon law enforcement has busted a 14-man multistate crime ring with 54,000 catalytic converters. He expressed the understanding that the lucrative underground market had existed because of a lack of regulations. He shared that CSI Protect AK has etched identifiers into metal catalytic converters, and the marked catalytic converters have been registered into a global database used in over 33 countries. He stated that law enforcement has been given access to the database, thereby allowing stolen converters to be identified and traced back to their owners. He cited Section 4 of the bill and recommended changing the class A misdemeanor to a class C felony, as this would deter bad actors and prevent further "clogging" of the judicial system. Additionally, he suggested including a definition of "mechanic" in the bill, as referenced in Section 5. 3:28:25 PM HOWARD HANDLER, National Insurance Crime and Borough (NICB), gave invited testimony on HB 118. He presented the following prepared remarks [copy included in the committee packet]: The National Insurance Crime Bureau (NICB) is a national, century-old, not-for-profit organization supported by approximately 1,200 property and casualty insurance companies, including many who write business in Alaska. Working hand-in-hand with our member companies and Alaska state and local law enforcement, we help to detect, prevent, and deter insurance crimes, including vehicle theft. Catalytic converter theft has skyrocketed in recent years in part due to the significant rise in the price of various precious metals, including rhodium, platinum, and palladium. All are used in the construction of catalytic converters. Criminals are seizing the opportunity to profit off these increased prices by removing the catalytic converter from vehicles in relatively easy fashion and selling the stolen part on the black market. The component precious metals can be recycled into new products. Nationally, catalytic converter thefts more than quadrupled from 3,389 in 2019 to 14,433 in 2020. Thefts jumped dramatically yet again to over 52,000 in 2021, an increase of 1,215% since 2019. Additionally, installing a replacement catalytic converter can cost thousands of dollars. Because thieves try to remove the converters as quickly as possible, their hastiness often causes higher repair costs due to incidental damage. Moreover, businesses with large vehicle fleets, such as vehicle dealerships or utility companies, are often targeted due to the number of potential marks in a small area. Thefts from commercial carriers can lead to replacement costs in excess of tens of thousands of dollars, and additional lost revenue due to halted operations. House Bill 118 seeks to curb catalytic converter thefts by, among other things: criminalizing possession of a used catalytic converters in certain instances; limiting purchases of used catalytic converters to scrap metal dealers; and imposing certain record keeping requirements on scrap metal dealers. This bill will help deter catalytic converter thefts by discouraging illegal secondary market sales and providing law enforcement with additional records to help investigate cases. Accordingly, we respectfully request your support for HB 118 We thank you for scheduling a hearing and for considering our views as you deliberate the merits of this bill. We strongly encourage you to utilize NICB as a resource and partner in the fight against catalytic converter theft. If you have any questions or need additional information, please contact me at hhandler@nicb.org or 847-544-7083. 3:31:33 PM The committee took a brief at-ease. 3:32:41 PM CHAIR SHAW opened public testimony on HB 118. 3:33:19 PM ARTY FONOP, Owner, Eagle Eye Secure Storage, testified in support of HB 118. He stated that he has been personally affected by catalytic converter theft and shared his experience, noting that the ability to turn the devices into cash has fueled the crime. He explained that scrap dealers do not require proof of ownership from customers, and this is problematic if the converters are stolen. He shared the belief that every vehicle owner in Anchorage would benefit from the passage of HB 118. 3:35:56 PM CHAIR SHAW, after ascertaining that there was no one else who wished to testify, closed public testimony on HB 118. He sought questions from committee members. 3:36:26 PM REPRESENTATIVE STORY directed attention to page 4, line 7 of the bill and asked how DPS's central registry of scrap metal dealers would work. She asked whether an educational component would be needed. 3:37:33 PM MS. BIEBER directed the question to the department. 3:38:19 PM CORNELIUS SIMS, Captain, Alaska State Troopers, Department of Public Safety (DPS), acknowledged the necessity of an educational component for the scrap metal dealers. He suggested that an online registry could be developed, in addition to a paper form option that could be mailed into the department. REPRESENTATIVE STORY sought to confirm that scrap metal dealers would be statutorily required to keep a separate registry. PAM HALLORAN, Director, Division of Administrative Services, Department of Public Safety, referred to the fiscal note, which indicated that DPS would need to develop and implement an application to develop a central registry for persons engaged in the business of purchasing the converters. She shared her understanding that law enforcement would engage with people purchasing the converters while the department would build and develop the registry. 3:40:45 PM CAPTAIN SIMS, in response to Representative Story, confirmed that law enforcement would develop a registry separate from that of the scrap metal dealers. CHAIR SHAW requested an explanation of the fiscal note. MS. HALLORAN reported that the fiscal note reflected an amount of $141,700 in 2024 and $123,300 in 2025, and this would be to create a criminal justice specialist position, who would develop and maintain the new database. REPRESENTATIVE STORY asked whether there would be a registration fee. MS. HALLORAN responded that the fees have not been discussed. REPRESENTATIVE STORY asked why the bill stipulated a five-year timeframe for record retention. MS. HALLORAN offered to follow up with the requested information. 3:43:38 PM REPRESENTATIVE CARPENTER referred to the exclusions in Section 5, subsection (c)(2) of the bill. He asked what "documentation" referred to and whether a receipt and registration for the vehicle from which the catalytic converter came from would suffice. MS. HALLORAN deferred to Captain Sims. 3:44:47 PM CAPTAIN SIMS expressed uncertainty. He shared his understanding that a used catalytic converter would not be added to the registry if the person turning it in for profit provided proof of ownership. REPRESENTATIVE STORY expressed her concern about criminalizing the possession of a detached catalytic converter. 3:47:45 PM REPRESENTATIVE CARPENTER asked how the ownership of a catalytic converter could be proven with documentation, per Section 5 and Section 3 of the bill. CAPTAIN SIMS expressed uncertainty. REPRESENTATIVE C. JOHNSON referred to the testimony from Mr. Stefano who owned a company that tagged catalytic converters. Additionally, she reported that current carmakers place the vehicle identification number (VIN) on catalytic converters. 3:51:55 PM REPRESENTATIVE CARPENTER asked whether the theft of catalytic converters could be prevented by prohibiting the sale of these converters to scrapyards. REPRESENTATIVE D. JOHNSON suggested that the crime was often "drug inspired." She said the legislation is modeled after a bill in Tennessee, and the intent is to provide a tool for law enforcement. She acknowledged that Representative Carpenter has identified an issue that requires further examination. 3:54:11 PM REPRESENTATIVE STORY asked whether DPS could provide statewide rates of catalytic converter theft. 3:54:50 PM CHAIR SHAW announced that HB 118 would be held over.