BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 287


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          Date of Hearing:   April 13, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 287  
          (Gordon) - As Amended March 23, 2015


          SUBJECT:  Vehicle safety:  recalls


          SUMMARY:  Establishes the Consumer Automotive Recall Safety Act  
          (Act) and prohibits a motor vehicle dealer or rental car company  
          from displaying, selling, or renting a used or rental vehicle  
          unless specific conditions are met.  Further establishes  
          additional requirements and procedures to the Department of  
          Motor Vehicles (DMV) and vehicle manufacturers relative to  
          implementation of the Act.  Specifically, this bill:  





          1)Makes legislative findings and declarations regarding the  
            increasing number of vehicle recalls and the safety and  
            economic impacts associated with vehicle recalls. 

          2)Requires the provisions specified in the Act to commence on or  
            after July 1, 2016.

          3)Establishes a claims and appeals process, as specified,  
            between vehicle dealers and manufacturers regarding payment  
            requirements and obligations identified in the Act.   









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          4)Directs the DMV's New Motor Vehicle Board (Board) to hear and  
            decide on disputes between vehicle dealers and manufacturers  
            related to the Act's payment requirements and obligations. 

          5)Prohibits DMV from accepting the initial, renewal, or transfer  
            of a vehicle registration if the applicant fails to provide  
            DMV with a recall disclosure statement as specified in the  
            Act. 

          6)Proclaims that it is unlawful and a misdemeanor violation for  
            a manufacturer, as specified, to unfairly discriminate against  
            a dealer based on certain provisions specified in the Act.  

          7)Provides clarifying definitions for a variety of terms  
            relative to how they are applied in the Act.  

          8)Prohibits a dealer from displaying or offering for sale a used  
            vehicle unless the dealer has obtained a recall database  
            report within 30 days of the display of offer.  

          9)Prohibits a dealer from selling or leasing a used vehicle if  
            the recall database report indicates the vehicle is subject to  
            a "Stop Sale-Stop Drive" recall until the recall repair has  
            been made.  

          10)Prohibits a dealer from selling or leasing a used vehicle if  
            the recall database report indicates the vehicle is subject to  
            a manufacturer's recall and the line make is the same as the  
            dealer, until the recall repair has been made. 

          11)Allows a dealer to sell or lease a used vehicle that is  
            subject to a manufacturer's recall, as specified, if the  
            vehicle is not the same line make as the dealer if the  
            following conditions are satisfied: 
             a)   The dealer provides the recall database report to the  
               consumer disclosing the manufacturer's  recall; and,
             
             b)   The consumer signs a disclosure agreement acknowledging  
               the manufacturer's recall, as specified. 








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          12) Specifies that a recall database report and the disclosure  
            agreement provided and signed by the consumer are to be  
            provided separate from the conditional sales contract or other  
            vehicle purchase agreement.  

          13)Prohibits a rental car company from renting a vehicle unless  
            the company has obtained a recall database report within 30  
            days of the offer.

          14) Prohibits a rental car company from renting a vehicle if the  
            recall database report indicates the vehicle is subject to a  
            "Stop Sale-Stop Drive" recall until the recall repair has been  
            made.  

          15) Allows a rental car company to rent a vehicle that is  
            subject to a manufacturer's recall, as specified, if the  
            following conditions are satisfied: 

             a)   The rental car company discloses the recall database  
               report to the consumer disclosing the manufacturer's   
               recall prior to rental; and,

             b)   The consumer signs a disclosure agreement acknowledging  
               the manufacturer's recall, as specified. 

          1)Requires the seller of a motor vehicle, including private  
            party sales, to disclose all recalls related to the vehicle  
            being sold and requires the buyer to provide the an  
            acknowledgement form to DMV indicating they have received all  
            recall information in order to transfer vehicle registration,  
            as specified.  

          2)Requires a vehicle manufacturer to provide all recall  
            notifications on its website, as specified, and whether a  
            vehicle is subject to a Stop Sale-Stop Drive recall.  

          3)Requires a vehicle manufacturer to provide a consumer, upon  
            request, a rental or loaner vehicle when the consumer's  








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            vehicle is subject to a recall and the parts and/or procedures  
            are not available, as specified.  

          4) Requires a vehicle manufacturer to compensate a dealer for  
            costs associated with providing a rental or loaner vehicle and  
            the storage of a recalled vehicle waiting to be repaired, as  
            specified.  

          5)Provides that a dealer, rental car company, or private seller  
            is not legally responsible for any errors or inaccuracies  
            contained in the recall database report, as specified.   
            Further identifies several vehicles not subject to provisions  
            of the Act, as specified.   

          EXISTING LAW:  





          1)Requires DMV to oversee motor vehicle registrations.  



          2)Prohibits any person from acting as a dealer, remanufacturer,  
            manufacturer, or transporter, as specified, without having  
            first been issued a license or temporary permit from DMV, as  
            specified. 

          3)Requires new car dealers to enroll in the DMV-administered  
            Business Automation Program and electronically transfer  
            vehicle registration and titling transactions to DMV, as  
            specified.
            


          4)Establishes the New Motor Vehicle Board within DMV and  
            requires the Board to hear and decide on certain appeals and  
            protests presented by a motor vehicle franchisee pertaining to  








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            a dispute with a vehicle manufacturer. 
              


          5)Prescribes specific instances when DMV may refuse the initial  
            registration, renewal, or transfer of registration for a  
            vehicle, as specified.  



          6)Prohibits a vehicle manufacturer, manufacturer branch,  
            distributor, and distributor branch, as defined, from engaging  
            in specific practices and makes a violation of these  
            prohibitions a misdemeanor.  



          7)Sets forth in federal regulations the requirements for when  
            manufacturers must notify vehicle owners, dealers, and  
            distributors about a defect that relates to motor vehicle  
            safety or noncompliance with a federal motor vehicle safety  
            standard.  



          8)At the federal level, prohibits a motor vehicle dealer from  
            selling a new vehicle subject to a recall, as specified,  
            unless and until the defect is repaired.  Federal law does not  
            afford similar prohibitions to used vehicles. 



          9)At the federal level, establishes the Moving Ahead for  
            Progress in the 21st Century Act (MAP-21), and requires the  
            Secretary of the United States Department of Transportation  
            (U.S. DOT) to promulgate regulations by July 6, 2013,  
            requiring motor vehicle safety recall information to be  
            publicly available online and searchable by vehicle make,  
            model, and vehicle identification number (VIN).








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          FISCAL EFFECT:  Unknown


          COMMENTS:  In 2014, more than 60 million motor vehicles were  
          subject to recalls totaling more than the prior three years  
          combined.  In total, 803 recalls were announced with 123  
          resulting from investigations from the Nation Highway Traffic  
          Safety Administration (NHTSA) and the remaining 680 recalls  
          initiated by auto manufacturers.  These recalls encompassed a  
          wide variety of vehicle defects; however, two of the more  
          notable recalls involved faulty ignitions in General Motor  
          vehicles and defects in Takata airbags used in a variety of  
          vehicle models.    


          The federal government's ability to set and administer vehicle  
          safety standards was established in 1966 under the National  
          Traffic and Motor Vehicle Safety Act (NTMVSA).  Specifically,  
          NTMVSA created NHTSA and granted the agency the authority to  
          investigate and require auto manufacturers to recall vehicles  
          that have safety-related defects or do not meet federal safety  
          standards.  Generally, a safety-related defect is determined  
          when a defect poses a risk to motor vehicle safety and exists in  
          a group of vehicles of the same design or manufacture or items  
          of equipment of the same type and manufacture.   


          Under a NHTSA-initiated safety recall, the agency may have  
          received enough complaints and information about the operation  
          of a vehicle that it finds there is a significant threat to  
          public safety and initiates a mandatory recall.  NHTSA may  
          perform an investigation with a review by engineers and experts  
          and work with the vehicle manufacturer to recall vehicles.   
          These safety recalls are facilitated through direct  
          relationships between manufacturers, franchised dealerships, and  
          owners who purchased the new vehicles.  Manufacturers may  








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          dispute a mandatory recall by petitioning NHTSA or bringing suit  
          in court.  


          Conversely, auto manufacturers also have the ability to  
          voluntary initiate both safety and non-safety recalls.  Auto  
          manufacturers carry out their own vehicle testing and inspection  
          procedures and run information gathering systems to evaluate  
          vehicle performance.  If a safety defect is discovered, the  
          manufacturer must notify NHTSA, as well as vehicle or equipment  
          owners, dealers, and distributors. The manufacturer is then  
          required to remedy the problem at no charge to the owner (for  
          vehicles sold up to 10 years before the recall).  NHTSA is  
          responsible for monitoring the manufacturer's corrective action  
          to ensure successful completion of the recall campaign.   
          Additionally, a manufacturer may administer a non-safety recall  
          such as a recalling a vehicle for defective air conditioners or  
          radios.  The process is similar to safety recalls in that the  
          manufacturer notifies the appropriate parties, the defect is  
          repaired at no cost to the owner, and the manufacturer provides  
          information of the recall on its website.


          Aside from the recall notification processes described above,  
          vehicle owners and consumers also have the opportunity to  
          research vehicles through various recall databases.  In 2012,  
          Congress enacted MAP-21, a funding and authorization bill to  
          govern federal transportation spending that contains a provision  
          requiring motor vehicle safety recall information about  
          outstanding recalls to be posted online in a format that  
          preserves consumer privacy and is searchable by vehicle make,  
          model, and VIN.  In August of 2013, NHTSA issued a final rule  
          that will require all major manufacturers (those who produce  
          more than 25,000 vehicles per year) to provide the public with  
          online access to recall information searchable by a VIN and  
          without requiring additional information to allow consumers to  
          instantly determine whether action is required to address an  
          uncompleted safety recall.  The online database,  
          www.safercar.gov, is required to be updated with vehicle recall  








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          information on a weekly basis.  Additional online recall  
          research tools include an auto manufacturer's website or  
          obtaining a vehicle history report through a variety of  
          providers.   


          This bill aims to establish a process that will prohibit the  
          sale of motor vehicles for the most serious safety-related  
          recalls, provide consumers with motor vehicle recall information  
          under certain circumstances, and when recall parts are not  
          available, provide motor vehicle owners the option of leaving  
          their vehicle at the dealership and using a rental vehicle.   
          Respectively, this bill also includes provisions that would  
          expand the Board's oversight obligations and prohibits DMV from  
          approving motor vehicle registration if specific recall  
          information is not provided under certain circumstances.   



          Created in 1967 as the New Car Dealers Policy and Appeals Board,  
          the Board's initial functions were limited to hearing appeals  
          that arose from final decisions made by the DMV.  In 1973, the  
          Legislature passed the California Automobile Franchise Act,  
          which gave the Board its present name and tasked it with  
          regulating and settling disputes in the new motor vehicle  
          industry.  The Board's current mission is to enhance relations  
          between dealers and manufactures of automobiles, RV's, and  
          motorcycles by resolving disputes in the industry in an  
          efficient, fair, and cost-effective manner.  Under this bill,  
          the Board would additionally be authorized to hear and decide on  
          storage and vehicle rental reimbursement claims between dealers  
          and manufacturers, which is consistent with the Board's existing  
          practices. 


          Furthermore, the bill requires DMV to refuse the transfer of  
          motor vehicle registration if the applicant transferring the  
          registration fails to include, with all other required  
          documentation, a signed statement acknowledging all motor  








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          vehicle recall information was disclosed to the applicant prior  
          to acquiring the motor vehicle.  Should this bill pass, several  
          implementation provisions will need to be further clarified in  
          the next policy committee.  


          Writing in support of this bill, the California New Car Dealers  
          Association notes, "California already has the strongest  
          consumer protection laws in the country for car buyers, but  
          neither California nor federal law address the sale, lease, or  
          rental of a recalled used vehicle.  The CARS Act would  
          comprehensively enhance California's existing consumer  
          protections by ensuring the most pressing safety issues are  
          fixed in a timely manner, improving the information made  
          available to consumers about cars subject to recall and  
          providing consumers with access to loaner vehicles at no cost if  
          their vehicle is subject to recall and parts are not available  
          to repair the vehicle." 


          In opposition, Consumers for Auto Reliability and Safety writes,  
          "AB 287 would weaken existing consumer protection against  
          unscrupulous car dealers who sell unsafe, recalled used cars to  
          consumers; undermine progress being made at the federal level in  
          addressing rental car and used car safety; create even more  
          confusion among owners of recalled cars regarding the  
          seriousness of lethal safety defects; and set a harmful  
          precedent for allowing retailers to foist unsafe products onto  
          consumers."  Additionally, "allowing for dealers to sell unsafe,  
          recalled cars to consumers with 'disclosure,' AB 287 fails to  
          recognize the broader public interest in ensuring that cars are  
          safe to operate on public roads.  Even if a consumer happens to  
          see the recall notice prior to completing the sale, reads it,  
          fully understands the risks involved, and decides to drive the  
          car anyway, there is a strong public interest in protecting the  
          safety of their passengers, others who share the roads,  
          pedestrians, bicyclists, and potentially many other  
          individuals." 









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          Previous legislation: SB 686 (Jackson) of 2014, would have  
          prohibited a vehicle dealer from selling a used vehicle if the  
          dealer knew or should have known that the vehicle is subject to  
          a manufacturer's safety recall and failed to correct the defect.  
          SB 686 failed passage in the Assembly Business, Professions, and  
          Consumer Protection Committee.  





          AB 753 (Monning) of 2011, would have prohibited rental car  
          companies from renting a vehicle that is subject to a federal  
          safety recall unless specific conditions are met.  AB 753 would  
          have also prohibited a rental car company from selling a vehicle  
          subject to a federal safety recall.  


          AB 753 was referred to the Senate Appropriations Committee but  
          was not heard at the request of the author.
          


          Double referral: This bill will be referred to the Assembly  
          Privacy and Consumer Protection Committee should it pass out of  
          this committee. 


          


          REGISTERED SUPPORT / OPPOSITION:




          Support









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          California New Car Dealers Association (Sponsor) 


          Independent Automobile Dealers Association of California 




          Opposition


          Advocates for Highway and Auto Safety


          CALPIRG  


          California Conference of Machinists


          California Rural Legal Assistance Foundation


          Center for Auto Safety


          Consumer Action


          Consumer Attorneys of California 


          Consumers for Auto Reliability and Safety 


          Consumers Union










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          Consumer Watchdog


          Courage Campaign 


          Housing and Economic Rights Advocates


          International Association of Machinists and Aerospace Workers 


          The Sturdevant Law Firm


          The Trauma Foundation 







          Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093