BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: AB 287 Hearing Date: 6/21/2016 ----------------------------------------------------------------- |Author: |Gordon | |----------+------------------------------------------------------| |Version: |6/13/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Randy Chinn | |: | | ----------------------------------------------------------------- SUBJECT: Vehicle safety: recalls DIGEST: This bill establishes various consumer and car dealer protections for recalled vehicles. ANALYSIS: Existing law: 1)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. 2)Establishes restrictions on when used vehicles may be advertised as "certified." 3)Requires manufacturers to properly fulfill every warranty agreement and fairly compensate their dealers for the diagnostics, repair, servicing and all other conditions of that obligation. 4)Federal law 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. 5)Federal law requires motor vehicle safety recall information AB 287 (Gordon) Page 2 of ? to be publicly available online and searchable by vehicle make, model, and vehicle identification number (VIN). 6)Federal law prohibits vehicles which are subject to recall from being rented, provided the company renting the cars has a fleet of at least 35 vehicles. This bill: 1)Includes the cost of disposing of hazardous materials in the compensation required of the manufacturer to the dealer. 2)Prohibits the advertising of a vehicle subject to a manufacturer's recall as being "certified." 3)Prohibits the renting or loaning of a vehicle subject to a manufacturer's recall. 4)Requires the California Department of Motor Vehicles ( DMV), when mailing a notice of registration renewal, to notify a vehicle owner if their vehicle is subject to recall. 5)Becomes effective July 1, 2017, with the exception that the DMV notification requirement becomes effective when the DMV director declares that the DMV has access to the necessary recall databases and has available funding to include the recall disclosure statement in the notice of registration renewal. 6)Exempts recreational vehicles, motorcycles, and off-highway motor vehicles from the provisions regarding the use of "certified" in advertising, the renting or loaning prohibitions, and the DMV notification provisions. COMMENTS: 1)Purpose. According to the author, California already has the strongest consumer protection laws in the country for car buyers. While federal law prohibits the sale of a new vehicle with an unrepaired recall, neither federal nor California law specifically requires the disclosure or repair of a used vehicle subject to a recall. This bill would further enhance those protections by ensuring that automobile dealers, rental car companies, automobile manufacturers, and the government AB 287 (Gordon) Page 3 of ? all have a role in improving the auto recall and repair process. 2)Recalls increasing, millions affected. From 1995 to 2015, the number of vehicle recalls has almost tripled, from 348 to 973, with more than 87 million vehicles affected in 2015. The recall of Takata airbags impacts as many as 68.8 million airbags in what the National Highway Traffic Safety Administration (NHTSA) called the largest and most complex safety recall in history. 3)Reimbursing dealers. Current law requires auto manufacturers to reimburse their dealers for the diagnostics, repair, servicing and all other conditions of that obligation. Airbags are considered hazardous waste because of the inflation mechanism. This bill specifically identifies the cost of disposing of hazardous waste as a cost the manufacturers must reimburse to the dealers. 4)Certified, or not? Current law prohibits the use of the term "certified" in the sale of used vehicles under certain conditions, including the following: a) The dealer knows or should have known the odometer reading is incorrect, the vehicle was reacquired pursuant to federal or state warranty laws, or the vehicle has frame damage b) The vehicle title is noted as salvage, flood, or unrepairable This bill also prohibits using the term "certified" to describe a vehicle with an unremedied manufacturer's recall. This bill does not prohibit the sale of vehicles subject to recall. 1)Fixing rentals and loaners. New federal law prohibits rental car companies and dealers with 35 or more available vehicles from renting or loaning cars with an unremedied manufacturer's recall. This bill extends that prohibition to all rental car companies and dealers, regardless of how many vehicles they have available. While the bill is silent on an enforcement mechanism for this provision, the author intends to allow the DMV to impair the dealer's license as the penalty, as is the case with similar provisions of the Vehicle Code. AB 287 (Gordon) Page 4 of ? 2)DMV recall notice. The track record for fixing recalled vehicles is mediocre. NHTSA has estimated that only 70% of recalled vehicles are repaired. To improve that record, the NHTSA established a website where the public can determine whether a vehicle is subject to recall: www.safercar.gov . This bill tries to improve on that record by requiring the DMV to indicate on the annual registration renewal notice when a car is subject to recall. This provision shall be effective when the DMV director certifies that the department has adequate funding and access to the appropriate database. The author's intent is for California to participate in a recently established federal grant program to fund pilot projects for state notification to consumers of vehicle recalls. Implementing this provision may take a while because the DMV is currently working on a number of IT projects. However, there is precedent for doing this, as the DMV has an ongoing program of notifying owners when their vehicle is subject to an air emissions-related recall and withholding registration renewal until the equipment is repaired. 3)Double-referral. This bill has also been referred to the Senate Judiciary Committee. Any amendments will need to be adopted in that committee. Related 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 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. This bill failed in the Senate Appropriations Committee. Assembly Votes: Floor: 76-0 AB 287 (Gordon) Page 5 of ? Appr: 16-0 P&CP: 11-0 Trans: 16-0 FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes POSITIONS: (Communicated to the committee before noon on Wednesday, June 15, 2016.) SUPPORT: California New Car Dealers Association Independent Automobile Dealers Association of California OPPOSITION: (all prior version) Consumer Action California Rural Legal Assistance Foundation Calpirg Consumer Watchdog Courage Campaign -- END --