BILL ANALYSIS                                                                                                                                                                                                    

                              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.

          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  

          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  

          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.


          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  

          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  
             b)   The vehicle title is noted as salvage, flood, or  

            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  

          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:  .   
            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  

          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  
                          June 15, 2016.)

          California New Car Dealers Association
          Independent Automobile Dealers Association of California


          (all prior version)
          Consumer Action 
          California Rural Legal Assistance Foundation
          Consumer Watchdog
          Courage Campaign
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