BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 287 (Gordon) - Vehicle safety:  recalls
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          |Version: August 2, 2016         |Policy Vote: T. & H. 11 - 0,    |
          |                                |          JUD. 7 - 0            |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: August 8, 2016    |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.

          Summary:  AB 287 would require the Department of Motor Vehicles  
          (DMV) to notify vehicle owners on their registration renewal  
          notice if a vehicle is subject to a manufacturer's recall, as  
          specified.  The bill would also prohibit a dealer or rental car  
          company from loaning or renting a vehicle is subject to a recall  
          until the repair has been made.

           Unknown one-time DMV costs, potentially in the range of  
            $75,000 to $150,000, to contract with an outside entity to  
            provide vehicle recall database reports for vehicles subject  
            to registration renewal.  (Motor Vehicle Account)

           One-time DMV programming costs of approximately $125,000 to  
            make IT changes to the vehicle registration database systems  


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            to provide for the vehicle recall disclosure.  Timing of the  
            programming would depend upon when the DMV declares that it  
            has access to a recall database and funding available to  
            provide the disclosure on vehicle registration renewals.   
            (Motor Vehicle Account)

           Ongoing DMV costs of approximately $580,000 for field office  
            and call center staff time to respond to inquiries about the  
            recall notices, assuming a small percentage of the 4.5 - 5  
            million registration renewal customers request additional  

           Potential DMV costs beginning in 2017-18 for ongoing  
            dealership inspections and enforcement activities.  Staff  
            estimates any additional activities would result in minor  
            costs. (Motor Vehicle Account)

          Background:  Vehicle safety recalls are necessary when a motor vehicle or  
          item of vehicle equipment does not comply with a Federal Motor  
          Vehicle Safety Standard, or when there is a safety-related  
          defect in the vehicle or equipment.  The National Highway  
          Traffic Safety Administration (NHTSA) has the authority under  
          federal law to require manufacturers to recall vehicles that  
          have safety defects or do not meet safety standards.  If a  
          safety defect is identified, manufacturers are required to  
          notify the NHTSA, owners, dealers and distributors, and, correct  
          the defect at no change (unless the vehicle is more than 10  
          years old), and vehicle dealers are prohibited from selling a  
          new vehicle subject to a recall, unless the defect is repaired.   
          Federal law requires motor vehicle safety information to be  
          publicly available online and searchable by vehicle make, model,  
          and vehicle identification number (VIN).  Federal law also  
          prohibits rental car companies and vehicle dealers with 35 or  
          more available vehicles from renting or loaning vehicles that  
          are subject to a safety recall.
          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 NHTSA called the largest and  
          most complex safety recall in history.  Despite the large number  
          of affected vehicles, 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  


          AB 287 (Gordon)                                        Page 2 of  
          whether a vehicle is subject to recall:  .  

          Proposed Law:  
            AB 287 would prohibit the renting or loaning of vehicles  
          subject to a recall, and require DMV to notify vehicle owners on  
          registration renewal documents if their vehicle is subject to a  
          recall.  Specifically, this bill would:
           Prohibit a dealer or rental car company from loaning or  
            renting a vehicle subject to a recall until the recall repair  
            is performed.  If a remedy is not immediately available but a  
            temporary repair is available to eliminate the safety risk,  
            the dealer or rental company may rent or loan a vehicle after  
            the repair is made, but must make the recall repair when the  
            remedy is available.
           Require DMV to include a specified recall disclosure statement  
            on the notice of registration renewal for a vehicle subject to  
            a manufacturer's recall.
           Require DMV to obtain a recall database report before mailing  
            a notice of registration renewal, and require DMV to notify  
            the registered owner if a vehicle is subject to a recall by  
            checking a box next to the recall disclosure statement.
           Specify that the DMV recall disclosure requirements are  
            operative on the date the director of DMV executes a  
            declaration certifying that DMV has appropriate access to the  
            necessary data within a recall database and available funding  
            to include a recall disclosure statement on registration  
            renewal documents.  The declaration must be posted on the DMV  
            website and sent to the Legislature.
           Clarify that automobile manufacturers are liable for costs  
            associated with the disposal of hazardous materials associated  
            with a recall through a specified reimbursement of dealer  
            costs to make the recall repair.
           Specify that the bill would become operative on July 1, 2017,  
            except as specified.

          Legislation:  SB 686 (Jackson) would have prohibited a vehicle  
          dealer from selling, leasing, or loaning a used vehicle if the  
          dealer knows or should have known that the vehicle is subject to  
          a manufacturer's safety recall, unless repairs are made to  


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          correct the defect have been performed.  This bill failed  
          passage in the Assembly Business, Professions, and Consumer  
          Protection Committee in 2014.
          AB 753 (Monning) would have expressly prohibited a rental car  
          company from renting a vehicle that is subject to a recall  
          notice unless the vehicle has been repaired as specified in the  
          notice. This bill was held without a hearing in this committee  
          in 2011 at the request of the author.

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