BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 287|
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                                   THIRD READING 

          Bill No:  AB 287
          Author:   Gordon (D), Eggman (D) and Mark Stone (D), et al.
          Amended:  8/15/16 in Senate
          Vote:     21 

           SENATE TRANS. & HOUSING COMMITTEE:  11-0, 6/21/16
           AYES:  Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,  
            McGuire, Mendoza, Roth, Wieckowski

           SENATE JUDICIARY COMMITTEE:  7-0, 6/28/16
           AYES:  Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,  

           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  76-0, 6/2/15 - See last page for vote

           SUBJECT:   Vehicle safety:  recalls

          SOURCE:    Author


          DIGEST:  This bill establishes various consumer and car dealer  
          protections for recalled vehicles.


          Existing federal law:

          1)Sets forth in federal regulations the requirements for when  


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            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)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.

          3)Requires motor vehicle safety recall information to be  
            publicly available online and searchable by vehicle make,  
            model, and vehicle identification number (VIN).

          4)Prohibits vehicles which are subject to recall from being  
            rented, provided the company renting the cars has a fleet of  
            at least 35 vehicles.

          Existing state law 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.  

          This bill:

          1)Includes the cost of disposing of hazardous materials in the  
            compensation required of the manufacturer to the dealer.

          2)Prohibits the renting or loaning of a vehicle subject to a  
            manufacturer's recall.

          3)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.  This  
            provision shall become operative when the DMV has access to a  
            recall database and sufficient funding.


          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  


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                                                                     Page 3

            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  
            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.  Existing 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)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.

          5)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  


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                                                                     Page 4

            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.
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee:

           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  
            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)

          SUPPORT:   (Verified8/16/16)


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          California New Car Dealers Association
          Independent Automobile Dealers Association of California

          OPPOSITION:   (Verified8/16/16)

          None received

          ASSEMBLY FLOOR:  76-0, 6/2/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,  
            Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Wood, Atkins
          NO VOTE RECORDED:  Bonta, Chávez, Grove, Williams

          Prepared by:Randy Chinn / T. & H. / (916) 651-4121
          8/16/16 17:21:26

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