BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 287| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 287 Author: Gordon (D), Eggman (D) and Mark Stone (D), et al. Amended: 8/19/16 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, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 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. Senate Floor Amendments of 8/19/16 require that a notice by the Department of Motor Vehicles (DMV) be provided with every vehicle registration renewal notice that gives information about determining whether a vehicle is subject to a recall. The prior version of the bill required that a more definitive version of AB 287 Page 2 this notice be provided only to vehicles which are under recall. ANALYSIS: Existing federal 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)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. AB 287 Page 3 3)Requires the DMV, when mailing a notice of registration renewal, to notify a vehicle owner of a specific mechanism to determine if their vehicle is subject to recall. 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 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. 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 AB 287 Page 4 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: www.safercar.gov. This bill tries to improve on that record by requiring the DMV to indicate on the annual registration renewal notice that many vehicles are subject to recall and that recall information about individual vehicles can be obtained from a specified website. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes According to the Senate Appropriations Committee analysis for a prior version of the bill containing provisions which have since been deleted: 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 information. Potential DMV costs beginning in 2017-18 for ongoing AB 287 Page 5 dealership inspections and enforcement activities. Staff estimates any additional activities would result in minor costs. (Motor Vehicle Account) SUPPORT: (Verified8/22/16) California New Car Dealers Association Independent Automobile Dealers Association of California OPPOSITION: (Verified8/22/16) 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 8/22/16 20:38:02 **** END ****