BILL NUMBER: SB 734 CHAPTERED 10/05/01 CHAPTER 539 FILED WITH SECRETARY OF STATE OCTOBER 5, 2001 APPROVED BY GOVERNOR OCTOBER 4, 2001 PASSED THE SENATE SEPTEMBER 12, 2001 PASSED THE ASSEMBLY SEPTEMBER 10, 2001 AMENDED IN ASSEMBLY SEPTEMBER 5, 2001 AMENDED IN ASSEMBLY AUGUST 23, 2001 AMENDED IN ASSEMBLY JULY 19, 2001 INTRODUCED BY Senator Karnette FEBRUARY 23, 2001 An act to amend Sections 285, 286, 296, 297, 331, 331.1, 331.2, 672, and 9250.15 of, and to add Sections 4004.7, 8058, 9259.3, and 9259.5 to, the Vehicle Code, relating to vehicles. LEGISLATIVE COUNSEL'S DIGEST SB 734, Karnette. Vehicles: trailers: registration: International Registration Plan. (1) Existing law defines various terms for purposes of regulating and licensing vehicle dealers, distributors, franchises, and manufacturers. This bill would include in those definitions trailers that are subject to identification. To the extent that the inclusion of trailers within the scope of these definitions would have the effect of expanding the scope of licensing requirements, violations of which are currently crimes, this bill would impose a state-mandated local program by expanding the scope of a crime. (2) Existing law authorizes the Reciprocity Commission, on behalf of the state, to enter into, and become, a member of the International Registration Plan Agreement developed by the American Association of Motor Vehicle Administrators. The commission is authorized to adopt rules and regulations necessary to carry out the provisions of the International Registration Plan or other apportioned registration agreements entered into under the authority of existing law. In administering the International Registration Plan, the state is authorized to collect all appropriate registration and license fees due other jurisdictions, and foreign jurisdictions that are members of the agreement are authorized to collect all appropriate registration and license fees due to California and remit those fees to the state pursuant to the terms of the agreement. The Department of Motor Vehicles is authorized to collect an administrative service fee of $1 for each application for apportioned registration. This bill would authorize the department to issue a permit to authorize the unladen operation of that vehicle or vehicle combination for a period of not more than 15 continuous days, if the apportioned registration for a commercial vehicle or vehicle combination that was last registered by a California resident has expired or been terminated, and the department has received a completed application, a fee of $30, and proof of financial responsibility for the vehicle. This provision would not apply to any vehicle or vehicle combination for which any vehicle registration fees, other than those for the current year, vehicle license fees, or penalties, or any combination of those are due. Operation of a laden vehicle or vehicle combination under an unladen operation permit issued pursuant to this provision would be an infraction. The bill thereby would impose a state-mandated local program by creating a new crime. The bill would require the department to charge interest on any underpaid fees due under the apportioned registration provisions, at the rate of 1% per month of the underpaid portion of the fees, commencing on the date the underpaid portion of the fees were originally due. Interest charged would continue to accumulate during any disputation or hearing regarding the fees, except that the registrant would be authorized to pay underpaid fees and other charges during the disputation process or hearing, in order to avoid additional interest charges, and request a refund of any overpaid fees after final review. The bill would require the department to impose a penalty of $50 or 10% of the underpaid fees, whichever is greater, commencing on the date the underpaid fees were determined to be due. The bill would require the administrative service fee specified above to be at least the amount determined by the department to be sufficient to pay membership dues to the association acting as the repository for the International Registration Plan, but not more than $2 for each application. The bill would require the department to require a deposit in an amount determined by the department to be sufficient to ensure compliance with the apportioned registration provisions, for each application to include an additional operating area or vehicle in a registration issued under those provisions. The bill would require the department to impose a fee in an amount determined by the department to be sufficient to cover its administrative costs under this provision, for each application for immediate telephone service for a registration issued under the apportioned registration provisions. (3) This bill would incorporate additional changes in Section 286 of the Vehicle Code, proposed by AB 871, to be operative only if AB 871 and this bill are both enacted and become effective on or before January 1, 2002, and this bill is enacted last. (4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 285 of the Vehicle Code is amended to read: 285. "Dealer" is a person not otherwise expressly excluded by Section 286 who: (a) For commission, money, or other thing of value, sells, exchanges, buys, or offers for sale, negotiates or attempts to negotiate, a sale or exchange of an interest in, a vehicle subject to registration, a motorcycle subject to identification under this code, or a trailer subject to identification pursuant to Section 5014.1, or induces or attempts to induce any person to buy or exchange an interest in a vehicle and, who receives or expects to receive a commission, money, brokerage fees, profit, or any other thing of value, from either the seller or purchaser of the vehicle. (b) Is engaged wholly or in part in the business of selling vehicles or buying or taking in trade, vehicles for the purpose of resale, selling, or offering for sale, or consigned to be sold, or otherwise dealing in vehicles, whether or not the vehicles are owned by the person. SEC. 2. Section 286 of the Vehicle Code is amended to read: 286. The term "dealer" does not include any of the following: (a) Insurance companies, banks, finance companies, public officials, or any other person coming into possession of vehicles in the regular course of business, who sells vehicles under a contractual right or obligation, in performance of an official duty, or in authority of any court of law, if the sale is for the purpose of saving the seller from loss or pursuant to the authority of a court. (b) Persons who sell or distribute vehicles of a type subject to registration or trailers subject to identification pursuant to Section 5014.1 for a manufacturer to vehicle dealers licensed under this code, or who are employed by manufacturers or distributors to promote the sale of vehicles dealt in by those manufacturers or distributors. However, any of those persons who also sell vehicles at retail are vehicle dealers and are subject to this code. (c) Persons regularly employed as salespersons by vehicle dealers licensed under this code while acting within the scope of that employment. (d) Persons engaged exclusively in the bona fide business of exporting vehicles or of soliciting orders for the sale and delivery of vehicles outside the territorial limits of the United States, if no federal excise tax is legally payable or refundable on any of the transactions. Persons not engaged exclusively in the bona fide business of exporting vehicles, but who are engaged in the business of soliciting orders for the sale and delivery of vehicles, outside the territorial limits of the United States are exempt from licensure as dealers only if their sales of vehicles produce less than 10 percent of their total gross revenue from all business transacted. (e) Persons not engaged in the purchase or sale of vehicles as a business, who dispose of any vehicle acquired and used in good faith, for their own personal use, or for use in their business, and not for the purpose of avoiding the provisions of this code. (f) Persons who are engaged in the purchase, sale, or exchange of vehicles, other than motorcycles subject to identification under this code, which are not intended for use on the highways. (g) Persons temporarily retained as auctioneers solely for the purpose of disposing of vehicle stock inventories by means of public auction on behalf of the owners at the owners' place of business, or as otherwise approved by the department, if intermediate physical possession or control of, or an ownership interest in, the inventory is not conveyed to the persons so retained. (h) Persons who are engaged exclusively in the business of purchasing, selling, servicing, or exchanging racing vehicles, parts for racing vehicles, and trailers designed and intended by the manufacturer to be used exclusively for carrying racing vehicles. For purposes of this subdivision, "racing vehicle" means a motor vehicle of a type used exclusively in a contest of speed or in a competitive trial of speed which is not intended for use on the highways. (i) Any person who is a lessor. (j) Any person who is a renter. (k) Any salvage pool. (l) Any yacht broker who is subject to the Yacht and Ship Brokers Act (Article 2 (commencing with Section 700) of Chapter 5 of Division 3 of the Harbors and Navigation Code) and who sells used boat trailers in conjunction with the sale of a vessel. (m) Any licensed automobile dismantler who sells vehicles that have been reported for dismantling as provided in Section 11520. (n) The Director of Corrections when selling vehicles pursuant to Section 2813.5 of the Penal Code. (o) Any public or private nonprofit charitable, religious, or educational institution or organization that sells vehicles if all of the following conditions are met: (1) The proceeds of the sale of the vehicles are retained by that institution or organization for its charitable, religious, or educational purposes. (2) The vehicles sold were donated to the institution or organization. (3) They meet all of the applicable equipment requirements of Division 12 (commencing with Section 24000) and have been issued a certificate pursuant to Section 44015 of the Health and Safety Code. (4) The institution or organization has qualified for state tax-exempt status under Section 23701d of the Revenue and Taxation Code, and federal tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. (p) Any motor club, as defined in Section 12142 of the Insurance Code, that does not arrange or negotiate individual motor vehicle purchase transactions on behalf of its members but refers members to a new motor vehicle dealer for the purchase of a new motor vehicle and does not receive a fee from the dealer contingent upon the sale of the vehicle. SEC. 2.5. Section 286 of the Vehicle Code is amended to read: 286. The term "dealer" does not include any of the following: (a) Insurance companies, banks, finance companies, public officials, or any other person coming into possession of vehicles in the regular course of business, who sells vehicles under a contractual right or obligation, in performance of an official duty, or in authority of any court of law, if the sale is for the purpose of saving the seller from loss or pursuant to the authority of a court. (b) Persons who sell or distribute vehicles of a type subject to registration or trailers subject to identification pursuant to Section 5014.1 for a manufacturer to vehicle dealers licensed under this code, or who are employed by manufacturers or distributors to promote the sale of vehicles dealt in by those manufacturers or distributors. However, any of those persons who also sell vehicles at retail are vehicle dealers and are subject to this code. (c) Persons regularly employed as salespersons by vehicle dealers licensed under this code while acting within the scope of that employment. (d) Persons engaged exclusively in the bona fide business of exporting vehicles or of soliciting orders for the sale and delivery of vehicles outside the territorial limits of the United States, if no federal excise tax is legally payable or refundable on any of the transactions. Persons not engaged exclusively in the bona fide business of exporting vehicles, but who are engaged in the business of soliciting orders for the sale and delivery of vehicles, outside the territorial limits of the United States are exempt from licensure as dealers only if their sales of vehicles produce less than 10 percent of their total gross revenue from all business transacted. (e) Persons not engaged in the purchase or sale of vehicles as a business, who dispose of any vehicle acquired and used in good faith, for their own personal use, or for use in their business, and not for the purpose of avoiding the provisions of this code. (f) Persons who are engaged in the purchase, sale, or exchange of vehicles, other than motorcycles subject to identification under this code, which are not intended for use on the highways. (g) Persons temporarily retained as auctioneers solely for the purpose of disposing of vehicle stock inventories by means of public auction on behalf of the owners at the owners' place of business, or as otherwise approved by the department, if intermediate physical possession or control of, or an ownership interest in, the inventory is not conveyed to the persons so retained. (h) Persons who are engaged exclusively in the business of purchasing, selling, servicing, or exchanging racing vehicles, parts for racing vehicles, and trailers designed and intended by the manufacturer to be used exclusively for carrying racing vehicles. For purposes of this subdivision, "racing vehicle" means a motor vehicle of a type used exclusively in a contest of speed or in a competitive trial of speed which is not intended for use on the highways. (i) Any person who is a lessor. (j) Any person who is a renter. (k) Any salvage pool. (l) Any yacht broker who is subject to the Yacht and Ship Brokers Act (Article 2 (commencing with Section 700) of Chapter 5 of Division 3 of the Harbors and Navigation Code) and who sells used boat trailers in conjunction with the sale of a vessel. (m) Any licensed automobile dismantler who sells vehicles that have been reported for dismantling as provided in Section 11520. (n) The Director of Corrections when selling vehicles pursuant to Section 2813.5 of the Penal Code. (o) (1) Any public or private nonprofit charitable, religious, or educational institution or organization that sells vehicles if all of the following conditions are met: (A) The institution or organization qualifies for state tax-exempt status under Section 23701d of the Revenue and Taxation Code, and tax-exempt status under Section 501(c)(3) of the federal Internal Revenue Code. (B) The vehicles sold were donated to the nonprofit charitable, religious, or educational institution or organization. (C) The vehicles subject to retail sale meet all of the applicable equipment requirements of Division 12 (commencing with Section 24000) and are in compliance with emission control requirements as evidenced by the issuance of a certificate pursuant to subdivision (b) of Section 44015 of the Health and Safety Code. Under no circumstances may any institution or organization transfer the responsibility of obtaining a smog inspection certificate to the buyer of the vehicle. (D) The proceeds of the sale of the vehicles are retained by that institution or organization for its charitable, religious, or educational purposes. (2) An institution or organization described in paragraph (1) may sell vehicles on behalf of another institution or organization under the following conditions: (A) The nonselling institution or organization meets the requirements of paragraph (1). (B) The selling and nonselling institutions or organizations enter into a signed, written agreement pursuant to subparagraph (A) of paragraph (3) of subdivision (a) of Section 1660. (C) The selling institution or organization transfers the proceeds from the sale of each vehicle to the nonselling institution or organization within 45 days of the sale. All net proceeds transferred to the nonselling institution or organization shall clearly be identifiable to the sale of a specific vehicle. The selling institution or organization may retain a percentage of the proceeds from the sale of a particular vehicle. However, any retained proceeds shall be used by the selling institution or organization for its charitable, religious, or educational purposes. (D) At the time of transferring the proceeds, the selling institution or organization shall provide to the nonselling institution or organization, an itemized listing of the vehicles sold and the amount for which each vehicle was sold. (E) In the event the selling institution or organization cannot complete a retail sale of a particular vehicle, or if the vehicle cannot be transferred as a wholesale transaction to a dealer licensed under this code, the vehicle shall be returned to the nonselling institution or organization and the written agreement revised to reflect that return. Under no circumstances may a selling institution or organization transfer or donate the vehicle to a third party that is excluded from the definition of a dealer under this section. (3) An institution or organization described in this subdivision shall retain all records required to be retained pursuant to Section 1660. (p) Any motor club, as defined in Section 12142 of the Insurance Code, that does not arrange or negotiate individual motor vehicle purchase transactions on behalf of its members but refers members to a new motor vehicle dealer for the purchase of a new motor vehicle and does not receive a fee from the dealer contingent upon the sale of the vehicle. SEC. 3. Section 296 of the Vehicle Code is amended to read: 296. A "distributor" is any person other than a manufacturer who sells or distributes new vehicles subject to registration under this code, new trailers subject to identification pursuant to Section 5014.1, or new off-highway motorcycles subject to identification under this code, to dealers in this state and maintains representatives for the purpose of contacting dealers or prospective dealers in this state. SEC. 4. Section 297 of the Vehicle Code is amended to read: 297. A "distributor branch" is an office maintained by a distributor for the sale of new vehicles or new trailers subject to identification pursuant to Section 5014.1 to dealers or for directing or supervising, in whole or in part, the distributor's representatives. SEC. 5. Section 331 of the Vehicle Code is amended to read: 331. (a) A "franchise" is a written agreement between two or more persons having all of the following conditions: (1) A commercial relationship of definite duration or continuing indefinite duration. (2) The franchisee is granted the right to offer for sale or lease, or to sell or lease at retail new motor vehicles or new trailers subject to identification pursuant to Section 5014.1 manufactured or distributed by the franchisor or the right to perform authorized warranty repairs and service, or the right to perform any combination of these activities. (3) The franchisee constitutes a component of the franchisor's distribution system. (4) The operation of the franchisee's business is substantially associated with the franchisor's trademark, trade name, advertising, or other commercial symbol designating the franchisor. (5) The operation of a portion of the franchisee's business is substantially reliant on the franchisor for a continued supply of new vehicles, parts, or accessories. (b) The term "franchise" does not include an agreement entered into by a manufacturer or distributor and a person where all the following apply: (1) The person is authorized to perform warranty repairs and service on vehicles manufactured or distributed by the manufacturer or distributor. (2) The person is not a new motor vehicle dealer franchisee of the manufacturer or distributor. (3) The person's repair and service facility is not located within the relevant market area of a new motor vehicle dealer franchisee of the manufacturer or distributor. SEC. 6. Section 331.1 of the Vehicle Code is amended to read: 331.1. A "franchisee" is any person who, pursuant to a franchise, receives new motor vehicles subject to registration under this code, new off-highway motorcycles, as defined in Section 436, or new trailers subject to identification pursuant to Section 5014.1 from the franchisor and who offers for sale or lease, or sells or leases the vehicles at retail or is granted the right to perform authorized warranty repairs and service, or the right to perform any combination of these activities. SEC. 7. Section 331.2 of the Vehicle Code is amended to read: 331.2. A "franchisor" is any person who manufactures, assembles, or distributes new motor vehicles subject to registration under this code, new off-highway motorcycles, as defined in Section 436, or new trailers subject to identification pursuant to Section 5014.1 and who grants a franchise. SEC. 8. Section 672 of the Vehicle Code is amended to read: 672. (a) "Vehicle manufacturer" is any person who produces from raw materials or new basic components a vehicle of a type subject to registration under this code, off-highway motorcycles subject to identification under this code, or trailers subject to identification pursuant to Section 5014.1, or who permanently alters, for purposes of retail sales, new commercial vehicles by converting the vehicles into housecars that display the insignia of approval required by Section 18056 of the Health and Safety Code and any regulations issued pursuant thereto by the Department of Housing and Community Development. As used in this section, "permanently alters" does not include the permanent attachment of a camper to a vehicle. (b) A vehicle manufacturer who produces a vehicle of a type subject to registration that consists of used or reconditioned parts, for the purposes of the code, is a remanufacturer, as defined in Section 507.8. (c) Unless a vehicle manufacturer either grants franchises to franchisees in this state, or issues vehicle warranties directly to franchisees in this state or consumers in this state, the manufacturer shall have an established place of business or a representative in this state. (d) The scope and application of this section are limited to Division 2 (commencing with Section 1500) and Division 5 (commencing with Section 11100). SEC. 9. Section 4004.7 is added to the Vehicle Code, to read: 4004.7. (a) If the apportioned registration issued under Article 4 (commencing with Section 8050) of Chapter 4 for a commercial vehicle or vehicle combination that was last registered by a California resident has expired or has been terminated, the department, upon receipt of a completed application, a fee of thirty dollars ($30), and proof of financial responsibility for the vehicle, may issue an unladen operation permit to authorize the unladen operation of that vehicle or vehicle combination for a period of not more than 15 continuous days. (b) This section does not apply to any vehicle or vehicle combination for which any vehicle registration fees, other than those for the current year, vehicle license fees, or penalties, or any combination of those are due. (c) Operation of a laden vehicle or vehicle combination under an unladen operation permit issued pursuant to this section is an infraction. SEC. 10. Section 8058 is added to the Vehicle Code, to read: 8058. (a) The department shall charge interest on any underpaid fees due under this article, at the rate of 1 percent per month of the underpaid portion of the fees, commencing on the date the underpaid portion of the fees were originally due and accruing monthly until paid. (b) Interest charged under subdivision (a) shall continue to accumulate during any disputation of the underpaid fees or any hearing regarding the underpaid fees. During any disputation or hearing, the registrant may pay the underpaid fees and other charges to avoid additional interest charges and may request a refund of any overpaid fees after final review. (c) For any underpaid fees, the department shall impose a penalty of fifty dollars ($50) or 10 percent of the underpaid fees, whichever is greater, commencing on the date the underpaid fees were determined to be due. (d) For the purposes of this section, "underpaid fees" include additional vehicle registration, weight, and license fees found to be due to this state and any other member of the International Registration Plan as the result of an audit or finding of an International Registration Plan carrier. SEC. 11. Section 9250.15 of the Vehicle Code is amended to read: 9250.15. (a) In addition to any other fees specified in this code, the department shall collect an administrative service fee in the amount authorized under subdivision (b) for each application for registration, renewal of registration, or supplement apportioned registration pursuant to Article 4 (commencing with Section 8050) of Chapter 4. (b) The administrative service fee required to be collected under subdivision (a) shall be at least the amount determined by the department to be sufficient to pay membership dues to the association acting as the repository for the International Registration Plan under Article 3 (commencing with Section 8000) of Chapter 4, but may not be more than two dollars ($2) for each application. (c) The money collected by the department under this section, less the department's administrative costs in collecting and transmitting the money, shall be available, upon appropriation, to the department for payment to the association described in subdivision (b). (d) Funds provided to the association under this section shall be used exclusively for the administration and support of reciprocity activities under the International Registration Plan. SEC. 12. Section 9259.3 is added to the Vehicle Code, to read: 9259.3. For each application to include an additional operating area or a registration issued under Article 4 (commencing with Section 8050) of Chapter 4 of Division 3, the department shall require a deposit in an amount determined by the department to be sufficient to ensure compliance with that article. SEC. 13. Section 9259.5 is added to the Vehicle Code, to read: 9259.5. For each application for immediate telephone service for a registration issued under Article 4 (commencing with Section 8050) of Chapter 4 of Division 3, the department shall impose a fee in an amount determined by the department to be sufficient to cover its administrative costs under this section. SEC. 14. Section 2.5 of this bill incorporates amendments to Section 286 of the Vehicle Code proposed by both this bill and AB 871. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 286 of the Vehicle Code, and (3) this bill is enacted after AB 871, in which case Section 2 of this bill shall not become operative. SEC. 15. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.