BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1215|
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                                 THIRD READING


          Bill No:  AB 1215
          Author:   Blumenfield (D), et al.
          Amended:  8/18/11 in Senate
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  9-0, 6/28/11
          AYES:  DeSaulnier, Gaines, Harman, Huff, Kehoe, Lowenthal, 
            Pavley, Rubio, Simitian
           
          SENATE JUDICIARY COMMITTEE  :  5-0, 7/5/11
          AYES:  Evans, Harman, Blakeslee, Corbett, Leno
           
          SENATE APPROPRIATIONS COMMITTEE  :  8-0, 8/22/11
          AYES:  Kehoe, Walters, Alquist, Lieu, Pavley, Price, 
            Runner, Steinberg
          NO VOTE RECORDED:  Emmerson
           
          ASSEMBLY FLOOR  :  75-3, 6/2/11 - See last page for vote


           SUBJECT  :    Vehicles:  electronic registration and dealer 
          fees

           SOURCE  :     Author


           DIGEST  :    This bill requires new car dealers to 
          participate in a program to electronically title and 
          register vehicles that they sell and to post specified 
          warning notices on some used cars.  This bill allows 
          vehicle dealers to charge car buyers higher add-on fees on 
          the sale of new and used vehicles.
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           ANALYSIS  :    

           Vehicle License Plates and Registration
           
          Existing law prohibits a person from driving, moving, or 
          parking a motor vehicle on the highway or in a public 
          parking facility unless it is registered with the 
          Department of Motor Vehicles (DMV).  When someone buys a 
          new car, it is not yet registered, nor does it display 
          license plates.  Sometimes used cars also do not have 
          license plates, and in any case, the dealer must transfer 
          the title and registration to the buyer.  

          At the time of retail sale, the vehicle dealer is 
          responsible for applying to DMV for the registration of a 
          new vehicle and the transfer of registration for a used 
          vehicle.  Before the dealer can deliver the vehicle to the 
          buyer, the dealer must affix to the vehicle's windshield a 
          DMV-created report-of-sale showing that the vehicle is in 
          the process of being registered.  The dealer then has 20 
          days for a new vehicle or 30 days for a used vehicle to 
          deliver to DMV the application and fees necessary to 
          register the vehicle in the buyer's name.

          Once DMV receives and processes the application, it issues 
          and mails to the new owner two license plates, a vehicle 
          registration card, and the appropriate registration 
          stickers for the vehicle's rear license plate.  The two 
          license plates must remain affixed to a vehicle, but the 
          vehicle may be operated for 180 days after purchase while 
          displaying a report-of-sale rather than license plates with 
          registration stickers.

          In 2001, under SB 46 (Polanco), Chapter 127, Statutes of 
          2001, DMV established an Electronic Vehicle Registration 
          (EVR) program in which motor vehicle dealers may enter into 
          contracts to act as DMV business partners for vehicle 
          registration and titling purposes.  A business partner 
          either directly, or through a service provider, 
          communicates electronically with DMV to register a vehicle 
          it has sold and then mails license plates, registration 
          cards, and registration stickers to the buyer.  DMV 
          estimates that less than half of new car dealers 

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          participate in this voluntary EVR program.

           Document Processing Fee
           
          Existing law requires any person acting as a dealer of 
          motor vehicles subject to registration to be licensed by 
          DMV.  Among other requirements and prohibitions, a motor 
          vehicle dealer must advertise the total price of a vehicle, 
          but may exclude taxes, registration and smog check fees, 
          finance charges, and document preparation fees.  In 
          addition, the dealer must sell the vehicle at the 
          advertised price, exclusive of the mentioned taxes and 
          fees.  Existing law caps dealer document preparation fees 
          at $45 for a leased vehicle and $55 for a purchased 
          vehicle.  While existing law does not define what this fee 
          is, generally vehicle dealers assert that the fee is meant 
          to cover the cost to the dealer of processing paperwork, 
          including that required to register the motor vehicle with 
          the state.

           National Motor Vehicle Title Information Service

           The Federal Anti-Car Theft Act of 1992 (Act) provided for 
          the establishment of a national information system to 
          enable states and others to access vehicle titling 
          information.  In 1996, United States Congress reauthorized 
          the Act and gave U.S. Department of Justice responsibility 
          for implementation and development of the system, which is 
          known as the National Motor Vehicle Title Information 
          Service (NMVTIS). 

          The federal government created NMVTIS to:

          1. Prevent the introduction or reintroduction of stolen 
             vehicles into interstate commerce;

          2. Protect states, consumers, and others from fraud;

          3. Reduce the use of stolen vehicles for illicit purposes, 
             including fundraising for criminal enterprises; and

          4. Provide consumer protection from unsafe vehicles, 
             including showing when a vehicle title has been branded 
             in a jurisdiction.  (A "brand" is a descriptive label 

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             that states assign to a vehicle to identify the 
             vehicle's current or prior condition, such as "junk," 
             "salvage," or "flood.")

          For a consumer to access NMVTIS information about a 
          particular vehicle's title and history, the consumer pays a 
          small fee (typically $5 to $8) to one of several private 
          companies that provide access to NMVTIS records. 

          This bill:

          1. Requires that a new motor vehicle dealer register motor 
             vehicles -- new or used -- that it sells or leases using 
             the EVR program.  This provision does not apply to 
             motorcycles, off-highway vehicles, or recreational 
             vehicles.  To this end, this bill makes any new car 
             dealer that has not signed up as a business partner in 
             DMV's EVR program by October 1, 2012 to be in violation 
             of statutory dealer licensing requirements.

          2. Changes the name of the document preparation fee to the 
             "document processing charge" and expressly authorizes 
             dealers to charge a purchaser or lessee the charge.  
             This bill states that the document processing charge is 
             "for preparation and processing of documents, 
             disclosures, and titling, registration, and information 
             security obligations imposed by state and federal law" 
             but prohibits a dealer from representing it as a 
             governmental fee. 

          3. Increases the cap on the document processing charge for 
             both purchases and leases to $80 for those dealers that 
             participate in electronic registration and $65 for those 
             dealers - who could only be used vehicle dealers - who 
             do not participate.  

          4. Authorizes a dealer to charge an electronic filing 
             charge not to exceed the actual amount the dealer pays 
             to a DMV service provider for providing a license plate. 
              The dealer may not represent this as a governmental fee 
             either.  (DMV regulations currently allow a dealer who 
             is a business partner under the EVR program to charge 
             consumers up to $29 for electronic registration.)


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          5. Shortens the period from six months to 90 days during 
             which a vehicle may be operated while displaying a 
             report-of-sale and without a license plate and 
             registration stickers.  This bill clarifies that a 
             registered owner must affix license plates to a vehicle 
             upon receiving those plates.

          6. Prohibits a dealer from offering a used vehicle for sale 
             unless the dealer obtains an NMVTIS report on that 
             vehicle.  If the report indicates that the vehicle is a 
             junk automobile or a salvage automobile, that specified 
             parties have reported it as such, or that its title 
             contains a brand, then the dealer must affix to the 
             vehicle a prescribed warning to that effect in 14 point 
             font on a 4 inch by 5.5 inch, red background.  The 
             warning shall also advise the buyer that he or she may 
             get a copy of the NMVTIS report from the dealer or 
             obtain it independently and the web address at which to 
             obtain it.  The dealer must make the NMVTIS report 
             available to the purchaser upon request prior to sale.  

          7. States nothing shall prohibit a NMVTIS data provider 
             from including in the report additional vehicle history 
             information obtained from resources other than NMVTIS, 
             and that this bill does not create any legal duty upon 
             the dealer related to the accuracy, errors, or omissions 
             contained in the report, or create a duty upon the 
             dealer to provide information added to the report after 
             the dealer obtained the report.

          8. Provides the NMVTIS report requirements contained in the 
             bill shall cease in the event that all NMVTIS data 
             providers cease to make MNTVIS vehicle history reports 
             available to the public.

          9. Specifies that the NMVTIS report requirements do not 
             apply to the sale of recreational vehicles, motorcycles, 
             or off road motor vehicles.

          10.Takes effect on July 1, 2012.

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


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          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions              2011-12      2012-13     
           2013-14   Fund  

          Dealer enrollment           one-time costs for DMV to 
          register         Special*
                           non-participating dealers into 
          partnerships 
                           under the EVR program, fully offset by 
          fees.
                           
           Electronic registration  
           Staff Savings                          ($3,600)        
          ($3,800)         Special*
          Fee revenue gains                                 
          ($5,600)         ($5,800)              Special*

          Loss of data sales          unknown potential revenue 
          loss of          Special*
                           $300-$500  

          * Motor Vehicle Account

           SUPPORT  :   (Verified  8/23/11)

          Auto Data Direct
          AutoNation
          California Association of Highway Patrolmen
          California Motorcycle Dealers Association
          California New Car Dealers Association
          CARCO
          CarMax Auto Superstores
          Coalition of Vehicle Registration Services
          Consumer Action
          Consumers for Auto Reliability and Safety
          Metropolitan Transportation Committee
          National Salvage Vehicle Reporting Program
          North American Export Committee

           OPPOSITION  :    (Verified  8/23/11)


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          African American Chamber of Commerce
          California Urban Partnership
          Carfax
          Experian 
          Greater Sacramento Urban League
          West Angeles Community Development Corp


           ASSEMBLY FLOOR  :  75-3, 6/2/11
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Cook, Davis, Dickinson, Eng, 
            Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, 
            Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Harkey, 
            Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, 
            Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, 
            Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, 
            Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel 
            Pérez, Portantino, Silva, Skinner, Smyth, Solorio, 
            Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, 
            Yamada, John A. Pérez
          NOES:  Conway, Donnelly, Halderman
          NO VOTE RECORDED:  Gorell, Hall


          JJA:kc  8/24/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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