BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1215| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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. CONTINUED AB 1215 Page 2 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 CONTINUED AB 1215 Page 3 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 CONTINUED AB 1215 Page 4 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.) CONTINUED AB 1215 Page 5 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 CONTINUED AB 1215 Page 6 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) CONTINUED AB 1215 Page 7 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 **** END **** CONTINUED