BILL ANALYSIS �
AB 501
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CONCURRENCE IN SENATE AMENDMENTS
AB 501 (Nazarian)
As Amended September 3, 2013
Majority vote
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|ASSEMBLY: |70-0 |(May 16, 2013) |SENATE: |39-0 |(September 9, |
| | | | | |2013) |
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Original Committee Reference: TRANS .
SUMMARY : Modifies various provisions related to motor vehicle
dealers.
The Senate amendments :
1)Add provisions allowing consumers to qualify for restitution
from the Consumer Motor Vehicle Recovery Corporation (CMVRC)
for two additional dealer omissions including:
a) Failure to provide a consumer with a clean title on a
purchased vehicle, unless clearly and conspicuously agreed
to otherwise; and,
b) Failure to remit funds the dealer has received or
committed to pay to third parties for insurance, service
contracts, or other goods or services.
1)Clarify the definition of "tire brokers" to specify that a
tire broker does not include a tire retailer primarily engaged
in the retail sale, service, and installation of new tires on
customer vehicles.
2)Delete provisions clarifying that license plate brackets (the
frame used to secure a license plate to a vehicle) and paper
advertisement inserts held within a license plate bracket are
not considered mobile billboard advertising displays.
3)Delete provisions repealing the requirement for car dealers to
place a warning label on vehicles they sell that have a model
year between 1972 and 1990 notifying the buyer that the
vehicle may not be equipped with both lap belts and shoulder
restraints.
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4)Delete provisions exempting certain car wash facilities,
including those operated by car dealers, from the requirement
to use recycled water in their car wash facilities.
5)Include chaptering out amendments in the event this bill and
AB 529 (Lowenthal) of the current legislative session are both
enacted.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
Brake Friction Material : Scientific studies show that dissolved
copper has a devastating impact on the aquatic food chain and
that a major source of copper in watersheds comes from material
worn off of vehicle brake pads. To address this problem, SB 346
(Kehoe), Chapter 307, Statutes of 2010, sought to improve
California's water quality by requiring brake pad manufacturers
to reduce the use of copper in brake pads sold in California to
no more than 5% by 2021 and no more than 5% by 2025.
Additionally, that bill also created limits for other brake pad
materials, established a certification process for compliance,
established civil penalties for violations, created a Brake
Friction Materials Water Pollution Fund, and provided a
mechanism that manufacturers could use to extend new brake pad
manufacturing deadlines if a safe and compliant product cannot
be developed within the timeframes established in SB 346.
According to the sponsor of this bill, the California New Car
Dealers Association, statutes enacted by SB 346 that limited the
sale of noncompliant brake pads could be interpreted to mean
that car dealers would be required to remove non-conforming
brake pads ("legacy" brake pads) from used vehicles they acquire
after 2014 and replace them with conforming brake pads before
the vehicles can be sold. The sponsor indicates that this was
not the intent of SB 346 and that if brake pad replacement must
be performed before used cars can be resold by a dealership,
this provision would represent a considerable expense to dealers
and, ultimately, to used car buyers.
To avoid these potential unintended costs, the sponsor is
seeking to clarify the intent of SB 346 by clearly stating in
statute that if a dealer acquires a vehicle equipped with
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"legacy" brake pads, they are not required to replace them with
brake pads that comply with SB 346 before the vehicle can be
sold. The author claims that this was the original intent of SB
346 and that this bill represents a simple clarification in
statute.
Tire Broker : AB 1647 (Gordon), Chapter 534, Statutes of 2012,
sought to curb the growing trend of illegally exporting waste
tires overseas, where they are converted into bunker fuel,
rather than being recycled here in California. To reduce the
practice of exporting tire waste overseas, AB 1647 instituted
reporting practices that require tire brokers to register with
the Department of Resources Recycling and Recovery (CalRecycle)
and periodically report information on tire shipment activity.
AB 1647 defined a tire broker as "a person that arranges for the
shipment of used or waste tires to or from a site located within
the state, or through the state . . ." The author claims that
this definition was meant to include only those actively engaged
in purchasing waste tires for resale inside or outside of
California and that AB 1647 was not intended to include car
dealers or tire retailers primarily engaged in the retail sale,
service, and installation of tires on customer vehicles since
these businesses merely generate waste tires as a byproduct of
their primary business and do not arrange for the shipment of
used tires as their primary business model.
In a letter to the Assembly Journal dated August 30, 2012,
Assembly Member Gordon clarified that it was his intent that
motor vehicle dealers would not be not required to comply with
the provisions of AB 1647 since those provisions only applied to
tire brokers. The author has, therefore, introduced this bill
to clarify in statute (rather than simply in a letter to the
Assembly Journal) that a "tire broker" does not include a tire
retailer primarily engaged in the retail sale, service, and
installation of tires on customer vehicles or vehicle dealers.
Despite that the bill seems to codify the letter to the Assembly
Journal submitted by Assembly Member Gordon with regard to AB
1647, there are concerns that exempting car dealers and tire
retailers may be problematic because exempting these groups
could hamper CalRecycle's ability to gather data regarding the
movement and disposal of used tires thereby inhibiting their
ability to further develop regulations to track used tire
disposal and carry out enforcement actions.
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The author, the sponsor, the New Car Dealers Association, and
CalRecycle crafted the amendments taken in the Senate with
respect the definition of a "tire broker" to specify that a
"tire broker" does not include a tire retailer primarily engaged
in the retail sale, service, and installation of new tires on
customer vehicles.
Consumer Motor Vehicle Recovery Corporation : Existing law
requires motor vehicle dealers to maintain a non-profit
corporation known as the CMVRC for the purpose of providing
payments to consumers for unsatisfied claims for economic loss
as a result of licensed dealer's failure to remit license or
registration fees the dealer has received or committed to pay to
the Department of Motor Vehicles (DMV); pay off the loan on a
vehicle taken as a trade-in; make agreed upon payments to the
lessor of a vehicle taken as a trade-in; and, make good on a
consignment agreement after the sale of a consigned vehicle.
Motor vehicle dealers support the CMVRC by contributing $1 per
vehicle sold, up to $2,500 per year through the DMV. DMV ceases
to collect the fee if the balance of the recovery fund exceeds
$5 million and reinstates the fee when the fund balance dips
below $2 million.
This provision, added in the Senate, would allow consumers to
qualify for restitution from the CMVRC for two additional dealer
omissions including failure to provide a consumer with a clean
title on a purchased vehicle (unless clearly and conspicuously
agreed to otherwise) and failure to remit funds the dealer has
received or committed to pay to third parties for insurance,
service contracts, or other goods or services.
Motor Carrier Permit Exemption : The Motor Carrier of Property
Permit Act of 1996 (Act) was enacted primarily to protect the
safety of the traveling public by requiring commercial motor
vehicles to obtain a Motor Carrier Permit (MCP). Motor carriers
of property include any vehicle that is used for commercial
purposes as well as any motor truck with two or more axles that
weighs more than 10,000 pounds, gross vehicle weight rating
(GVWR). Certain vehicles, however, are exempted from the
definition of a motor carrier including a pickup truck with a
GVWR of less than 11,500 pounds that is equipped with an open
box-type bed not exceeding nine feet in length. Other vehicles
that are exempt include motor trucks or two-axle truck tractors
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with a GVWR of less than 26,001 pounds only when they are being
used to tow a camp trailer, trailer coach, fifth-wheel travel
trailer, or utility trailer. If the truck is not towing one of
the specified trailers and is instead operated singly, it is
required to have a MCP and the owner is required to carry a
higher level of insurance coverage on the vehicle.
According to the author, over the past few decades, pickup
trucks have been built larger and heavier than they once were
and the result is that few pickup trucks (particularly those
used for towing) continue to meet the 11,500 pound GVWR
exemption from needing a MCP and enhanced insurance coverage.
The author cites the Ford F-350 or Dodge Ram 3500 as an example
of trucks that are commonly used for towing camp trailers and
fifth-wheel trailers but have a GVWR of 10,800 pounds and 13,000
pound, respectively. If used to tow a camp trailer, utility
trailer, fifth wheel, or utility trailer, a Ford F-350 is exempt
from the requirement to have a MCP and enhanced insurance (when
these trailers are in tow) but the same truck operated singly
(not towing one of the specified trailers), must have a MCP and
enhanced insurance coverage.
The author and the sponsor note that there have been cases when
people use these vehicles to tow a camp trailer to a campground
and then receive a citation for not having a MCP when the owner
unhitches the trailer and drives the truck singly (without the
trailer attached) to the grocery store or other nearby location.
The sponsor contends that these requirements are discouraging
individuals from purchasing and using these larger trucks
because of the cost associated with maintaining a MCP ($35 per
year for an MCP) plus the cost of the enhanced insurance
coverage.
To alleviate this problem, this bill which would extend the
exemption for larger pickup trucks (up to 16,000 pounds GVWR) to
operate singly without the need to be towing a trailer as long
as the vehicle is not being operated for commercial use. The
bill also adds trailers used to carry watercrafts to the list of
trailers that can be towed by these larger trucks (up to 26,000
pounds GVWR) without needing to have a MCP.
Analysis Prepared by : Victoria Alvarez / TRANS. / (916) 319-
2093
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FN:
0002333