Trial Engrossment of Amendment A05196 to House Bill 1898 P.N. 2688, Regular Session 2017-2018

A05196

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1898

Session of

2017

INTRODUCED BY SANTORA, MUSTIO, READSHAW, DAY, EMRICK, GILLESPIE,

HELM, HICKERNELL, MAHER, MENTZER, M. QUINN, SONNEY, BRIGGS,

D. COSTA, DEASY, J. HARRIS, KORTZ, McCLINTON, RAVENSTAHL,

CHARLTON, PASHINSKI, DRISCOLL, GALLOWAY, MATZIE, SNYDER,

CORBIN, NESBIT, SAINATO, SCHLOSSBERG, PETRARCA, GOODMAN,

CARROLL, MARKOSEK, MILLARD, DUNBAR, PEIFER, KEEFER, HARKINS,

LONGIETTI, DeLUCA, TAYLOR, MASSER, MARSHALL, STEPHENS,

NEILSON, FARRY, SCHWEYER, TOPPER, BARRAR, WHITE, WATSON,

MARSICO, REESE, FLYNN, BENNINGHOFF, KIM, HENNESSEY AND

PICKETT, NOVEMBER 8, 2017

REFERRED TO COMMITTEE ON PROFESSIONAL LICENSURE,

NOVEMBER 8, 2017

AN ACT

Amending the act of December 22, 1983 (P.L.306, No.84), entitled

"An act providing for the State Board of Vehicle

Manufacturers, Dealers and Salespersons; and providing

penalties," further providing for definitions; providing for

vehicle recalls; and further providing for unlawful acts by

manufacturers or distributors, for application for license

and for licensing cost.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 2 of the act of December 22, 1983

(P.L.306, No.84), known as the Board of Vehicles Act, is amended

by adding definitions to read:

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Do-not-drive order." A notification provided to the owner

of an affected vehicle by a manufacturer or by the National

Highway Traffic Safety Administration unconditionally

instructing the owner to stop driving the vehicle until the

noncompliance or defect remedy is performed.

* * *

"Significantly modify facilities." An alteration that has a

major impact on the architectural features, characteristics,

appearance or integrity of a structure or lot. The term does not

include routine maintenance, such as interior painting,

reasonably necessary to maintain a dealership facility in

attractive condition.

* * *

"Stop-sale order." A notification issued by a manufacturer

to its new vehicle dealers stating that certain used vehicles in

inventory should shall not be sold or leased, at retail or

wholesale, due to a Federal safety recall for a defect or a

noncompliance or a Federal or California emissions recall.

* * *

Section 2. The act is amended by adding a section to read:

Section 9.1. Vehicle recalls.

(a) General rule.--A manufacturer shall compensate its new

vehicle dealers for all labor and parts required by the

manufacturer to perform recall repairs. Compensation for recall

repairs shall be in the same manner as warranty parts and labor

compensation under section 9. If parts or a remedy are not

reasonably available to perform a recall service or repair on a

used vehicle held for sale by a new vehicle dealer of the same

line-make within 15 30 days of the manufacturer issuing the

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initial notice of recall, and the manufacturer has issued a

stop-sale order or a do-not-drive or similar notification order

on the vehicle, the manufacturer shall compensate the dealer at

a prorated rate of at least 1.75% 1.5% of the value of the

vehicle per month , or portion of a month, while the recall or

remedy parts are unavailable and the stop-sale order or the do-

not-drive or similar notification order remains in effect. ,

beginning on the date that is 30 days after the date on which

the stop-sale or do-not-drive order was provided to the dealer,

until the earlier of the date the recall or remedy parts are

made available or the date the dealer sells, trades or otherwise

disposes of the affected used vehicle. The following shall

apply:

(1) The value of a used vehicle shall be the average

trade-in value for used vehicles as indicated in an

independent third-party guide for the year, make, model and

mileage of the recalled vehicle prior to at the time of the

announcement of the stop-sale order or the do-not-drive or

similar notification order.

(2) This section shall only apply to used vehicles

subject to safety or emissions recalls pursuant to and

recalled in accordance with Federal law and regulations and

where a stop-sale order or a do-not-drive or similar

notification order has been issued. Further, this section

shall only apply to new vehicle dealers holding used vehicles

for sale that are a line-make that the dealer is franchised

to sell or on which the dealer is authorized to perform

recall repairs . :

(i) in inventory at the time the stop-sale or do-

not-drive order was issued; or

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(ii) which were taken into the used vehicle

inventory of the dealer as a lease return vehicle or

consumer trade-in incident to the purchase of a new

vehicle from the dealer after the stop-sale or do-not-

drive order was issued.

(3) Nothing in this section shall require a manufacturer

to provide total compensation to a dealer which would exceed

the total average trade-in value of the affected used motor

vehicle as originally determined under paragraph (1).

(b) Violation.--It is a violation of this section for a

manufacturer to reduce the amount of compensation otherwise owed

to a new vehicle dealer who because the new vehicle dealer has

submitted a claim for reimbursement under this section or was

otherwise compensated for a vehicle subject to a recall where a

stop-sale order or a do-not-drive or similar notification order

has been issued. This subsection applies regardless of whether

the reduction in the amount of compensation owed to a new

vehicle dealer is through a chargeback, removal from an

incentive program, reduction in amount owed under an incentive

program or any other means.

dealers under this section for recall remedies or repairs, or

for compensation where no part or repair is reasonably available

and the used vehicle is subject to a stop-sale order or a do-

not-drive or similar notification order, shall be subject to the

same limitations and requirements as a warranty reimbursement

claim made under section 9. A claim shall be either approved or

disapproved within 30 days after the claim is submitted to the

manufacturer in the manner and on the forms the manufacturer

reasonably prescribes. A claim shall be paid within 30 days of

A05196 - 4 -

approval of the claim by the manufacturer. A claim not

specifically disapproved in writing within 30 days after the

manufacturer receives a submitted claim shall be deemed to be

approved.

(d) Alternative compensation.--As an alternative to the

compensation provided for under subsection (a), a manufacturer

compensation provided for under subsection (a):

(1) a manufacturer may compensate its new vehicle

dealers under a national recall compensation program if the

compensation under the program is equal to or greater than

that provided under subsection (a) or the subsection (a); or

(2) the manufacturer and dealer otherwise agree . to

equal or greater compensation than that provided under

subsection (a).

(e) Exclusive remedy.--Any compensation provided to a new

vehicle dealer pursuant to this section is exclusive and may not

be combined with any other Federal or State recall compensation

remedy.

(e) (f) Disclosure.--A new or used vehicle dealer shall

disclose in writing to used retail vehicle purchasers at the

time of sale the existence of any open, unremedied recalls. By

providing to the used vehicle retail purchaser a report obtained

from the publicly accessible Internet website safercar.gov, or a

successor website, based on a vehicle identification number

search, the dealer shall be deemed to have complied with the

disclosure requirement under this subsection. For the purpose of

this subsection, failure to provide disclosures to multiple

vehicle retail purchasers at the time of sale in violation of

this subsection constitutes a single offense with a maximum fine

of $1,000 under section 28(a).

A05196 - 5 -

Section 3. Section 12(a)(8) of the act is amended to read:

Section 12. Unlawful acts by manufacturers or distributors.

(a) Unlawful coercive acts.--It shall be a violation for any

manufacturer, factory branch, distributor, field representative,

officer, agent or any representative whatsoever of such

manufacturer, factory branch or distributor licensed under this

act to require, attempt to require, coerce or attempt to coerce

any new vehicle dealer in this Commonwealth to:

* * *

(8) Expand, construct or significantly modify facilities

before a date that is ten years after the date of the

construction of the facility or the alteration or remodeling

at that location was completed and without assurances that

the manufacturer or distributor will provide a reasonable

supply of new vehicles within a reasonable time so as to

justify such an expansion in light of the market and economic

conditions. This paragraph shall not apply if the expansion,

construction or significant modification is necessary to

comply with a health or safety law or to comply with a

technology requirement, which is necessary to sell or service

a vehicle that the new vehicle dealer is licensed by the

manufacturer to sell or service. This section shall apply to

any successor dealer provided the dealer has been designated

and approved by the manufacturer in the franchise agreement

and the construction, alteration or remodeling substantially

complied with the manufacturer's brand image standards or

plans that the manufacturer provided at the time the

construction, alteration or remodeling was completed. Nothing

in this paragraph shall prohibit a manufacturer from:

(i) Continuing a facility improvement program that

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is in effect as of the effective date of this

subparagraph with more than one new vehicle dealer in

this Commonwealth or to renewing or modifying the

facility improvement program.

(ii) Providing lump sum or regularly scheduled

payments to assist a new vehicle dealer in making a

facility improvement, including construction, alteration

or remodeling or installing signage or an image element.

(iii) Providing reimbursement to a new vehicle

dealer on reasonable, written terms for a portion of the

new vehicle dealer's cost of making a facility

improvement, including construction, alteration or

remodeling, the purchase of goods, building materials or

services or installing signage or an image element.

* * *

Section 4. Section 22 of the act is amended by adding a

subsection to read:

Section 22. Application for license.

* * *

(b.1) Temporary license.--Upon receipt of a complete and

accurate new vehicle dealer application or new vehicle dealer

change of address application with manufacturer letter of

intent, and prior to proof of compliance with 49 Pa. Code §

19.18 (relating to established place of business for dealers),

the board shall issue a new vehicle dealer license and approval

letter immediately. In the interim, at such time as the board

processes and reviews the application, the new vehicle dealer

shall maintain a copy of the application sent to the board as

its temporary license pending receipt of its approval letter and

new vehicle dealer license. The temporary license shall expire

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at the end of 60 days from the date on the application. If a new

vehicle dealer has submitted an application and proof of

compliance with 49 Pa. Code § 19.18 during the 60-day time

period and has not received an approval or denial from the

department, the temporary license shall be extended until the

approval or denial is received by the new vehicle dealer.

(b.1) Temporary license.--Upon receipt of a complete and

accurate new vehicle dealer application or new vehicle dealer

change of address application, the board shall issue a new

vehicle dealer license immediately. If the new vehicle dealer

does not have the franchise approval letter, the telephone

business line information, the certificate of occupancy or the

lease or deed for the property available when the application

has been submitted, the new vehicle dealer shall receive a

temporary license that expires at the end of 45 business days

from the date of closing. The new vehicle dealer shall submit

the franchise approval letter, the telephone business line

information, the certificate of occupancy and the lease or deed

for the property prior to the expiration of the temporary

license. Upon receipt of the franchise approval letter, the

telephone business line information, the certificate of

occupancy and the lease or deed for the property, the board

shall issue a license immediately.

* * *

Section 5. Section 27.1(a)(2) of the act is amended to read:

Section 27.1. Licensing cost.

(a) Licensing cost.--Subject to the limitations established

under subsection (c), a licensed dealer who has a contract with

the Department of Transportation pursuant to 75 Pa.C.S. § 7501

(relating to authorization of messenger and agent services) may

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charge the purchaser of a vehicle a licensing cost permissible

under 75 Pa.C.S. Ch. 19 (relating to fees) and the act of

December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade

Practices and Consumer Protection Law, and regulations

promulgated thereunder, to include any of the following:

* * *

(2) A documentary preparation charge for:

(i) Preparation and completion of documents required

to register and license the vehicle under 75 Pa.C.S.

(relating to vehicles).

(ii) Collection and submission of taxes payable by

the purchaser.

(iii) Preparation of any other information

associated with titling and registration of a vehicle.

(iv) Complying with Federal and State laws and

regulations , including relating to the privacy and

safeguarding of customer information requirements ,

providing financial services to the customer and

preparation and retrieval of documents .

* * *

Section 6. This act shall take effect in 60 days.

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