2017 -- H 5490 SUBSTITUTE B

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LC001433/SUB B

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES -- REGULATIONS OF BUSINESS

PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND

DEALERS

     Introduced By: Representatives Morin, Phillips, Casey, Messier, and McNamara

     Date Introduced: February 15, 2017

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 31-5.1 of the General Laws entitled "Regulation of Business

Practices Among Motor Vehicle Manufacturers, Distributors, and Dealers" is hereby amended by

adding thereto the following section:

     31-5.1-6.1. Obligations during recalls.

     (a) A manufacturer shall compensate its new motor vehicle dealers for all labor and parts

required by the manufacturer to perform recall repairs. Compensation for recall repairs shall be at

the dealer retail rate in effect at the time the recall repair work is performed. The dealer retail rate

for parts and labor shall be at the same rates as those provided for under §31-5.1-6. If parts or a

remedy are not reasonably available to perform a recall service or repair on a used vehicle held

for sale by the dealer authorized to sell new vehicles of the same line make within thirty (30) days

of the manufacturer issuing the initial notice of recall and the manufacturer has issued a "Stop-

Sale", or "Do-Not-Drive", order on the vehicle, the manufacturer shall compensate the dealer at a

rate of at least one and one-half percent (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", or "Do-Not-

Drive", order remains in effect. A "Stop-Sale" shall be defined as a notification issued by a

vehicle manufacturer to its franchised dealerships stating that certain used vehicles in inventory

shall not be sold or leased, at retail and/or wholesale, due to a federal safety recall for a defect or

a noncompliance, or a federal or California emissions recall.

     (b) 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 on the later of:

     (1) The date the "Stop-Sale" or "Do-Not-Drive" order was issued; or

     (2) The date the vehicle is taken in the used motor vehicle inventory.

     (c) This section shall apply only to used vehicles subject to safety or emissions recalls

pursuant to and recalled in accordance with federal law and regulations adopted thereunder and

where a "Stop-Sale", or "Do-Not-Drive", order has been issued; provided, further, that this

section shall apply only to new motor 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. This section further shall apply only to new motor vehicle dealers holding an

affected used motor vehicle for sale that was:

     (1) In inventory at the time the "Stop-Sale" or "Do-Not-Drive" order was issued;

     (2) Taken in the used motor vehicle inventory of the new motor vehicle dealer as a

consumer trade-in incident to the purchase of a new motor vehicle before or after the "Stop-Sale"

or "Do-Not-Drive" order was issued; or

     (3) Properly taken in the used motor vehicle inventory of the new motor vehicle dealer as

a lease return vehicle returned to the new motor vehicle dealer before or after the "Stop-Sale" or

"Do-Not-Drive" order was issued in accordance with the terms of the applicable contract.

     (d) It shall be a violation of this section for a manufacturer to reduce the amount of

compensation otherwise owed to a new motor vehicle dealer, whether through a chargeback,

removal from an incentive program, reduction in amount owed under an incentive program, or

any other means, because the new motor 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", or "Do-Not-Drive", order has been issued.

     (e) All reimbursement claims made by new motor vehicle dealers pursuant to this section

for recall remedies or repairs, or for compensation where no part or repair is reasonably available

and the vehicle is subject to a "Stop-Sale", or "Do-Not-Drive", order, shall be subject to the same

limitations and requirements as a warranty reimbursement claim made under §31-5.1-6. Claims

shall be either approved or disapproved within thirty (30) days after they are submitted to the

manufacturer in the manner and on the forms the manufacturer reasonably prescribes. All claims

shall be paid within thirty (30) days of approval of the claim by the manufacturer. Any claim not

specifically disapproved in writing within thirty (30) days after the manufacturer receives a

properly submitted claim shall be deemed to be approved. In the alternative, a manufacturer may

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compensate its franchised dealers under a national recall compensation program provided the

compensation under the program is equal to or greater than that provided under subsection (a) of

this section or the manufacturer and dealer otherwise agree.

     (f) Nothing in this section shall require a manufacturer to provide total compensation to a

new motor vehicle dealer which would exceed the total average trade-in value of the affected

used motor vehicle as determined under §31-5.1-6.1(b).

     (g) Any remedy provided to a dealer under this section is exclusive and may not be

combined with any other state recall compensation remedy.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES -- REGULATIONS OF BUSINESS

PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND

DEALERS

***

     This act would require manufacturers of motor vehicles to compensate its new motor

vehicle dealers for costs incurred while holding a vehicle for sale but are unable to sell it due to

unavailability in parts, remedy or performance of a recall service or repair, when the

manufacturer has issued a "Stop-Sale", or "Do-Not-Drive", order on the vehicle.

     This act would take effect upon passage.

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