CARB fines dealers for DMV mistake

APRIL 26, 2010

By ANTHONY PIGNATARO

Where the California Air Resources Board (CARB) is concerned, trying to do the right thing often just isn’t enough to keep a company from paying tens of thousands of dollars in penalties. Just ask the guys who work at GP Motorcycles and Moto Forza in San Diego. Last August, CARB made each of those dealers pay $90,000 for “illegally selling Husqvarna off-road motorcycles as on-road models” even though they were just doing what the state Department of Motor Vehicles (DMV) told them to do.

At issue was the fact that in the state of California, a motorcycle designated off-road – like the Husqvarna models involved in this matter – are not legal to drive on highways. “Off-highway vehicles do not meet federal motor vehicle safety standards – or CARB’s emission standards – required of on-road motorcycles,” an Aug. 31, 2009 CARB press release on the GP Motorcycles/Moto Forza case states. “There are no street-legal kits or conversions that make an off-road motorcycle legal for on-road use or registration. A motorcycle is either certified by CARB for on-road use or off-road use.”

It’s a simple thing, really: off-road bikes get green stickers, on-road bikes get plates. Except the DMV allegedly didn’t understand it, says Paul Lima, GP Motorcycles’ owner and Balz Renggli, Moto Forza’s general manager. They say that in 2004 and 2005, the years this matter took place, the DMV repeatedly issued street licenses to clearly off-road Husqvarnas.

“The DMV kept wanting to issue street licenses to off-road bikes,” Renggli said. “At first we fought it. But they wouldn’t listen. There were instances where I was almost kicked out of the DMV. At some point we just quit fighting it because we couldn’t get anywhere.”

Lima’s experiences registering bikes at the DMV were mellower than Renggli’s, but every bit as frustrating. “I didn’t want to tell them how to do their jobs, but the system defaults to giving out plates,” Lima said. “I don’t want to sound ignorant, but to be honest I didn’t know which bikes were to get green stickers and which were to get plates. Maybe I was just being naïve, but my initial thing was that you go in, submit the paperwork in an honest manner and expect to get green stickers. Except we got plates.”

At first, Lima said, CARB investigators said the whole thing was a paperwork problem only and wasn’t a big deal. “I asked if we were in trouble and she [the CARB investigator] said no,” Lima said. “She said it was a problem between CARB and the DMV. In fact, the people at ARB made statements to us about how stupid the DMV was.”

And there it stood for a few months. Then the investigator returned. “She came back and said it was our responsibility to get the right licenses,” Lima said. And then she started talking penalties.

At first it was $100,000 to make the whole thing end. There were “several dozen” bikes involved, and with a $2,000 penalty per bike, the whole thing came to about a hundred grand. Renggli and Lima thought that “ludicrous,” so they decided to fight it out in court.

Possible fees and penalties eventually reached half a million dollars. When one attorney asked Lima if he really needed his dealer’s license from the DMV, Lima was outraged. “What is this, the mafia?” he wondered.

“The judge said it could go either way,” Renggli said. “CARB didn’t care – they just wanted their money. But even if we won, we’d still have to pay CARB’s legal costs. So what’s the upside to winning? Other than walking away and saying we won, there was no upside.”

So they each settled for $90,000 – the Aug. 31, 2009 CARB press release says the agency “fined” the two dealers, an assertion that infuriates Renggli and Lima. In any case, the press release is unusually harsh and condescending, especially considering the DMV’s complicity in the whole mess.

“Companies that deliberately flout the law are often assessed higher penalties,” CARB Chairman Mary D. Nichols said in the release. “Playing by the rules from the start is the most cost-effective, smart business plan any company can follow.”

There was also the not subtle implication that the two motorcycle dealers were hurting asthmatics and even farmers; though CARB never provided the dealers with an analysis of any alleged increase in pollution they were causing, the release’s last paragraph read, “California’s air pollution control efforts include regulating emissions from cars, trucks, buses and motorcycles. Smog can damage lungs, cause coughing and chest tightness, and worsen asthma symptons while also affecting crop yields.”

What’s more, the press release used phrases like “illegal sales” and “put public health and safety at risk” which implied that Lima and Renggli were running a criminal conspiracy, fooling customers with “street-legal kits” – charges both men deny. “I’ve been in business 20 years,” Lima said. “I’ve never had any complaints against me. Nobody bought a ‘kit.’ We didn’t falsify anything. We never put anything on those bikes, beyond lights or things the customer asked for.”

CARB’s public information office would have no comment for this story, beyond what they’d published last year. “We stand behind the details that are in the [Aug. 31, 2009] press release,” CARB spokeswoman Mary Fricke said. “The DMV’s part? That’s their separate piece in it.”

And what is the DMV’s take on all this? Basically that, yeah, the department could and should have done things differently, but what’s done is done.

“The settlement with ARB speaks for itself,” DMV spokesman Armando E. Botello wrote in an e-mail. “The DMV instituted procedural changes in response to this case to make it more difficult for these vehicles to be incorrectly registered.”

Which is great, except that Lima denies that anything has changed at the DMV. In fact, Lima says he still has to go “above and beyond” what others do, all but holding the DMV clerks’ hands while they issue motorcycle registrations.

“Generally now, I ask them what they’re doing and make sure they punch it in green,” he said. “Ultimately, it was a comedy of errors, but we’re the ones who ended up paying.”