BILL ANALYSIS Ó AB 2740 Page 1 Date of Hearing: April 22, 2014 ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION Susan A. Bonilla, Chair AB 2740 (Bonilla and Lieu) - As Amended: April 10, 2014 SUBJECT : Bureau of Electronic and Appliance Repair, Home Furnishings and Thermal Insulation. SUMMARY : Requires the Bureau of Electronic and Appliance Repair, Home Furnishings and Thermal Insulation (BEARHFTI) to be subject to review by the Legislature before January 1, 2019, and requests that BEARHFTI report on specified concerns to the Legislature by March 1, 2015. Specifically, this bill : 1)Requires that BEARHFTI's powers and duties be subject to review by the Assembly Business, Professions and Consumer Protection Committee and the Senate Business, Professions and Economic Development Committee (Committees), and further requires that the review be performed as if the provisions of BEARHFTI were scheduled to be repealed on January 1, 2019. 2)Makes findings and declarations relating to BEARHFTI's creation, its jurisdiction, and its joint oversight sunset hearing held by the Committees, and to the following issues and recommendations that were raised in BEARHFTI's sunset background paper: a) Reporting on its long-term fiscal outlook and any planned efforts to increase revenues and reduce expenditures; b) Advising the Committees on its pro rata costs and whether BEARHFTI could achieve cost savings by handling more consumer complaints in house; c) Examining the pros and cons of biennial license renewals for electronic and appliance repair and thermal insulation licensees; d) Conducting market condition assessments for both the electronic and appliance repair market and the home furnishings and thermal insulation market to determine if current law reflects the needs of the markets, where risk AB 2740 Page 2 to consumers is greatest, where resources could be refocused or expanded, and whether continued regulation is necessary across all segments of these markets; e) Considering whether various licenses should be consolidated and if it should continue to regulate, or issue, standalone sanitizer and custom upholsterer licenses; f) Reexamining product testing protocols to ensure it has the information it needs to identify areas of highest risk to consumers, and reexamining product standards to determine if some standards could be relaxed, presuming there is no appreciable impact on consumer safety, if standards could be better clarified or advertised, or if penalties for violations are too low to act as a proper deterrent; and g) Updating the Committees on implementation of the Department of Consumer Affair's (DCA's) BreEZe system. 3)States that it is the intent of the Legislature that BEARHFTI examine and respond to the issues and recommendations identified in the background paper, and report back to the Committees by March 1, 2015, with its findings. EXISTING LAW: 1)Establishes the Electronic and Appliance Repair Dealer Registration Law (EARDRL), and provides for the licensure and regulation of electronic and appliance repair dealers and service contract sellers and administrators. (Business and Professions Code (BPC) Section 9800 et seq.) 2)Establishes the Home Furnishings and Thermal Insulation Act, and provides for the licensure and regulation of manufacturers, sellers, importers, upholsterers, and sanitizers of home furnishings, including upholstered furniture and bedding and thermal insulation. (BPC 19000 et seq.) 3)Establishes BEARHFTI under the supervision and control of the Director of DCA, and requires the Director to administer and enforce the HFTI Act and the EARDRL. (BPC 9810) AB 2740 Page 3 4)Requires the Governor to appoint a chief of the bureau to serve under the direction and supervision of the Director, as specified, and authorizes the chief to exercise or perform the powers and duties imposed upon the Director. (BPC 9810) FISCAL EFFECT : Unknown COMMENTS : 1)Purpose of the bill . This bill requires BEARHFTI to be subject to review by the Legislature before January 1, 2019, and requests that BEARHFTI report specified information back to the Committees by March 1, 2015. This is an author-sponsored bill. 2)Author's statement . According to the author, "Although BEARHFTI is subject to sunset review, and was subject to a sunset review oversight hearing on March 10, 2014, its statutory provisions do not contain a sunset review provision. This bill simply seeks to make clear that BEARHFTI is subject to sunset review, and to reinforce the recommendations contained in BEARHFTI's sunset review report in order to increase accountability." 3)BEARHFTI . The California Bureau of Home Furnishings and Thermal Insulation was established in 1911 by AB 547 (Ryan), Chapter 73, Statutes of 1911, in response to unscrupulous manufacturing practices in the mattress industry, which contributed to the fires following the 1906 San Francisco earthquake. The California Bureau of Electronic and Appliance Repair was established in 1963 under the Electronic and Appliance Repair Dealer Registration Law by SB 1292 (Short), Chapter 1492, Statutes of 1963, in response to growing concerns from consumers and law enforcement agencies about fraud and negligence in the television repair industry. In 2009, AB 20 X4 (Audra Strickland and Huber), Chapter 18, Statutes of 2009-10 Fourth Extraordinary Session, officially merged the Bureau of Home Furnishings and Thermal Insulation with the Bureau of Electronic and Appliance Repair to create BEARHFTI. BEARHFTI, which is housed under DCA, licenses and regulates over 40,000 businesses, including businesses that engage in the repair of electronics and appliances; the sale and AB 2740 Page 4 administration of service contracts; and the manufacture, sale, and repair of home furnishings and thermal insulation. BEARHFTI also inspects businesses and conducts investigations; researches and develops standards for, and tests, home furnishings and thermal insulation products; handles consumer complaints; and initiates disciplinary action against businesses that violate statutory or regulatory requirements. 4)Sunset Review . Existing law establishes the Joint Sunset Review Committee to identify and eliminate waste, duplication, and inefficiency in government agencies. The purpose of the committee is to conduct a performance review of every eligible agency, including boards, bureaus, commissions and councils under DCA, to determine if the agency is still necessary and cost effective. Currently, the duties of the Joint Sunset Review Committee are performed by the Assembly Business, Professions and Consumer Protection Committee and the Senate Business, Profession and Economic Development Committee (Committees). Each eligible agency scheduled for repeal ("sunset"), and even some bureaus which do not sunset at all, is required to submit to the committee a report covering the entire period since last reviewed that includes, among other things, the purpose and necessity of the agency and any recommendations of the agency for changes or reorganization in order to better fulfill its purpose. During "sunset review", the Committees take public testimony and evaluate the eligible agency prior to the date the agency is scheduled to be repealed. An eligible agency is allowed to sunset unless the Legislature enacts a law to extend, consolidate, or reorganize the eligible agency. As part of the 2014 Sunset Review, the Committees prepared a sunset background paper on BEARHFTI, and on March 10, 2014, held a joint oversight sunset hearing. Although BEARHFTI is subject to review, and voluntarily participated in a sunset review oversight hearing, its statutory provisions do not contain a sunset review provision. This bill simply clarifies that BEARHFTI shall be subject to review by the appropriate policy committees of the Legislature, and requires that review to be performed as if BEARHFTI's provisions were to be repealed on January 1, 2019. In addition, while the hearing and the background paper found AB 2740 Page 5 BEARHFTI was generally in good standing, it also identified areas for follow up and requested BEARHFTI to report back to the Committees on specific issues. This bill specifies that it is the intent of the Legislature that BEARHFTI examine and respond to the issues and recommendations identified in the background paper, and report back to the Committees by March 1, 2015. 5)Related legislation . AB 1926 (Bonilla) of 2014 clarifies when a statement or advertisement is untrue or misleading for purposes of existing law prohibiting an electronic or appliance service dealer from making an untrue or misleading statement or advertisement. That bill is in the Assembly Business, Professions and Consumer Protection Committee. 6)Previous legislation . AB 480 (Calderon) (Chapter 421, Statutes of 2013) defined service contracts to include contracts for the performance of services relating the maintenance, replacement, or repair of optical products, thereby making administrators and sellers of those contracts subject to registration with the bureau and other requirements of the act. AB 127 (Skinner) (Chapter 579, Statutes of 2013) required the State Fire Marshal, in consultation with BEARHFTI, to review the flammability standards for building insulation materials, including whether the flammability standards for some insulation materials can only be met with the addition of chemical flame retardants, and would require, if deemed appropriate, the State Fire Marshal to propose updated insulation flammability standards. AB 1443 (Logue) (Chapter 90, Statutes of 2012) required BEARHFTI to reimburse the manufacturer, distributer, or retailer for the actual cost of the article or sample taken for product testing unless the article or sample is found to be in violation of the Home Furnishings and Thermal Insulation Actor a regulation of the bureau. REGISTERED SUPPORT / OPPOSITION : Support None on file. AB 2740 Page 6 Opposition None on file. Analysis Prepared by : Eunie Linden / B.,P. & C.P. / (916) 319-3301