BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 21, 2015


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                Susan Bonilla, Chair


          AB 873  
          (Jones) - As Amended April 13, 2015


          SUBJECT:  Automotive repair.


          SUMMARY:  Deletes the current list of minor repairs exempted  
          from registration with the Bureau of Automotive Repair (BAR),  
          effective January 1, 2017, and requires the director of the  
          Department of Consumer Affairs (DCA), prior to January 1, 2017,  
          to adopt regulations defining a new list. 


          EXISTING LAW:


          1)Establishes the BAR under the supervision and control of the  
            director of DCA (Business and Professions Code (BPC) § 9882)


          2)Regulates the business of automotive repair and makes it  
            unlawful for any person to be an automotive repair dealer  
            unless registered with the BAR. (BPC § 9880-9889.68)


            Defines the "repair of motor vehicles" to mean all maintenance  
            of, and repairs to, motor vehicles, except the following  
            services:  (BPC § 9880.1(e))









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             a)   Repairing tires; 


             b)   Changing tires; 


             c)   Lubricating vehicles; 


             d)   Installing light bulbs, batteries, windshield wiper  
               blades and other minor accessories; 


             e)   Cleaning, adjusting and replacing spark plugs;


             f)   Replacing fan belts, oil and air filters; and 


             g)   Other minor services the director determines to be  
               customarily performed by a gasoline service station. 


          3)States that the director shall not designate a service as  
            minor if the director finds that performance of the service  
            requires mechanical expertise, has given rise to a high  
            incidence of fraud or deceptive practices or involves a part  
            of the vehicle essential to its safe operation. (BPC §  
            9880.1(e))


          4)Defines an "automotive repair dealer" as a person who engages  
            in the business of repairing or diagnosing malfunctions of  
            motor vehicles for compensation. (BPC § 9880.1(a))


          5)Defines "automotive technician" as a dealer, or a person  
            employed by a dealer, who performs maintenance, diagnostics,  








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            repair, removal or installation of specified integral  
            automotive components, excluding the services excluded from  
            repair of motor vehicles. (BPC § 9880.1(g))


          6)Regulates motor clubs and makes it unlawful to provide motor  
            club services, including emergency road services, without a  
            certificate of authority from the insurance commissioner.  
            (Insurance Code (INS) § 12140-12159) 


          7)Defines "emergency road service" as the adjustment, repair or  
            replacement by a motor club of the equipment, tires, or  
            mechanical parts of a motor vehicle so that it may be operated  
            under its own power. (INS § 12146)


          THIS BILL:


          1)Adds a new subsection that requires the director to adopt  
            regulations prior to January 1, 2017 defining "minor services"  
            as used in the definition of automotive repair.


          2)Adds a new subsection that repeals BPC § 9880.1 on January 1,  
            2017.


          3)Adds a new BPC § 9880.1 that becomes operative on January 1,  
            2017.  It is identical to the old section, except that it:


             a)   Recasts the definition of "repair of motor vehicles" to  
               delete the list of excluded services and instead exclude  
               minor services as defined by the director and roadside  
               services;










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             b)   Recasts the definition of "automotive technician" to  
               delete the list of excluded services and the provisions  
               describing the specific work an automotive technician  
               performs;


             c)   Defines "roadside services" as the  services performed  
               upon  a motor vehicle for the  purpose of transporting the  
               vehicle or to permit it to be operated under its own power,  
               by or on behalf of a motor club holding a certificate of  
               authority issued by the insurance commissioner; and 


             d)   Declares that the regulations adopted by the director  
               that define "minor services" continue in effect on and  
               after January 1, 2017 and allows the director to amend or  
               repeal the regulations, consistent with the chapter.


          FISCAL EFFECT: Unknown. This bill is keyed fiscal by the  
          Legislative Counsel. 


          COMMENTS:


          1)Purpose. This bill is sponsored by the author.  According to  
            the author, this bill "will require the [BAR], within the  
            [DCA], to determine through regulation which automotive  
            services are minor and which necessitate oversight. 


            The Automotive Repair Act of 1971 has not been significantly  
            update[d] since it was enacted.  Existing law should be  
            updated and a determination of what constitutes minor repair  
            work and major repair should be developed through the formal  
            rulemaking process so that: 










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             1.   The [BAR] takes a comprehensive technical approach to  
               determine what business practices necessitate registration  
               as an automotive repair dealer; and 


             2.   This determination can be periodically updated through  
               the rulemaking process, as the automotive industry  
               continues to evolve.  This approach allows the industry to  
               participate through the rulemaking process to help  
               determine which services are minor and should be excluded  
               from registration and which services are major and require  
               registration."


          2)Background.  In 2014, the Assembly Committee on Business,  
            Professions and Consumer Protection and the Senate Committee  
            on Business, Professions and Economic Development (Committees)  
            conducted joint oversight hearings to review the BAR and eight  
            other regulatory entities.  As a part of the review, staff of  
            the Committees made recommendations for each agency and  
            program reviewed by the Committees.


            In its Sunset Report to the Committees, the BAR raised the  
            issue of ancillary services which have typically been seen as  
            simple enough to be considered exempt areas of practice, and  
            therefore not subject to regulation and registration, such as  
            replacing spark plugs, batteries and fan belts.  The BAR noted  
            that, because of advances in automotive technology, many of  
            the services require specialized repair skills and may require  
            the removal of automotive systems, engine components, shrouds  
            or other electrical equipment. 


            One of the examples cited by the BAR was tire services.  The  
            federal Transportation Recall Enhancement, Accountability and  
            Documentation (TREAD) Act requires that, beginning with the  
            2006 model year, every new vehicle of less than 10,000 pounds  
            gross vehicle weight rating be equipped with a Tire Pressure  








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            Monitoring System (TPMS) (Title 49 of the United States Code  
            §§ 30101-30170). 


            As a result, many modern vehicles are equipped with a TPMS  
            that may require the technician to update the vehicle's  
            on-board diagnostic system when serviced.  A malfunctioning  
            TPMS can lead to tire blowouts, undetected slow leaks and  
            other dangerous conditions. 


            Another example is spark plugs.  According to the BAR, some  
            vehicle manufacturers have made spark plugs inaccessible  
            without removal of other major systems, even the removal of  
            motor mounts and, in a few cases, the entire engine.  Because  
            these examples can lead to dangerous situations for consumers,  
            BAR still believes that an automotive repair dealer  
            registration should be required for those performing those  
            types of repairs.  By requiring the director to determine a  
            new list of exclusions that can change to keep up with  
            technology, this bill seeks to ensure the regulation of  
            complicated repairs and maintenance.


            Motor Club Exemption. In California, motor clubs that provide  
            automotive benefits and discounts to their members are  
            regulated by the Department of Insurance.  All motor clubs are  
            required to apply for a certificate of authority (INS §  
            12160).  In order to qualify for a certificate of authority,  
            motor clubs must meet minimum financial requirements  
            ($100,000) and provide supporting documents (INS §12162).   
            They are not required to meet any personnel or training  
            standards.  According to the department's website, there are  
            currently 23 certified motor clubs.  


            Certified motor clubs are permitted to provide emergency road  
            services, such as the repair or replacement of the equipment,  
            tires, or mechanical parts of a motor vehicle (INS § 12146).   








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            Current law specifically exempts some of the motor club  
            emergency roadside services from registration with the BAR,  
            such as tire repair and battery installation (BPC §  
            9880.1(e)).  


            This bill will delete the list of exempted services that  
            normally exempt motor clubs from registration with the BAR.   
            However, it will also add language specifically exempting  
            motor club emergency roadside services.  The new exemption  
            appears to be broader than current law-it will exempt  
            emergency roadside service on all mechanical parts, not just  
            tires, batteries, or windshield wipers. 


            Stakeholder Input. Last year, AB 1665 (Jones) of 2014, would  
            have deleted repairing and changing tires from the list of  
            excluded minor services.  The bill was vetoed by Governor  
            Brown to give the BAR the opportunity to include more  
            stakeholder input. 


            To address the concerns of the veto, the BAR plans to hold  
            industry stakeholder workshops following its quarterly BAR  
            Advisory Group meetings.  The first is scheduled for April 22,  
            2015.  The Advisory Group is composed of a range of industry  
            professionals.  The decision to have the industry stakeholder  
            workshops was decided before this bill was introduced.


          3)Previous Related Legislation. AB 1665 (Jones) of 2014, would  
            have deleted "repairing tires" and "changing tires" from the  
            list of repair services exempt from registration as an  
            automotive repair dealer under the BAR.  It would have also  
            required an automotive repair dealer to be capable of  
            diagnosing and servicing TPMS, as specified.  NOTE: This bill  
            was vetoed Governor Brown. He stated in his veto message that  
            further review and input from stakeholders was needed.









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            SB 202 (Galgiani) of 2013, would have deleted repairing and  
            changing tires from those exclusion lists. It would have also  
            excluded tire services provided by or on behalf of a motor  
            club holding a specified certificate of authority or an  
            operator of a tow truck owned or operated by a person or  
            entity possessing a valid motor carrier permit from the  
            definitions of "repair of motor vehicles" and "automotive  
            technician."  NOTE: This bill was held on the Assembly  
            Appropriations Suspense File.


            AB 2065 (Galgiani) of 2012 was essentially the same as SB 202.  
             NOTE: This bill was held on the Assembly Appropriations  
            Committee Suspense File.


          ARGUMENTS IN SUPPORT: 


          The  Automotive Service Councils of California  writes in support,  
          "Current law (more than 40 years old) declares certain minor  
          services such as: repairing and changing tires, lubricating  
          vehicles, installing light bulbs, batteries, windshield wiper  
          blades, replacing spark plugs, replacing fan belts, oil and air  
          filters are exempt from BAR oversight.  Because of the advances  
          in automotive technologies many of these minor services now  
          require more specialized training and skills and may necessitate  
          the removal of engine components and other electrical and  
          computer equipment.





          There also is an unfair playing field for those businesses that  
          are currently registered/licensed by BAR who must compete with  
          repair facilities that provide the same repair services but are  
          not registered or licensed."








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          The  California Autobody Association  writes in support, "Existing  
          law does not adequately address the current market realities  
          regarding services provided by auto repair businesses.  Certain  
          automotive services were designated minor in [the] early 1970's  
          and did not require oversight by the BAR.  However, automotive  
          technology has advanced significantly since then, which requires  
          much more specialized training and equipment to properly repair  
          vehicles."


          ARGUMENTS IN OPPOSITION:


          None on file.


          IMPLEMENTATION ISSUE:


          The bill will require the director to adopt regulations defining  
          "minor services," but it does not specify how detailed the  
          regulations must be.  Similarly, if the director is not able to  
          adopt regulations by January 1, 2017, there could be a period of  
          time where there are no exclusions. 


          However, as noted above, BAR has been working to resolve  
          Governor Brown's veto concerns and has taken steps to reach out  
          to stakeholders.  It also plans to hold additional stakeholder  
          workshops to specifically address industry concerns.


          REGISTERED SUPPORT:












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          Automotive Service Councils of California 
          California Autobody Association


          California Tire Dealers Association 


          REGISTERED OPPOSITION:


          None on file. 




          Analysis Prepared by:Vincent Chee / B. & P. / (916) 319-3301