BILL ANALYSIS Ó AB 873 Page 1 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)) AB 873 Page 2 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, AB 873 Page 3 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; AB 873 Page 4 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: AB 873 Page 5 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 AB 873 Page 6 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). AB 873 Page 7 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. AB 873 Page 8 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." AB 873 Page 9 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: AB 873 Page 10 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