BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 873 Hearing Date: June 27
2016
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|Author: |Jones |
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|Version: |May 25, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Automotive repair.
SUMMARY: Deletes the current list of minor repairs exempted from
registration with the Bureau of Automotive Repair (BAR),
effective January 1, 2018, and requires the director of the
Department of Consumer Affairs (DCA), prior to January 1, 2018,
to adopt regulations defining a new list; excludes propulsive
batteries from the current list of minor services; excludes
motor clubs and operators of tow trucks from the definition of
roadside services.
Existing law:
1)Establishes 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)
3)Defines the "repair of motor vehicles" to mean all maintenance
of, and repairs to, motor vehicles, except the following
services: (BPC § 9880.1(e))
a) Repairing tires;
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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.
4)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))
5)Defines an "automotive repair dealer" (ARD) as a person who
engages in the business of repairing or diagnosing
malfunctions of motor vehicles for compensation.
(BPC § 9880.1(a))
6)Defines "automotive technician" as a dealer or a person
employed by a dealer who performs maintenance, diagnostics,
repair, removal or installation of specified integral
automotive components, excluding the services excluded from
repair of motor vehicles. (BPC § 9880.1(g))
7)Regulates motor clubs and makes it unlawful to provide motor
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club services, including emergency road services, without a
certificate of authority from the insurance commissioner.
(Insurance Code (INS) §§ 12140-12159)
8)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)Excludes propulsive batteries from the current list of minor
services.
2)Requires the Director of DCA, prior to January 1, 2018, to
adopt comprehensive regulations defining "minor services".
3)Prohibits the changing of "propulsive batteries" from being
categorized as minor services.
4)Repeals BPC § 9880.1 and adds an identical section that
becomes operative January 1, 2018. 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;
b) Recasts the definition of "automotive technician" as an
employee of an automotive repair dealer or is that dealer,
who for salary or wage repairs motor vehicles as set forth
in the new definition of "repair of motor vehicles";
c) Defines "roadside services" as the services performed
upon a motor vehicle for the purpose of transporting the
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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, or by an
operator of a tow truck that is owned or operated by a
person or entity who possesses a valid motor carrier permit
and is enrolled in the Basic Inspection of Terminals
program, as specified.
d) Declares that the regulations adopted by the Director
that defines "minor services" continue in effect on and
after January 1, 2018 and allows the director to amend or
repeal the regulations, consistent with the chapter.
FISCAL
EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Appropriations Committee analysis
dated April 29, 2015, this bill will result in minor and
absorbable costs to DCA to update regulations.
COMMENTS:
1. Purpose. The Author is the sponsor of the bill. 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
updated 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:
a) BAR takes a comprehensive technical approach to
determine what business practices necessitate registration
as an automotive repair dealer; and
b) 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
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determine which services are minor and should be excluded
from registration and which services are major and require
registration."
1. 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
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
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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.
2. 2014 Stakeholder Input. 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 and decide which other automotive repair
services require regulation.
To address the concerns of the veto, BAR held an industry
stakeholder workshop following its quarterly April 25, 2015
BAR Advisory Group meeting. At this Advisory Group meeting,
industry stakeholders and BAR representatives discussed a
range of issues including major/minor services, compliance
with advertising requirements, and the definition of roadside
services. Based on the discussion and future introduction of
this bill, stakeholders decided to see the outcome of the
bill before developing any formal regulations.
3. 2015/2016 Stakeholder Meetings and Mechanisms for Consumer
Protection. Over the interim and beginning of this year,
Committee staff, BAR, DCA, Author's staff, and other industry
stakeholders sat down and discussed the main issue with this
bill - the definition of roadside services.
Since this bill seeks to amend provisions related to the
Automotive Repair Act and BAR's regulatory duties, concerns
were raised that the new term "roadside services" within the
definition of "repair of motor vehicles" might require motor
clubs and other tow truck operators to register with BAR.
While BAR does receive input or complaints from the public
regarding the towing industry, they do not directly regulate
or license tow truck operators.
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After discussions, industry representatives have argued and
highlighted that there are other mechanisms in place that
provide proper consumer protection. In addition to
contractual obligations and remedies with law enforcement and
motor clubs, tow companies/emergency roadside service
operators currently must hold a motor carrier permit (MCP),
administered by the Department of Motor Vehicles (DMV),
post/provide a copy of the Towing Fees and Access Notice
(Notice) to consumers, and be enrolled in the Basic
Inspection of Terminals (BIT) Program.
Currently, all tow companies must obtain a MCP from the DMV
in order to operate a commercial vehicle. In order to obtain
an MCP, a tow company must produce: proof of financial
responsibility (generally no more than $750,000), proof of
workers' compensation insurance, a Carrier Identification
number (CA#) issued by the California Highway Patrol (CHP),
payment of fees, and enrollment in the BIT program.
Starting in 2016, all tow companies are subject to the CHP's
BIT program due to the enactment of AB 529 (Lowenthal,
Chapter 500, Statutes of 2013). Under the BIT program, after
payment of fees, the CHP conducts a rigorous inspection of a
towing company that includes the safety of the vehicles as
well as compliance with a wide variety of laws related to
drivers and commercial motor carrier businesses.
Additionally, consumers have rights under law in the event
they are unsatisfied with a towing/emergency roadside service
company, as detailed in the Notice in Vehicle Code §
22651.07, enacted by AB 519 (Solorio, Chapter 566, Statutes
of 2010). A tow company's office must post the Notice and
provide a copy, upon request, to the consumer. The Notice
answers questions a consumer may have related to charges,
complaints, liability, and remedies if anything on the Notice
is violated.
AB 519 also mandated that each consumer receive a detailed
written itemized invoice of actual charges and imposes civil
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penalties of up to two times the amount charged, not to
exceed $500, for any violation of the section.
Finally, from a business standpoint, industry members have
underscored that economically it would be extremely
difficult, if not impossible, to survive in the industry
without towing for at least one of the 23 motor clubs
certified by the Department of Insurance, or at least one of
the hundreds of local police and sheriff departments or CHP.
If a tow company exclusively performed private property tows
(which are not dispatched by law enforcement or motor clubs)
it would be extraordinarily rare and such a company would be
subject to the extensive, rigorous requirements of Vehicle
Code § 22658 which permit a consumer to obtain four times the
amount of the towing and storage charges in the event a
violation occurs. Nevertheless, such a company, if it
exists, would only be removing a vehicle from private
property, not performing any type of minor automotive repair
services that are the subject of AB 873.
While the Legislature has kept a close eye on tow truck
operators, this bill's goal was not to directly license tow
truck operators/motor clubs. Representatives have argued
that tow truck operators and motor clubs are there to help
move a vehicle off the road and into a safe and secure area.
This activity has never been regulated by BAR. While there
is an exemption for these groups under the definition of
"roadside services", by no means does it exempt them from BAR
jurisdiction if they perform activities regulated by a
license.
4. New Registration for Unlicensed Shops. At the beginning of
April 2016, Oil Changers, a quick oil changing shop that
provides a number of preventative maintenance services,
requested an amendment excluding their shops from BAR
regulation. Specifically, Oil Changers feared that by
updating "minor services", services the company has
historically provided would now require them to register as
an ARD. They are currently not required to register or apply
for a license with BAR.
Since there is a gray area about whether these shops actually
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fall under BAR's jurisdiction, Oil Changers agreed to a new
registration category that will give BAR authority over their
activities. This compromise was discussed in conjunction
with other issues raised with AB 778 (Allen, 2015). During
stakeholder meetings convened by Senator Allen's office on SB
778, committee staff has also engaged in discussions
regarding this new registration category. This new
registration category, deemed "automotive maintenance
provider", is defined as a person who, for compensation,
engages in the business of the preventative automotive
maintenance services associated with fluid and filter
changes, fluid treatment, and belt and windshield wiper blade
replacement.
This new registration category will allow these unregistered
shops to explicitly fall under BAR's regulatory purview and,
in turn, allow these newly registered shops to maintain their
current business model.
AB 873 will be amended to reflect the new registration
category in SB 778.
5. Previous 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. ( Status: This bill was vetoed
Governor Brown who wrote in his veto message that "Before a
new licensing scheme is enacted, a more comprehensive review
is needed. I am directing the Bureau to work with interested
parties to determine which, if any, automotive repair
services merit further regulation.")
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
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definitions of "repair of motor vehicles" and "automotive
technician." ( Status: This bill was held in the Assembly
Committee on Appropriations.)
AB 2065 (Galgiani) of 2012 was essentially the same as SB
202. ( Status: This bill was held in the Assembly Committee
on Appropriations.)
6. 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."
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."
SUPPORT AND OPPOSITION:
Support:
Automotive Service Councils of California
California Autobody Association
California Automotive Business Coalition
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California Tire Dealers Association
Les Schwab Tire Centers
Opposition:
None on file as of June 21, 2016.
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