BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: SB 778 Hearing Date: January 11, 2016 ----------------------------------------------------------------- |Author: |Allen | |----------+------------------------------------------------------| |Version: |January 4, 2016 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Mendoza | |: | | ----------------------------------------------------------------- Subject: Automotive repair: oil changes: notification to customers. SUMMARY: Requires that, when an automotive repair dealer recommends the date or mileage for the next oil change, the automotive repair dealer follow the oil drain interval specified in the maintenance schedule of the vehicle's owner's manual when making that recommendation to the customer verbally, in the form of a window sticker, through settings in a vehicle's oil sensor, or any other means, as specified. Existing law: 1) Establishes the Automotive Repair Act and the Bureau of Automotive Repair (BAR) under the supervision and control of the Director of the Department of Consumer Affairs (DCA). (Business and Professions Code (BPC) § 9880 et seq.) 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)) SB 778 (Allen) Page 2 of ? 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 of DCA determines to be customarily performed by a gasoline service station. 1) 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)) 2) States that the Director shall not designate a service as minor if the Director of DCA 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)) 3) Pursuant to The California Oil Recycling Enhancement Act: (Public Resources Code § 48600 et seq.): a) Establishes a program to encourage the recycling of used oil. SB 778 (Allen) Page 3 of ? b) Authorizes the Department of Resources Recycling and Recovery (CalRecycle) to award grants to and work with local governments, non-profit entities, and private companies in order to develop and advance certain developments in lubricating oil, such as oil recycling, collection, research, testing, and re-refining. c) Charges a fee on all oil sold in California to fund local curbside oil pickup programs, local collection facilities, and rebates to oil manufacturers. d) Provides that a person convicted of violating the California Oil Recycling Enhancement Act is guilty of an infraction, which is punishable by a fine of not more than $100/day for each day the violation occurs. This bill: 1) Makes numerous findings and declarations regarding the use of automotive oil in California, the development of oil quality and engine technology, and the goal of reducing the use of automotive oil in California. 2) Requires, prior to performing any work, an automotive repair dealer to notify a customer purchasing an oil change of the recommended oil drain interval, oil grade, and viscosity specified in the maintenance schedule of the vehicle's owner's manual. 3) Requires that, if an automotive repair dealer recommends the date or mileage for the next oil change, the automotive repair dealer will follow the oil drain interval specified in the maintenance schedule of the vehicle's owner's manual when making that recommendation to the customer verbally, in the form of a window sticker, through settings in a vehicle's oil sensor, or any other means, as specified. 4) Authorizes a customer to choose a different drain interval used for purposes of Item #3, above, if a customer purchases oil for the oil change that has a recommended drain interval different from the oil drain interval specified in the maintenance schedule of the vehicle's owner manual. SB 778 (Allen) Page 4 of ? FISCAL EFFECT: Unknown. This bill has been keyed fiscal by Legislative Counsel. COMMENTS: 1. Purpose. The Californians Against Waste is the Sponsor of the bill. According to the Author, "Oil chemistry and engine technology have evolved over the past 5 decades, with lubricants that can last up to 15,000 miles. In fact, most cars today call for an oil change at 7,500 or more miles. However, a 2012 survey by CalRecycle shows that almost 10 million Californians change their motor oil every 3,000 miles or less. This is partly because of the ingrained myth that all vehicles must have their oil changed every 3000 miles, but it is also because some automotive repair shops still recommend, through window stickers and other means, that drivers have their oil changed every 3,000 miles. Ensuring that auto repair dealers follow the manufacturer's recommendations when listing the date or mileage for the customer's next oil change will reduce the amount of oil waste generated and save consumers dollars." 2. Types of Oil. Oil comes in a variety of types - conventional motor oil, premium conventional oil, semi-synthetic, full-synthetic, or high-mileage. Conventional oil. This is the oil used in bulk at dealerships and is the cheapest at auto stores. It is fossil fuel oil. Conventional oil tends to break down and separate more quickly than synthetic oil [due to heat and elements]. Full-synthetic oil. This oil is made for high-tech engines. If these oils pass stringent special tests, it means they have superior, longer-lasting performance in critical areas, such as viscosity index and protection against engine deposits. They flow better at low temperatures and maintain peak lubrication at high temperatures. Although it is considered an excellent quality oil, synthetics are about three times as expensive as conventional oil and not always SB 778 (Allen) Page 5 of ? necessary for some engines. However, some engines call for synthetic only such as Corvette, BMW and Mercedes-Benz. According to Popular Mechanics, petroleum-type engine oil contains a mixture of several different types of base oil. Oil companies typically pick from a selection of five groups, each of which is produced in a different way and in different viscosities. The more expensive groups are more highly processed, in some cases with methods that produce a lubricant that can be classified as a synthetic. The full synthetics contain chemicals that may be derived from petroleum, but are altered so much that they are not considered natural oil anymore. In general, synthetic oils have a lower environmental impact, higher vehicle performance, and can extend the time between oil changes. Synthetic Blend Oil. This oil is a mix of synthetic and conventional oils, which is formulated to provide protection for heavier loads and high temperatures. This generally means they are less volatile and evaporate less, which reduces oil loss. They are less expensive than full-synthetic oils. High-Mileage Oil. This oil is formulated for vehicles with higher mileage. They may have higher viscosities, higher dose of anti-wear additives, and are formulated with seal conditioners that flow into the pores of the seals to restore their shape and increase their flexibility. High-mileage oils have ingredients to take care of older engines, like conditioners, seal swells, antioxidants, detergents and wear or friction additives. Typically they use a viscosity modifier that is durable and will not lose viscosity very easily. These oils need to stay thicker longer to protect engine parts. 3. Extended-Life Oils. Many oil companies are releasing extended-life oils that are guaranteed for specific mileage listed on the bottle. For example, Mobil's most advanced fully synthetic product is guaranteed for 15,000 miles. The company recommends it for vehicles that are beyond their warranty period because many automakers will void the warranty if the owner does not follow the manufacturer's SB 778 (Allen) Page 6 of ? recommended service intervals. 4. Automotive Oil Changes. Changing the oil in a motor vehicle is necessary to protect the engine, keeping vital engine parts well lubricated so that they do not overheat. An engine cannot function without it and going too long between oil changes can cause permanent damage to an engine over time. Depending on the vehicle, the intervals for required oil changes vary. For example, many newer models require an oil change at least every 5,000 miles; some require every 15,000 miles. Oil change information is located in a vehicle owner's manual and many automakers post their manuals online. Automaker oil change recommendations differ depending on driving conditions as well as car make, model and year. According to car manufacturers, for driving conditions considered "severe" (e.g. extensive idling or stop and go traffic; extreme weather or humidity; repeated short-distance trips of less than five miles; or towing a trailer or hauling heavy materials), the oil should be changed more frequently or at shorter mileage intervals than for conditions considered normal. In addition, some automakers have installed oil life monitors in their vehicles with varying capabilities - the basic versions are maintenance reminders based on mileage while the more advanced systems take information from various sensors throughout the vehicle and use an algorithm to predict the life of the oil. These systems are calibrated to work with the factory-recommended oil. Although these systems take the guess work out of knowing when the next oil service should be, many people have preconceived notions about oil change intervals such as all cars need the oil changed every 3,000 miles. 5. Used Oil. Used Oil in California. According to CalRecycle, in 2005, the latest year for which statistics are available, approximately 153.5 million gallons of used oil is generated annually. 59 percent of that oil was recycled. Used Oil Can Harm the Environment. According to CalRecycle, used oil can contain such contaminants as lead, magnesium, SB 778 (Allen) Page 7 of ? copper, zinc, chromium, arsenic, chloride, cadmium, and chlorinated compounds. Used motor oil poses a great risk to the environment - oil poured down drains or onto the ground can work its way into ground and surface waters causing serious pollution because it is insoluble, persistent and contains heavy metal and toxic chemicals. Used oil that is not recycled often finds its way into California's waterways - lakes, streams, and ocean - via the stormwater system. Used oil in waterways threatens fish, waterfowl, insects, and aquatic life. One gallon of used oil can foul the taste of 1 million gallons of water. Federal reports indicate that used motor oil accounts for more than 40 percent of the total oil pollution in the nation's harbors and waterways. 6. Educating the Vehicle Owner. Oil change information is in the maintenance section of a vehicle owner's manual. Also, many automakers have put their manuals online. In addition, CalRecycle has an easily accessible, interactive webpage to see how often one should change the oil for a car based on the make, model, and year of the car. Many cars today require a minimum oil change of every 5,000 or 7,500 miles. Ford Motor Company recommends oil changes for many of its new vehicles at 10,000 miles. Some cars commonly seen on the road require an oil change every 15,000 miles. According to CalRecycle, "[c]hanging motor oil according to the manufacturer specifications would reduce motor-oil demand in California by about 10 million gallons a year." (Jerry Hirsch, "State hopes to break car owners' habit of changing oil too often," Los Angeles Times, December 15, 2011). Prior to the January 4, 2016 amendments, this bill faced a policy concern in the Senate Committee on Environmental Quality about whether educating the vehicle owner was a more effective way to reduce oil waste. With the new amendments, the bill addresses the concerns and explicitly requires the automotive repair dealer to notify the customer of the recommended oil change interval listed in the vehicle's owner's manual and change the oil at that interval, unless otherwise specified. 7. Ongoing Litigation. Currently, the California Attorney General, on behalf of BAR, filed an accusation against SB 778 (Allen) Page 8 of ? numerous Jiffy Lube stations across the state. The accusation lists various causes for discipline including failure to provide a copy of the signed estimate, departure from trade standards, fraud, false and misleading records, unfair competition, and untrue and misleading statements. 8. Prior Legislation. SB 916 (Correa, 2014) would have specified that synthetic oil included oil composed of biobased feedstock for the purposes of regulating disposal and recycling of used oil; would have prohibited on and after January 1, 2017, the sale of lubricating oil in the state unless the lubricating oil met certain requirements, including meeting or exceeding minimal standards for biodegradability. ( Status : This bill was amended to address firearms). SB 546 (Lowenthal, Chapter 353, Statutes of 2009) made broad changes to the California Oil Recycling Enhancement Act to encourage the best re-use of used oil and reduce air pollution from the use of used oil, including: raising the fee paid by lubricating oil manufacturers from $0.16 to $0.26 per gallon; increasing the incentives paid for recycling used oil; increasing the testing requirements for used oil transporters; and, requiring a life-cycle analysis of used oil. 9. Policy Issue : Should all facilities that provide oil changes be included in this bill? As amended, the bill only covers licensed automotive repair dealers (e.g. Jiffy Lube) and not quick lube/oil shops (e.g. such as Oil Changer) that solely provide oil changes. Current law exempts independent shops from registering with BAR because an oil change service is considered a minor service, as are tires and battery services (BPC § 9880.1(e)). Namely, these quick lube/oil businesses will not be impacted because they are not regulated by BAR. If the bill is attempting to reduce the use of automotive oil, and make customers more aware of when an oil change should be made, the Author may wish to revise some of the language used in Section 2 of the bill. However, it should be noted that AB 873 (Jones), which is SB 778 (Allen) Page 9 of ? currently in this Committee, may achieve the goal of including all oil change services under BAR oversight if passed by the Legislature and signed by the Governor. AB 873 is sponsored by the Department of Consumer Affairs and seeks to update what is considered a major and minor service under BAR. If AB 873 is passed, it is possible that oil changes may be considered a major service since performance of the service has given rise to a high incidence of fraud or deceptive practices (e.g. ongoing litigation with Attorney General and Jiffy Lube). By re-categorizing oil changes as a major repair, BAR would be able to take action against all facilities that oversell oil services. 10.Arguments in Support. According to CALPIRG , "bringing oil change shop recommendations in line with automaker recommendations for oil change intervals would protect consumers from this [unnecessary and costly oil changes] deceptive and misleading practice." SUPPORT AND OPPOSITION: Support: Californians Against Waste (Sponsor) CALPIRG Opposition: None on file as of January 6, 2016. -- END --