BILL ANALYSIS Ó
SB 778
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Date of Hearing: June 14, 2016
ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION
Ed Chau, Chair
SB
778 (Allen) - As Amended June 9, 2016
SENATE VOTE: 22-12
SUBJECT: Automotive repair: oil changes: notification to
customers
SUMMARY: Requires oil change shops to register as Automotive
Repair Dealers (ARDs) with the Department of Consumer Affairs'
Bureau of Automotive Repair (BAR), and further requires ARDs
that recommend to consumers the date or mileage for the next oil
change to follow the oil drain interval specified in the vehicle
manufacturer's published maintenance schedule, with certain
exceptions. Specifically, this bill:
1)Deletes oil replacement and vehicle lubrication from the list
of vehicle maintenance services that are excluded from the
definitions of "repair of motor vehicles" and "automotive
technician" so that oil replacement and vehicle lubrication
are considered a "repair" under current law.
2)Requires oil change shops to register as ARDs with BAR, as a
practical result of redefining oil replacement and vehicle
lubrication as vehicle "repairs."
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3)Requires an ARD that performs an oil change and recommends a
date or mileage for an oil drain interval to follow the
vehicle manufacturer published maintenance schedule.
4)Allows an ARD to make a recommendation that deviates from the
published maintenance schedule if the ARD notes the basis for
the deviation on the final invoice or a document attached to
the invoice.
5)Specifies that the bill does not prohibit a customer from
selecting an oil change interval of their own choice.
6)Defines the terms "recommended" and "recommendation" to mean
any written recommendation including, but not limited to, a
window sticker, a key tag, or by programming the settings in
the vehicle's oil life indicator, but clarifies that resetting
a preset or nonprogrammable oil life indicator or monitor does
not constitute a "recommendation."
7)Requires an ARD that performs an oil change to include the
following statutory disclosure on the final invoice or
document attached to the final invoice: "It is important to
change your oil at the proper intervals. Your vehicle
manufacturer publishes oil change intervals in your owner's
manual and on the manufacturer's website."
8)Makes legislative findings and declarations of legislative
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intent regarding the environmental protection and consumer
protection benefits of these provisions.
EXISTING LAW:
1) Establishes the Automotive Repair Act (ARA) and BAR under the
supervision and control of the Director of the Department of
Consumer Affairs (DCA) for the purpose of regulating the
business of automotive repair. (Business and Professions Code
(BPC) Section 9880, et seq.)
2) Defines an "automotive repair dealer" (ARD) as "a person who,
for compensation, engages in the business of repairing or
diagnosing malfunctions of motor vehicles." (BPC 9880.1(a))
3) Defines the "repair of motor vehicles" to mean "all
maintenance of, and repairs to, motor vehicles," except the
following:
a) Repairing tires;
b) Changing tires;
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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.
(BPC 9880.1(e))
1) Requires ARDs to do all of the following:
a) Register with BAR annually, which includes paying a $200
annual registration fee per ARD facility location in the
state. (BPC 9884-9884.6, 9886.3);
b) Post a sign at each location containing a notice that
customers have the right to request and receive any car
parts that were replaced as part of the service and the
phone number and website address of BAR (BPC 9884.17);
c) Provide an estimate of parts and labor before performing
services (BPC 9884.9);
d) Provide an invoice after performing services (BPC
9884.8); and
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e) Maintain its transaction records for three years. (BPC
9884.11).
2) Requires "auto body repair shops," as defined, to register
with BAR using the ARD registration form but indicating that
the shop is registering as an "auto body repair shop" not an
ARD. (BPC 9889.51 - 9889.52)
3) Exempts wholesale parts suppliers from BAR registration, but
requires wholesale parts suppliers to provide customers with
a "written description of the services to be performed" and a
notice to each customer stating that the business is not
regulated by BAR and including BAR's toll-free consumer phone
number. (BPC 9880.2(d))
4) Makes a violation of the ARD provisions of ARA, which include
among other things prohibitions on making untrue or
misleading statements; committing fraud or gross negligence;
and willful disregard for accepted trade standards for good
and workmanlike repair; a misdemeanor punishable by a fine of
up to $1,000 or six months imprisonment, or both. (BPC
9884.7 and 9889.20)
5) Authorizes BAR to promulgate regulations and to enforce
violations of the ARA against registered and unregistered
ARDs by: investigating on its own initiative or in response
to a consumer complaint; gathering evidence of violations;
suggesting measures to compensate for damages suffered;
issuing citations and notices of abatement; pursuing
administrative disciplinary proceedings against registered
ARDs (and unregistered ARDs who in BAR's opinion should be
registered); pursuing disciplinary proceedings against a
registered ARDs, including registration denial, suspension,
revocation or probation proceedings using the administrative
hearing process; pursuing injunctive relief against
registered and unregistered ARDs in superior court; and
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filing criminal charges with the district attorney or city
attorney against a registered or unregistered ARD. (BPC
9882.(a), 9882.5, 9884.7, 9882.12-9882.15, 9884.19, 9884.22)
6) Gives the Director of DCA the discretion to remove a service
designation as "minor" if the Director finds that 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))
7) Defines "automotive technician" as an "employee of an
automotive repair dealer or is that dealer, if the employer
or dealer repairs motor vehicles and who for salary or wage
performs maintenance, diagnostics, repair, removal, or
installation of any integral component parts of an engine,
driveline, chassis or body of any vehicle, but excluding
repairing tires, changing tires, lubricating vehicles,
installing light bulbs, batteries, windshield wiper blades,
and other minor accessories; cleaning, replacing fan belts,
oil and air filters; and other minor services which the
director, by regulation, determines are customarily performed
by a gasoline service station." [Emphasis added] (BPC
9880.1(g))
FISCAL EFFECT: According to the Senate Appropriations Committee
analysis of a prior (April 20, 2015) version of this bill,
"unknown costs, possibly in the hundreds of thousands of
dollars, from the General Fund and various special funds for
increased automotive oil costs for the state's automotive
fleet."
COMMENTS:
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1)Purpose of this bill . This bill is intended to protect
consumers and the environment by ensuring that all drivers
receive accurate information about when they need to change
the oil in their cars, so they can avoid needless oil changes,
save time and money, and reduce oil waste. The bill would
prohibit auto dealers, repair shops, and maintenance shops
from using window stickers and other written reminders that
recommend oil changes more frequently than the vehicle
manufacturer recommends. This bill is sponsored by
Californians Against Waste.
2)Author's statement . According to the author, "For decades,
drivers have been told that taking proper care of their
vehicle means getting the oil changed every three months or
3,000 miles. While this may have been true 30 years ago,
advances in motor oil and engine technology have allowed
drivers to extend oil change intervals greatly. Most vehicles
built since 2000 call for an oil change at intervals of 7,500
[miles] or greater. Further, many new vehicles require the
use [of] high quality motor oil that can last 10,000 or even
25,000 miles between changes.
"Most busy car owners rarely read their owner's manuals; and
therefore, have no idea how often they should change their
oil. They simply follow the windshield reminder sticker,
which stubbornly insists on following the outdated 3,000 miles
change interval. In fact, a 2012 survey by CalRecycle
indicated almost 10 million Californians change their motor
oil every 3,000 miles or less. This means Californians are
unnecessarily wasting money and needlessly wasting oil simply
because they are cautiously following the recommendations of
their repair dealer. [This bill] will finally put an end to
this wasteful practice by requiring automotive repair dealers
to follow the manufacturer's maintenance schedule when
recommending how soon to return for the next oil change.
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"The bill also ensures that all shops that perform oil changes
will be regulated by the Bureau of Automotive Repair (BAR),
leveling the playing field for millions of small businesses
that are currently registered and regulated. This will ensure
all shops follow the statutory and regulatory requirements in
place to protect customers from fraud and overselling of parts
or service."
3)Automotive oil changes and recommended change intervals .
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 or wear too quickly. 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 and the type of oil used, the intervals for
required oil changes vary. Many newer models require an oil
change every 5,000 miles and some models require a change
every 15,000 miles.
Oil change information is located in a vehicle owner's manual
and many automakers post their manuals online. In addition,
CalRecycle has an easily accessible, interactive webpage where
consumers can see how often they should change oil based on
the make, model, and year of the car.
Automaker oil change recommendations differ depending on
driving conditions as well as car make, model and year.
According to car manufacturers, for driving conditions
sometimes called "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 manufacturer
recommends oil should be changed more frequently or at shorter
mileage intervals than for conditions considered normal or
ideal.
Some automakers have installed oil life monitors in their
vehicles with varying capabilities - the basic versions are
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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 consumers have preconceived notions about oil change
intervals, such as all cars need oil changed every 3,000
miles.
4)Protecting consumers and the environment . According to an
article published by Edmunds, a web-based automotive
information provider, a Jiffy Lube customer who buys high
quality oil but follows the window sticker recommendation of
"three months or 3,000 miles" would waste $369 and 15.2 quarts
of useable oil every year. Over five years of the car's life
and 60,000 miles of driving, this would amount to $1,847 and
125 quarts of wasted oil. ("Stop Changing Your Oil! Breaking
the 3,000 Mile Habit" Edmunds, April 23, 2013.)
While California has a motor oil collection and recycling
program, only about half of used oil is recycled. In February
2016, the California Department of Resources Recycling and
Recovery (CalRecycle) released a report entitled "Used Oil
Life Cycle Assessment Report to the Legislature" which
examined the agency's oil recycling program and suggested
improvements to decrease the amount of oil negatively
impacting the environment. One of the policy recommendations
in the report includes "Service stations that change customer
oil would be required to indicate the next recommended oil
change service based on the manufacturer's recommended drain
interval for their particular vehicle (windshield reminder
stickers) rather than the typical 3,000 miles." According to
CalRecycle, "Changing motor oil according to the manufacturer
specifications would reduce motor-oil demand in California by
about 10 million gallons a year."
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This bill would adopt CalRecycle's policy recommendation by
requiring all car repair and oil change shops to make oil
change recommendations based on the manufacturer's published
maintenance schedule. Specifically, this bill requires car
repair and maintenance shops to make recommendations for oil
changes based on the specific vehicle manufacturer's published
oil change interval for a given car, rather than using a
one-size-fits-all sticker or notice that recommends "three
months or 3,000 miles." If the shop makes a recommendation
that deviates from the manufacturer's published schedule, then
this bill requires the shop to write basis for that deviation
on the customer's invoice, or on a document attached to the
invoice.
The bill also requires shops to educate consumers about the
vehicle manufacturer's published intervals by including the
following statement on every oil change invoice: "It is
important to change your oil at the proper intervals. Your
vehicle manufacturer publishes oil change intervals in your
owner's manual and on the manufacturer's website."
5)How will this bill be enforced ? Under current law, new car
dealers as well as independent car dealers that service and
repair cars have to register with BAR as ARDs. However,
so-called "oil change shops" that only provide "vehicle
maintenance" services, such as oil changes and lubrication, do
not have to register as ARDs because the services they provide
are not defined as "repairs" in statute - raising the question
of how these provisions would be evenly enforced.
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In response, this bill changes the statutory definitions of
"repair" and "automotive technician" to include oil changes
and vehicle lubrication, which would effectively require all
oil change shops to register with BAR as ARDs and be subject
to BAR oversight if this bill becomes law.
The author contends that oil change shops should be required
to register as ARDs because this gives BAR direct authority to
enforce these provisions against all businesses in California
that provide oil change services. The author also argues that
this bill ensures an even playing field for all businesses
because BAR will have the same enforcement authority against
all businesses that change oil in California.
Current law allows BAR to investigate and cite registered and
unregistered ARDs, pursue administrative remedies such as
fines and registration revocation, and file criminal charges
in superior court against ARDs. Current law makes it a
misdemeanor for an ARD to violate any of ARA's provisions.
Because this bill amends ARA, a violation of this bill would
be a misdemeanor.
Interestingly, ARA specifically prohibits ARDs from making
untrue or misleading statements or committing fraud. Some
industry representatives contend that even without this bill,
BAR could already pursue an action for making misleading
statements or fraud against a registered ARD that places a
sticker on every car or prints a notice on every invoice
telling consumers to return for service within 3 months or
3,000 miles.
6)Does this bill step into the debate over whether BAR should
regulate car maintenance shops? In recent years, BAR and the
Legislature have grappled with the question of whether vehicle
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maintenance services, such as oil changes and tire repairs,
should be regulated by BAR. In its 2014 sunset review
hearing, BAR suggested that because of advances in automotive
technology, many car maintenance services now require
specialized repair skills and may require the removal of
automotive systems, engine components, and electrical
equipment.
AB 1665 (Jones) of 2014 would have deleted the repair and
changing tires from the list of excluded minor services, but
the bill was vetoed by the Governor in order to give BAR the
opportunity to include more stakeholder input and decide which
other automotive repair services require regulation. In 2015,
BAR held an industry workshop where industry stakeholders and
BAR representatives discussed a range of issues including
major/minor services, compliance with advertising
requirements, and the definition of roadside services.
This year the Legislature is also considering AB 873 (Jones),
which is sponsored by DCA and currently pending in the Senate
Business, Professions and Economic Development Committee. AB
873 requires the Director of DCA to promulgate regulations by
2018 that would revise the list of services excluded from the
current statutory definition of "repair." AB 873 would also
give DCA the authority to update that list to keep up with
technology.
This bill proposes changing the definition of "repair" in
statute to specifically include oil changes and vehicle
lubrication services, so that if this bill were passed and
signed, on January 1, 2017, all shops - including oil change
shops - would have to comply with the bill and be subject to
BAR enforcement actions if they do not.
If both AB 873 and this bill are signed into law, DCA could
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theoretically adopt regulations that again change the
definition of repair to specify that oil changes are "minor"
repairs, eliminating the need for oil change shops to be
registered with and regulated by BAR. However, this is
unlikely given BAR's suggestion at its sunset review hearing,
as noted above, that many services now excluded from the
definition of "repair" should be included due to advances in
car technology.
7)What would the impact of BAR oversight be ? Representatives of
the oil change industry, who oppose this bill, contend that
requiring oil change shops to register with BAR as ARDs is
unnecessary and unfair, given that they do not diagnose and
repair malfunctioning vehicles, but rather simply provide
maintenance services, such as oil changes.
Supporters of the bill contend that without BAR oversight and
BAR's ability to discipline ARDs through the administrative
hearing process, it would be difficult to enforce the
provisions of this bill because BAR would have to rely on an
overworked city attorney or district attorney to pursue an
action in criminal court to enforce these provisions. Absent
egregious circumstances, a violation of this bill likely would
not make it to the top of a city attorney's or D.A.'s priority
list of cases to pursue.
8)Oil change industry arguments against BAR oversight . From a
business standpoint, oil change industry representatives have
underscored that it would be difficult to stay in business if
they are required to register as ARDs because profit margins
in the industry are very small, approximately 10%. Similar to
some other industries, such as the supermarket industry, the
oil change industry business model is based on the ability to
serve a high volume of consumers at a very small profit
margin.
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Oil change industry representatives also contend that
registration as an ARD would trigger a 40% increase in
liability insurance costs alone, due to being officially
categorized as a "repair" shop which carries a much higher
risk for liability insurance purposes.
In addition, the cost of creating new systems to prepare printed
estimates of "parts and labor" before each oil or lubrication
service, and the cost of annual registration of $200 for each
shop location each year, would further reduce already narrow
margins, according to industry representatives.
9)Discussions over the exact form of regulatory oversight may
continue . In its current version, this bill requires oil
change shops to register with BAR as ARDs. If the bill passes
this Committee, it will be heard next in the Assembly Business
& Professions Committee, which has been working with BAR and
the industry on potentially developing a new regulatory scheme
for minor repair and maintenance services.
The author's office has stated an interest in continuing the
conversation with stakeholders on how best to balance the need
to enforce this bill across all businesses that provide oil
change services and the potential impact this bill could have
if oil change shops in California have to register with BAR as
"repair" shops, i.e., ARDs. One option under consideration is
whether a new registration category should be added, so that
oil change shops could simply register as "maintenance
service" shops rather than ARDs.
10)Arguments in support . According to the bill's sponsor,
Californians Against Waste, "Used motor oil, which is
insoluble and contains heavy metals and toxic chemicals, if
improperly disposed can enter our oceans and fresh waters via
the storm water systems, endangering humans, fish and
wildlife. In addition, one gallon of used motor oil can foul
the taste of 1 million gallons of water. This hazardous waste
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is also often burned as fuel, creating dangerous air
pollution. While California has a motor oil collection and
recycling program, source reduction makes the best
environmental and economic sense. In addition to saving
consumers money by reducing oil changes, [this bill] will
reduce greenhouse gas emissions by reducing our consumption of
petroleum."
According to Consumers for Auto Reliability and Safety, "Oil
technology has changed enormously over the last 30 years
making the 3,000 mile oil change unnecessary in nearly all
vehicles. The majority of automakers today call for oil
changes at either 7,500 or 10,000 miles, and the interval can
go as high as 15,000 miles in some cars. And yet, a 2012
survey by CalRecycle indicates almost 10 million Californians
change their motor oil every 3,000 miles or less. It is for
this very reason that CalRecycle launched their "Check Your
Number" campaign to encourage drivers to rethink their current
driving habits and only change the motor oil as needed. While
consumer education is important, many maintenance facilities,
including those specializing in oil changes, continue to
promote the old standards, perpetuating the myth. It is
particularly important that the bill apply equally to
currently unlicensed facilities that perform oil changes, and
require them to properly register with the Bureau of
Automotive Repair, become licensed, and comply with all
applicable laws. Given the stakes involved, ensuring
compliance with environmental and consumer protections is
important enough to warrant uniform licensing and uniform
enforcement of the law."
11)Arguments in opposition . The Automotive Oil Change
Association (AOCA), which represents the lube and oil change
industry, including 54 California companies at two hundred
locations, states that it "must respectfully oppose SB 778
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unless amended to protect the existence of true automotive
maintenance providers (AMPs) by creating a specific category
to distinguish them from repair facilities. Failure to do so
would be catastrophic for AMPs' business model and ultimately
result in significant increases in consumer costs and time
spent trying to obtain basic preventive automotive maintenance
services.
"The current exception for preventative maintenance services,
including oil changes, in the Automotive Repair Act of 1971,
represents a core principal of that Act, which is to protect
and promote consumer access to the preventative maintenance
services historically associated with full service gasoline
stations at the time the Act was written. Checking and
changing oil was the hallmark of that maintenance category.
"Failure to create a separate AMP category will destroy a
highly effective business model that provides services
consumers need most, faster, in more convenient locations, and
at less cost than typical repair industry competitors. In
order to accomplish this, AMPs generally operate on a 7-10%
profit margin?[P]ushing AMPs to become "automotive repair
dealers" would also change their risk category for insurance
purposes, raising their total rates up to 40%.
?As the name indicates, AMPs do only automotive maintenance
services associated with fluid and filter changes, fluid
treatments, and belt and windshield wiper blade replacement-a
nearly identical category of the core preventative maintenance
services originally recognized as deserving exception in the
ARA."
12)Related legislation . AB 873 (Jones) deletes the current list
of minor repairs exempted from registration with BAR,
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effective January 1, 2018, and requires the Director of DCA,
prior to January 1, 2018, to adopt regulations defining a new
list; excludes propulsive batteries from the current list of
minor services; and excludes motor clubs and operators of tow
trucks from the definition of roadside services. AB 873 is
currently pending in the Senate Business, Professions and
Economic Development Committee.
AB 1174 (Bonilla) would require BAR to adopt regulations on
its complaint, investigation, and mediation process and would
require BAR to track and retain data on every mediation
attempted and completed for each ARD. The bill also would
require BAR to study the feasibility, effectiveness, and
impact of requiring all service workers who are employed by
ARDs to be licensed or certified by BAR and report to the
Legislature on this by July 1, 2018. AB 1174 is currently
pending in the Senate Business, Professions and Economic
Development Committee.
13)Prior 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
ARD to be capable of diagnosing and servicing vehicles, as
specified. AB 1665 was vetoed by Governor Brown.
SB 202 (Galgiani) of 2013 would have deleted repairing and
changing tires from the list of repair services exempt from
registration as an automotive repair dealer under the BAR.
However, it would have 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
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technician." SB 202 was held in the Assembly Appropriations
Committee.
AB 2065 (Galgiani) of 2012 was similar to SB 202 (Galgiani) of
2013. AB 2065 was held in the Assembly Appropriations
Committee.
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.
14)Double-referral . This bill was double-referred to the
Assembly Business & Professions Committee, where it will be
heard if passed by this Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
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Californians Against Waste (sponsor)
Biosynthetic Technologies
California League of Conservation Voters
California Product Stewardship Council
CALPIRG
CarMax Auto Superstores
Clean Water Action
Consumer Federation of California
Consumers for Auto Reliability and Safety
Honda
Natural Resources Defense Council
Sierra Club California
Solid Waste Association of North America
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StopWaste
Opposition
Automotive Oil Change Association (AOCA)
Auto Care Association
California Automotive Wholesalers' Association
Integrated Services, Inc.
Service Station Dealers of America and Allied Trades
Tire Industry Association
802 individuals
Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916)
319-2200
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