BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  June 28, 2016


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                  Rudy Salas, Chair


                      SB 778(Allen) - As Amended June 23, 2016


          SENATE VOTE:  22-12


          NOTE: This bill is double-referred, having been previously heard  
          by the Assembly Committee on Privacy and Consumer Protection on  
          June 14, 2016 and approved on a 8-0 vote.


          SUBJECT:  Automotive repair:  oil changes:  notification to  
          customers


          SUMMARY:  Requires an automotive repair dealer (ARD) who  
          performs oil change services to use the manufacturer's published  
          oil drain schedule, except as specified, when recommending an  
          oil change to a customer; establishes a new registration type  
          under the Bureau of Automotive Repair (BAR) for automotive  
          maintenance providers (AMPs); subjects AMPs to the oil changing  
          requirements and other select ARD requirements, as specified;  
          and makes other conforming changes. 




          EXISTING LAW:

          1)Establishes the BAR under the supervision and control of the  








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            Director of the DCA to enforce and administer the Automotive  
            Repair Act (Act).  (Business and Professions Code (BPC)   
            9880-9889.68)
          2)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))


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


             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 that the director determines to be  
               customarily performed by a gasoline service station. 


          4)Provides 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   








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            9880.1(e))
          5)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  
            the definition of "repair of motor vehicles."  (BPC   
            9880.1(g))


          6)Makes it unlawful for any person to engage in the work of an  
            ARD unless the person has a current, valid registration in  
            accordance with the Act.  (BPC  9884.6)


          7)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; and,  (BPC  
                9884.8) 


             e)   Maintain its transaction records for three years.  (BPC  
                9884.11)









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          8)Requires "auto body repair shops," as defined, to register  
            with the BAR using the ARD registration form, and indicate  
            that the shop is registering as an "auto body repair shop" not  
            an ARD.  (BPC  9889.51-9889.52)
          9)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))


          10)Makes a violation of the ARD provisions of the Act, 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, 9889.20)


          11)Authorizes the BAR to promulgate regulations and to enforce  
            violations of the Act 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 suspected unregistered ARDs; pursuing disciplinary  
            proceedings against 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 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)










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          THIS BILL:

          1)Makes several findings and declarations regarding waste of  
            automotive oil and oil change intervals, including that to  
            reduce waste, it is the intent of the Legislature to ensure  
            that an ARD or AMP follows a vehicle manufacturer's published  
            maintenance schedule unless the manufacture specifies  
            conditions that require shorter oil change intervals. 


          2)Amends the title of the Automotive Repair Act to the  
            Automotive Repair and Maintenance Act.


          3)Defines "Automotive Maintenance Provider" as a person who, for  
            compensation, engages in the business of the preventative  
            automotive maintenance services associated with fluid and  
            filter changes, fluid treatments, and belt and windshield  
            wiper blade replacement.


          4)Defines "recommended" or "recommendation" to mean any written  
            recommendation, including, but not limited to, a  
            recommendation of an oil drain interval in the form of a  
            window sticker or a key tag, or through programmable settings  
            in the vehicle's oil life indicator.


          5)Provides that "recommended" or "recommendation" does not mean  
            resetting a preset or nonprogrammable oil life indicator or an  
            oil life monitor based on a mathematical algorithm of the  
            vehicle's usage.


          6)Requires an ARD or an AMP who performs oil change services and  
            recommends a date or mileage for an oil drain interval to  
            follow the vehicle manufacturer published maintenance  








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            schedule, except as specified.


          7)Provides that, if an ARD or an AMP recommends a date or  
            mileage for an oil drain interval that deviates from the  
            vehicle manufacturer's published maintenance schedule for  
            reasons, including, but not limited to, compliance with a  
            consumer's preference, the basis for the date or mileage  
            recommendation shall be noted on the final invoice or on a  
            document attached to the final invoice.


          8)Specifies that none of the oil change requirements under this  
            bill shall be construed as prohibiting the customer from  
            selecting any date or mileage for an oil drain interval of his  
            or her choice and having that choice reflected on future  
            recommendations from an ARD or an AMP.


          9)Specifies that, when an ARD or an AMP performs an oil change  
            service, the dealer shall include the following oil change  
            disclosure statement on the final invoice or on a 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 Web site."


          10)Subjects AMPs to the same registration requirements as ARD's  
            and makes conforming changes.  Excludes language and  
            provisions specific to the repair of motor vehicles,  
            including:
             a)   Repair specific terms, such as "install" or "retrofit";
             b)   The requirement for compliance with Penal Code  551  
               relating to referrals and agreements with insurance  
               companies;









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             c)   Requirements relating to repair-specific estimates and  
               repair-specific activities; and


             d)   The prohibition against liens without a valid  
               registration.


          11)Makes other conforming changes. 
          FISCAL EFFECT:  According to the Senate Committee on  
          Appropriations May 11, 2016 analysis, pursuant to Senate Rule  
          28.8, this bill will result in negligible state costs. 




          COMMENTS:

          Purpose.  This bill is sponsored by  Californians Against Waste  .   
          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 or greater. Further, many new vehicles  
          require the use high quality motor oil that can last 10,000 or  
          even 25,000 miles between changes.  However, 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  








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          requiring any shop performing oil changes to follow the  
          manufacturer's maintenance schedule when recommending how soon  
          to return for the next oil change."


          Background.  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 ("Stop Changing Your  
          Oil! Breaking the 3,000 Mile Habit", Edmunds, April 23, 2013).   
          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.  


          Further, 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 states,  
          "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."  


          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  








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          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.  


          Enforcement by BAR.  Currently, the BAR regulates the automotive  
          repair industry and enforces the Act.  The primary purposes of  
          the Act are to protect consumers from unethical and illegal  
          behavior by the automotive repair industry and improve consumer  
          confidence in the California auto repair industry.


          The Act mandates a statewide automotive repair consumer  
          protection program, including the requirement that ARDs be  
          registered and regulated by BAR.  The Act also gives the BAR the  
          authority to license and regulate official stations and  
          mechanics in the areas of lamp, brake, and smog device  
          inspection and repair.  


          The Act protects consumers by requiring all ARD's, including  
          lamp, brake, and smog stations to: (1) post a sign with  
          information for consumers; (2) provide written estimates that  
          detail the parts and labor to be provided; (3) obtain  
          authorization from their customers prior to commencing any  
          repair services; and (4) provide customers with itemized  
          invoices that detail the parts provided and the labor performed.  
           The Act further requires the BAR to mediate complaints,  
          investigate violations, and take action against ARDs and  
          licensed technicians that fail to comply with the Act or  
          regulations adopted under the Act.  


          However, existing law exempts those performing minor services,  
          which at the time of the enactment of the Act were services  
          typically performed at gas stations, such as oil changes,  








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          replacing light bulbs, and changing air filters.  The rationale  
          for excluding these services was that they were simple services  
          that carried a lower risk of serious consumer harm.


          As a result, individuals who only perform oil changes are not  
          currently regulated by the BAR.  While the BAR can send cease  
          and desist letters to individuals suspected of performing  
          automotive repairs without an ARD registration, without a  
          registration to tie an administrative disciplinary proceeding  
          to, the BAR is limited to referring cases to the Office of the  
          Attorney General or the district attorney.  


          To allow the BAR to enforce the oil changing requirements under  
          this bill, this bill creates a new category of registrants  
          called AMPs.  According to the author, the purpose of generating  
          a new type of registration is to avoid overburdening those who  
          do not perform repairs (maintenance only).  Specifically,  
          creating a new category creates a clear delineation of the scope  
          of the work an ARD or AMP may perform and the requirements.  The  
          delineation may relieve unforeseen issues with liability,  
          insurance, and other regulatory compliance and risk management  
          concerns. 


          Current Related Legislation.  AB 873 (Jones) of the current  
          Legislative Session, deletes the current list of minor repairs  
          exempted from registration with the BAR, effective January 1,  
          2018, and requires the Director of the 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.  STATUS: This bill is currently  
          pending in the Senate Business, Professions and Economic  
          Development Committee.


          AB 1174 (Bonilla) of the current Legislative Session, would  








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          require the BAR to adopt regulations on its complaint,  
          investigation, and mediation process and would require the BAR  
          to track and retain data on every mediation attempted and  
          completed for each ARD.  The bill also would require the BAR to  
          study the feasibility, effectiveness, and impact of requiring  
          all service workers who are employed by ARDs to be licensed or  
          certified by the BAR and report to the Legislature by July 1,  
          2018.  STATUS: This bill is currently pending in the Senate  
          Committee on Business, Professions and Economic Development.


          Prior 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 ARD to be  
          capable of diagnosing and servicing vehicles, as specified.   
          NOTE: This bill was vetoed by Governor Brown, writing "The  
          legislature conducted an oversight hearing that highlighted the  
          need for the [BAR] to update its regulations to better reflect  
          changes in automotive technology that have occurred in recent  
          decades.  As a result, the legislature passed [the] bill to  
          require businesses that change or repair tires for compensation  
          to register as automotive repair dealers.  Before a new  
          licensing scheme is enacted, a more comprehensive review is  
          needed. I am directing the [BAR] 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 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  








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          the definitions of "repair of motor vehicles" and "automotive  
          technician."  NOTE: This bill was held in the Assembly Committee  
          on Appropriations.  





          AB 2065 (Galgiani) of 2012, was similar to SB 202 (Galgiani) of  
          2013. NOTE: This bill was held in the Assembly Committee on  
          Appropriations.   





          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.




          ARGUMENTS IN SUPPORT:


           Californians Against Waste  (sponsor) and others similarly write  
          in support, "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 is also often burned as fuel,  
          creating dangerous air pollution. While California has a motor  








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          oil collection and recycling program, source reduction makes the  
          best environmental and economic sense.


          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 [BAR], 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 enforcement  
          of the law."




          ARGUMENTS IN OPPOSITION:


          None on file.




          IMPLEMENTATION ISSUES:


          This bill establishes a new registration scheme under the BAR.   
          Because the BAR will be responsible for implementing the new  
          registration program, the author should continue to work with  
          the BAR to ensure there are no fiscal, administrative, or  
          technological barriers to implementation. 


          Further, the author should continue to work with stakeholders to  
          ensure that the proper conforming changes have been made.   
          Specifically, because the language of the new AMP registration  
          is based largely off of the existing ARD provisions, there may  
          be more duplicative requirements to fix. 









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          REGISTERED SUPPORT:


          Californians Against Waste (sponsor)


          Automotive Oil Change Association
          Biosynthetic Technologies
          Californians Against Waste
          California Product Stewardship Council
          CALPIRG and CALPIRG Education Fund
          Clean Water Action
          Consumer Federation of California
          Natural Resources Defense Council
          Sierra Club California
          Tri-CED Community Recycling
          WILDCOAST
          REGISTERED OPPOSITION:
                                                                       

          None on file.


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