BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


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


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          |Policy       |Privacy and Consumer           |Vote:|8 - 0        |
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          |             |Business and Professions       |     |14 - 1       |
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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill 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  








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          oil change to a customer; establishes a new registration type  
          under the Bureau of Automotive Repair (Bureau) for automotive  
          maintenance providers (AMPs); and subjects AMPs to the oil  
          changing requirements and other select ARD requirements, as  
          specified. 


          FISCAL EFFECT:


          1)Major costs of $1.7 million in 2017-18 and $1.5 million in  
            2018-19 (special funds) to the Bureau to fund 15.0 two-year  
            limited-term positions to promulgate regulations and for  
            inspection-related activities.


          2)Minor costs for licensing of $78,000 in 2017-18 and $70,000  
            annually ongoing to the Bureau to fund 1.0 Program Technician  
            II to process AMP registration applications.


          3)Ongoing costs of $185,000 for Attorney General (AG) and  
            $36,000 for the Office of Administrative Hearings beginning in  
            2017-18.


          4)Costs will partially offset by approximately $500,000 per year  
            in additional fee revenue from approximately 2,500 new AMP  
            registrants.


          COMMENTS:


          1)Purpose. 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  








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



          2)Background.  The Bureau regulates the automotive repair  
            industry and enforces the Automotive Repair Act (Act).  The  
            primary purposes of the Act are to protect consumers from  
            unethical and illegal behavior by the automotive repair  
            industry and to improve consumer confidence in the California  
            auto repair industry.



            Under current law, new car dealers as well as independent car  
            dealers that service and repair cars have to register with the  
            Bureau 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. In response, this bill changes the  
            statutory definitions of "repair" and "automotive technician"  








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            to include oil changes and vehicle lubrication, which would  
            effectively require all oil change shops to register with the  
            Bureau as ARDs and be subject to Bureau oversight. 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.





            In recent years, the Bureau and the Legislature have grappled  
            with the question of whether vehicle maintenance services,  
            such as oil changes and tire repairs, should be regulated by  
            the Bureau.  In its 2014 sunset review hearing, the Bureau  
            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 the  
            Bureau the opportunity to include more stakeholder input and  
            decide which other automotive repair services require  
            regulation.  In 2015, the Bureau held an industry workshop  
            where industry stakeholders and the Bureau representatives  
            discussed a range of issues including major/minor services,  
            compliance with advertising requirements, and the definition  
            of roadside services.  


          3)Oil Recycling. California has a motor oil collection and  
            recycling program, but only about half of used oil is  
            recycled.  In February 2016, the California Department of  
            Resources Recycling and Recovery (CalRecycle) released a  








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            report entitled  Used Oil Life Cycle Assessment Report to the  
            Legislature  . 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.  





          4)Current Legislation.  


             a)   AB 873 (Jones), pending in the Senate Appropriations  
               Committee, 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.


             b)   AB 1174 (Bonilla), pending in the Senate Appropriations  
               Committee, would require the Bureau to adopt regulations on  
               its complaint, investigation, and mediation process, and  
               would require the Bureau to track and retain data on every  
               mediation attempted and completed for each ARD.  The bill  
               also would require the Bureau to study the feasibility,  








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               effectiveness, and impact of requiring all service workers  
               who are employed by ARDs to be licensed or certified by the  
               Bureau and report to the Legislature by July 1, 2018.  


          1)Prior Legislation.  In addition to the 2014 Jones bill  
            mentioned in Comment #2 above:



             a)   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  
               Bureau, as specified. This bill was held on this  
               Committee's Suspense file.   



             b)   AB 2065 (Galgiani) of 2012, was similar to SB 202  
               (Galgiani) of 2013. This bill was held on this Committee's  
               Suspense file.   



             c)   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.


          


          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  








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          319-2081