BILL ANALYSIS Ó SB 778 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 778 (Allen) - As Amended June 23, 2016 ----------------------------------------------------------------- |Policy |Privacy and Consumer |Vote:|8 - 0 | |Committee: |Protection | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Business and Professions | |14 - 1 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 SB 778 Page 2 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 SB 778 Page 3 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" SB 778 Page 4 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 SB 778 Page 5 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, SB 778 Page 6 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) SB 778 Page 7 319-2081