BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 778 Hearing Date: August 25,
2016
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|Author: |Allen |
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|Version: |August 19, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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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; adds a
contingent enactment provision with AB 873 (Jones); adds
chaptering out amendments with AB 873 (Jones); and makes other
conforming changes.
NOTE : The Assembly Floor Amendments as of 8/19/16 constitute
a rewrite and this measure has been referred to this Committee
pursuant to Senate Rule 29.10 (d) for consideration. The
Committee may, by a vote of the majority, either: (1) hold
the bill, or (2) return the bill to the Senate floor for
consideration of the bill as amended in the Assembly.
The Assembly amendments require oil change businesses to
register with the BAR as AMPs; remove the requirement that an
ARD notify the consumer, prior to performing any work, of the
recommended oil drain interval, oil grade, and viscosity as
specified in the vehicle's owner's manual; require the ARD to
include a specify disclosure statement in the final invoice when
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performing an oil change regarding oil change intervals; apply
oil change notification requirements to AMPs; and authorize the
Department of Consumer Affairs to purchase vehicles that do not
meet fuel-efficiency standards for investigation and enforcement
purposes, as specified.
Existing law:
1) Establishes the BAR under the supervision and control of the
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;
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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.
1) 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 §
9880.1(e))
2) 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))
3) 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)
4) Requires ARDs to do all of the following:
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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)
1) 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)
2) 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))
3) 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 §§
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9884.7, 9889.20)
4) 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)
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
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filter changes, fluid treatments, and belt and windshield
wiper blade replacement.
4) Defines "minor services" as services provided by an AMP.
5) Provides that, in order to avoid unnecessary delays to
promote prompt enforcement, motor vehicles purchased pursuant
to this section are exempt from existing laws, rules,
resolutions, or procedures that are otherwise applicable to
the acquisition of motor vehicles to be used by a state
agency.
6) Authorizes DCA to purchase vehicles of various makes, models,
and condition for investigative purposes, as specified.
7) Prohibits a facility registered with the Director from
registering as both an automotive repair dealer and an
automotive maintenance provider. Provides a business that
maintains multiple facilities to register the facilities
separately with the individual facilities registered as an
automotive repair dealer or an automotive maintenance
provider.
8) Authorizes BAR to adopt, amend, or repeal regulations to
regulate AMPs.
9) 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
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in the vehicle's oil life indicator.
10)Provides that "recommended" or "recommendation" does not mean
written communications or advertisements that do not suggest
timing or mileage for an oil drain interval or resetting a
preset or nonprogrammable oil life indicator or an oil life
monitor based on a mathematical algorithm of the vehicle's
usage.
11)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
schedule, except as specified.
12)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.
13)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.
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14)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."
15)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;
c) Requirements relating to repair-specific estimates and
repair-specific activities; and
d) The prohibition against liens without a valid
registration.
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1) Requires the AMP registration and renewal fee be no more than
$200 for each place of business in the state.
2) Adds a contingent enactment provision with AB 873 (Jones).
3) Incorporates the language contained in AB 873 (Jones) of the
current legislative session to avoid chaptering conflicts.
4) Makes other conforming changes.
FISCAL EFFECT: According to the Assembly Appropriations
Committee analysis dated August 3, 2016, BAR will incur costs to
fund 15 two-year limited-term positions to promulgate
regulations and for inspection-related activities, as well as
ongoing costs to process AMP registration applications, and
costs for the Office of Administrative Hearings. The analysis
does note that the costs will be offset by additional fee
revenue stemming from approximately 2,500 new AMP registrants.
COMMENTS:
1. Purpose. Californians Against Waste is the sponsor of this
measure. 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.
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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. 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."
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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.
3. 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
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changes, 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 major 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.
Also, it is important to note, that the creation of the new
AMP registration has been wholly vetted and discussed by all
stakeholders, including industry representatives, the
Administration, and both houses' Business and Professions
Committees.
4. Letter to the Journal. Currently, this measure tasks BAR to
promulgate regulations to determine what are considered
"minor services". The bill additionally defines "minor
services" as services provided by an AMP. To avoid
confusion, the letter clarifies that minor services are not
solely limited to the services performed by an AMP, but also
services the Director may deem minor. In other words, the
definition of "minor services" aims to clarify that the
services performed by AMPs are not regulated as an ARD.
5. Current Legislation. AB 873 (Jones) 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
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authority to update that list to keep up with technology.
This bill has a contingent enactment provision with this
measure. ( Status : This bill is currently on the Senate
Floor).
AB 1174 (Bonilla) 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, 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. ( Status : This bill is currently re-referred to the
Assembly Committee on Business and Professions pursuant to AR
77.2).
6. Prior Legislation. 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. ( Status : This bill was
held in the Assembly Committee on Appropriations).
AB 2065 (Galgiani) of 2012, was similar to SB 202 (Galgiani)
of 2013. ( Status : 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.
7. 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
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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 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."
SUPPORT AND OPPOSITION:
Support:
Californians Against Waste (Sponsor)
Automotive Oil Change Association
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
Management Task Force
Natural Resources Defense Council
Northern California Recycling Association
Oil Changers, Inc.
Sierra Club California
StopWaste
LA County Solid Waste Management Committee/Integrated Waste
Management Task Force
The Solid Waste Association of North America
Tri-CED Community Recycling
Wildcoast Costasalvaje
Opposition:
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None on file as of August 23, 2016.
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