BILL ANALYSIS                                                                                                                                                                                                    



          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. 

                                      -- END --