BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 778| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 778 Author: Allen (D) Amended: 8/19/16 Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE: 4-1, 4/29/15 AYES: Hill, Jackson, Leno, Pavley NOES: Gaines NO VOTE RECORDED: Wieckowski, Bates SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 5-1, 1/11/16 AYES: Hill, Block, Hernandez, Jackson, Wieckowski NOES: Bates NO VOTE RECORDED: Berryhill, Galgiani, Mendoza SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 7-2, 8/25/16 (Pursuant to Senate Rule 29.10) AYES: Hill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski NOES: Bates, Gaines SENATE FLOOR: 22-12, 1/25/16 AYES: Allen, Beall, Block, De León, Glazer, Hall, Hancock, Hernandez, Hill, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth, Wieckowski NOES: Anderson, Berryhill, Cannella, Fuller, Gaines, Huff, Moorlach, Morrell, Nguyen, Nielsen, Runner, Vidak NO VOTE RECORDED: Bates, Galgiani, Hertzberg, Hueso, Stone, Wolk ASSEMBLY FLOOR: 66-10, 8/22/16 - See last page for vote SUBJECT: Automotive repair: oil changes: notification to SB 778 Page 2 customers SOURCE: Californians Against Waste DIGEST: 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 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. 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 performing an oil change regarding oil change intervals; apply oil change notification requirements to AMPs; and authorize the Department of Consumer Affairs (DCA) to purchase vehicles that do not meet fuel-efficiency standards for investigation and enforcement purposes, as specified. ANALYSIS: 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) SB 778 Page 3 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. SB 778 Page 4 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) 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) 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 §§ 9884.7, 9889.20) 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. SB 778 Page 5 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 "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. SB 778 Page 6 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 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 SB 778 Page 7 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. 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 SB 778 Page 8 "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. 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. SB 778 Page 9 Background 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 requiring any shop performing oil changes to follow the manufacturer's maintenance schedule when recommending how soon to return for the next oil change." 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. SB 778 Page 10 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, 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. SB 778 Page 11 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes 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 SB 778 Page 12 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. SUPPORT: (Verified8/25/16) Californians Against Waste (source) 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: (Verified8/25/16) None received 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 SB 778 Page 13 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 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." ASSEMBLY FLOOR: 66-10, 8/22/16 AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Bigelow, Brough, Beth Gaines, Gallagher, Grove, Harper, Obernolte, Patterson NO VOTE RECORDED: Dahle, Hadley, Mayes, Melendez Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104 8/29/16 9:22:57 **** END ****