Proposed California Bill Erroneously Includes Body Shops

Sacramento Capital
Sacramento Capital - Wikimedia

Every year at this time, Jack Molodanof, a registered lobbyist for the California Autobody Association (CAA) and president of Molodanof Government Relations in Sacramento, CA, begins the process of reviewing hundreds of proposed bills.

He needs to identify the ones that can potentially affect the collision repair industry, either positively or, more importantly, negatively.

One particular bill, introduced by Assemblymember Miguel Santiago, immediately caught Molodanof’s attention for all the wrong reasons.

“AB 294 was introduced this year and is sponsored by the insurance companies,” he said. “It’s definitely a big one, for the automotive repair industry, especially for auto body shops.

"It will create a new regulatory board for towing and storage companies under the California Department of Consumer Affairs (DCA.) Unfortunately, the bill is overly broad and captures auto body shops that are already heavily regulated by the Bureau of Automotive Repair (BAR.) In addition, it prohibits auto repair shops from charging reasonable rates for storage.

“The bill weakens consumer protections and hurts small businesses, by stripping the BAR of its expertise and authority to regulate auto repair shops' ancillary storage issues,” he said. "It creates a new Vehicle Towing & Storage Board within DCA to oversee and enforce towing and storage issues in the state.

"This new board is overly broad and would place automotive repair dealers (ARDs), that charge ancillary storage, under separate regulatory jurisdiction." It's simply unnecessary to include ARDs in the bill because they are already subject to BAR oversight, Molodanof said.

"ARDs are not in the towing and storage business. The auto repair industry is in the business to diagnose, perform maintenance and repair vehicles," he said. "Storage service is ancillary to auto repair shops, but usually only comes into play on total loss vehicles, or when a customer does not pick up and pay for authorized repairs in a reasonable amount of time.

"If an ARD is charging unreasonable storage rates or an issue arises regarding storage, a consumer can file a complaint with BAR to investigate. BAR has authority to take disciplinary action against an automotive repair shop that fails to comply with laws and regulations.

"Creating another unnecessary board to oversee auto repair and related storage issues not only deprives consumers of BAR’s expertise and oversight authority, but creates bureaucratic ping pong. The bill should exempt ARDs from the new Vehicle Towing & Storage Board.” Monte Etherton is the president of Fender Mender in Encinitas, CA, as well as chairman of CAA’s Legislative Committee.

“With pandemic lockdowns, and fewer miles driven, body shops are already struggling to survive,” he said. “Now legislators want to reduce what body shops can charge insurance companies for storing totaled cars---just so insurers can save a few bucks. But shops will lose more than a few bucks.

"Since insurers will no longer have financial incentive to move their totaled cars out of shops, shops will lose space they need to keep repairable, revenue-generating cars," Etherton said. "Storage rate income will not cover the cost of keeping employees. Only repairable cars can do that.

"If insurers want to save a few bucks, they should look in the mirror. Leaving totaled cars in body shops for longer than necessary is on them.”

Molodanof pointed out AB 294 also prohibits ARDs' ability to charge reasonable market rates for ancillary storage, currently defined as charges comparable to other shops in the local area, and instead caps storage rates based on the rate CHP or other local enforcement agencies pay under contract to towing/storage vendors.

"CHP and local enforcement agency rates are negotiated and discounted with towing and storage companies in exchange for volume referrals," Molodanof said. "It is simply not fair to apply these negotiated rates to automotive repair shops who do not contract with these government agencies, nor benefit from that arrangement.” The bill repeals VC Code section 22524.5 (c)(2)(B). AB 2392, introduced by the same assemblymember, created that section of code, and took effect in 2019, addressing the issue regarding reasonable storage charges.

The sponsors of AB 2392 and the auto repair industry recognized auto repair businesses are different from towing and storage companies and negotiated this language in good faith, and so far, this newly enacted law is working fine.

During this unprecedented COVID-19 climate, many auto repair businesses are struggling financially. Depriving repair shops the ability to charge a fair and reasonable rate only exacerbates the problem and will cause further harm to many small businesses.

Simply stated, “AB 294 should not repeal this new law and we strongly oppose it,” Molodanof said.

Ed Attanasio

Ed Attanasio is an automotive journalist and Autobody News columnist based in San Francisco.

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