BILL ANALYSIS Ó
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|Hearing Date:June 23, 2014 |Bill No:AB |
| |1665 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 1665Author:Jones
As Amended:May 23, 2014 Fiscal:Yes
SUBJECT: Automotive repair.
SUMMARY: Deletes "repairing tires" and "changing tires" from the list
of repair services exempt from registration as an automotive repair
dealer under the Bureau of Automotive Repair, and requires an
automotive repair dealer to be capable of diagnosing and servicing
tire pressure monitoring systems (TPMS), as specified.
Existing law:
1)Registers and regulates more than 35,000 automotive repair dealers
(ARDs) under the Automotive Repair Act (Act) by the Bureau of
Automotive Repair (BAR) within the Department of Consumer Affairs
(DCA). (Business and Professions Code (BPC) § 9880 et seq.)
2)Defines certain terms in the Act, including:
a) "Automotive repair dealer" to mean a person who, for
compensation, engages in the business of repairing or diagnosing
malfunctions of motor vehicles. (BPC § 9880.1 (a))
b) "Repair of motor vehicles" to mean maintenance of and repairs
to motor vehicles performed by an automotive repair dealer
including automotive body repair work, and excludes from the
definition: (BPC § 9880.1 (e))
i) Repairs made under a commercial business agreement.
ii) Repairing tires and changing tires.
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iii) Lubricating vehicles.
iv) Installing light bulbs, batteries, windshield wiper blades
and other minor accessories.
v) Cleaning, adjusting and replacing spark plugs, fan belts,
oil and air filters.
vi) Other minor services customarily performed by gasoline
service stations.
c) "Automotive technician" to mean an employee of an automotive
dealer (or the dealer itself) who performs maintenance,
diagnostics, repair, removal or installation of any integral
component parts of an engine, driveline, chassis or body of any
vehicle and excludes from the definition: (BPC § 9880.1 (g))
i) Repairing and changing tires.
ii) Lubricating vehicles.
iii) Installing light bulbs, batteries, windshield wiper blades
and other minor accessories.
iv) Cleaning, replacing fan belts, oil and air filters.
v) Other minor services customarily performed by gasoline
service stations.
3)Requires all work done by an ARD to be recorded on an itemized
invoice that describes all service work done and parts supplied, and
requires the invoice to contain specified information. (BPC §
9884.8)
4)Requires an ARD to provide a customer with an itemized written
estimate for parts and labor and to obtain authorization from the
customer before performing work or charging for any work on the
customer's vehicle. (BPC § 9884.9)
5)Prohibits an ARD from charging a customer for work done or parts
supplied in excess of the written estimate without first obtaining a
customer's oral or written authorization.
(BPC § 9884.9 (a))
6)Establishes the following fees for an ARD registration: (BPC §
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9886.3)
a) Initial registration fee of not more than $200 for each place
of business.
b) Annual renewal fee of not more than $200 for each place of
business.
c) Delinquent renewal fee of 1 1/2 times the renewal fee, but not
more than the renewal fee plus $50.
7)Makes it unlawful for a person to be an ARD unless registered with
the BAR, and unless the registration is currently valid. Makes any
violation of the Act a misdemeanor (crime).
(BPC §§ 9884.6, 9889.20).
This bill:
1)Removes the exemption for tire repair and tire changing from the
definitions of "repair of motor vehicles" and "automotive
technician."
2)Exempts from the definitions of "repair of motor vehicles" and
"automotive technician," tire services provided by or on behalf of
either of the following:
a) A motor vehicle club holding a certificate of authority under
the Insurance Code.
b) A tow truck operator possessing a valid motor carrier permit
under the Vehicle Code.
3)Defines TPMS as the automotive safety device that warns the driver by
using a lighted icon on the onboard diagnostic (OBD) system that one
or more of the tires are underinflated.
4)Revises and recasts a number of definitions in the Automotive Repair
Act and makes clarifying, technical and conforming changes.
5)Requires an ARD to be capable of diagnosing and servicing the TPMS in
accordance with industry standards if a vehicle is manufactured with
the device.
FISCAL EFFECT: This measure has been keyed "fiscal" by Legislative
Counsel. The May 7, 2014 Assembly Committee on Appropriations
analysis indicates that registering and overseeing 2,800 new tire
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facilities (an 8% workload increase for BAR) as ARDs could result in
on-going costs in the range of a several hundred thousand dollars.
Those costs should be fully offset by increased licensing revenue
(Vehicle Inspection and Repair Fund)."
COMMENTS:
1. Purpose. This bill is sponsored by Les Schwab Tire Centers and
California Tire Dealers Association (Sponsors) to require a business
that changes and repairs tires to register as ARD with the BAR, and
to have the capability to diagnose and service tire pressure
monitoring systems in vehicles that are manufactured with that
safety system.
The Author states: "On November 1, 2000, Congress enacted the TREAD
Act (Transportation Recall Enhancement Accountability Documentation)
as a direct consequence of its hearings on the safety and fatalities
related to the Firestone tire situation at the time. It directed
NHSTA to adopt regulations to update the Federal motor vehicle
safety standards and to require a system in new motor vehicles that
warns the operator when a tire is significantly under inflated. The
warning telltale appears on the dashboard screen as a red
cross-section of a tire."
The Author further cites a 2011, National Highway and Traffic Safety
Administration (NHTSA) letter to the Tire Industry Association,
stating: "In the case of a vehicle equipped with a functioning TPMS
system, a service provider would violate the 'making inoperative'
prohibition of 49 USC 30122(b) by installing new tires and wheels
that do not have a functioning TPMS system. To avoid a 'make
inoperative' violation, the service provider would need to decline
to install the new tires and rims, use the TPMS sensors from the
original wheels (if they are compatible), or convince the motorist
to purchase new TPMS sensors and ensure the sensors are properly
integrated with the vehicle's TPMS system."
The Sponsors state that the bill is necessary for the following
reasons:
It is a federal compliance issue relating to the repair
and servicing tires equipped with TPMS;
It will improve automotive safety through properly
inflated tires;
It will improve fuel economy with an estimated annual
savings in the hundreds of millions of gallons of gas in
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California alone; and,
It is an environmentally friendly bill that will
ultimately provide better air quality for all Californians.
1. Tire Pressure Monitoring Systems (TPMS). TPMS is a vehicle
safety device and its proper functioning is essential to the safe
operation of a vehicle. The repair and diagnosis of TPMS issues
often requires specialized equipment and adherence to specific
diagnostic procedures. For this reason, the BAR has determined,
under its existing authority to distinguish between exempt minor
services and major services requiring registration; that businesses
that work with TPMS need to be registered as an ARD. A March 2013
Chief's Message, from the former BAR Chief John Wallauch, states,
"Tire stores that diagnose TPMS sensors must be registered with
[BAR]. Businesses benefit from this registration because it
establishes a level-playing field where all tire stores that serve
these warning devices are registered. Consumers will benefit
because they will receive a written estimate and be protected by all
other provisions in the [Act]."
This bill would codify the BAR's position by making clear that tire
change and repair services are no longer exempt from the BAR
oversight. It would also require ARDs that service vehicles with
TPMS sensors must be capable of repairing and diagnosing TPMS in
accordance with industry protocols.
3.Proposed Oversight of Tire Dealers by the BAR. Last year, SB 202
(Galgiani, 2013) sought to include tire repair and changes in the
list of services performed by an ARD. Although this bill is
distinct from SB 202, in that it defines TPMS and requires ARDs that
work on vehicles with TPMS to be capable of diagnosing and servicing
the TPMS, this bill also includes tire repair and changing in the
list of services performed by an ARD and automotive technician. As
a result, tire repair and changing services generally would be
licensed and regulated under the BAR. The annual fee for an ARD
license is $200.
Supporters of the bill state that consumers have encountered
situations where they are quoted one price for replacing tires, but
are charged an additional amount after the tires have been
installed. Consumers may file a civil action in a small claims
court or ask public prosecutors to take legal action for a false
advertisement claim, but many consumers are unlikely to take those
actions. This bill effectively grants the BAR disciplinary
authority over such cases.
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The Act requires all ARDs to provide customers with a written estimate
prior to commencement of work, record all work done on an invoice,
describe all service work done and parts supplied and seek customer
approval for additional work or costs, as specified. The Author
contends that this bill would increase consumer protection by
subjecting individuals offering tire changing and repair services to
those same requirements. In addition, by including these businesses
as ARDs, this bill would give the BAR the authority to investigate
complaints related to tire services and take disciplinary action by
issuing a citation and fine, suspension or revocation of an ARD
license potentially shutting down a bad-actor licensee.
According to the BAR, it receives very few consumer complaints
relating to unlicensed tire shops. However, because individuals
providing tire changing and repair services are currently not
regulated by the BAR, it is not clear how many problems simply go
unreported, or how many more complaints the BAR would receive if
these individuals were under the BAR's jurisdiction.
4.Sunset Review of the Bureau of Automotive Repair. Earlier this
year, the Senate Business Professions and Economic Development
Committee and the Assembly Business, Professions and Consumer
Protection Committee (Committees) conducted joint oversight hearings
to review the BAR and 8 other regulatory entities. As a part of
that review, staff of the Committee made recommendations which are
reflected in the Background Papers prepared for each agency and
program reviewed by the Committees.
As a result of the review, SB 1242 , relating to the BAR, along with
five other bills were introduced by Senator Lieu to extend sunset
dates and make various recommended changes.
One of the issues raised by Committee staff during the review was the
issue of exempt areas of practice in the Act.
In its Sunset Report, the BAR raised the issue of ancillary services
which have typically been regarded as exempt areas of practice and
therefore not subject to regulation and registration as an ARD; such
as replacing spark plugs, batteries and fan belts. The BAR
indicates that because of advances in automotive technology many of
these services require more specialized repair skills and
necessitate the removal of automotive systems, engine components,
shrouds or other electrical equipment. The Bureau indicates that an
ARD registration should be required for those carrying out such
complex repairs.
One of the examples of repairs exempt from registration under the Act,
cited by the BAR, is tire services. Many modern vehicles are
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equipped with tire pressure monitoring systems that may require the
technician to update the vehicle's on-board diagnostic system when
serviced.
Discussions with repair industry representatives indicate that the BAR
recently determined that some tire dealers must register as ARDs.
This determination has apparently been made because of the
definitions in BPC § 9880.1, and the TREAD Act. The TREAD Act
requires that beginning with the 2006 model year, every new vehicle
of less than 10,000 pounds gross vehicle weight rating must be
equipped with a TPMS (Tire Pressure Monitoring System). The BAR has
determined that shops engaging in the repair, removal and
installation of TPMS must register as ARDs because the TREAD Act
mandated new vehicles be equipped with TPMS in response to numerous
deaths. As a clear health and safety issue, the proper functioning
of such components is essential to the safe operation of a vehicle.
The BAR has further indicated that the repair and diagnosis of TPMS
often requires the use of specialized equipment and adherence to
specific diagnostic procedures, which necessitates specific
mechanical expertise.
In its Sunset Report, the BAR indicated that the definition of repair
of motor vehicles may need to be updated by regulation to clarify
what constitutes maintenance and repairs of motor vehicles, given
changes to automotive technology over time.
In its response to the issues raised in the Committee's Background
Paper, the BAR stated that spark plug replacement is a prime example
of these exemptions which might need to be changed. It is not
uncommon for vehicles to have spark plugs replaced if a specific
diagnosis determines that replacement is warranted or at scheduled
intervals of 100,000 miles. Vehicle manufacturers have made spark
plugs inaccessible without removal of other major systems, even the
removal of motor mounts, and in a few cases, the entire engine,
according to the BAR. Additionally, these same services are not
exempt from the consumer disclosure and
other protections of the Act if other automotive repair services
performed by the facility require registration with the Bureau.
Committee staff recommended that BAR provide input on this issue, and
asked whether the Bureau's regulatory authority is sufficient in
these areas. In its reply to the Committee, however, the BAR did
not make a specific recommendation for legislation in this area.
5.Related Legislation. SB 1242 (Lieu, 2014) subjects the powers and
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duties of the Bureau of Automotive Repair to review by the
appropriate policy committees of the Legislature as if these
provisions were scheduled to be repealed on January 1, 2019; makes
technical, updating and correcting changes to the Automotive Repair
Act. ( Status : SB 1242 is set for hearing on June 24, 2014 before
the Assembly Business, Professions and Consumer Protection
Committee.)
SB 202 (Galgiani) of 2013 deleted repairing and changing tires from
those exclusion lists. The bill additionally excluded tire services
provided by or on behalf of a motor club holding a specified
certificate of authority or an operator of a tow truck owned or
operated by a person or entity possessing a valid motor carrier
permit from the definitions of "repair of motor vehicles" and
"automotive technician." ( Status : SB 202 was held on the Assembly
Appropriations Suspense File.)
AB 2065 (Galgiani, 2012) also sponsored by Les Schwab Tire Centers
was essentially the same as SB 202. ( Status : AB 2065 was held on
the Assembly Appropriations Committee Suspense File.)
6.Arguments in Support. In sponsoring the bill, Les Schwab Tire
Centers (Schwab) states that properly maintained tire pressure is
the single most important factor of tire safety, and that AB 1665
brings the entire tire service and repair industry in compliance
with the current federal and industry standards for the activation,
calibration, maintenance and replacement of the tire pressure
monitoring systems (TPMS) embedded in all cars and light weight
truck sold in California and the USA since 2007.
Schwab states: "Properly inflated tires are not only safer but they
also deliver improved fuel economy that in turn results in improved
environmental quality. It has been estimated that the annual fuel
savings in California would be in the hundreds of millions of
gallons. Finally, the bill would additionally remove the Automotive
Repair Act's 42-year-old exemption for tire sales only stores. This
would [provide] a significant consumer protection advancement.
Placing these long-time exempt businesses under the jurisdiction of
the Bureau of Automotive Repair would finally require them to give
written estimates, meet both the minimum industry requirements for
conducting tire repairs and the federal and industry standards for
servicing the TPMSs."
Also sponsoring the bill, the California Tire Dealers Association
(CTDA), representing a number of small and medium sized independent
tire dealers, argues that the bill reflects current federal and
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industry standards by requiring tire dealers and service providers
to be able to activate and calibrate TPMSs. CTDA indicates three
reasons it supports the bill:
(1) the bill requires all shops that sell, repair, or change tires
(and which must install and calibrate TPMS) to register with the
BAR; (2) properly installed and maintained TPMS increases safety for
occupants in all vehicles that have them; and (3) properly inflated
tires, the reason for TPMS, improve a vehicle's fuel economy and
benefit the environment.
California New Car Dealers Association (CNCDA) states there is
widespread potential for fraud among "tire sales only" shops who
prey on customers by quoting one price for replacing tires, but
charging an inflated amount after the tires have been installed. By
requiring "tire sales only" shops to register with the BAR, the bill
would require these shops to provide customers with written
estimates for parts and labor before any work is done to their
vehicle and prohibit additional charges from accruing without the
customer's prior authorization, according to CNCDA. CNCDA believes
the bill levels the playing field for dealers, creates a fairer
business environment and protects consumers.
7.Technical, Clarifying Amendments. Committee staff recommends the
following technical clarifying amendments which will be adopted as
Author's amendments in Committee.
a) In recasting the definition of automotive technician, the bill
inadvertently refers to "cleaning or replacing fan belts, oil,
and air filters." Existing law does not necessarily link the
term cleaning with "replacing fan belts." Staff recommends the
following technical amendment.
On page 3, amend lines 12-14 to read:
(3) Installing light bulbs, batteries, windshield wiper blades,
and other minor accessories; cleaning, replacing fan belts,
oil, and air filters .
b) Staff recommends amendments to clarify that only those ARDs
who repair or change tires are required to be capable of
diagnosing and servicing the TPMS on a vehicle.
On page 4, line 34, after "An automotive repair dealer" insert:
" that repairs tires or changes tires "
SUPPORT AND OPPOSITION:
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Support:
Les Schwab Tire Centers (Sponsor)
California Tire Dealers Association (Sponsor)
California New Car Dealers Association
Opposition:
None received as of June 18, 2014
Consultant:G. V. Ayers