California TPMS bill passes

[TPMSProAlbert]

SACRAMENTO, Calif.—The California Legislature has passed legislation that its proponents claim will improve automotive safety, protect consumers from “unscrupulous” tire dealers and increase fuel economy.

Approved with overwhelming bipartisan support, Assembly Bill 1665 is headed to the governor's desk for his signature.

Enforced by the Bureau of Automotive Repair (BAR), AB 1665 requires all tire dealers to be capable of diagnosing and servicing tire pressure monitoring systems (TPMS), strengthens state oversight of tire dealer and repair shops and provides new recourse for consumers who've been wronged, according to a statement issued by the bill's sponsors, Assemblyman Brian Jones, R-Santee, and Senator Ted Lieu, D-Redondo Beach.

“This is the most important automotive safety legislation since California's hands-free while driving law took effect,” Mr. Jones said. “TPMS devices are one of the most significant improvements to ensure proper air pressure, which allows our tires to last longer and improves mileage.

“With passage of this legislation, consumers will also have better assurance that tire dealers are properly trained and certified to service these important warning devices.”

Mr. Lieu added: “The bottom line is properly inflated tires are safer, last longer and give us better fuel economy and cleaner air. For California, these systems are already saving millions of gallons [of fuel] each year. These fuel savings will only increase as more TPMS vehicles enter our state's car pool.”

Les Schwab Tire Centers and the California Tire Dealers Association were co-sponsors of A.B. 1665, the CTDA said, because the bill is expected to “level the playing field” for all tire retailers, including those currently operating as “tire sales only” shops that are able to avoid BAR regulation.

“While most of those operations are legitimate,” the CTDA said, “there are many that advertise below-wholesale cost for new tires in direct competition with CTDA members. When a customer finds that unspoken 'add-ons'—such as mounting, tire inflation, etc.—brings the charges to much higher than the advertised price, there is nowhere to turn other than a local district attorney or Small Claims Court.”

Under AB 1665, the BAR will inspect all tire shops annually, the CTDA said, and customers will be able to call one number—prominently displayed in the shop—to report unfair charges or other complaints against the business. The annual fee for an automotive repair dealer (ARD) license is $200.

[TPMSProAlbert]

BILL ANALYSIS Ó



AB 1665
Page 1

Date of Hearing: April 22, 2014

ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 1665 (Jones) - As Amended: March 20, 2014

SUBJECT : Automotive repair.

SUMMARY : Authorizes the Bureau of Automotive Repair (BAR) to
regulate businesses that change and repair tires as an
automotive repair dealer (ARD), and requires ARDs and tire
dealers, if a vehicle is manufactured with a tire pressure
monitoring system (TPMS), to be capable of activating and
calibrating the TPMS. Specifically, this bill :

1)Deletes tire changing and tire repair from the list of
services that are excluded from the definitions of the "repair
of motor vehicles" and "automotive technician" and that are
exempt from BAR regulation, thereby making tire changing and
tire repair subject to BAR's authority.

2)Exempts rotating tires, adjusting tire pressure, and providing
tire services by or on behalf of a motor vehicle club or a tow
truck operator possessing a valid motor carrier permit, as
specified, from the definitions of the "repair of motor
vehicles" and the duties of an "automotive technician."

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)Requires, if a vehicle is manufactured with TPMS, an ARD and
tire dealer to check the OBD system to ensure that the TPMS is
operative and be capable of activating and calibrating the
TPMS when necessary in accordance with industry protocol.

5)Makes other technical and conforming changes.

EXISTING LAW

1)Provides for the licensing and regulation of ARDs by BAR,
which is under the Department of Consumer Affairs, pursuant to
the Automotive Repair Act (Act). (Business and Professions
Code (BPC) Section 9880 et seq.)

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AB 1665
Page 2


2)Defines "repair of motor vehicles" to mean all maintenance of
and repairs to motor vehicles performed by an ARD, including
automotive body repair work, but excluding those repairs made
pursuant to a commercial business agreement and also excluding
repairing tires, changing tires, lubricating vehicles,
installing light bulbs, batteries, windshield wiper blades and
other minor accessories, cleaning, adjusting, and replacing
spark plugs, replacing fan belts, oil, and air filters, and
other minor services which the director of BAR, by regulation,
determines are customarily performed by a gasoline service
station. (BPC 9880.1(e))

a) Prohibit services from being designated as minor
services that may be exempt if the Director of BAR 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))

b) Defines "automotive technician" to mean an ARD or ARD's
employee, who for salary or wage, repairs motor vehicles
and performs maintenance, diagnostics, repair, removal, or
installation of any integral component parts of an engine,
driveline, chassis, or body of any vehicle, but excluding:
repairing tires, changing tires, lubricating vehicles,
installing light bulbs, batteries, windshield wiper blades,
and other minor accessories; cleaning, replacing fan belts,
oil, and air filters, and other minor services which the
director of the BAR, by regulation, determines are
customarily performed by a gasoline service station. (BPC
9880.1(g))

c) Limits the ARD registration fee to $200 for each place
of business in this state and the annual ARD registration
renewal fee to $200 if renewed prior to its expiration
date, and provides that the renewal fee for a delinquent
renewal shall be 1 1/2 times the renewal fee, but not more
than the renewal fee plus $50. (BPC 9886.3)

FISCAL EFFECT : Unknown

COMMENTS :

1)Purpose of this bill . This bill would require BAR to regulate

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AB 1665
Page 3

and license as ARDs businesses that change and repair tires,
except as specified, and would require ARDs and tire dealers
to activate and calibrate TPMS when necessary, in accordance
with BAR's previous announcement that businesses that diagnose
TPMS be registered with BAR. The author contends that AB 1665
would increase consumer protection by requiring individuals
that service vehicles with TPMS to be capable of activating
and calibrating the TPMS system, and also ensuring that tire
shops are under BAR's jurisdiction, so that BAR could
investigate complaints and take enforcement action against
these businesses if necessary. This bill is sponsored by Les
Schwab Tire Centers and the California Tire Dealers
Association.

2)Author's statement . According to the author, "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 National Highway and Traffic Safety Administration
(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.

"According to the November 22, 2011, (NHTSA) letter of
explanation to the Tire Industry Association: 'In the case of
a vehicle equipped with a functioning TPMS system, a service
provider would violate the "making inoperative" prohibition
under Section 30122(b) of Title 49 of the United States Code
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.'"

"[This bill] is necessary because it will improve automotive
safety through properly inflated tires, and will improve fuel
economy with an estimated annual savings in the hundreds of
millions of gallons of gas in California alone. Finally, this
is an environmentally friendly bill that will in turn provide
better air quality for all Californians. This is also a

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AB 1665
Page 4

federal compliance issue."

3)TPMS and federal law . Congress passed the Transportation
Recall Enhancement, Accountability and Documentations Act
(TREAD Act) in 2000 in response to a major recall of defective
tires that created unsafe driving conditions. The TREAD Act
mandates new vehicles that are less than 10,000 pounds gross
vehicle weight to be equipped with TPMS beginning with the
2006 model year, to alert drivers when the pressure in a tire
falls more than 25 percent below the manufacturer's
recommended tire pressure.

TPMS continuously monitors the pressure in the tires through
sensors located in the tires (direct system) or the use of
wheel speed and other vehicle sensors (indirect system). The
information collected by the sensors is transmitted to the OBD
system that interprets the sensor signals and warns the driver
when tire pressure is below the minimum acceptable level.
Under federal law, motor vehicle repair businesses are
prohibited from "making inoperative" any part of a device
installed in a motor vehicle in compliance with an applicable
motor vehicle safety standard. As a result, individuals who
service vehicles with TPMS are prohibited from installing
tires and rims without TPMS sensors on a vehicle with a
functioning TPMS system, and are required to make sure that a
vehicle's TPMS remains operational.

Because TPMS is a vehicle safety device and its proper
functioning is essential to the safe operation of a vehicle,
and also because the repair and diagnosis of TPMS often
requires specialized equipment and adherence to specific
diagnostic procedures, BAR has determined, under its existing
authority to distinguish minor services that are exempt from
major services that require registration, that businesses that
work with TPMS need to be registered as an ARD. In a March
2013 Chief's Message, former BAR Chief John Wallauch stated,
"Tire stores that diagnosis 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 implement BAR's position by making clear that
tire change and repair services are no longer exempt from BAR

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AB 1665
Page 5

oversight. It would also require ARDs that service vehicles
with TPMS be capable of repairing and diagnosing TPMS in
accordance with industry protocols.

4)Proposed oversight by BAR . Last year, SB 202 (Galgiani) of
2013 sought to include tire repair and changing in the list of
services performed by an ARD. Although this bill is distinct
from SB 202 in that it would define TPMS and require ARDs that
work on vehicles with TPMS to be capable of diagnosing and
servicing the TPMS, this bill would also include 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 BAR.
The annual fee for an ARD license is $200.

According to supporters of the bill, 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 would effectively
grant BAR disciplinary authority over such cases.

The Act requires all ARDs to provide customers with a written
estimate prior to commencement of work, record all work done
on an invoice and 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 the same
requirements. In addition, BAR would have the authority to
investigate complaints related to tire services and take
disciplinary action by issuing a citation, suspension or
revocation of an ARD license, potentially shutting down a
bad-actor licensee.

According to 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 BAR, it is not clear how many
problems simply went unreported, or how many more complaints
BAR would receive if these individuals were under BAR's
jurisdiction.

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AB 1665
Page 6

5)Exemptions for motor vehicle clubs and tow truck operators .
This bill exempts tire services provided by a motor vehicle
club holding a certificate of authority under the Insurance
Code and a tow truck operator possessing a valid motor carrier
permit under the Vehicle Code from licensure as an ARD. Motor
clubs, such as the American Automobile Association of Northern
California, Nevada & Utah or the Allstate Motor Club, and tow
truck operators often provide emergency flat repair, tire
changing or other tire services to their members and vehicle
owners.

This bill also seeks to exempts tire rotation and tire pressure
adjustment services. However, because tire rotation and tire
pressure adjustment services may affect the vehicle's TPMS and
therefore its safety, the Committee may wish to consider
deleting these exemptions as potentially dangerous to
consumers.

6)Questions for the Committee . Under this bill, individuals
providing tire changing and repair services would be required
to register with BAR as ARDs. The bill currently imposes
TPMS-related requirements on ARDs "and tire dealers," but tire
dealers are undefined under the Act and anyone working on cars
with TPMS would be required to register as ARDs under the
bill. In addition, the bill requires ARDs to "check the [OBD]
system to ensure that the TPMS is operative," but according to
BAR, a vehicle's TPMS system may have an indicator that is
separate from the OBD system, which would require an
individual to check the TPMS separately.

The Committee may wish to clarify that all individuals who work
on TPMS are required to register as ARDs, and remove the
specific means by which an ARD can check the TPMS and instead
require that ARDs be generally capable of diagnosing and
servicing the TPMS.

7)Arguments in support . According to Les Schwab Tire Centers,
"[This] bill would bring 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 [TPMSs] embedded in all cars and light
weight trucks sold in California and the USA since 2007."

"[This bill] would additionally remove the [Act's] 42-year old
exemption for tire sales only stores. This would be a

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AB 1665
Page 7

significant consumer protection advancement. Placing these
long-time exempt businesses under the jurisdiction of [BAR]
would finally require them to give written estimates [and]
meet both the minimum industry requirements for conducting
tire repairs and the federal and industry standards for
servicing the TPMSs."

According to the California Tire Dealers Association, "CTDA
supports this bill for two key reasons: 1) properly inflated
tires are safer for occupants in all vehicles; and 2) properly
inflated tires improve fuel economy and benefit the
environment. [This bill] requires that all tire dealers, when
servicing a vehicle manufacturer with [TPMS], must have the
appropriate calibration equipment and a qualified technician
in accordance with industry protocol."

According to the California New Car Dealers Association,
"[There] is widespread potential for fraud among "tire sales
only" shops preying on customers by quoting one price for
replacing tires, but charging an inflated amount after the
tires have been installed. This bill would require "tire
sales only" 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. [This bill] levels the
playing field for our dealer members, creates a fairer
business environment, and protects consumers."

8)Related legislation . SB 202 (Galgiani) of 2013 would have
deleted tire repair and changing from the list of services
exempt from licensure as an ARD under BAR, as specified. This
bill was held in the Assembly Appropriations Committee.

9)Previous legislation . AB 2065 (Galgiani) of 2012 was nearly
identical to SB 202 and also would have deleted tire repair
and changing from the list of services exempt from licensure
as an ARD under BAR. This bill was held in the Assembly
Appropriations Committee.

10)Suggested Committee Amendments . The Committee may wish to
delete the exemptions for tire rotation and tire pressure
adjustment services because those services may affect the
vehicle's TPMS. The Committee may also consider deleting
"tire dealers" from the bill to reduce any confusion about who
is required to register with BAR. The Committee may also wish

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AB 1665
Page 8

to remove the specific means by which an ARD can check the
TPMS and instead require that ARDs be generally capable of
diagnosing and servicing the TPMS.

On page 3, delete lines 12-13, and renumber remaining
paragraphs.

On page 3, line 24, strike "cleaning," and add "cleaning
or"

On page 4, delete lines 26-27 and renumber remaining
subparagraphs.

On page 5, delete lines 13-17 and insert, "If a vehicle is
manufactured with a TPMS, the automotive repair dealer
shall be capable of diagnosing and servicing the TPMS in
accordance with industry standards."

REGISTERED SUPPORT / OPPOSITION :

Support

Les Schwab Tire Centers (co-sponsor)
California Tire Dealers Association (co-sponsor)
California New Car Dealers Association

Opposition

None on file.

Analysis Prepared by : Eunie Linden / B.,P. & C.P. / (916)
319-3301