Legislative & Regulatory Update

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Government Affairs Report to the LTAA Long Range Planning Meeting

State Activities

State Legislation

State Laws Impacting Altered-Height Vehicles - Click here to read state laws impacting altered-height vehicles.

Florida, Illinois, Missouri Bumper Heights:  Florida and Missouri legislation to add new sections to the law relating to maximum bumper heights for motor vehicles died in the respective legislatures.  The Illinois bill, which prohibits operation of any vehicle, regardless of size, with a front bumper height that exceeds 28 inches or a rear bumper in excess of 30 inches was signed into law.  Each of these bills was consistent with the model legislation currently endorsed by the American Association of Motor Vehicle Administrators (AAMVA), which SEMA supports.   

Minnesota Snorkels:  SEMA helped defeat legislation that would have prohibited operation of an off-highway vehicle (OHV) on public land or public waters with an air-intake pipe or snorkel that is more than six inches above the manufacturer's original air-intake pipe.  The bill formally died when the Legislature adjourned for the year.  The measure was introduced as a proposal for a study on the impact of OHVs on wetlands, but was amended in committee to include the proposed ban on snorkel use. 

Tennessee Lighting:  Working with Tennessee native and SEMA Board Chairman Corky Coker, SEMA defeated a bill in the Tennessee House of Representatives that would have prohibited motor-vehicle windshield wipers from having lights or reflectors.  SEMA convinced legislators not to support legislative initiatives that banned optional lighting equipment or accessories not related to a proven safety hazard.   

State Regulations

California Greenhouse Gases:  The California Air Resources Board (ARB) released its draft proposal to reduce greenhouse gas (GHG) emissions from passenger cars and light trucks by nearly 30 percent.  The proposal responds to legislation enacted in 2002 that required ARB to limit emissions from California passenger cars that the Legislature deemed as contributing to global warming.  The proposal identifies methods that can be used by automakers to improve the performance of car engines, transmissions and drivetrains to reduce GHG emissions.  Automakers have resisted these changes.  The manufacturers' arguments, supported by SEMA, rest on the fact that by limiting GHG emissions, California is effectively creating a state-level fuel-economy standard -- a federal prerogative -- because GHG emissions are directly linked to fuel use.  If finalized, a number of other states most likely would adopt the California standard.  The proposal almost definitely will face a legal challenge from the car companies.


Washington Activities

Federal Legislation

“Association Health Plans” (AHP):  SEMA is actively supporting passage of the AHP legislation to permit small companies to pool together collectively across state lines and purchase health plans through trade associations.  The policies would give small companies the same clout as held by large employers and unions.  The U.S. House of Representatives has passed an AHP bill but action has stalled in the Senate Health Committee.  SEMA delivered a letter to all U.S. Senators in mid-May urging them to pass the legislation.  SEMA members have also been encouraged to send a letter to their Senators (a sample letter is on the website).  SEMA is also working with other aftermarket associations and as a member of the National Federation of Independent Businesses.  Unfortunately, prospects for passage this year are now bleak.  The Senate Health Committee Chairman, Sen. Judd Gregg (R-NH), has reservations about allowing businesses to bypass state regulations.  There is also noteworthy opposition from Blue Cross and other health care providers that make a large profit on small business premiums, as well as from unions that fear AHPs will drain healthier individuals from state-regulated health plans.  Finally, the campaign season is in full swing and politicians are now introducing similar or competing proposals to take to the voters, effectively putting off health care reform until next year.

Bed Liners: MDI Exposure in Bed Lining Operations

Corporate Taxes:  The U.S. House of Representatives passed a corporate tax bill that contains many SEMA supported measures, such as a reduced tax rate on manufacturing income (from 35 to 32 percent), a two-year extension of the provision allowing expensing for small business investments in new equipment, and an extension of the research and development tax credit that expires on June 30.  The Senate has already passed its version of the same bill.  A House-Senate conference committee will attempt to produce a compromise bill later this summer.

Legal Reforms:  The business community suffered yet another setback in early July in its ongoing attempts to replace a current patchwork of state laws with uniform federal standards covering a variety of legal issues.  In the latest defeat, opponents successfully blocked passage of the Class Action Fairness Act despite the fact that a majority of Senators supported the bill. The legislation would have curbed trial lawyer "forum shopping" by shifting most major class-action litigation (more than 100 claimants, more than $5 million) to federal courts.  The House had already approved a similar bill.  Although few SEMA members are subject to class action lawsuits, the automakers are a frequent target and the large jury awards force up everyone’s insurance premiums.  Passage of the bill would have then allowed more focused attention on the SEMA-supported “Small Business Liability Reform Act.”  The current goal for this bill is to get a strong vote of support in the House Judiciary Committee and on the House floor this summer and fall, which may then translate into Senate passage in the next year or two.  Toward that goal, SEMA helped convince Reps. Bob Goodlatte's (R-VA) and Lamar Smith (R-TX) to support the legislation.  The bill would limit small business (25 employees or less) liability in most civil actions, including product liability suits.  The legislation would cap punitive damages against small companies with fewer than 25 employees at the lesser of $250,000 or three times compensatory damages.  SEMA is working with the Small Business Liability Coalition on this bill. 

Steel Tariffs:  Steel prices appear to be leveling off and there is a chance that downward price corrections may occur over the next 6 to 12 months.  The increases that occurred over the winter and spring months were mainly blamed on supply-and-demand issues such as increased global demand, a shortage of raw materials, hoarding, etc.  SEMA conducted a survey to gauge how the price hikes impacted the membership.  A modest number of members responded but for those members there was a wide range of price increases averaging in the 10-30 percent range.  Most members are passing along the costs, reducing profits, and otherwise dealing with the short-term problem.  A key reason prices seem to be moderating is the fact that the largest importer of raw materials used to produce steel, China, has instituted a policy to cool-off its economy.  On the other hand, China is also the world’s largest coke producer and exports of that steel component have been reduced, a move that could once again destabilize global steel prices.  SEMA will continue to monitor this issue very closely since price trends in the steel market have proven to be unpredictable.

Reducing Paperwork:  The U.S. House of Representatives passed the “Paperwork and Regulatory Improvements Act” that would require each federal agency to conduct an annual cost-benefit estimate of all its required paperwork.  The SEMA-endorsed bill also would require the Internal Revenue Service to identify ways for reducing the paperwork burdens placed on small businesses.  It has been sent to the Senate.

Business-Friendly OSHA:  The U.S. House of Representatives passed four bills that would help protect small businesses from overzealous regulators within the Occupational Safety and Health Administration (OSHA).  The SEMA-supported legislation would provide small companies with a grace period for responding to OSHA citations, expand the OSHA Review Commission to handle a larger case load, defer interpretation of regulations to the Commission rather than the OSHA Administrator, and permit reimbursement of attorney’s fees if a small company prevails against OSHA in court.   

Anti-Counterfeiting Legislation:  SEMA is participating in a coalition of business groups in support of a bill introduced by Rep. Joe Knollenberg (R-MI) that would toughen federal law against counterfeit auto parts.  The bill would require the destruction of counterfeit goods and forfeiture of the equipment used to manufacture the phony products, among other issues.  SEMA staff is reviewing the legislation to determine if SEMA can recommend ways to make it even stronger.  Meanwhile SEMA staff is also reviewing a just-introduced bill by Rep. Sandy Levin (D-MI), co-chair of the Congressional Automotive Performance and Motorsports Caucus, to make it unlawful to import or sell products that are falsely labeled or advertised as meeting a U.S. government safety standard.   This would make it easier for Customs to block imports of illegal auto equipment.  Prospects for passing either bill this year are unclear. 

Intellectual Property Protection:  SEMA is discussing the possibility of joining forces with MEMA and AAIA to combat counterfeit goods and protect members' intellectual property, and exchange ideas on best practices to protect intellectual property at trade shows.  Meanwhile, SEMA staff continues to develop material to be distributed to members, primarily via SEMA News, on understanding intellectual property and how to protect it, and similar topics such as country-of-origin labeling requirements.  For example, SEMA has created a webpage called “Trademarks, Patents & Copyrights: What Your Business Needs to Know” which provides a basic overview of the subject along with information on how to register intellectual property.  SEMA notes that registering intellectual property is a key to establishing legal rights, such as the right to protect against infringement by obtaining a restraining order from a court.  The webpage is listed under the “Legislation & Regulations” link on SEMA’s home page: www.semasan.com

Unsolicited Faxes:  SEMA supports legislation passed by the U.S. House of Representatives that would allow businesses to continue faxing to a recipient with whom the sender has an existing business relationship.  The bill would block a Federal Communications Commission (FCC) rule, scheduled to take effect on January 1, 2005, to require the sender to get advance written permission from all recipients.   There has been a large outcry from the business community that it would be burdensome if not impossible to obtain signed permission slips before sending a fax.  SEMA is optimistic that the U.S. Senate will approve the bill later this year so that it can become law.  Under the legislation, businesses would be required to include an “opt-out” provision on the first page explaining how the recipient could request removal from the fax list.

Federal Regulations

Aftermarket Seat Covers:  SEMA staff is working to address OEM service bulletins that are being sent to dealerships warning them not to allow installation of aftermarket seating equipment, alleging that it could impact the proper functioning of the airbag systems in the cars they produce.  At issue are the air bag sensors inside the seats and access to the diagnostic codes.  The warnings note that there could be significant liability for both the OEMs and the dealerships.  SEMA is reviewing the issue to determine the best remedy, which could include educating dealers that the installation of the aftermarket covers will not result in liability or claims of tampering and that the practice is covered by insurance.  This is one more instance in which denied access to OBD information triggers potential loss of aftermarket business based on issues such as certification and warranty denial.

Tougher Side Impact Standard:  SEMA staff is reviewing a NHTSA proposal to strengthen the side-impact crash standard to require head protection in side crashes for the first time.  Among other things, SEMA will consider whether a new rule would create incentives for the vehicle manufacturers to lockout aftermarket equipment manufacturers that need access to air bag sensor codes or warn dealers about installing aftermarket equipment.  The performance standard does not dictate what specific technologies are needed to comply with the rule, but most auto manufacturers would likely have to make structural changes to their vehicles and install head-protection airbags.   NHTSA could issue a final rule in 2005, which would then be phased in for all new vehicles over the following four years.  The automakers announced last year that they intended to voluntarily add side air bags, and upgrade bumpers and door beams by 2009 to achieve the same goals.

Standardized Black Boxes:  SEMA staff commented on a NHTSA proposal to establish uniform standards for Event Data Recorders (EDR) that are voluntarily installed in light duty vehicles.  The EDRs would be required to collect up to 42 specific elements of data useful for crash investigations, such as air bag deployment, speed, engine performance, braking, safety belt use and other key mechanical parameters.  SEMA noted that it supports uniform standards and recommended that the aftermarket have access to the information in the same fashion as it is made available to other industry sectors, such as the dealers.  SEMA also recommended that the EDR data be considered the sole property of the vehicle owner and that access to the data be restricted to owner consent or court order.  SEMA noted two exceptions, when the data is collected solely to improve vehicle safety and the identity of the vehicle owner/driver remains anonymous, or to determine the need for emergency medical response.

Certifying Vehicles Built in Two or More Stages:  SEMA staff is reviewing a NHTSA proposal designed to make it more practical for multistage vehicle manufacturers and alterers to certify their vehicles when they do not have the ability to perform the same crash tests or other engineering studies as the large vehicle manufacturers.  Examples of multistage or altered vehicles would include converted vans, recreational vehicles, specialized trucks, and dealer modified vehicles.  A negotiated rulemaking committee worked for several years to craft a proposed rule intended to better allocate legal responsibility among the incomplete and final stage manufacturers.  The Committee was unable to reach an agreement on all issues; however, NHTSA will attempt to move the process forward by issuing a proposed rule subject to public comment. 

New Tire Performance Standard:  SEMA is still awaiting a ruling by NHTSA on whether low production radial tires can continue to be regulated under the current safety standards (Nos. 109 & 119) rather than a new and more stringent performance standard (No. 139).  A ruling is expected this summer or fall.  SEMA member Denman Tires petitioned NHTSA to continue the current regulatory regime.  Its petition has been supported by letters from SEMA, the Tire Industry Association, the Small Business Administration, the U.S. House Small Business Committee, and various members of Congress. 

Tire Pressure Monitoring Systems (TPMS):  NHTSA intends to issue a revised tire pressure monitor rule which mandates installation of direct pressure sensors on all four wheels, a position that SEMA had strongly advocated during the original rulemaking procedure.  Last year a federal court struck down a final rule that gave automakers the choice of installing "direct" pressure monitors within each tire or "indirect" measurements using a vehicle's antilock brake system hardware to sense pressure differences by comparing the speed of tire revolutions.  The court found that the indirect system was not as reliable since it could fail if all four tires were underinflated or if two tires on the same axle were underinflated.   NHTSA is expected to issue a proposed rule this Fall.  SEMA will seek to maintain the exemption that it gained in the first rulemaking whereby the TPMS requirements do not apply to optional or replacement rims of any size.  (Since there are a wide variety of rim designs, NHTSA did not think it was feasible to mandate accommodation of a TPMS sensor.)  NHTSA also exempted optional and replacement rims, along with tires that are of a different size recommended by the automaker, from the “render inoperative” prohibition in which you cannot take a vehicle or item of equipment out of compliance with a safety standard. 
 
Dynamic Rollover Test:  NHTSA has created an enhanced scoring system for estimating the rollover potential of stock vehicles.  The scoring system combines a vehicle’s mathematical profile (divide ½ of a vehicle’s track width by the height of the center of gravity) with the results of dynamic test to produce a percentage chance of rollover in a single vehicle crash.  Using this approach, cars are the least likely to rollover, followed by pick-up trucks.  SUVs are the most likely to tip, with 13 of the 36 SUVs test-driven by NHTSA tipping up on two wheels during the dynamic test’s tight, sudden turns.  The new scoring system is not a safety standard but, rather, an extension of the current "rollover resistance" consumer information program.  SEMA is concerned that the ratings may not reflect real-life operating conditions.  SEMA is also concerned that, while applicable only to new stock vehicles, the dynamic test may create a de-facto industry standard.  Issues of concern to the aftermarket include scientifically replicated tests that identify potential safety related defects.  Product liability concerns may also increase, for example, when add-on equipment changes the vehicle’s original height.  Access to information may also become even more problematic since vehicles will likely be equipped with additional equipment (sway bars, antilock braking, etc.) that is tied into the vehicle’s electronic system. 

More ORV Access to Southern California Forests:  SEMA submitted comments to the U.S. Forest Service (USFS) on its proposals for managing four national forests in Southern California that would open up more backcountry trails to off-highway vehicles (OHVs).  The four national forests are Angeles, Cleveland, San Bernardino and Los Padres, covering 3.7 million acres from the U.S.-Mexico border to Big Sur.  SEMA supports the proposals to increase by about 2% the total backcountry acreage in the four forests zoned for motorized use, which is nearly 1.6 million acres.  This would include some new trails to connect existing routes along with an informal network of roads in other areas.  SEMA opposes any new wilderness designations and also recommends that all existing roads and trails be maintained, even if only to allow forest maintenance and quick access for firefighters and emergency personnel.  SEMA stated that its goal is to allow all to enjoy recreational opportunities responsibly, balancing that with the need to maintain the health and beauty of our forests, and the safety of patrons.

U.S. Forest Service Limits on Off-Road Vehicles:  The U.S. Forest Service (USFS) has for the first time issued a draft rule to manage motorized recreational use in national forests and grasslands in response to a sevenfold increase in the level of off-road vehicle (ORV) activity over the past 30 years.  All ORVs, including all-terrain vehicles and dirt bikes, would be restricted to designated trails.  According to the USFS, cross-country travel by ORVs through areas with no roads or trails, or on unsanctioned roads has caused mounting environmental damage.  Under the proposal, forest managers would work with the local community and recreationalists to designate roads, trails and other areas where ORV use would be permitted.  It would likely take several years to complete the inventory of sanctioned roads and trails, and then begin enforcement activities.  Current policy on ORV use varies widely from forest to forest. 

Clinton Roadless Rule:  The Bush Administration has issued a proposed rule to overturn the Clinton Administration’s roadless rule that blocked new road construction, logging, mining and other development within nearly 60 million acres of national forests and grasslands.  The roadless rule has been in legal and administrative limbo since it was issued in 2001.  The Bush Administration has already opened up 15 million acres of national forest land in Alaska to potential roadbuilding and lawsuits on the remaining lands would be sidestepped by issuing a new rule altogether.  Under the revised rule, state governors would be allowed to petition the U.S. Forest Service to recreate a rule for management of roadless areas within each state, thus permitting more local input on land use policy.  The revision would likely be consistent with SEMA’s position that state government and local communities should participate in forest management decisions.

Rights-of-Way Claims:  A 2003 agreement between the Interior Department and the State of Utah has temporarily made it easier for state and local governments to pursue rights-of-way claims on public lands under an old mining law known as RS 2477.  Such a claim could prevent some federal lands from being designated as wilderness since wilderness is, by definition, roadless.  The issue is of keen interest to off-roaders and the companies that market products to those groups.  While the 2003 agreement is limited to Utah, it has national implications and is being closely monitored.  In the most recent developments, the U.S. General Accounting Office has concluded that the agreement was illegal since Congress must authorize any regulation that recognizes right-of-way claims.  Utah has filed one claim, for the 99-mile Weiss Highway, which may be dismissed since there is evidence that the federal government paid for its construction.  Utah’s State Attorney General does not plan to file any more claims at this time.   Meanwhile, several Utah counties are pursuing rights-of-way claims at the local level, including a claim on the 8-mile Salt Creek Trail within Canyonlands National Park.  In another action, a Utah county has challenged a federal court ruling that limits the definition of “highways” under RS 2477 to graded roadways.  Dirt routes or two track trails for off highway vehicles would not fall under that definition, even if they have been in continuous use since before the land was designated as federal property.

Criteria To Pass Wilderness Bills:  Rep. Richard Pombo (R-CA), Chairman of the House of Representatives’ Resources Committee, established two key principles for allowing the panel to consider legislation to create or expand federal wilderness areas: the U.S. Forest Service or Interior Department must deem the property to be suitable for wilderness designation and there must be broad local support for the initiative.  Local community backing would include support from the governor and a state’s congressional delegation.  Wilderness is by definition “roadless.”   Therefore, that designation eliminates recreational access for off-roaders along with the off-road equipment sales derived from such activities.  Rep. Pombo’s wilderness criteria is largely consistent with SEMA’s policy which supports responsible off-road vehicle access (ORV) to public lands and opposes legislative and regulatory efforts to unfairly restrict access.

MISCELLANEOUS

SEMA Lighting Task Force:  The National Highway Traffic Safety Administration (NHTSA), charged with overseeing federal lighting regulations, has still not acted on finalizing two proposed letters of interpretation governing aftermarket lighting equipment.  These draft letters seek to prohibit replacement items that do not conform to federal standards in the same manner as the original equipment and use the same light sources as the original equipment.  NHTSA’s proposed restrictive interpretation of the lighting standard was heavily criticized by SEMA, other aftermarket associations and the Alliance of Automobile Manufacturers.   Instead of responding to the negative comments, NHTSA may now be attempting to find another mechanism to accomplish the same mission.  NHTSA held a public meeting on August 2nd to consider the agency’s initial decision that HID conversion kits being sold by a company named ASTEX (not a SEMA member) are noncompliant.  The fact that the HID kits do not comply with FMVSS No. 108 is a secondary issue.  Rather, NHTSA could choose to cite its interpretation of the lighting standard as part of the proceedings in order to establish it as policy.  SEMA submitted public comments charging that that this is an inappropriate mechanism to craft policy and to once again cite reasons as to why the policy is flawed.

In other actions, NHTSA has delayed its decision on limiting the maximum intensity of daytime running lights and withdrawn a proposal to simplify headlighting standards.  These actions reinforce our belief that the agency is behind schedule on addressing most lighting issues due to limited agency resources and competing demands for those resources.   

SEMA participated in a technical workshop on July 13th to discuss glare and the use of enhanced lighting equipment.  Presentations concentrated on how to evaluate and quantify the tradeoff between glare and visibility needed to enhance nighttime driving safety and mobility for all road users.  Topics included: physiology of the visual system, visual requirements for driving, new forward lighting technologies, and measuring the impact of forward lighting on safety.  The dialogue may assist NHTSA and the industry to define glare and to identify useful approaches for developing metrics and safety limits. The workshop did not address changes to NHTSA policies or regulations regarding glare.  

A plan by the American Association of Motor Vehicle Administrators (AAMVA) to develop model state laws and regulations that reflect federal mandates on lighting products continues to remain largely unimplemented.  For the past several years AAMVA has been in the process of reviewing lighting products for compliance with state and federal regulations.  Time, budget restraints and ever-changing federal activity on these issues, have apparently forced this effort to the back burner.    

SEMA Suspension Task Force:  SEMA continues the fight against unreasonable restrictions on altered-height vehicles.  The association provided a detailed technical rebuttal to the American Association of Motor Vehicle Administrators’ (AAMVA) draft report on altered-height vehicles.  The report provided a description and analysis of braking tests done on a single modified Ford F-150 several years ago.  Without sufficient data and analysis, AAMVA's report concluded that oversized tires have a profound effect on rollover propensity and increases the applied pedal force required to achieve equivalent levels of braking performance.  The report also made vague recommendations to “further address safety issues that arise from the practice of installing lift kits and oversized tires . . .”

As we have done for the past several years, SEMA recommended retaining the existing AAMVA model legislation providing for fair and reasonable standards for these vehicles.  AAMVA distributed copies of the report to state regulators and members of the press, which garnered some attention from the Detroit News and U.S. News and World Report.  SEMA sent a Member Alert to its membership alerting them to SEMA’s position on altered-height vehicles, including its support of the existing AAMVA model. 

The Government Affairs office is also participating in the activities of SEMA’s newly-created Suspension Task Force (under the LTAA) which will address, among other things, the AAMVA report on altered-height vehicles.  AAMVA’s working group on this issue, of which SEMA is a member, will convene meetings in August (conference call) and September (Washington, D.C.) to discuss the development of uniform inspection guidelines and ultimately, a revised model bill.  Suspension Task Force member and engineer Bill Johnson (Rancho) has agreed to participate with Washington staff in these meetings.  Since the July 27th organizational meeting in Diamond Bar, Washington staff has provided the Task Force with information on NHTSA’s rollover rating system, state laws and regulations for altered-height vehicles and a grid to record measurement data on lifted trucks.

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