SEMA eNews Vol. 14, No. 32, August 11, 2011

SEMA's Regulatory and Legislative Priority List for 2011–2012

SEMA News—August 2011

2011–2012 SEMA Legislative/Regulatory Priority List

PRIORITY ISSUES: STATE

Vehicle Equipment Standards and Inspections: State policy makers continue to revise and update equipment and inspection standards—often with a bias toward the vehicle manufacturer’s original equipment, such as lighting, tires and wheels, suspension components and bumper/frame height. SEMA opposes arbitrary and unnecessarily restrictive equipment and inspection procedures.

  Scrappage programs accelerate natural vehicle retirement by allowing for the purchase of older cars from owners.
   
Accelerated Vehicle Scrappage: Under pressure from the U.S. Environmental Protection Agency (EPA) to develop clean-air plans, a few states have considered including vehicle scrappage programs in their state implementation plans. Scrappage programs accelerate natural vehicle retirement by allowing for the purchase of older cars from owners. These vehicles are then typically crushed into blocks of scrap metal. SEMA opposes scrappage proposals. Where proposals can’t be defeated, SEMA seeks to amend them to protect collector vehicles, focus on gross polluters, use measured emissions values, allow parts recycling and include repair/upgrade alternatives.

Emissions Testing and Maintenance Programs: States have incorporated the Onboard Diagnostics (OBD) testing method as part of the vehicle emissions inspection for ’96 and newer vehicles. These OBD tests replace tailpipe tests by identifying emissions problems through information stored in the vehicle’s onboard computer system. I/M 240 tests require visual inspection of emissions-control devices, an evaporative emissions test and a transient drive-cycle exhaust emissions test performed while the vehicle is running on rollers.

Many of these state programs mistakenly fail vehicles based on the presence of aftermarket engine products, some of which are required to be tested, certified and labeled (e.g. California Air Resources Board (CARB) Executive Orders) as not increasing emissions. Others force older collector vehicles and newer vehicles to undergo some type of testing, the results of which demonstrate no significant threats to air quality from these vehicles.

The idea behind exempting older and newer vehicles of all classes is to reduce costs while not losing appreciable emissions reductions. SEMA supports programs that properly focus inspection procedures and do not confuse legitimate aftermarket parts with emissions-defeat devices and state and federal tampering violations. SEMA also supports proactive legislative initiatives to establish exemptions from inspections for low-mileage vehicles, classic vehicles (defined as 25 years old and older) and newer vehicles.

Greenhouse Gas Emissions/Engine Size/MPG: SEMA opposes legislation that imposes an added fee, surcharge or tax on the sale or lease of a new passenger motor vehicle based on carbon emissions, engine size or fuel-economy rating. These measures could affect a consumer’s ability to purchase the vehicle of choice and consequently vehicle safety. SEMA also opposes added yearly registration and renewal fees based on carbon emissions, engine size or fuel-economy rating.

  vehicle suspension and height regulations are often so unclear that the industry, motorist and inspection technician have no clear guidance
   
Vehicle Suspension and Height Regulations: Modifications that affect vehicle suspension and steering as well as those changing the vehicle’s frame and/or bumper height continue to draw attention from regulators and legislators. Many state regulations are more restrictive than necessary. Others discriminate against aftermarket parts manufacturers and their customers by allowing the vehicle manufacturers to effectively set the frame and bumper-height standards. In addition, vehicle suspension and height regulations are often so unclear that the industry, motorist and inspection technician have no clear guidance. SEMA opposes state regulations targeting suspension and height modifications without regard to reasonable and useful modifications.

Specialty Vehicle Titling and Registration: Special titling and registration designations for specialty cars, including antique, street rod, custom, classic, collector, modified, replica and kit-car vehicles, have led to an easing of certain equipment standards and exemptions from stringent emissions testing.

SEMA supports initiatives that allow for the use of non-original materials and create a titling and registration criterion that assigns these vehicles the same model-year designations as the production vehicles they most closely resemble. SEMA supports initiatives to establish distinctive license plates and separate vehicle code definitions for these cars to allow special consideration during emissions testing and equipment inspections. SEMA supports initiatives to create classic motor-vehicle project titles that apply to vehicles undergoing restoration that are at least 25 years old, are not roadworthy and are currently without a title or with a title from another state.

SEMA supports initiatives to establish minimal one-time registration fees for specialty vehicles and opposes efforts to disproportionately increase registration fees and taxes for these cars based on state budget deficiencies. SEMA also supports legislation that allows vehicles with these special registrations to be driven for a variety of purposes, including occasional transportation, exhibitions, club activities, parades, tours and similar uses.

Lighting Equipment: Some states apply an approach to optional and auxiliary lighting equipment that essentially prohibits all such lights if not specifically permitted in the regulations. Poorly written legislation and regulations can confuse the issues of a clear safety hazard versus consumer demand for legitimate and safe lighting enhancement. Regulators are also scrutinizing blue-hued headlamps, some of which the federal government has declared legal for operation on the nation’s roadways, for excessive glare. Government officials are also concerned about non-compliant high-intensity-discharge headlamp conversion systems, clear taillamp covers, marker lamps and bulbs. SEMA opposes any use limitations or prohibitions on optional lighting equipment or accessories not related to a proven safety hazard.

Tire Fuel Efficiency: SEMA opposes separate state legislation requiring the development of a program to mandate that replacement tires for passenger cars meet fuel-efficiency standards. These state replacement tire-efficiency programs are anti-consumer, anti-small business and require substantial appropriations. Most importantly, state replacement tire efficiency programs often conflict with a federal program to create a “consumer information system” to rate the fuel economy, safety and durability characteristics of most replacement tires. The program includes a SEMA-drafted exemption for limited production tires (15,000 units or less in a tire line or 35,000 tires in total brand-name production) that are mostly tires for classic and antique vehicles or off-highway vehicles.

 
   
Tire Aging: SEMA opposes state legislation to limit the distribution or sale of tires based strictly on age. No auto industry, tire industry or federal government data has determined that tires fail to perform when they reach a particular chronological age. Proposals to outlaw tires based on age distract consumers from focusing on qualities proven to enhance safety, such as the tire’s handling and performance characteristics. The legislation also imposes unnecessary regulatory burdens on tire manufacturers and retailers while filling state landfills with tires that retain useful life.

Window Tint: Severe limits on window-film light transmission and reflectance percentages continue to surface in a number of states. SEMA supports advancement of the industry standard of not less than 35% light transmittance on all windows other than the windshield.

Inoperable Vehicles: SEMA opposes legislation that allows state, county or local officials to confiscate inoperable project vehicles or those vehicles in need of repair from private property.

Exhaust Systems: SEMA opposes legislation or regulations that unfairly discriminate against modified exhaust systems and apply arbitrary enforcement standards relative to muffler noise limits. SEMA supports efforts to reduce improper citations and encourage modifications that comply with applicable state regulations.

Nitrous-Oxide/Performance Enhancers: SEMA opposes legislation that bans the installation of power booster systems, including nitrous-oxide systems intended for off-road use.

 
   
Street Racing: SEMA supports efforts to abolish illegal street racing through focused legislation designed to incentivize drivers to pursue racing activities at legal racing venues. SEMA opposes anti-street-racing legislation that unfairly targets owners of legally modified vehicles for enhanced scrutiny, title branding and additional fees.

Due to the popularity of sanctioned racing events on closed streets in downtowns across the country and the current urgency to generate tourism and revenue, states are beginning to introduce legislation to provide for municipal racing. Known as “municipal racing acts,” these bills include provisions to limit local government liability and allow permits to be issued to race promoters to host Grand Prix-style events on public roads and highways. SEMA supports the promotion of the racing industry through such legislative action.

Alternative Fuels/Greenhouse Gases: SEMA opposes legislation that would unreasonably restrict opportunities for the aftermarket to continue providing performance equipment. SEMA supports such initiatives where opportunities exist to expand market opportunities for SEMA-member products.

Ethanol-Blended Gasoline Labeling Requirements: Each state sets its own labeling requirements for ethanol-blended gasoline, with 12 states and the District of Columbia currently not requiring pumps dispensing such blends to display labels. Ethanol increases water formation in the fuel system, especially when the vehicle sits over a period of time. Under these conditions, formic acid is created, which corrodes metals, plastics and rubber. This can lead to engine/parts failures and, potentially, safety hazards. Many products in the marketplace, including older cars, use materials that are incompatible with ethanol.

SEMA supports labels on fuel pumps dispensing ethanol-blended gasoline as important to consumers, especially those with classic cars and performance automobiles, who want to know what they are putting into their vehicles. There is a new urgency for more precise labeling due to the recent EPA approval of E15 for use in ’01 and newer light-duty vehicles, since owners of pre-’01 vehicles need to be able to distinguish between E10 and E15.

PRIORITY ISSUES: FEDERAL

Clean Air Act Amendments (CAAA): The EPA continues to revise and update rules authorized by the 1990 CAAA. Recent examples include setting stricter standards for ozone and particulate matter, volatile organic compounds emissions and hazardous air pollutants. SEMA opposes any revisions that are unnecessarily restrictive or do not balance economic and small-business considerations.

CAAA Revisions: SEMA supports revising the CAAA to require cost-benefit rationales for rulemakings, a scientific basis for regulations and periodic reviews of existing rules. SEMA also supports implementation procedures that reduce future court battles (citizens’ suits, consent agreements, etc.).

Compensatory Time for Overtime: SEMA supports legislation that would give workers a voluntary choice between overtime pay and compensatory time off, accruing at 1½ hours for each hour of overtime. Unions generally oppose the legislation for fear that workers will be coerced to take leave in lieu of pay.

Corporate Average Fuel Economy (CAFE) Standards: SEMA supports CAFE standards that take into account the impact on jobs, safety, consumer choice and technological feasibility. Drastically increased CAFE potentially limits consumer choice if manufacturers are forced to make smaller, less powerful and less useful cars and light-duty vehicles in order to meet government fuel-economy demands. SEMA supports market-based solutions that allow the consumer to participate in and respond to national energy policies.

Ergonomics Standard: SEMA supported repeal of the Occupational Safety and Health Administration’s (OSHA) ergonomics standard in 2000. The controversial rule imposed onerous compliance requirements on businesses to protect workers from musculoskeletal disorders, such as repetitive-motion injuries, commonly referred to as “ergonomics injuries.” SEMA supports OSHA’s subsequent approach to provide voluntary guidance materials for addressing ergonomic problems.

Ethanol Content in Gasoline: SEMA opposes the EPA’s waiver to permit the sale of gasoline containing 15% ethanol (E15) for model-year ’01 and newer vehicles. SEMA has consistently voiced concern that ethanol increases water formation, which can then create formic acid and corrode metals, plastics and rubber, placing older cars and certain high-performance specialty parts at risk. The EPA waiver would not protect consumers from misfueling these vehicles.

Gas Taxes: Lawmakers are considering legislation to address the nation’s dependency on foreign oil and reduce carbon dioxide emissions. Proposals include establishing a carbon tax, taxing motorists based on miles traveled and using feebates as an incentive toward purchasing fuel-efficient cars. While SEMA opposes such tax hikes, SEMA supports policies that balance the interests of the business community with reasonable means to reduce reliance on foreign oil and create incentive-laden programs to help clean the air.

Greenhouse Gas Emissions/Global Warming: The primary greenhouse gas is carbon dioxide (CO2), which is released in direct proportion to the amount of carbon-based fuel that is burned. SEMA supports regulating CO2 emissions from automobiles through the CAFE standards. This approach also has the benefit of establishing a national standard rather than a patchwork of state rules.

With respect to stationary source emitters, SEMA supports a congressionally defined limited approach to regulate the largest stationary source emitters, such as powerplants, factories and refineries. The automotive specialty-equipment market is also part of the solution, since it is a leading innovator for products designed to address technological challenges, such as greenhouse gases.

Health Care: SEMA has consistently advocated for legislation providing small businesses with access to a pool of insurance plans, whether offered through trade associations or government agencies. The health-care law enacted in March 2010 contains SEMA-supported “exchanges,” which will offer small businesses access to a variety of competitively priced plans. While this is beneficial, the law is also limited and flawed (e.g., mandates on larger companies and not enough cost controls). SEMA remains committed to pursuing additional meaningful reforms to health-care policy.

Independent Contractors: Defining whether an individual is an “employee” or an “independent contractor” impacts whether a business withholds income tax and the employee’s share of the FICA tax, pays an employer share of FICA as well as many other issues. An imperfect 20-point test for defining classifications has emerged following decades of court decisions and IRS rulings. SEMA supports simplified worker classification rules, since the current rules are too complicated, confused and subjective.

Intellectual Property Protection: Assisting SEMA members in protecting intellectual property rights (IPR) is a top priority for the association. SEMA is taking steps through webinars, seminars and SEMA News to ensure that its members are better informed on understanding the value of IPR (trademarks, patents, copyright, etc.) and how to properly protect them. SEMA’s IPR enforcement rules at the SEMA Show have been effective and well received. SEMA actively supports IPR legislation in the U.S. Congress and government enforcement activities through the Coalition Against Counterfeiting and Piracy.

Minimum Wage: SEMA supports policies that allow wages to be set by the marketplace. If a wage hike is contemplated, SEMA maintains that tax relief targeted at small businesses should be considered in order to balance the impact of the wage hike.

Onboard Diagnostics and Service Information Sharing: SEMA and certain OEMs have established partnerships for sharing technology information. Increased sales of SEMA-member products should also translate into more vehicle sales. SEMA is working with other automakers to forge similar service information-sharing partnerships.

Parental Leave: SEMA opposes any attempt to expand the Family Leave Act but supports legislation that would clarify certain aspects of the law.

Product Liability and Legal Reforms: SEMA supports sensible legal reforms. This includes bills to develop uniform standards of liability, take small-business size into consideration, alter rules pertaining to punitive and non-economic damages, discourage frivolous lawsuits and restore credibility to the judicial system.

Public Land Access and Use: Threats to OHV access typically take form in legislation passed by Congress or regulations issued by the U.S. Forest Service, Bureau of Land Management or other federal and state agencies. The actions threaten recreational access, designate lands as “wilderness” (roadless) or unnecessarily close lands to protect endangered species. Public land access issues are of keen interest to off-roaders and the SEMA-member companies that market products to those groups. SEMA supports land-use decisions that are reasonable and enjoy local community support.

Regulatory Reform: The current regulatory climate is adversarial, focusing more on detecting violations than with helping the regulated communities solve problems. SEMA supports efforts to permit more flexibility in achieving standards, consider more cost-effective ways to meet goals, require cost-benefit rationales for rulemakings, require scientific basis for regulations and require periodic review of existing rules. In addition, President Obama recently issued an Executive Order directing all federal agencies to review their regulations in an attempt to eliminate rules that hinder economic growth.

Retirement Savings Plans: An estimated 70% of those working for small businesses are not covered by retirement plans. There are many reasons for this: revenue is too uncertain; administrative costs are too high; there is too much paperwork and government regulation; and required company contributions are too severe. Many small businesses cite reduced administrative rules, business tax credits and eased vesting requirements as necessary conditions for starting a plan. SEMA supports legislation that helps defer the costs of a retirement program, provides guidance in plan construction and establishes clear regulations to govern the program.

Rollover: SEMA supports performance-based initiatives that are cost-effective and technologically feasible to reduce vehicle rollovers. SEMA has developed a program to help member companies identify how a product may interact with the vehicle’s electronic stability control (ESC) system that addresses vehicle rollover.

Tax Policy: SEMA supports small-business tax relief through reduction and simplification of business taxes and a federal budget that promotes productivity. Tax cut examples include establishing a reasonable estate tax, extending tax credits for research and development and raising the alternative minimum tax. SEMA has not taken a position on the imposition of state sales/use taxes on sellers that do not have nexus in that state.

 
Vehicle Scrappage Legislation: For two decades, SEMA convinced federal lawmakers that vehicle scrappage programs are not cost effective and unnecessarily remove older vehicles from the marketplace. Responding to a global recession, lawmakers established a “cash for clunkers” program in 2009 to help spur car sales. SEMA helped lessen the impact of the program on the automotive specialty-equipment market by including a restriction that scrapped cars be less than 25 years old and by allowing the transmission to be recycled along with all other parts except the engine. SEMA will continue to oppose any future scrappage programs, especially those that simply target old cars and exclude recycling/repair/retrofit provisions.

Vehicle Equipment Standards: The federal government, through the National Highway Traffic Safety Administration (NHTSA), maintains the right to set, enforce and investigate safety performance standards for motor vehicles and motor-vehicle equipment. Many NHTSA regulations, such as the Federal Motor Vehicle Safety Standards, have a direct effect on how specialty equipment is produced and marketed and how customers use the products. SEMA supports regulations that are necessary, practical and based on performance rather than on design criteria. SEMA uses the same criteria when supporting or opposing legislation to expand NHTSA mandates.