Law and Order

SEMA News - August 2009

LEGISLATIVE AND TECHNICAL AFFAIRS

By Steve McDonald

Law and Order

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

SEMA NEWS-AUGUST 2009-LAW AND ORDER

California

Emissions Tests

SEMA-opposed legislation to require annual smog check inspections for vehicles 15 years old and older was held in the California Assembly Appropriations Committee and is essentially dead for the year. The bill would also have required that funds generated through the additional inspection fees be deposited into an account that could have been used to scrap older cars. Pre-1976 motor vehicles would have remained exempt under the measure. SEMA launched a statewide lobbying campaign to oppose the bill.

Scrappage

SEMA is opposing a California Air Resources Board (CARB) proposal to spend roughly $30 million annually to augment the state’s existing vehicle scrappage program. The proposal would provide incentives for vehicles not currently eligible under the Consumer Assistance Program by removing the existing requirements that vehicles be subject to and fail smog check to participate. CARB is specifically targeting for scrappage pre-1976 vehicles that are not currently required to undergo smog check inspections. According to CARB, allowing vehicles that are not currently undergoing registration or that have passed their smog check to participate greatly expands the vehicle population that can be retired. Participants would receive $1,000 per vehicle or $1,500 per vehicle if they meet low-income requirements. The proposal would also establish a pilot voucher program in the south coast and San Joaquin Valley air basins that targets the highest-emitting vehicles and requires their replacement with newer, cleaner vehicles. Consumers would retire their vehicles at participating dismantlers, receiving an immediate compensation of $1,000 to $1,500 for vehicle retirement. Consumers could then redeem their vouchers at participating car dealerships toward the purchase of replacement vehicles. CARB is proposing that the voucher compensation be $2,000 or $2,500 per vehicle, depending on income level.

Michigan

Inoperable Vehicles

A version of SEMA-model legislation has been reintroduced in the Michigan State Legislature that would outlaw local zoning ordinances that prohibit the hobby of collecting and restoring motor vehicles. Junked, wrecked or inoperable vehicles (including parts cars) stored on private property could still require screening from public view by fencing, vegetation or other means. The bill has been referred to the Senate Committee on Local, Urban and State Affairs.

Ohio

Street Rods/Customs

SEMA-model legislation to create a vehicle registration and titling classification for street rods and custom vehicles and provide for special license plates for these vehicles has been reintroduced in the Ohio State Legislature. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allows a kit car or replica vehicle to be assigned a certificate of title bearing the same model-year designation that the body of the vehicle was constructed to resemble.

Oregon

Aftermarket Parts

The Oregon House of Representatives approved an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the alternative, negotiated between SEMA and the Oregon Department of Environmental Quality, the bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles. The bill is now being considered by the Oregon Senate.

Texas

Street Rods/Customs

SEMA-model legislation to create a vehicle registration classification for street rods, custom vehicles and replicas and provide for special license plates for these vehicles did not receive a vote by the Texas House of Representatives before the legislature’s crossover deadline. The crossover deadline requires legislation to be approved by a certain date by at least one of the legislative chambers, House or Senate. Bills must be approved by both the House and Senate in order to be sent to the governor and enacted into law.

FEDERAL UPDATE

Vehicle Scrappage

SEMA NEWS-AUGUST 2009-LAW AND ORDER 

SEMA convinced lawmakers to include a provision that excludes vehicles of model-year 1983 and earlier from the scope of the scrappage program. 

After months of contentious debate, Congress passed “cash for clunkers” legislation that will pay consumers to scrap cars and trucks that get 18 miles per gallon or less in exchange for a cash voucher to buy a new car. The one-year program is primarily intended to spur car sales, but lawmakers insisted on including a scrappage component. Consumers will receive either $3,500 or $4,500, depending on the fuel economy improvement of the new vehicle. SEMA convinced lawmakers to include a provision that excludes vehicles of model-year 1983 and earlier from the scope of the scrappage program. This provision serves to safeguard vehicles that may possess unique historic or aesthetic value qualities and are irreplaceable to hobbyists as a source of restoration parts. The law allows all parts to be recycled except the engine. SEMA and other aftermarket associations convinced lawmakers to permit the drivetrain to be recycled if the transmission, driveshaft or rear end are sold as separate parts. The vehicle scrappage program primarily targets SUVs, pickups and minivans, since most passenger cars manufactured during the last 25 years get more than the 18 mpg combined city/highway requirement. SEMA maintained that a better environmental approach would have been to support vehicle repairs, installation of specialty equipment to reduce emissions and increase fuel economy, and engine recycling.

Fuel Economy and CO2 Emissions

The Obama administration will set tough, new fuel-economy standards for model-year (MY) 2012-2016 cars and trucks and will simultaneously reduce carbon dioxide (CO2) emissions through a national standard. The decision ends years of debate between California, the federal government and the automakers over who can regulate CO2 emissions. Fuel economy and CO2 emissions are directly related, since CO2 is released in proportion to the amount of carbon-based fuel that is burned. In 2007, the Bush administration blocked implementation of a California CO2 rule that had been adopted by 13 other states. California will now rewrite its CO2 rule to match the national standard. The National Highway Traffic Safety Administration (NHTSA) will set Corporate Average Fuel Economy (CAFE) standards for MY 2012-2016 vehicles that nearly match CO2 emission standards adopted by California. The EPA will also establish corresponding CO2 emissions standards using its authority under the Clean Air Act. The average CAFE rating will be 35.5 mpg in 2016, based on a combined 39 mpg rating for passenger cars and 30 mpg for light trucks. The EPA will set a CO2 emissions standard of 250 grams per mile for vehicles sold in 2016, roughly equivalent to 35.5 mpg.

Health Care Reform

SEMA NEWS-AUGUST 2009-LAW AND ORDER 

SEMA is working in an alliance with the National Federation of Independent Business and the Small Business Coalition for Affordable Healthcare to enact legislation that will reduce skyrocketing premiums and protect small companies from costly mandates. 

Lawmakers in the House and Senate are drafting comprehensive health care reform legislation with a goal of completing passage by the end of the year. SEMA is working in an alliance with the National Federation of Independent Business and the Small Business Coalition for Affordable Healthcare to enact legislation that will reduce skyrocketing premiums and protect small companies from costly mandates. Lawmakers intend to maintain the current employer-based system and implement other structural reforms to promote market-based competition, reduce costs and simplify paperwork. They will likely include a “pay or play” mandate for employers, whereby companies must offer qualifying coverage or pay a payroll tax into a federal insurance fund. The tax could be staggered based on a company’s size and revenue, with some small employers being exempt. Individuals would be required to obtain qualifying coverage if not offered by the employer. Lower-income individuals would likely need subsidies.

Small-Business Credit Relief

The U.S. Small Business Administration will provide a 100% guarantee on America’s Recovery Capital (ARC) loans, a $255 million program established under the Recovery Act of 2009. The program will provide interest-free, deferred-payment loans of up to $35,000 to established for-profit small businesses that need short-term help making principal and interest payments on existing debt such as credit card obligations, capital leases and notes payable to vendors/suppliers. Repayment of the loan principal begins 12 months after the final disbursement and extends over a five-year period. The program will last until September 2010 or until the $255 million has been spent, whichever comes first. ARC loans are provided by commercial lenders, not the SBA.

OHV Access to Public Lands

A House subcommittee held a hearing on a SEMA-opposed bill called the Northern Rockies Ecosystem Protection Act, which would designate as wilderness 19 million acres of land in Idaho, Montana, Wyoming, Oregon and Washington. By law, roads and motorized vehicles are generally prohibited in wilderness areas. The issue is consequential to SEMA members, since off-roaders would have less riding areas in the region and potentially less demand for off-highway (OHV) equipment. SEMA contends that the legislation is overly broad in scope and does not reflect the views of local communities and stakeholders on how the land should be managed.