Law and Order

SEMA News—June 2011

LEGISLATIVE AND TECHNICAL AFFAIRS

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. 

 
 
STATE UPDATE 
 
 

Arizona Emissions Exemption:

   
   
Legislation that originally sought to exempt all vehicles more than 25 years old from the state’s mandatory biennial emissions inspection program was amended and passed in the Arizona House and Senate. Under the amendment, vehicles manufactured in the ’74 model year and earlier would be exempted. Currently, only vehicles manufactured in 1966 and earlier and “collectibles” are exempt. The bill has now been sent to the governor for her signature and enactment into law. While the bill is now not as inclusive as the previous version, SEMA continues to support the measure for creating additional model-year exemptions.

Arkansas Inoperable Vehicles:


SEMA helped defeat legislation that would have allowed cities to remove inoperable vehicles from private property if the vehicle was deemed a “nuisance” under a local ordinance. Among other things, the bill provided no reasonable safeguards for legitimate automotive hobbyists to work on inoperable collector vehicles on private property, even those located out of public view.  
 

California Air Resources Board:

SEMA is working with the bill sponsor in support of legislation that would give small-business owners a voice on the California Air Resources Board (CARB). The bill was approved unanimously by the Assembly Natural Resources Committee and now moves to the Appropriations Committee. Recognizing that regulations issued by the board directly affect small businesses, the measure would create a requirement for one member of CARB to be a current owner of a small business and have experience with a small business for at least 10 years.

Connecticut Antique Vehicles:

SEMA is opposing legislation to increase the age requirement for vehicles eligible for registration as “antique, rare or special-interest motor vehicles.” The bill was amended in the Joint Committee on Planning and Development to increase the age requirement for registration as an antique to 30 years old and increase the tax assessment amount on vehicles registered as antiques to $2,500. Currently, vehicles 20 years old or older are eligible for antique status; antique, rare or special-interest motor vehicles are assessed at a rate of $500; and owners pay personal property taxes on that amount. The bill will next be considered by the full House of Representatives.

Florida Street Rods/Customs:

   
   
SEMA is supporting Florida legislation to correct existing titling laws to include street rods and custom vehicles. Due to the enactment of SEMA-model legislation in 2007, Florida already provides for the registration of these specialty vehicles. The bill will require titles to be issued under the provisions that provide for rebuilt vehicles and be labeled with “street rod” or “custom vehicle” designations. The bill also offers a means for enthusiasts who are unable to provide the DMV with sufficient proof of ownership for a vehicle, or its major component parts, to obtain a bonded title for the vehicle.

Illinois Antiques:

SEMA is supporting legislation to provide for an expanded-use antique vehicle registration class that would allow antique vehicles and replicas to be driven without limitation during the warmer part of the year, from April 1 through October 31. The bill has been approved by the Illinois House. Under the bill, expanded-use antiques are limited to traveling to and from car shows, exhibitions, servicing or demonstration during the colder months, from November 1 through March 31. Regular antique vehicle registration would still be available for a lower fee to hobbyists who prefer operating their vehicles on a limited-use-only basis year-round. The bill will next be considered by the Illinois Senate.

Iowa Ethanol:

   
   
SEMA is opposing Iowa legislation to change labeling requirements on gas pumps across the state to only require labeling for unblended gasoline and E85. Current law in Iowa requires labeling when gasoline is blended with ethanol in any amount. If enacted, the bill would remove labeling requirements for ethanol-blended gasoline containing 15% or less ethanol, thereby increasing the risk of misfueling and potential engine damage. Unblended gas is required to be labeled, but there is no guarantee that unblended gas will be available. The U.S. Environmental Protection Agency (EPA) has been urged to create national labeling requirements for ethanol-blended gasoline that are placed as close as possible to the pump’s product selection mechanism, but since such requirements are not currently in place, vehicle owners must rely on state labeling requirements for information about the gasoline they use in their vehicles. The bill has been approved by the Senate Agriculture Committee.

Nebraska Ethanol:

Working with a coalition of business associations, SEMA successfully opposed Nebraska legislation to change labeling requirements on gas pumps across the state so that labeling is only required when gasoline contains 11% or more alcohol. A previous version of the bill eliminated labeling requirements altogether. Current law in Nebraska requires labeling when gasoline contains 1% or more alcohol, including labels for pumps dispensing E10. The bill would have made it impossible for enthusiasts to know whether the gasoline they put into their vehicles contains any ethanol, making it possible to misfuel the vehicle and cause engine damage. While the measure will receive no further consideration this year, it will remain alive through the 2012 legislative session.

Nevada Old Car Tax:

   
   
SEMA is supporting Nevada legislation to repeal a 2009 increase in the valuation of older vehicles for the purpose of assessing the yearly government services tax. The 2009 increase raised the tax assessment from 5% to 15% of the initial value of vehicles nine years old and older. The measure changes the yearly assessment rate back to 5% of the initial value. The bill has been referred to the Assembly Taxation Committee for consideration.

Nevada Emissions Exemption:

SEMA is supporting legislation to provide that classic vehicles and classic rods would be exempted from emissions inspections if owners pay a one-time $6 fee and submit a certification that their vehicles will not be driven more than 5,000 miles per year. The bill was passed by the Nevada Assembly. Currently, classic rods and classic vehicles are subject to a 2,500-mile-per-year limit to qualify for an emissions exemption. Also, these cars must pass an initial two-speed idle emissions inspection to qualify. To maintain the exemption each year, the owners of classic rods and classic vehicles must fill out a certification that their vehicles have not been driven more than 2,500 miles during the previous year, and the certification must be verified by a DMV emissions lab technician. Under the bill, the initial emissions inspection would no longer be required. The bill will now be considered by the Senate.

North Carolina Ethanol:

SEMA-supported legislation requiring ethanol content labels on all pumps that dispense ethanol-blended gasoline has been signed into law by North Carolina Governor Bev Perdue. The new law requires these labels to indicate that the gasoline contains 10% or less ethanol or greater than 10% ethanol. Previously, retailers operating pumps dispensing ethanol-blended gasoline were not required to post labels regarding ethanol content. Many products on the market, including older cars, special-interest collector vehicles and historic vehicles, use materials that are incompatible with ethanol.

North Dakota Vehicle Modifications:

   
   
As a result of opposition mounted by SEMA and North Dakota vehicle hobbyists and businesses, legislation that threatened to prohibit the modification of any motor vehicle that altered the manufacturer’s original suspension, steering or brake system unless the state highway patrol issued an inspection certificate has been amended to remove those restrictions. The amended bill now only provides for a study of the state’s transportation laws to be conducted between the 2011 and 2012 legislative sessions.

Oregon Exhaust Systems:

At the insistence of SEMA, the sponsor of legislation that would have banned the sale of certain new motor-vehicle exhaust systems has decided to withdraw the measure from further consideration. The bill would have prohibited the sale of exhaust systems and exhaust system components that cause motor vehicles to produce noise exceeding certain noise limits. Under the bill, noise limits specified in rules adopted by the Environmental Quality Commission (EQC) would have been used to determine which systems would be permitted or banned. However, the EQC terminated its noise-control program in 1991, and no noise-testing procedure is currently in place. The bill would have led to significant confusion regarding compliance and enforcement.

Oregon Altered-Height Vehicles:

A SEMA-opposed bill that would have severely limited vehicle suspension, body lift and wheel/tire alterations died without committee consideration. Specifically, the measure sought to ban vehicles whose bumpers were elevated more than 3 in. over the original manufactured bumper clearance. Among other things, the bill discriminated against hobbyists and aftermarket parts makers by leaving it solely to the vehicle manufacturers to choose bumper heights, would have forced owners of modified vehicles to spend large sums of money to reinstall original components and would have banned useful alterations that provide adequate clearance for on-/off-road capability and accommodate heavy loads, larger tires, improved suspension and water-fording capability. The bill also would have imposed a fine of up to $360 per offense for vehicles that exceed the 3-in. clearance requirements.

Tennessee Emissions Exemption:

Legislation to exempt vehicles more than 25 years old from the state’s annual emissions inspection and maintenance program was passed by the Tennessee House and Senate. To qualify for the SEMA-supported exemption, these vehicles must be registered as “antique motor vehicles.” Existing law exempts only vehicles manufactured before the ’75 model year from emissions inspection. The bill now moves to the governor for his signature and enactment into law.

Utah Vintage Vehicles:

SEMA-supported legislation to allow vehicles 30 years old and older to be classified as “vintage vehicles” was signed into law by Utah Governor Gary Herbert. Under previous law, Utah reserved the “vintage vehicle” class only to vehicles 40 years old and older. Under the new law, vintage vehicles 30 to 40 years old would be charged a $45 annual registration fee. When the vehicle reaches 40 years old, the registrant would pay a one-time $40 fee. Vintage vehicles are exempted from annual emissions and safety inspections. Utah exempts vehicles manufactured prior to 1968 from emissions inspections. Vehicles manufactured after that date must be registered as “vintage vehicles” or “customs” to qualify for this exemption.

Washington Street Rods/Customs:

   
   
SEMA-model legislation to create a vehicle titling and registration classification for street rods and custom vehicles was signed into law by Washington state Governor Christine Gregoire. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 30 years old and manufactured after 1948. Kit cars and replica vehicles will be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Washington Collector Vehicles:

Under pressure from SEMA, legislation that originally sought to increase the age requirement for vehicles eligible for registration as collector vehicles was amended. Under the amended bill, vehicles seeking registration as collector vehicles for a one-time registration fee would still only be required to be at least 30 years old rather than 40 years old as the original bill required. The bill was also amended to delete provisions that would have created penalties for violating the limited-use provisions.

Washington Collector Plates:

   
   
SEMA-opposed legislation to require annual renewal fees for collector-vehicle and horseless-carriage license plates did not receive committee consideration this year. Under the bill, the initial $35 license plate fee for these vehicles would have remained, and a new annual $30 renewal fee would have been added.

West Virginia Exhaust Noise:

A bill to provide that the noise from a motor-vehicle exhaust system that has been deemed “disturbing or unreasonably loud” constitutes the crime of disturbing the peace did not receive committee consideration before adjournment of the legislature. SEMA opposed the bill because it did not supply law enforcement with an enforcement standard, allowing for subjective judgments on whether an exhaust system was “disturbing or unreasonably loud.” The bill also would have made it difficult for hobbyists to replace factory exhaust systems with more durable, better-performing options. Under the bill, violators could have been fined up to $1,000 per occurrence, jailed for six months or both. Meanwhile, SEMA-model legislation that would have allowed West Virginia’s vehicle hobbyists to install and use aftermarket modified exhaust systems that meet a 95-decibel limit under a fair and predictable test was also not given consideration.

Canada (Nova Scotia) Altered-Height Vehicles:

   
   
SEMA submitted comments regarding a Nova Scotia proposal to regulate altered-height vehicles. The proposal is the policy adopted by the Canadian Council for Motor Transport Administrators, which is identical to the revised model regulation adopted by the American Association of Motor Vehicle Administrators in 2007. Two years ago at SEMA’s request, a Nova Scotia regulation that would have required retailers and installers to provide proof that all suspension-lift products had been approved by a certified engineer was put on hold to allow regulatory agencies to conduct an impact study. At the time, the province had only one certified engineer available to conduct these inspections. In its comments, SEMA reiterated its support for the 1988 American Association of Motor Vehicle Administrators policy as the only model regulation of its kind that gained the support of the car companies, the affected industry and the regulators and is still as valid and effective today as when first adopted.  

FEDERAL UPDATE

Collector Car Appreciation Day:

The U.S. Senate passed Senate Resolution 154 designating July 8, 2011, as Collector Car Appreciation Day (CCAD). The resolution was introduced by Senator Jon Tester (D-MT) and Senator Richard Burr (R-NC) at the request of SEMA and its Automotive Restoration Market Organization (ARMO) and Hot Rod Industry Alliance (HRIA) councils. The date marks the second commemoration in what has become an annual event to raise awareness of the vital role automotive restoration and collection plays in American society. Business owners, car clubs and individuals are encouraged to organize events to help celebrate the day. A list of CCAD events already planned is posted on www.semasan.com/collectorcarappreciationday.

1099 Reporting Rule:

   
   
After a year of debate, Congress approved and President Obama signed into law legislation to repeal the costly 1099 reporting requirement included in last year’s health care law. Businesses will no longer be required to issue 1099 forms to all vendors from whom they buy more than $600 worth of goods or services in any year, beginning in 2012. The requirement was intended to prompt vendors receiving 1099 forms to pay taxes on the income. SEMA contended that it would fail to generate much under-reported income but would succeed in punishing businesses that already comply with U.S. tax law. SEMA was an active leader in the repeal effort, working on its own and with a number of other small-business organizations. In asking President Obama to sign the bill into law, SEMA President and CEO Chris Kersting noted that “small businesses remain the most important economic engine driving America’s expanded recovery. Eliminating the 1099 reporting burden will allow our companies to focus on producing tangible goods and services rather than wasteful paperwork.”

Ethanol:

SEMA is working with a number of other organizations to address ethanol issues at the state level. A number of states are seeking to remove state laws that currently require labels when gasoline contains 10% ethanol (E10). Since there is no national gas-pump labeling requirement for ethanol content below 15%, the topic is subject to state law. SEMA and its coalition members want consumers to know what they are putting in their gas tanks. The EPA has approved the sale of E15 for vehicles made in model year ’01 or later. The EPA has also made it illegal to fuel pre-model-year ’01 vehicles with E15 but placed the burden on the motorist not to misfuel the vehicle. The EPA agreed with SEMA that the corrosive effects associated with E15 posed a risk to these vehicles. Gas stations cannot offer E15 until the EPA finalizes a national rule covering E15 gas-pump warning labels. Several lawsuits have been filed to overturn the EPA’s decision to allow the sale of E15. SEMA is also pursuing legislation in Congress to block the EPA decision.

Patent Reform: 

The U.S. Senate passed legislation to change how patents are awarded. Patents are currently granted to individuals who can prove that they were the original inventors. The Senate bill would switch the United States to a “first-inventor-to-file” system, a method utilized by most other nations. One major drawback to the current system is that it provides an incentive for individuals to claim credit for a patent and demand royalties and damage awards years after a product has been on the market. On the other hand, it has been considered advantageous to small businesses without the resources to get to the patent office first. The bill would make a number of administrative changes as well. The House of Representatives is now considering its version of patent reform legislation.

Lawsuit Abuse:

A House Judiciary Subcommittee held a hearing on a SEMA-supported bill that would require federal judges to sanction plaintiffs and attorneys who file lawsuits the judges deem frivolous. Under current law, federal judges are allowed but not required to impose penalties. The Lawsuit Abuse Reduction Act (LARA) would also eliminate a provision in current law that allows lawyers to avoid penalties by withdrawing frivolous claims after sanction proceedings have begun. Courts could also award the prevailing parties reasonable expenses and attorney’s fees in defending against a frivolous lawsuit. Similar legislation has been introduced in the last decade—most recently in 2005, when the House passed a bill but it failed in the Senate.

Alternative Fueled Vehicles:

The EPA has streamlined the process for approving fuel-conversion systems. The systems allow light- and heavy-duty vehicles to run on alternative fuels (natural gas, propane, alcohol, electricity, etc.) while complying with Clean Air Act emissions standards. The EPA has established a three-tiered compliance process based on the age of the vehicle. Under the old one-size-fits-all approach, the vehicle and engine conversion system must have been covered by a certificate of conformity demonstrating emissions compliance. Under the new system, a certificate is required for only newer vehicles (less than two years old). To certify alternative-fuel conversions for intermediate-aged engines (more than two years old but still within their useful life), manufacturers need to perform exhaust and evaporative emissions tests to demonstrate compliance and send the test data to the EPA. For vehicles that have outlived their useful life, manufacturers must submit a detailed description of the conversion technology to demonstrate that it is well-engineered.