SEMA News - June 2009
SEMA 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

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. 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 allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on 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 negotiated agreement, the new 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.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. 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 measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law 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 law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.