SEMA News-October 2009

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.

Indiana

Indiana Antiques: SEMA is working with the Indiana Department of Environmental Management (IDEM) and state hobbyist groups on a compromise to an agency proposal that would redefine the term “antique vehicle” in order to force more of these hobby cars into the emissions inspection program. Under existing law, an antique vehicle is defined as “a motor vehicle or motor scooter that is at least 25 years old.” Under the regulation, the definition would be revised to require that the vehicle must be at least 25 years old, registered and plated as a historic motor vehicle, driven a maximum of 3,000 miles per calendar year and include federally required pollution control equipment for that make and model year. Under the plan, the vehicle would be periodically forced into a vehicle emissions test site to verify that these requirements have been met. IDEM indicated that it will issue a revised version of its proposal that will contain less burdensome requirements.  

North Carolina

North Carolina Street Rods/Replicas: A version of SEMA-model legislation to create a vehicle registration classification for street rods, replicas and custom vehicles was signed into law by North Carolina Governor Bev Perdue. The new law is the product of negotiations between SEMA and the hobbyist network in North Carolina. The law retains the key components of the SEMA-model bill while relieving vehicle owners of unfair title branding and inspection concerns. The measure provides specific registration and titling classes for street rods and replicas; allows for the use of non-original materials; creates a titling and registration criterion that assigns replica vehicles the same model-year designation as the production vehicle intended to be replicated and requires that the title of a replica vehicle clearly indicates that the vehicle is a replica and not an original. The law is slated to take effect on October 1, 2009.

Oregon

Greenhouse Gas: Oregon Governor Ted Kulongoski signed into law 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 new law will 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.  

FEDERAL UPDATE

Health Care Reform: SEMA urged President Obama and Congress to ensure that reform efforts facilitate access to affordable health care for all small businesses. In a letter to the president, SEMA cautioned the administration not to ignore structural changes needed to reduce costs, increase competition and provide access to more choices. SEMA has committed itself to working with lawmakers to enact comprehensive health care reforms that will provide access to the estimated 27 million small-business owners, employees and dependents who are now uninsured. SEMA recommended that Congress allow small businesses to pool their resources when shopping for insurance, reject employer mandates under a “pay or play” system, and require the individual to participate in the system if they have access to a variety of insurance options and tax incentives. SEMA also urged lawmakers to tackle tort reform in order to eliminate billions of dollars of spending on unnecessary defensive medicine practices.

Cash for Clunkers Program: The $1 billion vehicle scrappage program authorized under the “Consumer Assistance to Recycle and Save Act” (CARS) began in late July and almost immediately ran out of cash. Lawmakers quickly authorized another $2 billion in spending. Preliminary data indicated that consumers were replacing SUVs and pickups with smaller passenger cars. However, future data may reveal whether the scrapped cars were actually rarely driven second or third vehicles. SEMA convinced lawmakers to exclude pre-1984 vehicles from the program to safeguard vehicles that may possess unique historic or aesthetic value and are irreplaceable to hobbyists as a source of restoration parts. The program allows all parts to be recycled except the engine. During the scrappage debate, 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.

Ethanol-15: SEMA submitted comments to the U.S. Environmental Protection Agency (EPA) opposing a request to allow the ethanol content of gasoline to increase to 15% (from 10%). SEMA cited concerns that the additional content could harm automobile parts of all ages, including special-interest collector and historic vehicles. A number of other organizations expressed similar concerns. Tests using ethanol concentrations of up to 20% have shown a notable increase in wear on vehicle fuel systems produced up through model year 1995, and especially for pre-1990 vehicles. Fuel pumps, tanks, seals, hoses and other rubber components are particularly subject to failures. The EPA has until December 1 to decide whether to grant or deny the request.

Tariffs on Chinese Tires: The U.S. International Trade Commission (ITC) recommended imposing tariffs of up to 55% to combat market disruptions caused by surging tire imports from China. Tariffs are currently 4% for radial passenger and light-truck tires and 3.4% for bias passenger and light-truck tires. President Obama is expected to decide by October whether to approve or deny the ITC’s recommendation or issue some other form of relief. Last June, the ITC ruled in favor of a petition filed by the United Steelworkers union on behalf of 15,000 U.S. tire workers that an import surge of Chinese-made tires had caused major job losses and plant closures in the U.S. The union had argued that China exported nearly 46 million tires last year to the U.S., and that the volume had tripled since 2004 while domestic production had decreased by more than 25%.

Truck Brakes: The National Highway Traffic Safety Administration issued a final rule aimed at improving the stopping distance for large trucks by 30%. The tougher requirements were first proposed in 2005 and will now be phased in over a four-year period beginning in model-year 2012. The rule applies only to truck tractors and does not include single-unit trucks, trailers or buses. Under the new performance standard, a tractor trailer traveling at 60 miles per hour must be able to come to a complete stop in 250 feet rather than the old standard’s 355 feet. Manufacturers should have several alternatives for achieving compliance, including installation of enhanced drum brakes, air disc brakes or hybrid disc/drum systems.