SEMA News - February 2010

By Steve McDonald

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.


Canada (Saskatchewan)

Raised Vehicles: The province of Saskatchewan is postponing the adoption of a raised-vehicle policy and will instead participate in the Canadian Council of Motor Transport Administrators (CCMTA) Excessively Raised Vehicle Working Group. The CCMTA convened the working group with a mandate to develop a national best practice for the regulation of raised vehicles. In August 2009, SEMA submitted technical comments to a regulatory proposal issued by Saskatchewan Government Insurance (SGI) to regulate raised vehicles in the province. SGI operates the province’s driver’s licensing and vehicle registration system. SGI regulators claimed that the number of raised vehicles imported into and operating in Saskatchewan had increased, prompting inquiries from the general public, raised-vehicle owners, off-road enthusiasts, vehicle inspection stations and law enforcement with requests to clarify the existing regulations and standards for raised vehicles. Under the proposed policy, all aftermarket raised vehicles operated on Saskatchewan highways would be subject to a raised-vehicle inspection after January 1, 2011. The policy would be rolled out in two phases to mitigate the impact on existing raised-vehicle owners and provide time to train and inform the public, inspection stations and law enforcement. Regulators were considering requiring owners to carry a “Letter of Authorization” issued by the province in order to operate a raised vehicle. The letter would signify that the vehicle had passed inspection and would be shown to law enforcement during roadside stops to demonstrate compliance with the applicable frame-height limit.


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 continues to be considered by the Ohio House Transportation and Infrastructure Committee. 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.


Street Rods/Customs: SEMA is working with state legislators, regulators and vehicle hobbyists on a compromise to 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 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. In late 2008, a similar measure was vetoed by Governor Deval Patrick.


SEMA Federal Update

Health Care: The U.S. Senate is debating its version of health care reform legislation, following passage of a bill by the House of Representatives. The Senate legislation contains a number of elements recommended by SEMA as priorities in a letter sent last August to President Obama, including an exemption for most small businesses from employer mandates; a reliance on the private-sector insurance system; and small-business access to regional or nationwide purchasing pools. However, as introduced, the Senate legislation fails to tackle the market reforms necessary to eliminate wasteful spending. It also threatens the viability of private-sector plans with a government-run program. SEMA is joining with other trade associations comprising the Small Business Coalition for Affordable Healthcare to support amendments that will better control health care costs rather than impose new burdens on businesses. Providing access to the estimated 27 million small-business owners, employees and dependents who are now uninsured remains a SEMA priority.

Federal Lighting Standard: The National Highway Traffic Safety Administration (NHTSA) again postponed the effective date for the revised lighting standard, Federal Motor Vehicle Safety Standard No. 108, from December 1, 2009, to December 1, 2012. According to the NHTSA, the agency wants the extra time to confirm that there were no substantive changes included when the agency published the reorganized and simplified standard in 2007. The revised standard was originally scheduled to take effect in 2008. The lighting standard has been amended many times since it was first adopted in 1967 in order to address technological advances and enhance safety. As a consequence, the previous regulation was unnecessarily complex and difficult to understand. Early compliance to the revised standard is permitted.

Ethanol-15: The U.S. Environmental Protection Agency (EPA) delayed until mid-2010 a decision on whether to permit the ethanol content of gasoline to increase to 15% (from 10%). The original deadline was December 2009. The EPA indicated that it would likely accept the new level if tests confirm that the blend would not cause damage to cars. The EPA noted that it might limit use only in cars of the 2001 and later model years, since initial tests suggest that newer cars may better accommodate the fuel. The EPA needs additional time for durability testing regarding the long-term effects on vehicle components and emissions control systems. If the application is limited to model-year 2001 and newer cars, gasoline retailers would have to supply varying ethanol blends and relabel pumps, and drivers of older cars would need to be cautioned not to misfuel. Last year, SEMA submitted comments to the EPA opposing the 15% ethanol content, citing 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.

Tax Write-Offs: Lawmakers expanded a provision enacted last year that allows small businesses (gross receipts of $15 million or less) to extend the net operating loss (NOL) carryback period from two to five years for tax years beginning in or ending in 2008. Under the new law, all businesses can now take advantage of the NOL carryback provision. The law allows companies to apply losses sustained in recent years against taxes on profits paid in earlier years. Businesses may offset 50% of the available income from the fifth year and 100% of all income in the remaining four carryback years. All businesses may carry back net operating losses for up to five years for losses incurred either in 2008 or 2009 but not both (at the option of the taxpayer). Small businesses that have already elected to carry back 2008 may also elect to carry back losses from 2009.

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