SEMA News - July 2010 

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 UPDATE

Prince Edward Island

Nitrous Oxide: The province of Prince Edward Island has introduced a bill to permit the installation of nitrous-oxide systems as long as the feed lines are disconnected or the canisters are removed while the vehicle is being operated on a public road. The bill largely mirrors SEMA-model legislation to better protect public road safety while ensuring legitimate off-road uses of nitrous-oxide systems.

STATE UPDATE

California

Specially Constructed Vehicles: The California State Assembly approved legislation to increase the registration limit for exempted specially constructed vehicle registrations from 500 to 750 vehicles per year. The Senate will now consider the bill, where it is likely to have a much tougher journey. Current law provides for emissions-system certification and a model-year designation for specially constructed vehicles. Under the law, vehicle owners choose whether a smog-test referee certifies the engine model year or the vehicle model year. To determine model year, inspectors compare the vehicle to those from the era that the vehicle most closely resembles. If there is no close match, it is classified as a ’60 vehicle. Only those emissions controls applicable to the model year and that can be reasonably accommodated by the vehicle are required. The Department of Motor Vehicles provides a new registration to the first 500 specially constructed vehicles per year that meet the criteria.

Small Business: SEMA-member Egge Machine Co. was honored in a ceremony recognizing the contributions of small businesses to the state of California. Egge was chosen to receive the recognition by State Assemblymember Tony Mendoza. Sponsored by the California Small Business Association, “A Salute to Small Business Day” took place at the Sacramento Convention Center on May 25. Founded in 1915, Egge manufactures internal engine components for antique, classic and collector cars as well as engine kits and performance products for domestic cars and trucks built from 1900–1980. Based in Santa Fe Springs, California, Egge supplies the needs of automotive enthusiasts nationwide, providing rare parts for vehicles that have long been out of production.

Louisiana

Inspection Exemption: A SEMA-supported bill to exempt antique vehicles 25 years old and older from the motor-vehicle inspection requirements was passed by the Louisiana House. The bill now moves to the Senate for consideration. Current law only exempts vehicles 40 years old and older. The bill makes the inspection exemption consistent with current state law defining an antique vehicle as a vehicle that is 25 years old or older and used primarily for shows, parades, tours and other special uses and not for general transportation. Vehicles in Louisiana are subject to an annual vehicle inspection, including a safety-equipment inspection and an additional emissions inspection for vehicles registered in selected parishes. The emissions inspection consists of a visual anti-tampering check and a gas-cap integrity check. Vehicles manufactured in 1995 and later are also subject to an on-board diagnostic (OBD-II) emissions check.

New York

Historic Vehicles: SEMA is backing legislation in the New York Assembly to provide that historical-vehicle owners only pay a one-time registration fee of $100 upon initial registration. The bill has been referred to the New York Assembly Transportation Committee for consideration. The reduced registration fee would be available to owners of historical vehicles owned and operated as an exhibition piece or collector’s item and used for club activities, exhibits, tours, parades, occasional transportation and similar uses. Under current New York law, a historical motor vehicle is either a vehicle manufactured more than 25 years ago or one that has unique characteristics and is determined to be of historical, classic or exhibition value. The $100 one-time fee would replace the current annual fee of $28.75.

North Carolina

Street Rods/Custom Vehicles: Jim Barber of SEMA member Classic Automotive Restoration Specialists Inc. has been appointed by the North Carolina DMV to serve on the vehicle classification review committee. The committee was established pursuant to the enactment into law of SEMA-model legislation to create a vehicle registration classification for street rods, replicas and custom vehicles. The new 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 committee will review grievances filed by vehicle owners regarding the DMV’s determination of the appropriate vehicle classification for a specially constructed vehicle.

Vermont

Inoperable Vehicles: Legislation to provide an exemption to automotive hobbyists from the restrictions on salvage yards has been approved by the Vermont Legislature. The bill seeks to increase the regulation of salvage yards and automobile graveyards in the state but includes a provision stipulating that hobbyists are not to be confused with the owners of automobile graveyards. The bill defines an “automobile hobbyist” as a person not primarily engaged in the sale of vehicles and parts or dismantling junk vehicles. Further, the definition of “automobile graveyard” does not include an area used by an automobile hobbyist for storage and restoration purposes, provided their activities comply with federal, state and municipal law. The bill now goes to the governor for his signature and enactment
into law.

FEDERAL UPDATE 

New Auto Safety Rules: Legislation has been introduced in Congress to strengthen the authority of the National Highway Traffic Safety Administration (NHTSA) and to mandate new auto safety standards. A House subcommittee held a hearing on the bill, which was introduced in response to recent recalls of Toyota vehicles. The legislation would require NHTSA to establish new motor vehicle safety standards related to electronics and unintended accelerations, such as a brake-override requirement. Event data recorders (“black boxes”) would eventually be required on all new vehicles. The maximum amount that could be imposed in civil penalties would be increased. NHTSA would also have more money to fund agency programs, including a new department dedicated to vehicle electronics and emerging technologies.

Small-Business Health Care Tax Credit: Companies that purchase health care insurance and have 25 or fewer employees may claim a tax credit. The credit varies according to size and average wages. The maximum credit of 35% of premiums paid in 2010 is available to small-business employers with 10 or fewer workers who have an average salary of $25,000. The rate will increase to 50% in 2014. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and with the equivalent of between 10 and 25 fulltime workers. The credit took effect on January 1, 2010, and is designed to help small employers that mainly employ low- and moderate-income workers. Firms can claim the credit for 2010 through 2013 and for any two years after that.

Credit Card Swipe Fees: SEMA and other trade associations asked Congress to limit the amount credit card companies can charge merchants when processing payments. Under the current system, the merchant pays a transaction fee every time a card is used, whether for credit or debit. The “swipe” fees can average 2% to 4% for businesses that accept debit/credit cards and amounted to $63 billion in 2008. In a joint letter to the U.S. Senate, the trade associations asked that swipe fee reform be included in a comprehensive financial regulatory reform bill. The trade associations specifically asked that debit card transactions be treated the same as paper checks. The Federal Reserve requires all banks to clear paper checks at par (no exchange fees). The trade associations also urged lawmakers to give the Federal Trade Commission authority to regulate credit card company practices that currently allow the company to forbid merchants from setting credit-card minimums (example: must be over $10), offering discounts for cash payments, passing along the swipe fees to the consumers and similar practices.