SEMA News—October 2011

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.

State Update

Arkansas Bonded Titles:

SEMA-supported legislation to create a less-expensive bonded title procedure for assembled vehicles was signed into law by Arkansas Governor Mike Beebe. The new procedure calculates the amount of the bond as equal to the value of the vehicle. Prior to the enactment of the new law, all vehicle owners applying for a bonded title had to post a bond of 1.5 times the value of the vehicle. The law also permits assembled vehicles to be bought and sold in inoperable condition. Arkansas defines an assembled vehicle as a vehicle constructed by a collector from parts obtained from a variety of different sources on various occasions.

California Specially Constructed Vehicles:

The California Air Resources Board (CARB) is considering a program that would allow OEM engines from previously certified on-road vehicles to be installed in “Specially Constructed Vehicles” (SCVs). Under the proposal, CARB officials would also create a program for certifying engines that are not from certified vehicles (e.g., crate engines). California defines an SCV as a vehicle that has been built by an individual (rather than a company) from a kit, a combination of new and used parts or a dismantled vehicle that, when reconstructed, does not resemble the original make. In a workshop held to discuss the proposal, CARB officials re-stated that the program would not override current California law that allows for the first 500 SCVs for which registration is sought each year to be inspected at the owner’s option based on the engine model year used or the vehicle model year. In determining the vehicle model year, a referee station compares the vehicle to vehicles of the era that it most closely resembles. The referee then requires only those emissions control systems that are applicable to the established model year. According to CARB, the new program is only intended to make it easier for California enthusiasts to construct and register an SCV that meets California emissions standards when the 500-vehicle limit has been met. The SCV engine package choices would cover ’12 and subsequent model years.

California Scrappage:

California is considering legislation to restrict eligibility for the state’s motor-vehicle scrappage program to the highest polluting vehicles, with priority given to vehicles registered in air basins that are out of compliance with federal air quality standards. The measure is currently pending consideration in the California Senate Transportation Committee. Among other things, the bill recognizes that the state cannot afford to continue operating a wide-open program to scrap older cars, which actually does little to offset emissions.

Colorado Collector Vehicles:

A SEMA-supported bill to reorganize and simplify the various laws dealing with collector cars was approved by the Colorado legislature and signed into law by Governor John Hickenlooper. The Collector Car Council of Colorado, a group that works to promote pro-hobby legislation in the state, supported the consolidation. Reorganizing the statutes into one location in the code will help the Department of Revenue, law enforcement, county clerks and enthusiasts more easily locate and apply state law governing the titling and registration of collector vehicles.

Connecticut Antique Vehicles:

Legislation that threatened to increase the age requirement for vehicles eligible for registration as “antique, rare or special-interest motor vehicles” died when the Connecticut Legislature adjourned for the year. Opposed by SEMA, the bill had been approved in committee and amended 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 currently assessed at a rate of $500 and owners pay personal property taxes on that amount.

Iowa Ethanol:

SEMA-opposed legislation in Iowa to change labeling requirements on gas pumps across the state to only require labeling for unblended gasoline and E85 was successfully defeated for the year. Current law in Iowa requires labeling when gasoline is blended with any amount of ethanol. If the bill had been enacted, it would have removed labeling requirements for ethanol-blended gasoline containing 15% or less ethanol, thereby increasing the risk of misfueling and potential engine damage. At the federal level, the U.S. Environmental Protection Agency (EPA) now requires that an orange-and-black label be placed on fuel pumps dispensing gasoline with 15% ethanol (E15). The label will warn consumers not to use the fuel in vehicles older than model-year ’01, since it could cause damage. States are free to impose their own labeling requirements for gasoline containing E10, and vehicle owners must rely on various state labeling requirements for information about the gasoline they use in their vehicles.

Maine Custom Vehicles:

A SEMA-supported bill to include more model-year vehicles in the definition of a custom vehicle by changing the definition from 30 to 25 years old and older was signed into law by Maine Governor Paul LePage. The new law also expands the weight limit for custom vehicles from 6,000 to 10,000 lbs. and clarifies that custom vehicles are held to special inspection criteria promulgated by the Chief of the State Police.

Massachusetts “Gas Guzzlers”:

Multiple bills have been reintroduced in the Massachusetts State Legislature to impose fees on the purchase, registration and registration-renewal of larger or higher-emitting vehicles. A progressive purchase surcharge for some new motor vehicles based on state calculations of carbon emissions is the subject of one bill, while another would impose a “green fee” on vehicles upon registration, both initially and upon renewal. In another bill, registration fees would be adjusted based on vehicle weight, with increases limited at $200 above the initial fee.

Massachusetts Commercial Vehicles:

SEMA is opposing a Massachusetts bill that is seeking to redefine “commercial motor vehicle” as a vehicle with a minimum 10,001 lbs. gross vehicle weight rating (GVWR) for SUVs and trucks and above a 6,000-lb. GVWR for cars. Many larger vehicles that are now considered regular passenger vehicles and not subject to commercial vehicle regulations would be affected if the bill were enacted into law. Under the bill, antique cars and dual-rear-wheel pickups that are not used for commercial purposes would not be considered commercial vehicles. Commercial vehicles are charged higher registration fees, undergo more stringent and expensive equipment inspections, require a special permit to operate and are prohibited from traveling on certain roads. A separate bill to specify that dual-wheel pickups used solely for private purposes are not to be considered commercial vehicles is
also pending.

Pennsylvania Antiques, Classics and Collectibles:

A bill to allow antique, classic and collectible vehicles to be registered under a seasonal registration class was passed by the House of Representatives and is now pending in the Senate Transportation Committee. The measure would permit collector-car owners to specify which months they would like to register their vehicles. The fee would be set at the same amount as the annual registration fee on these vehicles, but insurance for the vehicles would only be required for the months specified in the seasonal-use registration. The bill also increases the maximum allowable weight for vehicles registered under seasonal-use provisions and vehicles allowed to be issued various special license plates and vanity plates from 10,000 to 14,000 lbs.

Federal Update

Bonneville Salt Flats:

The Bureau of Land Management (BLM) will issue an Environmental Assessment (EA) in the near future governing potash mining operations at the Bonneville Salt Flats. The Bonneville Salt Flats is a National Landmark under the jurisdiction of the BLM. Hundreds of speed records have been set at this rare and unique geological site over the past 100 years. Originally 96,000 acres in size, the Bonneville Salt Flats has shrunk to about 30,000 acres as a direct consequence of an adjoining mining operation in which potash is removed from the salt. Between 1963 and 1982, an estimated 11 million tons of salt was withdrawn from the Bonneville Salt Flats. A prototype salt replenish program from 1997 to 2002 demonstrated that salt brine could be pumped back onto the salt flats to stabilize the landmark and its underlying aquifer but the program was allowed to expire. SEMA has joined with other organizations as part of the “Save the Salt Coalition” urging the BLM to mandate a permanent replenishment program that guarantees the same quantity and quality of salt be returned to the Bonneville Salt Flats.

Lawsuit Abuse:

The U.S. House Judiciary Committee approved a SEMA-supported bill that would require federal judges to sanction plaintiffs and attorneys who file frivolous lawsuits. The bill will now be scheduled for a House floor vote. Under current law, federal judges are permitted but not required to impose penalties. The “Lawsuit Abuse Reduction Act” 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 frivolous lawsuits. Similar legislation has been introduced in the last decade, most recently in 2005, when the House passed a bill that failed in the Senate.

Expanded Reg-Flex Act:

The U.S. House Small Business Committee approved two SEMA-supported bills to close loopholes that federal agencies may use to avoid compliance with the Regulatory Flexibility Act (RFA). The RFA was created by Congress in 1980 to require the federal government to examine the impact of regulations on small businesses and to consider alternative approaches that are less burdensome. Among other changes, the legislation would force agencies to perform better periodic reviews of their rules and grant the Chief Counsel for Advocacy at the Small Business Administration greater power to enforce the RFA. SEMA has joined with a number of other businesses and organizations to support passage of the legislation.

State Sales Tax:

Identical bills have been introduced in the U.S. House and Senate to require companies that sell goods via the Internet and catalogs to collect sales tax in the same manner as “brick-and-mortar” retailers. The so-called “Main Street Fairness Act” would recognize the “Streamlined Sales and Use Tax Agreement,” an ongoing initiative by state and local governments to address the collection of sales/use taxes. The agreement creates a system for companies to register with member states, collect and remit taxes, and file one tax return for each state. To date, 44 states have worked to create the agreement, and 24 states are participating members. Under a 1992 U.S. Supreme Court decision, states cannot force retailers to collect use taxes unless the company has a physical presence in the state (“nexus”). The legislation would provide states with this authority if within the scope of the agreement. The federal legislation would treat all sales transactions in a state equally regardless of whether the sale was completed in person, through the mail, over the phone or over the Internet. Small-seller retailers would be exempted at a sales threshold set under the agreement.

Ethanol:

The Government Accountability Office issued a report which finds that intermediate blends of ethanol (e.g., E15) pose a variety of challenges to the current U.S. infrastructure. Issues include transporting the larger volumes of ethanol, potential corrosion of underground storage tanks and delivery systems, and liability to retailers if E15 causes problems because consumers misfuel their older vehicles. The EPA has issued a waiver to allow the sale of E15 for newer vehicles and require gas stations to place consumer labels on the pumps warning motorists against misfueling. The EPA’s waiver decision is the subject of lawsuits and congressional actions to delay or overturn the decision.

Vehicle Lighting:

The National Highway Traffic Safety Administration (NHTSA) amended Federal Motor Vehicle Safety Standard No. 108 to correct technical errors and address concerns that the standard was changed in substance when it was reorganized in 2007. The standard had been amended many times since it was first adopted in 1967 in order to address technological advances and enhance safety. In the process, the old regulation was unnecessarily complex and difficult to understand. The intent of the 2007 revision was to simplify the regulation to the extent possible. The NHTSA is still reviewing the revised standard to confirm that there were no other changes of substance. The standard is scheduled to take effect on December 1, 2012, although voluntary compliance is now permitted.

Fuel Economy Standards:

The federal government, California regulators and auto industry representatives have agreed on fuel economy and carbon dioxide (CO2) emissions limits for model-year ’17–’25 vehicles. The fleetwide average will rise from 35.5 miles per gallon (mpg) at the end of 2016 to 54.5 mpg for model-year ’25, a nearly 5% annual increase with slightly lower standards for light-duty trucks. The agreement preserves California’s authority to regulate CO2 emissions and other greenhouse gases while creating a single national standard. CO2 emissions and fuel economy are linked, since carbon dioxide is a byproduct of fossil-fuel combustion. The automakers pursued an agreement to increase fuel economy, which would also preserve affordability, vehicle choice, jobs and safety. The EPA and NHTSA will now draft regulations to implement the agreement.  

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