SEMA News—December 2012

By Steve McDonald

Law and Order

The laws and regulations that govern how SEMA members do business have a growing impact on the way automotive specialty-equipment products are made, distributed and marketed. SEMA’s charge is to stay on top of relevant state and federal legislation and regulations to ensure the best possible outcome for its membership. The following are just a few examples of critical legislative/regulatory issues that the SEMA government affairs team was involved in this year.


California Hot-Rod Emissions Project

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation For the past several years, SEMA worked with the legislature and state agencies to provide protection for owners of improperly or illegally titled and registered specially constructed vehicles (SPCNS). This program was pursued to help vehicle owners and builders under a looming threat of prosecution avoid confiscation of cars and felony law-enforcement actions. On July 1, 2011, an amnesty program to allow proper registration of previously registered SPCNS went into effect. The program ended on June 30, 2012. This law provided a method to obtain legal title/registration for owners who may have misrepresented the value of a vehicle or its model year at initial registration.

California Legacy Plates

Governor Jerry Brown signed into law SEMA-supported legislation to establish the California Legacy License Plate Program. Under the new law, the Department of Motor Vehicles (DMV) will create and issue a series of specialized license plates that replicate plates from the state’s past. Previously, classic-car owners could revive only well-maintained older plates that matched the vintage of their vehicle. The law requires that at least 7,500 applications for any particular plate must be received by the DMV on or before January 1, 2015.

California Collector Car Appreciation Day

State Senator Tony Strickland issued a certificate of recognition for Collector Car Appreciation Day. Mayor Jacqui Irwin of Thousand Oaks issued a similar certificate.

Connecticut Antique/Rare/Special-Interest Motor Vehicles

SEMA helped defeat legislation that threatened to increase the age requirement for vehicles eligible for registration as “antique, rare or special-interest motor vehicles.” Under the measure, vehicles that owners were seeking to register under these categories would have been required to be at least 30 years old. Currently, vehicles 20 years old or older are eligible for this status and special license plates. For the purpose of property taxes, the bill also increased the maximum assessment of these vehicles to $2,500 rather than the current $500.

Hawaii Audio Equipment

Legislation to ban the installation, ownership or use of any car with aftermarket speakers more than 6.5 in. in height or depth, five-speaker aftermarket systems, aftermarket speakers more than 100 watts and aftermarket speakers installed external to the passenger compartment or in an open hatch back was defeated. The measure was discriminatory toward aftermarket products, as it did not seek to limit systems installed by the original vehicle manufacturer or dealer.

Hawaii Collector Car Appreciation Day

Two resolutions were approved by the Hawaii State Legislature recognizing July 13, 2012, as Collector Car Appreciation Day.

Idaho Collector Car Appreciation Day

Idaho Governor Butch Otter issued a proclamation recognizing July 13, 2012, as Collector Car Appreciation Day.

Iowa Ethanol

SEMA defeated legislation that would have changed labeling requirements on gas pumps to require labeling for only unblended gasoline and E85. Current state law 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. Unblended gas is required to be labeled, but no guarantee was made that unblended gas would be available.

Maryland Historic Vehicles

The legislature tabled legislation that originally threatened to limit the use of historic vehicles, despite the inclusion of SEMA amendments that would have protected historic-vehicle owners. House and Senate lawmakers intend to further research the issue. SEMA has committed to bill sponsors that it will continue to participate in efforts to help enact a version of the bill next year that will allow these vehicles continued eligibility for the historic class upon their 20th year, not require collector insurance policies and retain the “occasional use” provision.

Maryland Tires

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation SEMA helped defeat legislation that would have required the tire industry to affix a tire label containing the month/year of manufacture and other information. This legislation would have placed tire dealers, wholesalers and manufacturers at an unfair disadvantage by requiring additional sidewall information of no value to the motoring public. The date of a tire’s manufacture is already on the sidewall as part of the tire identification number.

Massachusetts Exhaust Systems

A SEMA-opposed bill to ban the “use and sale of any exhaust pipe that increases the sound emissions of any vehicle, including motorcycles” has been assigned for study. The study order authorizes a committee to investigate the bill and report to the legislature the results and its recommendations, together with a draft of legislation necessary to carry the recommendations into effect. This action killed activity on the bill for the year. Several other Massachusetts bills were assigned for similar studies, including a bill to provide for the adjustment of registration fees based on vehicle weight.

Michigan Historic Vehicles

Governor Rick Snyder signed into law a SEMA-supported bill to allow unlimited use of historic motor vehicles during the month of August. Under previous law, use of historic vehicles was limited to participation in club activities, exhibitions, tours, parades and similar uses, including mechanical testing, but not for general transportation. The law provides historic-vehicle owners with the opportunity to enjoy recreational driving during August in addition to the other sanctioned uses.

Michigan Automotive Heritage Month

The Michigan State Senate approved a resolution to commemorate August 2012 as Automotive Heritage Month in the state.

Nebraska Ethanol

Through the opposition of SEMA, legislation to remove labeling requirements on pumps dispensing ethanol-blended gasoline was defeated. Current law requires labeling when gasoline contains 1% or more alcohol, including labels for pumps dispensing E10. The bill would have made it impossible for owners to know whether the gasoline they put into their vehicles contained any ethanol, making unintentional misfueling and engine damage more likely.

Nebraska Special-Interest Vehicles

SEMA-supported legislation to create a registration class and special license plate for special-interest motor vehicles was signed into law by Governor Dave Heineman. The new law authorizes a single license plate on the rear of special-interest vehicles. Special-interest motor vehicles are defined as vehicles “of any age which are being collected, preserved, restored or maintained by the owner as a leisure pursuit and not used for general transportation of persons or cargo.” Under a SEMA-drafted amendment, special-interest motor vehicles can be driven for occasional transportation, public displays, parades and related pleasure or hobby activities. SEMA worked to delete provisions that would have forced owners to account for all daily driver vehicles, submit a sworn affidavit that the vehicle would not be used for daily transportation and maintain the vehicle essentially unaltered from the original manufacturer’s specifications.

Nevada Collector Car Appreciation Day

Las Vegas Mayor Carolyn G. Goodman and the Las Vegas City Council issued a proclamation declaring Collector Car Appreciation Day in the city.

New Jersey New Car Exemption

In 2010, SEMA-supported legislation to extend the emissions-inspection exemption to vehicles five model years old or newer was signed into law, subject to approval by the U.S. Environmental Protection Agency (EPA). Previous law exempted only vehicles four model years old or newer. The EPA incorporated revisions to the state’s plan to include the extension of the new vehicle inspection exemption from four years to five years. This action acknowledges that it is senseless to test newer vehicles, the results of which demonstrate no significant air-quality benefits.

New Mexico Collector Cars

New Mexico Governor Susana Martinez issued a proclamation designating July 13, 2012, as Collector Car Appreciation Day in the state.

New York “Gas Guzzlers”

SEMA-opposed legislation to establish a progressive purchase surcharge for some new motor vehicles based on state calculations of carbon emissions was defeated. Depending on the vehicle purchased, this surcharge could have required owners to pay up to $2,500 more for the vehicle. Funds collected under the program would have been used in part to fund discounts for hybrids and electric cars.

New York Tire Dating

SEMA helped defeat legislation to prohibit the manufacture, distribution or sale of tires for passenger vehicles, multi-purpose passenger vehicles or light trucks unless a date of manufacture is clearly molded on both sides of the tire in a non-coded fashion. SEMA also successfully opposed bills that sought to prohibit the sale of tires that are more than six years old.

New York Wheel Marking

SEMA-opposed legislation that would have required vehicle identification numbers on the wheels of all motor vehicles assembled or sold died upon adjournment of the legislature. All wheels sold in the United States generally comply with industry standards, which include markings with the wheel manufacturer’s name, trademark or symbol, date of manufacture, manufacturer’s part number or code.

New York Collector Car Appreciation Day

The New York State Assembly approved a resolution authorizing Governor Andrew Cuomo to proclaim July 13, 2012, as Collector Car Appreciation Day in the state.

North Carolina Emissions

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation SEMA-supported legislation to extend the emissions-inspection exemption to vehicles three years old and newer was signed into law by Governor Bev Perdue. Previous law required the inspection of all ’96 and newer vehicles. The new law acknowledges the relatively minimal environmental impact of the newer vehicles targeted for the exemption.

Pennsylvania Year-of-Manufacture Plates

SEMA-supported legislation to provide vehicle owners the option of using vintage, original model-year license plates on antique and classic vehicles was signed into law by Governor Tom Corbett. Under the measure, vintage plates must have been issued by the state between the years 1906 and 1975, must be provided by the vehicle owner and be legible from a reasonable distance.

Pennsylvania Motorsports Day

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation The Pennsylvania House approved a resolution designating June 5, 2012, as Pennsylvania Motorsports Day at the Capital.

Texas Street Rods/Custom Vehicles

The Texas DMV issued its policies and procedures for issuance of titles and specialty license plates to owners seeking to register their vehicles as street rods or custom vehicles. The policy also provides for a basic safety-equipment inspection. These procedures were drafted pursuant to the 2011 enactment into law of SEMA-model legislation. 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 also allows for the use of non-original materials and creates a titling and registration criterion that assigns these vehicles the same model-year designations as the production vehicles they most closely resemble. Due to a flawed interpretation of the law by the DMV, all vehicles that owners are seeking to register as street rods and custom vehicles must carry a title with a “Replica” brand—even those vehicles altered from original steel bodies. SEMA is currently working with members of the legislature to seek additional legislation to correct this flaw.

Utah Vintage Travel Trailers

A SEMA-supported bill to create a statutory definition of a “vintage travel trailer” and provide for a one-time $40 registration fee was signed into law by Governor Gary Herbert. Under the law, vintage travel trailers would also be eligible for a special group license plate and would be exempted from wheel cover, mudguard, flap or splash apron requirements. The new law defines a “vintage travel trailer” as a travel trailer, camping trailer or fifth-wheel trailer that is 30 years old or older and is primarily a collector’s item that is used for participation in club activities, exhibitions, tours, parades, occasional recreational or vacation use and other similar uses. 

Vermont Exhaust Noise

A SEMA-opposed bill to ban motor-vehicle exhaust systems that increase the noise level above the level emitted by the originally installed system died when the legislature adjourned for the year. Under the bill, vehicles in violation would not have passed the state’s required inspection. The bill also did not provide for the installation and use of aftermarket exhaust systems that meet an objective 95-decibel limit under a fair and predictable test and allowed law enforcement to make subjective judgments on whether an exhaust system increased noise.

Virginia Restoration Projects

SEMA helped defeat legislation that originally threatened to provide localities with the authority to raise from $100 to $500 the amount charged for an annual license tax for vehicles that do not display current license plates. Virginia Governor Bob McDonnell vetoed a substitute bill containing SEMA-drafted amendments. The SEMA amendments exempted from the license tax all vehicles and parts cars stored on private property for the purpose of restoration or repair.

Washington Restoration/Custom Shops

A SEMA-supported bill to exempt restoration and custom shops from the requirement that they provide written estimates for the repair of any vehicle that qualifies for a “horseless carriage” or “collector vehicle” license plate or is a “parts car,” “street rod” or “custom vehicle” was signed into law by Governor Chris Gregoire. Under a SEMA-drafted provision, the law allows restoration and custom shops to bill at least every two weeks on a time-and-materials basis.

West Virginia Property Tax

A bill to provide a cap on property taxes paid by owners of antique and classic motor vehicles was vetoed by Governor Earl Ray Tomblin due to a technical issue. The bill had been amended and approved by the West Virginia State Legislature with a new $5,000 assessed value for all of these cars. Previous versions of the bill contained an assessed value provision of $1,000. Generally, the bill vetoed by the governor benefited antique and classic vehicle owners whose cars are worth more than $5,000. However, it would have penalized most antique and classic-vehicle owners whose cars are worth less than $5,000.

West Virginia Collector Car Appreciation Day

West Virginia Governor Earl Ray Tomblin issued a proclamation recognizing July 13, 2012, as Collector Car Appreciation Day.

Wisconsin Motor-Vehicle Registration Rights

Legislation that originally sought to provide legal registration to hobby vehicles with a clear title, the required safety equipment and that are presented in good working order was signed into law by Governor Scott Walker. Due to opposition from the Department of Transportation, the bill was amended to benefit only former military vehicles. Several favorable provisions in the bill with application to all hobby vehicles were eliminated. While the amended bill does not solve the many problems associated with registering a hobby car, it still gained SEMA’s support, as it improves the rules governing military vehicles.

Canada Collector Car Appreciation Day

The Manitoba Minister of Culture, Heritage and Tourism designated July 13, 2012, Collector Car Appreciation Day and the month of July Collector Car Appreciation Month in the province. A similar proclamation designating July 2012 Automotive Heritage Month was issued by the Canadian Province of Nova Scotia and Premier Darrell E. Dexter.


Collector Car Appreciation Day

At SEMA’s request, U.S. Senators Jon Tester (D-MT) and Richard Burr (R-NC) co-sponsored Senate Resolution 452 designating July 13, 2012, Collector Car Appreciation Day. The date marked the third commemoration in what has become an annual event to raise awareness of the vital role automotive restoration and collection plays in American society. SEMA-member companies, car clubs and individuals helped organize scores of events to celebrate the day, including car shows, small-business open houses and “drive your car to work” displays.

Low-Volume Vehicle Production

Rep. John Campbell (R-CA) introduced a bipartisan bill in the U.S. House of Representatives to enable low-volume car manufacturers to produce a range of specialty vehicles for customers nationwide. SEMA worked with Rep. Campbell to craft the Low Volume Motor Vehicle Manufacturers Act, which directs the National Highway Traffic Safety Administration (NHTSA) and the U.S. EPA to establish a regulatory structure to facilitate production of these cars. The vehicles include replica street rods, customs and sports cars that are primarily used in exhibitions, parades and for occasional transportation. The United States currently has just one system for regulating cars, which is designed for companies that mass produce millions of vehicles. The bill creates an alternative regulatory framework for American manufacturers producing 1,000 or fewer vehicles a year. The cars would meet current emissions standards, and companies would be permitted to install clean engines already certified by another manufacturer. The bill will be reintroduced for consideration when the new Congress convenes in 2013.

Bonneville Salt Flats

The U.S. Bureau of Land Management (BLM) approved a final Environmental Assessment (EA) for replenishing salt to the Bonneville Salt Flats (BSF). The BLM adopted the approach recommended by SEMA and other organizations that are members of the Save the Salt Coalition. The EA requires a permanent replenishment program that guarantees the same quantity and quality of salt is returned to the BSF as is removed under an existing potash mining lease agreement. The mining company has already exceeded the EA requirements, pumping nearly 1 million tons of salt onto the BSF over the past two years without removing any salt from the same area. SEMA and the coalition are now pursuing a public fundraising campaign to go beyond simple replenishment so that the BSF can be restored with millions of tons of additional salt necessary to achieve the goal. All contributions will be used to purchase salt and the equipment necessary to pump, transport and lay down the salt.

Save Johnson Valley

SEMA has recommended that the U.S. Marines Corps secure special-use permits from the BLM when conducting troop maneuvers within Johnson Valley, California, rather than take ownership of the land as part of an expanded Twentynine Palms base. The BLM land is a designated off-highway vehicle (OHV) recreation area and site of “King of the Hammers” and other OHV events throughout the year. The Marines need access to Johnson Valley for less than two months a year but are seeking ownership rights from the BLM for 56% of the land (147,000 acres). The Marines have proposed providing limited access to only 40,000 acres of that land for OHV activities during 10 months of the year. Any land transfer requires Congressional approval. Congress is considering legislation that will require the Marines to study alternative ways to share the land with the OHV community, potentially to include special permits. The Johnson Valley off-road area draws at least 200,000 visitors annually and may generate as much as $191 million annually into the economy.

E15 Ethanol

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation A federal appeals court dismissed a lawsuit challenging the EPA’s decision to permit 15% ethanol (E15) content in gasoline for ’01 and newer model-year cars and light trucks. The EPA made it “illegal” to put E15 in pre-’01 vehicles but is relying on a gas-pump label cautioning motorists not to misfuel their older vehicles. The ruling is still subject to further court review. The EPA has previously limited ethanol content to 10% (E10) for most vehicles. SEMA opposes E15 based on scientific evidence that it causes corrosion with incompatible parts. SEMA is seeking passage of federal legislation that would prevent the EPA from permitting E15 sales until the National Academies has conducted a study on how E15 may impact gas-powered vehicles.

Highway Bill/Auto Safety Measures

Congress passed a sweeping $120 billion package to fund highway construction and other transportation projects for the next two years. The spending is financed by the current $.184/gallon gas tax and $.244/gallon diesel tax along with $19 billion in general treasury funds. The new law funds state programs to reduce distracted and impaired driving and increase seat belt use. It also increases civil penalties for defective or noncompliant vehicles and equipment, although lawmakers dropped some of the more onerous provisions opposed by SEMA and the automakers, such as mandatory installation of event
data recorders.

Tire Fuel Efficiency

The NHTSA held a public workshop to gather additional information on how to implement a tire fuel-efficiency consumer information program. The program is required under a 2007 law. In 2010, the NHTSA established test procedures to be used by tire manufacturers when rating the fuel economy and safety and durability characteristics of replacement tires. However, the agency is still debating how to convey the information to consumers at the point of sale and online. The premise for the program is to allow consumers to compare ratings for different replacement tires and determine the effect of tire choices on fuel economy or the potential tradeoffs between tire fuel efficiency (rolling resistance), safety (wet traction) and durability (tread wear life). The 2007 law included a SEMA provision exempting tires that have been produced or imported in annual units of less than 15,000 and do not exceed 35,000 tires in total brand-name production.

Distracted Drivers

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation The NHTSA issued proposed guidelines intended to limit the risk of driver distraction from in-vehicle electronic devices that are not directly applicable to driving. The guidelines are similar to those already developed by the Alliance of Automobile Manufacturers and would be voluntary and apply specifically to original equipment installed in new light-duty vehicles. The electronic devices covered include “information, navigation, communications and entertainment” products that require drivers to take their eyes off the road and hands off the wheel. For example, certain functions, such as inputting an address into a navigation system, text messaging, dialing a phone number or browsing the Internet would be disabled until the vehicle is in park. Operations that require less than two seconds and one hand to achieve would be permitted. In the future, the agency intends to issue a guidance document for aftermarket products, such as smartphones, electronic tablets and other mobile communications devices. The NHTSA could also issue a third set of guidelines covering voice-activated control devices offered by the automakers and aftermarket.

Illegal HID Conversion Kits

The U.S. Customs and Border Protection (CBP) is impounding illegal imports of noncompliant high-intensity discharge (HID) conversion kits, light sources and ballasts. The CBP is working with the NHTSA to pursue enforcement. As reported by SEMA, the NHTSA has determined that it is impossible to produce HID conversion kits (converting a halogen system to HID) that would be compliant with the federal lighting standard, Federal Motor Vehicle Safety Standard (FMVSS) No. 108. The NHTSA is specifically concerned that HID conversion kits can produce excessive glare to oncoming motorists.

ESC Compliance

In 2007, the NHTSA issued FMVSS No. 126 requiring all motor vehicles weighing less than 10,001 lbs. have an electronic stability control (ESC) system. The rule was phased in over several years, taking full effect in September 2011. As of September 2012, the NHTSA requires aftermarket-modified vehicles that have ESC systems to maintain compliance with FMVSS 126. Over the past five years, SEMA and some of its member companies developed the Vehicle Dynamics Program to better understand how aftermarket vehicle modifications (suspension, brakes, wheels, tires, steering, etc.) may interact with ESC systems. The program is tailored to individual company needs and ranges from physical testing to Hardware-in-the-Loop and vehicle dynamics simulations.

Feds Update Motorcycle Brake Standard

The NHTSA updated the performance test standards for motorcycle brakes first adopted in 1972. The requirements are part of FMVSS No. 122, Motorcycle Brake Systems, which applies to both two-wheeled and three-wheeled motorcycles. The revised rule includes a more-stringent dry brake measure and new high-speed, wet-brake and heat-fade tests. The rule specifies minimum performance requirements for antilock brake systems when they are voluntarily installed on motorcycles. The revised rule also harmonizes the U.S. standard with a global technical regulation developed in 1998.

Brake-Throttle Override System

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation The NHTSA issued a proposed rule to update FMVSS No. 124 by requiring the installation of a brake-throttle override system on all new light-duty vehicles. The system would be triggered when the gas pedal and brake are simultaneously applied or when the accelerator control system is disconnected. It would not address instances in which the driver accidentally presses down on the accelerator rather than applying the brakes. Once the rule is finalized, the automakers will have two or three years to install the equipment.

Global Rule for Auto Glass

The NHTSA has proposed changes to FMVSS No. 205, Glazing Materials, so that is will conform with a global glazing standard. The changes modernize the test procedures for tempered glass, laminated glass and glass-plastic glazing used in front and rear windshields and side windows. According to the agency, the changes include an upgraded fragmentation test for curved tempered glass and a new procedure for testing an optical property of the windshield at the angle of installation to better reflect real-world driving conditions. Aftermarket replacement glazing would need to meet the revised FMVSS No. 205, except glazing produced for vehicles manufactured prior to November 1, 2006. In that case, the manufacturer has the option of complying with the previous standards, FMVSS No. 205(a).

Corporate Average Fuel Economy (CAFE) Standards

The federal government issued final regulations implementing an agreement reached with auto industry representatives and California regulators on fuel economy and carbon dioxide (CO2) emissions limits for model-year ’17–’25 vehicles. The fleet-wide average will rise from 34.5 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 that would also preserve affordability, vehicle choice and jobs.

Greenhouse Gases

A federal court upheld an EPA finding that greenhouse gases contribute to global warming and threaten public health. The court ruling allows the EPA to limit emissions of carbon dioxide (CO2) and other greenhouse gases through new regulations for vehicle tailpipe emissions and large stationary source emitters. For tailpipe emissions, the EPA is regulating CO2 through the CAFE standards. The EPA also intends to regulate the largest stationary source emitters (power plants, refineries, iron and steel mills, pulp and paper mills, etc.) by requiring them to obtain permits that track emissions and to potentially install the best available control technology.

Gas Pump Vapor Recovery Nozzles

The EPA is phasing out a rule that certain gasoline stations install vapor-recovery nozzles on gas pumps. The pollution-control devices have been required since 1994 in about 40 ozone non-attainment areas across the country. Individual states will still have authority to mandate the nozzles. The EPA concluded that the controls are unnecessary, since about 70% of all U.S. vehicles are now equipped with onboard vapor recovery systems, including all vehicles manufactured after 2006. According to the EPA, 31,000 affected gas stations in mostly urban areas will save $3,000 apiece once the ruling is implemented.

Chrome Emissions

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation The EPA has established new emissions standards for chromium electroplating and anodizing operations. For decorative chrome plating, the EPA has lowered the emissions levels for existing sources from 0.01 milligrams per dry standard cubic meter (mg/dscm) to 0.007 mg/dscm. New sources will be required to meet a 0.006 mg/dscm limit. The EPA also adopted a reduction in the bath surface tension and has banned the use of perflouroctyle sulfonates, a substance that reduces the bath surface tension. SEMA has questioned the need for additional regulations at a time when, according to the EPA’s own data, industry’s emissions have been reduced by 99.7% since 1995. The plating and finishing industry’s total U.S. emissions are less than 1% of all chromium emissions from various other sources.

State Sales Tax

Legislation was introduced in Congress that would require companies selling goods via the Internet and catalogs to collect sales tax in the same manner as brick-and-mortar retailers. The legislation would allow states to force retailers to collect sales tax from consumers even when the companies otherwise have no physical presence in that state. The legislation provides a “small-seller exemption” that varies from $500,000 to $1 million in total sales or less. Under a 1992 U.S. Supreme Court decision, states cannot currently force retailers to collect use taxes unless the company has a physical presence in the state.

Bonus Depreciation

SEMA urged Congress to extend the 100% bonus depreciation through 2012. The depreciation had been at 100% since 2010 but dropped to 50% on January 1, 2012. Lawmakers considered but did not pass legislation to implement the depreciation, which would have allowed businesses to write off 100% of the cost of new equipment in the first year rather than depreciating the cost over multiple years. SEMA contends that the bonus depreciation encourages companies to invest in newer, more efficient equipment, spurs sales and creates jobs.

Small Public Companies

President Obama signed into law a bipartisan bill designed to remove regulatory barriers for companies going public and seeking to attract investors. The SEMA-supported Jumpstart Our Business Startups (JOBS) Act makes it easier for small companies to comply with Securities and Exchange Commission (SEC) rules when securing outside capital investment. Companies will be able to file initial public offerings more quickly, and the new law raises the threshold number of shareholders triggering SEC registration from 500 to 2,000 and increases the offering threshold from $5 million to $50 million in shares. Companies can raise capital using the Internet and social media so long as the website is registered with the SEC and investors are informed about a company’s financial condition and shareholder risks.

Regulatory Burdens

SEMA-supported legislation was introduced in Congress to reduce the cost of burdensome regulations on business owners and job creators. The Regulatory Accountability Act of 2011 would require federal agencies to conduct a cost-benefit analysis when issuing new rules. Although the law already permits such analysis, the legislation would overturn the prohibition contained in other laws, such as the Clean Air Act, Motor Vehicle Safety Act, Occupational Health and Safety Act and Endangered Species Act. Agencies would generally be required to adopt the least costly approach to achieve policy goals established by Congress. The House of Representatives passed the bill before Congress adjourned for the year.

Merging Federal Agencies

President Obama asked Congress for authority to reorganize the federal government, which had been granted to former presidents through the ’80s. Congress would have an up-or-down vote on each proposed change. The intent is to consolidate functions and reduce duplication in the federal workforce. To start, the White House proposed merging the Commerce Department and five other agencies, including the Small Business Administration.

Crash Parts Legislation

A U.S. House Judiciary Subcommittee held a hearing on a bill that would allow companies to sell collision-repair parts without infringing a design patent once a vehicle has been marketed for two-and-a-half years. Under current law, a design patent covers the ornamental design for an object having practical utility for a 14-year term. At issue is the recent practice of many automakers to obtain design patents for individual vehicle parts associated with collision repairs, such as fenders, lamps, hoods, bumpers and grilles. Historically, the auto companies have sought design patents for the car’s overall design rather than individual parts. A design patent allows a company the right to exclude others from copying the product or, alternatively, to license the rights. The automakers are seeking to protect millions of dollars in investments to develop and market the parts. The collision repair industry argues that the patents eliminate competition and raise consumer repair costs and insurance premiums.

Employee Rights Poster

A U.S. District Court has temporarily postponed a rule issued by the National Labor Relations Board instructing employers to display an 11x17-in. poster informing workers of their right to unionize and bargain collectively. The rule was scheduled to take effect in April but is on hold while the court reviews its legality. The rule is widely opposed by business groups, including SEMA, over concerns that it unfairly promotes unionization.

Steel Wheels From China

Aftermarket Parts Laws, Aftermarket Parts Regulation, Auto Legislation, Federal Regulation The U.S. International Trade Commission determined that American industry was not being threatened with injury from certain Chinese steel wheels that are being sold at less than fair value in the U.S. Therefore, no duties will be imposed despite the fact that another government agency had calculated dumping margins of 45% to 194% and unfair subsidies from 26% to 38%. The subject wheels range from 18 to 24.5 in. in diameter and are typically used in commercial vehicles (trucks, buses, trailers, etc.), but passenger car wheels within that size range also fell within the scope of the investigation.

Forest Service Planning Rule

The U.S. Forest Service updated its Planning Rule, which provides guidance and directives for managing the country’s 155 national forests and 20 grasslands encompassing 193 million acres. The courts have rejected previous versions of the Planning Rule in recent years. SEMA joined with a number of other organizations representing the off-road community in opposing the latest version on grounds that it does not adequately protect access for motorized recreation and will be a source of ongoing litigation. The issue is of importance to SEMA-member companies that market products to the off-road community based on the consumers’ ability to have access to Forest Service roads and trails. Forest managers will now begin applying the rule’s guidelines as they gradually update management rules for each individual forest and grassland. 

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