SEMA News—January 2012

LEGISLATIVE AND TECHNICAL AFFAIRS
By Steve McDonald

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

California Air Resources Board:

Despite being approved by bipartisan and overwhelming majorities in the California Assembly and Senate, legislation that would have given small-business owners a voice on the California Air Resources Board (CARB) was vetoed by Governor Jerry Brown. Introduced by Assemblymember Curt Hagman, who represents the Diamond Bar district in which SEMA headquarters is located, the bill would have created a requirement for one CARB member to have been a small-business owner within the past five years. CARB is a department within the California Environmental Protection Agency that is charged with the task of attaining and maintaining healthy air quality, protecting the public from exposure to toxic air contaminants and issuing air-pollution rules and regulations. The SEMA-supported measure recognized that the regulations issued by the Board directly affect small businesses and would have ensured that the rights of small-business owners were represented.

New York Restoration/Customization Shops:

SEMA is working with restoration and customization shop owners in New York on legislation to exempt these facilities from the scope of the state’s Motor Vehicle Repair Shop Act. Specifically, the bill would exclude shops whose activities primarily consist of restoring, rebuilding or customizing specialty motor vehicles or motor vehicles at least 25 years old. The purpose of the bill is to differentiate businesses that restore and customize specialty collector’s automobiles from typical motor-vehicle repair shops. According to the bill’s sponsor, “These types of businesses do not repair vehicles used for daily transportation, but rather restore classic cars close to their original look and feel.”

Pennsylvania Street Rods:

   
   
Legislation has been reintroduced in Pennsylvania to amend the definition of street rod to include materially altered vehicles 40 years old and older. Currently, only vehicles of the ’48 model year or older (and reproductions of these vehicles) can qualify for this specialty designation. The bill has been referred to the House Transportation Committee for consideration.

SEMA Action Network:

The SEMA Action Network (SAN) announced that it had launched a streamlined website, www.semasan.com, to make it easier than ever for SAN members to find the information they need to help protect their passion. The intent with the new website design is to make the comprehensive set of tools and resources more readily accessible to the thousands of vehicle enthusiasts who rely on the SAN daily for updates on threats and opportunities facing the hobby. The SAN is a nationwide partnership between enthusiasts, vehicle clubs and members of the specialty automotive parts industry who have joined forces to promote hobby-friendly legislation and oppose unfair laws. With more than 60,000 North American members, the SAN is the premier organization defending the rights of vehicle enthusiasts. SAN is free to join, with no obligations or commitments.

Federal Update 

Low-Volume Vehicle Production:

Representative John Campbell (R-CA) introduced a bipartisan bill in the U.S. House of Representatives to enable low-volume car manufacturers to provide a range of specialty vehicles for customers nationwide. The legislation directs the National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) to establish a regulatory structure to facilitate the production of these cars. SEMA worked with Rep. Campbell to craft the “Low Volume Motor Vehicle Manufacturers Act” (H.R. 3274). Vehicles produced by low-volume manufacturers include replica street rods, customs and sports cars that are primarily used in exhibitions, parades and for occasional transportation. The U.S. currently has just one system for regulating cars, which is designed for companies that mass-produce millions of vehicles. The legislation creates an alternative regulatory framework for American manufacturers producing 1,000 or fewer vehicles a year. This approach acknowledges the unique circumstances associated with limited-edition cars. Vehicles produced would meet current emissions standards. Companies would be permitted to install clean engines already certified by another manufacturer.

Bonneville Salt Flats:

   
   
SEMA and the Save the Salt Coalition, a diverse group of racing enthusiast organizations, urged the Bureau of Land Management (BLM) to require a mandatory salt-replenishment program of the Bonneville Salt Flats (BSF). For decades, the BSF has been shrinking as salt brine was transferred to an adjoining mining operation to remove potash. A prototype program from 1997 to 2002 demonstrated that the remaining salt brine could be pumped back onto the salt flats to stabilize the landmark and its underlying aquifer. The BLM allowed the program to expire. The Coalition is working with the mine owner to reinstitute the program, subject to BLM’s approval. The Coalition will also be pursuing supplemental salt-replenishment programs to be implemented by the racing community and the BLM. The BSF is a registered National Historic Place managed by the BLM. Hundreds of speed records have been set at this unique geological site over the past 100 years.

Warranty Denials:

SEMA urged the Federal Trade Commission to expand its rules on warranty denials to clarify vehicle manufacturer responsibilities and consumer protections. The Federal Trade Commission is reviewing its rules and guidance documents on the Magnuson-Moss Warranty Act, a 1975 federal law that governs consumer product warranties. The Federal Trade Commission issued a consumer alert in 2010 confirming that it is illegal to void a warranty or deny coverage based on the mere presence of an aftermarket part. SEMA recommended that the Federal Trade Commission issue a supplemental alert to specifically reference installation of specialty parts, since the 2010 alert generally described straight repair/maintenance issues. SEMA also recommended that the Federal Trade Commission’s definition of “consumer product” be clarified to include specialty parts. SEMA urged that auto dealerships be required to put in writing why a warranty is being denied. While the law requires that consumer warranties be written in a single, clear and easy-to-read document, there is no corresponding requirement for warranty denials. Under the law, it is the dealership’s obligation to diagnose a problem and demonstrate that the aftermarket part caused the damage or defect.

Ethanol Content in Gasoline:

   
   
A SEMA-supported bill has been introduced in the U.S. House of Representatives requiring the EPA to seek independent scientific analysis on the effects of 15%-blend ethanol gasoline (E15) on vehicles and engines. The review would include an evaluation of the short- and long-term environmental, safety and performance effects of E15 on both on- and off-road vehicle engines. Last January, the EPA decided to allow the use of E15 in vehicles manufactured after 2001, based solely on a limited study by the U.S. Department of Energy. Ethanol increases water formation, which can then create formic acid and corrode metals, plastics and rubber. SEMA opposes the introduction of E15 due to concerns that corrosion will harm automobiles of all ages, including special-interest collector and historic vehicles. The EPA has no procedure in place to ensure that misfueling does not occur nor any plan for ensuring that regular gasoline continues to be available for older vehicles.

State Sales Tax:

Bipartisan legislation has 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 Marketplace Equity Act (MEA) is similar to the Main Street Fairness Act introduced earlier this year. Both bills 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 Main Street Fairness Act requires states to participate in the Streamlined Sales Tax Agreement, which sets uniform tax rules. To date, 24 states are full participants. In contrast, the MEA would set minimum federal rules and then allow states flexibility in establishing individual rules. Both bills authorize a “small-seller exemption.” The current threshold for the Main Street Fairness Act is $500,000 and below. The MEA bill’s threshold is less than $1 million in total sales or less than $100,000 in sales in a particular state. 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 (“nexus”).

Regulatory Burdens:

SEMA-supported legislation has been introduced in both the U.S. House and Senate 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 a few laws already permit such analysis, the legislation would overturn the prohibition contained in other laws, such as the Clean Air Act, the Motor Vehicle Safety Act, the Occupational Health and Safety Act and the Endangered Species Act. The data and evidence gathered in the analysis would be subject to judicial review. Agencies would generally be required to adopt the “least costly” approach to achieving policy goals established by Congress. The House Judiciary Committee has approved the House bill.

Illegal HID Conversion Kits:

U.S. Customs and Border Protection (CBP) is impounding illegal imports of noncompliant high-intensity discharge (HID) conversion kits, light sources and ballasts. CBP is working with the National Highway Traffic Safety Administration (NHTSA) to pursue enforcement. As reported by SEMA for a number of years, 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 No. 108. The NHTSA is specifically concerned that HID conversion kits can produce excessive glare to oncoming motorists.

State Automotive Enthusiast Leadership Caucus:

   
   
Members of the State Automotive Enthusiast Leadership Caucus gathered again in November to meet with SEMA government affairs staff and enjoy the 2011 SEMA Show in Las Vegas.

From top row left: Representative Terry Calloway (Kansas), Assemblyman Richard Carrillo (Nevada), Assemblyman Curt Hagman (California), Representative Gordon Hendrick (Montana), Assemblyman John Oceguera (Nevada), Senator Andy Sanborn (New Hampshire), Assemblyman Kevin Jeffries (California), Senator Ted Gaines (California). Bottom row from left: Senator Mark Manendo (Nevada), Representative Elaine Bowers (Kansas), Representative Nancy McLain (Arizona), Representative Gail Finney (Kansas), Senator Mo Denis (Nevada), Assemblyman Tony Mendoza (California), Representative Joe Pitre (New Hampshire), Representative Laurie Sanborn (New Hampshire), Senator Peter Bragdon (New Hampshire), Delegate Gary Howell (West Virginia).

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