LEGISLATIVE AND TECHNICAL AFFAIRS
Law and Order
2017: The Year in Review
The laws and regulations that govern how SEMA members do business have a continuous impact on the way automotive specialty-equipment products are made, distributed and marketed. The charge of the SEMA government affairs office is to stay on top of all relevant state and federal legislation and regulations and advocate for industry positions to ensure the best possible outcome for our membership. The following are just a few examples of critical legislative/regulatory successes the SEMA government affairs team was involved in this year.
California Proposition 65: Governor Jerry Brown signed a pro-business bill into law to amend the state’s Proposition 65 law. The law requires businesses to warn California consumers if their products contain threshold amounts of chemicals causing cancer or reproductive harm. Companies will now be able to access supporting information submitted by another entity to file a Proposition 65 claim against it. For more information, visit www.sema.org/prop65.
Connecticut Antique Vehicles: A measure to increase the age requirement of an antique, rare or special-interest motor vehicle from 20 years old or older to 30 years old or older was amended to remove all restrictions to those hobby vehicles. The amendments also removed language that would have increased the maximum property tax assessment on any antique, rare or special-interest motor vehicle from $500 to $1,000. As introduced, the bill provided that those vehicles no longer eligible for antique, rare or special-interest motor-vehicle status would be valued at the same percentage of their actual valuation, thereby increasing the property tax.
Delaware Emissions: Legislation was signed into law by Governor John Carney to extend the emissions-inspection exemption for new cars from five to seven model years. Emissions inspections are required for vehicles being registered or titled for the first time in Delaware and then biennially based on their model year (during registration renewals).
Hawaii Exhaust Noise: A legislative effort to provide that no motor-vehicle muffler or exhaust system shall emit a noise level greater than 60 decibels did not receive committee consideration this year but is eligible for consideration in 2018. The bill exempted those mufflers or exhaust systems installed as original equipment. Among other things, the measure provided no test by which vehicles would be tested.
Hawaii Fee Increases: Legislation to increase annual registration fees, increase the gas tax and increase the motor-vehicle weight tax was not given committee consideration this year. The bill increased the annual registration fee from $45 to $75, increased the weight tax by $.01 per pound, and increased the gas tax from $.16 to $.22.
Indiana Exhaust Noise: A bill to require all motor vehicles to be equipped with a factory-installed or equivalent aftermarket muffler died when the legislature adjourned for the year. Indiana already requires that exhaust systems be “in constant operation to prevent excessive or unusual noise or smoke.” Among other things, the bill failed to recognize that factory replacement parts or comparable parts are not always readily available for all motor vehicles and would have made it difficult for consumers to replace factory exhaust systems with more durable, better-performing options.
Kentucky Headlamps: A measure was signed into law by Governor Matt Bevin to allow headlamps that emit a slight blue tint if the headlamps were installed by the vehicle manufacturer as original equipment or the aftermarket headlamps meet federal motor-vehicle safety standards.
Kentucky Mileage-Based User Fee: A House Concurrent Resolution to create a mileage-based transportation funding task force to determine the feasibility of implementing a road user fee instead of the gas tax died when the legislature adjourned. The resolution would have required the Mileage-Based Transportation Funding Task Force to submit its findings, recommendations and any proposed legislation by December 1, 2017.
Kentucky OHVs: Legislation was signed into law by Governor Matt Bevin to promote and fund outdoor recreation and tourism development by establishing the Kentucky Mountain Regional Recreation Authority (KMRRA). Under the new law, the state will establish, maintain and promote a recreational trail system throughout the KMRRA to increase economic development, tourism and outdoor recreation for residents and visitors. The law will provide recreational opportunities for, among other things, all-terrain vehicle riding, motorcycle riding, rock climbing, off-highway vehicle driving and pleasure driving.
Maine Mileage-Based User Fee: A proposal to establish a task force to guide the development of a mileage-based user fee pilot program has been amended to remove reference to the user fee. The revised bill seeks to establish the Commission to Study Transportation Funding Reform, charged with studying how to reform and supplement funding for transportation infrastructure to promote equity, sustainability and predictability. Under the bill, the commission is required to report its findings and recommendations, including suggested legislation, to the Joint Standing Committee on Transportation no later than December 6, 2017.
Montana Single Plate: Legislation was signed into law by Governor Steve Bullock to provide for the issuance of a single rear-mounted license plate for certain motor vehicles. Under the new law, “if a person is not able to comply with the requirement that a front license plate be displayed because of the body construction of the motor vehicle, the person may submit to the Highway Patrol an application for a waiver along with a $25 inspection fee.” The law requires that the waiver certificate be carried in the motor vehicle and available upon demand by law enforcement. Vehicle owners are not obligated to apply for the waiver or pay the fee.
Nevada Classic Vehicles: Poorly drafted legislation to alter the registration requirements for “classic” vehicles was withdrawn by the bill’s sponsor. Under the measure, the holder of a classic-vehicle license plate seeking an emissions-inspection exemption would have been required to verify the odometer reading of the vehicle. The verifications would have been completed for a fee by an approved inspector to determine that the vehicle was driven less than 5,000 miles the previous year. The bill also required proof that the vehicle was covered by only a collector motor vehicle liability policy. SEMA will host a stakeholders meeting in the state later this year to discuss practical methods by which the law can be applied to better target abusers of the classic plate.
Nevada Vintage Plates: Legislation was signed into law by Governor Brian Sandoval to extend the model-year vehicles eligible to receive vintage license plates from not earlier than 1942 to not later than 1961. Vintage plates are produced by the state to appear the same as the plates that were issued in Nevada during the year of manufacture of the vehicle. The fee for vintage plates is $35, and they are renewable upon payment of $10.
New Hampshire Road Usage Fee: A bill to establish a road usage fee for all state motor vehicles with a miles-per-gallon rating of more than 22.5 was not considered this year. The bill would have required that the fee be collected at the time of annual registration of the vehicle. In addition to creating privacy concerns, road usage fees penalize national efforts to create a more fuel-efficient vehicle fleet by taxing drivers based on vehicle mileage. As gas tax revenues decrease due to hybrid and electric vehicle ownership, states are looking for new sources of funding for pet projects.
North Dakota OHVs: A bill was signed into law by Governor Doug Bergum to allow out-of-state OHVs that are exempt from a registration fee in the state to purchase a public trails and lands access permit. Under the new law, the cost of the permit will be $10 per year, and the permit will be displayed prominently on the OHV. In North Dakota, OHVs exempt from registration fees include those validly licensed in another state and which have not been within the state for more than 30 consecutive days; those used exclusively on private lands; and those used exclusively in organized track racing events.
Oregon Military Vehicles: A measure has been signed into law by Governor Kate Brown to allow a military vehicle the opportunity to be registered as a “vehicle of special interest.” Included in the definition would be a “high mobility multipurpose wheeled vehicle originally manufactured for military use.” Owners may apply for the special-interest vehicle registration for a one-time fee of $81 and a single plate for a one-time fee of $12. Special-interest vehicles may be used only for exhibitions, parades, club activities and similar uses.
Oregon Old-Car Tax: Legislation that would have required registered owners of vehicles 20 years old and older to pay a $1,000 “impact tax” every five years was quickly killed after an onslaught of objections were lodged by vehicle owners in the state. Under the bill, vehicles registered as antiques would have been exempted from the tax. House Speaker Tina Kotek’s office confirmed with SEMA that the bill would not be considered and was dead on arrival.
Virginia Antique Tax: Governor Terry McAuliffe signed into law a measure to exempt a motor vehicle, trailer or semitrailer that is licensed as an antique from the imposition of local license tax and fees. Virginia law defines an antique motor vehicle as “every motor vehicle which was actually manufactured or designated by the manufacturer as a model manufactured in a calendar year not less than 25 years prior to January 1 of each calendar year and is owned solely as a collector’s item.”
West Virginia Ethanol: A West Virginia House resolution was approved supporting the passage of legislation introduced in the U.S. House of Representatives to roll back ethanol fuel requirements. The resolution recognizes that ethanol can cause metal corrosion and dissolve certain plastics and rubbers, especially in older motor vehicles that were not constructed with ethanol-compatible materials. The resolution also acknowledges that pending U.S. House legislation would prohibit the sale of gasoline containing 15% ethanol in order to meet artificial Renewable Fuel Standards deadlines.
West Virginia Exhaust Systems: A bill that would have made it a criminal offense to disturb the peace with “noise from an exhaust system of any vehicle that is not equipped or constructed to prevent any disturbing or unreasonably loud noise” died when the legislature adjourned for the year. Under the bill, vehicle owners convicted of a violation would have been fined up to $1,000 per occurrence, confined up to six months in jail, or both. Current law allows only a muffler originally installed by the manufacturer or an equivalent. The law provides no objective noise measurement standard for exhaust systems that would benefit consumers, industry and police officers charged with enforcing the law. The term “disturbing or unreasonably loud” is highly subjective and open to wide interpretation.
West Virginia License Plates: Legislation to require registration plates on the front and back of all motor vehicles died when the legislature adjourned for the year. The bill was not given consideration by the Senate Transportation and Infrastructure Committee. In addition to increasing costs, the measure would have wasted valuable resources and brought West Virginia into conflict with other states that are moving to a single-plate requirement.
West Virginia Light Bars: Legislation was signed into law by Governor Jim Justice to eliminate the requirement that roof-mounted off-road light bars be covered when vehicles are operated on roads and highways. The bill also raises the number of permissible auxiliary passing lamps and auxiliary driving lamps from one to two. The new law requires that light bars be turned off when vehicles are being operated on roads and highways, and it promotes the fact that aftermarket lighting systems are manufactured to improve off-road safety.
West Virginia OHV Areas: Governor Jim Justice signed into law legislation to require that the state create a searchable digital road map that indicates the condition of public roads. The new law requires that a digital road map indicate whether public roads are unpaved and unimproved, unpaved and improved, unlined and paved, or lined and paved. The digital road map will also indicate the types of vehicles that may use each road, including fullsize vehicles and off-highway vehicles such as all-terrain vehicles, utility-terrain vehicles, motorcycles and off-
National Collector Vehicle Appreciation Day: The eighth annual Collector Car Appreciation Day (CCAD) took place on Friday, July 14, 2017. The United States Senate approved a resolution to focus attention on the vital role automotive restoration and collection plays in American society. Thousands of Americans gathered at car cruises, parades and other events to celebrate our nation’s automotive heritage.
Replica Vehicle Law: A SEMA-supported law enacted in 2015 will allow small auto manufacturers to sell completed replica cars. Those are vehicles that resemble cars manufactured at least 25 years ago. The companies will be able to produce up to 325 turnkey replica vehicles (per company) in the United States and 5,000 worldwide under a simplified regulatory system. Until now, the federal government’s regulatory system did not differentiate between a company producing millions of vehicles and a business producing a few custom cars. The National Highway Traffic Safety Administration, the U.S. Environmental Protection Agency and the California Air Resources Board are still working on regulations to implement the law, which was scheduled to take effect in 2017.
Outdoor Recreation Industry Roundtable: SEMA has joined with other organizations representing off-roading, camping, fishing, boating, hiking, archery and other sports to form the Outdoor Recreation Industry Roundtable (ORIR). Its primary mission is to spotlight the economic value of outdoor recreation and pursue federal policy reforms for rebuilding and expanding the nation’s recreation-related infrastructure. SEMA and other ORIR members are working with lawmakers on Capitol Hill and federal agency officials to identify ways to assist in improving visitor experiences on the nation’s public lands and waters. This includes public-private partnerships to reduce a multi-billion-dollar maintenance backlog, modernizing campsites, extending service hours and seasons, and implementing electronic fee collection.
Tax Reform: While lawmakers in both political parties want to simplify the tax code and reduce personal and corporate rates, reaching an agreement on the details is a challenge. Much of the groundwork was laid in recent years as the House Ways and Means and Senate Finance Committees conducted studies and prepared recommendations. Nevertheless, differences of opinion on how to approach reform need to be bridged. The primary challenge is eliminating enough tax breaks to match lost revenues from tax-rate reductions. If lawmakers are unable to reach an agreement on major issues, they may seek to simply reduce corporate tax rates while continuing to debate comprehensive reform. For small businesses, critical issues include retaining the R&D tax credit (which was made permanent in 2015) and allowing companies to deduct expensing in the first year.
Regulatory Reform: Congress and the White House have been addressing regulatory reform in three ways: through existing law, new legislation and federal agency actions. Under the Congressional Review Act, Congress has authority to pass a resolution with a simple majority vote to reject any major rulemaking issued in the previous six months. Congress used the tool to repeal 14 Obama administration regulations, including the BLM Planning 2.0 rule, which gave the federal government more authority in land-use decisions, and a Department of Labor regulation that provided a five-year window for citing companies that did not record worker injuries during the first six-month citation period. Congress is also pursuing reform legislation, and the House has passed the Regulations from the Executive in Need of Scrutiny (REINS) Act (which would require congressional approval of regulations before they can take effect) and the Regulatory Accountability Act (which would require federal agencies to identify the objective of a proposed rule and choose the lowest-cost alternative). It may be difficult to pass these bills in the Senate, however, since a 60-vote super-majority is required. The Trump administration has also directed all federal agencies to review existing regulations and determine whether any should be rescinded or modified. Given the rulemaking process, it will take months, if not years, to implement any recommendations.
E15/Ethanol: A SEMA-supported bill has been introduced to cap the amount of ethanol that can be blended into conventional gasoline at 10% and prohibit the sale of E15 (gasoline with 15% ethanol). The bill would eliminate the Renewable Fuel Standard’s (RFS) mandate that 15 billion gallons of corn-based ethanol be blended into the U.S. fuel supply each year. While the RFS was intended to reduce the nation’s dependency on foreign oil, the 2007 law has translated into ever-increasing corn production so that the ethanol byproduct can be blended into gasoline. The EPA has turned to sales of E15 to achieve the law’s artificial mandate. Ethanol—especially in higher concentrations such as E15—can cause metal corrosion and dissolve certain plastics and rubbers in automobiles produced before 2001 that were not constructed with ethanol-resistant materials. SEMA has joined with more than 50 other organizations to support the bill’s passage. Congress is not expected to pass legislation until the “blend wall” has been reached—the point at which no more ethanol can be blended without forcing higher blends such as E15 and above into the marketplace. The legislation is divided more on whether the politicians represent corn-growing regions rather than political party affiliation.
Autonomous Vehicles: The U.S. House of Representatives approved a bill to provide federal oversight for highly automated vehicles (HAVs). The legislation directs the U.S. Department of Transportation (DOT) to complete research on the most cost-effective methods for informing consumers about the capabilities and limitations for self-driving vehicles and make such terminology consistent with industry standards such as the Society of Automotive Engineers (SAE) International Recommended Practice Report J3016. The legislation is intended to create a national approach rather than a patchwork of state rules governing the safety of HAVs as it relates to design, performance, testing and deployment of such vehicles. The U.S. Senate is considering the bill. In a separate action, the DOT announced that it will pursue voluntary guidelines for HAVs rather than enforceable rules to provide a flexible approach while driverless technology evolves. The DOT would still retain authority to recall any HAVs found to be unsafe. The automakers are incorporating sensors, software and other mechanisms to facilitate vehicle-to-vehicle and vehicle-to-infrastructure communications.
Overtime Pay for Salaried Workers: A federal court overturned a 2016 rule issued by the U.S. Department of Labor (DOL) that greatly expanded the number of salaried employees who are required to be paid time-and-a-half for overtime work. The DOL rule raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemption to $47,476 per year. The rule was scheduled to take effect on December 1, 2016, but the same federal court placed it on hold in 2016 pending review—meaning that now the old threshold remains in effect. Management, administrative and professional employees who earn a salary of more than $23,660 per year are exempt from receiving overtime pay when they work more than 40 hours per week. The rule impacts an estimated 4.2 million salaried workers. Some employers had already increased workers’ salaries or adjusted work schedules in anticipation that the 2016 rule would take effect. The DOL intends to revisit the issue and has requested public feedback on issues addressed in the rule, such as whether the current threshold should be updated for inflation and whether that threshold should consider other factors such as employer size, industry and regional cost-of-living.
Flexible Overtime: The U.S. House of Representatives passed the Working Families Flexibility Act, which would allow private-sector employers to provide their workers the option of receiving an hour-and-a-half of comp time or time-and-a-half pay for overtime hours worked. The comp time option would be subject to a collective bargaining agreement or the consent of affected employees. A companion bill has been introduced in the U.S. Senate, but there has been no action to date.
Patent Trolls: The U.S. Supreme Court ruled that patent troll suits are to be filed in the state in which the alleged infringer is incorporated or has its place of business. Courts had previously allowed patent infringement suits to be filed in any district where the defendant does business. The ruling should reduce the number of suits that are filed in areas of the country deemed to be friendly forums for the plaintiff. At issue are frivolous lawsuits asserting that a company or individual is infringing a patent. The entity making the assertion is usually seeking licensing fees but not actually manufacturing a product or supplying services. The allegations are frequently associated with common technologies or business practices rather than a single patent. The lawsuits have exploded in recent years, costing small and large businesses billions of dollars. Many companies have settled rather than fight the cases, allowing the patent trolls to secure funds to pursue
National Monuments: Last April, President Trump ordered the U.S. Department of Interior (DOI) to review up to 40 national monument designations dating back to 1996 and recommend whether any should be rescinded, resized or modified. The DOI recommended that 10 national monuments be modified, including a size reduction for four monuments: Grand Staircase-Escalante (1.88 million acres), Bears Ear (1.35 million acres), both in Utah, Nevada’s Gold Butte (300,000 acres) and Washington’s Cascade-Siskiyou (87,000 acres). President Trump will now consider the recommendations. At issue is the 110-year-old Antiquities Act, a law that gives the president authority to preserve land with significant natural, cultural or scientific features. Hundreds of millions of acres have been set aside over the decades, leading many to question whether the footprints are larger than necessary. SEMA supports the current review along with legislation in the U.S. Congress to curtail the President’s power to unilaterally designate national monuments by requiring their approval by Congress and the impacted state legislature(s). The issue is consequential, since national monuments automatically prohibit new roads or trails for motorized vehicles and require a new land-management plan to be drafted that could lead to more road closures.
California OHVs: The U.S. House of Representatives passed legislation that requires the BLM to reopen the 75,000-acre Clear Creek National Recreation Area (NRA) in California’s San Benito and Fresno Counties for recreational use, including OHV access. The bill would provide OHV access to more than 240 miles of public trails. Clear Creek NRA was closed in 2008 due to potential asbestos exposure concerns. However, an independent risk-assessment study requested by the California Off-Highway Motor Vehicle Recreation Commission concluded that management and operational strategies could be effectively employed to allow OHV use without exposing the public to unacceptable risks. The legislation has been referred to the U.S. Senate Energy and Natural Resources Committee.
Nitrous-Oxide Shortage: Deliveries of nitrous oxide struggled to return to normal for much of the year following a 2016 explosion that destroyed a production plant in Florida. There are only a small number of plants in the United States that produce the gas. The shortages were expected to gradually disappear, but suppliers and racers had difficulty purchasing nitrous in many local areas throughout the spring and summer. Adjustment of the nationwide supply chains is expected to be resolved by the end of the year. SEMA has urged manufacturers to increase nitrous-oxide production for racing, which also competes with nitrous use demands in the medical and food sectors.