Law and Order
SEMA News—March 2011
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.
Indiana Antiques: SEMA-supported legislation to provide additional accommodations for antique vehicle owners has been introduced in the Indiana Senate. Among other things, the bill authorizes the use of blue dot taillights and provides emissions exemptions for antique vehicles without condition if they are actually manufactured, or designated by the manufacturer as a model manufactured, 25 years earlier. The measure also incorporates SEMA-model legislation to prohibit local governments from adopting zoning ordinances that restrict the hobby of automobile restoration and collection. Under the bill, inoperable vehicles, including parts cars stored on private property, would only require screening from ordinary public view.
|As of October 13, 2010, Iowa street rods, replicas and specially constructed vehicles are no longer required to be equipped with fenders and bumpers. Previous Iowa inspection requirements for these specialty cars specified that all vehicles were to be equipped with fenders and required a front and rear bumper. In altering the fender and bumper specifications, regulators signaled their understanding that street rods and special-interest vehicles are driven less frequently than daily drivers (about one-third the miles each year) and should, therefore, not be bound to conventional equipment requirements.|
Nevada Emissions Exemption:
|SEMA is supporting Nevada legislation that provides an emissions inspection exemption to antiques, classic vehicles, street rods and classic rods if owners certify to the DMV that the vehicle was not driven more than 2,500 miles the previous year during the initial registration. Current law requires an initial inspection evaluation of these vehicles in order to obtain the first emissions exemption and a certification for each subsequent registration period the owner wishes to be exempt from inspection.|
New York Street Rods/Customs: SEMA-model legislation to create a vehicle titling and registration classification for street rods and custom vehicles has been reintroduced in the New York State Senate. The bill 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. Under the bill, kit cars and replica vehicles will be assigned a certificate of title bearing the same model-year designation as the production vehicle they most closely resemble. The measure also provides for a one-time registration fee of $23, creates special license plates for street rods and custom vehicles and permits the use of blue dot taillights.
Pennsylvania Registration Fees: SEMA-opposed legislation that threatened to increase fees for all vehicle owners was not considered at the end of the 2010 legislative session. Under the proposed bill, general passenger cars would face a $13 increase in their registration fee, while the one-time registration fee for antique, classic and collectible vehicles would have gone up by $27 (from $75 to $102) and the initial registration fee for street rods by $31 (from $20 to $51). Additionally, these fees would have increased again each subsequent year following enactment. This proposal could return in 2011.
Tax Cut Compromise: An agreement to extend the 2001 and 2003 tax cuts for two years reached by President Obama and Republican leaders in December was passed by Congress and signed into law. The SEMA-supported law includes a retroactive extension of the research and development tax credit through 2011, a two-year reinstatement of the estate tax at 35% after the first $5 million, a 100% write-off on capital expenses for businesses during 2011 (up from 50%), and a one-year reduction in the worker’s Social Security payroll tax from 6.2% to 4.2%.
1099 Reporting Rule:
|The last Congress failed to remove the 1099 reporting requirement which was included as a revenue-raising provision within the health care law. There was widespread support to repeal the rule during a series of votes in November, but Senators could not agree on how to fund the lost revenues. The rule will require businesses to issue 1099 reporting forms to all vendors from whom they buy more than $600 of goods or services in any year, beginning in 2012. SEMA continues to work with other organizations to repeal the provision in 2011 and key lawmakers have expressed their intent to accomplish the task.|
|SEMA asked the U.S. Environmental Protection Agency (EPA) to suspend the partial waiver issued last October to permit the sale of gasoline containing 15% ethanol (E15) for model-year ’07 and newer vehicles. While issuing the waiver, the EPA confirmed that there was insufficient test data to permit E15 to be used in model-year ’00 and older light-duty motor vehicles. SEMA has consistently voiced concern that ethanol increases water formation, which can then create formic acid and corrode metals, plastics and rubber. The agency is still gathering data for the ’01–’06 vehicles. The EPA’s ruling responded to a request from the ethanol industry to raise the ethanol content in gasoline from 10% (E10) to 15%. SEMA also opposed a proposed rule on how to label gas pumps to help prevent vehicle misfueling. If the rule were to be issued, SEMA recommended that the EPA create national labeling requirements for both E15 and E10, and that the E15 warning label be placed as close as possible to the pump’s product selection mechanism.|
|The National Highway Traffic Safety Administration will soon require all new passenger cars be equipped with a rearview camera system. The equipment is intended to prevent back-over accidents by alerting drivers when pedestrians are behind the vehicles. Under a law passed in 2008, the National Highway Traffic Safety Administration has until early 2011 to issue a rule to be phased-in by 2014. The National Highway Traffic Safety Administration has issued a proposed rule that would set performance requirements to be achieved, but allow manufacturer discretion when selecting the video camera system. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue.|
Warranty Denials: The Federal Trade Commission issued a consumer alert, which confirms that the Magnuson-Moss Warranty Act makes it illegal for companies to void a warranty or deny coverage simply because the consumer used an aftermarket part. The alert outlines key provisions in the law that provides protections to car owners. As defined by the Federal Trade Commission, an “aftermarket” part is a part made by a company other than the vehicle manufacturer or the original-equipment manufacturer. The Federal Trade Commission’s reference to aftermarket parts is equally applicable to specialty parts. Under the Magnuson-Moss Warranty Act, the warranty cannot be conditioned to a specific brand of parts, services or vehicle modifications unless those parts or services are provided free of charge. The dealer/vehicle manufacturer has the right to deny a warranty repair, but they must demonstrate that the aftermarket part caused the problem. The warranty remains in effect for all other covered parts.
The U.S. Bureau of Land Management (BLM) unveiled a regulatory initiative to identify unspoiled backcountry, which can be designated as “wild lands.” SEMA opposes the program since it usurps the exclusive authority of Congress to designate “wilderness.” The designation is consequential to SEMA members that produce equipment intended for off-road activities and their customers since no motorized activities are allowed in “wilderness” lands. The BLM action is a back-door method to identify “wilderness study areas” (WSAs), lands that Congress may then designate as wilderness. The BLM’s authority to establish WSAs expired in 1991, but the Bureau of Land Management continued to pursue the initiative until 2003 when the Bush Administration barred such actions. The new Bureau of Land Management program will likely be challenged in court and reviewed by Congress.