SEMA News—June 2012
LEGISLATIVE & 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.
Specially Constructed Vehicles:
For the past several years, SEMA has been working with the California legislature and state agencies to provide protection for owners of improperly or illegally titled and registered specially constructed vehicles (SPCNS). Under a looming threat of prosecution, this program was pursued to help vehicle owners and builders avoid a situation that could have led to confiscated cars and felony law enforcement actions. Beginning July 1, 2011, an amnesty program to allow proper registration of previously registered SPCNS went into effect. The program is slated to conclude on June 30, 2012. Working with the Bureau of Automotive Repair (BAR) and the Department of Motor Vehicles (DMV), SEMA has finally resolved program implementation problems on behalf of California SPCNS owners seeking amnesty. These solutions permit these owners and builders to demonstrate compliance with current BAR smog-check tailpipe emissions requirements in addition to providing amnesty for owners who have knowingly made false statements regarding the value of these vehicles, the year of manufacture or knowingly falsified any other facts in documents filed with the DMV or Highway Patrol.
SEMA-supported legislation to exempt all motor vehicles prior to the 1981 model year from the emissions inspection requirement has been granted reconsideration after failing to be approved by the Senate Transportation and Housing Committee on a 3-4 vote. The bill will be reconsidered in a future committee hearing. In 2004, legislation was enacted to repeal California’s rolling emissions-test exemption for vehicles 30 years old and older and replace it with a law requiring the lifetime testing of all 1976 and newer model-year vehicles.
Antique/Rare/Special-Interest Motor Vehicles:
SEMA-opposed legislation to increase the age requirement for vehicles eligible for registration as “antique, rare or special-interest motor vehicles” was approved by the Connecticut Joint Committee on Planning and Development by a narrow 10-9 vote. Under the bill, vehicles to be registered as antique, rare or special-interest motor vehicles would be 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 increases the maximum assessment of these vehicles from $500 to $2,500. The bill will now be sent to the Connecticut House of Representatives for a vote by all members.
SEMA is supporting resolutions introduced in the Hawaii House of Representatives urging the city and county of Honolulu to create a 10% vehicle registration credit for residents who drive limited miles in their vehicles, such as rarely used hobby cars. The resolutions were introduced to offset the burden put on certain vehicle owners by increased registration fees. Under the resolutions, the credit would extend to any resident who is registering a vehicle and can provide the two most recent safety inspections (at least 11 months apart) showing that less than 3,000 miles were driven between the two inspections.
SEMA is supporting Michigan legislation requiring retail dealers that offer gasoline for sale to label those pumps dispensing ethanol-blended gasoline with a notice that indicates the grade of gasoline and the percentage of ethanol contained. Under current Michigan law, gasoline that contains 10% or less ethanol is not subject to the labeling requirement. The bill provides that a person who violates the labeling requirement is liable for a civil fine up to $1,000 for each day the violation continues.
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 owners of special-interest motor vehicles to operate them on Nebraska’s roads displaying a single license plate on the rear of the vehicle. Under the new law, special-interest motor vehicles are defined as those 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 may be driven on public streets and roads for occasional transportation, public displays, parades and related pleasure or hobby activities. SEMA worked with the bill sponsor and staff to delete provisions in the original bill that would have required proof of membership in a recognized car club; forced owners to account for all daily-driver vehicles owned or operated by the applicant; obligated owners to a sworn affidavit that the vehicle would not be used for daily transportation; and mandated that these vehicles be essentially unaltered from the original manufacturer’s specifications.
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 has now incorporated revisions to the State Implementation Plan (SIP) submitted by the New Jersey Department of Environmental Protection to include the extension of the new vehicle inspection exemption from four years to five years. This action acknowledges the relatively minimal environmental impact of the vehicles targeted for this exemption and that it is senseless to test newer vehicles, the results of which demonstrate no significant air quality benefits.
SEMA-supported legislation to provide vehicle owners with 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 bill, an application fee of $75 would be charged to use year-of-manufacture plates. 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. Under current law, antique-vehicle owners may apply for special antique, classic or collectible plates that bear the designation “antique vehicle.” These plates would still be available to state hobbyists if the bill is signed into law.
The Texas Department of Motor Vehicles (DMV) has issued its policies and procedures for issuance of titles and specialty license plates to owners who seek to register their vehicle as street rods or custom vehicles. The policy also provides for a basic safety equipment inspection to be performed by an Automotive Service Excellence (ASE) master technician. These procedures were drafted pursuant to the 2011 enactment into law of SEMA-model legislation. Originally slated to go into effect on September 1, 2011, 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. In addition, the law holds only street rods, customs and replicas to the equipment standards specified by law during the model year listed on the title of the vehicle. Unfortunately, due to a flawed interpretation of the law by the DMV, all vehicles seeking registration as street rods and custom vehicles must carry a title with a “Replica” brand—even those vehicles altered from original steel bodies. According to the DMV, any changes to that policy must be provided to the agency through amendments to the law. SEMA is currently in the process of contacting members of the Texas legislature to seek additional legislation to correct this flaw. The Texas legislature does not meet for a regular 2012 session, requiring legislation to be introduced in 2013. In the meantime, the new polices should accommodate owners of replica street rods and custom vehicles.
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 special group license plates and would be exempted from wheel cover, mudguard, flap, or splash-apron requirements. Slated to go into effect on July 1, 2012, 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.
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.
A bill to provide a cap on property taxes paid by owners of antique and classic motor vehicles was vetoed by Governor Early 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. The legislature chose not to call an additional vote on the bill in an attempt to override the veto.
Motor Vehicle Registration Rights:
Legislation that originally sought to provide legal registration to hobby vehicles with clear titles, required safety equipment and in good working order was signed into law by Governor Scott Walker. Due to opposition from the Wisconsin Department of Transportation, the bill was amended to now affect only former military vehicles. Several pro-hobby provisions of 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 in Wisconsin, it still gained SEMA’s support since it improves the rules governing former military vehicles.
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” 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 as regulations will be phased in over a period of five years. The legislation 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. Individual investments are limited to 5% of annual income for those earning under $100,000 a year and 10% for those earning above that amount. Companies with gross annual revenues of up to $1 billion can sell shares to the public while being exempted from some of the requirements of the Sarbanes-Oxley Act.
Certain Steel Wheels from China:
The U.S. International Trade Administration has issued final duty rates for certain steel wheels from China that are being sold at less than fair value in the United States. The subject wheels range from 18 to 24.5 inches in diameter and include rims and discs whether imported as an assembly or separately. The wheels are typically used in commercial vehicles (trucks, buses, trailers, etc.), but duty rates also apply to passenger car wheels within that size range. Calculations for the final dumping margins range from 44.96% to 193.54% ad valorem, and countervailing duties range from 25.66% to 38.32% ad valorem. The duties are on hold until the U.S. International Trade Commission confirms that the dumping and unfair subsidies are causing harm to U.S. industry.
The U.S. Senate passed its version of legislation to fund highway construction and other transportation projects over the next two years. SEMA supports the bill’s maintenance of current funding levels in order to address the nation’s aging infrastructure and provide states with more spending flexibility. The legislation also would dramatically increase fines for vehicle or equipment recalls and include mandates to address distracted driving, unintended acceleration and pedal placement and require installation of event data recorders. SEMA contends that current civil penalties are already higher than those imposed on manufacturers for many other types of consumer products, and the National Highway Traffic Safety Administration is already addressing the other issues. The legislation has been sent to the House of Representatives, which is attempting to draft its own bill for a five-year plan. The draft bill currently does not include the auto safety provisions. The government’s authority to fund highway programs expires on June 30.
The EPA has begun approving applications by fuel producers to blend gasoline with 15% ethanol (E15). However, there are several other regulatory hurdles to be met before the fuel can be offered for sale. Gas stations will not be required to sell the fuel, and the federal government and most states have not yet enacted laws to shield the industry (gas stations, fuel producers, automakers, auto parts manufacturers, etc.) from lawsuits by consumers who allege that E15 caused mechanical breakdowns. Ethanol increases water formation in the gas tank, which can then produce formic acid and corrode certain metal, plastic and rubber parts. Last year, the EPA approved the sale of E15 for model-year 2001 and later vehicles. The EPA agreed with SEMA’s concerns that ethanol poses a threat to older vehicles and made it “illegal” to fuel pre-2001 vehicles with E15. A court is expected to rule this summer on a lawsuit challenging the EPA waivers. SEMA is working with a diverse coalition of other associations to oppose the introduction of E15.
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. Lawmakers attending a recent U.S. House Natural Resources Subcommittee hearing expressed similar concerns, noting that the rule incorporates a number of undefined terms and does not ensure a “full mix of recreational opportunities.” 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.