SEMA News -- April 2009
LEGISLATIVE AND TECHNICAL AFFAIRS

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.

Massachusetts

Street Rods/Custom Vehicles: Governor Deval Patrick “pocket vetoed” SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles after he failed to sign the bill within 10 days of receiving it. SEMA has pledged to work to resolve concerns raised by the governor and his administration so that the bill may be revived in 2009. The Massachusetts bill defined 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 bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Montana

Exhaust Noise: Montana legislation to repeal a SEMA-sponsored law enacted in 2007 that permits vehicles with modified exhaust systems that do not emit an excess of 95 decibels was tabled in committee. Under the repeal legislation, all exhaust system modifications that are subjectively determined to increase noise would have been illegal. Similar legislation to restrict exhaust system noise has been introduced this year in Connecticut and New Jersey. The Montana bill is effectively dead for the year.

New York

Tire Efficiency: Legislation that seeks to require the development of a statewide program to mandate that replacement tires for passenger cars and light trucks be as energy efficient as tires sold as original equipment was reintroduced in the New York State Legislature. SEMA has defeated previous versions of this bill. While the measure contains a SEMA-drafted exemption for some hobbyist tires, including limited-production and off-road tires, SEMA has consistently recommended that the bill be rejected, since the replacement-tire efficiency program conflicts with federal law by regulating fuel economy, imposes substantial redesign costs on tire manufacturers, competes with federal consumer information requirements and essentially sets a 50-state standard.

Oregon

Aftermarket Parts: The Oregon House Environment and Water Committee will consider SEMA-opposed legislation to prohibit the sale and distribution of aftermarket motor vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” The bill is primarily focused on aftermarket tires and would authorize the Environmental Quality Commission to implement enforcement regulations, likely based on a rolling-resistance calculation. The bill was introduced at the request of Governor Theodore Kulongoski.

Texas

Nitrous Oxide: Texas has introduced SEMA-model legislation to allow for nitrous-oxide systems on motor vehicles. The bill allows the system if the vehicle is en route to or from a track, the device is inoperative or the container has been removed from the vehicle.

Virginia

Inoperable Vehicles: The sponsor for SEMA-opposed legislation to allow the city of Newport News to adopt a more restrictive inoperable vehicle ordinance has withdrawn the bill from consideration by the Virginia Legislature. Under the bill, the city could have adopted an ordinance prohibiting any person from keeping more than one inoperable motor vehicle on private property except within a fully enclosed building. Further, the bill required that the one vehicle now be shielded from view by the “installation of an opaque fence.” In 2004, Virginia signed into law a SEMA-negotiated bill to exempt at least two inoperable vehicles being actively repaired or restored on private property from any local ordinance if shielded or screened from public view. The law defines “shielded or screened from view” as not visible by someone standing at ground level from outside of the property on which the inoperable vehicles are located. This measure would have changed the rules of this fairly negotiated compromise.

Wyoming

Rods/Custom Vehicles: SEMA-model legislation to create a vehicle registration and titling class for street rods and custom vehicles was approved by the Wyoming House and awaits final passage by the Wyoming Senate before being sent to the governor for his signature. The measure 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 bill allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

STATE UPDATE

State Automotive Enthusiast Leadership Caucus: Two members of the State Automotive Enthusiast Leadership Caucus won seats in the U.S. Congress. Former State Senators Tom McClintock and Bill Posey were sworn into the 111th Congress in January. No stranger to SEMA members in California, Tom McClintock has been a long-time supporter of the automotive hobby in the California State Legislature. In 2004, he worked tirelessly against the repeal of the 30-year rolling emissions exemption in the state. An avid enthusiast, Bill Posey introduced and worked to enact into law the SEMA Street Rod/Custom Vehicle bill in Florida. In addition, fellow caucus members Johnny Key of Arkansas, Bob Huff of California, David Parks of Nevada and Daylin Leach of Pennsylvania were successful in their campaigns to move from the House to the Senate in their respective legislatures. Founded in 2005 and supported by SEMA, the caucus is a nonpartisan group of approximately 350 state legislators whose common thread is a love and appreciation for automobiles. Working with the state legislatures in recent years, SEMA has sought legislation to overhaul existing statutes and create brand-new programs to safeguard and expand the automotive hobby. These efforts have brought a series of significant legislative and regulatory accomplishments for the specialty-equipment industry on issues ranging from equipment standards and registration classifications to emissions test policies and hobbyist rights.

FEDERAL UPDATE

Vehicle Scrappage Programs: SEMA is opposing efforts in Congress to provide federal funds for a “Cash for Clunkers” program. The program accelerates the normal retirement of vehicles through the purchase of older cars that are then typically crushed into blocks of scrap metal. As a consequence, the vehicle hobby loses potential collector cars and parts forever. In early 2009, thousands of SEMA members and motor-vehicle enthusiasts responded to a call for action urging lawmakers to reject the program as part of the economic stimulus bill passed into law in February. The effort was a success. Both the House and Senate rejected inclusion of vehicle scrappage. Two proposals were put forth during the debate. The first was an $8 billion program targeting SUVs and pickups of any year that make less than 18 mpg. The second would have provided $16 billion worth of cash vouchers to individuals making less than $50,000 a year ($75,000 for families) who allowed their turned-in cars to be destroyed. The two Cash for Clunker proposals may reemerge later this year, so SEMA will remain vigilant in educating legislators on the need to oppose programs that do not spur car sales, reduce emissions or raise fuel economy. The economic stimulus bill included a SEMA-supported amendment allowing taxpayers to claim a tax deduction for state and local sales and excise taxes when they buy a new car in 2009.

Greenhouse Gases: The U.S. Environmental Protection Agency (EPA) is reconsidering its decision to deny California and 13 other states from regulating greenhouse gases emitted from motor vehicles. The EPA had cited a 2007 law raising the Corporate Average Fuel Economy (CAFE) standards as justification for denying the waiver request to regulate carbon dioxide (CO2) emissions starting in 2009. The EPA ruled that the new CAFE law will produce greater CO2 savings than the California program and that a federal approach provides a national solution, as opposed to a potential patchwork of state rules. SEMA has joined with the automakers in support of a national approach to greenhouse gases, contending that the California rule is actually a fuel-economy regulation. Only the federal government can establish fuel standards. The EPA will review public comments before making a decision on the waiver later this year.

Early-Warning Rule: The National Highway Traffic Safety Administration (NHTSA) has proposed increasing the reporting threshold under the early-warning rules, but the changes should have no impact on most manufacturers of specialty equipment. Under the current rules, all vehicle and equipment manufacturers must provide the NHTSA with notice of fatalities that are alleged or proven to be the result of product defects. Furthermore, large-volume vehicle manufacturers (more than 500 vehicles annually), large-volume tire manufacturers (more than 15,000 tires of the same size and design annually) and child restraint-system manufacturers must supply the NHTSA with “early-warning” information about injuries, property damage, consumer complaints, warranty claims, field reports and production data every calendar quarter. Equipment manufacturers are not required to supply early-warning materials, but reporting is triggered if there is an incident or allegation involving a death or the company issues recall notices or advisories referencing a defect or malfunction. The NHTSA is proposing to raise the threshold for large-volume vehicle manufacturers to 5,000 or more vehicles and require more recall information from tire manufacturers.

Labor Legislation: President Obama signed into law the “Ledbetter Fair Pay Act,” which overturns a 2007 Supreme Court ruling that enforced a 180-day statute of limitations for filing a pay discrimination complaint. At issue was whether an employee could pursue an allegation of pay discrimination beyond a 180-day filing deadline. The new law relaxes the statute of limitations and clarifies that discrimination can be alleged each time a paycheck is issued. SEMA joined the National Association of Manufacturers and the U.S. Chamber of Commerce in opposing the bill since it could potentially open the door to frivolous litigation and open-ended lawsuits without time limits.

Wilderness Legislation: The House of Representatives is expected to approve legislation already passed by the U.S. Senate to add more than 2 million acres to the National Wilderness Preservation System. The “wilderness” designation is consequential since no mechanized activity is permitted on lands so designated. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. The legislation designates wilderness in nine states and establishes several new national parks, monuments and conservation areas. Covered areas include portions in and around Joshua Tree National Park and the Eastern Sierras in California, Owyhee-Bruneau Canyonlands in Idaho, Mt. Hood in Oregon and Zion National Park in Utah. Some roads and trails were excluded from the wilderness designations and, therefore, remain available to the OHV enthusiast. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly since not all roads and trails received protection.