SEMA News - September 2010

By Steve McDonald

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 Specially Constructed Vehicles:

After passing in the Assembly with the full support of the automotive hobbyist community, the California Senate Transportation Committee failed to approve legislation to increase the registration limit for exempted specially constructed vehicle registrations from 500 to 750 vehicles per year. The bill was defeated on a three-to-five vote. Current law provides for emissions-system certification and a model-year designation for specially constructed vehicles. Under the law, vehicle owners choose whether a smog-test referee certifies the engine model year or the vehicle model year. To determine model year, inspectors compare the vehicle to those of the era that the vehicle most closely resembles. If there is no close match, it is classified as a ’60 vehicle. Only those emissions controls applicable to the model year and that can be reasonably accommodated by the vehicle are required. The Department of Motor Vehicles provides a new registration to the first 500 specially constructed vehicles per year that meet the criteria. 

California Tire Pressure:

The California Air Resources Board has issued a proposed rule that would require all automobile service providers to check tire pressures for every vehicle being maintained or repaired at their facilities as of September 1, 2010. The regulation would apply to auto maintenance/repair providers but not to auto parts distributors/retailers, auto body/paint facilities, auto glass installers or wreckers/dismantlers. The rule is intended to reduce greenhouse gas emissions associated with under-inflated tires. Service providers would be required to check and inflate the tires to the recommended tire-pressure rating. The provider would have to note on the invoice that the tire inflation service was completed and then keep a copy of the service invoice for at least three years. The rule would apply to all vehicles weighing less than 10,000 lbs.

California Consumer Products:

Legislation currently being considered in the California Legislature would place additional requirements on the manufacture, sale or distribution of certain consumer products, including automotive products used to maintain the appearance of a motor vehicle (including those for washing, waxing, polishing, cleaning or treating the interior or exterior of the vehicle). Under the bill, a manufacturer is required to disclose each ingredient contained in the product on the manufacturer’s website and provide the web address and a statement on the product’s label. The bill provides some protection for trade secrets, unless the ingredient that the manufacturer claims trade secret protection for is a “hazardous substance.”


California/Hawaii Tires:

SEMA derailed California legislation that would have required tire dealers to provide a written disclosure to customers informing them about the risks associated with tire age. The bill had been approved by the full Assembly. Similar legislation that would require automotive repair dealers to list on the invoice the manufacture date of any tire installed or sold has also been abandoned. In addition, SEMA-opposed legislation in Hawaii that sought to prohibit the sale of any new tire that was manufactured more than six years prior to the date of the sale of the tire was defeated. The National Highway Traffic Safety Administration has studied the tire aging issue but has yet to reach a conclusion. SEMA contends that the service life of a tire is affected by many factors that are independent of the chronological age of the tire. Tire properties evolve over a combination of time, service and storage conditions. Tires change more rapidly when exposed to excessive heat, under-inflation or overloaded conditions. SEMA recommends having tires, including the spare, inspected regularly. Tire inflation pressure should be checked and properly adjusted at least once a month to maintain safety and fuel economy.

Illinois Lead Wheel Weights:

As of January 1, 2011, it will be illegal to sell or install a wheel weight that contains lead or mercury in Illinois. The state joins several others that have enacted laws banning the manufacture, sale and use of lead wheel weights. California’s law went into effect on January 1, 2010. Maine, Vermont and Washington also ban the products, while Iowa, Maryland, New York, Rhode Island and Wisconsin have considered a ban. The automakers have already agreed to stop using lead weights as original equipment, and the three major manufacturers of wheel weights in the United States stopped distributing lead weights in 2009. The U.S. Environmental Protection Agency launched a voluntary nationwide initiative in 2008 and began a rulemaking process in 2009 that may eventually translate into a mandatory federal ban. The weights have been banned in the European Union since 2005. Auto makers, tire makers and the aftermarket are turning to three main substitute materials: steel, zinc or composites.

Louisiana Inspection Exemption:

A SEMA-supported bill to exempt antique vehicles 25 years old and older from the motor-vehicle inspection requirements was signed into law by Governor Bobby Jindal. Prior to the bill’s enactment, only vehicles 40 years old and older were exempted from testing. The bill makes the inspection exemption consistent with current state law defining an antique vehicle as a vehicle that is 25 years old or older and is used primarily for shows, parades, tours and other special uses and not for general transportation. Vehicles in Louisiana are subject to an annual vehicle inspection, including a safety equipment inspection and, for vehicles registered in selected parishes, an additional emissions inspection. The emissions inspection consists of a visual anti-tampering check and a gas cap integrity check. Vehicles manufactured in 1995 and later are also subject to an on-board diagnostic (OBD-II) emissions check.

New Jersey Emissions Exemption:

SEMA-supported legislation to extend the emissions inspection exemption to vehicles five model years old or newer has been sent to Governor Chris Christie for his signature and enactment into law. Current law exempts vehicles that are four model years old or newer. New Jersey already exempts historic (at least 25 years old) and collector (driven no more than 3,000 miles per year and insured for limited use) vehicles from emissions testing. The logic for this trend is clear: Such vehicles do not contribute in significant ways to air-quality problems. This logic applies equally to newer cars.  

 

FEDERAL UPDATE

Bonus Depreciation:

The U.S. Senate included a SEMA-supported provision to allow businesses to write off 50% of the cost of newly purchased depreciable property as part of a larger bill to provide banks with access to funds intended for small-business loans. The legislation would create a $30 billion fund available to smaller financial institutions. Interest rates charged would be lowered if the banks loaned the monies to small businesses. The bill would also extend the bonus depreciation through 2010. In 2008 and 2009, all businesses were permitted to immediately write-off 50% of the cost of new equipment (“bonus depreciation”). The depreciation expired at the end of 2009. SEMA contends that the depreciation write-off encourages companies to invest in newer, more efficient equipment and spurs sales and creates jobs. The House and Senate are expected to complete action on the bill this summer.

Idaho Wilderness Legislation:

SEMA-opposed legislation has been introduced in the Senate to set aside 333,000 acres of wilderness in central Idaho. 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. Existing roads and trails would be closed as a result of the legislation, and a previously suggested compromise to create an off-highway vehicle park near Boise was dropped. Idaho already has 5 million acres of wilderness, second only to Alaska.

Website for Health Insurance Plans:

Small-business owners shopping for health insurance have a new tool to learn more about the health care options in their area. The government site www.healthcare.gov provides information on coverage options, health care providers and important dates for the implementation of the new health care law. The website identifies available insurance options for small-business owners and, beginning in October 2010, will allow users to compare prices between insurance companies tailored to their individual needs. The site currently provides information on 3,531 small-employer health insurance options and 2,030 individual health insurance plans.

Study on Small-Businesses Credit:

The Small Business Administration released a study that examines the types of credit used by small businesses, namely bank credits (loans or lines of credit) and trade credits (from suppliers). The report found that the two types of credit are complements, with many small firms using both types simultaneously. The study compares companies that use credit (leveraged) with those that do not (unleveraged). For more information, visit here.

Federal Trade Commission Guide to Correct Advertisements:

The Federal Trade Commission (FTC) published answers to frequently asked questions to help businesses better understand the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising.” The guides were revised in October 2009 to clarify that they apply to all types of advertising, including via social media websites and blogs. For more information:
www.ftc.gov/bcp/edu/pubs/business/adv/bus71.pdf.