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 Air Resources Board:

Legislation that would give small-business owners a voice on the California Air Resources Board (CARB) was passed by the Senate Environmental Quality Committee and will now be considered in the Senate Appropriations Committee. The California Assembly has already passed the bill. Introduced by Assemblymember Curt Hagman, who represents the Diamond Bar district in which SEMA headquarters is located, the bill would create a requirement for one CARB member to have been a small-business owner within the past five years. CARB is a department within the California Environmental Protection Agency that is charged with the task of attaining and maintaining healthy air quality, protecting the public from exposure to toxic air contaminants and issuing air pollution rules and regulations. The current 11-person board does not represent the interests of small businesses that comprise the regulated community. In light of hard economic times and California’s continued commitment to clean air and green business practices, it is essential that small-business owners be included in important discussions and decisions made by California Air Resources Board. This measure recognizes that the regulations issued by the board directly affect small businesses and would ensure that the rights of small-business owners are represented.

New York

One-Time Fee:

Legislation to provide historical-vehicle owners with a one-time registration fee of $100 upon initial registration was passed by the New York Senate. The bill, supported by SEMA, will now be considered by the Assembly Transportation Committee. The reduced registration fee would be available to owners of historical vehicles owned and operated as exhibition pieces or collectors’ items and used for club activities, exhibits, tours, parades, occasional transportation and similar uses. Under current New York law, a historical motor vehicle is either a vehicle manufactured more than 25 years ago or one that has unique characteristics and that is determined to be of historical, classic or exhibition value. The $100 one-time fee would replace the current annual fee of $28.75.

New York Collector Car Appreciation Day:

The New York State Assembly approved a resolution to memorialize July 8, 2011, as Collector Car Appreciation Day in the state of New York, in conjunction with National Collector Car Appreciation Day. The effort was sponsored by New York Assemblymember Bill Reilich, who has served the automotive hobbyist community for the past four years as national chairman of the State Automotive Enthusiast Leadership Caucus. Earlier this year, at SEMA’s request, U.S. Senators John Tester (D-MT) and Richard Burr (R-NC) introduced and the U.S. Senate approved Resolution 154 (S. Res. 154), officially designating July 8, 2011, as National Collector Car
Appreciation Day.

Pennsylvania

Year-of-Manufacture Plates:

A Pennsylvania bill that would provide vehicle owners with the option to use vintage, original model-year license plates on antique and classic vehicles has passed the Pennsylvania House of Representatives and is now awaiting consideration in the Senate Transportation Committee. An application fee of $75 would be charged for a request to use year-of-manufacture plates. Under the measure, vintage plates must have been issued by the state of Pennsylvania between the years 1906 and 1975, must be provided by the vehicle owner and legible from a reasonable distance. Under current law, antique-vehicle owners may only 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 enacted into law.

Texas Street Rods/Customs:

After an effort that stretched into two legislative sessions, SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles (including kit cars and replicas) and provide for special license plates was signed into law by Governor Rick Perry. 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 street rods, customs and replicas to only the equipment standards specified by law during the model year listed on the title and exempts them from the state’s emissions inspection program.

Federal Update

Patent Law Changes:

The U.S. House of Representatives approved legislation to overhaul the federal patent system. The Senate passed a slightly different version of the bill last March. The two bills must now be reconciled into a single measure. President Obama has indicated his support for the reform measures. Under current U.S. law, patents are granted to individuals who can prove that they were the “first to invent.” Both the House and Senate bills would switch the United States to a “first-inventor-to-file” (FITF) system, a method used by most other nations. One major drawback to the current system is that it provides an incentive for individuals to claim credit for a patent and demand royalties and damage awards years after a product has been on the market. On the other hand, it has been considered advantageous to small businesses without the resources to get to the patent office first. Lawmakers have been refining the legislation for about five years to address small-business concerns. For example, a new “post-grant review” procedure would be created, allowing third parties to lodge objections on any grounds during the first nine months after a patent has been issued. The U.S. Patent and Trademark Office would resolve these disputes, potentially reducing litigation costs associated with court challenges. The legislation represents the first significant change to the U.S. patent system since 1952.

Debit Card Fees:

The Federal Reserve Board issued a final rule to limit swipe fees imposed on retailers when accepting debit card payments at $.21 per transaction, effective October 1, 2011. Banks and payment processors may also charge $.01–$.03 more to cover fraud prevention and other adjustments, bringing the total potential fees to $.24. The limit is higher than the $.12 fee proposed last winter but less than the current average of $.44. The Federal Reserve was authorized to regulate debit card fees under last year’s financial reform bill based on what it believes to be “reasonable and proportional.” However, the Federal Reserve’s power does not extend to credit card fees. Credit unions and small banks with less than $10 billion in assets are exempt from the swipe card limits, although merchants are not required to accept their cards.

Ethanol:

The U.S. Environmental Protection Agency (EPA) will require that an orange and black label be placed on fuel pumps dispensing E15 gasoline, warning consumers not to use the fuel in vehicles older than model-year ’01 since it could cause damage. SEMA continues to oppose the EPA labeling program, since it places the burden on the motorist not to misfuel. The EPA agreed with SEMA that ethanol’s corrosive effects pose a hazard to older cars. The EPA’s decision to issue a waiver allowing the sale of E15 for newer cars is still subject to lawsuits and Congressional actions to delay or overturn the decision.

Mileage-Rate Deduction:

Soaring gas prices caused the Internal Revenue Service (IRS) to increase the standard business-mileage deduction by $.041/2, from $.51 to $.551/2 cents for all business miles driven between July 1 and December 31, 2011. It is unusual for the IRS to make a mid-year adjustment. The mileage calculation also includes all other aspects of buying and operating a vehicle, such as depreciation, insurance, tires, etc. Businesses and individuals who use their cars for business have the option of using the standard rate in lieu of keeping records of their actual expenses.

OHV Recreation:

A House Natural Resources Subcommittee held a hearing entitled “Opportunities for Outdoor Recreation on Public Lands.” The main topics of discussion were protecting recreational access to federal lands and recognizing the economic benefits derived from such activities. The hearing included testimony in support of multiple-use federal lands and responsible OHV recreation. The BlueRibbon Coalition, of which SEMA is a partner, spoke on the need to reopen the Clear Creek Management Area (CCMA) in California. Currently closed due to an “emergency closure” in 2008, the CCMA includes more than 75,000 acres of land containing off-road trails. The Coalition testified that the decision was based on inaccurate data and false assumptions and recommended that the land be designated as a National Recreation Area with prescribed OHV uses.

The SEMA Action Network’s (SAN) monthly legislative newsletter, Driving Force, took home the gold medallion in the “Best Single Issue: Newsletter” category during the 20th International Automotive Media Awards, which took place on June 20 at the Automotive Hall of Fame in Dearborn, Michigan. The International Automotive Media Competition, a function of the International Society for Vehicle Preservation, is an awards program. The purpose of this peer-judged program is to recognize excellence in all forms of automotive media. The SAN provides legislative updates and feature articles to members through the Driving Force on a monthly basis. The SAN is a unique partnership between car clubs, individual enthusiasts and members of the automotive specialty-equipment industry who work together to promote pro-hobby legislation. “As the leader in legislative advocacy on behalf of the automotive hobby, the SAN relies upon Driving Force to reach thousands of enthusiasts regarding government activity in the states and in Washington, D.C.,” said Steve McDonald, SEMA vice president of government affairs. “This recognition is a testament to its continued effectiveness in providing enthusiasts with the information they need to help effect pro-hobby governmental policies.”

Membership in the SAN is free. To join, visit www.semasan.com.