SEMA News—September 2019

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

FEDERAL UPDATE

Delaware—Street Rods: Delaware Governor John Carney signed into law a bill easing the process of registering a street rod by favorably changing the existing age and equipment requirements. The new law amends the definition of street rod from a vehicle manufactured before ’70 to one 25 years old or older. The law also removes the requirement that a street rod’s tires be covered by fenders.

Tariffs—Automobiles and Auto Parts: At press time, it was still unknown whether tariffs will be imposed on imported automobiles and auto parts. The tariffs may be bargaining chips as the U.S. negotiates new trade agreements with the European Union and Japan. President Trump provided negotiators until mid-November before deciding whether to impose tariffs and, if so, on which vehicles and parts. The results of a U.S. Department of Commerce investigation have not been made public, but it is known that the report expresses concern about increases in the volume of automobile and auto-parts imports over the past three decades, along with unease about foreign markets such as the European Union and Japan that have imposed significant barriers to U.S. automotive exports.

SEMA is part of the Driving American Jobs Coalition, a group representing the entire scope of the auto industry, including OEMs, dealers, suppliers and the aftermarket. While the coalition supports the Trump administration’s efforts to create fair trade, it opposes the threatened tariffs that create continued uncertainty as businesses contend with higher production costs, lower sales and profit margins, and retaliatory actions by U.S. trading partners.

Tariffs—China: As of press time, U.S. and Chinese officials were seeking to reach agreement on trade talks that would result in lowering the U.S./China trade deficit and deterring cyber theft of intellectual property by the Chinese government and companies. The Trump Administration had imposed 25% tariffs on $250 billion worth of Chinese imports under three separate listings.

Lists 1 and 2 cover $50 billion worth of goods, including some miscellaneous metal, rubber and plastic parts for auto equipment. List 3 imports include many auto parts, ranging from engines and metal fasteners to tires, brake pads and suspension springs. The U.S. government is accepting exclusion requests for List 3 products until September 30, 2019.

Any exclusions granted will be retroactive to September 2018, when the duties were first enacted, and the exclusion will be good for one year. The government is still reviewing requests previously submitted for Lists 1 and 2 tariffs. If a request is granted, it will apply to all imported products within the tariff subheading, not just those from the company making the request.

E15 Gasoline: The U.S. Environmental Protection Agency (EPA) issued a final rulemaking to allow gas stations around the country to sell E15 (gasoline that’s 15% ethanol) year-round. Previously, the EPA prohibited the sale of E15 between June 1 and September 15 due to fuel-volatility concerns that higher blends of ethanol combined with warmer temperatures may lead to increased ground-level ozone formation and smog.

It is unclear if the EPA’s rulemaking will be implemented immediately, since it will likely face court challenges. SEMA opposes an expansion of E15 sales, which the EPA is pursuing in order to achieve the Renewable Fuel Standard’s artificial mandates to blend large volumes of ethanol into gasoline sold in the United States. Ethanol, especially in higher concentrations such as E15, can cause damage to high-performance parts and vehicles manufactured prior to 2001.

Retirement Plan Legislation: The U.S. House of Representatives passed a bipartisan bill to expand retirement savings programs. The Setting Every Community Up for Retirement Enhancement (SECURE) Act represents the most comprehensive plan to modify retirement programs in more than a decade. The U.S. Senate is considering a similar bill.

The SECURE Act makes it easier for small businesses to join multiple employer plans by not requiring businesses to be affiliated. It also increases tax credits for small businesses adopting a retirement plan, permits part-time employees to enroll in 401(k) plans, increases the age when individuals must start withdrawing money from an IRA from 701/2 to 72, and protects employers offering annuities from liability if the insurance company administering the plan is not able to make payments.

While many of those provisions are favorable for small businesses and workers, SEMA is concerned by sections of the bill designed to offset the loss of revenue to the federal government, such as the amount of penalties imposed for paperwork filing errors.

Route 66 Centennial: The U.S. Senate Environment and Public Works Committee passed a bill to create a commission to recommend ways to commemorate the 100th anniversary of Route 66, which was completed in 1926 as the first all-paved U.S. highway. The Route 66 Centennial Commission Act creates a 19-person board, including governors of states through which the highway passed from Illinois to California. The commission will recommend ways to celebrate the anniversary, such as through writings, films and documentaries, education programs, artistic works and commemorative memorabilia.

Oklahoma—Military Vehicles: Legislation to allow the titling of High-Mobility Multipurpose Wheeled Vehicles (HUMVEE or HMMWV) failed to pass before the Oklahoma legislature adjourned for 2019. The bills defined HUMVEE as a four-wheel-drive tactical military vehicle that can carry a wide variety of military hardware. By rule, each bill is eligible to be reconsidered during next year’s legislative session.

STATE UPDATE

Michigan—Military Vehicles: Legislation was introduced in the Michigan Senate to allow for the titling and registration of historic military surplus vehicles. The bill awaits consideration in the Transportation and Infrastructure Committee. A similar proposal passed the Michigan legislature last year but was vetoed by then-Governor Rick Snyder.

Missouri—Historic Vehicles: Legislation to allow historic vehicles to be issued license plates without an annual mileage restriction failed to pass before Missouri’s legislature adjourned for the year. In Missouri, a historic vehicle is defined as being 25 years old or older, owned solely as a collector’s item, and used only for exhibition and educational purposes. The law currently limits such vehicles to 1,000 miles of personal driving per year and requires owners to keep a log of miles driven.

Nebraska—License Plates: Legislation to require the issuance of only a single, rear-mounted license plate for all motor vehicles failed to pass before the Nebraska legislature adjourned for 2019. The bill is eligible to be reconsidered during next year’s legislative session.

Nevada—Military Vehicles: Nevada Governor Steve Sisolak signed into law legislation that allows for the titling and registration of retired military vehicles. The new law also authorizes the design and production of a specialty plate for those vehicles. Previously, such vehicles could not be titled or registered for use on highways in the state.

Rhode Island—License Plates: Legislation in Rhode Island to allow vehicles with year-of-manufacture tags to display a single license plate on the rear of the vehicle passed the Special Legislative Committee and now awaits consideration on the House floor.

Texas—License Plates: Companion bills requiring the issuance of only a single, rear-mounted license plate for all passenger cars and light trucks failed to pass before the Texas legislature adjourned for 2019. Under current law, such vehicles must display two license plates.