SEMA News—March 2021

LEGISLATIVE AND TECHNICAL AFFAIRS

Law and Order

By Stuart Gosswein

FEDERAL UPDATE

COVID-19 Relief Bill: Following months of debate, the U.S. Congress agreed to a nearly $900 billion coronavirus stimulus plan. The law was enacted in December and reopened the Paycheck Protection Program to provide loans for companies with 300 or fewer employees, including second loans for businesses that had suffered a 25% or more loss of revenue during the pandemic. The loans are forgiven if certain requirements are met, and amounts spent on the business expenses are deductible. The stimulus plan makes it easier for businesses to file a one-page forgiveness application for loans of $150,000 or less. The law extends the $300 weekly federal supplement unemployment insurance until mid-March and provides relief funds for childcare, education, farmers, airlines and vaccine development, among other provisions. The plan includes a second round of direct $600 payments for individuals. The law renews the employee retention tax credit for businesses that keep workers on their payrolls and extends several expiring tax credits including the seven-year recovery period for motorsports entertainment complexes through December 31, 2025. The law does not include a SEMA-supported temporary federal liability shield against COVID-
related lawsuits or funding for state and local governments.

Automated Driving Systems: The National Highway Traffic Safety Administration (NHTSA) issued an advanced proposed rule to begin creating a framework for regulatory oversight of Automated Driving Systems (ADS). The agency is seeking public comment on ADS safety issues. The framework is intended to define, assess and manage ADS performance safety issues while providing flexibility for continued design innovation. NHTSA identified four core ADS functions:

• Sensing: The ability of the automated vehicle (AV) to receive information from its environment.
• Perception: The ability of the AV to interpret the information received through sensors.
• Planning: The ability of the AV to establish and navigate a route to its destination.
• Control: The ability of the AV to execute the driving functions necessary to carry out the driving plan.

Although wide-scale deployment of AVs may be several years away, the technology is being actively developed and tested—from cameras, radar and LIDAR to global-position satellite data, vehicle-to-vehicle communications and vehicle-to-everything devices. The technology is being included in new crash-avoidance safety systems such as automated braking and lane-departure warnings. NHTSA noted that it is premature for the agency to consider issuing safety standards or other performance standards for ADS competency.

NHTSA Test Procedures: NHTSA invited the public to identify any test procedures under the Federal Motor Vehicle Safety Standards (FMVSS) that should be modified or repealed. Most of the FMVSS governs the entire motor vehicle, from braking systems and tire-pressure monitoring systems to crash-worthiness standards (roof crush, side impact, air bags, etc.). Some standards cover equipment such as tires, brake hoses and fluids, and glazing materials. NHTSA uses the FMVSS test procedures to confirm that a vehicle or item of equipment complies with a particular standard. Companies self-certify compliance and, if asked, the agency expects them to have a reasonable basis for reaching that conclusion. A manufacturer may select an appropriate way to evaluate the product, including actual testing, computer simulation, engineering analyses or other means. Questions on whether FMVSS tests are still valid might include: Do the tests require equipment that is obsolete or no longer available at a reasonable cost? Are there any test procedures that do not accurately reflect real-world scenarios? Has industry developed better and/or more cost-effective tests?

STATE UPDATE

California and Washington—Copper Brakes: Beginning January 1, 2021, the states of California and Washington prohibited the sale of automotive brakes containing more than 5% copper. The ban on excessive copper stems from a pair of 2010 laws designed to limit the amount of the chemical in waterways. By 2025, brakes must contain less that 0.5% copper. Copper is used as a friction material in brake pads, as it effectively dissipates heat and allows for smooth braking. However, each time a vehicle’s brakes are applied, copper dust is released that eventually makes its way into waterways, where it is toxic to marine life. In 2015, brake manufacturers, automakers and the U.S. Environmental Protection Agency (EPA) signed a memorandum of understanding agreeing to adopt California’s and Washington’s standards and to phase out the use of copper brake pads.

New Jersey—License Plates: The New Jersey legislature introduced a pair of SEMA-supported bills permitting the state’s Motor Vehicle Commission to issue a newly created classic license plate to be available for display on all vehicles. It will resemble the license plates issued between 1979 and 1991. The bills currently await consideration in the Assembly Transportation and Independent Authorities Committee and Senate Transportation Committee.

EPA Issues New Policy on Tampering and Defeat Devices

The EPA released a new EPA Tampering Policy (November 23, 2020), which replaces Mobile Source Enforcement Memorandum 1A (June 25, 1974). The policy addresses civil enforcement of the Clean Air Act’s prohibitions on tampering and aftermarket defeat devices.

The updated policy emphasizes Memo 1A’s guidance that the EPA does not take enforcement action if the party engaging in the conduct has a documented “reasonable basis” to conclude that the part, component or part installation will not adversely affect emissions. SEMA generally welcomes the revised policy, as it will now allow SEMA members to undertake emissions testing and maintain the test data to document a “reasonable basis” for demonstrating that the part does not take a vehicle out of emissions compliance. The test data can be raised as a defense to EPA enforcement, except in California, which is separately governed by the California Air Resources Board (CARB) through its Executive Order (EO) program.

SEMA is seeking further clarification from EPA on how the policy will be applied to certain types of parts and required test data. The new policy identifies systems that monitor, process or reduce emissions such as onboard diagnostics, electronic control units (ECUs), and exhaust gas recirculation, noting that a product that changes these systems might be an illegal defeat device. Under both the previous EPA Memo 1A and the new policy, products that have been successfully tested pursuant to the CARB EO program, including modified ECUs, are treated by EPA as legal for sale.

The policy includes six categories illustrating what the EPA views to be a reasonable basis. Paraphrased here, they are:

• Reasonable Basis A: The part is identical to the EPA-certified configuration [replacement parts].
• Reasonable Basis B: The equipment is a replacement after-treatment system that is as effective as the vehicle’s or engine’s original system and is durable enough to last for a period of time equal to at least half of the vehicle’s or engine’s useful life as defined in EPA regulations [example: replacement catalytic converters].
• Reasonable Basis C: Addition of a new after-treatment system to decrease emissions [examples: diesel particulate filters and oxidation catalysts].
• Reasonable Basis D: Aftermarket modification parts where emissions testing demonstrates no adverse effect on emissions [example: specialty add-on equipment].
• Reasonable Basis E: Aftermarket part certified or approved by EPA.
• Reasonable Basis F: Aftermarket part exempted by CARB.

Of these six, D is the expression of the common industry practice of conducting testing on an aftermarket part to determine the emissions impact of the part. While not a mandate, the policy suggests using the services of a third-party test facility (such as SEMA Garage). The policy provides guidance on demonstrating a reasonable basis, including:

• Testing may be performed by an independent test facility or by the aftermarket parts manufacturer, but the test data documenting a reasonable basis should be gathered in advance of sales or product installation.
• In-use testing protocols and accelerated aging techniques should employ procedures recognized by the EPA and consistent with good engineering judgment. OEM deterioration factors used for EPA certification may be employed.
• The product should be tested on a “worst case” vehicle or another scenario for which the product is intended to be installed.

The policy makes clear that emissions testing requirements and prohibitions on tampering and defeat devices apply for the entire life of vehicles, engines and equipment and continue to apply regardless of whether the regulatory “useful life” or warranty period has ended.

The policy does not address the issue of EPA-certified motor vehicles that are converted into a vehicle used solely for motorsports competition nor the related aftermarket parts sold exclusively for the track. SEMA is seeking clarification to verify that such parts are exempt from the emissions compliance and testing requirements.

SEMA had urged the EPA to update its tampering policy and believes the new document provides a reasonable new pathway for companies to demonstrate compliant products.

The EPA is continuing to reevaluate its 1986 policy on catalytic converters. The agency published a request for information on potential costs and air-quality benefits of withdrawing or changing the 1986 catalyst policy; the current state of the market of replacement catalysts, including the cost, volume of sales, frequency of installation, the age and mileage of vehicles on which replacement catalysts are installed; to what extent catalyst replacement is needed due to failure of the original catalyst or other reason, including theft; and the effectiveness of replacement catalysts at treating air pollution.