Law and Order

SEMA News—May 2011

LEGISLATIVE AND TECHNICAL AFFAIRS

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

Arizona Emissions Tests:

SEMA-supported legislation to exempt all vehicles 25 years old and older from the state’s mandatory biennial emissions inspection and maintenance program was approved by the Senate Rules and Natural Resources and Transportation Committees. The bill will now make its way to the floor for a vote by the full Senate. Existing law in Arizona exempts only pre-’67 model-year vehicles and those vehicles designated as “collectible.”

Arkansas Inoperable Vehicles:

SEMA is opposing legislation that would allow cities to remove inoperable vehicles from private property if the vehicle is deemed a “nuisance” under a local ordinance. The bill was approved by the Arkansas House of Representatives. Among other things, the measure provides no reasonable safeguards for legitimate automotive hobbyists who choose to work on inoperable collector vehicles on private property and establishes no provisions that would enable vehicles located out of public view to avoid being classified as abandoned.

California Air Resources Board:

SEMA-supported legislation to require that one appointed member of the Air Resources Board be a current small-business owner has been introduced in the California Legislature. The bill has been referred to the Assembly Committee on Natural Resources but has not yet been scheduled for hearing.

Connecticut Antique Vehicles:

Legislation to increase the age requirement for vehicles eligible for registration as “antique, rare or special-interest motor vehicles” has been introduced in the Connecticut General Assembly. Under the SEMA-opposed bill, vehicles seeking registration under these classes would be required to be at least 25 years old. Currently, vehicles 20 years old or older are eligible for such status and a reduced assessment for personal property tax purposes. Antique, rare or special-interest motor vehicles are currently assessed at a rate of $500, and owners pay personal property taxes on that amount.

Hawaii Car Audio Equipment:

SEMA-opposed legislation to ban the installation, ownership or use of any car with aftermarket speakers more than 6.5 in. in height or depth; any five-speaker aftermarket system; any aftermarket speaker more than 100 watts; and any aftermarket speaker installed external to the passenger compartment or in an open-hatch back will not be considered in the Hawaii legislature this year. The measure was discriminatory toward aftermarket products, as it did not seek to limit systems installed by the original vehicle manufacturer or dealer. If enacted, the bill would have denied hobbyists the opportunity to purchase and install a range of aftermarket alternatives to original-equipment stereos. The measure was deferred following a hearing on the bill in the House Transportation Committee.

Nebraska Parts Cars:

Nebraska Governor Dave Heineman signed into law a bill to redefine parts cars and make such vehicles easier to transfer. Prior to the bill’s enactment, Nebraska required a certificate of title when transferring any vehicle. The new law, effective immediately, allows for parts cars to be transferred using a bill of sale issued by the DMV. Parts vehicles eligible to be transferred using only a bill of sale under the new provisions include vehicles for which title has been surrendered due to the vehicle being destroyed, dismantled or scrapped or for which title has been surrendered to another state or an insurance company to render it fit for sale for scrap parts.


New Mexico Street Rods/Customs:  

SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles and provide for special license plates for these vehicles was approved by the Senate Transportation Committee. The Senate Finance
Committee will now consider the bill, which 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. Among other things, the measure allows for the use of non-original materials; creates a titling and registration criterion that assigns these vehicles the same model-year designation as the production vehicle they most closely resemble; holds only street rods, customs and replicas to the equipment standards specified by law during the model year listed on the title of the vehicle; and provides for a one-time registration and plate fee of $100.

North Dakota Vehicle Modifications:

A bill in North Dakota to severely restrict the modification of any motor vehicle that alters the manufacturer’s original suspension, steering or brake system has been amended and approved by the House of Representatives. At the insistence of SEMA and the North Dakota hobbyist community, among the provisions that were deleted from the bill are those requiring the state highway patrol to issue an inspection certificate for all modifications (without indicating objective criteria that would be used to determine which modifications are legal) and requiring fenders on all vehicles regardless of whether or not they were originally manufactured with this equipment. The Senate Transportation Committee will now consider the bill.

Oregon Suspension/Tire Alterations:

SEMA is opposing a bill in the Oregon legislature that would severely limit vehicle suspension, body lift and wheel/tire alterations. Specifically, the measure would ban vehicles whose bumpers are elevated more than 3 in. over the original manufactured bumper clearance. Identical legislation was last introduced in Oregon in 2001. Among other things, the bill discriminates against hobbyists and aftermarket parts makers by leaving it solely to the vehicle manufacturers to choose bumper heights; would force owners of modified vehicles to spend large sums of money to reinstall original components; and would ban useful alterations that provide adequate clearance for on-/off-road capability and accommodate heavy loads, larger tires, improved suspension and water-fording capability. The bill would also impose a fine of up to $360 per offense for vehicles that exceed the 3-in. clearance requirement.


Oregon Exhaust Systems:  

A bill to ban the sale of certain new motor-vehicle exhaust systems or exhaust system components that cause motor vehicles to produce noise that exceeds noise limits has been introduced in Oregon. Under the bill, noise limits would be specified in rules adopted by the Environmental Quality Commission (EQC). However, in 1991 the EQC terminated its noise control program. Among other things, the bill would prohibit the sale of these exhaust systems in Oregon and the sale of these systems by an Oregon-based business to an out-of-state customer; provides no clear standard to enforce and refers to EQC noise standards that are not currently in use; and makes no accommodation for SEMA-model legislation to allow vehicle hobbyists to buy and install aftermarket modified exhaust systems that meet a 95-decibel limit under a fair and predictable test.

Tennessee Emissions Tests:

SEMA is supporting identical legislation in the Tennessee House of Representatives and Senate to exempt vehicles more than 25 years old from the state’s annual emissions inspection and maintenance program, where applicable. To qualify for the exemption, these vehicles must be registered as “antique motor vehicles.” Existing law defines an antique vehicle as a motor vehicle more than 25 years old with a non-modified engine and body that is used for club activities, exhibits, tours, parades and similar uses as a collector’s item; on the highways for the purpose of selling, testing the operation of, or obtaining repairs or maintenance; and for general transportation on Saturday and Sunday.

Texas Street Rods/Customs:

 
   

The Texas Senate has joined the House in introducing SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles and provide for special license plates for these vehicles. Both bills define 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 measures also allow for the use of non-original materials and create a titling and registration criterion that assigns these vehicles the same model-year designations as the production vehicles they most closely resemble.

 

 

 

Utah Vintage Vehicles:

 
   
   

SEMA-supported legislation to allow vehicles 30 years old and older to be classified as “vintage vehicles” was approved by the Utah House of Representatives and Senate. Currently, Utah reserves the vintage vehicle class only to vehicles 40 years old and older. Under the bill, vintage vehicles 30–40 years old would now be included in the class and be charged a $45 annual registration fee. When the vehicle reaches 40 years old, the registrant would pay a one-time $40 fee. Vintage vehicles are exempted from annual emissions and safety inspections. The bill now moves to Governor Gary Herbert for his signature and enactment into law.

Washington Street Rods/Customs:

SEMA-model legislation to create a vehicle titling and registration classification for street rods and custom vehicles was approved unanimously by the Washington State Senate. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 30 years old and manufactured after 1948. Under the bill, kit cars and replica vehicles will be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Among other things, the measure exempts street rods and customs from a range of standard-equipment requirements (only that equipment required in the model year that the vehicle resembles) and emissions inspections, provides that vehicles titled and registered as street rods and custom vehicles may be used for only occasional transportation, exhibitions, club activities, parades, tours, etc., and not for general daily transportation and permits the use of blue-dot taillights. The House Committee on Transportation will now consider the bill.

Washington Collector License Plates:

Legislation that originally sought to increase the age requirement for vehicles eligible for registration as “collector vehicles” was amended and approved by the Washington House Transportation Committee. Under the amended bill, vehicles seeking registration as collector vehicles and the one-time registration fee would only be required to be at least 30 years old rather than 40 years old. The amended bill also deletes provisions that would have created penalties for violating the limited-use provisions. The measure now only requires the Department of Licensing to establish a method for law enforcement to readily access collector vehicle information using the collector vehicle’s plate number, which will aid in ensuring that a plate is being used on its properly assigned vehicle.

Wisconsin Imported Collector Cars:

   
     
     

The Wisconsin Department of Transportation has officially withdrawn its proposal to prohibit the registration of imported vehicles manufactured after 1967 that do not meet Federal Motor Vehicle Safety Standards (FMVSS). SEMA opposed the proposal. U.S. law specifically exempts imported vehicles that are 25 years old and older from these safety standards. The Department of Transportation proposal offered no such reasonable exemption. The regulation would only have permitted the continued registration of subject vehicles that are already legally registered in Wisconsin, but only until they are transferred to a new owner. Among other things, the proposal failed to recognize the fact that collector vehicles are overwhelmingly well-maintained and infrequently driven, was inconsistent with federal law and would prohibit the registration of vehicles coming in from other states that have already been proven safe on U.S. roads.

Wyoming Vehicle Titles:

A bill to ease the burden on hobbyists by providing an exemption from bonded title requirements has been signed into law by Governor Matt Mead. By allowing enthusiasts to title vehicles being restored for personal use without posting bond, the exemption reduces costs associated with titling hobby vehicles when an original title was never issued or can no longer be located. The new law allows restorers to title their completed works by submitting an affidavit of vehicle ownership, a notarized bill of sale, a written statement of the value of the vehicle (based on a national appraisal guide or appraisal performed by a dealer) and a VIN inspection. To prevent abuse of the new procedure, titles issued under this procedure will not be transferable for the first 180 days after issuance.

Federal Update

1099 Reporting Rule:

    After months of debate, the U.S. House of Representatives approved legislation removing the costly 1099 reporting requirement from the health care law passed last year.
SEMA Congressional Affairs Manager Dan Sadowski (right) with Rep. Dan Lungren (R-CA), sponsor of 1099 repeal legislation.
     
     

Adopted after SEMA and other small business organizations advocated strongly on its behalf, the “Small Business Paperwork Mandate Elimination Act” has been sent to the Senate for action. Under the bill, businesses will no longer be required to issue 1099 forms to all vendors from whom they buy more than $600 worth of goods or services in any year, beginning in 2012. The mandate has garnered widespread opposition on Capitol Hill, and President Barack Obama called for its repeal during his State of the Union address. The requirement was intended to prompt vendors receiving 1099 forms to declare and pay taxes on the income. SEMA was a leader among small-business organizations in supporting the repeal and was invited to participate in a press conference with the bill’s original sponsor, Representative Dan Lungren (R-CA) urging support for the legislation.

Ethanol:

The U.S. House of Representatives approved a provision to prevent the U.S. Environmental Protection Agency (EPA) from using agency funds to permit an increase in the amount of ethanol content in gasoline to 15% (E15). The provision is part of a larger bill to fund the federal government during fiscal-year 2011 that must also be approved by the U.S. Senate. SEMA requested this action and worked hard to secure the final vote, which was a significant temporary victory demonstrating widespread concern about E15 in Congress. SEMA is working with an industry coalition to secure Senate support for an E15 moratorium in both the fiscal-year 2011 and 2011 appropriation bills. SEMA will continue to oppose E15 until there are conclusive scientific findings that demonstrate that it will not harm automobiles of any age as a result of corrosion or other chemical incompatibilities.

Patent Reform:

The U.S. Senate is considering legislation that proposes to change how patents are awarded. Patents are currently granted to individuals who can prove that they were the original inventors. The Senate bill would switch the U.S. to a “first-to-file” system—a method utilized 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. The bill would make a number of administrative changes as well. If approved, the House of Representatives will consider the legislation.

Scrap Tires:

The EPA will continue to allow industrial facilities to recycle tires by burning them as fuel. Supported by SEMA, the decision preserves an important recycling option, which accounts for more than 50% of annual scrap-tire disposals. The EPA had initially ruled that the tires would be classified as solid waste, requiring the removal of metal before being burned. Paper mills, cement kilns and electric power plants are the major fuel users of recycled tires.

Air Conditioning Refrigerant:

The EPA approved hydrofluoroolefin (HFO-1234yf) as an acceptable substitute chemical for R-12 (Freon), R-134a and other chlorofluorocarbon refrigerants in new motor vehicles. The chemical is believed to have far less global-warming potential than the other chemicals. The EPA approval applies to only new vehicles. HFO-1234yf may not be used in retrofitted vehicles or by “do-it-yourselfers” to recharge vehicle air conditioners, pending further review.

Anti-Ejection Rule:

The National Highway Traffic Safety Administration (NHTSA) has established a new safety standard, FMVSS No. 226, intended to prevent occupants from being ejected through side windows during
a vehicle rollover or side-impact crash. Vehicle manufacturers will have flexibility in determining how to meet the standard’s performance requirements. Anticipated automaker alternatives include using advanced window glazing, making side airbags larger and more robust or tethering side airbags to the base of the vehicle’s pillars. FMVSS No. 226 will be phased in over a four-year period beginning in 2013.

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