August 1998

Congress Considers Bill Granting Tax Relief to Car Collectors

In a move that would favor hobbyists, Speaker of the House, Newt Gingrich recently introduced the Economic Growth Act of 1998 (H.R. 4125). Among other provisions, this Bill would reduce the capital gains tax rate from 28 to 15 percent for "collectibles" - including collector automobiles - purchased after June 24, 1998 and held at least one year before sale.

Last year, the Taxpayer Relief Act of 1997 cut the capital gains tax rate on the sale of investments from 28 to 20 percent; however, proceeds from the sale of collectibles used as investments were specifically excluded in the 1997 law and continue to be taxed at 28 percent. This tax break will benefit automotive hobbyists by seeking to tax all investments the same, whether they are stocks and bonds or valuable collector cars.

SEMA and the SEMA Action Network urge hobbyists to support H.R. 4125 and its companion bill in the Senate, S. 2214. It will be an uphill fight, but we need to let Congress know that this potential change in the law will have far-reaching positive effects for automotive hobbyists and the economy as a whole. Chris Kersting, SEMA Vice President of Government Affairs, commented, "H.R. 4125 would spur economic growth by adding to the billions of dollars spent annually on collector vehicles and allow auto enthusiasts the benefit of treating collector cars as true investments."

Texas Repeals Scrappage Program

The Texas Natural Resource Conservation Commission (TNRCC) approved a proposal to repeal that state’s vehicle scrappage program. According to the agency, the action was taken because the scrappage program is inconsistent with the state’s current inspection and maintenance program. As a result, the U.S. Environmental Protection Agency (EPA) withdrew its proposal to disapprove the Texas scrappage program for the same reason.

The EPA argued that Texas should not be able to generate emissions credits through its scrappage program because it was assessing credit values based on a two-speed idle emissions test that officials found inadequate. SEMA Director of State Relations Steve McDonald commented, "All mobile source emissions-reduction programs must be carefully developed to achieve maximum real environmental benefits. In this regard, we feel that current state scrappage programs fail and we support efforts to repeal them, especially those that lack credible test methods and data needed to assess claimed environmental benefits."

The Texas Vehicle Club Council (TVCC) and SEMA have been coordinating efforts to oppose any future scrappage programs that might emerge in Texas. SAN contact and TVCC Chairman Troy Mennis commented, "We are pleased that the current Texas scrappage program was repealed and we are cautiously optimistic that an even worse program will not be substituted in its place. If another scrappage program appears, however, our crusher response team is poised to act." The TVCC's "crusher response team" is a group that publicizes and educates the public on efforts to crush valuable restorable automobiles.

Delaware Street Rodders Win Emissions Exemption

Street rodders in Delaware report that Governor Thomas Carper signed H.B. 494 into law, exempting street rods from the requirements of the state’s emissions inspection. The bill allows street rods, unlike antique vehicles, to be used for daily transportation and requires valid liability insurance. Under the law, street rods are defined as vehicles manufactured prior to 1949 that have been modified for safe road use, or kit cars resembling an original pre-1949 vehicle. Further, the bill describes the requirements that must be met in order for a street rod to pass the state’s safety inspection, including a new provision allowing a 7-inch minimum height for windshields.

The bill received heavy backing from the Mid Atlantic Street Rod Association (MASRA) and Delaware Street Rods, Inc. According to SAN contact Mark Warrington, former VP of Delaware Street Rods, Inc., "This law creates a level playing field and codifies the rules for everyone. All the specialty car clubs in Delaware are pleased with the legislation."

California SCAQMD Reconsiders Scrappage

California hobbyists and SEMA joined forces to convince the South Coast Air Quality Management District (SCAQMD) to once again postpone implementing amendments requiring the permanent destruction of vehicles and parts under the Rule 1610 vehicle scrappage program. The parts recycling issue will now be taken up by the SCAQMD technical committee for further review.

At the hearing, Frank Bohanan, SEMA Director of Technical Affairs, argued against the amendments citing their conflict with existing State legislation requiring maximization of the salvage value of collector vehicles and parts. Bohannon also pointed out that the U.S. EPA has not mandated the destruction of parts as a condition for approving Rule 1610. Car club representatives also provided first-hand knowledge that recycled parts ensure affordable repairs and are indispensable for restoring classic and collector vehicles.

SEMA and SAN hobbyist testimony was reinforced by a letter from California State Senator Richard Mountjoy (R-CA) requesting the SCAQMD governing board not approve the amendments. As a result of these combined efforts, the SCAQMD board has indefinitely postponed ruling on the issue pending further evaluation. Further, SCAQMD Chairman William Burke (an avid vehicle enthusiast) has volunteered to become personally involved in the SCAQMD Technical Committee process for investigating the issue.

SEMA and the SEMA Action Network will continue to work with the SCAQMD, the California Air Resources Board and the legislature to ensure a solution which does not hinder the enthusiast's ability to buy scrapped vehicles and parts. The SEMA Action Network would like to recognize the Association of California Car Clubs and all the other individual clubs which responded to our alerts and sent members to testify against the proposed vehicle scrappage program.

Nevada Exempts Restored Vehicles from Emissions Inspection

The Nevada Division of Environmental Protection has approved a petition to exempt restored vehicles from emissions inspection and maintenance programs. Vehicles that may qualify for the exemption include "classic rods" (20 years old or older), "classic cars" (25 years old or older), "street rods" (Pre-1948) and "old timers" (40 years old or older). Qualifying vehicles are required to have specialty license tags, be driven less than 2,500 miles a year and must pass an initial emissions inspection before they are eligible for the exemption.

SEMA Vice President of Government Affairs Chris Kersting commented, "We support state regulatory actions that acknowledge the relatively minimal impact of specific older vehicles on air quality. Such vehicles constitute a small portion of the vehicle fleet and are generally well-maintained and infrequently operated."

New Jersey Pursues ‘Modified Performance’ Vehicle Classification

New Jersey’s Council of Vehicle Associations/Classic Vehicle Advocate Group (COVA/CVAG) has asked SEMA to join an effort to encourage state regulators to implement a new "modified performance" vehicle classification. According to COVA/CVAG, the New Jersey Departments of Motor Vehicles (DMV), Transportation (DOT) and Environmental Protection (DEP), agreed in principal to include this new classification in the DMV’s regulations for "collector motor vehicles." Under the agreement, modified performance vehicles would be limited to 10,000 drive- miles per two year cycle. Those manufactured between 1981 and the present would be emissions inspected using an idle test and a stationary 2,500 RPM test. Those manufactured prior to 1981 would only be idle tested. In addition, all of these vehicles would be required to carry the appropriate insurance for mileage-restricted vehicles and bear a window sticker identifying the vehicle as a "modified performance" vehicle.

In a letter to the DMV, SEMA supported the agreement and also stated its opposition to failing vehicles in emissions tests based on visual inspections of emissions control devices. "Many of these cars can pass the tailpipe emissions test, but are failed solely because there is an emissions-legal modification or add-on device present," said SAN contact Butch DeZuzio, President of COVA/CVAG. "Some of these modifications, which result in a visual check failure, actually improve emissions and result in a cleaner operating vehicle."

SEMA Action Network Presents Award to Old Car Council of Colorado

Brian Caudill, SEMA Director of Outreach and Public Affairs, and Steve McDonald, Director of State Relations, journeyed to Denver, Colorado, recently to address and present an award to the Old Car Council of Colorado (OCCC). Representing 11,000 people in 65 clubs, from streetrods to antiques to late-model and muscle cars, the OCCC is a remarkable example of the political impact that can be generated by organized hobbyists.

Caudill briefly explained what SEMA is and the goals of the SAN. Further, he encouraged each OCCC member club to join the SAN individually, because, as Caudill often states, "Duplication of information is a beautiful thing. If even a handful more people receive our legislative and regulatory alerts, it’s worth the effort." Caudill also urged representatives to remain politically active both within the OCCC and their own clubs. "The key to keeping our cars safe is to stay active and avoid complacency."

Steve McDonald congratulated the OCCC on its political savvy and power, as exhibited earlier this year when the OCCC combined with other Colorado vehicle clubs to lead the charge against a restrictive raised vehicle Bill in the Colorado legislature. No sooner had the Bill been introduced than the OCCC and the SAN sprang into action. The SAN sent out legislative alerts to the OCCC. These alerts were immediately distributed by OCCC representatives to their member clubs. This highly organized grassroots effort helped force the withdrawal of legislation prohibiting vehicles with suspension or height modifications from traveling Colorado roads. The Council also retains its own lobbyist to monitor automotive legislation and maintain OCCC's relationships with Colorado legislators.

The SAN and Colorado hobbyists are particularly indebted to the OCCC's SAN representative, Rick Shopmier, and OCCC President, Wayne Kreps, for their service to the OCCC and for their willingness to spread the word.