January 30, 2017 Weekly Legislative Update

Letter Supporting Death Tax Repeal Act

On January 24, 2017 the Family Business Coalition sent a letter to Senator John Thune (R-SD) and Congresswoman Kristi Noem (R-SD) supporting their introduction of the Death Tax Repeal Act of 2017. 132 trade associations and advocacy organizations representing a wide range of America’s family businesses joined the letter in support the legislation. The coalition letter states in part, “The negative effects of the estate tax make permanent repeal the only solution for family businesses and farms. Your legislation will help America’s family businesses create jobs, expand operations, and grow the economy.”

The Family Business Coalition applauds Senator Thune (R-SD), Congresswoman Noem (R-SD), Congressman Bishop (D-GA) and the original cosponsors of the Death Tax Repeal Act for offering bipartisan, bicameral legislation that will protect family businesses. The Death Tax Repeal Act of 2017 provides much needed relief to family business owners and farmers working with the intent to pass their businesses to the next generation. Comprehensive tax reform should eliminate double taxation like the death tax and encourage the succession of family owned businesses and farms. Family businesses are important pillars in the communities that they are a part of and provide the majority of jobs in the country. According to the Harvard Business Review family businesses account for 60 percent of workers and 78 percent of new jobs.

Identical legislation in the 114th Congress by Chairman Kevin Brady (R-TX) passed the House of Representatives with bipartisan support, 240-179. The Family Business Coalition will be mobilizing its members to help add cosponsors to the legislation.

The full letter is available here: http://familybusinesscoalition.org/wp-content/uploads/2017/01/FBC-Coalition-Letter-Death-Tax-Repeal-Act-of-2017.pdf
 

Kia/Hyundai Update

In talks with the law firm that handling this class action suit, it looks like there’s overlap we may be able to use for our members’ customers who are cheated by Kia on aftermarket service/parts allegations. The law firm is checking now to see how much information they can give me. I asked them to check if Kia denied warranty coverage for any problems in the underlying complaints due to a plaintiff’s failure to use a Kia brand oil filter.

Greg Wallis and Jodie Peltier v. Kia Motors America Inc., Case No. 8:16-cv-01033 (U.S. District Court for the Central District of California).

This is a 2016 consumer class action lawsuit over allegations that certain Sportage, Optima, and Sorento vehicle models are prone to catastrophic engine failure due to an engine oil defect. Plaintiffs were represented by Richard D. McCune, David C. Wright, Joseph G. Sauder, Matthew D. Schelkopf, and Joseph B. Kenney of McCune Wright LLP. Their main office number is (909) 557-1250.

Voluntarily dismissed November 7, 2016 under agreement that Kia pays for all repairs.

Details/Allegations

The class action lawsuit arises from Kia Motor America’s alleged failure to disclose that the engines in affected vehicles contain a latent defect that results in the restriction of oil flow through the connecting rod bearing, as well as to other vital areas of the engine.

Plaintiff Greg Wallis of California purchased a pre-owned 2013 Kia Optima LX in November 2013. In March 2016, while driving on the highway, Wallis claims he heard an unusual engine noise upon acceleration and brought his car into a Kia service department. A Kia service technician reportedly evaluated Wallis’ vehicle and advised him that he needed to replace the motor due to metal shavings found inside the vehicles engine for a cost of $7,000. After charging $200 just to diagnose the issue, Wallis declined additional work on his vehicle and left the dealership.

However, after leaving the dealership to drive a short 15 miles home, Wallis’ Kia Optima seized while driving and he was forced to have the car towed to his home, where is vehicle remains inoperable due to the failed engine, the lawsuit states. Wallis claims that he contacted Kia’s customer service center numerous times, but Kia was unwilling to assist him with the costs of repairing the failed engine in his vehicle.

Co-plaintiff Jodie Peltier of Illinois alleges similar circumstances with her 2013 Kia Sorento, which caused her vehicle to dangerously stall during high speed. It is believed the connecting rod bearings in certain engines fail as metal debris circulate throughout the engine via the engine oil. Over time, the contaminants in the oiling system cause the connecting rod bearings to fracture and spew large amounts of metal debris into the engine oil, which it cannot filter out to maintain necessary oil pressure.

“This contaminated engine oil is recirculated throughout the engine by the oil pump, causing damage to the various engine components and eventually results in sudden and unexpected catastrophic engine failure. If the vehicle is being operated on the highway at the time of the engine failure, it will ultimately result in a high speed stalling event, as it did for Plaintiff Peltier,” the class action lawsuit reports.

Both plaintiffs assert that Kia had a longstanding knowledge that this sufficient engine oil defect existed and could cause catastrophic engine failure and stalling while in operation, posing a significant safety risk to the vehicle occupants. According to the Kia engine oil defect lawsuit, many owners and lessees of the affected vehicles communicated with Kia to remedy the concealed engine oil defect and damage caused to their cars, but claim that Kia refused to take any action to correct, even within the warranty period.

“Not only did Kia actively conceal the material fact that this particular component is defectively designed (and requires costly repairs to fix), but it also did not reveal that the existence of this defect would diminish the intrinsic resale value of the vehicle,” the lawsuit states.

Even numerous complaints filed with the National Highway Traffic Safety Administration (NHTSA), have not prompted Kia to repair the engine oil defect or to reimburse customers who incurred out-of-pocket expenses to repair the defect.

The lawsuit cites at least 19 customer complaints filed with the NHTSA. One of these NHTSA complaints posted by a 2011 Kia Optima owner states that “while driving approximately 60 mph an abnormal sound emitted from under the hood of the vehicle as the check engine oil warning light flickered. The vehicle was taken to an independent mechanic where it was diagnosed that the connecting rod failed and the engine needed to be replaced…”

RPM Act of 2017 Talking Points

Q:  How does this bill differ from last year?

·         The text of the RPM Act of 2017 (H.R. 350/S. 203) and the RPM Act of 2016 (H.R. 4715/S. 2659) is identical. The only difference is the bill number.

·         Like last year’s bill, the bipartisan RPM Act of 2017 clarifies the Clean Air Act by affirming that it has always been legal to modify a street vehicle into a race vehicle used exclusively at the track.

·         The bill also confirms that modifying these vehicles for exclusive track use would not be considered tampering.

·         It addresses any doubts regarding the regulation of racecars and gives the public and racecar industry much-needed certainty regarding how the Clean Air Act is applied.

Q:  Didn’t the EPA withdraw its proposed racing regulation from the Proposed

      Phase 2 Medium- and Heavy-Duty Greenhouse Gas Standards rule?

·         Yes, with the support of industry and enthusiasts, Congress pushed the EPA to withdraw problematic language about racecars from its Proposed Phase 2 Medium- and Heavy-Duty Greenhouse Gas Standards rule in August 2016.

·         However, the EPA still maintains that converted street cars and motorcycles are illegal if the emissions-system has been altered from its certified configuration in order to become a race vehicle. 

·         As a consequence, the EPA considers any business that makes or supplies the parts and services that support these racecars to have engaged in an illegal practice subject to civil penalties.

·         The racing industry cannot survive with this doubt and uncertainty.  Clarifying action from Congress, through passage of the RPM Act, remains necessary.

Q:  Doesn’t the Clean Air Act make it illegal to modify the emissions system

      of a motor vehicle from its original configuration?

·         The Clean Air Act was never intended to allow the EPA to regulate racecars. 

Ø  Motor Vehicle Air Pollution Control Act of 1965:  Congress defined the term “motor vehicle” as “any self-propelled vehicle designed for transporting persons or property on a street or highway.”  Congress included “anti-tampering” language, making it illegal for “any person to remove or render inoperative any device or element of design installed on or in a motor vehicle or motor vehicle engine in compliance with regulations under this title prior to its sale and delivery to the ultimate purchaser”.
 

Ø  Clean Air Act Amendments: 1970:  Lawmakers expand the anti-tampering provision to provide that no person can render the emissions controls inoperative “after such sale and delivery to the ultimate purchaser.”  Congress also clarifies that the law does not apply to vehicles manufactured or modified for racing.  The clarification was included in the congressional conference committee report (language below).

*    See House Consideration of the Report of the Conference Committee, Dec. 18, 1970 (reprinted in A legislative history of the Clean air amendments of 1970, together with a section-by-section index, U.S. Library of Congress, Environmental Policy Division, Washington: U.S. Govt. Print. Off. Serial No. 93-18, 1974, p. 117) (Representative Nichols: “I would ask the distinguished chairman if I am correct in stating that the terms “vehicle’ and “vehicle engine” as used in the act do not include vehicles or vehicle engines manufactured for, modified for or utilized in organized motorized racing events which, of course, are held very infrequently but which utilize all types of vehicles and vehicle engines?”; Representative Staggers: “In response to the gentleman from Alabama, I would say to the gentleman they would not come under the provisions of this act, because the act deals only with automobiles used on our roads in everyday use. The act would not cover the types of racing vehicles to which the gentleman referred, and present law does not cover them either.”).

Q:  What are the bill’s prospects for this year?

·         Last year, racing enthusiasts and Americans working in the motorsports parts industry flooded Congress with nearly 200,000 letters in support of the bill.  This encouraged more than one-fourth of the U.S. House of Representatives and Senate to join the bill as cosponsors.

·         However, the shortened election year schedule did not permit sufficient time for passage of the bill in 2016.

·         Given the enthusiasm we’ve seen from Congress this year – the bill was submitted for reintroduction in the House on the first day of the new Congress. H.R. 350 gained more than 73 cosponsors from both parties in less than two weeks, and we expect that number to go up significantly.  S. 203 was introduced in the Senate on Jan. 24 with 14 cosponsors.  We’re excited and optimistic about its outlook this year.

·         We look forward to continuing the bill’s momentum and working with the new Congress and the Trump Administration to get the RPM Act over the finish line. 

The bill is likely to be looked at favorably by the committees of jurisdiction, as House Energy & Commerce Chairman Greg Walden (R-OR) and Senate Environment and Public Works Chairman John Barrasso (R-WY) cosponsored the RPM Act in 2016. 

Q:  Why is it important for Congress to pass this bill?

·         Converting a vehicle into a dedicated racecar is part of American heritage. 

·         It’s also a big industry -- motorsports competition involves tens of thousands of participants and vehicle owners each year, both amateur and professional.  Retail sales of racing products make up a $1.4 billion market annually. 

·         There are an estimated 1,300 racetracks operating across the U.S., including oval, road, track and off-road racetracks, a majority of which feature converted race vehicles.

·         Until now, it has been an unquestioned practice by enthusiasts, industry and regulators that has worked harmoniously with previous application of the Clean Air Act.

·         Passage of the RPM Act will end this debate, provide race enthusiasts and businesses with long-term certainty regarding how the Clean Air Act is applied to motorsports.  

·         We look forward to working with Congress to enact the RPM Act and make permanent the Clean Air Act’s original intention that race vehicle conversions are legal.

Q:  What are next steps?

·         We are working with House and Senate leaders to schedule the legislation for consideration by the committees of jurisdiction.

Q:  Are you seeking help from racers/ enthusiasts again this year?

·         Last year, the racing community undertook an unprecedented effort to protect Americans’ right to modify street vehicles into dedicated racecars and our industry’s right to sell the parts that support the sport.

·         Their persistence and enthusiasm resulted in a huge achievement – garnering 148 Congressional lawmakers signing on to cosponsor the RPM Act.

·         We are calling on racing enthusiasts throughout the U.S. to contact their members of Congress to request support for the bill.

·         We are working with our allies in the House and Senate to get increase the number of bill cosponsors in order to position the RPM Act to become law in 2017.