November 16, 2015 Weekly Legislative Update

CONGRESS IS IN SESSION

Congress returns today from its Veteran’s Day recess, a top issue to be reviewed is the 6-year Transportation Bill. As Congress tries to reach a consensus, many issues are being discussed – including the mandatory tire registration and turning over customer lists to manufacturers.

Tire retailers are urged to contact their representatives – and especially the conferees – to remove the controversial language and to call for a study, with all segments of the industry participation, to seek realistic solutions to increase tire registration sales and to improve recall procedures. The Tire Industry should develop solutions for the tire industry!

For the House Transportation and Infrastructure Committee, GOP conferees will include Chairman Bill Shuster, Jimmy Duncan of Tennessee, Sam Graves of Missouri, Rick Crawford of Arkansas, Lou Barletta of Pennsylvania, Blake Farenthold of Texas, Jeff Denham of California, Reid Ribble of Wisconsin, Scott Perry of Pennsylvania, Rob Woodall of Georgia, John Katko of New York, Bob Gibbs of Ohio, Brian Babin of Texas, Cresent Hardy of Nevada and Garret Graves of Louisiana.

Democratic conferees on the Transportation committee will include Peter DeFazio, Eleanor Holmes Norton of DC, Jerrold Nadler of New York, Corrine Brown of Florida, Eddie Bernice Johnson of Texas, Elijah Cummings of Maryland, Rick Larsen of Washington, Michael Capuano of Massachusetts, Grace Napolitano of California, Daniel Lipinski of Illinois, Steve Cohen of Tennessee and Albio Sires of New Jersey.

If you know one of the House conferees, please reach out to them on the tire registration provision. Please call the Association office to report how your discussion went.

Senate conferees include:

GOP Sens. Jim Inhofe (R-OK), John Thune (R-SD), Orrin Hatch (R-UT), Lisa Murkowski (R-AK), Deb Fisher (R-NE), John Barrasso (R-WY) and John Cornyn (R-TX).

Democratic conferees will be Sens. Barbara Boxer (D-CA), Sherrod Brown (D-OH), Bill Nelson (D-FL), Ron Wyden (D-OR), Dick Durbin (D-IL) and Chuck Schumer (D-NY).

CONGRESS SHOULD REJECT A NEW TIRE REGISTRATION MANDATE FOR INDEPENDENT DEALERS

Section 34433 “Tire registration by independent sellers” was included in the DRIVE Act and adopted by reference into the companion House bill, the STRR Act (HR 22).  If included in the conference report, the provision would set into motion a NHTSA rulemaking that could reinstate a 1970s-era paperwork mandate on small businesses.  The impact would be to potentially shift blame for recall performance from the product manufacturers to independent gasoline stations, truck stops, and tire dealers.

This provision could reinstate previously rejected NHTSA rules that Congress halted under the Motor Vehicle Safety and Cost Savings Authorization Act of 1982.  Under the 1970’s-era rules, NHTSA demanded detailed registration information and levied hefty fines on independent dealers who had failed to comply.  The demands were onerous and serious legal requirements became the responsibility of mechanics, tire installers, and gasoline station managers.  Yet compliance rates were low and small businesses could not afford to pay the fines, which could reach as high as $700,000.  This regulatory burden threatened the viability of the family-owned businesses.  The system was unworkable and did not effectively advance safety.

In 1982, Congress changed the requirements to establish a voluntary registration process in which customers, rather than dealers, voluntarily registered their tires.  This process is similar for other consumer products, such as child safety seats and toys, where the purchaser voluntarily registers their purchase to get recall notices.  We are not aware of any other safety products in which an independent salesperson is responsibility for a customer’s product registration or a manufacturers’ product defect.

While the provision is vague and gives broad latitude to NHTSA to regulate these small businesses, the language is specific enough to include direction for tire dealers to turn over their customer lists to manufacturers, even when no recall has been issued.  This is an idea that dealers adamantly oppose.

Tire dealers are urging conferees to remove Sec. 34433 from the bill and prevent a return to the failed, onerous paperwork requirements of the past. 

We do agree however, that recall performance can be improved and we would like to work on with the tire manufacturers to achieve this goal.  For example, we believe one way to improve recall performance would be for manufacturers to add low-cost, proven RFID chips to tires that allow maintenance professionals to scan the tires and immediately be alerted to open recalls during routine maintenance.  Adoption of this technology not only will improve registration compliance, but also greatly improve recall rates.

We ask Congress to encourage tire manufacturers and dealers to come to a mutual agreement to improve recall performance, rather than pit the two sides against each other with controversial legislation and new regulatory burdens.

PETITION CONGRESS: OPPOSE MANDATORY TIRE REGISTRATION

 (H.R. 22; S. 1741; H.R. 2410)

PLEASE SIGN THIS PETITION!

Last week, we launched a nationwide grassroots petition opposing a return to an ineffective and burdensome mandatory tire registration system. We received stacks of signatures from those who attended the GTE show in Las Vegas. We plan on sending these signatures to every member of Congress showing them how united the tire industry is on this issue.

If you were unable to attend GTE and would still like to sign this petition there is still time! So we can involve all our members we have launched an online petition though change.org. This website allows us to directly collect signatures and send them to members of Congress. We ask that you please sign the petition by clicking the link below (**PLEASE LEAVE YOUR COMPANY NAME IN THE "I'M SIGNING BECAUSE" BOX**):

https://www.change.org/p/congress-petition-congress-to-reject-a-mandatory-tire-registration-proposal?recruiter=403257752&utm_source=share_petition&utm_medium=copylink

Our petition makes the following points:

Tire Retailers Oppose:

  • Shifting the liability and cost for tire registration to the retailer.
  • Returning to an archaic pencil and paper registration system that Congress ended in 1982.
  • Requiring retailers to turn their customer lists over to manufacturers as manufacturers begin online tire sales.
  • Fining retailers up to $1,000 per tire and $700,000 per location for failure to properly register tires.

Tire Retailers Support:

  • Tire manufacturers and retailers coming together to develop an industry solution to improve registration and recall performance.

-You can see the full letter we will be sending to Congress at the bottom of the petition.

Background:

A little-noticed tire dealer provision was quietly added to the Senate highway bill (the DRIVE Act) in a manager’s amendment in the Commerce Committee markup.  The provision is titled “Tire registration by independent sellers.”  If implemented, the provision would set into motion a NHTSA rulemaking that could reinstate a 1970s-era paperwork mandate on small businesses and potentially shift blame for recall performance from the product manufacturers to independent gasoline stations, truck stops, and tire dealers.

The Senate proposal was added without hearings or discussion, yet would reinstate previously rejected NHTSA rules that Congress halted under the Motor Vehicle Safety and Cost Savings Authorization Act of 1982.

Under the 1970s rules, NHTSA demanded detailed registration information and levied hefty fines on independent dealers who had failed to comply.  The demands were onerous and serious legal requirements became the responsibility of mechanics, tire installers, and gasoline station managers.  Compliance rates were low but small businesses could not afford to pay the fines, which could reach as high as $700,000, threatening the viability of the family-owned businesses.  The system was unworkable and did not advance safety.

In 1982, Congress changed the requirements to establish a voluntary registration process in which customers, rather than dealers, voluntarily registered their tires.  This process is similar for other consumer products, such as child safety seats and toys, where the purchaser voluntarily registers their purchase to get recall notices.  We are not aware of any other safety products in which an independent salesperson is responsibility for a customer’s product registration or a manufacturers’ product defect.

While the Senate provision is vague and gives broad latitude to NHTSA to regulate these small businesses, the language is specific enough to include direction for tire dealers to turn over their customer lists to manufacturers – an idea that dealers adamantly oppose.  We oppose a return to the failed, onerous paperwork requirements of the past and urge the House to reject any legislation that could lead to independent dealers being forced to turn over our customer information to product manufacturers.

We do agree however, that recall performance can be improved and we would like to work on with the tire manufacturers to achieve this goal.  For example, we believe one way to improve recall performance would be for manufacturers to add low-cost, proven RFID chips to tires that allow maintenance professionals to scan the tires and immediately be alerted to open recalls during routine maintenance.  Instead of more NHTSA rules, adoption of this technology not only will improve registration compliance, but also greatly improve recall rates.

We ask Congress to encourage tire manufacturers and dealers to come to a mutual agreement to improve recall performance, rather than pit the two sides against each other with controversial legislation and more regulations.

LEGISLATIVE UPDATE

While there has been quite a bit of high profile legislation and exciting developments on Capitol Hill recently, we wanted to take an opportunity to touch on a few lesser known pieces of legislation making their way through Congress that could have a positive impact for small business.  

REGULATORY REFORM LEGISLATION

In October, the Senate Homeland Security and Governmental Affairs Committee (the “Committee”) marked up, and voted to move forward, four bills that would impact the regulatory process.  Each of these bills has bi-partisan co-sponsorship. TIA has been a strong supporter of regulatory reform and has advocated on behalf of efforts to alleviate the over-regulation that stifles small business growth and will be assessing the strength of each of these bills.

The Independent Agency Regulatory Analysis Act

The Independent Agency Regulatory Analysis Act (S. 1607), which is said to have been in development for a few years, was introduced by Senator Rob Portman (R-OH) on July 18, 2015.  Presently, the bill is co-sponsored by Senators Susan Collins (R-ME) and Mark Warner (D-VA).

The Independent Agency Regulatory Analysis Act would give the President the authority to (through an Executive Order) require independent regulatory agencies, such as the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB), to comply with the same regulatory analysis requirements that are applicable to non-independent agencies.  The Act would also authorize the President to require the independent regulatory agencies to publish and provide the Office of Information and Regulatory Affairs (OIRA) with cost-benefit assessments for proposed or final rules of economic significance and/or to submit such rules for review by OIRA. 

The Independent Agency Regulatory Analysis Act was approved by the Committee in a 9-4 vote.  However, certain Democratic Senators, including some on the Committee, have raised concerns that adding OIRA review is counter to the independence of the independent agencies, while others have suggested that the bill is targeted primarily (and improperly) at reigning in the NLRB. 

The Smarter Regulations Act 

The Smarter Regulations Act (S.1817) was introduced on July 21, 2015, by Senator Heidi Heitkamp (D-ND) and is co-sponsored by Senators James Lankford (R-OK), Mark Warner (D-VA) and Kelly Ayotte (R-NH).

The Smarter Regulations Act would require that, when introducing a major proposed or final major rule, each agency include a framework for reassessing the rule.  Specifically, the framework would need to include a time frame for reassessment not to exceed 10 years after the promulgation of the rule.

The Principled Rulemaking Act

The Principled Rulemaking Act (S.1818) was introduced on July 21, 2015, by Senator James Lankford (R-OK) and is currently co-sponsored by Senators Kelly Ayotte (R-NH) and Heidi Heitkamp (D-ND). 

The Principled Rulemaking Act would codify parts of two existing executive orders and require that agencies only promulgate rules that are “(A) required by law; (B) necessary to interpret a law; or (C) made necessary by compelling public need, such as a material failure of the private markets to protect or improve the health and safety of the public, the environment, or the wellbeing of the people of the United States.”

The Principled Rulemaking Act would set forth the considerations that each agency must make before promulgating a rule to ensure that the rule falls into one of these categories.

The ranking member of the Committee, Senator Tom Carper (D-DE) raised concerns that codifying these executive orders would eliminate flexibility on the part of the agencies and slow down the rulemaking process by subjecting each step of the process to judicial review.  Senator Carper offered two amendments that were rejected by the Committee.  The bill was passed out of committee without amendment by a vote of 7-5.

The Early Participation in Regulations Act

Like the Principled Rulemaking Act, the Early Participation in Regulations Act (S. 1820) was introduced on July 21, 2015, by Senator Lankford and is co-sponsored by Senators Ayotte and Heitkamp.

The Early Participation in Regulations Act would require agencies to provide at least ninety days advance notice before publishing a proposed major rule. Such notice would be required to include a statement of nature of the issue sought to be addressed by the rule. The agency would then need to provide interested parties with at least sixty days to submit comments to the agency.

For the purposes of the Act, a “major rule” would be a rule that is likely to impose “(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, local, or tribal government agencies, or geographic regions; or (C) significant effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.”

Senator Carper also raised concerns about the Early Participation in Regulation Act, specifically, that it would bind the agencies to follow the process even if early notice and comment would not be the most effective way to rulemaking.  Senator Carper proposed an amendment to the bill to give agencies more flexibility to decide if advance notice and comment would be effective.  This amendment was rejected and the bill was voted out of committee without amendment by an 8-4 vote.

A fifth bill, the Regulatory Improvement Act (S.708), sponsored by Senator Angus King (I-ME) and co-sponsored by Senators Roy Blunt (R-MO), Roger Wicker (R-MS) and Jeanne Shaheen (D-NH) was introduced before the Committee but then withdrawn after lengthy debate.  The Regulatory Improvement Act would have created a Regulatory Improvement Commission with the authority to evaluate regulations and recommend modification, consolidation or repeal.

 

While each of the four bills passed out of the Committee had some level of bi-partisan support, they have still faced some significant opposition.  In advance of the mark-up, thirty-one organizations (many of them well known, including the AFL-CIO and the Natural Resources Defense Council) sent a letter to the Senators on the Committee urging them to vote against all of the bills.  The letter asserted that each of the bills would contribute to further “regulatory delay and inaction” and undermine the agencies’ ability to promulgate rules to protect the public.

PROTECTING LOCAL BUSINESS OPPORTUNITIES ACT

The Protecting Local Business Opportunity Act, introduced by Senators Lamar Alexander (R-TN) and Johnny Isakson (R-GA), in the Senate (as S. 2015), and Reps. John Kline (R-MN) and Phil Roe (R-TX), in the House (as H.R. 3459). The two versions of the bills are identical.  Presently, the Senate version has forty-seven additional co-sponsors all of whom are Republicans.  The House version now has 107 additional co-sponsors, 104 of whom are Republicans and 3 of whom Democrats. 

The Protecting Local Business Opportunities Act was introduced as a response to the National Labor Relations Board’s (NLRB) August 2015 decision involving Browning-Ferris Industries of California, in which the NLRB revised its standard for determining joint employer status (and liability) under the National Labor Relations Act.  Specifically, the NLRB stated that two or more entities will be considered joint employers if they are both employers under common law and “share or codetermine those matters governing the essential terms and conditions of employment.”  Most importantly, in its decision the NLRB stated that it would no longer require that a joint employer both possess and exercise control over the employee, and that the NLRB will consider “reserved authority to control.”

In an effort to repeal the NLRB’s new standard, the Protecting Local Business Opportunities Act would amend the National Labor Relations Act to state that “Notwithstanding any other provision of this Act, two or more employers may be considered joint employers for purposes of this Act only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.”

In the Senate, no action has been taken on the bill since it was introduced on September 9 and assigned to the Committee on Health, Education, Labor, and Pensions. 

In the House on the other hand, the House Education and Workforce Committee marked up the bill on October 28, 2015, and voted the bill out of committee in a vote of 21-15.  We have not yet heard anything regarding when the bill might be brought to the House floor for a vote.

SMALL BUSINESS HEALTHCARE RELIEF ACT

As we have previously reported, another important piece of legislation pending in both the House and Senate is the Small Business Healthcare Relief Act (S. 1697/H.R. 2911) which the SBLC has publically supported.  The Small Business Health Care Relief Act is a bipartisan bill being sponsored in the Senate by Senators Chuck Grassley (R-IA) and Heidi Heitkamp (D-N.D) and in the House by Congressmen Charles Boustany (R-LA) and Mike Thompson (D-CA). 

The Act would reverse IRS Notice 2013-54, which prohibits health reimbursement arrangements for medical expenses and individual health insurance (including Medicare parts B and D and Tricare) for two or more employees.  Under Notice 2013-54, businesses that currently do not provide group health insurance but that reimburse their employees for their premiums for individual health coverage are violating the Affordable Care Act and subject to a $100 per day per employee penalty, totaling up to $36,500 per employee over the course of the year.  In February 2015, the IRS issued a notice (2015-17) stating that it would not enforce the penalties against small employers with fewer than 50 full time employees until July 1, 2015, to give small businesses more time to bring themselves into compliance.  Nonetheless, the type of premium reimbursements prohibited under Notice 2013-54 have been common among small businesses for many years and we are concerned that many small businesses are still not aware that such arrangements are no longer permitted.  We also think that this type of arrangement should continue to be allowed. This is why the Small Business Healthcare Relief Act is so important.

The Act would allow small businesses and local municipalities that are not Applicable Large Employers (employers with 50 or more full-time and full-time equivalent employees) to continue using pre-tax dollars to give employees a premium reimbursement for health care insurance.    

Unfortunately, there has not been any movement on the legislation in either chamber since the bills were introduced and assigned to committees in June.  However, just this week seven new co-sponsors signed onto the House version of the bill.  The House version of the bill now has sixty-one co-sponsors, thirty-one of whom are Republicans and thirty of whom are Democrats.  Given the significant bi-partisan support for the bill we are hopeful that we will see some movement on it in the near future.

WHAT WE’VE BEEN UP TO

On November 9, 2015, TIA had a number of meetings with Congressional staffers including staffers for members of the Senate Small Business Committee, Senate Health, Education, Labor and Pensions Committee, and House Small Business Committee.  During these meetings, we discussed, among other things, the need for Section 179 and bonus depreciation to be extended as soon as possible and for at least two years, tax reform, small businesses and the ACA, the importance of maintaining the Nation’s highways and transportation infrastructure and the critical need to get a long term bill in place, the new nominee for Chief Counsel at Office of Advocacy, Darryl DePriest, Esq., and the small business retirement system.