U.S. Legislative Issues

Bobby Jindal, Governor of Louisiana, vetoed legislation that would have exempted truck fleets from existing warranty restrictions that prohibit fleets from performing manufacturer-approved warranty repair work on their own vehicles. The Truck Renting and Leasing Association (TRALA), working with other organizations, were successful in gaining passage of S.B. 318 in the Louisiana Legislature. However, according to the Governor’s veto message, the Louisiana Automobile Dealers Association, as well as dealerships across the state, pushed for the veto.

Unlike many states that are attempting to enact new laws to prevent non-dealers from performing warranty work, Louisiana already has decades-old language in statute that specifically forbids any non-dealer from conducting warranty maintenance on their own vehicles. Although the law has rarely  been enforced, recently some car and truck dealer representatives who serve on the Louisiana Motor Vehicle Commission have recently taken a stand against non-dealers performing this work.

The exemption in the vetoed-bill was limited for many fleets. It limited the types of repairs that could be made on vehicles owned or leased by a fleet owner or government entity, and would not have eliminated restrictions on light-duty warranty work.

NAFA’s Government Affairs Committee will review the Louisiana legislation in the expectation that similar legislation may be reintroduced in Louisiana and other states.

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At a May 29 Committee markup, the House Ways and Means Committee voted along party lines to approve a handful of "Tax Extenders," including a permanent extension of the Bonus Modified Accelerated Cost Recovery System (MACRS) or "bonus depreciation" program. Before expiring on December 31 of last year, the program allowed bonus depreciation to be taken for fifty percent of a truck’s purchase price and an extra bonus depreciation deduction of up to $8,000 for automobiles, light trucks, vans, and SUVs.

The tax deduction has never enjoyed a permanent status in the tax code before, instead being extended a year at a time. This permanent extension would grant greater certainty to fleets for vehicle acquisition planning. The bill faces an uncertain future in the Senate, where Finance Committee Chairman Ron Wyden shepherded a tax extenders package through his committee that included 55 incentives and deductions (including a temporary extension of bonus depreciation). Chairman Wyden, who said he intends for this to be the last tax extension package on his watch, is interested in comprehensive tax reform, and wants this extension package to serve as a test run for a larger tax reform deal later this year. The tax extenders package was blocked during Senate floor consideration, but many expect a compromise will ultimately be reached in the lame duck session at the end of the year.

On a related issue, the House voted on June 11 to approve HR 4457, "America’s Small Business Tax Relief Act," which permanently extends the increased expensing limits under Section 179 of the Tax Code. Under the bill, small- and medium-sized businesses can write off up to $500,000 worth of capital assets in the year purchased. Again, the fate of this legislation will be determined in the context of a compromise on the larger tax extenders package.

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On June 5, General Motors released a 300 page internal report detailing the events that eventually led to the recall. According to news accounts, the report, conducted by former US Attorney Anton Valukas, laid fault at the bureaucratic structure of GM. NHTSA released a statement saying "GM's decision-making, structure, process, and corporate culture stood in the way of safety at a time when airbags were failing to work properly in millions of GM products."

Meanwhile, Senator Claire McCaskill, who chairs the subcommittee which oversees National Highway Traffic Safety Administration (NHTSA), reiterated plans to hold further hearings this summer with both GM CEO Mary Barra and Valukas. On the House side, Congressman Fred Upton, who chairs the House Energy and Commerce Committee, also announced plans for another hearing in the coming weeks.

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Speaker John Boehner and other members of the House leadership issued a proposal for patching the shortfall in the Highway Trust Fund that would end most Saturday mail delivery by the United States Postal Service. House Republicans say this will prevent a future bailout of the Postal Service. According to the memo, the plan would use a savings of $10.7 Billion generated over ten years to keep the Highway Trust Fund solvent until May 2015. This would give lawmakers additional time to reach agreement on a longer-term plan.

The Postal service has lost money for seven straight years, including $20 billion over the past two years. The plan would also transfer money out of the Leaking Underground Storage Tank (LUST) Trust Fund into the highway trust fund.

Reaction to the plan has been harsh, from both the left and the right. Senate Environment and Public Works (EPW) Committee Chairwoman Barbra Boxer (D-CA) said the plan is unworkable and Senator Tom Carper (D-DE) who chairs the EPW Transportation and Infrastructure Subcommittee, said the plan was a non-starter. A representative from the Heritage Action Fund, a conservative group, also criticized the plan, saying "The idea Congress would use a supposedly self-funding agency that cannot pay its bills as a piggy bank to fund another bankrupt, self-funding fund is absurd."

With the Highway Trust Fund expected to become insolvent in August and the current transportation bill, MAP-21, expiring in September, the House and Senate remain far apart on any solutions.

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During a Senate Appropriations Committee meeting on June 5, the committee approved an amendment to a transportation funding bill that would roll back part of the Hours of Service rule issued by the Federal Motor Carrier Safety Administration (FMCSA) last summer. The rule, offered by Senator Susan Collins (R-ME), would provide a temporary suspension of two provisions: that drivers take two consecutive 1:00 AM to 5:00 AM periods of rest before they can work again and that 168 hours must pass before a new workweek can be started (the restart rule). The amendment was adopted by a margin of 21-9. The bill will now head to the Senate floor for a vote before the entire chamber.

The House of Representatives approved a companion transportation funding bill on May 10, but that measure does not include a revision of the Hours of Service rules. This discrepancy, among others between the chambers, will be ironed out in conference committee.

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A study released at the end of May by the National Highway Traffic Safety Administration (NHTSA) shows vehicle crashes in the year 2010 alone had an $871 Billion impact on the American economy. The study found that crashes cost the nation $277 Billion in economic costs and an additional $594 Billion resulting from deaths and injury. Speeding accounted for 21 percent of the economic harm, and distracted driving accounted for seventeen percent. More information about the study can be found by clicking here.