Industry leaders hope for infrastructure bill

WASHINGTON — Massive changes that 2017 brought to Washington make predicting 2018 all the more difficult, according to industry association representatives.

The Trump administration has demonstrated genuine concern about business growth and the government-related handicaps businesses face, association officials said.

"With the Trump administration, you don't have to watch for the Federal Register to come out at 4 a.m. to see what the surprises might be," said Robert L. Redding, Washington representative for the Automotive Service Association (ASA).

On the other hand, the administration's focus on reducing regulatory burdens, while beneficial on its face, has led to delay and confusion in necessary regulatory activity, they said.

"The length of time getting people confirmed is a problem," Mr. Redding said. "There's no NHTSA administrator, no head of the Federal Insurance Office, no head at the FTC."

Meanwhile, it has yet to be seen what benefits the Tax Cuts and Jobs Act President Trump signed into law on Dec. 22 will bring small business, they said.

"For some people, it's a great bill," said Roy E. Littlefield III, executive vice president of the Tire Industry Association (TIA). "We will have to do a lot of work in conference to make sure small business also benefits."

Here are some of the main issues the tire and auto service industries will be watching in 2018:

Regulatory issues

The U.S. Tire Manufacturers Association (UTSMA) voiced support of plans by the National Highway Traffic Safety Administration (NHTSA) to eliminate unnecessary, outdated and redundant regulations.

The USTMA suggested a number of tire-related regulations that could be repealed, including the bead-unseating test required under federal tire safety standards and the Uniform Tire Quality Grading System.

As of early December, though, Mr. Trump had not answered a Sept. 20 request by USTMA President and CEO Anne Forristall Luke that his administration appoint a NHTSA administrator as soon as possible.

The USTMA is working closely with NHTSA's professional staff, as well as with congressional committees that have oversight over the agency, toward that end, Ms. Luke said. Not having an administrator in place makes it difficult for NHTSA to act on important pending rules, such as revisions in tire registration procedures and the consumer education portion of the tire fuel-efficiency labeling standard, she added.

"Outside the tire industry, NHTSA has a very important safety mandate," she said. "The staff is doing very good work in moving that mission forward, but the agency is without political leadership at the top to help the staff manage that."

Mr. Littlefield agreed with Ms. Luke. "It's hard to imagine anything big coming out of NHTSA until there's an administrator," he said.

Still, there are negotiations going on among various stakeholders that could mean some really great strides in improving tire registration rates, according to Mr. Littlefield.

"As an industry, we have an opportunity to do something that will make a lot of sense," he said. "I think we can make this a win-win for manufacturers, dealers and motorists."

Infrastructure

Passage of a comprehensive surface-transportation funding package was one of President Trump's major campaign promises. However, the chances of passing an infrastructure bill, and what that bill might contain, are still unclear.

Mr. Littlefield said TIA officials have attended two briefings on surface transportation — one from the transition team and one at the White House.

"This is an issue we've talked about to a lot of people on the Hill for years," he said.

"President Trump's definition of infrastructure is everything — trains, airports, ships, electric grids," Mr. Littlefield said. "I'm not saying those are not important, but when you talk about infrastructure, a lot of people think of highways."

Thirty-eight surface transportation bills, widely varying in focus and details, have been introduced in Congress so far this session, Mr. Littlefield said. The White House proposal — which relies heavily on private spending — isn't even a bill yet.

"Philosophically we support the effort, but we're concerned about what will get taxed," he said. "It's easy to tax groups that don't have a big impact on Congress. There are only 800 retreaders left. It would be a disaster if they passed a tax on retreading."

Ms. Luke said the USTMA has talked to the domestic policy staff at the White House, and interest there in developing an infrastructure package is very high.

"The timing of the infrastructure package is after tax reform," she said. "We're staying in very close contact with our contacts on the Hill and in the White House, and we hope they will turn to infrastructure early in the New Year."

Tax reform

TIA has been watching the tax reform process in Congress very closely.

For example, TIA favors phasing out the estate tax. Instead, the new law doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.

Mr. Littlefield said that helps members, but not enough.

"A guy on our board has a business worth $30 million, and he wants to leave it to his children. If the threshold is still only $11 million, how can he?"

The ASA has many of the same concerns about the tax package as does TIA, especially the tax treatment of "pass-through" entities — i.e. companies in which the owners pay taxes at the individual rate.

The new law raises the standard deduction to 20 percent for pass-through businesses, but the deduction ends in 2026. Deductions are limited once income reaches $157,500 for singles and $315,000 for those filing jointly.

The USTMA has not taken a stand on the tax bill, because of differences of opinion among its members, according to Ms. Luke.

"We can all agree that strong economic growth is very good for U.S. tire manufacturers," she said.

Health care

The new tax bill repeals the individual mandate of the Affordable Care Act. It is unclear what passage will mean for small businesses struggling to provide health insurance to their employees, according to Mr. Littlefield.

"More than any other small business group, tire dealers insure their people, whether for competitive reasons or something else," he said. "But at the end of this year, our people are either losing their insurance or seeing their premiums go through the roof.

"We get more questions and complaints about health care than on any other subject," he said.

Scrap tires

In 2018, the USTMA plans to introduce a five-year plan for supporting sustainable markets, according to Ms. Luke. Rubber-modified asphalt will play a big role in that plan, as will collaborating with state governments to maximize the use of rubberized asphalt, she said.

The Scrap-to-Profit Conference, held in Nashville, Tenn., last October, is a good example of the USTMA's approach, Ms. Luke said.

A significant number of state regulators attended the conference, as did many academics and representatives of private companies that make rubber-modified asphalt and other recycled rubber products, she said.

"Collaboration has the most potential for developing rubber-modified asphalt and any other new markets for scrap tires," she said.

Tire-derived fuel remains the largest end market in the U.S. for scrap tires, and its environmental benefits are becoming ever more apparent as environmental protests against TDF have died down, Ms. Luke said.

A presentation by Robin Ridgway of Purdue University at the Scrap-to-Profit Conference on a new TDF project at Purdue points at the continuing relevance, advancing technology and expanding benefits of TDF, she said.

Auto service

For the ASA, according to Mr. Redding, periodic motor-vehicle safety inspections (PMVIs) and cybersecurity/telematics remain the most important issues.

The Texas legislature considered a bill in 2017 that would have repealed the state's safety inspection law, Mr. Redding said. Although the bill died with the legislature's adjournment, it pointed to a lot of problems faced by advocates of state inspection programs, he said.

"We can't rest on our laurels," he said. "Less than one-third of the states have PMVIs, but our opponents think everybody has them."

The Texas bill points up the necessity of the ASA's getting its members more engaged in defending PMVIs, according to Mr. Redding.

"Partnerships arise in states like Texas where state groups are willing to step up and write letters to their legislators," he said.

In cybersecurity and telematics, Mr. Redding said, a lot of interesting information should come out of the Senate Commerce Committee's Jan. 24 hearing at the Washington Convention Center, held as part of the Washington Auto Show.

The ASA is monitoring similar bills before the House and Senate that would establish a Data Advisory Committee to provide recommendations on cybersecurity issues relating to highly automated vehicles.

The big question for the ASA, according to Mr. Redding, is whether repair and diagnostic information will be available in the marketplace.

"This is important," he said. "In our view, this is an appropriate next step for the aftermarket."

Motorsports

The Specialty Equipment Market Association (SEMA) said it has seen "great progress" in protecting the racing industry through the Recognizing the Protection of Motorsports (RPM) Act.

The bill makes it legal under federal law to modify the emissions system of a motor vehicle that is converted for race-use-only, in response to the U.S. Environmental Protection Agency's assertion that it is illegal to convert a motor vehicle into a race car if the vehicle's emissions system no longer remains in its certified configuration. The agency alleges that the Clean Air Act exemption applies only to purpose-built race vehicles.

The bill was approved recently by the House Energy and Commerce Committee and now awaits consideration in the Senate Environment and Public Works Committee. SEMA said it hopes to get the bill signed into law in 2018.

"The RPM Act remains at the forefront of our government affairs efforts, and we will continue to push for passage of the bill," said SEMA President and CEO Chris Kersting.

"In 2017, our efforts ranged from generating support at a grassroots level to hosting a rally in Washington, D.C., and providing enthusiasts an easy way to write to their members of Congress asking them to support the RPM Act."

SEMA is urging the motorsports and automotive industries to reach out to their elected officials and request support for the bill through its dedicated portal, www.sema.org/rpm.