Federal Legislative Activity
Energy Bill With CAFÉ Increases Becomes a Reality
After a grinding, yearlong battle over energy conservation, Congress cleared and President Bush quickly signed an 800 page Energy Bill that mandates the first statutory increase in fuel economy standards in 32 years. The new law increases CAFE standards for cars and light trucks from a combined 25 miles per gallon to 35 miles per gallon by 2020. It also requires that 36 billion gallons of ethanol and other biofuels be added to gasoline by 2022. The final Bill does not determine which governmental agency, the EPA or NHTSA, has primary jurisdiction to regulate fuel economy and emissions. The Administration will attempt to harmonize the authority of the two agencies soon, when the EPA is expected to issue controversial new Rules to regulate tailpipe greenhouse gas emissions. Congress will likely hold oversight hearings next year to examine the Administration’s approach.
Global Warming Legislation Heating Up?
Supporters of global warming legislation hope to bring a Bill to the Senate floor this Spring, if they can find the votes. Senate Bill 2191 would impose sweeping limits on greenhouse gas emissions and set up a market-based program for companies to trade emissions credits. The Bill was approved by the Environment and Public Works Committee in December and now goes before the full Senate. The trading of these credits would be regulated by a board to be established, which would be modeled after the Federal Reserve Board.
Federal Regulatory Activity
EPA Denies California’s Waiver Request
As expected, the EPA has rejected a request by California and a dozen other states to impose their own strict controls on vehicle emissions, a major victory for automakers. The EPA's decision denied California a waiver under the federal Clean Air Act that would have allowed the state to enforce its own greenhouse gas rules. Meeting California's emissions rules would require raising fuel economy to an average 43.7 miles per gallon for cars and 26.6 miles per gallon for light trucks by 2016, a more aggressive requirement for automakers than federal CAFE standards.
The states claim they have the authority to limit greenhouse gases to prevent climate change. The main target is carbon dioxide, a byproduct of burning fuel. In a letter to lawmakers, the White House said there should be a single national regulatory standard, rather than allowing states to set their own rules. While this decision bars states from adopting tougher emissions rules than the federal government's, the battle is not over. The state of California has filed an appeal in the 9th U.S. Circuit Court of Appeals in San Francisco.
Vehicle Roof Strength Standard Gets an Infrequent Look
The federal government is trying again to update one of the oldest and most controversial vehicle safety regulations on the books, the standard for vehicle roof strength, which has been essentially unchanged since 1971. Regulators first issued a revised version of a proposed rewrite of the regulation in 2005. According to a statement from NHTSA, the latest version would require both sides of a vehicle roof to support at least two and a half times the vehicle's weight.
REAL ID Rules Remain Costly Issue for States
Looking around the country, Ohio is the first state to be granted an extension by the U.S. Department of Homeland Security to comply with the provisions of the Real ID Act. The first compliance deadline is Dec. 31, 2009, by which states must have implemented the first security upgrade of their drivers' license systems.
According to the National Conference of State Legislatures, the latest and supposedly final regulations proposed for the national Real ID program should shave costs off what the states had estimated to be an $11 billion hit under the new identification card safety mandates. Although the 284-page “Final Rule” document is still under review, various national groups now estimate the cost of implementing the program at $3.9 billion. While this is a substantial reduction, to date Congress has provided states with only $90 million for the program, which poses a significant problem for state legislators having to produce balanced budgets while considering the merits of many competing priorities.
Vehicle Recalls Total 14.5 Million in 2007
According to data released by the National Highway Traffic Safety Administration automakers issued 588 separate recalls involving 14.5 million vehicles in 2007, about 30 percent more vehicles than the previous year. In 2006, the industry recalled 11.2 million vehicles as part of 490 individual recalls. The industry set a record of 30.8 million recalled vehicles in 2004. Automakers have averaged about 524 separate recalls involving 18.9 million vehicles a year since 2000, according to an Associated Press analysis of the NHTSA data.
Bankruptcy Filings Jump 40 Percent in 2007
Consumer bankruptcy filings jumped 40 percent throughout the country in 2007 over the previous year, according to the National Bankruptcy Institute. Consumer bankruptcy filings for the year reached 801,840, compared with 573,203 in 2006. Some say that the roughly 40 percent increase in consumer bankruptcies during 2007 is a precursor to even higher filings this year, as the heavy consumer debt load is made worse by the home mortgage crisis. As of January 16th a total of 875,899 open bankruptcies are being processed for discharge by the U.S. bankruptcy courts. What does this mean to auto dealers? Industry research indicates that following a bankruptcy discharge, 1 in 3 people purchase an automobile within 30 days, with a grand total of 2 in 3 purchasing within one year of the discharge.
Case of the Month
Our case of the month deals with something those of us in the auto industry are quite familiar with from both ends; telemarketing calls. In 2004 Philip Charvat, a consumer, filed a lawsuit in Franklin County Common Pleas Court after receiving an automated telemarketing phone call at his home. Dentist Thomas Ryan had placed the call as a way to market his practice.
Mr. Charvat alleged multiple violations of the Federal Telephone Consumer Protection Act and the Ohio Consumer Sales Practices Act. He asked the trial judge to award him $1,500, which is three times the penalty stated in the law, for each violation of the federal law and attorney fees.
The judge granted Mr. Charvat awards of $500 each for two violations, but rejected his request for treble damages and attorney fees. The 10th District Court of Appeals upheld the judge's ruling after finding that Dr. Ryan did not “knowingly” violate the law in placing the phone call.
A unanimous Ohio Supreme Court agreed with the denial of attorney fees under the state Consumers Sales Practices Act, but reversed the appellate court on the denial of triple damages under the Federal Act. The Court stated, "The TCPA is neither a criminal nor a highly technical statute and thus ignorance of the law is no defense. Although the evidence established that Ryan did not intend to violate any law, proof of such intent is not necessary. For an award of treble damages under the TCPA, the term 'knowingly' requires that liability be imposed even without (the doctor's) knowledge that the conduct violated the statute.”
The bottom line is that under Consumer Protection Laws, a consumer must generally only prove that a supplier knew he acted or failed to act in a given manner, not that the supplier knew that the conduct itself constituted a violation of law, to prevail in a case.