We welcome in 2008 with a great flurry of significant legal, legislative and regulatory activity that affects our industry. Add to this the presidential election that is on the horizon, and this will likely be one of the more interesting and important times in recent memory.
Federal Legislative Activity
President Signs Energy Bill
President Bush signed into law an Energy Bill containing an increase in fuel economy standards for motor vehicles. The Bill mandates a 40 percent increase in industry wide fuel efficiency by 2020 and requires billions more gallons of biofuels to be blended into gasoline over the next 15 years. The measure would boost CAFE standards for cars and light trucks, including sport utility vehicles, from a combined 25 miles per gallon today to 35 miles per gallon by 2020, about 40 percent higher than today. The first fuel economy standards under the measure are to be imposed for the 2011 model year, setting automakers on a path to reach the 35-mpg standard a decade later. The Bill also requires 36 billion gallons of ethanol and other biofuels to be incorporated into gasoline by 2022, and mandates the use of more efficient light bulbs and home appliances. It does not, however, determine which government agency, EPA or NHTSA, has primary jurisdiction to regulate fuel economy and emissions. The Administration should resolve the issue surrounding the authority of the two agencies later this month when the EPA issues its new rules to regulate greenhouse gas emissions from tailpipes.
Federal Regulatory Activity
The FACT Act of 2003: The Saga Continues as FTC Issues New Credit Regulations
As part of its continued implementation of the FACT Act of 2003, the FTC recently released three new final regulations impacting dealers: the long-awaited "Red Flags" Rule, the Address Discrepancy Rule, and the Affiliate Marketing Rule. The Red Flags Rule requires dealers to develop comprehensive procedures to prevent identity theft, including the development, implementation, and administration of a written Identity Theft Prevention Program. The Address Discrepancy Rule requires dealers to develop and implement procedures to verify a customer's identity when receiving a notice of address discrepancy from a credit-reporting agency. Compliance with these rules is mandatory by November 1, 2008. The Affiliate Marketing Rule, which requires compliance by October 1, 2008, generally requires the customers of a business to be offered the opportunity to "opt out" of receiving solicitations from affiliates of the business before the affiliates may market to the customer. The Federal Reserve Board also has issued Final Rules clarifying the requirements for providing electronic disclosures to consumers under several of its regulations, including Regulations B, M and Z. The compliance date for these Rules is also October 1, 2008.
Federal Court Upholds California Emission Rules
A Federal judge in Fresno ruled that California could set its own standards on greenhouse-gas emissions from vehicles. But the state still needs permission from the U.S. Environmental Protection Agency to implement the rules. "Both EPA and California ... are equally empowered through the Clean Air Act to promulgate regulations that limit the emissions of greenhouse gases, principally carbon dioxide, from motor vehicles," U.S. District Court Judge Anthony W. Ishii said, citing recent decisions by the U.S. Supreme Court and a federal court in Vermont. The ruling is similar to one made by a federal court in Vermont in September. Automakers have appealed the Vermont ruling and are likely to do so in California. Automakers had argued that only the federal government had such power. California has plans to reduce greenhouse-gas emissions by 30 percent from 2009 to 2016, under a plan passed by the California Air Resources Board in 2004. In November, California sued to force an EPA ruling. The EPA could, however, still block the state rules by denying California a waiver under the Clean Air Act. Guess what the EPA does?……
Federal EPA Blocks California’s Fuel Rules
The Environmental Protection Agency rejected a request by California and a dozen other states to impose their own strict controls on vehicle emissions. The EPA's decision came the same day President Bush signed a landmark energy bill that hikes fuel efficiency standards 40 percent by 2020 to an industry fleet wide average of 35 miles per gallon. Meeting California's emissions rules would require raising fuel economy to an average 43.7 mpg for cars and 26.6 mpg for light trucks by 2016, a more aggressive requirement for automakers. "The Bush administration is moving forward with a clear national solution, not a confusing patchwork of state rules," EPA Administrator Stephen L. Johnson said in denying California a waiver under the Clean Air Act to set emissions standards as a way to cut pollution. “I believe this is a better approach than if individual states were to act alone." While the decision bars states from adopting tougher emissions rules than the federal government's, the battle is not over. Gov. Arnold Schwarzenegger said in a statement that California would sue to overturn the decision.
The Battle Against Greenhouse Gases: A New Target Emerges
Global warming and carbon dioxide are near-interchangeable terms in the climate change debate. After all, carbon emissions account for 84 percent of the greenhouse gases trapping heat on the planet, scientists say. But carbon dioxide isn’t the only greenhouse gas or, as it turns out, the strongest. That distinction may belong to sulfur hexafluoride (SF6), a substance that makes up less than 2 percent of all greenhouse gases but is about 15,000 times more potent than carbon emissions and lasts three times longer in the atmosphere. Both those factors could make SF6 a serious long-term threat to the climate. On the other hand, SF6 could be easier to regulate because of its specialized use. Unlike carbon dioxide, which billows out of nearly every economic sector, from manufacturing to agriculture, SF6 mainly insulates power lines and industrial circuit breakers, escaping into the atmosphere through leaks.
Justice Department Alerts Public to Fraudulent Spam E-Mail
The Department of Justice has recently become aware of fraudulent spam e-mail messages that claim to be from DOJ. Based upon complaints from the public, including dealers, it is believed that the fraudulent messages are addressed "Dear Citizen." The messages are believed to assert that the recipients or their businesses have been the subject of complaints filed with DOJ and also forwarded to the Internal Revenue Service. In addition, such e-mail messages may provide a case number, and state that the complaint was filed by “Mr. Henry Stewart." A DOJ logo may appear at the top of the message or in an attached file. Finally, the message may include an attachment that supposedly contains a copy of the complaint and contact information for Mr. Stewart.