With the presidential election primary process in full swing and Spring just around the corner, our nation’s economy and energy related issues continue to dominate the legislative and regulatory agenda.
FEDERAL LEGISLATIVE ACTIVITY
Congress Passes “Kids and Cars” Act
Senate Bill 694, The Cameron Gulbransen Kids Transportation Safety Act, which was approved by the House in December, passed unanimously in the Senate. The Bill is named after a 2-year-old New York boy who was accidentally run over and killed in 2002 when his father backed his SUV out of the driveway. The Bill, dubbed The "Kids and Cars” Act, requires the National Highway Traffic Safety Administration to create a database of deaths and injuries of children in non-traffic but auto-related accidents. It also requires NHTSA to study whether to require that power windows and door panels reverse direction when they detect an obstruction, similar to how automated garage-door openers operate. President Bush signed the Act into law.
FEDERAL REGULATORY ACTIVITY
Yearly Fuel Economy Increases Established
NHTSA has completed its proposal establishing annual fuel economy increases and sent it to the White House Office of Management and Budget for review. The proposal covers passenger cars beginning with 2011 models and light trucks starting with the 2012. NHTSA proposed four years of fuel economy increases could be revised by the OMB which has authority to review the regulation. NHTSA began work on its proposal in May after President Bush ordered federal agencies to begin drafting new regulations to increase fuel efficiency and reduce tailpipe emissions after the Supreme Court ruled that the federal EPA had the right to regulate tailpipe emissions as a greenhouse gas under the Clean Air Act.
NHTSA is seeking to reverse a November 2007 decision of the federal appeals court in San Francisco that tossed out the light-truck increases as insufficient, for failing to address why the so called light trucks are allowed to pollute more than passenger cars and for not properly assessing the benefits of reducing greenhouse gas emissions when it set the new standards. NHTSA's proposal also includes a credit-trading system for manufacturers as spelled out by the recently enacted Energy Bill.
EPA States Grounds for Denying California Waiver
Last week the EPA justified blocking California from regulating auto emissions by saying the problems of global warming aren't unique to one state. The EPA denial also blocked more than a dozen other states from implementing the tailpipe emissions reductions sought by California. The EPA stated that California does not have the "compelling and extraordinary conditions" required for a waiver under the Clean Air Act, because the rest of the nation suffers similar effects of global warming. As a result, California does not merit the establishment of separate state greenhouse gas emissions standards for new motor vehicles.
Chairman Dingell Releases White Paper on Global Warming
House Energy and Commerce Committee Chairman John Dingell issued a "White Paper" recently on state and local roles in global warming policies as a prelude to introducing emissions cap-and-trade legislation this year. The paper says State and local climate initiatives may be counterproductive to a federal global warming program. Chairman Dingell is issuing a series of these papers with Rick Boucher who chairs the Subcommittee on Energy and Air Quality.
As Congress considers legislation on global warming, one of the most contentious issues is whether federal legislation should pre-empt state and local governments from setting their own pollution-control standards. The paper warns that broad state and regional climate initiatives “may interfere with the efficient functioning of the federal cap-and-trade program” by forcing industry to comply with multiple regulations. It goes on to say that under a nationwide cap on greenhouse gases, a state-level cap on greenhouse gases “might shift emissions from the more stringent state to other states” without reducing national emissions.
OTHER ACTIVITY OF INTEREST
Gasoline and Diesel Prices Continue to Rise
USA Today reported that last Friday, Diesel fuel hit a record high price and gasoline prices remain on the rise as a result of $100-a-barrel crude oil prices and tight supplies as refineries switch to producing costlier summer-blend, clean-air gasoline that is required by federal regulations. The nationwide average price for diesel was a record $3.54 per gallon while regular-grade gasoline averaged $3.11, below the record national average price of $3.22 set last spring. What does this mean to the average consumer and our economy? One industry analyst calculated that the higher prices mean consumers spent $1.19 billion for fuel Friday, some $250 million more than a year ago, when gasoline averaged $2.28 a gallon and diesel averaged $2.58.
American Consumer Confidence at 14-Year Low
A recent ABC News/Washington Post consumer confidence survey showed that the confidence of American consumers remains at a 14-year low, with less than half of Americans having a positive rating of their personal finances. The report’s Consumer Comfort Index was steady at a minus 37, its lowest reading since November 1993. They also reported its index of consumer sentiment fell to a five-year low, while its expectations index fell to a level that is the lowest in 17 years.
CASE OF THE MONTH
Our Case of the Month deals with something we all face in the motor vehicle industry: what constitutes a customer list and how is it protected?
Robert Martin was a former employee of Al Minor & Associates (AMA), an actuarial firm that designs and administers retirement plans and works with about 500 clients. AMA hired Mr. Martin in 1998 as a pension analyst. He later organized his own firm and resigned in 2003.
Although he took no documents with him containing confidential client information, he successfully solicited 15 AMA clients with information from his memory. AMA charged in a lawsuit that he had violated Ohio's Trade Secrets Act. A judge found that Mr. Martin had misappropriated AMA's client list, and ordered him to pay $25,973 in fees that AMA would have earned from its former clients.
The 10th District Court of Appeals affirmed the lower court, and Mr. Martin appealed to the Ohio Supreme Court. He argued that AMA should not have the right to control use of his memory and, furthermore, that the firm had an opportunity to protect its information through an employment contract, which it did not utilize. Mr. Martin did not take any actual documents. He simply memorized certain aspects of documents enabling him to contact those individuals, and earn fees that should have gone to AMA.
Justice Terrence O'Donnell, writing for the court, said nothing in state law indicates the General Assembly intended, for purposes of trade secrets, to distinguish between information reduced to a tangible form and information that has been memorized. He went on to say “The legislature ... could have excluded memorized information from the definition of a trade secret or added a requirement that such information be reproduced in physical form in order to constitute a trade secret, but it did not, and we are not in a position to read such language into the statute."
In today’s motor vehicle industry, employees tend to be more transient than in the past. We live in an electronic age where data can be easily and quickly transported without detection. Although decisions like this offer us some comfort, the best way to protect your dealership and its information remains through a written agreement.