By Robert L. Redding, Jr.
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Of several high-profile pieces of legislation placed in limbo at the end of 2001, none could have more impact on our industry than the proposed energy legislation. Section 803 of the legislation, “Assistance for State Programs to Retire Fuel-Inefficient Motor Vehicles,” creates a federal vehicle scrappage program. Cars and light trucks more than 15 years old would be scrapped. ASA has many concerns with Section 803 and encourages repairers to contact their U.S. senators and ask them to oppose it.
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There were several high-profile pieces of legislation placed in limbo at the end of the congressional calendar year in December 2001. These included the economic stimulus legislation, insurance legislation related to recent terrorist attacks and energy legislation. It is the latter that could have the most significant impact on the automotive repair industry.
The White House recently announced that President George W. Bush will include energy policy in his January 29 State of the Union Address. The focus of the address will be national security. Energy's role in the major policy address will concentrate on reducing U.S. reliance on foreign sources of oil by enacting new energy policy. Recently, as reported by the Automotive Service Association, President Bush emphasized the need for increasing ethanol in the U.S. energy arsenal.
The importance of the energy debate is not so much the changing environmental, economic and international policy issues, but a specific low-key provision of a recently introduced Senate bill. Republican leaders have accused Majority Leader Tom Daschle, D-S.D., of holding up energy legislation in 2001. After the first of the year, Sens. Daschle and Jeff Bingaman, D-N.M., introduced Senate bill 1766, the Energy Policy Act of 2002.
Section 803 of the legislation, “Assistance for State Programs to Retire Fuel-Inefficient Motor Vehicles,” creates a federal vehicle scrappage program. Although several states have scrappage programs, none are well-funded with most dependent on state appropriations and some form of private sector contribution. Several years ago, during the consideration of federal highway legislation, language was placed in the Senate bill that established a federal scrappage subsidy program. This language was supported by mid-Atlantic new car dealer organizations but was eliminated in the conference with the U.S. House of Representatives.
This new bill, S. 1766, authorizes the U.S. Department of Energy to provide grants to states to carry out incentive programs to scrap cars and light trucks with poor vehicle fuel efficiency. ASA opposes the provision.
ASA has consistently taken issue with any scrappage legislation - state or federal - that did not, at a minimum, provide a repair option for these older vehicles. The few state programs in existence have also eliminated in their policy discussions the hope of a repair option. None of these programs have had any degree of success.
S. 1766 creates the “National Motor Vehicle Efficiency Improvement Program” whereby the Secretary of Energy “shall provide grants to states to operate programs to offer owners of passenger automobiles and light-duty trucks manufactured in model years more than 15 years prior to the fiscal year in which appropriations are made to provide financial incentives to scrap such automobiles and to replace them with automobiles with higher fuel efficiency.”
The governor of a particular state, if this bill becomes law, would submit a formal plan to the Secretary of Energy for approval. These state plans will be reviewed under seven general criteria, including:
- Requiring that all passenger automobiles and light-duty trucks turned in be scrapped.
- Requiring that all passenger automobiles and light-duty trucks turned in be currently registered in the state to be eligible.
- Requiring that all passenger automobiles and light-duty trucks turned in be operational at the time they are turned in.
- Restricting automobile owners (except not-for-profit organizations) from turning in more than one passenger automobile and one light-duty truck in a 12-month period.
- Providing an appropriate payment to the person recycling scrapped vehicles for each turned-in passenger automobile or light-duty truck.
- Providing a minimum payment to the automobile owner for each passenger automobile and light-duty truck turned in.
- Providing an additional credit that may be redeemed by the owner of the turned-in passenger automobile or light-duty truck at the time of purchase of a new, fuel-efficient automobile.
ASA believes this provision will not have a significant impact on reducing U.S. fuel consumption but will continue to erode the marketplace of vehicles available to the American aftermarket. Coupled with the U.S. Environmental Protection Agency's insistence on clean engine technologies and new fuels, the lack of emphasis on maintenance has been quite prevalent since the mid-1990s. Scrappage legislation implies that cars beyond the warranty period or older vehicles cannot be restored to a fuel-efficient or environmentally friendly state. This is made clearer by the establishment of a program that at some point will include very fuel-efficient vehicles that may or may not need limited maintenance.
ASA, along with seven other aftermarket associations, pointed out concerns with Section 803 in a letter to Sen. Daschle. (To read the lettter, click here.) A summary of concerns includes:
- No protections for classic car hobbyists.
- No salvage provisions for potential usable parts.
- The likelihood that it would have a negative economic impact on low-income Americans.
- No guarantee that scrapped vehicles will be replaced by more fuel-efficient vehicles.
- Ignoring the fact that many of these vehicles are rarely driven.
- Providing no repair option necessary for a viable aftermarket, ignoring vehicle maintenance options.
ASA encourages repairers to contact their U.S. senators and ask them to oppose Section 803 as included in Senate bill 1766, the Energy Policy Act of 2002. The phone number for the U.S. Senate switchboard is (202) 224-3121.
