Capitol Briefs 2022 | Issue 4

Greetings from VADA,

The General Assembly is in full action as the session gets closer and closer to “crossover day” on February 15. “Crossover day” is where bills must advance through one chamber or the other to avoid being killed for the session. It’s also what lobbyists call “halftime,” and no new bills may be introduced.

Governor Youngkin suffered a blow this week in the Senate as his proposed doubling of the standard deduction on income taxes was kicked to a study by a special subcommittee on tax policy. Senator Chap Petersen (D-Fairfax City) also had a proposal that would have raised the standard deduction on state income taxes even higher to match the federal deduction, but that bill died in subcommittee as well. The subcommittee did support a bill that would provide a one-time income tax refund but left that amount undetermined pending a revenue forecast.

Our priority legislation HB 259 (Wyatt) that supports fair warranty/recall reimbursement passed out of the House of Delegates unanimously (98-0) in support of the bill last Wednesday. The identical companion bill, SB 216 (McPike) also passed out of the Senate unanimously with a 40-0 vote in favor. Both bills go to the opposite chamber to be heard and voted on once again.

The bills address the continued struggles new car and truck dealerships face when seeking warranty reimbursement at retail amounts. The legislation addresses reimbursement for dealers for customer rental vehicles while warranty/recall repairs are made. The bill also requires that technicians be compensated for their time when assisting in software updates at the dealership. Finally, the bill will protect consumers from unknown software upgrade charges. These subscription fees have become a frequent target by manufacturers and consumers should be made aware by manufacturers.

We will continue to work these bills for support and get to the Governor’s desk for signature. Again, we thank the new car and truck dealerships who engaged in the process and wrote more than 800 letters to Virginia legislators!

Overtime Wage Act

As many of you know, the Virginia Overtime Wage Act was passed during the 2021 session. The bill sought to create a state remedy for violations of federal overtime requirements. Unfortunately, the language of the bill went far beyond that intended result, making substantive changes to overtime requirements for many Virginia employers. Federal law lays out various exemptions to overtime requirements that specify exemptions for auto dealership employees. During the special session in the summer, the VADA fixed this problem with budget language. That fix was temporary until July 2022.

To address this issue in perpetuity, the VADA is working on HB 1173 (Ware) and SB 631 (Barker). On Tuesday, HB 1173 (Ware) passed out of the House in support on Wednesday with a 59-40 vote. The bill will permanently fix the overtime issue and include all the exemptions, including the auto specific exemptions. We are still working on passage of the SB 631 (Barker) which is the identical companion bill that has been referred to the Senate Commerce and Labor Committee.

Vehicle Exhaust Systems

There has been a focus among legislators from Northern Virginia and Richmond who are looking to prevent the loud noise of cars in high density areas. Two bills, HB 632 (Carr) and HB 367 (Watts), would address this problem by prohibiting any individual from operating a motor vehicle with an exhaust system that emits noise at more than 85 decibels.

VADA shared concerns that many cars and trucks sold by new franchise car and truck dealers are above 85 decibels. The House Transportation subcommittee killed HB 367 (Watts), and the panel amended HB 632 (Carr) to allow law enforcement to stop motor vehicles for existing vehicle violations. There were no new violations added to the code.

Electric Vehicles

The House Appropriations and the Senate Finance and Appropriations Committees will consider electric vehicle rebates. The VADA has requested $40 million in funding to launch the state’s electric vehicle (EV) rebate program. There are identical House and Senate budget amendments requesting $40 million in funding.  VADA has said if the California Air Resources Board (CARB) zero emissions vehicle standards are to be implemented (expected in 2025) in Virginia and the Commonwealth is serious about EV adoption, then EV incentives must be part of the solution.

HB 351 (Sullivan) would create a driving decarbonization program that would assist developers with non-utility costs associated with installing electric vehicle charging stations. The bill passed out of the House Agriculture, Chesapeake and Natural Resources Subcommittee 5-1 on Wednesday. The bill will make its way to the House Appropriations Committee as there is a fiscal impact related to selecting a program administrator. There is also a Senate version, SB 708 (Marsden), that passed out of the Senate Transportation Committee on Thursday 9-4. That bill will also make its way to the Senate Finance and Appropriations Committee because of the fiscal impact.

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VADA focuses our time and energy on our main priorities, but we stay part of additional business-related policy discussions. Please see legislation we are tracking in the list below. As always, we will continue our role at the General Assembly of serving the franchised new car and truck dealers of Virginia.

Motor vehicle dealers compensation for recall & warranty: HB 259 (Wyatt)/SB 216 (McPike)

Provides that new car dealers receive comparable compensation for recall and warranty repairs as they do for retail service. The bill also requires full reimbursement for new car dealers for rental vehicles under recall & warranty. Furthermore, the bill would require manufacturers to provide disclosure to consumers for updates to a vehicle accessory or function. The bill also requires that technicians receive compensation for vehicle updates under recall and warranty. HB 259 passed House 98-0 & SB 216 passed Senate 40-0. Both bills now go to the opposite chamber for review.

Independent dealer-operator recertification: HB 316 (Wyatt)

Codifies existing Motor Vehicle Dealer Board regulations related to independent dealer-operator recertification and changes the recertification from every 36 months to every 24 months. Instruction will also be modified from a six-hour course to a live four-hour instructor-led course and a requirement to pass an examination. We ensured that this bill included an amendment that franchise dealers remain exempted from this requirement. Passed House 98-0. Bill will now go to the Senate for review.

Consumer Protection Act: HB 737 (Krizek)

Provides that it would be a violation of the VA Consumer Protection Act for sellers, like dealers, to fail to disclose an advertisement for good or services restrictions on the consumer’s rights in any civil action or right to file a civil action. We opposed this bill. It was killed by the House Commerce and Energy.

DMV Transactions: HB 986 (Runion)

This bill would significantly change the online dealer system. The patron of this bill wants to develop other ways for Virginians to conduct DMV transactions through dealers. We are working with him to ensure we maximize the potential of the online dealer system. We expect to be able to do this without legislation. We worked with the patron to have these issues considered in a workgroup at DMV that will include VADA.

Replaces current provisions of the Virginia Overtime Wage Act: HB 1173 (Ware)/SB 631 (Barker)

Modifies that Virginia Overtime Wage Act to mimic federal statute for violation of the Federal Fair Labor Standards Act. This bill would fix the auto dealers exemption. HB 1173 passed House 59-40. Bill will go to the Senate for review. SB 631 will be considered in the Senate Commerce and Labor Committee this week.

Motor vehicle sales and use tax: HB 1190 (Marshall)

Excludes from the sale price for determining motor vehicle sales and use tax the amount of any credit given by the seller for any motor vehicle taken as a trade-in. We worked with the patron and the Administration to determine state fiscal impact and impact to consumers of this change over the coming year.

Consumer Protection Act: SB 309 (Edwards)

Provides that no merchant, like a dealer, may use any provision in a contract that restricts a consumer’s right to file a civil action, like arbitration. To be considered by the Senate General Laws Committee. This bill passed the Senate General Laws Committee 8-7. We are working to kill this bill on the Senate floor this week.