Capitol Briefs 2022 | Issue 5

Greetings from VADA,

“Crossover" day, tomorrow (Tuesday), is the deadline for each General Assembly chamber to complete work on its own bills before the bills cross over to the other chamber. Last week, the House and Senate raced to finish their own bills before the deadline. As of Friday, there are over 1,800 bills still pending.

It was a roller coaster ride last week for Gov. Glenn Youngkin’s administration. Gov. Youngkin’s nomination for Secretary of Natural Resources, Andrew Wheeler, was blocked from an appointment by the Virginia Senate, and the ultimate demise of his appointment seems inevitable. Gov. Youngkin’s goal of adding more charter schools was squashed on Thursday. However, there appears to be some hope for laboratory schools, which would be innovative partnerships with colleges and universities.

A hotly contested debate on the Senate floor led that chamber to approve a bill to give parents authority over school mask mandates in a bipartisan vote of 21-17. Gov. Youngkin is eager to sign the legislation, but the timing of when it would go into effect remains uncertain.

The ambitious tax cut package that Gov. Youngkin campaigned on is still on the table as a portion of his proposal to repeal the sales tax on groceries was resuscitated. The Senate Finance Committee on Thursday approved a compromise to repeal two parts of the grocery tax – the 1% that the state collects and redistributes to local school divisions based on school-age population, and the 0.5% that raises money for the state’s transportation program. It would not repeal the 1% local option tax that goes directly to local governments.

Fair Pay for Warranty/Recall Repair Legislation

VADA’s priority legislation HB 259 (Wyatt) that supports fair warranty/recall reimbursement passed out of the House of Delegates unanimously on Feb. 2nd and now heads over to the Senate to be heard in the Committee on Transportation. The identical companion bill, SB 216 (McPike), also passed out of the Senate unanimously with a 40-0 vote in favor. SB 216 will go to the House Transportation Committee.

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 to get them to the Governor’s desk for his signature. Again, we thank the new car and truck dealerships who engaged in the process and wrote more than 800 letters to Virginia legislators in support of this legislation!

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 Feb. 2, HB 1173 (Ware) passed out of the House on a 59-40 vote. The bill will permanently fix the overtime issue and include all the exemptions, including the auto specific exemptions. SB 631 (Barker), which is the identical companion bill, was heard last Monday in the full Senate Commerce and Labor Committee, which supported by the bill in a 15-0 vote. The bill was then heard in the Senate Finance and Appropriations Committee last Thursday and passed out of that committee in 14-1 vote. The bill will now be heard on the Senate floor. We are continuing to work on the full passage of both bills to permanently address the auto dealership overtime exemptions.

Vehicle Exhaust Systems

Legislators from Northern Virginia and Richmond are focusing on how to prevent the loud noise of vehicle exhaust systems. HB 632 (Carr) and HB 367 (Watts) sought to address this problem by prohibiting any individual from operating a motor vehicle with an exhaust system that emits noise louder than 85 decibels.

The 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 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. SB 180 (Saslaw) that focused on the same remedies for loud noises was struck by the patron, which killed the bill for the 2022 session.

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 that if the California Air Resources Board (CARB) zero emissions vehicle standards are implemented (expected in 2025) in Virginia, and the Commonwealth is serious about EV adoption, then EV incentives must be part of the solution.

HB 1267 (Wilt) would delay the California Air Resources Board standards from 2025 to 2030. It would say that regulations are not required for the development of the Advanced Clean Cars Program. The VADA opposed the repeal of this as the VADA is simultaneously working on EV incentives within the state budget. The Republican-led House Committee on Agriculture, Chesapeake and Natural Resources supported the bill on Wednesday with an 11-10 vote. The bill will be considered by the House. On the Senate side, there was a similar bill put forward, SB 365 (Stuart), but that bill was struck by the patron.

HB 351 (Sullivan) would create a driving decarbonization program that would assist developers with non-utility costs associated with the installation of electric vehicle charging stations. The bill passed out of the House Agriculture, Chesapeake and Natural Resources Committee on Wednesday and was re-referred to the House Appropriations Committee. 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 by a 9-4 vote. That bill will also make its way to the Senate Finance and Appropriations Committee because of the fiscal impact.

Civil Actions to Resolve Disputes

SB 309 (Edwards) intended to deal with violations of the Virginia Consumer Protection Act and stated that if a business is using any provisions in any contract or written agreement that restricts a consumer’s right to file a civil action to resolve a dispute that arises in connection with a consumer transaction that does not involve interstate commerce, any such provision would be void and unenforceable. Given that most, if not all, transactions affect interstate commerce, this provision has little utility. The bill would cause disputes rather than resolve them, and every civil action would have a preliminary fight over interstate commerce to determine whether common limitations affecting consumer transactions can be applied. The VADA opposed the bill in the Senate General Laws Committee, but the bill moved forward on an 8-7 vote. The VADA, however, was able to secure votes to kill the bill on the Senate floor by a 19-21 vote.

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The VADA focuses our time and energy on our main priorities, but we are involved in 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 dealer compensation for recall & warranty repairs: 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 provided during recall & warranty service. 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 the House by a vote of 98-0, and SB 216 passed the Senate in a 40-0 vote. 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 with an amendment that franchise dealers remain exempted from this requirement. This bill passed House 98-0. The bill now goes 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 bill’s author 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 bill’s patron to have this legislation killed this year and instead have a workgroup that will include the VADA.

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

Modifies the Virginia Overtime Wage Act to mimic federal statute for violation of the federal Fair Labor Standards Act. This bill would permanently preserve the auto dealers’ overtime exemptions. HB 1173 passed the House 59-40. The bill will go to the Senate for review. SB 631 passed the Senate Finance and Appropriations Committee in a 14-1 vote.

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

Excludes from the sales 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 to have this bill worked on with the Youngkin administration to determine state fiscal impact and the impact to consumers.

Nonrepairable and rebuilt vehicles: HB 1092 (Kilgore)

Repeals the sunset clause for definitions of nonrepairable and rebuilt vehicles. The legislation makes the amendments permanent. VADA participated in the workgroup on definitions and supported the legislation. HB 1092 passed the House Transportation Committee on Tuesday by a 20-1 vote.