Warranty/recall bill keeps on rolling to final passage, money for EV rebates not included in budget
Session 2022, Issue 7
February 28, 2022
Bills from each opposing Chamber are now being heard, and politics is heating up. The House and Senate also shared their budget versions with the public last Sunday. Today, we enter day 46 of 60 of this session.
The Democrat-led Senate swiftly rejected the House bill that would repeal the Virginia Clean Economy Act from 2020 that commits the state’s electric grid to decarbonizing by 2050. The bill failed with all three Democrats and one Republican voting against the proposal on the five-person Senate Energy Subcommittee. A slew of GOP legislation aimed at the state’s minimum wage was voted down. Virginia’s minimum wage is currently $11 an hour and will rise to $12 an hour next year under legislation Democrats passed in 2020. GOP legislation aimed at excluding small businesses with 10 or fewer employees; freezing the minimum wage at $11 an hour; and allowing employers who provide health care to pay below the minimum wage were all voted down in the Senate Commerce & Labor Committee last Monday.
Both the House and Senate released their budget proposals last Sunday. There is bipartisan agreement to replace or modernize crumbling public-school buildings and to provide raises for teachers and other public employees. The biggest difference comes in tax cuts. The House is operating with $3 billion less because it has approved certain tax cuts proposed by Gov. Glenn Youngkin. The Senate did not support Youngkin’s proposal to double the standard deduction for state income tax filers, and that chamber also rejected the 5-cent-per-gallon cut in the gasoline tax over 12 months. The Senate has approved a $1.2 billion one-time tax refund ($300 to individual filers and $600 to joint filers) and supports eliminating 1.5% of the grocery tax (but keeping the 1% local portion).
- Neither the House nor Senate budget proposals committed two-year funding for the EV rebate program. Budget requests for $40 million toward the initiative were made by Delegate David Reid (D-Loudoun) and Senator Jennifer McClellan (D-Richmond). VADA President and CEO Don Hall expressed his continued disappointment in this article with Virginia Mercury. The House and Senate budget proposals did include funding for electric vehicle infrastructure. The Senate proposed $10 million in grant money that would assist developers with building electric vehicle charging stations in economically distressed areas of Virginia. The House proposed $5 million for a different fund to be administered by the Virginia Tourism Authority that would provide grants for EV infrastructure in rural areas.
The competing budgets mean the House and Senate need to continue working so they can adopt an identical budget for the next two years. Gov. Youngkin will look to engage in these conversations and push his priority items. The budget agreement is expected to be completed before the March 12 deadline to adjourn.
VADA’s priority legislation HB 259 (Wyatt) that supports fair warranty/recall reimbursement passed the Senate Transportation Committee and made its way to the Senate floor where it passed 40-0 last Tuesday. The bill heads to Governor Youngkin’s desk to be signed and enacted into law on July 1. The identical companion bill, SB 216 (McPike) passed the House Transportation Committee 22-0 on Thursday. The bill will head to the House floor.
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.
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 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 permanently, the VADA is working on HB 1173 (Ware) and SB 631 (Barker). HB 1173 passed out of the House this month on a 59-40 vote. The bill will permanently fix the overtime issue and include all the exemptions, including the auto specific exemptions. HB 1173 passed the Senate Commerce & Labor Committee and included all those identical modifications from the Senate versions, but neither of these changes affect the auto specific exemption. SB 631 (Barker), the Senate companion bill, moved to the House and made its way on Thursday to the House Commerce and Energy Committee which adopted technical amendments that also did not affect the auto specific exemption. SB 631 passed out of the House Commerce and Energy Committee 18-3 and now moves to the House floor. The VADA team is working to make sure HB 1173 conforms to the Senate version so they will be identical. VADA is working to move both bills through both Chambers and get them to the Governor’s desk for his signature.
Vehicle Exhaust Systems
There has been a focus among legislators from Northern Virginia and Richmond who are looking to prevent the loud noise from vehicle’s exhaust systems. HB 632 (Carr) and HB 367 (Watts) addressed 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 operate at above the 85 decibel level. 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. An amendment was added to the bill that would allow localities, by ordinance, to regulate motor vehicle noise. The bill has been referred to the Senate Committee on Transportation.
HB 1267 (Wilt) would delay enacting the California Air Resources Board from 2025 to 2030. It would say 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 an 11-10 vote. The bill passed out of the House Tuesday on a party line vote of 52-48. The bill now heads to the Senate Agriculture, Conservation and Natural Resources Committee.
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 has a fiscal impact and was sent to the Appropriations Committee. The bill failed to move forward on a 12-6 vote. There is also a Senate version, SB 708 (Marsden), that passed out of the Senate 26-14. Given the House vote on HB 351, passage of SB 708 appears unlikely.
Civil Action to Resolve Dispute
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 was able to secure votes to kill the bill on the Senate floor by a vote of 19-21.
VADA focuses our time and energy on our main priorities, but we are also a 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 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 the House 98-0 and the Senate 40-0 while SB 216 passed the Senate 40-0 and the House Transportation Committee by a vote of 22-0.
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 legislation passed the House 98-0 and passed the Senate Committee on Transportation 15-0. The bill has been referred to the Senate Finance Committee because of the fiscal impact.
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 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 patron to have this bill killed this year and to create a workgroup 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 the House 59-40 and the Senate Commerce & Labor Committee 13-1-1. The bill will go to the Senate Finance and Appropriations Committee. SB 631 passed the Senate 32-8 and the House Commerce & Energy Committee 18-3.
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 to have this bill worked on with the Administration to determine state fiscal impact and 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 this legislation. HB 1092 passed the House floor 89-10 and has been referred to the Senate Committee on Transportation.
Catalytic Converters Thefts: HB 740 (Bell)/SB 729 (Ruff)
The House version would make the theft of these parts a felony regardless of the converter’s value. The Senate’s proposal would make it a misdemeanor for someone to assist in the theft of a converter valued at less than $1,000. Both bills would require scrap metal buyers to maintain records for two years that ensure the seller obtained the item legally. The Senate bill only covers catalytic converters, while the House bill expands the coverage to parts of any vehicle, aircraft, boat, or vessel. HB 740 passed the House 69-30 and passed the Committee on Judiciary 15-0. SB 729 passed the Senate 40-0 and passed the House Courts Subcommittee 8-0.