Gridlock may complicate matters for industry in 2015

WASHINGTON—This year promises to be an intense year in legislation and rulemaking for all stakeholders in the tire and rubber product industry. 2015 also ushered in a new Congress in which Republicans hold firm control of both the Senate and House of Representatives.

However, how much correlation there will be between those two facts is debatable. Political commentators—in the industry and elsewhere—expect at best only a slight loosening of Congress' legislative logjam this year. They also expect President Obama to start wielding his veto power against bills dear to the GOP.

For the tire industry, there will be plenty of issues to address in and out of Congress. The issue that promises to be the most contentious arose in the last month of 2014.

On Dec. 9-10, 2014, the National Transportation Safety Board hosted a symposium in Washington on passenger tire safety. At that meeting, the Rubber Manufacturers Association proposed an end to the voluntary tire registration rule Congress approved in 1982 and a return to the mandatory system begun in the 1970s.

This recommendation was opposed by the Tire Industry Association, whose predecessor organization, the National Tire Dealers & Retreaders Association, fought a hard battle to end mandatory registration in the first place.

At a time when the NTSB is investigating fatal accidents involving recalled tires that somehow stayed on the road, strong measures are needed, according to Dan Zielinski, RMA senior vice president of public affairs.

“After more than 30 years of experience with voluntary tire registration, the difference in registration rates between independent retailers and company-owned stores is stark,” he said. “The system has not worked.”

But while TIA favors stronger measures to register tires, it cannot support a registration system in which all the burdens and penalties are laid solely on retailers, according to Roy Littlefield III, TIA executive vice president.

“I can't think of any other product safety registration system in which the retailer is held responsible,” he said. “If a child safety seat is recalled and can't be recovered, Walmart doesn't get fined.”

Kevin Rohlwing, TIA's vice president of training, testified at the NTSB symposium. “The retailer is taking all of the accountability under the threat of serious fines that we have seen range from $1,000 to $6,000 to a maximum of $400,000 to $16 million,” he said at the session. “These are examples that we have seen over the years.”

TIA is doing everything it can to inform tire retailers and consumers about their responsibilities under the tire registration law, according to Roy Littlefield IV, TIA government affairs manager. Soon it will issue a new video, “Tire Safety Begins with Tire Registration,” which retailers can download free and play in their showrooms, he said.

Tire registration will be a major part of TIA's Lobby Day, scheduled for Feb. 5, according to Roy Littlefield III and IV. During Lobby Day, TIA members will have a chance to meet with key legislators and congressional staff members to discuss the issues most crucial to tire retailers.

RMA President Charles A. Cannon said that responsibility for tire registration properly belongs at the point of sale. But he also said his association is more than willing to work with TIA to create workable alternatives to the current system.

“What we're suggesting is finding the best way to collect information if we're going to conduct a reasonable tire recall,” he said. The RMA told TIA in advance that it would recommend a return to mandatory registration at the NTSB symposium, and that it looks forward to working with TIA to find mutually acceptable solutions, he said.

Roy Littlefield III, however, said TIA felt blindsided by the RMA's actions. “It's so unfortunate the way things happened,” he said.

Changing the current tire registration law would take an act of Congress. The NTSB report on tire safety is expected to be issued in the summer of 2015. The NTSB has no legislative power, but if it recommends a return to mandatory registration, that recommendation would have considerable persuasive force.

On the same day the NTSB symposium began, Transportation Secretary Anthony Foxx held a news conference at the White House. Foxx announced a new series of initiatives by the Obama administration designed to inform consumers on buying fuel-efficient tires and making sure their tires offer them maximum safety, fuel efficiency and service life.

Among other things, Foxx announced the release of a “Be TireWise” guide to tire safety and fuel efficiency and a “Drive for Safety” initiative with NASCAR during the 2015 racing season.

All of the RMA's tire manufacturing members pledged to support the administration's efforts, as did a number of major tire retailers.

During the news conference, Foxx said that the long-planned tire fuel efficiency labeling system would be released in 2017. Whereas tire manufacturers have been waiting for the labeling final rule since March 2010, Cannon said the RMA is not unduly upset about the further wait.

“The administration sent all the right messages that day,” he said. “This has certainly been a very long process, but when the White House sends a message saying that something is going to be done, we are confident it will be.”

Roy Littlefield III was less pleased, however, because this means the consumer education portion of the tire fuel efficiency rule also will have to wait at least that long to be issued. “We're disappointed that this is taking so long,” he said.

The RMA scored a coup in the summer of 2014, when it won passage in Colorado of a bill designed simultaneously to clean up the state's 60 million-plus scrap tire monofill and ban unsafe used tires from its roads.

Details of the used tire portion of the Colorado bill are still being worked out, according to Zielinski. However, he said the provisions would be simple enough: any tire that a professional technician would remove from service—whether because of sidewall bulges, improper repairs, insufficient tread or visible damage—would be illegal under the Colorado bill.

The RMA will be particularly active in Florida, Georgia, South Carolina and Texas in seeking passage of used tire bills this year, while other states are “bubbling,” he said.

Scrap tire laws in other states seem to be working as they should, according to Zielinski. However, the RMA needs to be vigilant to make sure cash-strapped state legislatures don't start diverting scrap tire abatement funds to their states' general funds.

“It's difficult for states when there's a downturn,” he said. “But when the economy improves, they don't always send the money back.”

Tire aging has been an issue since 2003, when the first news reports about it appeared, according to the RMA.

The association expects to see more state legislatures consider bills this year to ban tires above a certain age, despite the May 2014 report from the National Highway Traffic Safety Administration. In that report, the agency said that stringent new tire safety standards and improved tire technology made tire aging rulemaking unnecessary.

“People often intermingle tire aging and tire age,” Zielinski said. Tire aging—based far more on inflation, maintenance and storage than on the date of manufacture—determines a tire's service life, he said.

TIA expects to see a lot of state bills on the tire aging issue. A way out of the tire aging controversy, according to Roy Littlefield III, might be the public safety standards developed in Europe and now adopted in 31 countries. “It's an uphill battle, but it's the right battle,” he said.

With both houses of Congress in Republican control, legislation to repeal or revamp the Affordable Care Act seems virtually certain. Meanwhile small businesses must cope with some difficult provisions in the health care law, according to Roy Littlefield III.

“It's very unfortunate how the Affordable Care Act is playing out in the work force,” Littlefield said.

Because of the clause exempting small businesses from providing health care benefits to employees working less than 30 hours a week, small businesses are cutting hours for formerly full-time employees to avoid dealing with the law, he said.

“This was an unintended effect of the law, and it's bad for everyone,” he said.

Many initiatives at the Environmental Protection Agency affect the tire industry either directly or indirectly, according to Tracey Norberg, RMA senior vice president and general counsel. The RMA participates in many coalitions following broad EPA actions, such as one monitoring the pending National Ambient Air Quality Standard for ozone, she said.

One EPA action affecting the tire industry directly is its request for comments on the use of biomass as an energy feedstock, according to Norberg.

“Scrap tires are being treated favorably because of their natural rubber content,” she said. “This is a real opportunity to promote an end-use for tires as fuel.”