In 2018, Washington faces cloudy year, busy agenda

WASHINGTON—2017 brought massive changes to Washington, making 2018 all the harder to predict, according to industry association representatives.

The Trump administration has demonstrated real concern about business growth and the government-related handicaps businesses face, the association officials said.

"With the Trump administration, you don't have to watch for the Federal Register to come out at 4 a.m. to see what the surprises might be," said Robert L. Redding, Washington representative for the Automotive Service Association.

On the other hand, its focus on reducing regulatory burdens, while beneficial on its face, has led to delay and confusion in necessary regulatory activity, they said.

"The length of time getting people confirmed is a problem," Redding said. "There's no NHTSA administrator, no head of the Federal Insurance Office, no head at the FTC."

Here are some of the main issues the tire and auto service industries will be watching in 2018:

Regulatory issues

The U.S. Tire Manufacturers Association wrote the National Highway Traffic Safety Administration Dec. 1, praising the agency's plans to eliminate unnecessary, outdated and redundant regulations.

The USTMA had several suggestions on tire-related regulations that could be repealed, including the bead unseating test required under federal tire safety standards and the Uniform Tire Quality Grading System.

Yet also as of early December, President Trump had not answered the Sept. 20 letter of USTMA President and CEO Anne Forristall Luke, requesting that Trump appoint a NHTSA administrator as soon as possible.

The USTMA still is working closely with NHTSA's professional staff, as well as with congressional committees that have oversight over the agency, according to Luke. But not having an administrator in place makes it difficult for NHTSA to act on important pending rules, such as revisions in tire registration procedures and the consumer education portion of the tire fuel efficiency labeling standard.

"Outside the tire industry, NHTSA has a very important safety mandate," she said. "The staff is doing very good work in moving that mission forward. But the agency is without political leadership at the top to help the staff manage that."

Roy Littlefield, executive vice president for the Tire Industry Association, agreed with Luke. "It's hard to imagine anything big coming out of NHTSA until there's an administrator," he said.

Still, there are negotiations currently going on between various stakeholders that could mean some really great strides in improving tire registration rates, according to Littlefield.

"As an industry, we have an opportunity to do something that will make a lot of sense," he said. "I think we can make this a win-win for manufacturers, dealers and motorists."

Infrastructure

Passage of a comprehensive surface transportation funding package was one of President Trump's major campaign promises. However, the chances of passing an infrastructure bill, and what that bill might contain, is still unclear.

Littlefield said TIA officials have attended two briefings on surface transportation—one from the transition team, and one at the White House.

"This is an issue we've talked about to a lot of people on the Hill for years," he said.

"President Trump's definition of infrastructure is everything—trains, airports, ships, electric grids," Littlefield said. "I'm not saying those are not important, but when you talk about infrastructure, a lot of people think of highways."

Thirty-eight surface transportation bills, all widely varying in focus and details, have been introduced in Congress so far this session, according to Littlefield. The White House proposal, on the other hand, isn't even a bill yet.

"Philosophically we support the effort, but we're concerned about what will get taxed," he said. "It's easy to tax groups that don't have a big impact on Congress. There are only 800 retreaders left. It would be a disaster if they passed a tax on retreading."

Luke said the USTMA has talked to the domestic policy staff at the White House, and interest there in developing an infrastructure package is very high.

"The timing of the infrastructure package is after tax reform," she said. "We're staying in very close contact with our contacts on the Hill and in the White House, and we hope they will turn to infrastructure early in the New Year."

Tax reform

President Trump signed a comprehensive tax reform bill Dec. 20. The final package included:

• A top corporate tax rate of 21 percent;
• Individual tax rates ranging from 10 to 37 percent;
• Standard deductions of $12,000 for individuals and $24,000 for couples;
• A cap of $10,000 on deductions for state and local property, sales or income taxes; and
• Doubling the estate tax threshold to $11.2 million.

Before the vote, TIA watched the tax reform process in Congress very closely. "The current process is going so far that there is no question there are going to be many unintended results and hidden surprises in store," said the Dec. 7 issue of TIA's Weekly Legislative Update.

TIA favored the House provision on the estate tax, which would have phased out the tax by 2025.

"The Senate would double the estate tax threshold, which would help our members, but not enough," Littlefield said before the vote. "A guy on our board has a business worth $30 million, and he wants to leave it to his children. If the threshold is still only $11 million, how can he?"

There are still too many variables in the tax bill to say exactly how the tax package will affect Americans, according to Littlefield.

"If you take away the deductions for state and local taxes, but increase the standard deduction, I don't know if you're going to be ahead or behind," he said.

The final bill also changed the tax treatment of "pass-through" entities—i.e. companies in which the owners pay taxes at the individual rate. Most of the small businesses in the U.S. are pass-through entities.

The final bill allows pass-through entities to deduct 20 percent of their income tax-free, though this deduction expires after 2025.

"State taxes are important to us, but pass-through is critical," Redding said before the vote. "That's the one thing they've got to get right."

The USTMA took no stand on the tax bill, because of differences of opinion between its members, according to Luke.

"We can all agree that strong economic growth is very good for U.S. tire manufacturers," she said. "We hope the House/Senate discussions are fruitful."

Health care

The final version of the tax bill repealed the individual mandate of the Affordable Care Act. This repeal is widely regarded as the death knell for the ACA, but it is unclear what this will mean for small businesses struggling to provide health insurance to their employees, according to Littlefield.

"More than any other small business group, tire dealers insure their people, whether for competitive reasons or something else," he said. "But at the end of this year, our people are either losing their insurance or seeing their premiums go through the roof.

"We get more questions and complaints about health care than on any other subject," he said.

Scrap tires

In 2018, the USTMA plans to introduce a new five-year plan for supporting sustainable markets, according to Luke. Rubber-modified asphalt will play a big role in that plan, as will collaborating with state governments to maximize the use of rubberized asphalt, she said.

This year's Scrap-to-Profit Conference, held in Nashville in October, is a good example of the USTMA's approach, Luke said.

A significant number of state regulators attended the conference, as did many academics and representatives of private companies that make rubber-modified asphalt and other recycled rubber products, she said.

"Collaboration has the most potential for developing rubber-modified asphalt and any other new markets for scrap tires," she said.

Tire-derived fuel remains the largest market in the U.S. for scrap tires, and its environmental benefits are becoming ever more apparent as environmental protests against TDF have died down, according to Luke.

A presentation by Robin Ridgway of Purdue University at the Scrap-to-Profit Conference, on a new TDF project at Purdue, points up the continuing relevance, advancing technology and expanding benefits of TDF, she said.