The Bill is known as S 1766 and its declared function is “To Provide For The Energy Security Of The Nation, And Other Purposes.” It may also be cited as the “Energy Policy Act Of 2002.” Then again, the long title of Section 803 of the act (the section of our concern) is: “Assistance For State Programs To Retire Fuel-Inefficient Motor Vehicles.”

The plan calls for the Secretary of Energy (of the U.S. Energy Department) to establish a program to be known as “The National Motor Vehicle Efficiency Improvement Program.” One of it’s purposes is to encourage owners of cars and light trucks 15 years or older to scrap them, and to replace them with higher fuel efficiency vehicles.

(By the way, I didn’t make up any of those titles. If I had, my choice for the whole shebang would have been “New And Improved Bureaucratic Program To Inefficiently Retire Your Tax Dollars.”)

The feds themselves will not pay individual vehicle owners direct. Instead they will funnel the apportioned money to State-run scrappage programs. If a State has not yet established such a program, they will be pressured to do so.

Details about scrappage
To be a part of this dole, there are additional requirements to which the States must adhere. Their plan must include all of the items below.

1. Specific vehicular eligibility requirements including:
• A. All vehicles turned in must actually be scrapped
• B. All vehicles turned in must be currently registered in the relative State
• C. All vehicles turned in must be operational at the time of entry into the program
• D. Vehicle owners are restricted to turning in “only” one passenger car and one light truck in a 12-month period (except for non-profit organizations)

2. A payment to the vehicle scrapper (crusher operator) for each vehicle scrapped.

3. A payment to the vehicle scrappee (owner) for each vehicle turned in.

4. A redeemable credit to the owner of a turned-in vehicle for the purchase of a new, fuel-efficient vehicle.
What’s wrong with this plan?

1. Loss of parts and service sales. For those shops servicing customers who tend to keep their cars a little longer, like low-income folks, farmers, retiree's, etc., this bill has the potential to significantly decrease gross sales. By my quickie unofficial poll of shops across the country, the minimum expected loss is 10%; the maximum I heard was 30%. Admittedly, because of the reduced value of these older vehicles, not many are good prospects for extensive air-conditioning service. But certainly they need radiators, heaters and all types of cooling system service. Are you ready to lop off 10% of parts and service sales? 
Here are other questions and considerations plaguing this bill.

2. A crook’s delight. It will be virtually impossible to lawfully administer the regulations arising from this bill; it’s ripe for fraud and abuse. What’s to keep people from patching up their true junkers and turning them in for cash? If a family has four vehicles, all of which are registered in the husband’s name, how hard is it to change the registration of two of them over to the wife and turn them all in at one time? Got more cars sitting around? Got more 18-year old driver/potential registrants in the household?

3. Retiring retired cars. In many states, a vehicle has to pass a smog check to be licensed. But meeting today’s emission standards can be tough for older vehicles. However, in some states, low-income residents can get financial assistance to help bring the car into compliance. (In California, up to $500 per vehicle is available.)
So here’s risk with this program. Suppose a less-than-honest person has a clunker that’s been sitting in the weeds for a year or three. It won’t pass smog check and therefore has no value. What’s to keep him from pumping up the tires, dragging it to a smog shop, getting $500 worth of emissions work done to get it licensed—at State expense—and then taking it to another State agency to turn it in for crush money? It’s perfectly legal; he can take government money to earn more government money. No, it’s NOT government money; he’s using OUR tax money to grab more of OUR tax money!

Are you sufficiently annoyed yet?

4. No actual usage required. Notice in the eligibility requirements listed above that there is no requirement for the owner of the turned-in vehicle to actually be using it; nothing calls out how much it has to be driven per week, month or year. It can be a rusted out hulk, but as long as it’s registered and runs, it earns a check when turned in! But wait; aren’t they trying to just get gas-guzzlers off the road? If it isn’t being driven, it’s not guzzling gas.

5. Don’t have to buy a new one. There’s nothing that says you HAVE to buy a new vehicle. (Because of not using a tax-funded credit, maybe this is a positive.) But if the old one is not actually being “replaced,” why have the program?

6. Who gets the “credit?” The details about the “credit” portion for buying a new vehicle are not specified. Does the State hand the dealer a check, or does it go to the turned-in car owner? How do we know that a new car is actually purchased with the money?
Is the credit to be used only for brand new cars, or will new-used cars, dealer demos or leasebacks qualify? Again, sounds like a great opportunity for abuse of policy.

7. Gas mileage doesn’t really matter. Also missing from the eligibility list above is an actual fuel usage savings requirement. What about the 15-year or older cars that get better gas mileage than some of the new ones? A 1985 Honda Civic getting 35+ miles per gallon can be turned in for cash while also earning a credit that can be used toward the purchase of a 20 MPG 2002 Blazer. (And the scrapper still gets paid to scrap the Civic.) Are we buying up old cars and pickups because they get less gas mileage, or just because they’re old?

8. Potential for Non-profit abuse. Because there will be no restrictions on the numbers of vehicles turned by “non-profit” agencies, these folks will be out soliciting old car donations with twice the vigor as they are now. In their current ads they tout the fact that donated cars will be taken “running or not.” However, to be eligible for this program, one of the above requirements says the vehicle must be operational at turn-in. Ah ha, turned in where?
Here’s where the fraud potential pops up in this program. The non-profit agencies, in their ads, claim to use these vehicles as training aids for student mechanics. That seems well and noble at first, except that these agencies, with this low-paid or unpaid labor force, actually have a strong incentive to just convert these junkers into “barelys,” and turn them in for cash. Again, we’re paying to retire retired vehicles. (And don’t forget, the non-profits’ original car contributor will get a Federal tax credit as well.)

9. Paradox: How much to pay? No dollar amounts have yet been attached to any of these incentives; and here’s the conflict for that process. If the established reward$ (payment to turned-in car owner, payment to car crusher and redeemable credit to either dealer or turned-in car owner) are set too high, all of the potential for fraud and abuse indicated above will be amplified many times over. If, however, the handouts are set too low, no one will even bother to deal with the program; so why have it?

10. No parts recycled. Part of this bill states that the vehicles turned in must be crushed entirely. There are no provisions for the capture and reclamation of any parts. That’s odd, as a nation we seem to be ready to recycle everything else. And, because the public picks up the tab for the process, you can expect payouts to be well above what individuals through free enterprise and competition would pay.

11. Devastating to car collectors. Crushing older cars because of fuel inefficiency has the same downside as crushing them for dirty emissions; much needed replacement parts will quickly disappear. Teenagers and dads will no longer being able to rebuild, restore or customize a car because replacement parts will be scarce and/and extremely expensive. This hobby will effectively be priced out of reach of the average American.
A prime example is the going price for older Peugeot components. (I just priced a 1984 505 heater core at $160.) The few distributors that acquire and distribute these parts have only one price level, and everyone pays it. This is what would happen quickly for all older parts—even those that are readily available—if we start paying people to crush them.

12. Devastating to low-income people. When certain parts become scarce or unavailable, a low-income person will no longer be able to afford to fix his ride. There is nothing in this section that guarantees low-income individuals will be able to replace an existing vehicle, or to afford to buy a new vehicle or one that is even more fuel-efficient.

13. There’s no end to the crush. Once a program like this get enacted into law and funded, it will never end. Next year we will start crushing 1988 vintage vehicles, then 1989, and ‘90. There will never be collector cars again, nor will there be affordable, low usage cars.
I’m sure there are plenty more flaws yet to be revealed if this boondoggle is ever enacted. Hopefully, that will not happen in our lifetime.

What should be done with older cars?
By now we’ve all had our consciousness's raised and are aware that it is more socially responsible to recycle or reuse as much of our material possessions as possible. If we are going to financially assist low-income folks to keep driving, isn’t it more cost-effective to help maximize the fuel efficiency of their existing vehicles? After all, we are already doing this for emissions’ problems.

How to stop Section 803 of S. 1766
The Specialty Equipment Market Association (SEMA) has taken the lead in opposing this legislation. Cool Profit$ Magazine is thankful to SEMA for sharing this information and suggests that you visit their websites and follow their suggestions below:

“*Send a letter on your company letterhead to your U.S. Senators opposing Section 803 of S. 1766. The letter need not be long. Simply express how S. 1766 will affect you, your company and the automotive hobby. For more tips on writing your legislators, consult the SEMA document ‘How to Lobby Elected Officials.’

*This guide is available at www.enjoythedrive.com/san. To find out who your U.S. Senators are, call the SEMA Washington, D.C., office at 202/783-6007, or visit http://www.enjoythedrive.com/legislative/contact_legislator.asp.
Personal letters from employees of SEMA-member companies to their U.S. Senators opposing Section 803 of S. 1766 are encouraged. Again, letters can—and should—be brief (see notes in item above) and include personal reasons why the bill would affect their lives and careers. Contact the SEMA Washington, D.C., office at 202/783-6007 for help or information.

*Share the alert on S. 1766 found at www.sema.org/fedleg/fedredhot with as many people as possible, including your customers. Communicate with them the potential harm Section 803 of S. 1766 could have on the vehicle hobby, and urge them to get involved by writing letters as well.”

We will put links to the SEMA pages at www.imcool.com. In addition, we’ve included a sample letter on page 14 as a guide should you like to mail or fax in your own comments.          $$$