The Nickel Report

Ladies and Gentleman.

Start Your Engines.

Wait! According to California, you can only use engines that are certified to meet air-emission standards, have a current “Executive Order,” and have not been tampered with, OR engines that are used solely for competition (but not every competition) and are not used on public highways (is a dirt road a public highway?).

Sound complicated? The Clean Air Act provides racing vehicles a broad exemption from federal air emission standards and also provides for broad preemption of state motor vehicle standards, with specific exceptions for California. In addition, California has its own broad racing vehicle exemption which can be found in the California Health and Safety Code. The exemption for racing vehicles seemed straightforward enough—they are not subject to federal or state emissions standards. This exemption makes sense, of course, because when you are racing, you need enhanced engine capabilities to win and because racing engines are a small percentage of the engines we see on the road for everyday use, such as commuting to school/work, running errands, etc.

Now, it seems things are about to change, in California at least, as the state gears up for regulatory action surrounding the definition of racing vehicle and the associated exemption. These potential changes could affect not only engine and parts manufacturers, but also individual vehicle operators (i.e., your neighbor who modifies her Porsche so she can race it in a closed circuit competition).

Auto racing has long been a pastime enjoyed by many across the country. From Formula One to Indy Car to the dirt-track stock car races that kept me awake every summer Saturday in my youth to off-road racing (just to name a few), hordes of people have made auto racing their hobby. Whether builder, mechanic, manufacturer of vehicles and/or parts, retailer, driver, spectator or one who likes to tinker in their own garage, this country is steeped in a rich auto-racing history. But with automobiles comes regulation, specifically regulations limiting air emissions. The California Air Resources Board (CARB) recently announced its plans to take new regulatory action to clarify the exemption of racing vehicles from air quality regulations. In California, mobile sources (including vehicles, engines and aftermarket parts) generally must be certified to meet certain air-emission standards. CARB issues Executive Orders (EO) to mobile sources that meet the emission standards. Under a longstanding statutory exemption, a racing vehicle, “a competition vehicle not used on public highways” as defined in the California Health and Safety Code, is not required to have an EO or meet other CARB mobile source regulatory requirements.

Due to a lack of clarity around “competition” and “public highway,” many racing enthusiasts are left confused and concerned about potential enforcement action for how they use their racing vehicle and /or how they modify their vehicles, asking questions such as: Is it okay to install a racing aftermarket part on my certified on-road vehicle? Can I install a racing engine in my street car and drive it on the highway? Can I use my modified vehicle in a sanctioned competition on a highway? What about racing practice—do I lose the benefit of the exemption if I am testing out my vehicle to ensure performance and safety but I do so outside of a competition? If I sell an exempt racing-specific aftermarket part and the customer uses it in a non-racing application, will I be subject to enforcement action? The answers to all of these questions, and many more, start with whether the vehicle is “a competition vehicle not used on public highways.”

After discovering numerous, inconsistent interpretations of the definition of racing vehicle, and the confusion surrounding it, CARB is proposing to clarify the definition through regulation.

Last month, CARB held a workshop to discuss its plans for regulatory action. According to CARB’s workshop presentation, CARB aims to develop a regulatory definition for “racing vehicle” to provide clarity to manufacturers, distributors, wholesalers, retailers and end users on what constitutes exempted vehicle use and what vehicle conversions/modifications are allowed. It remains to be seen what specifically CARB will do (we likely won’t see a draft regulatory proposal until late this year), but based on the recent workshop, CARB expressed a desire to crack down on racing vehicles being used for non-racing purposes as well as modification of certified on-road and off-road vehicles. This will have a significant impact on parts manufacturers, retailers and individuals.

California’s proposed action comes in the context of the US Environmental Protection Agency’s (EPA) announcement in a final rule issued last summer, stating that it was changing its longstanding practice surrounding racing vehicles. The EPA had proposed a prohibition against modifying certified vehicles regardless of their status as a competition-only vehicle but ultimately withdrew its proposal, while leaving an open question regarding the current status of such activity (modification of certified vehicles for racing/competition purposes) under the Clean Air Act’s anti-tampering provisions.* As California and the EPA seek additional avenues to reduce criteria pollutants (and California continues to seek greenhouse-gas reductions), the question is whether California will once again seek to drive motor-vehicle emissions policy even though Congress made it clear that California and all other states are preempted from regulating motor vehicle emissions unless a waiver is obtained based on compelling and extraordinary conditions. To follow California’s progress in this respect, please visit CARB’s racing vehicle website.

*Hunton & Williams is counsel on a Petition for Reconsideration with the EPA and a Petition for Review in the United States Court of Appeals for District of Columbia Circuit associated with this rulemaking.