The Dodd-Frank financial reform law, which passed Congress in 2010, authorized the creation of the Consumer Finance Protection Bureau, and now the CFPB wants to regulate the banks that make consumer loans, the dealers that refer them, and the service providers that broker them.

The CFPB has been tasked by the Dodd-Frank law with, among other things, enforcing the Equal Credit Opportunity Act, which prohibits lending practices that discriminate against borrowers based on criteria such as gender or ethnicity.

The Marine Retailers Association of the Americas worked closely with the National Automobile Dealers Association and Robert Fisher, a New York City lawyer, to exempt marine, RV, and auto dealers from the jurisdiction of the CFPB when the Dodd-Frank legislation was in the House-Senate conference. The Bureau has since been lobbying Congress asking why it allowed this exemption. The Bureau clearly wants to further regulate boat dealers in the same way as it does when it regulates financial institutions. When asked during the lobby campaign, Rep. Frank (D-MA) said there was no intent to include dealers because dealers were not the cause of the financial meltdown in 2008.

MRAA understands some lending institutions have already told dealers that the Bureau can enforce fair lending laws to prohibit intentional and unintentional lending discrimination. Banks now suggest that they want to pass the additional compliance costs on to the consumer through higher interest rates or by placing limits on their financing programs. These additional costs would be charged because the CFPB believes there is discrimination in the lending process. That is the angle it appears to be using to regulate dealers, since dealers are clearly exempt from regulatory compliance under Dodd-Frank.

Banks may also look at other changes to consumer financing by either exiting the indirect marine lending business in favor of a direct-to-consumer model.

MRAA is closely watching these developments and is working to retain the dealer exemption to reduce the cost of compliance to Dodd-Frank but also wants to retain direct and indirect financing models at low competitive rates to encourage boat sales.

It is becoming clear that the CFPB wants to eliminate the indirect dealer/broker participation programs and regulate dealers by making indirect financing models cumbersome and costly for consumers, dealers, and banks or by placing banks in the position of overseeing the actions of dealers.

The entire issue has become more complicated by a recent Obama Administration executive order that says agencies cannot discuss rules and regulations with interested parties or groups that may be impacted by a rule during the drafting stage and not until a rule has been published in the Federal Register.

The Regulatory Accountability Act of 2013 was re-introduced last week in the U.S. House of Representatives (H.R. 2122) with a companion bill in the Senate (S. 1029). These bipartisan bills would update the process by which federal agencies promulgate regulations. It has been a process that has not been updated in more than 66 years.

The bills would seek to improve accountability and the integrity of the process by amending the Administrative Procedure Act. Specifically, they would: 1.) codify the duty to analyze the costs and benefits of new regulations; 2.) open the regulatory process to greater transparency and 3.) require agencies to follow a more evidence-based approach in crafting rules that will cost more than $1 billion annually.

MRAA is extremely pleased that both bills have substantial support. MRAA has long supported regulatory reform and works with many other industries.

“We applaud the sponsors of H.R. 2122 and S. 1029, including those who are original co-sponsors for their strong leadership on this very important issue,” said Matt Gruhn, MRAA President. “MRAA looks forward to working with Congress to move this legislation forward.”

The MRAA recognizes the following Senators, including Bob Portman (R-OH), Mark Pryor (D-AR), Susan Collins (R-ME), Bill Nelson (D-FL), John Cornyn (R-Texas), Joe Manchin (D-WV), Kelly Ayotte (R- N.H.), Angus King I-ME), and Mike Johanns (R-NE) and Representative Bob Goodlatte (R-VA) and six other Members of Congress for their efforts and support.

Florida House Bill 999 was signed by Governor Rick Scott (F) in late May and will take effect on July 1, 2013. The bill 1.) provides for general permitting of mooring fields not exceeding 100 vessels, removes availability of a general permit for public marinas so all marinas will be subject to the standard permitting process. The bill considers mooring fields to be environmentally friendly and economical. This portion of the bill intends for local governments to consider mooring fields in their areas to reduce the effects of anchoring in sea grass areas. 2.) Allows for 10-year leases or consents of use for boat show owners, allows reconfigurations of temporary docking facilities within the lease areas and simplifies lease fee calculations to be based on preempted size and period of the preemption. 3.) Directs state agencies to issue special events permits that allow a movement of temporary structures within the lease area. And 4.) adds dock fee reductions for certain multi-family docks so they are more fairly treated as residential docks.

It is unclear how these provisions will impact Florida boat yards and marinas.

The bill had the support of several marine trades associations in Florida, including the Marine Industries Association of Palm Beach County and the Marine Industry Association of Florida.

Legislation that began in Florida as H.B. 4001 and sponsored by Rep. Matt Gaetz (R) was signed by Governor Rich Scott (R) on May 31. The new law repeals a five-year old statue requiring all state service stations to sell gasoline containing an established percentage of ethanol. “The law, which fined retailers for not selling gasoline with ethanol blends and requires a minimum percentage of ethanol additives, is one more unneeded mandate that causes harm to many trailered recreational boats. This repeal takes a bad law off the books and should allow distributors to bring more unblended gas accessible to boats. MRAA applauds Rep. Gaetz and Governor Scott for their long quest to repeal this ethanol requirement,” Gruhn said.

Service stations can elect to sell gasoline containing ethanol if they wish, according to Rep Gaetz.

MRAA also thanks Senator Greg Evans (R) for sponsoring the Senate version of the bill.

The House Science, Space, and Technology Subcommittee on Environment held a hearing on February 26 titled, “Mid-level Ethanol Blends: Consumer and Technical Research Needs.” The purpose of the hearing was to examine the scientific, technical, and consumer impacts of the U.S. Environmental Protection Agency’s decision to allow the introduction of mid-level ethanol blends (E15) on engines and fuel supply infrastructure.

According to information supplied to Members of Congress by subcommittee staff, the national consumption of gasoline and gasoline products has grown from 96.5 billion gallon per year in 1974 to 134 billion gallons per year in 2011. As part of an effort to reduce the reliance on foreign sources of oil, the Federal government has supported numerous policies to increase efficiency of fuel use and supplant oil sources since the 1970s. One of these initiatives includes the production and use of bio fuels through various tax incentives. More recently, this support is evidenced in the establishment of the Renewable Fuel Standard (FRS) in the Energy Policy Act of 2005. The RFS mandates that transportation fuels contain renewable fuels, such as corn-based ethanol. The mandate required four billion gallons of renewable fuels be blended by 2006 and 7.5 billion by 2012.

Congress then expanded the RFS requirement in the Energy Independence and Security Act of 2007, which required a blending of 15.2 billion gallons of biofuels by 2012 and 36 billion gallons by 2022. The use of E10 was authorized by the EPA for use in 1978. However, E10 was not used on a widespread basis until the Clean Air Act of 1990 mandated the use of an oxygenate in fuel. By that time the cars engines being produced had the necessary technology to absorb this level of ethanol, however, many boat outboard motors and inboard engine and fuel systems did not. The boating industry has seen considerable safety and repair issues on older marine engines.

Blending fuel at concentrations greater than E10 in order to meet the increased production volumes required by the RFS presents a challenge to the industry. This challenge is referred to as the “blend wall,” or upper limit to the total amount of ethanol that can be blended into the national gasoline supply. In an effort to avoid the blend wall, on March 6, 2009, 54 ethanol manufacturers petitioned the EPA to allow E15.

The EPA issued a partial waiver for E15 on October 13, 2010, allowing the introduction of E15 for use in model year 2007 and newer cars and SUVs. On January 26, 2011, the EPA granted another partial waiver for use of E15 in model year 2001 and newer vehicles. The EPA did not grant a waiver for the use of E15 fuel in model years prior to 2001, non-road engines (boats), motorcycles, equipment, and heavy-duty gasoline engines.

In order to grant these waivers, the Clean Air Act requires the EPA to first determine that E15 would not cause or contribute to a failure of an emission control device or system. This determination by EPA was based on a single set of tests conducted by the Department of Energy in 2009-2010. The testing program only included eight models of vehicles made in 2001-2006 and 19 models representing 2007 and newer vehicles. No boats were tested.

In June, 2011, the EPA issued a mis-fueling rule intended to mitigate the potential for consumer confusion. The rule mandated a new label to be used on pumps at gas stations that sell E15, and it encourages but does not require measures to educate consumers about E15. Despite public concerns raised to the EPA, including comments by MRAA, the agency approved the recommendations submitted by the Renewable Fuels Association as sufficient to satisfy the partial waiver requirements on March 15, 2012.

Given the potential for E15 caused damage to vehicle engines, concerns have been raised and questions asked regarding warranty coverage for use of the fuel. The Automobile Association of America (AAA) issued a press release indicating its concern and called for the immediate stoppage in E15 blends until sufficient research has been completed to determine the effects E15 may have on engines. Additionally, eight automobile manufacturers have indicated that the use of E15 does not comply with the fuel requirements in their owner’s manual and may invalidate or void warranty coverage.

The issues of ethanol caused damage are magnified if the ethanol content of gasoline would be further increased to E20 or beyond. The hearing closed with the Subcommittee committed to the need for further research to determine the level of bio-fuel additives that are safe for engines and people.

Subsequent to the Environment Subcommittee hearing on mid-level ethanol blends, MRAA sent a letter to Rep. Chris Stewart, Chairman of the Subcommittee asking Congress to intercede with the EPA to prevent the sale of E15 gasoline blends until proper research has been completed to ensure the protection of boating consumers.

MRAA told the Subcommittee Chairman that boating consumers are confused as to what is appropriate for boats and many times have no idea of the effects of mid-levels of ethanol on older marine engines. Even at 10 per cent ethanol levels our members are seeing major repair problems with older outboard motors and inboard engine fuel systems. E15 will greatly exacerbate those problems. The letter said boats oftentimes are not used for several weeks or months at a time. The natural breakdown of ethanol causes the fuel system to clog and damage to engines imposing a safety problem to people underway.

MRAA is concerned the EPA forced usage of corn-based ethanol before thoughtful research had been conducted and has failed to meet its civil obligation to provide for consumer safety. But, most alarming to MRAA is that more than 90 per cent of boating and fishing consumers fill their boat gas tanks at on-road service stations at the same time as their cars. As a result without proper education, they could inadvertently use higher ethanol levels in boats.

MRAA called on the EPA to do complete and proper research into the effects of mid-levels of ethanol blends in gasoline before releasing the product to the marketplace and conduct a national consumer education campaign that fully explains how the new fuel can be used, if the results of the research support usage.

On February 14, Senator Roger Wicker (R-MS) introduced, S. 344, a bill to prohibit the EPA from approving the introduction of gasoline that contains greater than 10 per cent ethanol. The bill has three co-sponsors. The key to the Wicker bill is that it would nullify any EPA granted waiver to mitigate mis-fueling.

On February 27, James Sensenbrenner (R-WI) introduced H.R. 875 to provide for a comprehensive assessment of the scientific and technical research on the implications of the use of mid-level ethanol blends. The Sensenbrenner bill takes a different approach to the problems caused by mid-levels of ethanol blends. However, both bills would nullify EPA granted waivers. H.R. 857 also prohibits the EPA from issuing new waivers until the results of the additional research are complete. In addition, H.R 875 specifically includes testing of the effect of ethanol on marine engines and fuel systems and the potential of mis-fueling at various points in the distribution and supply chains. The bill provides $900,000 to pay for the testing to be taken out of already appropriated research funds.

MRAA supports both S. 344 and H.R. 875. It is expected the House Environment Subcommittee will mark up the Sensenbrenner bill in early summer with floor action in the House possible in the fall.

As an update to our ongoing watch about the estate tax, Senator Thune (R-South Dakota) has postponed his bill until next week to repeal the Death Tax. We will continue to look for the introduction of this important bill. In the mean time, the Family Business Estate Tax Coalition (FBETC), which the Marine Retailers Association of the Americas (MRAA) supports, issued a letter thanking the Senator for taking the initiative on this issue.