September 1999

• Online estate tax survey could impact tax debate at key time

• Product liability reform in the 106th Congress?

• AED comments blast OMB Shelby amendment proposal

• AED Washington staff underway with Tour USA

• AED joins surge break coalition

• AED Capitol Club membership continues to grow

As Congress returned from its summer recess, Republicans were being greeted with derision for their attempts to build support for their tax reform bill and its provisions to repeal the estate tax. Tax relief opponents are saying that the GOP effort has not been embraced by voters and that higher profile spending programs and budget restraint should be given more priority. But views about the chances for a veto coupled with cynicism over garnering the necessary override votes shouldn't be confused with a lack of interest.

AED's Washington office has spoken with numerous distributors who believe that the elimination of the estate tax is essential for the continuation of family business and real competition in the equipment distribution industry. One group working on the Internet is trying to measure public interest in elimination of the death tax at a key time in the debate. AED members should consider participating in the survey in order to send a strong pro-repeal message to Capitol Hill.

If you'd asked us a few weeks ago what the chances were for product liability reform this year, we would have told you that they weren't very good. An effort to pass a compromise bill in the Senate last year got bogged down in a Democratic filibuster over an unrelated health insurance issue. Sens. Slade Gorton (R-WA) and John Rockefeller (D-WV), who had worked with the White House to craft the compromise legislation, seemed to get disillusioned and walked away from the issue. So, it seemed, did everybody else on Capitol Hill. Now all that may be changing.

Earlier this year, Sens. Spencer Abraham (R-MI) and Joseph Lieberman (D-CT) introduced a scaled-back version of the Gorton-Rockefeller product liability bill. That new legislation has been attracting a lot of attention in the last month or so. Although the major benefit provided by the Small Business Liability Reform Act of 1999 (S. 1185) -- a limit on punitive damages -- is targeted to businesses with fewer than 25 employees, the bill does contain the all-important sellers exclusion clause that AED has sought for more than 15 years.

The sellers exclusion clause would do much to insulate AED members from frivolous product liability lawsuits. Specifically, it would provide that sellers, renters, and lessors of products could only be held liable for injuries and damage caused by their products if the distributor (1) was negligent with respect to the product, (2) breached an express warranty or (3) engaged in intentional wrongdoing.

Distributors could also be held liable if the original manufacturer of the product was unavailable for suit. The sellers exclusion clause is not covered by the small business limitations of the bill; it would apply to all distributors without regard to size. The bill would also create a uniform and predictable system of product liability laws that would discourage the widespread practice of "forum shopping" (filing suit against a product liability defendant in whatever state has the most favorable product liability laws).

In introducing the bill, Sen. Abraham said that it is needed because businesses "across this nation are faced with a daily threat of burdensome litigation, a circumstance which has created a desperate need for relief from unwarranted and costly lawsuits."

Earlier this month AED joined forces with the National Association of Wholesaler Distributors and the National Federation of Independent Business to build support for the Abraham-Lieberman bill, which to date has 30 cosponsors. A parallel bill (HR 2366) was recently introduced in the House by Rep. James Rogan (R-CA). That bill has three cosponsors so far.

How much should the public know about what the government is doing and why it's doing it? The answer depends on whom you ask. It seems like common sense to say that in a democracy the public should have access to all data generated at taxpayer expense. In the past, much of this research has been used as a basis for government policy and regulation. Giving the voters the opportunity to examine and question that data helps to build greater confidence in government action. Unfortunately, not everybody agrees.

Last year, after being denied access to the federally-funded research data that the Environmental Protection Agency used to craft its controversial new clean air standards, Sen. Richard Shelby (R-AL) secured passage of legislation that requires any agency that gives research grants to make all data produced under those awards available to the public through the Freedom of Information Act. This data, which is paid for by taxpayers, is frequently used by such agencies as EPA and the Occupational Safety and Health Administration to craft new regulations, yet it's usually not made available to the public. It's therefore commonly known as "secret science."

When fully implemented, the Shelby amendment, as this new law has become known, will do much to change current agency practice and to ensure that the Federal regulatory process is fairer and more open. But not everybody wants that. This summer AED led construction industry efforts to fight back an effort by Reps. Jim Walsh (R-NY) and David Price (D-NC) to use the appropriations process to prevent the Shelby amendment from going into effect.

Now, OMB, the agency tasked with implementing the Shelby amendment, is dragging its feet. Last month, OMB published its second proposal to implement the data access law in the Federal Register. Unfortunately, OMB didn't even come close to doing what the framers of the Shelby statute intended. And in comments filed with the OMB on the proposal on August 9, AED told the agency just that.

Rather than providing access to "all data" as the Shelby statute requires, the OMB has proposed limiting the applicability of the law to data cited by agencies in formulating regulations that cost society $100 million or more per year. Also, rather than making the data available through current FOIA procedures, the OMB proposal would make substantive changes to the way the government decides what to release to the public under the statute.

AED and our allies objected vigorously to these and other portions of the OMB proposal. In our comments, we wrote that "[i]f properly implemented, the Shelby amendment could prove to be one of the most important administrative law reforms in years and could do a great deal to restore public confidence in the workings of government. The Shelby amendment is fully in keeping with the democratic principle that the public should be allowed to review and question the basis for government action. However, OMB's proposal to implement the Shelby amendment falls far short of the goals of the statute's framers. OMB has taken legislative language that was intended to ensure that all data developed with taxpayer money be made available to the public and limited it so substantially that it becomes practically valueless."

AED's Washington team of Tony Obadal and Christian Klein continued their trek across the country this month to bring the gospel of AED's government affairs program to members in Utah, Portland, Seattle, St. Louis and Kansas City.

The goal of the Tour USA program is to provide an opportunity for AED's Washington staff to talk personally with members about the Association's activities in Washington and to reinforce the idea that the success of AED's efforts to advance the interests of the industry in Washington depends on AED member involvement.

"The meeting was a great way to learn more about what AED is doing for the industry on Capitol Hill," Jeff Simonson of Oregon Tractor & Equipment said. "The meeting gave me, as the local group president, some good ideas about how to make the Oregon AED members a more effective political force. I also enjoyed being able to ask Tony and Christian questions about the issues that they're working on in Washington -- like the Gray Market and estate tax repeal -- and talking to them about ways that we can help move AED's agenda along."

In November 1993 the Federal Highway Administration issued new guidance materials for the Federal motor carrier safety regulations. That guidance material declared that surge breaks, which are generally used on trailers between 3,000 and 26,000 lbs., do not comply with section 393.48 of the regulations and are therefore prohibited from use in interstate commerce. The reason given was that section 393.48 requires that brakes on trailers be operable at all times. According to the guidance material, however, surge brakes are only operative when the vehicle is moving in the forward direction and are not under the control of a single application valve when used on a combination of vehicles.

Although the regulations mentioned above are Federal and only apply to interstate commerce, states have been required to adopt compatible and comparable regulations. In many cases, states simply adopt the federal regulations and interpretations. But some do and some don't. As a result, ever since the adoption of that guidance material, distributors of smaller equipment whose customers use trailers with surge brakes have found themselves in a legal morass where they are frequently faced with conflicting local, state, and federal rules. More than one distributor has told us about angry customers complaining about being ticketed by zealous law enforcement officials.

Now the industry is banding together in an effort to solve the problem. Earlier this month the first meeting of an ad hoc surge break coalition was held on Capitol Hill. As Insights went to press, coalition members were considering the problem and working to craft a strategy to deal with the surge break issue.

We're happy to include an updated list of AED Capitol Club members. These individuals are helping to advance the interests of the construction equipment industry in Washington by providing much needed funds to help elect pro-growth candidates to Congress and support AED's ImPACt 2000 local group fundraiser program.

Membership in the Capitol Club is reserved for AED members who contribute $1,000 or more to AED's political action committee. The PAC allows AED to support congressional candidates who understand the issues facing equipment distributors and has played a major role in increasing the visibility of AED among lawmakers in recent years. Note that the number in parentheses after each name indicates the number of years the person has been a Capitol Club member.

• Kerry Walsh, Andress-Walsh Co., Houston, Texas (3)
• Alvin Richer, Arnold Machinery Co., Salt Lake City, Utah (3)
• Walter T. Berry, The Berry Companies, Wichita, Kansas (1)
• Jay Paradis, Brandeis Machinery & Supply Co., Louisville, Kentucky (3)
• Charles Leis, Brandeis Machinery & Supply Co., Louisville, Kentucky (2)
• W. Travis Burch, Burch-Lowe, Atlanta, Georgia (3)
• Edward Weisiger, Carolina Tractor and Equipment, Charlotte, North Carolina (3)
• Robert K. Henderson, Cummins Interstate Power, Hilliard, Ohio (3)
• Roger Poulson, Faris Machinery, Commerce City, Colorado (3)
• Roy Hunt, Hunt Tractor, Louisville, Kentucky (3)
• John W. Burress, III, J.W. Burress, Inc., Roanoke, Virginia (3)
• Dale A. Leppo, Leppo, Inc., Tallmadge, Ohio (3)
• Ben Johnston, McDonald Machinery, Ft. Wayne, Indiana (1)
• Kenneth Taylor, Ohio Machinery, Broadview Heights, Ohio (2)
• Chris Gaylor, Power Equipment Co., Knoxville, Tennessee (1)
• Lance Ringhaver, RPC, Inc., Tampa, Florida (2)
• Robert O. Mullins, ROMCO, Dallas, Texas (3)
• Robert G. Mullins, ROMCO, Dallas, Texas (2)
• Charles Clarkson, ROMCO, Dallas, Texas (1)
• Thomas Wilson, United Equipment, Inc., Memphis, Tennessee (2)
• J. William Pullen, Whayne Supply Company, Louisville, Kentucky (3)
• Lyle Campbell, Wheeler Machinery Co., Salt Lake City, Utah (3)
• Robert Campbell, Wheeler Machinery Co., Salt Lake City, Utah (3)
• Robert McNutt, Wolverine Tractor & Equipment Co., Detroit, Michigan (1)
• Jim Stephenson, Yancey Brothers Co., Atlanta, Georgia (3)