California: Catalyst-Equipped Exhausts by Next Year?

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The good news? California dealers soon may be able to buy and sell — legally — exhaust systems for motorcycles equipped with catalytic converters. These state-approved aftermarket systems would have catalysts of their own. The bad news? Dealers likely would be required to keep a record of every such system they sell for five years, or face up to a $500 penalty for each violation.

Staff of the California Air Resource Board (CARB) on Wednesday hosted a follow-up workshop to the one held in April (click here for a report on that workshop, which suggests that what's happening in California may have national significance). Again the topic of discussion was proposed regulations that would create an approval process for "critical" emission-related parts such as catalytic converters. Because no reasonable process exists today, the aftermarket does not offer exhaust systems equipped with catalysts. (A reasonable approval process does exist for "noncritical" emissions-related parts such as camshafts and fuel management systems. The government tests these parts for emissions only. It would test critical parts for emissions and durability.)

Most industry complaints during the April workshop dealt with rules carried over from the regulations applicable to whole motorcycles. Apparently CARB took these comments to heart: In July it released a new draft of the regulations that addressed the industry's four major complaints. A couple of participants at Wednesday's workshop expressed gratitude for the changes.

But that's not to say that participants didn't find fault with the new version of the regulations.

Dealer Recordkeeping
The two most hotly debated issues at the workshop were new proposals for warranty reporting and dealer-level recordkeeping.

If the regulations were adopted, retailers would be required to keep a record of each catalyst-equipped exhaust system they sell or install. Each record would have to specify the part number and model, the date of sale and/or installation, the buyer's name and address, and the motorcycle's make, model and VIN. At CARB's request, dealers would have to hand over all such records. Dealers would maintain the records for five years from the date of sale or installation.

As far as penalties go, a CARB lawyer on the panel said the statutory maximum would be $500 per violation, though the amount could be less depending on circumstances.

Several workshop participants voiced concerns about this new requirement.

"I think you are treating this product like a controlled substance," said Tom Austin, an emissions consultant to the Motorcycle Industry Council (MIC), who said he doubted dealers would create a separate recording system just for catalyst-equipped exhausts. "I'm not here representing dealers, but I know a vast majority of them are not going to end up changing things."

Instead, Austin said, dealers would be forced to spend a lot of time sifting through inventory records created by their regular inventory software. "They're going to have all that information, but it won't be flagged as an emissions-critical part," he told the panel. "Most of them don't have the ability to flag this stuff. They're buying packaged software from a vendor that keeps track of all their sales. And there is an enormous lead time associated with a new module."

Austin said somebody should show CARB what a typical dealership software package allows in terms of tracking parts. It's important, he said, that the board — and dealers — realize that most dealer management systems could track the required information, even if it would be difficult to access at first.

Other workshop participants, however, pointed out that many small, nonfranchised retailers don't even use inventory software.

Card Game
As mentioned earlier, the second hot topic was warranty cards. The regulations would require manufacturers to collect at least 50 percent of the cards making their way to consumers. The reason for this requirement, a CARB staff member said, was so that manufacturers could contact at least a portion of customers during a recall.

Brett Smith, president of S&S Cycle and a member of the MIC's American V-Twin Committee, addressed the panel on the subject. "There's a difference between trackability and completing a warranty card," he said. "I can pretty much tell you where all our parts end up at the dealer level…What you're asking us to do is take it a step further to the consumer purchaser level, and I can tell you that logistically, you're requesting something that could very well be an impossibility."

Smith supported the dealer record requirement, claiming this mandate would preclude warranty cards. "If the manufacturer has the ability to get this warranty recall information to the retailer level, I think it is arguable that we've met our goal," he said.

CARB's Jacline Lourenco disagreed. "The problem with that is that I don't have a club directly over the dealers," she said. "I have a club over you as a manufacturer because I can take away your E.O." (An E.O., or executive order, is the document approving a specific product.)

Lourenco is chief of the CARB branch that deals with new vehicles and engines. Later in the workshop she told Smith, "You have to be responsible for the product down to when I buy."

"I will be responsible for it, Jackie," Smith replied. "But I'm not going to track you all over the United States."

Smith provided further arguments against warranty cards by noting that customers often move, and they often sell their bikes on the secondary market. He also contended that even if a manufacturer got all its warranty cards back, few customers would respond to a catalyst recall.

A CARB staff member responded by saying that a California smog check was "in the works," but she did not elaborate.

Austin noted that spam has conditioned customers not to fill out warranty cards. He told the panel that all the money that the manufacturers would spend in trying to collect cards could be used instead to locate customers during the few recalls.

Several other workshop participants said that their attempts to collect warranty cards for marketing purposes never approach 50 percent, even when they offer incentives.

"We had warranty cards for years," said Ted Sands, chairman of the American V-Twin Committee. "We got maybe 10 back for every thousand."

A CARB enforcement officer in attendance told the panel that he believed the manufacturers would need to instruct their dealers to fill out the cards with their customers, as automotive muffler shops do.

Lourenco said that dealer outreach in general would be necessary. But most workshop participants seemed to support an idea offered up by another American V-Twin Committee member: that dealers shouldn't be told of any of these developments until the regulations are concrete. Dealers, he said, wouldn't be able to digest the information and may overreact.

A final comment about the warranty cards seemed to floor the panel. A manufacturer noted that to calculate a percentage of returns, two numbers are needed: the number of cards returned and the number of exhausts sold. But at the end of any given year, a large number of exhaust systems are stuck in the pipeline. "All you really know is what you sold to the distributors and dealers," he told the panel. Instead of tracking the percentage of cards returned, he suggested, CARB should track a manufacturers' efforts to collect cards.

If CARB decides to keep the percentage requirement, the dealer records mandate seemingly would be necessary.

Timeline and Relevance
So when can California dealers expect catalyst-equipped exhaust systems? The CARB panel said that it is accepting comments until mid-September. It hopes to have a staff report completed by the end of October, when the public will have another 45 days to comment. The panel plans to go before the full California Air Resources Board in December.

Lourenco says the board has accepted most of her proposals for the past 25 years, but that a denial is possible.

One manufacturer indicated that it's had product ready for testing since last December. Because of all the time needed for manufacturer and CARB testing, product probably won't be available by February's trade shows. But availability soon thereafter is likely, if the regulations are adopted.

"The dealers are very anxious to have product," said one manufacturer. "We've been hearing that every day."

Most workshop participants seemed to support expediency, and the CARB panel indicated that when it came to speed, the fewer draft changes the better.

How big is the market for catalyst-equipped exhausts?

"I actually think it's going to start a little bit small," Austin said. "Obviously it's possible that people are going to have to be induced to spend a little bit more money for a legal system. And right now, with motorcycles not yet in the smog test program, it may be more of a gradual ramp-up."

As we mentioned back in our initial April report, use of catalyst systems on new motorcycles became more common as the major OEMs strove to meet CARB's new emission standards for the 2008 model year. Beginning with the 2010 model year, the Environmental Protection Agency (EPA) will adopt the same standards. According to Austin, the EPA and most other states accept CARB-approved parts. Given this, we surmise that catalyst-equipped exhausts could eventually gain a national market.

Anti-tampering laws in California and the United States have been on the books for decades, but there was no enforcement for most of that time. Then CARB started handing out fines a few years ago.

CARB considers exhaust systems for motorcycles without catalytic converters as replacement parts. As such, they are legal in California as long as all emission controls such as oxygen sensors are reconnected to the system.

Readers can get the draft of the proposed regulatory order, and learn about how to comment, at the board's Web site.